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Securities Law Prof Blog

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Post Frequency: 38.1/day

Last Entry: March 31, 2011 at 16:18:26

Treasury Named as Selling Shareholder in Ally Financial Inc.?s IPO Registration Statement

Posted on March 31, 2011
The U.S. Department of the Treasury today announced that it has agreed to be named as a selling shareholder of common stock of Ally Financial Inc. (Ally) in Ally?s registration statement filed with the Securities and Exchange Commission (SEC) for...

Agencies Propose Incentive-based Compensation Arrangements

Posted on March 31, 2011
The Office of the Comptroller of the Currency, Treasury (OCC); Board of Governors of the Federal Reserve System (Board); Federal Deposit Insurance Corporation (FDIC); Office of Thrift Supervision, Treasury (OTS); National Credit Union Administration (NCUA); U...

FINRA Arb Panel Orders Broker to Pay $1 Million to Madoff Investors

Posted on March 30, 2011
The Wall St. Journal reports that a FINRA arbitration panel ordered Robert M. Jaffe, a part-owner of Cohmad Securities Corp., to pay $1.1 million plus interest to a group of investors formed to invest in Bernie Madoff's ponzi scheme. Jaffe...

Debating the Costs of Dodd-Frank

Posted on March 30, 2011
This from the House Financial Services Committee website: The Dodd-Frank Act will result in a bigger and more expensive Federal government. That?s the point the Financial Services Committee is driving home in a video released on Wednesday. The video, which...

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Proposed Rules on Credit Risk Retention Are Published

Posted on March 30, 2011
These agencies (Office of the Comptroller of the Currency, Treasury; Board of Governors of the Federal Reserve System; Federal Deposit Insurance Corporation; U.S. Securities and Exchange Commission; Federal Housing Finance Agency; and Department of Housing and Urban Development) are proposing...

SEC Proposes Rules Requiring Listing Standards for Compensation Committees and Compensation Consultants

Posted on March 30, 2011
The SEC today voted unanimously to propose rules directing the national securities exchanges to adopt certain listing standards related to the compensation committee of a company?s board of directors as well as its compensation advisers, as required by the Dodd-Frank...

March 30 SEC Meeting Takes Up Credit Risk Retention, Listing Standards for Compensation Committees

Posted on March 29, 2011
SEC Open Meeting Agenda, March 30, 2011 Item 1: CREDIT RISK RETENTION Office: Division of Corporation Finance The Commission will consider whether to propose joint rules with other Agencies to implement Section 941(b) of the Dodd-Frank Wall Street Reform and...

SEC CHARGES FDA CHEMIST WITH INSIDER TRADING AHEAD OF DRUG APPROVAL ANNOUNCEMENTS

Posted on March 29, 2011
The SEC charged Cheng Yi Liang, a U.S. Food and Drug Administration (FDA) chemist, with insider trading on confidential information about upcoming announcements of FDA drug approval decisions, generating more than $3.6 million in illicit profits and avoided losses...

SEC Charges Stock Promoters with Market Manipulation

Posted on March 28, 2011
The SEC announced that it filed a civil injunctive action against Joseph Catapano ("Catapano") and Michael Piervinanzi ("Piervinanzi"), alleging that they engaged in a fraudulent broker bribery scheme designed to manipulate the market for the common stock of Euro Solar...

Agencies Announce Consideration of Risk Retention Notice of Proposed Rulemaking

Posted on March 28, 2011
The staffs of the Office of the Comptroller of the Currency, the Federal Reserve, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, the Federal Housing Finance Agency, and the Department of Housing and Urban Development (together, the agencies)...

SEC Settles Fraud Charges Against Houston Businessman in Connection with Investment Advisory Firm

Posted on March 28, 2011
On March 25, 2011, the SEC filed suit in U.S. District Court in Houston against Daniel Sholom Frishberg (?Frishberg?), principal of Daniel Frishberg Financial Services (?DFFS?), a Commission-registered investment adviser. The Commission alleges that DFFS, with Frishberg?s approval, advised its...

SEC OBTAINS ASSET FREEZE AND OTHER RELIEF IN $47 MILLION OFFERING FRAUD

Posted on March 28, 2011
On March 25, 2011, the SEC obtained an emergency asset freeze in a $47 million offering fraud and Ponzi scheme orchestrated by John Scott Clark (Clark) through Impact Cash, LLC and Impact Payment Systems, LLC (collectively Impact), companies owned and...

SEC Blocks Connecticut Fund Manager's Attempt to Divert Funds From Petters Ponzi Scheme Victims

Posted on March 28, 2011
The SEC announced it obtained an emergency court order to halt an attempt by Marlon M. Quan, a Connecticut-based fund manager, to divert to himself and others settlement funds intended for U.S. victims of a Ponzi scheme operated by Minnesota...

Fairfax on the Inside Director

Posted on March 26, 2011
The Uneasy Case for the Inside Director, by Lisa M. Fairfax, George Washington University - Law School, was recently posted on SSRN. Here is the abstract: In the wake of recent scandals and the economic meltdown, there is nearly universal...

Schwarcz on Assessing Dodd-Frank

Posted on March 26, 2011
Keynote Address ? Identifying and Managing Systemic Risk: An Assessment of Our Progress, by Steven L. Schwarcz, Duke University - School of Law, was recently posted on SSRN. Here is the abstract: This short address attempts to provide a succinct...

Third Week of Rajaratnam's Trial: Testimony from Goldman CEO

Posted on March 26, 2011
During the third week of Raj Rajaratnam's trial, the star witness was clearly Goldman Sachs CEO Lloyd Blankfein, who testified on Wednesday. The government called him to testify that Rajat Gupta, the former Goldman director, violated the company's confidentiality policy...

FINRA CEO Speaks on Self-Regulation of Investment Advisers

Posted on March 25, 2011
Richard Ketchum, FINRA CEO, spoke on March 22 at the SIFMA Compliance and Legal Division's Annual Seminar and addressed the issue of FINRA's becoming an SRO for investment advisers, a possibility that most investment advisers oppose. In his prepared remarks,...

SEC Agenda: More Dodd-Frank Implementation

Posted on March 24, 2011
The SEC announced an Open Meeting on March 30, 2011.The subject matters of the Open Meeting will be: Item 1: The Commission will consider whether to propose joint rules with other Agencies to implement Section 941(b) of the Dodd-Frank Wall...

Will Ameriprise Bail Out Securities America?

Posted on March 24, 2011
Reuters reported earlier today that Ameriprise Financial doesn't want to bail out Securities America. If so, its brokerage unit would likely go under because of the huge liability resulting from customers' claims (both in a class action and arbitrations) stemming...

Judge Rakoff Challenges SEC Practice of Settling Defendants "Neither Admitting nor Denying"

Posted on March 23, 2011
Judge Jed Rakoff continues to poke and prod the SEC about how the agency negotiates consent judgments. In SEC v. Vitesse Semiconductor Corp.(Download SEC.VitesseSettlement), the Judge approved the settlement before him, but made it very clear that he has serious...

Supreme Court Unanimously Rules No Bright-Line Rule of Statistical Significance in Matrixx

Posted on March 22, 2011
The U.S. Supreme Court unanimously decided, in Matrixx Initiatives, Inc. v. Siracusano (No. 09-1156) (Mar. 22, 2011)( Download Matrixx opinion) that plaintiffs can state a case for securities fraud under Rule 10b-5 based on a pharmaceutical company's failure to disclose...

SEC BRINGS FRAUD CHARGES IN SILICON VALLEY REAL ESTATE INVESTMENT SCHEME

Posted on March 22, 2011
The SEC charged Calif.-based JSW Financial Inc. and five officers for defrauding investors in two real estate funds, alleging that the firm used investor funds to prop up the officers? own failing real estate development projects while concealing the loss...

SEC Charges Spyglass Equity Systems Reps with Boiler Room Operations

Posted on March 22, 2011
The SEC charged three firms and four individuals involved in a boiler room scheme operating out of Los Angeles that defrauded investors who they persuaded to buy purportedly profitable trading systems. According to the SEC, representatives of Spyglass Equity Systems...

FiNRA Fines Southwest Securities and Expels its Correspondent Firm for Improper Short Sales

Posted on March 22, 2011
FINRA announced today that it fined Southwest Securities, Inc., of Dallas, $650,000 for deficiencies in due diligence, risk assessment and written supervisory procedures that permitted one of its correspondent firms, Cutler Securities, to lose over $6 million in one day...

Oxley Works on Behalf of FINRA for Adviser SRO

Posted on March 21, 2011
Investment News reports that FINRA has hired Michael Oxley (of Sarbanes-Oxley) as a lobbyist to advocate its position for a SRO (presumably FINRA) for investment advisers. Finra hires big gun to lobby for advisor biz SRO

Judge Refuses to Approve Securities America Settlement

Posted on March 21, 2011
Securities America (as readers of this blog know) faces class actions and arbitrations brought by customers who suffered losses from private placement sold by its brokers. SA and plaintiffs' attorneys in one class action negotiated a $21 million settlement and...

Sale on Judges As Gatekeepers

Posted on March 19, 2011
Judges Who Settle, by Hillary A. Sale, Washington University School of Law in St. Louis, was recently posted on SSRN. Here is the abstract: This Article develops a construct of judges as gatekeepers in corporate and securities litigation, focusing on...

Bai on Deterring Manipulation in Financial Crisis

Posted on March 19, 2011
Deterring 'Double-Play' Manipulation in Financial Crisis: Increasing Transaction Cost as a Regulatory Tool, by Lynn Bai, University of Cincinnati - College of Law, was recently posted on SSRN. Here is the abstract: The sub-prime mortgage crisis that originated in the...

FDIC Sues Washington Mutual Execs for Recklessness

Posted on March 19, 2011
Earlier this week the FDIC sued Kerry K. Killinger, former CEO of failed savings bank Washington Mutual, and two of the bank's executives, Stephen J. Rotella and David C. Schneider. In the suit, which is seeking $900 million in damages,...

Raj Rajaratnam Trial: Second Week

Posted on March 19, 2011
The second week of the Raj Rajaratnam trial was mostly devoted to the testimony (both direct and cross) of Anil Kumar, the former McKinsey executive, who previously pleaded guilty to securities fraud charges. In addition, the prosecutors played more of...

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