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SEC Approves Expansion of BrokerCheck Disclosure
Posted on November 18, 2009Here is the link to the SEC's Order Approving a Proposed Rule Change Relating to Availability of Information Pursuant to FINRA Rule 8312 (FINRA BrokerCheck Disclosure). I blogged yesterday about the amendment to maintain the information on broker dealers permanently...
SEC Website Links to Short Sale Volume and Transaction Data
Posted on November 18, 2009The SEC now posts on its website SHORT SALE VOLUME AND TRANSACTION DATA. It states that: To increase the transparency surrounding short sale transactions, several self-regulatory organizations (SROs) are providing on their websites daily aggregate short selling volume information for...
SEC's Small Business Capital Formation Program Will be Held Nov. 19
Posted on November 18, 2009The Program for the 28th Annual SEC Government-Business Forum on Small Business Capital Formation (November 19, 2009) is posted at the SEC website.
Wells Fargo Settles ARS Charges with State Securities Regulators
Posted on November 18, 2009NASAA today announced another settlement (in principle) with a securities firm over its sales of auction rate securities (ARS). Wells Fargo Investments LLC agreed to return approximately $1.3 billion to the firm's clients who have had their funds frozen in...
FINRA Fines MetLife for Supervisory Failures over Brokers' Email
Posted on November 18, 2009FINRA announced today that it has fined MetLife Securities, Inc., and three of its affiliates a total of $1.2 million for failing to establish an adequate supervisory system for the review of brokers' email correspondence with the public. The fine...
Davidoff on BofA-ML Merger Testimony
Posted on November 17, 2009Great blog by NYTimes Deal Professor Steven Davidoff on the mysteries contained in former BofA GC Mayopoulos's testimony today before the House committee investigating the BofA-ML merger. His bottom line -- to which I heartily concur -- move on to...
Walters' Testimony on House Financial Stability Improvement Act Discussion Draft
Posted on November 17, 2009Testimony Concerning the Discussion Draft of The Financial Stability Improvement Act of 2009, by Commissioner Elisse B. Walter, SEC, Before the Committee on Agriculture, United States House of Representatives. November 17, 2009
SEC Charges Two Former Officers of Tivia with Accounting Fraud
Posted on November 17, 2009The SEC charged two former Silicon Valley executives for improperly inflating the reported financial results at Santa Clara, Calif., semiconductor company Tvia, Inc. The SEC alleges that Tvia's former Vice President of Worldwide Sales, Benjamin Silva III, made side deals...
SEC Approves Major Expansion of BrokerCheck Disclosure
Posted on November 17, 2009FINRA announced that the SEC has approved a major expansion of its BrokerCheck service ? to make records of final regulatory actions against brokers permanently available to the public, regardless of whether they continue to be employed in the securities...
TARP Special Inspector General Releases Report on Payments to AIG Counterparties
Posted on November 17, 2009As noted earlier, the Office of the Special Inspector General for TARP released its report on Factors Affecting Efforts to Limit Payments to AIG Counterparties (SIGTARP report on AIG). Here are its summary conclusions (note in particular the last sentence):...
Obama Administration Creates New Interagency Financial Fraud Enforcement Task Force
Posted on November 17, 2009The Obama Administration announced today the creation of an interagency Financial Fraud Enforcement Task Force to strengthen efforts to combat financial crime. The Department of Justice will lead the task force and the Department of Treasury, HUD and the SEC...
GAO Reports SEC's Continuing Lack of Effective Internal Controls over Financial Reporting
Posted on November 17, 2009The GAO released today its audit of the SEC's Financial Statements for Fiscal Years 2009 and 2008. In the GAO?s opinion, SEC?s fiscal years 2009 and 2008 financial statements are fairly presented in all material respects. However, in GAO?s opinion,...
SEC Proposes Amendments to "Dark Pools" of Liquidity
Posted on November 16, 2009The SEC is proposing to amend the regulatory requirements of the Securities Exchange Act of 1934 (?Exchange Act?) that apply to non-public trading interest in National Market System (?NMS?) stocks, including so-called ?dark pools? of liquidity. First, it is proposing...
Bancinsurance Corp. Settles SEC Accounting Charges
Posted on November 16, 2009The SEC filed a settled civil injunctive action against Ohio insurance company Bancinsurance Corporation ("Bancinsurance" or the "Company"), and its chief executive officer, John S. Sokol ("Sokol"), charging them with securities fraud and other violations of the federal securities laws...
SEC Brings Charges Alleging "Green" Ponzi Scheme
Posted on November 16, 2009The SEC charged four individuals and two companies involved in perpetrating a $30 million Ponzi scheme in which they persuaded more than 300 investors nationwide to participate in purported environmentally-friendly investment opportunities. The SEC alleges that Wayde and Donna McKelvy,...
Report Faults Fed's Handling of AIG Bailout
Posted on November 16, 2009It is reported this evening that the New York Fed (under Timothy Geithner), in its rush to bail out AIG last November, "refused to use its considerable leverage" to negotiate and obtain concessions from AIG's counter-parties. As a result, AIG's...
Coffee on Litigation Governance
Posted on November 15, 2009Litigation Governance: Taking Accountability Seriously, by John C. Coffee Jr., Columbia Law School; European Corporate Governance Institute (ECGI); American Academy of Arts & Sciences, was recently posted on SSRN. Here is the abstract: Both Europe and the United States are...
Rose on Multi-Enforcer Approach to Securities Fraud Deterrence
Posted on November 15, 2009The Peril and Promise of a Multi-Enforcer Approach to Securities Fraud Deterrence: A Framework for Analysis, by Amanda M. Rose, Vanderbilt University Law School, was recently posted on SSRN. Here is the abstract: Participants in the United States? national securities...
Black on Hewlett-Packard
Posted on November 15, 2009The Story of Hewlett-Packard, by Barbara Black, University of Cincinnati - College of Law, was recently posted on SSRN. Here is the abstract: With the development of the modern corporation, corporate boards have been the locus of corporate authority, and...
Gross on Grounds to Challenge FINRA Arbitrators
Posted on November 15, 2009Grounds to Challenge FINRA Arbitrators, by Jill Gross, Pace Law School, was recently posted on SSRN. Here is the abstract: This short article describes the grounds and processes parties can invoke to challenge the neutrality of arbitrators appointed to decide...
SEC Charges Two Computer Programmers with Assisting Madoff's Fraud
Posted on November 13, 2009The SEC charged two computer programmers for their role in helping convicted Ponzi schemer Bernard L. Madoff cover up the fraud at Bernard L. Madoff Investment Securities LLC (BMIS) for more than 15 years. The SEC alleges that Jerome O'Hara...
SEC Announces Speakers for Forum on Small Business Capital Formation
Posted on November 13, 2009The SEC announced the agenda, speakers and panelists for its November 19 forum on small business capital formation. The morning forum panels will focus on the state of small business capital formation and the SEC's "accredited investor" definition. In the...
SEC Settles Regulation G Charges against SafeNet, Former Officers and Former Accountants
Posted on November 12, 2009The SEC settled charges against SafeNet, Inc., its former Chief Executive Officer, Anthony Caputo, its former Chief Financial Officer, Kenneth Mueller, and three former SafeNet accountants, Clinton Ronald Greenman, John Wilroy, and Gregory Pasko. The SEC alleged that, during the...
Senate Proposed Legislation More Investor Protective than House Version
Posted on November 11, 2009Senator Dodd, Chair of the Senate Banking Committee, released yesterday a discussion draft of proposed financial reform legislation, entitled Restoring American Financial Stability Act of 2009.Download SenateBankingRegulatoryReformProposal It is a more comprehensive and investor protective reform package than the version...
SEC Charges Former Hedge Fund CFO with Securities Fraud
Posted on November 10, 2009The SEC charged Ezra C. Levy, the former chief financial officer of New York-based hedge fund Boston Provident LP, with securities fraud for arranging secret sales of securities from his personal trading account to the hedge fund accounts at inflated...
Bear Hedge Fund Managers Acquitted of Fraud Charges
Posted on November 10, 2009Ralph Cioffi and Matthew Tannin, two former Bear Stearns hedge fund managers, were found not guilty of all federal securities fraud charges today in Manhattan. The government charged that they misled investors by failing to disclose that the funds were...
Senate Banking Committee Chair Introduces Regulatory Reform Proposal
Posted on November 10, 2009Today Senate Banking Committee Chairman Chris Dodd (D-CT) introduced draft legislation to reform the way that our financial system is regulated. When questioned about his bill Dodd told reporters ?This is not a time for timidity.? HIGHLIGHTS OF THE DISCUSSION...
Attorney Pleads Guilty for Role in Dreier Securities Fraud
Posted on November 09, 2009Robert Miller, a former SEC enforcement attorney, pleaded guilty to conspiracy in the securities fraud scheme perpetrated by Manhattan attorney Marc Dreier. InvNews, Ex-SEC lawyer pleads guilty in Dreier fraud case.
More on ARS Arbitrations
Posted on November 09, 2009In a blog yesterday on ARS arbitrations, I remarked that my impression was that purchasers of auction rate securities were not faring well in claims for damages resulting from the freezing of the credit markets in early 2008. Today Investment...
Miller & Rosenfeld on Intellectual Hazard
Posted on November 08, 2009Intellectual Hazard: How Conceptual Biases in Complex Organizations Contributed to the Crisis of 2008, by Geoffrey P. Miller, New York University - School of Law, and Gerald Rosenfeld, New York University - School of Law, was recently posted on SSRN....
Morgenson on ARS Arbitration
Posted on November 08, 2009Gretchen Morgenson, the New York Times financial columnist, addresses the plight of investors in auction rate securities (ARS) whose investments, sold on the basis of their liquidity and safety, became illiquid as a result of the credit crisis. A Way...
SEC's Aguilar on Investor Protection
Posted on November 08, 2009This week the House Financial Services Committee, in the now somewhat ironically called "Investor Protection Act of 2009," added an amendment that would permanently exempt companies with $75 million or less market capitalization from the SOX 404(b) certification requirement, despite...
SEC Division of Risk, Strategy & Financial Innovation Announces 3 Senior Appointments
Posted on November 08, 2009No doubt in response to criticisms that the SEC lacks expertise, the agency announced three senior appointments in the fields of risk management, structured finance and corporate transactions to its newly created Division of Risk, Strategy, and Financial Innovation, headed...
Frank Asks SEC and CFTC for Input on Derivatives Legislation
Posted on November 05, 2009House Financial Services Committee Chairman Barney Frank sent a letter to Commodity Futures Trading Commission Chairman Gary Gensler and Securities and Exchange Commission Chairman Mary Schapiro seeking their input on efforts to strengthen the derivatives legislation recently approved by the...
Statement on Convergence of IASB and FASB
Posted on November 05, 2009Not as interesting as insider trading, but the SEC Chair Mary Schapiro stated today that: "I am greatly encouraged by the commitment of the IASB and the FASB to provide greater transparency to the standard setting process and their convergence...
NASAA Expresses Concern over Proposed Expansion of FINRA Authority over Investment Advisers
Posted on November 05, 2009Earlier today I blogged on the proposed Investor Protection Act that the House Financial Services Committee passed earlier this week. Here is NASAA's statement on the bill and, in particular, whether FINRA should regulate investment advisers: NASAA appreciates the Committee?s...
Government Charges 14 Defendants with Insider Trading
Posted on November 05, 2009The government's investigation into insider trading and hedge funds continues. The government today charged 14 defendants with insider trading in complaints connected to the charges filed against hedge fund manager Raj Rajaratnam. Defendants include money managers and an attorney at...
Supreme Court Hears Oral Argument in Excessive Mutual Fund Fees Case
Posted on November 05, 2009The U.S. Supreme Court heard oral argument Monday in Jones v. Harris Associates, a case that could impact the amount of managerial fees that millions of mutual fund investors pay fund advisers. The Court must decide what standard governs whether...
Value Line Settles SEC Charges of Bogus Brokerage Commissions
Posted on November 05, 2009The SEC settled charges that New York City-based investment adviser Value Line Inc., its CEO, its former Chief Compliance Officer and its affiliated broker-dealer defrauded the Value Line family of mutual funds by charging over $24 million in bogus brokerage...
House Financial Services Committee Passes Investor Protection Legislation
Posted on November 05, 2009The House Financial Services Committee voted (41-28) on Nov. 4 to recommend the Investor Protection Act of 2009(Download H.R.3817) that has a variety of measures intended to improve investor protection and increase investor confidence. Here is the Committtee's Press Release...
Merge Healthcare and Two Former Officers Settle SEC Accounting Fraud Charges
Posted on November 04, 2009The SEC settled charges that Milwaukee-based Merge Healthcare Incorporated and two former senior executives engaged in an accounting fraud that ultimately caused the company's stock price to drop by two-thirds during a seven-month period. The SEC alleges that former CEO...
Three Former Symbol Technologies Settle Accounting Fraud Charges
Posted on November 04, 2009On November 2, 2009, the United States District Court for the Eastern District of New York entered final consent judgments against three defendants in the pending enforcement action against former executives of Symbol Technologies, Inc. ("Symbol"). The Commission's complaint, filed...
SEC Charges Two Former J.P. Morgan Securities Officers in Alabama Illegal Payments Scheme
Posted on November 04, 2009The SEC filed fraud charges against Charles E. LeCroy and Douglas W. MacFaddin, two former directors of J.P. Morgan Securities Inc. in connection with an unlawful payment scheme which allowed J.P. Morgan Securities to obtain $5 billion in Jefferson County,...
Corp Fin Staff Release New Guidance on Shareholder Proposals related to Risk and Succession Planning
Posted on November 03, 2009The Division of Corporation Finance staff recently issued Shareholder Proposals, Staff Legal Bulletin No. 14E (CF), providing information regarding staff changes of position on two issues: the application of Rule 14a-8(i)(7) to proposals relating to risk; and the application of...
Investment Advisors Resist FINRA Oversight
Posted on November 03, 2009The investment advisory community continues its opposition to FINRA's assuming oversight over investment advisors. Investment News reports that industry leaders have expressed opposition to an amendment to the Investor Protection draft legislation that would give the SEC the authority to...
Madoff's Accountant Pleads Guilty and Settles SEC Charges
Posted on November 03, 2009Bernard Madoff's accountant, David Friehling, pleaded guilty to nine criminal counts today in federal district court in Manhattan, which carry a maximum sentence of 114 years. NYTimes, Madoff?s Accountant Pleads Guilty in Scheme. In addition, the SEC announced that Friehling...
Siebecker on Trust & Transparency
Posted on October 31, 2009Trust & Transparency: Promoting Efficient Corporate Disclosure Through Fiduciary-Based Discourse, by Michael R. Siebecker, University of Florida - Fredric G. Levin College of Law, was recently posted on SSRN. Here is the abstract: Could embracing the philosophy of ?encapsulated trust?...
Reuveni on Extraterritoriality of the Securities Laws
Posted on October 31, 2009Extraterritoriality as Standing: A Standing Theory of the Extraterritorial Application of the Securities Laws, by Erez Reuveni, United States Second Circuit Court of Appeals, was recently posted on SSRN. Here is the abstract: This Article contends that the current treatment...
Ferrarini & Miller on Takeover Regulation
Posted on October 31, 2009A Simple Theory of Takeover Regulation in the United States and Europe, by Guido A. Ferrarini, University of Genoa - Law School; European Corporate Governance Institute (ECGI), and Geoffrey P. Miller, New York University - School of Law, was recently...
SEC's Inspector General Releases Exhibits to Madoff Report
Posted on October 30, 2009The SEC's Inspector General released hundreds of exhibits supporting its highly critical report on the SEC's past investigations of Bernard L. Madoff, including a transcript of an interview with Madoff in which he expressed astonishment that the SEC staff did...
Continued Fight over Regulation of Investment Advisers by FINRA
Posted on October 30, 2009Investment advisers, state regulators and consumer advocates were critical of the adoption of an amendment to the Investor Protection Act that would give Finra power to oversee any adviser associated with a registered broker-dealer, including about 500 dually registered Finra...
Geithner's Testimony Before House Financial Services Committee
Posted on October 30, 2009TreasurySecretary Timothy F. Geithner's Written Testimony before House Financial Services Committee (October 29)
SEC Settles Insider Trading Charges against Former CyberKey Outside Counsel
Posted on October 30, 2009The SEC settled insider trading charges against J. Bennett Grocock, the former outside counsel for CyberKey Solutions, Inc. ("CyberKey"). It alleged that Grocock made at least $170,000 by selling shares of the company's stock while in possession of material, nonpublic...
SEC Charges Former CFO of California Investment Firm with Insider Trading
Posted on October 30, 2009The SEC today charged Chen Tang, the former chief financial officer of a San Francisco private investment firm, and six of his relatives and friends with insider trading, alleging that their scheme collectively reaped more than $8 million in illicit....
NASAA Calls for Expanding its Regulation of Investment Advisers
Posted on October 30, 2009The following is a statement from North American Securities Administrators Association President and Texas Securities Commissioner Denise Voigt Crawford calling for Congress to increase the regulatory responsibility of state securities regulators over investment advisers: ?States have both the will and...
FINRA and AMF Sign Agreement to Improve Cooperation in Financial Markets
Posted on October 30, 2009FINRA and the Autorité des marchés financiers (AMF) signed on 19 October 2009 a memorandum of understanding (MoU) on information-sharing with a view to strengthening and improving cooperation in the surveillance and supervision of the markets under their jurisdictions...
Schapiro on Investor Confidence
Posted on October 28, 2009Speech by SEC Chairman: "The Road to Investor Confidence" by Chairman Mary Schapiro, U.S. Securities and Exchange Commission, SIFMA Annual Conference, New York, New York, October 27, 2009
FINRA Fines Scottrade for Inadequate AML Program
Posted on October 26, 2009FINRA announced that it fined Scottrade $600,000 for failing to establish and implement an adequate anti-money laundering (AML) program to detect and trigger reporting of suspicious transactions, as required by the Bank Secrecy Act and FINRA rules. FINRA requires brokerage...
SEC Adopts Revisions to EDGAR Filer Manual
Posted on October 26, 2009The SEC adopted revisions to the Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) Filer Manual to reflect updates to the EDGAR system made in EDGAR Release 9.17. The revisions were made primarily to enforce additional XBRL validation requirements to...
SEC Settles Insider Trading Charges Against Former SemGroup Officer
Posted on October 26, 2009The SEC settled charges that Don N. Spaugy, the former Vice President of Financial Services at SemGroup, LP ("SemGroup"), engaged in insider trading in the securities of then Nasdaq-listed SemGroup Energy Partners, LP ("SGLP"). At the time of Spaugy's trading,...
Laby on Reforming Regulation of Brokers and Advisers
Posted on October 25, 2009Reforming the Regulation of Broker-Dealers and Investment Advisers, by Arthur B. Laby, Rutgers University School of Law - Camden, was recently posted on SSRN. Here is the abstract: A key component of financial regulatory reform is harmonizing the law governing...
Subramanian et al. on the Constitutionality of Delaware's Antitakeover Statute
Posted on October 25, 2009Is Delaware's Antitakeover Statute Unconstitutional? Evidence from 1988-2008, by Guhan Subramanian, Harvard Business School; Steven Herscovici, Analysis Group, Inc.; and Brian Barbetta, Analysis Group, Inc., was recently posted on SSRN. Here is the abstract: Delaware?s antitakeover statute, codified at Section...
Dent on Optional Federal Incorporation
Posted on October 25, 2009For Optional Federal Incorporation, by George W. Dent Jr., Case Western Reserve University - School of Law, was recently posted on SSRN. Here is the abstract: The American economy suffers from the domination of corporations by chief executive officers who...
Fanto on Adequacy of Risk Management
Posted on October 25, 2009Anticipating the Unthinkable: The Adequacy of Risk Management in Finance and Environmental Studies, by James A. Fanto, Brooklyn Law School, was recently posted on SSRN. Here is the abstract: The purpose of the Article is to consider the role of...
SEC Announces Nov. 19 Small Business Forum
Posted on October 23, 2009The SEC plans to host its 2009 Government-Business Forum on Small Business Capital Formation on Thursday, November 19, 2009, from 9:00 a.m. to 5:30 p.m., at its headquarters at 100 F Street, N.E., Washington, D.C. 20549. For the first time,...
SEC Charges Broker with Using Fake Press Releases to Manipulate Stock Prices
Posted on October 22, 2009The SEC charged a New York securities broker with securities fraud for repeatedly creating and then distributing fake press releases to manipulate the stock prices of multiple publicly traded companies. The SEC alleges that Lambros Ballas, a registered representative of...
SEC Charges Promoters of Real Estate Investment Scheme Targeted at Seniors with Fraud
Posted on October 22, 2009The SEC charged a N.Y.-based real estate funds promoter and the former president of a broker-dealer firm with orchestrating a multi-million dollar real estate investment scheme. The SEC also charged two brokers at the firm with selling unregistered securities by...
House Financial Services Votes for Consumer Financial Protection Agency
Posted on October 22, 2009The House Financial Services Committee voted (39-29) to create a Consumer Financial Protection Agency, a new, independent federal agency solely devoted to protecting Americans from unfair and abusive financial products and services. This is a central part of the Obama...
Fed Issues Proposal to Review Incentive Compensation Practices at Big Banks
Posted on October 22, 2009This morning I read in the New York Times that Morgan Stanley had returned to profitability and had plans to pay its employees healthy bonuses, because, its CFO said, "we have to pay people competitively." He also said the company...
Pay Czar Will Order Pay Cuts at Seven Recipients of Bailout Funds
Posted on October 21, 2009The federal "pay czar," Kenneth Feinberg, will order the seven companies receiving the most federal bailout money to reduce the cash compensation to their 25 highest-paid employees by about 90%. Many employees will instead receive restricted stock. Total compensation to...
SEC Settles Insider Trading Charges in Georgia Pacific Stock
Posted on October 21, 2009The SEC announced that the United States District Court for the Northern District of Illinois entered Final Judgment as to defendant Dr. Gautam Gupta ("Gupta") in connection with insider trading charges in Georgia Pacific Corporation. The Court ordered disgorgement and...
SEC Proposes Rules on Dark Pools
Posted on October 21, 2009The SEC voted to propose measures intended to increase transparency of dark pools so investors get a clearer view of stock prices and liquidity. Dark pools are essentially private trading systems in which participants can transact their trades without displaying...
Senior Financial Supervisors Say Risk Management Practices Continue to Need Improvement
Posted on October 21, 2009The Senior Supervisors Group (SSG) that comprises senior financial supervisors from seven countries (United States, Canada, France, Germany, Japan, Switzerland, United Kingdom) today issued a report that evaluates how weaknesses in risk management and internal controls contributed to industry distress...
Perceptive Advisors Settles SEC Charges of Reg M Violations
Posted on October 20, 2009The SEC and Perceptive Advisors LLC settled charges that from January 2005 through December 2005, Perceptive Advisors violated Rule 105 of Regulation M with respect to five repeat securities offerings. In each case, Perceptive Advisors sold securities short within five...
First New York Securities Settles Reg M Charges
Posted on October 20, 2009The SEC and First New York Securities LLC settled charges that First New York violated Rule 105 of Regulation M with respect to two repeat securities offerings. On both occasions, in connection with the offering, First New York sold securities...
SEC Brings Failure to Supervise Charges Against Ferris Baker Watts GC
Posted on October 19, 2009The SEC Enforcement Division instituted an administrative proceeding against Theodore W. Urban, who allegedly was the General Counsel and a member of the Board of Directors and Credit Committee of Ferris Baker Watts, Inc. (Ferris), a registered broker-dealer and investment...
SEC Proposes Revisions to Notice and Access Provisions of Proxy Rules
Posted on October 19, 2009On October 14 the SEC published proposed changes to the proxy rules to improve the notice and access model for furnishing proxy materials to shareholders. Specifically, it proposes revisions to provide additional flexibility regarding the format of the Notice of...
Canova on Financial Market Failure
Posted on October 18, 2009Financial Market Failure as a Crisis in the Rule of Law: From Market Fundamentalism to a New Keynesian Regulatory Model, by Timothy A. Canova, Chapman University - School of Law, was recently posted on SSRN. Here is the abstract: This...
SEC Charges Three with Running Ponzi Scheme Targeting Haitian-Americans in Florida
Posted on October 16, 2009The SEC filed a civil injunctive action on October 16, 2009 against HomePals Investment Club, LLC and HomePals, LLC (together, ?HomePals?), and their principals, Ronnie Eugene Bass, Jr., Abner Alabre and Brian J. Taglieri, alleging that they ran a Ponzi...
SEC Charges Hedge Fund Advisor with Inside Trading
Posted on October 16, 2009The SEC charged billionaire Raj Rajaratnam and his New York-based hedge fund advisory firm Galleon Management LP with engaging in a massive insider trading scheme that generated more than $25 million in illicit gains. The SEC also charged six others....
SEC & CFTC Issue Report on Harmonizing Regulation of Futures and Securities
Posted on October 16, 2009The SEC and the CFTC issued a joint report identifying areas where the agencies' regulatory schemes differ and recommending actions to address those differences, where appropriate. In June, the White House released a White Paper on Financial Regulatory Reform calling...
Schwab Receives Wells Notice over Bond Funds
Posted on October 15, 2009Charles Schwab said it received a Wells notice from the SEC about two bond funds that are the subject of a class action suit and numerous arbitrations. Investors in the two funds, Yield Plus Fund andTotal Bond Market Fund, allege...
House Committee Approves Legislation to Regulate OTC Derivatives
Posted on October 15, 2009The House Financial Services Committee today approved legislation that would, for the first time ever, require the comprehensive regulation of the over-the-counter (OTC) derivatives marketplace. Today?s bill, which was approved by a vote of 43-26, represents a key part of...
Former United Rental Officer Settles SEC Accounting Fraud Charges
Posted on October 14, 2009The SEC announced that John N. Milne, a former Vice Chairman, President and Chief Financial Officer of United Rentals, Inc. (?URI?) has agreed to settle pending fraud charges filed against him by the Commission. The SEC alleged that, from 2000...
SEC's Next Open Meeting Will Discuss "Dark Pools"
Posted on October 14, 2009The SEC's next Open Meeting is Wednesday, October 21, 2009 at 10:00 a.m. The subject matter of the Open Meeting will be: The Commission will consider recommendations to propose amendments to the regulatory requirements that apply to non-public trading interest,...
SEC Posts Rules on Internal Controls for Non-Accelerated Filers
Posted on October 14, 2009The SEC posted on its website its final rules regarding INTERNAL CONTROL OVER FINANCIAL REPORTING IN EXCHANGE ACT PERIODIC REPORTS OF NON-ACCELERATED FILERS. The agency is amending temporary rules that require companies that are non-accelerated filers to include in their...
U.S. Supreme Court Will Hear Jeff Skillings' Appeal
Posted on October 14, 2009The U.S. Supreme Court accepted certiorari in Enron executive Jeffrey Skilling's appeal from his conviction on two issues: (1) prejudicial pretrial publicity prevented him from getting a fair trial, and (2) the statute that makes it a crime "to deprive...
Madoff Victims Sue SEC
Posted on October 14, 2009The New York Times reports that two Madoff victims have filed a complaint in federal court in S.D.N.Y. against the SEC for its failure to uncover the Madoff scheme, despite numerous tips that should have aroused its suspicion. The complaint...
New York AG Posts Letter regarding Waiver of BofA Attorney-Client Privilege
Posted on October 13, 2009The New York Attorney General has posted on its website the Oct. 12 letter from Cleary Gottlieb, written on behalf of Bank of America, in which the Bank agrees to waive the attorney-client privilege or the attorney work product doctrine...
Companies Awarded Execs Pre-Takeover Stock Options
Posted on October 12, 2009Another stock options scandal? Many corporations awarded stock options to their senior executives while they were engaged in undisclosed discussions about being taken over, the Wall St. Journal reports today. As a result, the executives received a bigger payout when...
BofA Agrees to Turn Over Documents About Merrill Lynch Legal Advice
Posted on October 12, 2009The Bank of America, in a sharp reversal of strategy, has agreed to waive the attorney client privilege and turn over to the New York Attorney General documents concerning the legal advice it received in connection with the Merrill Lynch...
FINRA Fines Citigroup for Failure to Supervise Complex Trading Strategies
Posted on October 12, 2009FINRA announced that it has fined Citigroup Global Markets Inc. $600,000 and censured the firm for failing to supervise complex trading strategies designed in part to minimize potential tax liabilities. The firm also failed to report to an exchange trades...
Capital University Law School's 6th Annual Business & Tax Institute Focuses on Corporate Governance
Posted on October 12, 2009Capital University Law School?s Sixth Annual Business and Tax Institute is shifting its focus this year from tax and estate planning to new corporate governance issues emerging out of the financial crisis, and transaction options for distressed companies trying to...
Columbo on Trust and Finanical Regulation
Posted on October 11, 2009Trust and Financial Regulation, by Ronald J. Colombo, Hofstra University - School of Law, was recently posted on SSRN. Here is the sbstract: Trust is a critically important ingredient in the recipes for a successful economy and a well-functioning financial...
Johnsen on Mutual Fund Fees
Posted on October 11, 2009Myths About Mutual Fund Fees: Economic Insights on Jones v. Harris, by D. Bruce Johnsen, George Mason University - School of Law, was recently posted on SSRN. Here is the abtract: Mutual funds stand ready at all times to sell...
Strauss on the PCAOB Case
Posted on October 11, 2009Free Enterprise Fund v. Public Company Accounting Oversight Board, by Peter L. Strauss, Columbia Law School, was recently posted on SSRN. Here is the abstract: This is the introductory essay in an electronically published roundtable sponsored by the Vanderbilt Law...
Horwich & Siekkinen on PSLRA & 7th Amendment
Posted on October 11, 2009Pleading Reform or Unconstitutional Encroachment? An Analysis of the Seventh Amendment Implications of the Private Securities Litigation Reform Act, by Allan Horwich, Schiff Hardin LLP; Northwestern University - School of Law, and Sean Siekkinen, Northwestern University - School of Law,...
GAO Testifies on Financial Reform before Senate Banking Committee
Posted on September 30, 2009Richard J. Hillman, Managing Director Financial Markets and Community Investment, GAO, testifed on Sept. 29 before the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, on FINANCIAL REGULATION Recent Crisis Reaffirms the Need to Overhaul the U...
SEC Charges Illinois Money Manager with Misappropriating Investor Assets
Posted on September 30, 2009On September 29, 2009, the SEC obtained a court order freezing assets and halting a scheme in which Decatur, Illinois-based money manager, William A. Huber, falsely portrayed himself to investors as a successful money manager who managed three private investment...
SEC Obtains Preliminary Injunction in Florida Against Microcap Offering Fraud
Posted on September 30, 2009The SEC announced that, on September 29, the United States District Court for the Middle District of Florida entered preliminary injunction orders by consent against Stephen W. Carnes, Lawrence A. Powalisz, their companies K&L International Enterprises, Inc...
Update from SEC & CFTC on Harmonization
Posted on September 30, 2009The chairmen of the SEC and the CFTC announced today that they anticipate, in two weeks, the two agencies will issue a report that will address key areas in which their regulatory schemes are different. The chairmen also expect the...
SEC & AGCO Corp. Settle FCPA Charges
Posted on September 30, 2009The SEC settled another case involving Foreign Corrupt Practices Act books and records and internal controls charges, this time against AGCO Corporation, a manufacturer and supplier of agricultural equipment. The Commission?s complaint alleges that from 2000 through 2003, certain AGCO...
SEC's Inspector General Issues Recommendations to Improve OCIE and Enforcement Division
Posted on September 29, 2009The SEC's Office of Inspector General released two more reports stemming from its investigation into the agency's failures in connection with the Madoff ponzi scheme. One, entitled Review and Analysis of OCIE Examinations of Bernard L. Madoff Investment Securities, LLC,...
NASAA Examinations Find Problem Areas for Investment Advisers
Posted on September 29, 2009NASAA today released an updated series of recommended best practices that investment advisers should consider in order to improve their compliance practices and procedures. The best practices were developed after a series of coordinated examinations of investment advisers by 35...
SEC Charges Virtual Reality Company with Fraudulent Offerings
Posted on September 29, 2009The SEC filed a civil injunctive action against a virtual reality technology company, its principals, and three former sales agents for conducting a fraudulent offering scheme that garnered investors primarily through telemarketer sales out of a boiler room in the...
SEC Approves Expansion of TRACE to Agency Debt
Posted on September 29, 2009FINRA announced today that the SEC approved a major expansion of FINRA's Trade Compliance and Reporting Engine (TRACE) to include debt issued by federal government agencies, government corporations and government sponsored enterprises (GSEs), as well as primary market transactions in...
SEC Bars Former A.G. Edwards Salesperson for Market-Timing Activities
Posted on September 29, 2009The SEC found that Thomas C. Bridge, a salesperson formerly associated with broker-dealer A.G. Edwards & Sons, Inc., violated antifraud provisions in connection with trading in mutual funds on behalf of a client who engaged in market timing. The Commission...
SEC Censures United Global Securities for Annuity Switching
Posted on September 29, 2009The SEC issued a cease-and-desist order against United Global Securities, Inc. and Richard D. Blair, finding that they engaged in the improper switching of variable annuities by convincing 17 customers to surrender variable annuities and repurchase new variable annuities twice...
SEC Obtains Emergency Relief Against Distributors of Unregistered Microstock
Posted on September 28, 2009The SEC announced that on September 25, it obtained emergency relief against Stephen W. Carnes, Lawrence A. Powalisz, their companies K&L International Enterprises, Inc., Signature Leisure, Inc., and Signature Worldwide Advisors, LLC (collectively, the Stock Distributors), as well as Jared...
SEC Announces Speakers at Securities Lending and Short Sales Roundtable
Posted on September 28, 2009On Sept. 29-30, the SEC will host a one and a half day roundtable to solicit the views of investors, issuers, financial services firms, self-regulatory organizations and the academic community regarding securities lending and short sales. The roundtable will include...
Ohio Attorney General Amends Complaint in Class Action Against BofA
Posted on September 28, 2009Ohio Attorney General Richard Cordray announced today that the Lead Plaintiff group in a securities class action lawsuit against Bank of America has filed a consolidated amended complaint. The complaint alleges that statements made in 2008 by Defendants regarding the...
SEC Charges Detroit Broker with Participating in Ponzi Scheme
Posted on September 28, 2009The SEC charged Detroit-area stock broker Frank Bluestein with fraud, alleging that he lured elderly investors into refinancing the mortgages on their homes in order to fund their investments in a $250 million Ponzi scheme. The SEC alleges that Bluestein...
FINRA Proposes Changes to Rules Governing Communications with the Public
Posted on September 28, 2009FINRA recently posted on its website a request for comments on proposed new rules governing communications with the public. (Regulatory Notice 09-55). While the regulatory approach is similar to the existing rules, the new rules would reduce the number of...
Blair & Gerding on OTC Credit Derivatives
Posted on September 27, 2009Sometimes Too Great a Notional: Measuring the 'Systemic Significance' of OTC Credit Derivatives, by Margaret M. Blair, Vanderbilt University - School of Law, and Erik F. Gerding, University of New Mexico - School of Law, was recently posted on SSRN.....
Ramirez on Subprime Bailouts
Posted on September 27, 2009Subprime Bailouts and the Predator State, by Steven A. Ramirez, Loyola University of Chicago School of Law, was recently posted on SSRN. Here is the abstract: Recent bailouts in response to the subprime crisis evince an ad hoc government response...
Roe & Siegel on Finance and Politics
Posted on September 27, 2009Finance and Politics: A Review Essay Based on Kenneth Dam's Analysis of Legal Traditions in the Law-Growth Nexus, by Mark J. Roe, Harvard Law School; European Corporate Governance Institute (ECGI), and Jordan I. Siegel, Harvard Business School, was recently posted...
Anderson on Global Corporate Citizenship
Posted on September 27, 2009Law and Global Corporate Citizenship: A Research Agenda, by Rachel J. Anderson, William S. Boyd School of Law, UNLV, was recently posted on SSRN. Here is the abstract: The role and purpose of large transnational corporations is among the defining...
Chung on Wall St.'s Responses to Women
Posted on September 27, 2009From Lily Bart to the Boom Boom Room: How Wall Street?s Social and Cultural Response to Women Has Shaped Securities Regulation, by Christine Sgarlata Chung, Albany Law School, was recently posted on SSRN. Here is the abstract: In Edith Wharton?s...
SEC Charges Perot Systems Employee with Inside Trading Involving Dell's Tender Offer
Posted on September 24, 2009The SEC today charged Perot Systems employee Reza Saleh with insider trading around the public announcement of Dell Inc.'s tender offer for Perot Systems earlier this week. The SEC alleges that Saleh made increasingly large purchases of Perot Systems call...
House Oversight Hearing on Credit Rating Agencies Postponed
Posted on September 24, 2009The Chairman of the House Oversight Committee postponed a scheduled hearing on the credit rating agencies, saying he wanted to give Moody's time to respond to charges by a former employee that the agency continues to inflate ratings. The Wall...
SEC Alleges Pump and Dump Scheme Involving ConnectAJet. com Stock
Posted on September 24, 2009The SEC announced today that on September 18, 2009, it sued several individuals and entities, including ConnectAJet.com, Inc., its president and chief executive officer, Martin Cantu, Cantu's father Martin M. Cantu, registered representative Stephen Fayette, and stock promoter Timothy Page...
Former American Commercial Lines CFO Settles Reg FD Charges
Posted on September 24, 2009The SEC settled charges against Christopher A. Black (Black), the former chief financial officer of American Commercial Lines, Inc. (ACL), a Delaware marine transportation and manufacturing company. The SEC alleged that Black, while acting in his capacity as the company's...
SEC Staff Advice on Dealing with SEC Comment Letters
Posted on September 23, 2009An SEC official gave some advice on how to respond to a comment letter from the agency on the financial statements. First thing to do is to pick up the phone and call the agency -- he says they welcome...
Geithner on Financial Regulatory Reform
Posted on September 23, 2009Treasury Secretary Timothy F. Geithner, Written Testimony before the House Financial Services Committee, on Financial Regulatory Reform (Sept. 23, 2009): At a minimum, reform must achieve these critical objectives: It must provide substantial new protections for consumers and investors...
SEC Continues Temporary Rule Requiring MM Funds to Report Information to SEC
Posted on September 22, 2009The SEC, on September 18, adopted temporary Rule 30b1-6T under the Investment Company Act of 1940 to require money market funds to report portfolio holdings and valuation information to the Commission under certain circumstances. The new rule continues substantially similar...
FINRA Fines Underwriters for Miscommunications to Customers in Vonage IPO
Posted on September 22, 2009FINRA fined Citigroup Global Markets, UBS Securities and Deutsche Bank Securities a total of $425,000 ? and ordered the firms to make payments to customers that could total $420,000 ? in connection with the firms' failure to adequately supervise communications...
Professor Gordon Suggests Retail and Institutional Investors Should be Treated Differently in MMFunds
Posted on September 22, 2009Professor Jeffrey Gordon (Columbia) has filed a Comment Letter (Download Gordon SEC MMF Corr Comment Letter 091509) with the SEC in response to its proposal to reform money market funds. The SEC sought comment on proposed reforms that, among other...
Schapiro's Testimony on OTC Derivatives
Posted on September 22, 2009Testimony Concerning the Over-the-Counter Derivatives Markets Act of 2009, by SEC Chairman Mary L. Schapiro, Before the House Committee on Agriculture, September 22, 2009
SEC May Expand Charges Against BofA
Posted on September 22, 2009The SEC says that it will expand its investigation into alleged wrongdoing at Bank of America and may seek to bring additional charges. WPost, SEC Gets Tougher With Bank of America.
GAO: AIG's Ability to Repay the Government Unclear at this Time
Posted on September 21, 2009The GAO released a report TROUBLED ASSET RELIEF PROGRAM Status of Government Assistance Provided to AIG. From the summary: While federal assistance has helped stabilize AIG?s financial condition, GAO-developed indicators suggest that AIG?s ability to restructure its business and repay...
Seton Hall Symposium on The Global Economic Crisis
Posted on September 21, 2009The Seton Hall Law Review is sponsoring a Symposium entitled "Securities Regulation and the Global Economic Crisis: What Does the Future Hold?", which will take place on Friday, October 30, 2009, at Seton Hall University School of Law in Newark,...
BofA Pays $425 Million to End Government Guarantee
Posted on September 21, 2009Bank of America Corporation announced that it has reached an agreement with the U.S. Government to terminate its term sheet with respect to the guarantee of up to $118 billion in assets by the U.S. Government. The term sheet was...
SEC & Regions Bank Settle Offering Fraud Allegations
Posted on September 21, 2009The SEC charged Alabama-based Regions Bank for its role in an offering fraud that victimized thousands of investors predominantly in Latin America. The SEC alleges that Regions Bank and its predecessor were a key selling point in the investment scheme...
Heyman on Investigating Corporate Malfeasance
Posted on September 20, 2009Bottom-Up: An Alternative Approach for Investigating Corporate Malfeasance, by Susan Schwab Heyman, Benjamin N. Cardozo School of Law/Yeshiva University, was recently posted on SSRN. Here is the abstract: At least since the Enron scandal, the government has focused intensive efforts...
Baer on Corporate Compliance
Posted on September 20, 2009Governing Corporate Compliance, by Miriam H. Baer, Brooklyn Law School, was recently posted on SSRN. Here is the abstract: In light of the financial meltdown of 2008, it is reasonable to question whether the prior decade?s emphasis on corporate compliance...
Hazen on Regulating OTC Derivatives
Posted on September 20, 2009Filling a Regulatory Gap: It is Time to Regulate Over-the-Counter Derivatives, by Thomas Lee Hazen, University of North Carolina at Chapel Hill - School of Law, was recently posted on SSRN. Here is the abstract: The recent credit crisis has...
SEC Proposes to Eliminate Flash Orders -- Official Release
Posted on September 18, 2009The SEC has posted on its website the release proposing the amendment that would eliminate from Rule 602 of Reg NMS the exception for flash orders. Here is the introduction to the release: The Securities and Exchange Commission (?Commission?) is...
SEC Proposes Ban on Flash Orders
Posted on September 18, 2009The SEC unanimously proposed a rule amendment that would prohibit the practice of flashing marketable orders. A flash order enables a person who has not publicly displayed a quote to see orders less than a second before the public is...
SEC Takes Further Action to Regulate Credit Rating Agencies
Posted on September 18, 2009The SEC voted unanimously to take several rulemaking actions to bolster oversight of credit ratings agencies by enhancing disclosure and improving the quality of credit ratings, including: Adopted rules to provide greater information concerning ratings histories - and to enable...
New York AG Announces 4 Private Equity Firms Agree to End Pay-to-Play Practices
Posted on September 17, 2009New York Attorney General Cuomo announced that four leading private equity firms, HM Capital Partners I (?HM Capital?), Levine Leichtman Capital Partners (?Levine Leichtman?), Access Capital Partners (?Access?), and Falconhead Capital (?Falconhead?) have adopted Cuomo?s Public Pension Fund Reform Code...
New York AG Subpoenas BofA Directors
Posted on September 17, 2009The latest news today on the BofA-Merrill merger investigations is that the New York AG has issued subpoenas to 5 current or former directors of Bank of America, seeking to learn what they knew about Merrill's financial condition and the...
SEC Extends Temporary Exemption for Eligible Credit Default Swaps
Posted on September 16, 2009The SEC adopted an interim final temporary rules-- extension that provide exemptions under the Securities Act of 1933, the Securities Exchange Act of 1934, and the Trust Indenture Act of 1939 for certain credit default swaps in order to facilitate...
SEC and FSA Explore Common Approaches to Regulating Key Market Participants
Posted on September 16, 2009The SEC and the UK Financial Services Authority (FSA) announced plans to explore common approaches to reporting and other regulatory requirements for key market participants such as hedge funds and their advisers. In particular, they agreed to identify a common,...
Henry Hu Named Director of SEC's New Division of Risk, Strategy, and Financial Innovation
Posted on September 16, 2009The SEC announced the creation of a new Division of Risk, Strategy, and Financial Innovation, and University of Texas School of Law Professor Henry T. C. Hu will be its first Director. The new division combines the Office of Economic...
FINRA Sanctions Two Brokers for Stealing from Widow's Charity
Posted on September 15, 2009A FINRA Hearing Panel has barred John Edward Mullins, a former registered representative with Morgan Stanley DW, Inc., for misappropriating $11,156.47 from the charitable foundation of a 97-year old nursing home resident and widow who was his client for more...
Second Thoughts on Judge Rakoff's Rejection of the SEC-BofA Settlement
Posted on September 15, 2009I continue to ponder Judge Rakoff's order refusing to approve the SEC-BofA consent judgment in connection with the alleged misstatements about the Merrill bonuses in the BofA proxy statement seeking approval of the merger. The judge acknowledges the deferential standard...
What's New at SEC's Investor Advisory Committee
Posted on September 15, 2009The SEC's Investor Advisory Committee has its own home page. Its "big news" to date is the formation of subcommittees "to tackle its ambitious agenda for investors."
Treasury Releases Status Report on Financial Stabilization Efforts
Posted on September 14, 2009The Treasury Dept. issued a Status Report on Financial Stabilization Efforts and announced the "next phase:" This next phase will focus on winding down those programs that were once necessary to prevent systemic failure. The use of those programs, by...
Obama Repeats Reform Proposals to Wall St.
Posted on September 14, 2009President Obama delivered his much-publicized speech to Wall St., in which he first asserted that the nation's financial situation has improved since the collapse of Lehman a year ago and that government intervention was effective in dealing with the crisis...
Judge Rejects SEC-BofA Settlement, Sets Trial Date
Posted on September 14, 2009Judge Rakoff (SDNY) rejected the proposed settlement between the SEC and the Bank of America regarding misleading proxy disclosures over Merrill Lynch bonuses and set a Feb. 1 trial date. In his order, he emphasized the unfairness of making the...
Dana Holding Settles Accounting Fraud Charges
Posted on September 14, 2009On September 11, the SEC issued an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order against Dana Holding Corporation (as successor registrant to Dana Corporation)...
Johnson on Private Placements
Posted on September 13, 2009Private Placements: A Regulatory Black Hole, by Jennifer J. Johnson, Lewis & Clark Law School, was recently posted on SSRN. Here is the abstract: Many investors, including vulnerable senior citizens, are victimized each year in dubious securities offerings, yet governmental...
Booth on Stock Options
Posted on September 13, 2009Why Stock Options are the Best Form of Executive Compensation (And How to Make Them Even Better), by Richard A. Booth, Villanova University School of Law, was recently posted on SSRN. Here is the abstract: Stock options are the primary...
Painter on Bailouts & Conflicts of Interest
Posted on September 13, 2009Bailouts: An Essay on Conflicts of Interest and Ethics When Government Pays the Tab, by Richard W. Painter, University of Minnesota Law School, was recently posted on SSRN. Here is the abstract: This essay, a precursor for a book project...
Henning on SEC Enforcement
Posted on September 13, 2009Should the Sec Spin Off the Enforcement Division?, by Peter J. Henning, Wayne State University Law School, was recently posted on SSRN. Here is the abstract: The current environment is highly supportive of increased government regulation, particularly in the financial...
Hazen on Outsider Trading on Material Non-Public Information
Posted on September 13, 2009Identifying the Duty Prohibiting Outsider Trading on Material Non-Public Information, by Thomas Lee Hazen, University of North Carolina at Chapel Hill - School of Law, was recently posted on SSRN. Here is the abstract: The federal securities laws do not...
SEC & Former Tenet Healthcare COO Settle Accounting Fraud Charges
Posted on September 13, 2009On September 10, 2009, the SEC and Thomas B. Mackey, the former co-president and chief operating officer of Tenet Healthcare Corporation, settled accounting fraud charges. Mackey was the sole remaining defendant in an action brought by the Commission on April...
Ernst on Securities Regulation during the New Deal
Posted on September 13, 2009Dan Ernst has posted Lawyers, Bureaucratic Autonomy, and Securities Regulation during the New Deal as a working paper on "The Scholarly Commons," Georgetown Law's website for prepublication drafts. Here's the abstract: The federal regulation of financial markets was one of...
SEC Announces Upcoming Roundtable on Securities Lending and Short Sales
Posted on September 11, 2009The SEC will host a one and a half day roundtable, on Sept. 29-30, to solicit the views of investors, issuers, financial services firms, self-regulatory organizations and the academic community regarding securities lending and short sales. The roundtable will include...
Two New Legislative Proposals Introduced to Address Senior Investment Fraud
Posted on September 11, 2009Congressional members have recently introduced two bills aimed at senior investment fraud. Sen. Herbert Kohl (D-WI), chairman of the U.S. Senate Special Committee on Aging, and Senators Robert Casey (D-PA) and Kirsten Gillibrand (D-NY) introduced the ?Senior Investment Protection Act?...
Senate Banking Committee Holds (Another) Hearing on Madoff
Posted on September 10, 2009Testimony Concerning the SEC's Failure to Identify the Bernard L. Madoff Ponzi Scheme and How to Improve SEC Performance, by Robert Khuzami, SEC Director, Division of Enforcement, and John Walsh, Acting Director, SEC Office of Compliance Inspections and Examinations...
Former Officers of Marshall Holdings Settle SEC Charges of Improper Form S-8 Registration
Posted on September 10, 2009On September 4, 2009 the United States District Court for the Central District of California entered Final Judgments by consent against defendants Richard A. Bailey and Florian R. Ternes, residents of Las Vegas, Nevada and former officers and directors of...
SEC Schedules Meeting to Discuss NRSROs & Flash Orders
Posted on September 10, 2009The SEC will hold an Open Meeting on September 17, 2009. The subject matter of the September 17 Open Meeting will be: 1. Nationally Recognized Statistical Rating Organizations (NRSROs) A. Final Rule Amendments and Proposed Rule Amendments under the Credit...
Treasury Releases Report on 529 Savings Plans for College
Posted on September 10, 2009The Treasury Dept. released today AN ANALYSIS OF SECTION 529 COLLEGE SAVINGS AND PREPAID TUITION PLANS, A REPORT PREPARED BY THE DEPARTMENT OF TREASURY FOR THE WHITE HOUSE TASK FORCE ON MIDDLE CLASS WORKING FAMILIES. The Report discusses the benefits...
BofA Fights Back Against New York AG
Posted on September 09, 2009The WSJ reports that Bank of America has responded by letter to the New York AG's charges that its proxy statement in connection with the Merrill Lynch merger was misleading and that it was hiding behind the attorney-client privilege. On...
SEC Charges Former CEO of Globe Tel with Accounting Fraud
Posted on September 09, 2009The SEC filed a civil action against Timothy J. Huff ("Huff"), the former chief executive officer ("CEO") of GlobeTel Communications Corp. ("GlobeTel" or the "company"), a publicly-traded company headquartered in Fort Lauderdale, Florida, now known as Sanswire Corp...
Married Couple Settle SEC Insider Trading Charges
Posted on September 09, 2009The SEC filed a settled insider trading action in the United States District Court in Dallas, Texas against Jeff L. Soisson and Karen Kaye Walker. The Commission alleges that Soisson and Walker, who are married, engaged in unlawful insider trading...
Madoff Feeder Fund Settles with Massachusetts Secretary of State
Posted on September 08, 2009Fairfield Greenwich, Madoff Feeder Fund, Fined and Ordered to Make Restitution In Massachusetts Securities Case Settlement (On September 8, 2009). Here is the final order.
Ohio AG Announces $475 Million Settlement with Merrill Lynch Is Final
Posted on September 08, 2009Ohio Attorney General Richard Cordray has announced that the $475 million settlement between the State Teachers Retirement System (STRS Ohio) and Merrill Lynch, first reported in January 2009, has been finalized. The settlement, in connection with a class action lawsuit,...
SEC Charges Start-up Biotech Company with Securities Fraud
Posted on September 08, 2009The SEC charged CellCyte Genetics Corporation, a biotechnology company based in Bothell, Wash., and its former CEO and Chief Scientific Officer, for falsely telling investors that the company's cutting-edge stem cell technology had been proven successful and was headed for...
SEC Charges North Carolina Couple of Bilking Senior Citizens
Posted on September 08, 2009The SEC announced fraud charges and an asset freeze against the perpetrators of a Charlotte, N.C.-based investment scheme that bilked $32.5 million from approximately 500 investors by falsely promising extraordinarily high returns. The SEC alleges that Sidney S...
Brooklyn Money Manager Settles SEC Charges of Running a Ponzi Scheme
Posted on September 08, 2009Yet another Ponzi scheme! The SEC charged a Brooklyn money manager with running a $40 million Ponzi scheme in which he promised approximately 800 investors guaranteed high returns from safe, liquid investments, but instead spent their money on real estate,...
New York AG Wants BofA to Disclose Attorneys' Advice
Posted on September 08, 2009The New York AG's office is not buying Bank of America's defense of reliance on counsel without disclosure of the attorneys' advice. In a letter posted on its website today to BofA's outside counsel, the office stated: We are at...
Administration Announces Steps to Boost Participation in Retirement Savings Plans
Posted on September 06, 2009The Administration announced new (modest) steps to complement the president?s legislative proposals to boost participation in IRAs and match retirement savings. The Department of the Treasury will: Expand opportunities for automatic enrollment in 401(k) and other retirement savings plans, ?...
Geithner at the G-20 Meeting
Posted on September 06, 2009Statement by Secretary Geithner at the G-20 Meeting of Finance Ministers and Central Bank Governors (Sept. 5, 2009): Our strategy is to put in place stronger constraints on risk taking across the financial system, to bring comprehensive oversight to key...
Bondi on Arbitration of Mortgage-Backed Securities Suitability Claims
Posted on September 06, 2009Securities Arbitrations Involving Mortgage-Backed Securities and Collateralized Mortgage Obligations: Suitable for Unsuitability Claims, by Bradley J Bondi, Counsel to SEC Commissioner; Adjunct Professor of Law, was recently posted on SSRN. Here is an abbreviated version of the abstract: Over the...
Atkins & Bondi on SEC's Enforcement Program
Posted on September 06, 2009Evaluating the Mission: A Critical Review of the History and Evolution of the SEC Enforcement Program, by Paul S. Atkins, Securities and Exchange Commission (SEC), and Bradley J Bondi, Counsel to SEC Commissioner; Adjunct Professor of Law, was recently posted...
Verret on the Bailout
Posted on September 06, 2009Treasury Inc.: How the Bailout Reshapes Corporate Theory and Practice, by J.W. Verret, George Mason University - School of Law, was recently posted on SSRN. Here is the abstract: Corporate law theory and practice considers shareholder relations with companies and...
Booth on the Causes of the 2008 Credit Crisis
Posted on September 06, 2009Things Happen, by Richard A. Booth, Villanova University School of Law, was recently posted on SSRN. Here is the abstract: In this essay, I consider various theories about the cause the 2008 credit crisis and by implication what should be...
Bradley on Global Regulation of Credit Ratings
Posted on September 06, 2009Rhetoric and the Regulation of the Global Financial Markets in a Time of Crisis: The Regulation of Credit Ratings, by Caroline M. Bradley, University of Miami - School of Law, was recently posted on SSRN. Here is the abstract: The...
Selling Life Settlements of Old and Sick is Wall St.'s "Next Big Thing"
Posted on September 06, 2009The New York Times has a disturbing front-page article, New Exotic Investments Emerging on Wall St. (by Jenny Anderson), recounting the latest "exotic investment" Wall St. is planning -- securitization of "life settlements." Life settlements involve the sale of life...
SEC's Inspector General Releases Entire Report on its Madoff Investigation
Posted on September 05, 2009The SEC's Office of inspector General posted on its website the entire 477-page report of its investigation into why the SEC never uncovered the Madoff ponzi scheme despite numerous red flags and warnings over the years. From the introuction: The...
Credit Rating Agencies Can Be Liable for Ratings Issued in Private Placement, Court Holds
Posted on September 04, 2009Judge Scheindlin's opinion in Abu Dhabi Commercial Bank v. Morgan Stanley & Co. Download AbuDhabiCommercialBank(S.D.N.Y. Sept. 2, 2009) is receiving a great deal of press, and deservedly so. Two institutional investors brought a class action to recover losses stemming from...
SEC & Hain Celestial Group Settle Backdating Charges
Posted on September 03, 2009The SEC settles another backdating case, this one involving The Hain Celestial Group, Inc. ("Hain"), a Melville, New York natural foods company. The SEC's complaint, filed in federal court in Brooklyn, New York, alleges that from at least 1998 to...
Treasury Releases Principles for Reforming Regulatory Capital Framework for Banks
Posted on September 03, 2009The Treasury Department posted on its website a policy statement, "Principles for Reforming the U.S. and International Regulatory Capital Framework for Banking Firms." According to the statement, The global regulatory framework failed to prevent the build-up of risk in the...
SEC Charges 6 Defendants with Unregistered Distribution of 21 Billion Shares
Posted on September 03, 2009On September 1, 2009, the SEC filed a civil complaint against three individuals and three entities alleging that between February 2004 and June 2007, they engaged in an unregistered distribution and sale of over 21 billion shares of Universal Express...
Hill on Credit Rating Agencies
Posted on September 02, 2009Why Did Anyone Listen to the Rating Agencies After Enron?, by Claire A. Hill, University of Minnesota, Twin Cities - School of Law, was recently posted on SSRN. Here is the abstract: Enron was rated investment grade by Moody?s, Standard...
Bamberger on Technologies of Compliance
Posted on September 02, 2009Technologies of Compliance: Risk and Regulation in a Digital Age, by Kenneth A. Bamberger, University of California, Berkeley - School of Law, was recently posted on SSRN. Here is the abstract: Legal scholarship has been silent about a phenomenon with...
Wachter on the Ongoing Financial Upheaval
Posted on September 02, 2009The Ongoing Financial Upheaval: Understanding the Sources and Way Out, by Susan M. Wachter, University of Pennsylvania - Finance Department, was recently posted on SSRN. Here is the abstract: The present period of financial instability is also likely to become...
FINRA Increases Margin Requirements for Leveraged ETFs
Posted on September 02, 2009Effective December 1, 2009, FINRA is implementing increased customer margin requirements for leveraged ETFs and uncovered options overlying leveraged ETFs, in accordance with NASD Rule 2520 and incorporated NYSE Rule 431. ETFs are typically registered unit investment trusts (UITs) or...
Verifone Holdings Settles Accounting Falsification Charges
Posted on September 02, 2009The SEC settled charges that Silicon Valley technology company VeriFone Holdings, Inc. and a former finance department employee falsified the company?s accounting records which boosted gross margins and income reported to shareholders. The SEC alleged that in three consecutive quarters...
SEC Charges Former President and Former Company Attorney of Golden Apple with Fraud
Posted on September 02, 2009The SEC filed a complaint yesterday in the Southern District of New York charging Golden Apple Oil and Gas, Inc. ("Golden Apple"), its former President Jay Budd, former company attorney John Briner, and Ethos Investments, Inc., with securities law violations...
SEC Settles Insider Trading Action Involving Covansys Acquisition
Posted on September 02, 2009On August 31, 2009, the SEC filed a settled insider trading action against Sarath B. Gangavarapu, a resident of Chattanooga, Tennessee. The Commission's complaint, filed in the U.S. District Court for the Eastern District of Tennessee, alleges that Gangavarapu violated...
SEC & CFTC Meet Today and Tomorrow on Harmonizing Regulation
Posted on September 02, 2009The SEC and CFTC are holding two joint meetings on harmonization of their regulatory systems today and tomorrow. Here is the list of participants and agenda.
SEC Charges Investment Adviser with Ponzi Scheme Directed at California Church Community
Posted on September 02, 2009The SEC charged David A. Souza and his company, D.A. Souza Investments, LLC for conducting a fraudulent investment scheme that targeted a Redding, California church community. In a nine-month period during 2007 and 2008, according to the SEC's complaint, Souza...
FINRA Bars Two Brokers in Separate Ponzi Schemes
Posted on September 02, 2009FINRA announced that in separate enforcement actions, it has permanently barred two brokers for running multi-million-dollar Ponzi schemes that victimized a wide range of investors ? including elderly individuals, mentally and physically impaired individuals, church members and even family friends...
Statements from SEC-CFTC Meeting on Regulation Harmonization
Posted on September 02, 2009Here are the Opening Remarks before the SEC-CFTC Joint Meetings on Regulation Harmonization by SEC Chairman Mary L. Schapiro, held on September 2, 2009. Stephen Luparello, FINRA Vice Chairman, also made a Statement Before the SEC/CFTC Joint Meeting on Harmonization...
FINRA Settles ARS Charges with Three More Firms
Posted on September 02, 2009FINRA announced today that it has entered into final settlements with three additional firms to settle charges relating to the sale of auction rate securities (ARS) that became illiquid when auctions froze in February 2008. The settlements announced today are...
SEC Releases Inspector General's Summary of Agency's Failures to Detect Madoff Fraud
Posted on September 02, 2009The SEC released today the REPORT OF INVESTIGATION, UNITED STATES SECURITIES AND EXCHANGE COMMISSION OFFICE OF INSPECTOR GENERAL, Case No. OIG-509, Investigation of Failure of the SEC To Uncover Bernard Madoff's Ponzi Scheme. (This is the executive summary...
SEC's Inspector General Criticizes SEC's Oversight of Rating Agencies
Posted on September 01, 2009The SEC's Office of Inspector General released a report on The SEC's Role Regarding and Oversight of Nationally Recognized Statistical Rating Organizations (NRSROs) on August 27. The OIG concludes that despite recognition of the importance of NRSROs post-Enron the SEC...
SEC Chair Warns CEOS of Broker Dealer Firms of Supervisory Responsibilities
Posted on September 01, 2009SEC Chair Mary Schapiro released an open letter to the CEOs of broker-dealer firms warning that compensation arrangements could provide improper incentives for registered representatives to engage in abusive sales conduct and reminding them of the firms' supervisory responsibilities...
More Questions on the SEC-BofA Settlement
Posted on August 28, 2009Zachary Goldfarb of the Washington Post consistently provides insightful coverage into the SEC. Check out his article today on the SEC's dilemma in persuading Judge Rakoff to accept the Bank of America settlement over the Merrill bonuses, in the face...
Going Fishing
Posted on August 27, 2009I'll be out of town and without a pc for a few days. Check back here on Sept. 2, and I'll be doing some catch-up.
SEC Suspends Las Vegas CPA for Auditing Deficiences
Posted on August 27, 2009The SEC charged a Las Vegas-based CPA and his public accounting firm with securities fraud for issuing false audit reports that failed to comply with Public Company Accounting Oversight Board ("PCAOB") Standards and were often the product of high school...
Three Defendants Settle SEC Charges Involving Insider Trading in ISE Merger
Posted on August 27, 2009The SEC announced that it filed an amended complaint in its pending insider trading case originally filed on March 13, 2008, against John F. Marshall, the former Vice Chairman of International Securities Exchange Holdings, Inc. ("ISE"), Alan L. Tucker and...
Assessing Bernanke's First Term
Posted on August 26, 2009There has been much talk the last few days about the reappointment of Ben Bernanke to head the Federal Reserve, an action that went from unlikely to quite certain in a short period of time. Today's Wall St. Journal offers...
Judge Asks for More Explanation for SEC-BofA Settlement
Posted on August 25, 2009Judge Rakoff still isn't satisfied with the explanations given to him by the SEC and the Bank of America about the settlement involving the disclosure (or lack thereof) of Merrill bonuses in the BofA proxy statement. He instructed the SEC...
Bullard on Recursivity in Securities Laws
Posted on August 24, 2009Professor Mercer Bullard (Mississippi) recently published a commentary on recursivity in the securities laws as illustrated by Bank of America?s recent SEC settlement.
SEC Settles Insider Trading Charges Involving First Indiana Corp. Stock
Posted on August 24, 2009The SEC today settled charges against Nancy Jewell, Kristin Mays, and Matthew B. Murphy, III, alleging that the defendants violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder by buying First Indiana Corporation...
NASAA Identifies Top 10 Investor Traps
Posted on August 24, 2009NASAA recently published its Top 10 Investor Traps. They are: Entertainment Investments. Gold Bullion and Currency Scams. Leveraged Exchange-Traded Funds (ETFs). Life Settlements. Natural Resource Investments. Ponzi Schemes. Private Placement Offerings...
New Blog on FCPA
Posted on August 24, 2009Readers of this Blog know that the SEC has recently been enforcing the Foreign Corrupt Practices Act (FCPA) with renewed energy. Mike Koehler (Butler University) has a new blog, FCPA Professor, that is devoted to FCPA issues; check it out!
Velasco on Fiduciary Duties in Corporate Law
Posted on August 23, 2009How Many Fiduciary Duties Are There in Corporate Law?, by Julian Velasco, University of Notre Dame, was recently posted on SSRN. Here is the abstract: Historically, there were two main fiduciary duties in corporate law, care and loyalty, and only...
SEC & CFTC Announce Public Meetings on Harmonization of Market Regulation
Posted on August 20, 2009The SEC and the CFTC announced that the two regulatory agencies will hold joint meetings to seek input from the public on harmonization of market regulation. President Barack Obama in June called on the two regulators to recommend changes to...
Will Proxy Access Be Here Soon?
Posted on August 20, 2009Yesterday I attended a Directors' Roundtable program here in Cincinnati sponsored by the law firm KMK and others. The program was excellent, with panels discussing developments in securities regulation, risk management and D&O insurance. What I found particularly interesting were...
FINRA Expels Maximum Financial Investment Group for Forex Violations
Posted on August 18, 2009FINRA announced that it has expelled Maximum Financial Investment Group, Inc. of Southfield, MI, for violations arising out of its retail foreign currency (forex) business, as well as for repeated violations of FINRA registration and related rules. FINRA also permanently...
Financial Firms Pay Big Bucks to Lobby Congress
Posted on August 18, 2009Investment News reports on the big bucks paid by financial firms in the second quarter on lobbying Congress. SIFMA paid $1.25 million, the Investment Company Institute paid $1.23 million, and the American Council of Life Insurers paid $2 million. InvNews,...
FPA Asks SEC to Clarify FINRA's Authority over Financial Planning Activities of Broker Dealer
Posted on August 18, 2009On August 17 the Financial Planning Association (FPA) wrote to the SEC questioning the authority of FINRA to bring an enforcement action against a dual registrant (Ameritas) relating to its marketing of misleading financial plans. According to FPA, financial planning...
SEC Charges Two with Defrauding Brokers to Manipulate Penny Stocks
Posted on August 18, 2009On July 21, 2009 the SEC filed an emergency enforcement action against Eric Todd Seiden to halt an ongoing scheme in which Seiden fraudulently induced at least fifteen broker-dealers to buy over $1.8 million worth of thinly traded stock. On...
FINRA and SEC Issue Alert on Leveraged and Inverse ETFs
Posted on August 18, 2009FINRA and the SEC have issued an Investor Alert called Leveraged and Inverse ETFs: Specialized Products with Extra Risks for Buy-and-Hold Investors warning retail investors of the risks associated with investing in these highly complex financial products...
FINRA Officer's Senate Testimony on Stanford Oversight
Posted on August 17, 2009On August 17, 2009 Daniel M. Sibears, Executive Vice President, FINRA Market Regulation Programs, testified before the Senate Committee on Banking, Housing and Urban Affairs on FINRA's oversight over Stanford's broker-dealer operations. Mr. Sibears stated that the broker-dealer operations have...
SEC Proposes Alternative Uptick Rule
Posted on August 17, 2009The SEC announced that it is seeking public comment on an alternative approach to short selling price test restrictions that may be more effective and easier to implement than previously proposed price test restrictions currently under consideration. The alternative uptick...
New York AG Sues Schwab over ARS
Posted on August 17, 2009Attorney General Andrew M. Cuomo today filed a lawsuit against Charles Schwab & Co. (?Schwab?) charging the discount brokerage firm for falsely representing auction rate securities as liquid, short-term investments without discussing the risks. According to the Attorney General, Schwab...
Black on Reputational Damages
Posted on August 16, 2009Reputational Damages in Securities Litigation, by Barbara Black, University of Cincinnati - College of Law, was recently posted on SSRN. Here is the abstract: This short paper, originating in remarks made at the Institute for Law and Economic Policy's 15th...
Buxbaum on Personal Jurisdiction in Cross-Border Securities Litigation
Posted on August 16, 2009Personal Jurisdiction Over Foreign Directors in Cross-Border Securities Litigation, by Hannah L. Buxbaum, Indiana University School of Law-Bloomington, was recently posted on SSRN. Here is the abstract: Securities litigation against non-U.S. companies ? on the rise over the past decade...
Frankel on Fiduciary Duties of Securities Professionals
Posted on August 16, 2009Fiduciary Duties of Brokers-Advisers-Financial Planners and Money Managers, by Tamar Frankel, Boston University School of Law, was recently posted on SSRN. Here is the abstract: Broker dealers and investment advisers form the lifeline of the financial markets...
Bainbridge on STOCK Act
Posted on August 16, 2009The Stop Trading on Congressional Knowledge Act, by Stephen M. Bainbridge, University of California, Los Angeles - School of Law, was recently posted on SSRN. Here is the abstract: A 2004 study of the results of stock trading by United...
SEC Settles PIPE Offerings Insider Trading Case
Posted on August 12, 2009On August 7, 2009, the United States District Court for the Southern District of New York entered a final judgment against Edwin "Bucky" Lyon, IV, Gryphon Master Fund, L.P., Gryphon Partners, L.P., Gryphon Partners (QP), L.P., Gryphon Offshore Fund, Ltd...
Florida Attorney Settles SEC Market Manipulation Charges
Posted on August 12, 2009On July 31, 2009, the SEC filed a civil action in the United States District Court for the Southern District of Florida against L. Daniel Ferrer, a Florida attorney, alleging violations of the federal securities laws in connection with the...
SEC and Terex Settle Accounting Fraud Charges
Posted on August 12, 2009The SEC charged Terex Corporation, a heavy equipment manufacturer, with accounting fraud for making material misstatements in its own financial reports to investors, as well as aiding and abetting a fraudulent accounting scheme at United Rentals, Inc...
Reviving the Debate on SEC Corporate Penalties
Posted on August 12, 2009It seems like just yesterday that we were debating whether corporate penalties were too high and were unfair to the corporation's "innocent shareholders"; former SEC Commissioner Paul Atkins was the leading proponent of that view, shared by some academics...
Administration Proposes Legislation to Regulate OTC Derivatives
Posted on August 11, 2009The Administration delivered legislative language to Capitol Hill today focusing on the regulatory reform of over-the-counter (OTC) derivatives. Under the Administration's legislation, the OTC derivative markets will be comprehensively regulated for the first time...
FINRA Tells SEC It's Premature to Mandate Elimination of Industry Arbitrator in Customer Disputes
Posted on August 11, 2009One of the persistent criticisms of arbitration of customer-broker disputes before FINRA Dispute Resolution is the requirement that one of three arbitrators must come from the securities industry. Many investors and their advocates are suspicious of an industry-sponsored mandatory dispute...
Madoff Associate Pleads Guilty
Posted on August 11, 2009Frank DiPascali Jr., longtime associate of Bernard Madoff, pleaded guilty today to 10 criminal charges, including securities fraud, investment adviser fraud, mail and wire fraud, and conspiracy. He admitted that he helped Madoff to defraud his customers from 1990s-2008...
FINRA Fines Credit Suisse for Violating Global Research Analyst Settlement
Posted on August 10, 2009FINRA imposed a fine of $275,000 against Credit Suisse Securities (USA), LLC, for failing to comply fully with one of the key terms of the 2003 Global Research Analyst Settlement. That settlement, which was between regulators and 13 leading financial...
Judge Refuses to Approve SEC-BofA Settlement over Merrill Bonuses
Posted on August 10, 2009A federal district court judge refused today to approve the settlement that the SEC and Bank of America had negotiated over the failure to disclose bonuses to Merrill Lynch executives in the proxy materials submitted to the bank's shareholders to...
Stout on Trust Behavior
Posted on August 09, 2009Trust Behavior: The Essential Foundation of Securities Markets, by Lynn A. Stout, University of California, Los Angeles - School of Law, was recently posted on SSRN. Here is the abstract: Evidence is accumulating that in making investment decisions, many investors...
Free Enterprise Fund v. PCAOB Law Professors Amici Brief
Posted on August 09, 2009Supreme Court Amici Brief of Law Professors in Support of Petitioners in Free Enterprise Fund V. Public Company Accounting Oversight Board, No. 08-861, by Donna M. Nagy, Indiana University School of Law-Bloomington, was recently posted on SSRN. Here is the...
FINRA Fines Ameritas for Sales of Unsuitable VUL Policies
Posted on August 06, 2009FINRA fined Ameritas Investment Corp. $100,000 and suspended and fined one of its brokers for inducing customers to take on additional mortgage and/or home equity debt in order to purchase variable universal life insurance policies (VULs). Those policies were pitched...
SEC Enforcement Statistics in 2009
Posted on August 06, 2009Remarks to the New York City Bar Association, by Robert Khuzami, Director, Division of Enforcement, SEC, August 5, 2009: Comparing the period from late January [2009] to the present to roughly the same period in 2008, the Division has opened...
AIG's Former Executives Settle Accounting Fraud Charges with SEC
Posted on August 06, 2009The SEC settled charges that former American International Group Chairman and CEO Maurice "Hank" Greenberg and former Vice Chairman and CFO Howard Smith were involved in numerous improper accounting transactions that inflated AIG's reported financial results between 2000 and 2005...
Attorney Settles Charges in Pump and Dump Scheme
Posted on August 06, 2009On July 31, 2009, the United States District Court for the Northern District of Georgia entered final judgments by consent against Albert J. Rasch, Jr., Kathleen R. Novinger, Sandra B. Masino and 144 Opinions, Inc. (144 Opinions) in a civil...
Federal Judge Calls for Hearing on SEC-BofA Settlement
Posted on August 06, 2009Earlier this week the SEC announced a settlement with Bank of America over allegations that the bank misled its shareholders by not disclosing promised Merrill Lynch bonuses when it solicited their proxies for the merger, but a federal judge in...
Specter Introduces Bill to Create Private Aiding and Abetting Remedy for Rule 10b-5 Fraud
Posted on August 05, 2009Senator Specter introduced a Bill that would amend section 20 of the Securities Exchange Act to allow private Rule 10b-5 actions against persons that knowingly or recklessly provide substantial assistance to primary violators, thus overturning Central Bank and Stoneridge...
Former Royal Ahold Executive Settles SEC Accounting Charges
Posted on August 05, 2009The SEC settled charges against Johannes Gerhardus Andreae, a former Executive Vice President and former member of the executive board of Royal Ahold (Koninklijke Ahold N.V.). The SEC alleged that Andreae and others at Royal Ahold participated in a scheme...
SEC Settles Two Cases Alleging Naked Short Selling
Posted on August 05, 2009The SEC announced that it has taken its first enforcement actions for violations of the Commission's rules to prevent abusive "naked" short selling, charging two options traders and their broker-dealers with violating the locate and close-out requirements of Regulation SHO...
SEC is Looking at Flash Trading
Posted on August 04, 2009Senator Charles Schumer said that SEC Chairman Schapiro had promised him that the agency would ban flash trading, and Ms. Schapiro made a statement that the SEC may curb the practice to eliminate inequities. She also said that the agency...
SEC and GE Settle Accounting Fraud Charges
Posted on August 04, 2009The SEC announced that it settled charges against General Electric Company (GE) alleging that GE misled investors by reporting materially false and misleading results in its financial statements. The SEC alleges that GE used improper accounting methods to increase its...
SEC Publishes Proposed "Pay to Play" Rules for Investment Advisers
Posted on August 03, 2009The SEC published on its website for public comment proposed new rules that address ?pay to play? practices by investment advisers. The new rules would prohibit an investment adviser from providing advisory services for compensation to a government client for...
SEC and BofA Settle Charges Involving Merrill Bonuses
Posted on August 03, 2009The SEC and Bank of America settled charges that Bank of America misled investors about billions of dollars in bonuses that were being paid to Merrill Lynch & Co. executives at the time of its $50 billion acquisition of the...
Former Take-Two GC and CFO Settle Backdating Charges
Posted on August 03, 2009The SEC announced that Kenneth Selterman and Patti Tay, the former General Counsel and former Controller/ Chief Accounting Officer, respectively, of video game maker Take-Two Interactive Software, Inc. (Take-Two), settled charges of stock option backdating...
Heminway on Officer's Candor
Posted on August 02, 2009Martha?s (and Steve?s) Good Faith: An Officer?s Duty of Loyalty at the Intersection of Good Faith and Candor, by Joan MacLeod Heminway, University of Tennessee College of Law, was recently posted on SSRN. Here is the abstract: This short paper...
Brummer on International Securities Regulation
Posted on August 02, 2009Post-American Securities Regulation, by Chris Brummer, Georgetown University Law Center, was recently posted on SSRN. Here is the abstract: International securities regulation has arrived at the forefront of the country's debate on financial market reform...
NASAA Proposes Model Rule on Investment Adviser Solicitors
Posted on July 31, 2009NASAA?s Investment Adviser Regulatory Policy and Review Project Group is soliciting comments from the public on a proposed model rule regarding solicitors for investment advisers. The Proposed Rule keeps intact the increased investor protection standards presently required by the states,...
SEC Charges Integral Systems Failed to Disclose Criminal Background of Officer
Posted on July 31, 2009The SEC filed two actions (judicial and administrative) charging that Integral Systems, Inc. (Integral Systems or the Company), a corporation based in Columbia, Maryland that manufactures satellite ground systems, fraudulently concealed for over seven years the identity and involvement of...
Helmerich & Payne Settles FCPA Charges with SEC
Posted on July 31, 2009On July 30, the SEC settled administrative charges with Helmerich & Payne, Inc. (H&P), finding that from 2003 through 2008 H&P's books, records, and accounts did not properly reflect the improper payments made by H&P through two of its wholly-owned...
New York AG Releases Report on Bank Bonuses
Posted on July 31, 2009New York Attorney General Cuomo released a report on bank bonuses, NO RHYME OR REASON: The Heads I Win, Tails You Lose I Bank Bonus Culture.
SEC's Investor Advisory Committee Raises Issues
Posted on July 29, 2009The SEC's Investor Advisory Committee , after its first meeting, raised the following questions: Fiduciary duty: Should all financial intermediaries who provide investment advice to their customers be subject to the same fiduciary duties, and how should those duties be...
SEC's Inspector General Says Stanford Hindered Investigation
Posted on July 28, 2009The Wall St. Journal reports that the SEC's Inspector General (which has issued recent reports sharply critical of the agency) found that the SEC had been actively investigating Allen Stanford since 2005, but its investigation was hindered by Stanford's and...
Avery Dennison Settles FCPA Charges with SEC
Posted on July 28, 2009The Securities and Exchange Commission today filed two settled enforcement proceedings against Avery Dennison Corporation (Avery), a Pasadena, California-based multinational corporation, alleging violations of the Foreign Corrupt Practices Act (FCPA) in connection with improper payments and promises of improper payments...
SEC Removes Requirement of NYSE Surveillance Program to Track Floor Trading
Posted on July 28, 2009On July 28, 2009, the SEC issued an Order that removes the requirement for NYSE operate an on-floor video and audio surveillance program to track floor trading activity at NYSE trading posts, operated as a pilot, pursuant to the April...
FINRA Fines Merrill & UBS for Unsuitable CEF Sales
Posted on July 28, 2009FINRA announced today that it fined Merrill Lynch, Pierce, Fenner & Smith, Inc. $150,000 and UBS Financial Services, Inc. $100,000 for supervisory failures that led to unsuitable short-term sales of closed-end funds (CEF) purchased at the funds' initial public offerings...
SEC Finalizes Short Sales Rule and Announces Other Initiatives
Posted on July 27, 2009The SEC published amendments to Regulation SHO to make permanent amendments contained in Interim Final Temporary Rule 204T (?temporary Rule 204T?) of Regulation SHO, with some modifications to address commenters? concerns. These amendments are intended to help further the goals...
Treasury Sends Proposed Systemic Risk Legislation to Congress
Posted on July 23, 2009On July 22 Treasury sent to Congress proposed Systemic Risk Legislation that would require strong, consolidated supervision and regulation for all financial firms. The legislation also provides a regulatory regime to monitor, mitigate, and respond to risks in the financial...
SEC Approves Exemptions for Central Counterparties for CDSs
Posted on July 23, 2009The SEC approved conditional exemptions that will allow ICE Clear Europe Limited and Eurex Clearing AG to operate as central counterparties (CCPs) for clearing credit default swaps. These conditional exemptions provide the SEC with regulatory oversight of the central counterparty,...
SEC Proposes "Pay to Play" Rules for Investment Advisers
Posted on July 23, 2009The SEC voted unanimously to propose measures intended to curtail "pay to play" practices by investment advisers that seek to manage money for state and local governments. The measures are designed to prevent an adviser from making political contributions or...
FINRA Fines 5 Bank Broker-Dealers for Improper Variable Annuities Sales
Posted on July 23, 2009FINRA announced today that it fined five bank broker-dealers a total of $1.65 million for deficient supervision and procedures related to variable annuity (VA), mutual fund or unit investment trust (UIT) transactions. Brokers at each of the firms operated out...
FINRA Fines NEXT Financial Group for Supervisory Violations
Posted on July 22, 2009FINRA) announced today that it fined NEXT Financial Group, Inc., headquartered in Houston, TX, $1 million for supervisory violations that primarily involved the failure to supervise its approximately 130 Office of Supervisory Jurisdiction (OSJ) branch managers, who typically supervise transactions...
GAO Issues Report on Leverage at Financial Institutions
Posted on July 22, 2009The GAO issued a report on Financial Crisis Highlights Need to Improve Oversight of Leverage at Financial Institutions and across System. It explains that the purpose of the report is to study the role of leverage in the current financial...
SEC Seeks Clawback from Former CEO of CSK Auto
Posted on July 22, 2009The SEC asked the U.S. District Court for the District of Arizona to order the former chief executive officer of CSK Auto Corporation to reimburse the company and its shareholders more than $4 million that he received in bonuses and...
D.C. Circuit Remands SEC Fixed Indexed Annuity Rule for Further Consideration
Posted on July 22, 2009The D.C. Circuit continues its practice of being tough on the SEC's compliance with the requirements for federal rulemaking . Yesterday the Circuit remanded to the agency the SEC's controversial rule 151A that stated that fixed indexed annuities (FIAs) are...
Perry Corp. Settles SEC Charges for Failure to Disclose Stock Purchases
Posted on July 21, 2009The SEC settled charges that New York-based investment adviser Perry Corp. violated securities laws by failing to report that it had purchased substantial stock in a public company in order to vote them in favor of a merger from which...
SEC Brings ARS Action Against Morgan Keegan
Posted on July 21, 2009The SEC announced that it filed a complaint in the U.S. District Court for the Northern District of Georgia against Morgan Keegan & Company, Inc. (?Morgan Keegan?), a Tennessee-based broker-dealer, for misleading investors regarding the liquidity risks associated with auction...
Treasury Proposes Credit Rating Agency Reforms
Posted on July 21, 2009The Treasury Dept. announced that it has sent to Congress proposed reform to credit rating agencies. (Although the announcement refers to a link to the legislative language, in fact I couldn't link to it.) The announcement says that: Continuing its...
Morgan Stanley Settles SEC Charges Involving Recommendations about Money Managers
Posted on July 20, 2009The SEC and Morgan Stanley settled charges that the firm and one of its former investment adviser representatives misled clients about the money managers being recommended to them and failing to disclose conflicts of interest. According to the SEC?s orders...
TD Ameritrade Latest Firm to Settle ARS Charges with Regulators
Posted on July 20, 2009The SEC, NASAA and the New York AG each separately announced a settlement with TD Ameritrade regarding auction-rate securities (ARS). Similar to other ARS settlements, the firm agrees to purchase illiquid ARS from individuals, charities, non-profits and small businesses and...
SEC Charges Former Qualcomm Employee with Insider Trading
Posted on July 20, 2009The SEC today filed an insider trading action in the United States District Court for the Southern District of California against Andres Leyva, a former Director of Strategic Marketing Analysis at San Diego-based Qualcomm Incorporated. The SEC's complaint alleges that...
Gevurtz on Stoneridge
Posted on July 18, 2009Law Upside Down: A Critical Essay on Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., by Franklin A. Gevurtz, University of the Pacific (UOP) - McGeorge School of Law, was recently posted on SSRN. Here is the abstract: This essay uses...
Webber on Pay-to-Play in Securities Class Actions
Posted on July 18, 2009Is 'Pay-to-Play' Driving Public Pension Fund Activism in Securities Class Actions? An Empirical Study, by David H. Webber, Center for Law & Business at New York University School of Law and Stern School of Business, was recently posted on SSRN....
Black on Protecting the Retail Investor
Posted on July 18, 2009Protecting the Retail Investor in an Age of Financial Uncertainty, by Barbara Black, University of Cincinnati - College of Law, was recently posted on SSRN. Here is the abstract: This essay, originating in a presentation made at the University of...
Court Dismisses SEC's insider Trading Case Against Cuban
Posted on July 17, 2009A Federal District Court in Dallas has dismissed the SEC's insider trading case against Mark Cuban; the agency has 30 days to replead its case. According to the SEC, Cuban sold shares of Mamma.com while in possession of inside information....
Treasury Proposes Say on Pay Legislation
Posted on July 17, 2009On July 16 Treasury announced that it delivered draft "say-on-pay" legislation to Congress that would require all publicly traded companies to give shareholders a non-binding vote on executive compensation packages. This legislation would require a non-binding annual shareholder vote on...
A Dream Come True? Fiduciary Standards for Broker-Dealers
Posted on July 17, 2009Is it even remotely possible that an aftermath of the financial meltdown could be a heightened standard of conduct for broker-dealers? Yesterday SIFMA came out in favor of a uniform "fiduciary standard" for broker-dealers and investment advisers that provide individualized...
Sec Publishes Proposed Disclosure Amendments on Municipal Securities
Posted on July 17, 2009The SEC published for comment proposed amendments to Rule 15c2-12 under the Securities Exchange Act of 1934 (?Exchange Act?) relating to municipal securities disclosure. The proposal would amend certain requirements regarding the information that a broker, dealer, or municipal securities...
SEC Proposes to Improve Disclosure about Municipal Securities
Posted on July 16, 2009The SEC voted unanimously on July 15 to propose rule amendments to improve the quality and timeliness of municipal securities disclosure. The proposed amendments to SEC Rule 15c2-12 would help investors make more knowledgeable investment decisions, effectively manage and monitor...
Congressional Commission Appointed to Study Causes of Financial Crisis
Posted on July 16, 2009Congress has appointed a commission to examine the causes of the financial meltdown. Phil Angelides, a former California Treasurer, will lead the 10-person commission, and Bill Thomas, former Republican representative from California, will serve as vice-chair...
ICI and ETF Firms Call on FINRA to Withdraw ETF Notice
Posted on July 15, 2009According to Investment News, the Investment Company Institute and ETF firms call on FINRA to withdraw its June 29 Regulatory Notice 9-31 that warned brokers that inverse and leverage exchange traded funds "typically are unsuitable for retail investors" who hold...
Court Finds Butko Liable for Online Intrusion Scheme
Posted on July 15, 2009The SEC announced that on July 6, 2009, the United States District Court of Connecticut entered a Default Judgment against Dmitriy Butko ordering him to pay disgorgement in the amount of $60,362 together with prejudgment interest of $10,494.92 and imposing...
Marshall Holdings Int'l Liable for Public Offerings on Form S-8
Posted on July 15, 2009The SEC announced that on July 6, 2009 the United States District Court for the Central District of California entered Final Judgments by consent against defendants Marshall Holdings International, Inc. (Marshall Holdings) and Mark T. Ellis, a resident of Irvine,...
SEC Brings Allegations of Insider Trading Involving Two Separate Mergers
Posted on July 15, 2009The SEC today charged 11 individuals who were involved in separate insider trading schemes that were detected through surveillance of unusual trades preceding two different company merger announcements. The SEC alleges that five individuals, including a former investment banker at...
Schapiro Testifies on SEC's Priorities
Posted on July 14, 2009SEC Chairman Mary L. Schapiro testified today Concerning SEC Oversight: Current State and Agenda before the United States House of Representatives Committee on Financial Services, Subcommittee on Capital Markets, Insurance and Government-Sponsored Enterprises...
Key Provisions of Proposed Investor Protection Legislation--Part II
Posted on July 14, 2009Yesterday I examined the provisions of the proposed Investor Protection Act of 2009 (Download InvestorProtectionAct2009) that deal with the Investor Advisory Committee (sec. 911), the Establishment of a Fiduciary Duty for Brokers, Dealers and Investment Advisers and the Harmonization of...
Tyco Officers Settle with SEC
Posted on July 14, 2009Remember Tyco? The SEC announced settlements with three former officers: On July 14, 2009, the Securities and Exchange Commission (the Commission) filed settled Final Judgments against L. Dennis Kozlowski, the former Chairman and Chief Executive Officer of Tyco International Ltd...
SEC's July 15 Meeting will Consider Municipal Securities Underwritings
Posted on July 13, 2009The SEC's next Open Meeting is July 15. The subject matter is: The Commission will consider a recommendation regarding amendments to Rule 15c2-12 ("Rule") under the Securities Exchange Act of 1934 ("Act"), concerning the responsibilities of a broker, dealer, or...
SEC Charges Seattle Attorney with Pump & Dump Scheme for MitoPharm Stock
Posted on July 13, 2009The SEC charged Seattle-based securities lawyer David Otto and several others with conducting a fraudulent ?pump-and-dump? scheme in which they secretly unloaded more than $1 million in penny stock of a company touting non-existent anti-aging products...
SEC Releases Statement on Preventing Unfair Trading by Employees
Posted on July 13, 2009The Securities and Exchange Commission released a Statement for the Record Before the House of Representatives Committee on Financial Services, Subcommittee on Oversight and Investigations, on July 13 in connection with the Subcommittee?s hearing entitled, ?Preventing Unfair Trading by Government...
Some Key Provisions of Proposed Investor Protection Legislation
Posted on July 13, 2009I posted over the weekend the text of the proposed Investor Protection Act of 2009(Download InvestorProtectionAct2009) released by Treasury. In this blog, I discuss some of its key provisions: Investment Advisory Committee. The role of this Committee (already organized by...
Partnoy on Regulating Credit Ratings
Posted on July 12, 2009Rethinking Regulation of Credit Rating Agencies: An Institutional Investor Perspective, by Frank Partnoy, University of San Diego - School of Law, was recently posted on SSRN. Here is the abstract: This white paper was commissioned by the Council of Institutional...
Partnoy on Overdependence on Ratings
Posted on July 12, 2009Overdependence on Credit Ratings Was a Primary Cause of the Crisis, by Frank Partnoy, University of San Diego - School of Law, was recently posted on SSRN. Here is the abstract: A primary cause of the recent credit market turmoil...
Bruner on the Anglo-American Corporation
Posted on July 12, 2009Power and Purpose in the 'Anglo-American' Corporation, by Christopher M. Bruner, Washington and Lee University - School of Law, was recently posted on SSRN. Here is the abstract: Public corporations in the United States and the United Kingdom are ?...
Stout on Derivatives Regulation
Posted on July 12, 2009How Deregulating Derivatives Led to Disaster, and Why Re-Regulating Them Can Prevent Another, by Lynn A. Stout, University of California, Los Angeles - School of Law, was recently posted on SSRN. Here is the abstract: When credit markets froze up...
Former Mayer Brown Lawyer Convicted for his Role in Refco Fraud
Posted on July 11, 2009Joseph P. Collins, a former partner at Mayer Brown and longtime attorney for Refco, was convicted on Friday on conspiracy, securities and wire fraud charges in connection with Refco's scheme to hide its financial difficulties. The jury deadlocked on a...
Treasury Releases Proposed Investor Protection Legislation
Posted on July 11, 2009The U.S. Treasury Dept. released a Fact Sheet: Administration?s Regulatory Reform Agenda Moves Forward Legislation for Strengthening Investor Protection Delivered to Capitol Hill. Here it is in full: (The proposed legislative language is here.) Continuing its push to establish new...
SEC Publishes Proposed Amendments to Compensation and Corporate Governance Disclosures
Posted on July 11, 2009The SEC published on its website proposed amendments to the rules to enhance the compensation and corporate governance disclosures registrants are required to make about their overall compensation policies and their impact on risk taking; stock and option awards of...
Hedge Fund Found Liable for Short Selling Violations of Reg M
Posted on July 11, 2009On July 7, 2009, the United States District Judge for the Southern District of New York found after a bench trial that Cary G. Brody and two entities he controlled, New York hedge fund Colonial Fund LLC and its adviser,...
SEC Alleges Illinois Hedge Fund Manager Invested $2 Billion in Ponzi Scheme
Posted on July 11, 2009The SEC announced fraud charges and an asset freeze against a hedge fund manager and his firm for facilitating a multi-billion dollar Ponzi scheme operated by Minnesota businessman Thomas Petters. The SEC's complaint, filed in U.S. District Court for the...
Ameriprise Settles SEC Charges for Failing to Disclose REIT Revenue Sharing Payments
Posted on July 11, 2009The SEC announced that broker-dealer Ameriprise Financial Services, Inc., settled charges alleging that it received millions of dollars in undisclosed compensation as a condition for offering and selling certain real estate investment trusts (REITs) to its brokerage customers...
IPOS on U.S. Exchanges in 2009 Total Almost $2.5 Billion
Posted on July 11, 2009According to a NYSE Euronext press release, through first-half 2009, 11 IPOs on the NYSE raised a total of $2.2 billion in proceeds. Three IPOs listed on Nasdaq OMX during that time period raised $268 million. The press release says...
SEC Charges Russian Firm with Manipulating Stocks Through Innocent Victims' Accounts
Posted on July 09, 2009The SEC filed a complaint in the United States District Court for the Southern District of New York charging Russian entity Pointer Worldwide Ltd and its officer, Tatiana Badmaeva, with participating in a fraudulent scheme to manipulate the prices of...
SEC Staff Issues Warning on Cal. IOUs
Posted on July 09, 2009The SECstaff today issued the following statement: The staff of the Securities and Exchange Commission has expressed its belief that California?s recently-issued IOUs are ?securities? under federal securities law. As such, holders of these IOUs and those who may purchase...
SEC Charges New York Broker-Dealer with $61 Million Boiler Room Fraud
Posted on July 08, 2009On July 8, 2009, the SEC filed a civil injunctive action in the United States District Court for the Southern District of New York alleging that a New York based broker-dealer, Sky Capital LLC a/k/a Granta Capital LLC (Sky Capital)...
Pace Investor Rights Clinic Investor's Guide to Securities Industry Disputes
Posted on July 08, 2009The Pace Law School Investor Rights Clinic has published an Investors' Guide to Securities Industry Disputes( Securities Dispute Guide). This extremely useful guide first provides basic information on how to avoid disputes with brokers and sets forth investors' rights and...
SEC's Investor Advisory Committee Announces Public Meeting
Posted on July 08, 2009The SEC's newly-formed Investor Advisory Committee will hold a public meeting on July 27, 2009, at the SEC's main offices at 10 a.m. It will be open to the public and webcast. The public is invited to submit written statements...
Former CFO of UCI Medical Affiliates Settles Fraud, Embezzlement Charges with SEC
Posted on July 08, 2009The SEC filed a Complaint in the United States District Court for the District of South Carolina against Jerry F. Wells, Jr. ("Wells"), a former Executive Vice President and Chief Financial Officer of UCI Medical Affiliates, Inc. ("UCI" or the...
SEC Obtains Asset Freeze in Alleged $485 Million Ponzi Scheme
Posted on July 07, 2009On July 2, 2009, the SEC obtained a temporary restraining order and emergency asset freeze in yet another alleged Ponzi scheme, this one a $485 million offering fraud run by three individuals (Paul R. Melbye, Brendan W. Coughlin and Henry...
New York AG Announces Two More Assurances of Discontinuance in ARS Settlements
Posted on July 07, 2009The New York Attorney General announced Assurances of Discontinuance with Credit Suisse Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated relating to the auction rate securities settlements reached last summer. The Assurances detail how the firms have and...
Former HealthSouth CFO Speaks on Ethics
Posted on July 06, 2009CFO.com runs an interview with Aaron Beam, a former HealthSouth CFO who admitted to cooking the books during 1996-97 and who served three months in a minimum security prison. He is currently mowing lawns and speaking to business students on...
Schwartz on Mutual Fund Conflicts
Posted on July 05, 2009Mutual Fund Conflicts of Interest in the Wake of the Short-Term Trading Scandals: Encouraging Structural Change Through Shareholder Choice, by Jeff Schwartz, California Western School of Law, was recently posted on SSRN. Here is the abstract: This piece contends that...
Vega on SOX Whistleblowers
Posted on July 05, 2009The Sarbanes-Oxley Act & the Culture of Bribery: Expanding the Scope of Private Whistleblower Suits to Overseas Employees, by Matt A Vega, Faulkner University, Thomas Goode Jones School of Law, was recently posted on SSRN. Here is the abstract: This....
SEC Blew Chance to Expose Madoff's Fraud in 2004
Posted on July 02, 2009Fascinating article in today's Washington Post: Zachary Goldfarb reports that in 2004 an SEC staff attorney in Compliance, Inspections and Examinations (who previously worked at the American Stock Exchange and understood complicated trading strategies) figured out that there was something...
SEC Proposes Revisions to Proxy Disclosures on Compensation and Corporate Governance
Posted on July 01, 2009The SEC proposed a set of rule revisions intended to improve the disclosure provided to shareholders of public companies regarding compensation and corporate governance matters in proxy and information statements. They include information about: The relationship of a company's overall...
SEC Votes to Eliminate Broker Discretionary Voting for Uncontested Directors' Elections
Posted on July 01, 2009The SEC voted to approve an NYSE proposal that would eliminate broker discretionary voting for all elections of directors, whether contested or not. Currently, NYSE Rule 452 and corresponding Listed Company Manual Section 401.08 permit brokers to vote on behalf...
SEC Charges Former Beazer Homes Accounting Officer with Multi-Year Fraud
Posted on July 01, 2009The SEC filed a civil complaint against Michael T. Rand, the former chief accounting officer of Atlanta-based home builder Beazer Homes, USA, Inc., alleging that he conducted a multi-year fraudulent earnings management scheme and misled Beazer?s outside auditors and internal...
SEC Proposes Shareholder Approval of Exec Compensation Rule Applicable to TARP Recipients
Posted on July 01, 2009The SEC proposed amendments to the proxy rules to set forth certain requirements for U.S. registrants subject to Section 111(e) of the Emergency Economic Stabilization Act of 2008, which requires companies that have received financial assistance under the Troubled Asset...
FINRA Announces Initiatives Involving Municipal Securities
Posted on June 30, 2009Concerns have been expressed that municipal securities would be the next big headline fraud, as retail investors engage in the perennial search for safety with higher returns than CDs. Today FINRA announced initiatives to survey retail sales practices in the...
SEC Brings Action Alleging Sales of Fraudulent and Unsuitable Variable Annuities Through Free-Lunch Seminars
Posted on June 30, 2009The SEC today instituted an enforcement action against Prime Capital Services (PCS), a Poughkeepsie, N.Y.-based firm, and several representatives and supervisors for their alleged roles in fraudulent and unsuitable sales of variable annuities to senior citizens who were lured through...
Merkin's Art Collection to be Sold and Funds Placed in Escrow Pending Resolution of New York AG's Suit
Posted on June 30, 2009STATEMENT FROM ATTORNEY GENERAL ANDREW CUOMO ON THE SALE OF J. EZRA MERKIN'S ART COLLECTION: "Earlier this morning in New York State Supreme Court, my Office submitted a stipulation and order regarding the impending sale of J. Ezra Merkin's art...
FINRA Fines Firm and Former Broker for Improper Communications with Interdealer Brokerage Firms
Posted on June 30, 2009FINRA announced that it has fined ICAP Corporates LLC, of Jersey City, $2.8 million and sanctioned a former broker for numerous improper communications with other interdealer brokerage firms about customers' proposed brokerage rate reductions in the wholesale credit default swap...
FINRA Files Proposed Changes to Arbitration Code
Posted on June 29, 2009FINRA has filed with the SEC a proposed rule change to amend Rules 12100(r), 12506(a), and 12902(a) of the Code of Arbitration Procedure for Customer Disputes (?Customer Code?) and Rule 13100(r) of the Code of Arbitration Procedure for Industry Disputes...
Supreme Court Upholds Power of State Banking Regulators to Enforce State Law
Posted on June 29, 2009In an important case for state regulators, the Supreme Court held (5-4), in Cuomo v.Clearing House, that the federal Comptroller of the Currency?s regulation under the National Bank Act purporting to pre-empt state law enforcement is not a reasonable interpretation...
Madoff Sentenced to 150 Years
Posted on June 29, 2009Federal District Court Judge Denny Chin threw the book at Bernie Madoff today, imposing the maximum sentence of 150 years, exactly what the prosecutors asked for and what Madoff's defense attorney called as "defying reason" (he suggested 12 years). The...
Reiss on Fannie & Freddie
Posted on June 28, 2009Coming Out of Conservatorship: Developing an Exit Strategy for Fannie and Freddie, by David J. Reiss, Brooklyn Law School, was recently posted on SSRN. Here is the abstract: This brief article reviews the various policies that the Obama Administration can...
Schwartz on Investment Management Regulation
Posted on June 28, 2009Reconceptualizing Investment Management Regulation, by Jeff Schwartz, California Western School of Law, was recently posted on SSRN. Here is the abstract: This Article looks at mutual funds, hedge funds, and similar financial instruments as making up a single market -...
Simkovic on Open Market Stock Repurchases
Posted on June 28, 2009The Effect of Enhanced Disclosure on Open Market Stock Repurchases, by Michael Simkovic, Harvard Law School - John M. Olin Center for Law and Economics, was recently posted on SSRN. Here is the abstract: Publicly traded companies distribute cash to...
SEC Concludes Suprema Round-Tripping Charges
Posted on June 25, 2009The SEC announced that on June 3, 2009, the United States District Court for the District of New Jersey entered Final Judgments against Mark Cocchiola, former CEO, president, and chairman of the board of directors of New Jersey-based Suprema Specialties,...
FINRA Officer Testifies on Financial Literacy Initiatives
Posted on June 25, 2009John M. Gannon, Senior Vice President, Office of Investor Education, FINRA, testified today on improving financial literacy before the Subcommittee on Financial Institutions and Consumer Credit, Committee on Financial Services, U.S. House of Representatives.
FINRA Fines Wachovia $1.4 Million for Prospectus Delivery Failures
Posted on June 25, 2009FINRA announced today that it fined Wachovia Securities, LLC $1.4 million for its failure to deliver prospectuses and product descriptions to customers who purchased various investment products from July 2003 through December 2004 and for related supervisory failures...
SEC Settles Fraud Charges Against Former DVI Officers
Posted on June 25, 2009The SEC announced that it settled a civil action in the United States District Court for the Eastern District of Pennsylvania against Steven R. Garfinkel (Garfinkel) and Michael O?Hanlon (O?Hanlon) for their participation in a financial fraud that caused the...
SEC Proposes Changes to Money Market Funds
Posted on June 24, 2009The SEC today voted unanimously to propose rule amendments designed to significantly strengthen the regulatory framework for money market funds to increase their resilience to economic stresses and reduce the risks of runs on the funds. The SEC is seeking...
SEC Will Consider Discretionary Voting by Brokers at July 1 Meeting
Posted on June 24, 2009The SEC has several important issues on its July 1 meeting agenda: Item 1: The Commission will consider whether to propose amendments to the proxy rules under the Securities Exchange Act of 1934 to set forth requirements for U.S. registrants...
Money Market Fund Reform on June 24 SEC Agenda
Posted on June 23, 2009SEC's Open Meeting Agenda for June 24, 2009 Money Market Fund Reform Office: Division of Investment Management The Commission will consider whether to propose amendments to rule 2a-7 and other rules under the Investment Company Act of 1940 governing the...
Madoff Asks Court for Leniency in Sentencing
Posted on June 23, 2009Bernard Madoff, in a letter from his lawyer to the court, asks for leniency in sentencing, as little as twelve years. His lawyer stated that his estimated life expectancy is 13 years, and so twelve years would be close to...
SEC & CFTC Divide Up Regulation over Derivatives
Posted on June 23, 2009The Washington Post reports that the SEC and CFTC have reached agreement on the division of regulation over derivatives, with one exception. The SEC would regulate derivatives linked to securities, the CFTC would regulate all others, and the agencies are...
SEC Commissioner Paredes Speaks on Shareholder Access
Posted on June 23, 2009SEC Commissioner Troy A. Paredes spoke at the Conference on "Shareholder Rights, the 2009 Proxy Season, and the Impact of Shareholder Activism" sponsored by the Center for Capital Markets Competitiveness, U.S. Chamber of Commerce, in Washington, D.C. on June 23,...
SEC Obtains Emergency Asset Freeze Against Broker Charged with Attempting to Move Assets Offshore
Posted on June 22, 2009On June 17, 2009, a federal district court in Manhattan granted the SEC?s application for an emergency asset freeze against Guillermo David Clamens, FTC Capital Markets, Inc., a registered broker-dealer he controls, (?FTC?), and FTC Emerging Markets, Inc...
SEC Charges Madoff Solicitors and Feeder with Fraud
Posted on June 22, 2009The SEC charged a New York-based broker-dealer and four individuals with securities fraud, alleging that they collectively raised billions of dollars from investors for Bernard L. Madoff's Ponzi scheme. In a complaint filed in U.S. District Court for the Southern...
SEC Announces Victory in Case Involving Trading in T-Bills
Posted on June 22, 2009The SEC announced today that on June 22, 2009, a federal jury in Boston, Massachusetts, returned a verdict in its favor against Steven E. Nothern, a former Senior Vice President and manager of seven fixed income mutual funds for Massachusetts...
Schapiro Testifies before Senate on OTC Derivatives
Posted on June 22, 2009Chairman Mary L. Schapiro, U.S. Securities and Exchange Commission, presented Testimony Concerning Regulation of Over-The-Counter Derivatives Before the Subcommittee on Securities, Insurance, and Investment, Committee on Banking, Housing and Urban Affairs, United States Senate, on June 22, 2009.
Former American Italian Pasta Company Chairman Settles SEC Charges
Posted on June 22, 2009The SEC settled charges against Horst W. Schroeder, former chairman of the board of directors of Kansas-City based American Italian Pasta Company ("AIPC") that he signed SEC filings that he should have known contained material misstatements. According to the Commission's...
SEC & Ram Capital Resources Settle Unregistered Broker Dealer Charges
Posted on June 22, 2009On June 19, the SEC instituted a settled administrative proceeding charging Ram Capital Resources, LLC (Ram) and its two principals - Michael E. Fein and Stephen E. Saltzstein - with willfully violating Section 15(a) of the Securities Exchange Act of...
Orcutt on 404 Certification for Smaller Reporting Companies
Posted on June 21, 2009The Case Against Exempting Smaller Reporting Companies from Sarbanes-Oxley Section 404: Why Market-Based Solutions are Likely to Harm Ordinary Investors, by John L. Orcutt, Franklin Pierce Law Center, was recently posted on SSRN. Here is the abstract: Section 404 is...
Stanford & Antiguan Regulator Charged with Fraud
Posted on June 19, 2009Last February the SEC charged that R. Allen Stanford ran a $7 billion Ponzi scheme through two entities, Stanford International Bank and Stanford Financial Group. Today Stanford was arrested, and federal prosecutors filed federal fraud and obstruction charges against Stanford,...
SEC Files Amicus Brief in Mutual Fund Case
Posted on June 18, 2009The SEC filed an amicus brief in Jones v. Harris Associates in favor of the petitioners. The case, which will be argued next term before the Supreme Court, addresses the appropriate test for determining the fees investment advisors charge mutual...
Obama's No FDR
Posted on June 18, 2009Needless to say, there have been many news articles on the Obama Financial Plan, with various assessments of its merits. I commend to readers Joe Nocera's article on the front page of today's New York Times, because he says what...
Scrushy Ordered to Pay $2.8 Billion to HealthSouth
Posted on June 18, 2009An Alabama state court judge found that Richard Scrushy, ex-CEO of HealthSouth Corp., has to pay $2.8 billion in a state action brought by shareholders who sued alleging accounting fraud, unethical dealings and sweetheart deals. Scrushy was acquitted of federal...
Ulticom and Former Executive Settle Backdating Charges with SEC
Posted on June 18, 2009The SEC today filed settled civil charges against Ulticom, Inc. and a former executive, Lisa M. Roberts, for two separate fraudulent schemes, involving improper options backdating practices and certain improper accounting practices. The Commission's Complaint against Ulticom alleges the misconduct...
Comverse Technology Settles Backdating, Accounting Charges with SEC
Posted on June 18, 2009The SEC today filed a settled civil action in the United States District Court for the Eastern District of New York against Comverse Technology, Inc. ("Comverse") alleging that it engaged in two separate fraudulent schemes, during the course of more....
NYSE Euronext & Depository Trust Create Joint Venture for Clearing U.S. Fixed Income Derivatives
Posted on June 18, 2009NYSE Euronext and The Depository Trust & Clearing Corporation today agreed to create a joint venture for clearing U.S. fixed income derivatives. The new clearing house, New York Portfolio Clearing , ?NYPC?, will combine the capabilities of NYSE Euronext?s U...
Treasury Secretary Testifies in Senate on Financial Reform
Posted on June 18, 2009Treasury Secretary Tim Geithner testified today before the U.S. Senate Banking Committee on the Administration's Financial Regulatory Reform. Here is his Opening Statement ? As Prepared for Delivery.
SEC-DOL Hold Hearing on Target Date Funds
Posted on June 18, 2009SEC-DOL held its joint Hearing on Target Date Funds today. Here is the opening statement from Chairman Schapiro.
Former Enron Broadband CEO Settles Insider Trading Charges
Posted on June 18, 2009Enron never seems to go away -- the SEC announced that, on June 15, 2009, the U.S. District Court in Houston entered a final judgment in the Commission's pending civil action against Joseph Hirko, former Chairman and Chief Executive Officer...
Administration Releases Plan to Reform Financial Regulation Today
Posted on June 17, 2009President Obama willl announce the administration's plan to reform financial regulation. Here are some previews from major newspapers: WSJ, Draft Details New Rules for Markets NYTimes, Obama Sought to Enlist a Wide Consensus on Finance Rules WPost, Obama Blueprint Deepens...
SEC Charges Former Quest CEO & CFO with Stealing Corporate Funds
Posted on June 17, 2009On June 17, 2009, the SEC charged two former Quest officers with securities fraud and other violations in connection with a scheme in which they misappropriated millions of dollars from Quest Resource Corporation, Quest Energy Partners, L.P. and their affiliates...
FINRA Fines Two Firms for Stock Loan Improprieties
Posted on June 17, 2009FINRA announced that as part of its in-depth investigation of stock loan practices in the industry, it has imposed a fine of $1 million against Raymond James & Associates, Inc. of St. Petersburg, FL, and a fine of $400,000 against...
First Look at the Administration's Financial Regulatory Reform
Posted on June 17, 2009The Administration has released its Download Final financial reform plan061709, Preliminarily, it confirms what the news reports have stated -- that the Plan is the result of extensive discussions among various constituencies. As a result, it has something for everyone...
SEC Charges Convicted Felon with Running a Ponzi Scheme
Posted on June 16, 2009I frankly have become bored with the SEC's recent proliferation of enforcement actions against ponzi schemes, but here is an interesting one: The SEC announced that on June 15, 2009, it filed an emergency civil action in the United States...
Law Professors File Brief in Mutual Fund Fees Supreme Court Case
Posted on June 16, 2009William A. Birdthistle (Chicago-Kent College of Law) has posted on SSRN the Supreme Court Amicus Merits Brief of Law Professors in Support of Petitioners in Jones v. Harris Associates, No. 08-586, filed with the U.S. Supreme Court. William is the...
FINRA Announces Investor Education Initiatives
Posted on June 15, 2009FINRA announced today new initiatives aimed at protecting and educating investors, including a national advertising campaign and a 60-minute video, "Tricks of the Trade: Outsmarting Investment Fraud," as well as grassroots campaigns in Colorado, Florida, North Carolina, Vermont and Washington...
PIABA Submits Petition to SEC to Eliminate Requirement of Industry Arbitrator in Customer Disputes
Posted on June 15, 2009The Public Investors Arbitration Bar Association ("PIABA") submitted to the SEC, pursuant to SEC Rule of Practice 192A, a rule change petition to eliminate the requirement that an arbitrator affiliated with the securities industry sit on all customer cases in...
Geithner & Summers Outline Financial Reform
Posted on June 15, 2009In today's Washington Post, Timothy Geithner and Lawrence Summers offer a preview of the financial reform package that President Obama is expected to outline on Wednesday. WPost, A New Financial Foundation. They outline five principles, including: [O]ur current regulatory regime...
Cicero on Stock Option Exercise Strategies
Posted on June 14, 2009The Manipulation of Executive Stock Option Exercise Strategies: Information Timing and Backdating, by David C. Cicero, University of Delaware - Lerner College of Business and Economics, was recently posted on SSRN. Here is the abstract: I identify three option exercise...
Reiss on Ratings Failure
Posted on June 14, 2009Ratings Failure: The Need for a Consumer Protection Agenda in Rating Agency Regulation, by David J. Reiss, Brooklyn Law School, was recently posted on SSRN. Here is the abstract: As the credit crisis unfolds, rating agencies have been properly identified...
SEC v. Bear Stearns & Co.
Posted on June 11, 2009I am pleased to introduce Professor Jill Gross (Pace) as an occasional guest blogger. Today Jill analyzes SEC v Bear Stearns & Co. (S.D.N.Y. June 10, 2009), the final installment in the Global Research Analyst Settlement: Yesterday, in the SEC...
SEC Publishes Proposed Rules on Shareholder Nominations
Posted on June 11, 2009The SEC posted on its website the proposed rules on Facilitating Shareholder Nominations. According to the release, the SEC is proposing changes to the federal proxy rules to remove impediments to the exercise of shareholders? rights to nominate and elect...
Riverstone Settles Pay-to-Play Charges with New York AG
Posted on June 11, 2009New York Attorney General Andrew M. Cuomo today announced an agreement with private equity firm Riverstone Holdings LLC (?Riverstone?) to reform the public pension fund investment system and to resolve Riverstone?s role in Cuomo?s investigation of corruption involving the New...
SEC Charges Husband of Former Merrill Employee and Two Others with Insider Trading
Posted on June 10, 2009The SEC charged three Canadian citizens, Phillip Macdonald, Martin Gollan, and Michael Goodman, with insider tipping and trading in the securities of several companies ahead of public announcements of business combinations. According to the SEC, between January and June 2005,...
SEC Will Review Compensation Disclosure Again
Posted on June 10, 2009SEC Chairman Schapiro announced that the agency is considering proposals for additional disclosure regarding executive compensation: [T]he SEC is actively considering a package of new proxy disclosure rules that will provide further sunshine on compensation decisions...
SEC Settles Fraud Charges Against New York Adviser
Posted on June 10, 2009The SEC settled charges against Matthew D. Weitzman, an investment adviser who lives in Armonk, N.Y., for allegedly orchestrating a scheme in which he stole more than $6 million in investor funds for his own personal use, in some instances...
Reforms, Past and Present
Posted on June 09, 2009Two interesting articles on regulatory reform, present and past, in today's Wall St. Journal: 1. An article expands on the rumor I reported on yesterday, that the Obama administration is paring down its reform proposals and will not propose a...
SEC Charges Wyoming Company with Oil & Gas Fraudulent Offerings
Posted on June 09, 2009The SEC filed charges against Berkshire Resources, L.L.C. ("Berkshire"), a Wyoming company purportedly involved in oil and gas exploration, its principals, Jason T. Rose and David G. Rose, the six companies through which Berkshire carried out a securities offering -...
SEC Charges Swiss National with Insider Trading in connection with 2006 GlaxoSmithKline Merger
Posted on June 09, 2009The SEC filed charges against Lorenz Kohler (Kohler), a resident of Mels, Switzerland, and Swiss Real Estate International Holding AG (Swiss Real Estate) alleging that they engaged in insider trading in advance of the October 9, 2006 public announcement of...
SEC Files Charges Alleging Ponzi Scheme Aimed at Korean Americans
Posted on June 09, 2009And still another ponzi scheme -- this one operating out of California and directed at Korean-Americans: The SEC charged two California men and two companies they control for conducting an $80 million Ponzi scheme that targeted Korean-American investors with false...
Madoff Investors Dispute SIPC Trustee's Calculation of Damages
Posted on June 08, 2009Lawyers for some victims of the Madoff ponzi scheme are arguing that the SIPC Trustee should recalculate investors' losses to increase the investors' recovery, according to the New York Times. The Trustee is using the conventional method of calculating damages...
SEC & Massachusetts Settle Charges That Evergreen Overstated Value of Fund
Posted on June 08, 2009The SECC settled charges that Boston-based Evergreen Investment Management Company LLC and an affiliate overstated the value of a mutual fund that invested primarily in mortgage-backed securities, and then only selectively told shareholders about the fund?s valuation problems...
Obama Won't Propose Merger of SEC & CFTC, Says SIFMA
Posted on June 08, 2009SIFMA, in its daily news alert, says that the Obama administration has dropped the idea of proposing a merger of the SEC and CFTC. If true, this signals the importance of politics in any reform proposal. The merger of the...
SEC Charges Warrior Energy Director with Tipping Information about Merger
Posted on June 08, 2009On June 8, 2009, the SEC filed a Complaint for Injunctive and Other Relief ("Complaint") in the United States District Court for the Western District of Louisiana against Robert L. Hollier ("Hollier") and Wayne A. Dupuis ("Dupuis"). This matter involves...
Birdthistle on Mutual Fund Jurisprudence
Posted on June 07, 2009Investment Indiscipline: A Behavioral Approach to Mutual Fund Jurisprudence, by William A. Birdthistle, Chicago-Kent College of Law, was recently posted on SSRN. Here is the abstract: Next Term, in Jones v. Harris, the Supreme Court will be called upon to...
Boehmer & Al. on 2008 Short-Selling Ban
Posted on June 07, 2009Shackling Short Sellers: The 2008 Shorting Ban, by Ekkehart Boehmer, University of Oregon - Charles H. Lundquist School of Business; Texas A&M University - Mays Business School, and Charles M. Jones, Columbia Business School, and Xiaoyan Zhang, Cornell University -...
Geffen on Securities Act Claims Against Mutual Funds
Posted on June 05, 2009A Shaky Future for Securities Act Claims Against Mutual Funds, by David M. Geffen, Dechert LLP, was recently posted on SSRN. Here is the abstract: The article considers the liability of mutual fund issuers under Sections 11(a) and 12(a)(2) of...
Hill on SEC Discipline of Litigation Attorneys
Posted on June 05, 2009Divide and Conquer: SEC Discipline of Litigation Attorneys, by Julie Andersen Hill, University of Houston Law Center, was recently posted on SSRN. Here is the abstract: The Securities and Exchange Commission (?SEC?) can investigate and discipline attorneys for ?unethical or...
Three Broker Firms Settle FINRA Charges of Inadequate AML Compliance Programs
Posted on June 05, 2009FINRA announced that it fined three broker-dealers ? J.P. Turner & Co., of Atlanta, Park Financial Group, Inc., of Maitland, FL, and Legent Clearing, LLC, of Omaha ? for failing to implement reasonable anti-money laundering (AML) compliance programs, including the...
FINRA Seeks SEC Approval to Make Pilot Cease & Desist Program Permanent
Posted on June 05, 2009FINRA filed with the SEC a proposed rule change to adopt on a permanent basis the temporary and permanent cease and desist authority pilot program without any substantive changes to the terms of the existing program. In May 2003, the...
SEC Charges Former Employee of Investor Relations Firm with Insider Trading
Posted on June 05, 2009The SEC charged Zachary Bryant, a former account executive at the Los Angeles office of Lippert Heilshorn & Associates, Inc., an investor relations firm, for repeatedly misappropriating confidential information from firm clients and tipping his current employer and former colleague,...
SEC Charges Former Countrywide Financial CEO with Fraud
Posted on June 05, 2009On June 4, 2009, the SEC announced the filing of securities fraud charges against former Countrywide Financial CEO Angelo Mozilo, former chief operating officer and president David Sambol, and former chief financial officer Eric Sieracki. They are charged with deliberately...
Focus on Mary Schapiro
Posted on June 04, 2009Jeffrey Goldfarb of the Washington Post continues his examination of the SEC and focuses on the actions of SEC Chairman Mary Schapiro to date. WPost, SEC Chief Strives To Rebuild Regulator.
GAO Releases Report on Regulation SHO
Posted on June 03, 2009The GAO today released a report on naked short selling: REGULATION SHO Recent Actions Appear to Have Initially Reduced Failures to Deliver, but More Industry Guidance Is Needed. The GAO explains why it did this study: The Securities and Exchange...
SEC Creates Investor Advisory Committee
Posted on June 03, 2009SEC Chairman Mary Schapiro today announced the formation of an Investor Advisory Committee to give investors a greater voice in the Commission's work. SEC Commissioner Luis A. Aguilar will serve as the Commission's primary sponsor of the Committee. The Investor...
BofA, RBC & Deutsche Bank Finalize ARS Settlements with SEC & New York
Posted on June 03, 2009The SEC today announced finalized settlements with Bank of America, RBC Capital Markets, and Deutsche Bank to resolve SEC charges that the firms misled investors regarding the liquidity risks associated with auction rate securities (ARS) that they underwrote, marketed, or...
Schapiro Testifies Before Senate
Posted on June 02, 2009SEC Chairman Schapiro testified today before the Senate Subcommittee on Financial Services and General Government on the Commission's role in helping to address the financial crisis and reforms to improve investor protection and restore confidence in our markets...
SEC's Inspector General Releases Semi-Annual Report on SEC Performance
Posted on June 02, 2009The SEC's Office of Inspector General released its semi-annual report to Congress, covering the period from Oct. 1, 2008 -- Mar. 31, 2009. In it the OIG describes both its past and pending audits and investigations that look into a...
Cox Undermined Enforcement's Efforts, According to Washington Post
Posted on June 01, 2009The Washington Post has an in-depth story charging that former SEC Chairman Cox undermined the enforcement division's efforts to investigate corporate wrongdoing and punish those involved. It is based on 19 interviews with current and former SEC officials and focuses...
Glen on The Predictive Power of Form 4 Filings
Posted on May 30, 2009The Efficient Capital Market Hypothesis, Chaos Theory, and the Insider Filing Requirements of the Securities and Exchange Act of 1934: The Predictive Power of Form 4 Filings, by Patrick J. Glen, Department of Justice, Civil Division, Office of Immigration Litigation,...
Gerding on the Subprime Crisis
Posted on May 30, 2009The Subprime Crisis and the Link between Consumer Financial Protection and Systemic Risk, by Erik F. Gerding, University of New Mexico - School of Law, was recently posted on SSRN. Here is the abstract: This Article will appear in a...
Litvak on Cross-Listing Premia
Posted on May 30, 2009The Relationship Among U.S. Securities Laws, Cross-Listing Premia, and Trading Volumes, by Kate Litvak, University of Texas at Austin School of Law, was recently posted on SSRN. Here is the abstract: This paper studies the relationship among the U.S. securities...
Bebchuk & Spamann on Regulating Bankers' Pay
Posted on May 30, 2009Regulating Bankers? Pay, by Lucian A. Bebchuk, Harvard University - Harvard Law School; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI), and Holger Spamann, Harvard University - Harvard Law School, was recently posted on SSRN...
SEC Settles FCPA Charges Against Former ACL Technologies President
Posted on May 30, 2009On May 29, 2009, the SEC settled charges against Thomas Wurzel, the former President of ACL Technologies, Inc. (ACL), formerly a subsidiary of United Industrial Corporation (UIC), which provided aerospace and defense systems. The Commission?s complaint alleges that Wurzel authorized...
SEC Settles Two Proceedings Involving Undisclosed Marketing Agreements
Posted on May 30, 2009The SEC settled two administrative proceeding involving an undisclosed marketing arrangement between BISYS Fund Services, a mutual fund administrator, and AmSouth Bank (AmSouth), a mutual fund adviser. In one, J. David Huber, former BISYS Fund Services, Inc...
Connecticut Plans to Regulate Hedge Fund Managers
Posted on May 30, 2009Tired of waiting for the federal government to regulate hedge funds, Connecticut, home to many hedge funds, may enact legislation requiring fund managers that have not registered with the SEC as investment advisers to disclose material conflicts of interest...
NASAA Supports Hedge Fund Adviser Registration Act
Posted on May 28, 2009NASAA today endorsed proposed bipartisan legislation that would require hedge fund advisers to register with the Securities and Exchange Commission under the Investment Advisers Act of 1940. The Hedge Fund Adviser Registration Act of 2009 (H.R. 711) is sponsored by...
FINRA Brings Fraud Charges Against Brookstreet Securities Brokers for Sales of CMOs to Retail Investors
Posted on May 28, 2009FINRA today announced charges against six brokers formerly associated with Brookstreet Securities Corporation, a now-defunct nationwide brokerage firm based in Irvine, CA, including fraud and making unsuitable recommendations to retail customers in the sale of collateralized mortgage obligations (CMOs)...
Committee on Capital Markets Regulation Sets Forth Recommendations for Regulatory Reform
Posted on May 28, 2009On May 26, the Committee on Capital Markets Regulation released The Global Financial Crisis: A Plan for Regulatory Reform. The complete report, as well as the Executive Summary, is available at its website. Here is an excerpt from the Executive...
SEC Charges Pegasus Wireless Officers with Pump & Dump Scheme
Posted on May 28, 2009The SEC filed securities fraud charges against Pegasus Wireless Corporation, former CEO Jasper Knabb, and CFO Stephen Durland alleging they defrauded investors by illegally selling millions of Pegasus shares they secretly controlled and lying about the transactions in company filings...
SEC Settles Accounting Charges Against Three Former Cardinal Health Officers
Posted on May 27, 2009The SEC settled charges against three former finance executives of Cardinal Health, Inc. (Cardinal), a pharmaceutical distribution company based in Dublin, Ohio, that they engaged in a fraudulent revenue and earnings management scheme. Cardinal?s former chief financial officer, Richard J...
Judge Sotomayor's Securities Law Opinions
Posted on May 27, 2009My RA has found eleven Second Circuit opinions authored by Judge Sotomayor dealing with securities issues. Here is the list of the cases and a very brief description of the issue: Securities Investor Protection Corp v. BDO Seidman, LLP, 222...
Investment Adviser Censured for Failure to Provide Fund Directors with Information in Contract Renewal Process
Posted on May 27, 2009On May 27, the SEC settled charges against investment adviser New York Life Investment Management LLC (NYLIM) for failing to provide the Board of the Mainstay Equity Index Fund (Equity Index Fund), a mutual fund NYLIM advises, with information during...
SEC Suspends Former Kmart VP from Practicing before SEC
Posted on May 27, 2009On May 27, the SEC issued an Order under Rule 102(e) of the Commission's Rules of Practice against John T. McDonald, who was Vice President and Treasurer of Kmart Corporation prior to the company's bankruptcy, suspending him from appearing or...
Supreme Court Grants Cert in "Inquiry Notice" Statute of Limitations Case
Posted on May 26, 2009The Supreme Court accepted cert in a securities fraud action from the Third Circuit today, In re Merck & Co. Securities Deriv. & ERISA Litig., 543 F.3d 150 (3d Cir. 2008). In the action the plaintiffs charge that the drug...
CSK Auto Settles Accounting Fraud Charges
Posted on May 26, 2009The SEC today instituted settled cease-and-desist proceedings against CSK Auto Corporation (CSK), an auto parts retailer headquartered in Phoenix, Arizona, finding that the company violated the anti-fraud, reporting, books and records, and internal control provisions of the federal securities laws...
SEC Alleges Foreign Currency Software Program Fraud
Posted on May 26, 2009On May 21, 2009, the SEC filed a civil action against PrivateFX Global One Ltd., SA, 36 Holdings, Ltd., Robert D. Watson, and Daniel J. Petroski alleging their involvement in a multi-million dollar foreign-currency software program fraud. The U.S. District...
Romano on Sarbanes-Oxley
Posted on May 24, 2009Does the Sarbanes-Oxley Act Have a Future? by Roberta Romano, Yale Law School; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI), was recently posted on SSRN. Here is the abstract: Although the enactment of the Sarbanes-Oxley Act...
Fotak et alia on Naked Short Selling
Posted on May 24, 2009Naked Short Selling: The Emperor?s New Clothes?, by Veljko Fotak, University of Oklahoma - Division of Finance, Vikas Raman, University of Oklahoma - Division of Finance, and Pradeep K. Yadav, University of Oklahoma - Division of Finance, was recently posted...
2008 SEC Government-Business Forum on Small Business Capital Formation Available
Posted on May 22, 2009The SEC posted on its website its 2008 Annual SEC Government-Business Forum on Small Business Capital Formation.
SEC & Labor Dept. Solicit Requests to Participat in Target Date Funds Hearing
Posted on May 22, 2009The SEC and the Department of Labor announced today that they are accepting requests to participate in a joint hearing on June 18 examining target date funds. Target date funds and other similar investment options are investment products that allocate...
SEC Takes Steps to Strengthen Its Internal Compliance Program
Posted on May 22, 2009Following the announcement that the federal prosecutor was looking into allegations that SEC attorneys may have engaged in impermissible insider trading, SEC Chairman Mary Schapiro outlined a series of measures the agency is taking to strengthen its internal compliance program...
Schapiro Responds to Proposal for New Consumer Agency
Posted on May 21, 2009As expected, the SEC will not easily give up any of its regulatory authority. SEC Chairman Schapiro responded to reports that the Obama administration was considering a new regulatory commission that would focus on financial products to consumers, including credit...
SEC Official Testifies on Municipal Finance Reform
Posted on May 21, 2009Martha Mahan Haines, Assistant Director, Division of Trading and Markets, SEC, gave Testimony Concerning Legislative Proposals to Improve the Efficiency and Oversight of Municipal Finance before the U.S. House of Representatives Committee on Financial Services on May 21, 2009.
SEC Trading & Markets Division Co-Acting Director Speaks on Market Structure
Posted on May 21, 2009James A. Brigagliano, Co-Acting Director, Division of Trading and Markets, SEC, gave the Keynote Address to the 2009 SIFMA Market Structure Conference on May 20.
SEC Charges Brokers with Unauthorized Trading in Customers' Accounts
Posted on May 21, 2009On May 19, 2009, the SEC filed a complaint alleging that Guillermo David Clamens, FTC Capital Markets, Inc., a registered broker-dealer he controls, ("FTC"), and Lina Lopez, an FTC employee, engaged in a fraudulent scheme to engage in tens of...
SEC Charges Four in Delaware with Pump and Dump Scheme
Posted on May 21, 2009The SEC filed a complaint in the United States District Court for the District of Delaware against Pawel P. Dynkowski, Matthew W. Brown, Jacob Canceli, Gerard J. D?Amaro, Joseph Mangiapane Jr., Nathan M. Michaud, Marc J. Riviello and Adam S....
NASAA Supports Arbitration Fairness Act of 2009
Posted on May 21, 2009NASAA today announced its full support of the Arbitration Fairness Act of 2009 (S. 931, H.R. 1020), which seeks to protect the right of Americans to have their day in court by making pre-dispute agreements requiring arbitration for any employment,...
GAO Report on Sovereign Wealth Funds
Posted on May 20, 2009The GAO released a report on SOVEREIGN WEALTH FUNDS: Laws Limiting Foreign Investment Affect Certain U.S. Assets and Agencies Have Various Enforcement Processes. Here is the summary: Foreign investors in U.S. companies or assets include individuals, companies, and government entities...
SEC Proposes Rules to Permit Shareholders to Nominate Directors
Posted on May 20, 2009Once again the SEC is proposing changes to the proxy rules that will allow shareholders access to the management's proxy process to nominate directors. Chairman Schapiro stated in the open meeting: I believe that the most effective means of providing...
Obama Considers Consumer Protection Agency for Financial Products
Posted on May 20, 2009The Washington Post reports that the Obama administration is seriously considering the creation of a new federal agency that would have broad authority to protect consumers who use financial products, including mortgages, credit cards and mutual funds...
SEC Publishes Proposed Custody Rules for Investment Advisers
Posted on May 20, 2009The SEC posted on its website its proposed rules relating to Custody of Funds or Securities of Clients by Investment Advisers under the Investment Advisers Act of 1940 and related forms. The amendments, among other things, would require registered investment...
SEC Votes for Proposed Rule on Shareholders' Nominations for Directors
Posted on May 20, 2009The SEC today voted (3-2 along party lines) to propose a comprehensive series of rule amendments to facilitate the rights of shareholders to nominate directors on corporate boards. From its release: Overview: The nation and the markets are experiencing one...
New York AG's Statement on Code of Conduct for Pension Fund Industry
Posted on May 19, 2009STATEMENT FROM ATTORNEY GENERAL ANDREW CUOMO ON COMPTROLLER THOMPSON'S DECISION TO URGE NYC PENSION FUNDS TO ADOPT REFORM CODE OF CONDUCT "I commend Comptroller Bill Thompson for his quick and decisive action in asking that the City pension funds adopt...
SEC Will Consider Shareholder Director Nominations at May 20 Open Meeting
Posted on May 19, 2009SEC Open Meeting Agenda for Wednesday, May 20, 2009 Item 1: Facilitating Shareholder Director Nominations Office: Division of Corporation Finance Staff: Brian Breheny, Lillian Brown, Tamara Brightwell, Eduardo Aleman The Commission will consider whether to propose changes to the federal...
Arizona Attorney Enjoined From Unregistered Stock Sales and Fraud
Posted on May 19, 2009Two federal district courts recently entered orders against David B. Stocker, an Arizona attorney. First, the United States District Court for the Northern District of Texas recently permanently enjoined David B. Stocker and Curtis-Case, Inc., a corporation that he controlled,...
SEC Charges Northern California Residents with Fraudulent Multi-Level Marketing Scheme
Posted on May 19, 2009On May 13, 2009, the SEC charged two Northern California residents and two of their companies, one of which is a purported savings and loan association, with securities fraud in connection with a multi-level marketing scheme. The SEC obtained an...
SEC and Monster Worldwide Settle Backdating Charges
Posted on May 18, 2009The SEC and Monster Worldwide, Inc. settled charges that Monsster engaged in a multi-year scheme to secretly backdate stock options granted to thousands of Monster officers, directors and employees. Monster agreed to pay a $2.5 million penalty to settle charges...
FINRA Expels Kirlin Securities For Manipulating its Parent's Stock Price
Posted on May 18, 2009FINRA's National Adjudicatory Council (NAC) has expelled Kirlin Securities of Syosset, NY, (a wholly owned subsidiary of Kirlin Holding Corporation, nka Zen Holdings Corp.) and barred two Kirlin officials ? Anthony Kirincic, the firms' co-CEO and largest shareholder, and Andrew...
Supreme Court Agrees to Hear Conrad Black's Appeal
Posted on May 18, 2009The U.S. Supreme Court has agreed to accept certiorari in the criminal conviction of Conrad Black, U.S. v. Black, 530 F.3d 596 (7th Cir. 2008). Question(s) Presented: (1) Does 18 U.S.C. § 1346 apply to conduct of private individual whose...
SEC and WellCare Health Plans Settle Fraud Charges
Posted on May 18, 2009The SEC and WellCare Health Plans, Inc. ("WellCare"), a managed care services company that administers federal government-sponsored health care programs, settled charges that the company committed securities fraud. According to the Commission's complaint, from at least November 2003 to October...
SEC Attorneys Investigated for Possible Inside Trading
Posted on May 16, 2009The SEC's reputation suffers another blow, as both the Wall St. Journal and the New York Times report that the U.S. Attorney in D.C. is investigating whether some SEC enforcement division attorneys violated the insider-trading laws. A report by the...
Former KB Home Officer Settles Backdating Charges
Posted on May 15, 2009The SEC and Gary A. Ray, the former vice president of human resources at KB Home, Inc., a Los Angeles-based homebuilder, settled options backdating charges. The SEC's complaint alleges that Ray used hindsight to pick advantageous grant dates for KB...
SEC Obtains Emergency Relief Against Two New Jersey Investment Firms
Posted on May 15, 2009On May 14, 2009, the SEC filed an emergency civil injunctive action in the United States District Court for the District of New Jersey charging two investment firms and their two owner-managers with securities fraud. The Commission alleged that Paul....
Administration Proposes Regulation of OTC Derivatives Market
Posted on May 14, 2009On March 13 2009 Treasury Secretary Geithner sent to Congress a proposal to regulate OTC Derivatives. The Objectives of Regulatory Reform of OTC Derivatives Markets, as set forth in that proposal, include: The Commodity Exchange Act (CEA) and the securities...
SEC Considers Proposal for Independent Custodian of Client Assets
Posted on May 14, 2009The SEC held an open meeting on May 14, 2009 to consider a recommendation from the Division of Investment Management that the Commission propose rules to strengthen the custody controls that apply to investment advisers. The proposal is in response...
Lo on Regulatory Reform
Posted on May 14, 2009Regulatory Reform in the Wake of the Financial Crisis of 2007-2008, by Andrew W. Lo, MIT Sloan School of Management; National Bureau of Economic Research (NBER), was recently posted on SSRN. Here is the abstract: Financial crises are unavoidable when...
Wang on Insider Trading Damages
Posted on May 14, 2009Measuring Insider Trading Damages for a Private Plaintiff, by William K.S. Wang, University of California, Hastings College of the Law, was recently posted on SSRN. Here is the abstract: This article discusses various measures of the damages of a private...
Cunningham & Zaring on Financial Regulation
Posted on May 14, 2009The Three or Four Approaches to Financial Regulation: A Cautionary Analysis Against Exuberance in Crisis Response, by Lawrence A. Cunningham, George Washington University Law School, and David T. Zaring, University of Pennsylvania - Legal Studies Department, was recently posted on...
Booth on Securities Fraud Litigation
Posted on May 14, 2009Direct and Derivative Claims in Securities Fraud Litigation, by Richard A. Booth, Villanova University School of Law, was recently posted on SSRN. Here is the abstract: In the typical securities fraud class action under Rule 10b-5, the plaintiff class consists...
Wilmarth on Universal Banking
Posted on May 14, 2009The Dark Side of Universal Banking: Financial Conglomerates and the Origins of the Subprime Financial Crisis, by Arthur E. Wilmarth Jr., George Washington University Law School, was recently posted on SSRN. Here is the abstract: Since the subprime financial crisis...
SEC Proposes Rules Relating to Custody of Customers' Assets by Investment Advisers
Posted on May 14, 2009The SEC proposes rule amendments to substantially increase protections for investors who entrust their money to investment advisers. The SEC is seeking public comment on the proposed measures, which are intended to ensure that investment advisers who have ?custody? of...
Ingram Micro Settles Charges Related to McAfee Financial Fraud
Posted on May 12, 2009The SEC instituted settled cease-and-desist proceedings against Ingram Micro Inc. (Ingram Micro), a computer technology distribution company based in Santa Ana, California, finding that the company violated the books and records and internal controls provisions of the securities laws in...
Novo Nordisk Settles FCPA Charges
Posted on May 12, 2009The SEC settled Foreign Corrupt Practices Act books and records and internal controls charges against Novo Nordisk, a Danish company that specializes in the manufacture and development of pharmaceutical products and is a leading supplier of insulin worldwide...
SEC and Labor Dept. Announce Hearing on Target Date Funds
Posted on May 12, 2009The SEC and the U.S. Department of Labor will hold a joint one-day hearing on June 18 to explore issues relating to target date or lifecycle funds and other similar investment options. Details concerning the hearing will be announced by...
SEC Brings First Enforcement Action for Proxy Voting Rule Violations
Posted on May 12, 2009The SEC charged West Palm Beach, Fla.-based INTECH Investment Management LLC and its former chief operating officer David E. Hurley with violating the SEC's proxy voting rule for investment advisers by not sufficiently describing its proxy voting policies and procedures...
Participant in New York CRF Corruption Scheme Pleads Guilty
Posted on May 12, 2009New York's Attorney General Andrew M. Cuomo announced that Julio Ramirez, an unlicensed placement agent formerly associated with Wetherly Capital Group, has pled guilty to securities fraud under New York?s Martin Act in Cuomo?s ongoing investigation into corruption involving the...
FINRA Suspends Principal of RD Capital Group for Excessive Markups on STRIPs
Posted on May 12, 2009FINRA announced that it ordered Ramon Luis Dominguez, President of RD Capital Group in Puerto Rico, to pay restitution of $950,000 plus interest to three customers victimized when Dominguez and the firm charged undisclosed, excessive and fraudulent markups on the...
SEC's 2010 Budget Request Emphasizes Enforcement Efforts
Posted on May 07, 2009President Obama's 2010 budget would increase the SEC's funding by 6.8%, to $1.027 billion, and the CFTC's funding by 8.8%, to $161 million. WSJ, SEC, CFTC Would Get More Enforcement Resources. The SEC has posted on its website its FY...
FINRA Announces ARS Settlements with Four Firms
Posted on May 07, 2009FINRA announced today that it has entered into final settlements with four additional firms to settle charges relating to the sale of Auction Rate Securities (ARS) that became illiquid when auctions froze in February 2008. To date, FINRA has concluded...
GAO Testifies on Hedge Funds
Posted on May 07, 2009The GAO released testimony it presented before the Senate Subcommittee on Capital Markets on Hedge Funds: Overview of Regulatory Oversight, Counterparty Risks, and Investment Challenges GAO-09-677T, May 07, 2009. This testimony discusses: (1) federal regulators? oversight of hedge fund-related activities;...
SEC's Enforcement Director Testifies Before Senate Banking Subcommittee
Posted on May 07, 2009Robert Khuzami, the SEC's Director, Division of Enforcement made his first appearance before the U.S. Senate Banking, Housing, and Urban Affairs Subcommittee on Securities, Insurance, and Investment and presented Testimony Concerning Strengthening the SEC's Vital Enforcement Responsibilities...
SEC Will Consider Custody-Related Issues under IA Act on May 14
Posted on May 07, 2009SEC Open Meeting - Thursday, May 14, 2009 - 10:00 a.m. The subject matter of the Open Meeting will be: The Commission will consider custody-related matters, including whether to propose amendments to Rule 206(4)-2 under the Investment Advisers Act of...
Results of Stress Tests
Posted on May 07, 2009Here are the results of the stress tests: The Supervisory Capital Assessment Program:Overview of Results. Also: Statement by Chairman Ben S. Bernanke STATEMENT FROM TREASURY SECRETARY TIM GEITHNER REGARDING THE TREASURY CAPITAL ASSISTANCE PROGRAM AND THE SUPERVISORY CAPITAL ASSESSMENT PROGRAM
Paredes Speaks on Short Selling at Security Traders Association
Posted on May 06, 2009SEC Commissioner Troy Paredes spoke on short sales on May 6 at the Security Traders Association 13th Annual Washington Conference.
GAO Releases Report on SEC's Enforcement Division and Corporate Penalties Policies
Posted on May 06, 2009The GAO recently released a report entitled Greater Attention Needed to Enhance Communication and Utilization of Resources in the Division of Enforcement. As the report explains, The Securities and Exchange Commission?s (SEC) Division of Enforcement (Enforcement) plays a key role...
The Gossip about Madoff
Posted on May 06, 2009The June issue of Vanity Fair has an interview with Bernie Madoff's longtime secretary, detailing unflattering personal details about the Ponzi schemer. The magazine's website has a preview. Bernie Madoff's Secretary Spills His Secrets.
Treasury Will Release Banks' Stress Tests Thursday
Posted on May 06, 2009The stress tests on the leading banks will be released Thursday May 7 at 5 p.m., although the press is reporting many of the results; see WSJ, Stress Tests Separate Strong Banks From Weak; NYTimes, Bank of America Needs $33.9...
SEC Holds Round Table on Short-Selling
Posted on May 05, 2009Today is the SEC's Roundtable on Short Selling. Here are Chairman Mary L. Schapiro's written comments.
SEC Charges The Reserve Primary Fund with Fraud
Posted on May 05, 2009On May 5, 2009, the SEC filed a civil action in the United States District Court for the Southern District of New York charging the entities and individuals who operate The Reserve Primary Fund, including the Reserve Management Company, Inc....
SEC Charges Attorneys with Running a "Rule 144 Legal Opinion Mill"
Posted on May 05, 2009The SEC filed a complaint in the United States District Court for the Northern District of Georgia against Albert J. Rasch, Jr. ("Rasch") and Sandra B. Masino ("Masino") of Costa Mesa, California, Kathleen R. Novinger ("Novinger") of Cypress, California, and...
SEC Brings Insider Trading Charges Involving CDSs
Posted on May 05, 2009The SEC filed a civil action in the United States District Court for the Southern District of New York on May 5, 2009, alleging that Renato Negrin, a former portfolio manager at hedge fund investment adviser Millennium Partners, L.P., and...
FINRA Bars Former Citigroup Broker for Defrauding Nun
Posted on May 05, 2009FINRA announced today that it barred broker William Joseph Boyle from the securities industry for wrongfully converting and using funds from customer accounts and for failing to cooperate with FINRA investigators. Boyle's misconduct occurred both while he was working for...
Senior Investment Protection Act Introduced in Senate
Posted on May 04, 2009There was recently introduced in the Senate the Senior Investment Protection Act of 2009 (S. 906) that would provide grants to states to establish programs to combat misleading and fraudulent marketing techinques aimed at senior investors, including the use of...
Schapiro Addresses Mutual Fund Directors
Posted on May 04, 2009SEC Chair Mary Schapiro gave an Address at the Mutual Fund Directors Forum Ninth Annual Policy Conference: Critical Issues for Investment Company Directors, on May 4, 2009. Among the topics covered was target date mutual funds: However, target date funds...
Spindler on IPO Underpricing
Posted on May 03, 2009IPO Underpricing and Disclosure, by James C. Spindler, University of Southern California Law School, was recently posted on SSRN. Here is the abstract: Using a unique data set, I find that U.S. IPO prospectus disclosure dramatically affects the degree of...
Karmel on Voting Power
Posted on May 03, 2009Voting Power Without Responsibility or Risk - How Should Proxy Reform Address the Decoupling of Economic and Voting Rights?, by Roberta S. Karmel, Brooklyn Law School, was recently posted on SSRN. Here is the abstract: The regulation of proxy voting....
SEC Announces Short-Selling Roundtable Speakers
Posted on May 01, 2009The SEC announced the agenda and panelists for its May 5 roundtable to discuss short sale price tests and short sale circuit breakers: Panel One: Market Changes and Investor Confidence; Are short sale price tests or short sale circuit breakers...
Cuomo and Other States Form Task Force on Pension Fund Abuse
Posted on May 01, 2009New York Attorney General Andrew Cuomo announced the creation of a multi-state task force to explore pension fund abuse so that states can share information to prosecute wrongdoing and facilitate nationwide reform. His office also announced that it has issued...
SEC Charges Aldus Equity Partners in New York Pension Plan Fraud
Posted on April 30, 2009The SEC announced charges against Dallas-based Aldus Equity Partners, L.P. and one of its founding principals, Saul Meyer, in connection with a multi-million dollar kickback scheme involving New York's largest pension fund. According to the SEC, Meyer and Aldus participated...
SEC Announces an Industry & Markets Fellows Program
Posted on April 30, 2009The SEC today announced a new effort to identify and assess risks in the financial markets by attracting seasoned industry professionals to the agency's Office of Risk Assessment. The new Industry and Markets Fellows Program will help the agency expand...
SEC Charges Former Citigroup Investment Banker with Insider Trading Scheme
Posted on April 30, 2009On April 30, 2009, the SEC filed a civil action in the United States District Court for the Northern District of California against Maher Kara, his brother Michael Kara, and others. The Commission alleges that Maher Kara, a former Citigroup...
Call for Papers -- Law, Entrepreneurship & Economic Recovery
Posted on April 30, 2009CALL FOR PAPERS UMKC LAW REVIEW Fall 2009 Symposium Issue LAW, ENTREPRENEURSHIP & ECONOMIC RECOVERY The UMKC Law Review, published by the University of Missouri-Kansas City School of Law, is calling for papers by legal scholars addressing the potential for...
NASAA President Testifies on Life Settlement Fraud
Posted on April 29, 2009State securities regulators continue to see problems of fraud and abuse in the growing life settlement industry and outlined for Congress the need for strong regulation of these financial products by appropriate regulatory authorities, NASAA President and Colorado Securities Commissioner...
Ernst on Obama's Team of Bankers
Posted on April 29, 2009Dan Ernst has a great posting on the Legal History Blog on the legislative origins of the federal securities legislation and the brain power assembled by Felix Frankfurter to accomplish the task. He concludes: Analogizing across a historical divide like...
Court Enjoins Georgia Broker Charged with Defrauding Elderly Customer
Posted on April 29, 2009The SEC announced today that the federal district court for the Northern District of Georgia entered default judgment as to defendants Frederick J. Barton ("Barton"), Barton Asset Management, LLC ("Barton Asset Management"), and TwinSpan Capital Management, LLC ("TwinSpan") on April...
SEC Obtains Emergency Relief against Beverly Hills Hedge Fund Operator
Posted on April 29, 2009On April 29, 2009, the SEC obtained a court order halting a hedge fund fraud based in Beverly Hills, California. The SEC's complaint alleges that Bradley L. Ruderman ("Ruderman") raised at least $38 million from about twenty investors since at...
FINRA Fines Member for Failure to Protect Customer Information
Posted on April 28, 2009FINRA announced today that it has fined Centaurus Financial, Inc. (CFI), of Orange County, CA, $175,000 for its failure to protect certain confidential customer information. Centaurus was also ordered to provide notifications to affected customers and their brokers and to...
Cunningham on The New Federal Corporation Law
Posted on April 28, 2009The New Federal Corporation Law?, by Lawrence A. Cunningham, George Washington University Law School, was recently posted on SSRN. Here is the abstract: Could a preemptive federal incorporation law today assume the enabling character of traditional state corporation law, instead...
McTier & Wald on Causes of Securities Class Actions
Posted on April 28, 2009The Causes and Consequences of Securities Class Action Litigation, by Brian Carson McTier, University of Texas at San Antonio, and John K. Wald, University of Texas at San Antonio, was recently posted on SSRN. Here is the abstract: We test...
The Causes and Consequences of
Posted on April 28, 2009The Causes and Consequences of Securities Class Action Litigation, by Brian Carson McTier, University of Texas at San Antonio, and John K. Wald, University of Texas at San Antonio, was recently posted on SSRN. Here is the abstract: We test...
Call for Papers -- AALS Section on Securities Regulation
Posted on April 28, 2009Call for Papers AALS Section on Securities Regulation "Responding to the Financial Crisis: Change is in the Air" 2010 AALS Annual Meeting New Orleans, Louisiana The Executive Committee of the AALS Section on Securities Regulation invites you to submit a...
SEC Charges Former Officers of American Home Mortgage Investment with Accounting Fraud
Posted on April 28, 2009On April 28, 2009, the SEC filed a civil action in the United States District Court for the Southern District of New York against former officers at American Home Mortgage Investment Corp., Michael Strauss, Stephen Hozie and Robert Bernstein, charging...
Tulsa Attorney Settles Insider Trading Charges with SEC
Posted on April 28, 2009The SECfiled a civil action in the United States District Court for the Northern District of Oklahoma on April 28, 2009, alleging that Matthew J. Browne, a Tulsa, Oklahoma attorney, engaged in insider trading in securities of then Nasdaq-listed SemGroup...
NASAA President to Testify on Life Settlements
Posted on April 28, 2009NASAA President and Colorado Securities Commissioner Fred Joseph is scheduled to testify on April 29 before the U.S. Senate Special Committee on Aging in a hearing exploring the growing life settlement industry and its impact on seniors. The hearing, ?Betting...
SEC Obtains Emergency Relief Against Connecticut Hedge Fund
Posted on April 27, 2009On April 27, 2009, the SEC filed an emergency action in the United States District Court for the Western District of Texas to halt an on-going multi-million dollar fraud involving investments in a Stamford, Connecticut-based hedge fund and its affiliates...
SEC Obtains Freeze on Assets of Danny Pang
Posted on April 27, 2009The SEC obtained an emergency court order freezing the assets of Newport Beach, Calif.-based financier Danny Pang and his two companies for allegedly defrauding investors of hundreds of millions of dollars by misrepresenting investments in the life insurance policies of...
Two Defendants in Dick's Sporting Goods Insider Trading Case Settle with SEC
Posted on April 27, 2009On April 17, the U.S. District Court for the Western District of Pennsylvania entered Final Judgments against Joseph J. Queri, Jr.and Kyle D. Kaczowski in two separate district court cases. The Commission charged them, and fourteen other defendants, with insider...
FINRA Proposes Expansion of BrokerCheck
Posted on April 27, 2009FINRA is proposing a major expansion of its BrokerCheck service ? to make records of final regulatory actions against brokers permanently available to the public, regardless of whether they continue to be employed in the securities industry. Under current rules,...
Seton Hall Symposium Call for Papers
Posted on April 27, 2009SETON HALL LAW REVIEW Symposium October 30, 2009 Seton Hall Law School Newark, NJ Securities Regulation and the Global Economic Crisis: What Does the Future Hold? CALL FOR PAPERS The SETON HALL LAW REVIEW will be hosting a Symposium on...
ILEP's Conference on Recoveries for Victims of Securities Fraud
Posted on April 25, 2009I am participating in the 15th Institute of Law and Economic Policy (ILEP) conference in Scottsdale Arizona on "Recoveries for Victims of Securities Fraud." ILEP is a public policy research and educational foundation established to preserve, study and enhance access...
SEC Schedules Roundtable on Short Selling
Posted on April 25, 2009The SEC will hold a roundtable on May 5 to further discuss whether short sale price test restrictions or short sale circuit breakers should be adopted. The Commission voted unanimously on April 8 to propose two approaches to restrictions on...
Eighth Circuit Reviews Standard for Determining Mutual Fund Fees Excessive
Posted on April 25, 2009The 8th Circuit, in Gallus v. Ameriprise Financial (4/08/09) -- an excessive mutual fund fees case under Investment Company Act section 36(b), reversed the district court's grant of summary judgment for the defendant because it found that the lower court...
Fifth Circuit Issues Opinion on Loss Causation
Posted on April 25, 2009In Lormand v. US Unwired, Inc. (5th Cir. 4/09/09), the Fifth Circuit considered the issue of loss causation in partially affirming, partially reversing the district court's ruling on a MTD. Plaintiffs were able to establish loss causation as to alleged...
Fifth Circuit Affirms Rule 10b-5 Judgment Against Market-Timing Broker
Posted on April 25, 2009In SEC v. Gann (5th Cir. 4/17/09), the Fifth Circuit affirmed a district court's judgment that a broker that facilitated his customers' market-timing activities violated Rule 10b-5, although its affirmance seemed somewhat begrudging. In a seven-month period, the broker concluded...
Researchers Study CEOs' Annual Shareholders' Letters for Tone
Posted on April 25, 2009A press release from University of Nebraska: Study unlocks language of CEOs; provides 'heads-up' for auditors Honesty, attitude and behavior of CEOs, sometimes referred to as ?tone-at-the-top,? mean a lot to analysts and shareholders of any company, especially as firms...
SEC Plans to Approve NYSE Rule to End Broker Voting of Customers' Shares
Posted on April 23, 2009The Wall St. Journal reports that as early as next week the SEC will approve a NYSE Rule that will no longer permit brokers to exercise discretionary voting and vote customers' shares in uncontested elections. If true, this will be...
New York AG Releases Letter on BofA-Merrill Merger Investigation
Posted on April 23, 2009New York Attorney General Andrew Cuomo has been conducting an investigation into Bank of America's merger with Merrill Lynch. While the impetus of the investigation may have been Merrill's payment of bonuses prior to the acquisition, it has moved well...
SEC Commissioner Aguilar on Regulatory Reform
Posted on April 21, 2009SEC Commissioner Luis A. Aguilar presented a speech on "Making Investors a Priority in Regulatory Reform" in Boston, Massachusetts on April 17, 200. The three topics he addressed were: the SEC's role in regulatory reform, the role of a systemic...
SEC Obtains TRO & Freeze Against Philadelphia Investment Adviser
Posted on April 20, 2009On April 17, 2009, the SEC charged a Philadelphia-area investment adviser and its principal with misappropriating millions of dollars in client assets and obtained an emergency court order freezing their assets. According to the Commission's complaint, since mid-2005 Donald Anthony...
Bratton & Cunningham on the GAAP-IFRS Debate
Posted on April 19, 2009Treatment Differences and Political Realities in the GAAP-IFRS Debate, by William W. Bratton, Georgetown University Law Center; European Corporate Governance Institute (ECGI), and Lawrence A. Cunningham, George Washington University Law School, was recently posted on SSRN...
Epstein & Henderson on Marking to Market
Posted on April 19, 2009Marking to Market: Can Accounting Rules Shake the Foundations of Capitalism?, by Rchard A. Epstein, University of Chicago - Law School; Stanford University - Hoover Institution on War, Revolution and Peace, and M. Todd Henderson, University of Chicago - Law...
Jamal et alia on SEC's Proposed IFRS Roadmap
Posted on April 19, 2009A Research Based Perspective on SEC?s Proposed Rule on ROADMAP FOR Potential Use of Financial Statements Prepared in Accordance With International Financial Reporting Standards (IFRS) by U.S. Issuers, by Karim Jamal, University of Alberta - Department of Accounting & Management...
Fisch on Circularity in Private Securities Litigation
Posted on April 19, 2009Confronting the Circularity Problem in Private Securities Litigation, by Jill E. Fisch, University of Pennsylvania Law School, was recently posted on SSRN. Here is the abstract: Many critics argue that private securities litigation fails effectively either to deter corporate misconduct...
Federal Court Refuses Government Request to Stay FINRA Arbitration
Posted on April 17, 2009U.S. v. FINRA, a recently issued opinion from the federal district court (E.D.N.Y. Apr. 9, 2009), presents an interesting issue stemming from the collapse of Bear Stearns hedge funds. The U.S. sought to enjoin FINRA from conducting arbitration proceedings brought...
FINRA Waters Down Supervisory Review of Deferred Variable Annuities
Posted on April 17, 2009On May 21, 2008, FINRA filed with the SEC a proposed rule change to amend certain provisions of NASD Rule 2821 (Sales Practice Standards and Supervisory Requirements for Transactions in Deferred Variable Annuities). The Rule, as originally adopted, required supervisory...
Fraud on the Smart Investor? One Columnist's Experience
Posted on April 17, 2009Check this out -- a financial columnist for the New York Times worries that he has been the victim of fraud by his financial planner -- AFW Asset Management. NYTimes, Even Vigilant Investors May Fall Victim to Fraud.
American Skandia Investment Services Settles Market-Timing Charges
Posted on April 17, 2009On April 17, the SEC settled administrative charges against American Skandia Investment Services, Inc. (ASISI) that ASISI engaged in market-timing related misconduct as investment adviser to the American Skandia Trust (AST) portfolios underlying variable annuities issued by American Skandia Life...
Rattner Allegedly Involved in NYS Pension Kickbacks
Posted on April 17, 2009The Wall St. Journal reports that Steven Rattner, the leader of President Obama's auto task force, is implicated in the alleged kickback scheme involving the New York State pension fund that both the SEC and the New York AG are...
NASAA Sponsors Program on Regulatory Reform
Posted on April 16, 2009NASAA will host its annual Public Policy Conference on April 28 in Washington, D.C. to discuss the challenges facing the current financial services regulatory structure and outline policy proposals to strengthen regulatory safeguards for Main Street investors...
Defendant in SEC Universal Leases Action Settles
Posted on April 16, 2009The United States District Court for the Northern District of Illinois entered an order permanently enjoining Michael E. Kelly (Kelly), a former resident of North Liberty, Indiana and Cancun, Mexico, in connection with a civil injunctive action filed in September,...
Former Fidelity National Director Settles Insider Trading Charges in Lending Tree
Posted on April 16, 2009The SEC announced today that on April 10, 2009, the District Court for the Central District of California entered a final judgment against J. Thomas Talbot ("Talbot"), a former Director of Fidelity National Financial Inc. ("Fidelity"), in an insider trading...
SEC Holdsd Roundtable on Credit Rating Agencies
Posted on April 15, 2009Here is the agenda and list of participants at the SEC's Roundtable Discussion on Credit Rating Agencies, which is being held today, and is webcast from the SEC website. Academic participants include Professor Frank Partnoy of San Diego, Lawrence White...
SEC and New York State File Charges Against Former New York State Political Leader and Hedge Fund Manager in Pension Fund Fraud
Posted on April 15, 2009The SEC today charged Raymond Harding, who is a former leader of the New York Liberal Party, and Barrett Wissman, a former hedge fund manager, in connection with a multi-million dollar kickback scheme involving New York's largest pension fund. According...
SEC Charges Church Leaders in Queens N.Y. with Affinity Fraud
Posted on April 14, 2009On April 14, 2009, the SEC filed civil injunctive actions in the United States District Court for the Eastern District of New York charging seven leading members of a church in Queens, N.Y. for orchestrating a fraudulent investment scheme that...
FINRA Fines Fifth Third Securities for Unsuitable Variable Annuity Transactions
Posted on April 14, 2009FINRA announced today that it fined Fifth Third Securities, Inc., (FTS) of Cincinnati, OH, $1.75 million for a series of violations related to variable annuity sales and exchanges. FINRA found that FTS made 250 unsuitable sales and exchanges to 197...
Oregon Sues Oppenheimer over 529 Plan
Posted on April 14, 2009Orgeon sued Oppenheimer Funds charging that the money manager understated risks in its 529 College Savings bond fund that lost $36 million. According to the state, Oppenheimer did not disclose that the fund invested in credit default swaps and other....
Thomas & Cox on Empirical Studies of Securities Law Enforcement
Posted on April 13, 2009Mapping the American Shareholder Litigation Experience: A Survey of Empirical Studies of the Enforcement of the U.S. Securities Law, by Randall S. Thomas, Vanderbilt University - School of Law, and James D. Cox, Duke University School of Law, was recently...
Black on Eliminating Securities Fraud Class Actions
Posted on April 13, 2009Eliminating Securities Fraud Class Actions Under the Radar, by Barbara Black, University of Cincinnati - College of Law, was recently posted on SSRN. Here is the abstract: At least since Basic, Inc. v. Levinson, the business community and many influential...
Fishman on Nonprofit Corporate Law Reform
Posted on April 13, 2009The Development of Nonprofit Corporation Law and an Agenda for Reform, by James Fishman, Pace University - School of Law, was recently posted on SSRN. Here is the abstract: This article examines the development of the law of "charitable corporations"...
Cunningham on GAAP-IFRS Debate
Posted on April 13, 2009Treatment Differences and Political Realities in the GAAP-IFRS Debate, by Lawrence A. Cunningham, George Washington University Law School, was recently posted on SSRN. Here is the abstract: The Securities Exchange Commission has introduced a "Roadmap" that describes a process leading...
SEC Releases Information on April 15 Roundtable on CRAs
Posted on April 13, 2009In February 2009, the SEC issued a proposing release that included several proposals to further the Credit Rating Agency Reform Act?s purpose of promoting accountability, transparency, and competition in the credit rating industry. (The proposing release is available on the...
SEC's Director of Trading & Markets Defends the CSE Program
Posted on April 10, 2009Erik R. Sirri, the departing Director of the SEC's Division of Trading and Markets made a speech on April 9, 2009 at the National Economists Club on Securities Markets and Regulatory Reform, in which he defended the SEC's much-criticized actions...
SEC Releases Proposals on Short-Selling
Posted on April 10, 2009Following up on its meeting earlier this week, the SEC today released for comment the two proposals to restrict short sales. Here is the introductory paragraph in its release: The Securities and Exchange Commission (?Commission?) is proposing amendments to Regulation...
SEC Obtains TRO Against Ohio Adviser Alleging Fraud on Elderly Clients
Posted on April 10, 2009The SEC filed a civil action on April 8, 2009, against Crossroads Financial Planning, Inc., and Julie M. Jarvis, of Columbus, Ohio, in connection with an alleged scheme by Jarvis to misappropriate funds from two elderly clients. Crossroads is an...
SEC Dismisses Backdating Charges Against Former McAfee GC
Posted on April 10, 2009The SEC announced that it has voluntarily dismissed all claims against Kent H. Roberts, the former General Counsel of McAfee Inc. in connection with allegations of backdating stock options. On March 20, 2009, the United States District Court for the....
SEC Charges Georgia Attorney with Running a Ponzi Scheme
Posted on April 09, 2009On April 9, 2009, the SEC filed a Complaint for Injunctive and Other Relief ("Complaint") in the United States District Court for the Northern District of Georgia against Robert P. Copeland ("Copeland"). The Complaint sets forth a classic Ponzi scheme...
Edward D. Jones Settles FINRA Charges for Failure to Deliver Official Statements in Municipal Securities Sales
Posted on April 09, 2009FINRA announced today that it fined Edward D. Jones & Co., L.P. of St. Louis $900,000 for its failure to timely deliver official statements to customers who purchased new-issue municipal securities and related supervisory and recordkeeping failures. With limited exceptions,...
SEC Charges Colorado Man with Ponzi Scheme
Posted on April 08, 2009The SEC charged Shawn R. Merriman of Aurora, Colorado, and his firm, Market Street Advisors, with conducting a multi-million dollar Ponzi scheme through the sale of interests in at least four investment funds. The Commission alleges that Merriman raised at...
SEC Gets Injunction Against Massachusetts Hedge Fund Manager
Posted on April 08, 2009The SEC announced today that the Massachusetts federal district court entered a Final Judgment on April 8, 2009 against defendant Glenn Manterfield, a citizen of the United Kingdom, in connection with a civil injunctive action filed in April 2007 by....
SEC Proposes Alternative Approaches to Short Sale Regulation
Posted on April 08, 2009The SEC today voted unanimously to seek public comment on whether short sale price restrictions or circuit breaker restrictions should be imposed and whether such measures would help promote market stability and restore investor confidence. In June 2007, the SEC...
SIFMA Calls Proposed Changes to Arbitration Discovery Guide "Fundamentally Unfair"
Posted on April 07, 2009On March 6, 2009 the SEC published for public comment FINRA's proposed rule change on Amendments to the Discovery Guide to Update the Document Production Lists (Release No. 34-59534; File No. SR-FINRA-2008-024). Comments were due April 3. A number of...
SEC and Beverage Creations Settle Charges of Sales of Unregistered Stock
Posted on April 07, 2009The SEC announced today that Beverage Creations, Inc., a Minneapolis, Minnesota company, and two of its former officers settled SEC charges that they illegally sold Beverage Creations stock through certain stock promoters and promoted that stock with a false press...
SEC Will Consider Short Sale Restrictions at April 8 Meeting
Posted on April 07, 2009The SEC's Open Meeting Agenda for its April 8, 2009 meeting has one item that is being closely watched: Item 1: Amendments to Regulation SHO Office: Division of Trading and Markets Staff: James Brigagliano, Josephine Tao, Victoria Crane, Joan Collopy,...
Schapiro Outlines Agenda for Reform
Posted on April 06, 2009In a speech today before the Council of Institutional Investors, Mary Schapiro set forth an impressive agenda for reform, including shareholder access, disclosure about directors and other corporate governance issues and bolstering oversight over credit rating agencies.
Investor Alert for Stanford Investors
Posted on April 06, 2009The SEC posted an Investor Alert for Stanford Investors on its website, warning that some investors in the Stanford International Bank CD program are being contacted by crooks who are offering their "services" to help return investors' lost funds. The...
SEC Obtains Emergency Action Against Alleged Ponzi Scheme Targeting Chinese-American Community
Posted on April 06, 2009On April 3, 2009, the SEC filed an emergency action in the United States District Court for the Northern District of Texas to halt an on-going multi-million dollar Ponzi scheme and affinity fraud involving investments in Oversea Chinese Fund Limited....
SEC Feels Pressure to Limit Short Sales
Posted on April 06, 2009Should the SEC reinstate the uptick rule or consider other ways to restrict short-selling? The New York Times says that some legislators are putting pressure on the regulator to do just that. NYTimes, Some Revile Plan to Limit Short-Selling. Meanwhile,...
New York AG Charges Madoff Feeder Funds with Fraud
Posted on April 06, 2009New York Attorney General Andrew M. Cuomo today announced charges against J. Ezra Merkin and the funds he controlled for violating New York?s Martin Act by concealing from his clients the investment of more than $2.4 billion with Bernard L....
Kelly on Soft Law In Securities Regulation
Posted on April 05, 2009The Hardening of Soft Law in Securities Regulation, by Claire Kelly, Brooklyn Law School, was recently posted on SSRN. Here is the abstract: Securities law regulation frequently utilizes soft law, or non binding standards and principles of conduct. Often soft...
Muradoglu on the UK Financial Crisis
Posted on April 05, 2009The UK Crisis of 2008: What is Real and What is Behavioural?, by Yaz Gulnur Muradoglu, City University London - Sir John Cass Business School, was recently posted on SSRN. Here is the abstract: This paper is about the crisis...
SEC Charges New York Attorney with Participating in Illegal Penny Stock Scheme
Posted on April 02, 2009On April 2, 2009, the SEC filed a civil complaint in United States District Court for the Southern District of Florida against south Florida residents Frank C. Calmes, Lynn D. Rowntree, and Manny J. Shulman, New York attorney James E....
University of Cincinnati Presents Symposium on Regulatory Reform
Posted on April 02, 2009The University of Cincinnati College of Law presents its annual Corporate Law Symposium tomorrow April 3 on New Models of Regulating the Financial Markets: The SEC's Future as it Turns 75. Here is a brief description: April 3, 2009 ?...
G-20 London Summit Communique
Posted on April 02, 2009Here is the full text of the G-20 Communique resulting from the London Summit.
In re Refco, Inc. Securities Litigation
Posted on April 01, 2009The federal district court for the Southern District of New York recently dismissed charges against the Meyer Brown law firm in In re Refco, Inc. Securities Litigation, 2009 WL 724378 (S.D.N.Y. Mar. 17, 2009). As you may recall, one of...
Massachusetts Charges Fairfield Greenwich with Fraud
Posted on April 01, 2009Secretary of the Commonwealth of Masssachusetts Galvin today filed fraud charges against Fairfield Greenwich, a Madoff feed fund. All the documents are available on the website.
NASAA Posts Information on ARS Claims Procedures
Posted on April 01, 2009NASAA has posted on its website information on how to file ARS claims, specific to the firm and the investor's state. NASAA explains: Several brokerage firms have entered, or are expected to enter into, settlements with state securities regulators in...
FINRA Arbitration Filings Up 90% Over 2008
Posted on April 01, 2009Summary Arbitration Statistics from FINRA's website: New Case Filings through February 2009: 2007 535 2008 561 2009 1,065 2009 vs 2008 90%
Take-Two Settles Backdating Charges with SEC
Posted on April 01, 2009The SEC announced the filing of a civil action against video and computer game publisher and distributor Take-Two Interactive Software, Inc. ("Take-Two"), alleging that during a seven year period, Take-Two defrauded investors by granting backdated, undisclosed "in the money" stock...
SEC Charges New York Adviser with Running Ponzi Scheme
Posted on April 01, 2009The SEC charged Edward T. Stein with securities fraud and froze his assets to halt an ongoing alleged Ponzi scheme. The Court also froze the assets of seven entities, which Stein controlled, and the Commission charged as relief defendants, including....
Wachovia and Citigroup Agree to Buy Back ARS from California Residents
Posted on March 31, 2009Wachovia Securities and Citigroup Global Markets entered settlements with California to buy back $4.7 billion in ARS from California residents and companies. California regulators say these are "the first two" investment banks to settle with the state and "it won't...
Treasury Extends Money Market Fund Guarantees Until Sept. 18, 2009
Posted on March 31, 2009The U.S. Treasury Department today announced an extension of its temporary Money Market Funds Guarantee Program through September 18, 2009, in order to support ongoing stability in financial markets. The Program was scheduled to end on April 30, 2009...
SEC Obtains Consent Judgment in Action Involving Sales of Restricted Securities
Posted on March 31, 2009On March 30, 2009, the United States District Court for the Southern District of New York entered a partial consent judgment against defendant Pinchus Gold, of Brooklyn, New York, in an action filed in February by the SEC. Without admitting...
SEC Charges Tacoma Wash. Man with Affinity Fraud
Posted on March 31, 2009The SEC charged John H. Min of Tacoma, Wash., and his company Dime Financial Group LLC with raising more than $6 million in a fraudulent investment scheme that targeted churches, church members and senior citizens. The SEC alleges that Min...
GAO Update on TARP Program
Posted on March 31, 2009The GAO issued an update on the TARP program, Troubled Asset Relief Program: March 2009 Status of Efforts to Address Transparency and Accountability Issues. GAO-09-504. It contains a useful timeline of programs and selected actions under TARP from Jan 30,...
ARS Purchasers' Suit Against UBS Dismissed Because of SEC Settlement
Posted on March 31, 2009The federal district court in the Southern District of New York dismissed an investors' action against UBS that charged the investment bank misled them about the safety and liquidity of ARS. The judge said the investors could not continue their...
SEC Defers Consideration of Rule 12b-1 Reform
Posted on March 30, 2009Andrew J. Donohue, the SEC's Director, Division of Investment Management, gave the Keynote Address at the Investment Company Institute, 2009 Mutual Funds and Investment Management Conference on March 23, 2009. Among the topics covered was Rule 12b-1 reform, which the...
FINRA Panel Awards Customer Over $30 Million in Damages from Merrill
Posted on March 30, 2009On March 16, A FINRA arbitration panel awarded claimants $30.6 million in compensatory damages (the full amount of claimant's claim), plus 9% interest, against Advest, Inc. and Merrill Lynch, one of the largest awards in a customer dispute. The claimant,...
SEC Obtains Judgment in Ponzi Scheme Targeting Cambodian Immigrants
Posted on March 30, 2009The SEC announced that on March 26, 2009, the United States District Court for the District of Massachusetts entered final judgments against five defendants in a civil action filed in November 2005 involving a fraudulent investment scheme targeting Cambodian immigrants...
McCoy et alia on Securitization
Posted on March 29, 2009Systemic Risk through Securitization: The Result of Deregulation and Regulatory Failure, Patricia A. McCoy, University of Connecticut - School of Law, Andrey D. Pavlov, University of Pennsylvania - Real Estate Department; Simon Fraser University - Finance Area, and Susan M...
Three Defendants in Insider Trading Ring Settle Charges
Posted on March 27, 2009On March 26, 2009, the United States District Court for the Southern District of New York entered final consent judgments against defendants Nickolaus Shuster, Juan C. Renteria, Jr. and Monika Vujovic, in an action filed in 2005 by the Commission,...
FINRA's Ketchum Testifies Before Senate Banking Committee
Posted on March 26, 2009Richard G. Ketchum, Chairman and Chief Executive Officer, FINRA, testified today before the Senate Committee on Banking, Housing, and Urban Affairs.
Schapiro Testifies Before Financial Services on Enhancing Investor Protection
Posted on March 26, 2009SEC Chairman Mary L. Schapiro testified today on Enhancing Investor Protection and Regulation of the Securities Markets before the United States Senate Committee on Banking, Housing and Urban Affairs.
SEC Obtains Emergency Freeze Against Millennium Bank Alleging Ponzi Scheme
Posted on March 26, 2009Another day -- another Ponzi scheme: The SEC obtained an emergency court order halting a $68 million Ponzi scheme involving the sale of fictitious high-yield certificates of deposit (CDs) by Caribbean-based Millennium Bank. The SEC alleges that the scheme targeted...
GAO Reports on SEC Oversight of Clearing Agencies
Posted on March 26, 2009The GAO released a report on Securities and Exchange Commission: Oversight of U.S. Equities Market Clearing Agencies.
Geithner Testifies on Regulatory Reform
Posted on March 26, 2009Here is Treasury Secretary Tim Geithner's Written Testimony before the House Financial Services Committee Hearing today, and here is Framework for Regulatory Reform that Treasury also released.
E&Y Settles HealthSouth Accounting Fraud Charges for $109 Million
Posted on March 25, 2009Ernst & Young, HealthSouth's auditor from 1996-2002, agreed to pay $109 million to settle accounting fraud charges brought by HealthSouth investors. UBS previously settled similar charges for $100 million. Richard Scrushy, HealthSouth's CEO at the time, was acquitted of accounting...
FINRA Fines Morgan Stanley for Improper Retirement Advice to Kodak and Xerox Employees
Posted on March 25, 2009FINRA announced that it fined Morgan Stanley & Co. $3 million ? and ordered it to pay more than $4.2 million in restitution to 90 Rochester, NY-area retirees ? to resolve charges that its supervisory system failed to detect and...
SEC's Chief Accountant Testifies on Increased Credit Availability & Prudent Lending Standards
Posted on March 25, 2009James L. Kroeker, the SEC's Acting Chief Accountant, testified today on Testimony Concerning Exploring the Balance Between Increased Credit Availability and Prudent Lending Standards before the House Committee on Financial Services.
SEC Obtains Preliminary Injunction Against West Virginia-Based Ponzi Scheme
Posted on March 25, 2009The SEC announced that on March 23, 2009, the federal district court in the Western District of Virginia entered a preliminary injunction order, by consent, against John M. Donnelly, Tower Analysis, Inc., Nasco Tang Corp., and Nadia Capital Corp. The...
SEC Obtains Asset Freeze Against Chicago-Based Investment Advisor
Posted on March 25, 2009The SEC announced that on March 24, it obtained emergency relief against investment adviser The Nutmeg Group, LLC, and its principals Randall and David Goulding. In its complaint, filed March 23, the Commission alleges that Nutmeg, which controls and provides...
SEC's Inspector General Recommends Improved Procedures for Handling Complaints about Naked Short Selling
Posted on March 25, 2009The SEC's Office of Inspector General recently released a report on Practices Related to Naked Short Selling Complaints and Referrals, in which it examines the SEC Enforcement Division's procedures relating to naked short selling. The Report explains that Enforcement has...
Bernanke and Geithner Testify Before Financial Services on AIG
Posted on March 24, 2009Both Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner testified today before House Financial Services Committee on AIG and those bonuses.
FINRA Fines Wachovia for Customer Notification Violations
Posted on March 24, 2009FINRA announced that it fined Wachovia Securities, LLC and First Clearing, LLC, both of St. Louis, MO, $1.1 million for the firms' failure to provide more than 800,000 required notifications to customers over a five-year period ending in 2008. As...
SEC Freezes Assets in Alleged Oil and Gas Scam
Posted on March 24, 2009The SEC charged a Los Angeles man and two of his companies with securities fraud and obtained an emergency court order to freeze their assets and halt an alleged ongoing oil and gas investment scheme they have been operating out...
Former Managing Director at San Francisco Brokerage Firm Consents to SEC Fraud Charges
Posted on March 24, 2009The SEC filed today a civil injunctive action in federal district court in San Francisco against David "Scott" Cacchione, a former Managing Director at San Francisco-based brokerage firm Merriman Curhan Ford & Co. ("Merriman"), alleging that he helped a friend...
SEC Announces Panelists for Credit Rating Agencies Roundtable
Posted on March 24, 2009The SEC announced the expected panelists for its April 15 roundtable relating to its oversight of credit rating agencies. The roundtable will be held at the SEC's Washington, D.C., headquarters and will begin at 10 a.m. ET with opening remarks...
Palmiter & Taha on Manipulation of Mutual Fund Performance
Posted on March 23, 2009Star Creation: The Manipulation of Mutual Fund Performance through Incubation, by Alan R. Palmiter, Wake Forest University - School of Law, and Ahmed E. Taha, Wake Forest University - School of Law, was recently posted on SSRN. Here is the...
State Securities Regulators Testify Before Financial Services Committee
Posted on March 23, 2009Delaware Securities Commissioner James Ropp and Massachusetts Secretary of the Commonwealth William Galvin appeared before the House Financial Services Committee on Friday, March 20. The hearing, led by Committee Chairman Barney Frank (D-MA), brought together federal and state securities regulators...
FINRA Fines 25 Firms for Breakpoint Failures
Posted on March 23, 2009FINRA announced that it fined 25 broker-dealers a total of $2,145,000 for failures related to their completion of FINRA's (then NASD's) firm self-assessment of mutual fund breakpoint discount compliance. All firms settled the charges without admitting liability...
SEC Charges Escala Group and former officers with fraud
Posted on March 23, 2009The SEC filed a disclosure and accounting fraud case against then-NASDAQ National Market issuer Escala Group, Inc.; its founder and former CEO Gregory Manning, and its former CFO Larry Lee Crawford, alleging fraudulent related party transactions between Escala and its...
SEC's Investment Management Director Addresses ICI Conference
Posted on March 23, 2009Andrew J. Donohue, Director, Division of Investment Management, SEC, gave the Keynote Address, Investment Company Institute, 2009 Mutual Funds and Investment Management Conference, on March 23, 2009.
Ketchum's Remarks on Risk Management
Posted on March 23, 2009An excerpt from remarks by Richard G. Ketchum, Chairman & Chief Executive Officer, Remarks From the SIFMA Compliance & Legal Division's Annual Seminar: Let's talk about risk management. Several months ago on CNBC, John Gutfreund was asked about the leverage...
Former Mercury Interactive CFO Settles Backdating Charges with SEC
Posted on March 23, 2009The SEC today settled civil fraud charges against Sharlene Abrams, a former Chief Financial Officer of Mercury Interactive, LLC, arising from an alleged scheme to backdate stock option grants and from other alleged misconduct. The SEC previously charged Abrams and...
SEC Censures Cornerstone Capital Management
Posted on March 23, 2009The SEC issued anOrder Making Findings and Imposing Remedial Sanctions Pursuant to Sections 203(e), 203(f) and 203(k) of the Investment Advisers Act of 1940 (Order) against Cornerstone Capital Management, Inc. (Cornerstone Capital), a registered investment adviser, and its sole principal,...
SEC Obtains Asset Freeze Against Alleged Investment Fraud
Posted on March 23, 2009The SEC today obtained an emergency court order to halt an ongoing scheme by a Palmdale, California company and two individuals who have defrauded investors through a series of false claims including that Warren Buffett is associated with the company...
NY AG Says It Has List of AIG Bonus Recipients
Posted on March 19, 2009ATTORNEY GENERAL CUOMO ANNOUNCES SIGNIFICANT DEVELOPMENT RELATED TO AIG: "I have received the list of AIG FP employees who received retention payouts. Mr. Liddy testified in Congress yesterday that he intended to comply with our subpoena and expressed concern for...
SEC Sues Silicon Valley Hedge Fund Manager for Fraud
Posted on March 19, 2009The SEC sued Albert K. Hu, a hedge fund manager with ties to Silicon Valley, for falsely claiming that his funds were overseen by experienced attorneys, auditors and other professionals, and for misappropriating investor funds. As part of its suit,...
University of Dayton Law Presents Program on Bailout
Posted on March 19, 2009The University of Dayton Law School is presenting The Fallout from the Bailout: The Impact of the 2008 Bailout on Lending Regulation, Securities Regulation, and Business Ethics, a day-long program tomorrow. Former SEC Chairman Harvey Pitt is a featured speaker,...
FINRA Hearing Panel Sanctions Mutual Services Corp. on VA Reviews
Posted on March 19, 2009A FINRA hearing panel fined Mutual Service Corporation (MSC) of West Palm Beach, FL, more than $1.5 million for failing to conduct timely reviews of variable annuity transactions, falsifying various books and records of the firm to make it appear...
SEC and NY AG Charge NY Former Deputy Comptroller and Political Adviser with Pension Plan Fraud
Posted on March 19, 2009The SEC charged New York's former Deputy Comptroller, David Loglisci, and a top political advisor, Henry Morris, with extracting kickbacks from investment management firms seeking to manage the assets of New York's largest pension fund. In addition, the New York...
Citi Files Registration Statement for Conversion of Preferred into Common, Plans Reverse Stock Split
Posted on March 19, 2009Citigroup announced that it has filed a registration statement with the SEC in connection with its proposed offer to issue its common stock in exchange for publicly held convertible and non-convertible preferred and trust preferred securities. In addition, the company...
GAO Testimony on AIG
Posted on March 18, 2009Testimony Before the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises, House Committee on Financial Services, FEDERAL FINANCIAL ASSISTANCE Preliminary Observations on Assistance Provided to AIG, Statement of Orice M. Williams, Director, Financial Markets and Community Investment, March 18,...
New York AG on Court's Decision on Merrill Lynch Bonuses
Posted on March 18, 2009STATEMENT FROM ATTORNEY GENERAL CUOMO ON COURT DECISION TO FORCE BANK OF AMERICA AND MERRILL LYNCH TO TURN OVER LIST OF BONUS RECIPIENTS "Today?s decision in the Bank of America case is a victory for taxpayers. Let the sun shine...
Texas Men Settle Penny Stock Fraud Charges
Posted on March 18, 2009Two Texas men, Darrel T. Uselton and Jack E. Uselton, who perpetrated a massive e-mail spam campaign to drive up the demand for low value stocks they owned, will pay nearly $4 million in penalties and fines and will no...
SEC Charges Madoff's Auditor with Fraud
Posted on March 18, 2009The SEC charged the auditors of Bernard Madoff's broker-dealer firm with committing securities fraud by falsely representing that they had conducted legitimate audits, when in fact they had not. In its complaint filed today in federal court in Manhattan, the...
FINRA Announces Pilot Program for Margining of CDSs
Posted on March 18, 2009FINRA anounced that is has proposed a pilot program for the margining of credit default swaps (CDS) by FINRA-registered firms that clear CDS transactions on the Chicago Mercantile Exchange, other central counterparty platforms or outside of such platforms...
AIG's Liddy Testifies on Bonuses
Posted on March 18, 2009AIG CEO Edward Libby is still testifying before the House Financial Services Committee and explaining why AIG had to pay those bonuses. Perhaps the only noteworthy new information is that Liddy asked recipients of bonuses in excess of $100,000 to...
Cuomo on AIG Bonuses
Posted on March 17, 2009The latest from New York AG Cuomo on AIG's bonuses: AIG now claims that it had no choice but to pay these sums because of the unalterable terms of the plan. However, had the federal government not bailed out AIG...
Prosecutors Allege Lawyer Sold $700 Million in Phony Notes
Posted on March 17, 2009You'll recall that New York attorney Marc Dreier was indicted in January on charges that he sold fictitious promissory notes to investors. Federal prosecutors recently amended the indictment to up the amount of the alleged fraud. They now allege that...
Florida Broker Settles SEC Microcap Manipulation Charges
Posted on March 17, 2009The SEC filed a settled complaint against Paul M. Gozzo and PMG Capital, LLC of Jupiter, Florida, alleging that they violated the federal securities laws by manipulating the markets of numerous microcap stocks in 2006 and 2007. The Commission alleges...
Citigroup Settles FINRA Charges of Publishing Non-Bona Fide Quotations
Posted on March 17, 2009FINRA announced today that it has imposed a $2 million fine against Citigroup Global Markets for the erroneous publication of non-bona fide quotations and transactions at and around the NASDAQ market opening on a Quadruple Witch Expiration Friday; systemic Order...
FINRA Announces Explained Award Rule
Posted on March 16, 2009Effective April 13, 2009, FINRA will require arbitrators to provide an explained decision at the parties' joint request. An explained decision is a fact-based award stating the general reasons for the arbitrators' decision. Parties will be required to submit any...
Geithner's Statement at G-20 Meeting
Posted on March 16, 2009Here is the Prepared Statement by Treasury Secretary Tim Geithner at the G-20 Finance Ministers and Central Bank Governors Meeting March 14, 2009.
SEC Will Consider Short Sale Price Rules
Posted on March 16, 2009The SEC announced that it will hold an open meeting on April 8 to consider whether to propose short sale price test rules.
President Obama Speaks Out Against AIG Bonuses
Posted on March 16, 2009President Obama has called upon Treasury Secretary Geithner to take all steps to prevent AIG from paying those bonsues to employees at the company's Financial Products unit. The New York Times has posted Obama?s Statement on A.I.G.
New York AG Sends Letter to AIG on Bonuses
Posted on March 16, 2009Here is a letter from Attorney General Cuomo sent today to Edward M. Liddy, Chairman & CEO of AIG, concerning bonuses: The Office of the New York Attorney General has been investigating compensation arrangements at AIG since last Fall. We...
SEC Approves Temporary Exemptions for CME to Operate as Central Counterparty for CDSs
Posted on March 16, 2009The SEC approved conditional exemptions that will allow the Chicago Mercantile Exchange Inc. (CME) to operate as a central counterparty for clearing credit default swaps. These conditional exemptions, based on a request by the CME and Citadel Investment Group LLC,...
Cheffins & Bank on Berle & Means
Posted on March 15, 2009Is Berle and Means Really a Myth?, Brian R. Cheffins, University of Cambridge - Faculty of Law; European Corporate Governance Institute (ECGI), and Steven A. Bank, University of California, Los Angeles - School of Law, was recently posted on SSRN....
Hail, Leuz & Wysocki on IFRS in the US
Posted on March 15, 2009Global Accounting Convergence and the Potential Adoption of IFRS by the United States: An Analysis of Economic and Policy Factors, by Luzi Hail, University of Pennsylvania - The Wharton School, Christian Leuz, University of Chicago - Booth School of Business,...
Bhattacharya & Marshall on Insider Trading
Posted on March 15, 2009Do They Do It For The Money?, by Utpal Bhattacharya, Indiana University Bloomington - Department of Finance, and Cassandra D. Marshall, Indiana University Bloomington - Department of Finance, was recently posted on SSRN. Here is the abstract: Using a sample...
Barnard on Securities Fraud Recidivism
Posted on March 15, 2009Securities Fraud, Recidivism, and Deterrence, by Jayne W. Barnard, William & Mary Law School, was recently posted on SSRN. Here is the abstract: Legal scholars have expended considerable energy on the study of high-level securities fraud violators -- Ken Lay,...
Barnard on SEC & Corporate Therapeutics
Posted on March 15, 2009Corporate Therapeutics at the Securities and Exchange Commission, by Jayne W. Barnard, William & Mary Law School, was recently posted on SSRN. Here is the abstract: The Securities and Exchange Commission in recent years has often employed its remedial powers...
Thompson on Superfund for Hedge Funds
Posted on March 15, 2009Why We Need a Superfund for Hedge Funds, by Dale B. Thompson, University of St. Thomas - Department of Ethics & Business Law, was recently posted on SSRN. Here is the abstract: The current financial crisis has led to numerous...
Reiss on Rating Agencies & Reputational Risk
Posted on March 15, 2009Rating Agencies and Reputational Risk, by David J. Reiss, Brooklyn Law School, was recently posted on SSRN. Here is the abstract: This essay is a lightly-edited version of a talk given at the University of Maryland School of Law and...
Carlin & Gervais on Legal Protection in Retail Financial Markets
Posted on March 15, 2009Legal Protection in Retail Financial Markets, by Bruce I. Carlin, University of California, Los Angeles - Anderson School of Management, and Simon Gervais, Duke University - Fuqua School of Business, was recently posted on SSRN. Here is the abstract: Given...
SEC Charges MedQuist and Former Officers with Accounting Fraud
Posted on March 13, 2009The SEC filed a settled civil injunctive action against MedQuist Inc., a medical transcription company based in New Jersey, charging it with securities fraud and other violations of the federal securities laws. The Commission's complaint alleges that, from 1999 to...
SEC Sets Aside PHLX Sanction for Member's Refusal to Pay Litigation Expenses
Posted on March 13, 2009The SEC set aside an order of fees, expenses and sanctions imposed by the Philadelphia Stock Exchange, Inc. against Richard B. Feinberg. The PHLX had ordered Feinberg to pay $464,418.51 incurred by the PHLX in connection with a lawsuit Feinberg...
Walter Speaks on Regulatory Reform
Posted on March 13, 2009SEC Commissioner Elisse B. Walter spoke on "Principles to Help Guide Financial Regulatory Reform" ? before the Institute of International Bankers on March 2.
Quest Software Settles Stock Option Backdating Charges
Posted on March 13, 2009The SEC settled stock option backdating chargs with software manufacturer Quest Software, Inc. and three current or former officers. According to the SEC's complaint, Quest, its executive chairman Vincent Smith, its former chief financial officer John Laskey, and former controller...
SEC Approves CME Operating as Central Counterparty for CDSs
Posted on March 13, 2009The SEC approved conditional exemptions that will allow the Chicago Mercantile Exchange Inc. (CME) to operate as a central counterparty for clearing credit default swaps. These conditional exemptions, based on a request by the CME and Citadel Investment Group LLC,...
Six CHX Specialist Firms Settle SEC Charges
Posted on March 13, 2009The SEC announced that on March 11, 2009, the United States District Judge for the Southern District of New York entered Final Consent Judgments in the Commission's previously filed cases against six specialist firms operating on the Chicago Stock Exchange...
SEC's Accountant Testifies on Mark-to-Market Accounting
Posted on March 12, 2009James L. Kroeker, the SEC's Acting Chief Accountant, testified today on Testimony Concerning Mark-to-Market Accounting: Practices and Implications, before the Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises of the House Committee on Financial Services.
Attorney Pleads Guilty in Pump & Dump Scheme
Posted on March 12, 2009The DOJ announced today that it filed criminal charges against Arizona securities lawyer David B. Stocker in the United States District Court for the Eastern District of Virginia, charging him with one count of conspiracy to commit securities fraud involving...
Madoff Goes to Jail
Posted on March 12, 2009Bernard Madoff's bail was revoked after he pleaded guilty today to eleven felony counts and expressed remorse to his victims. NYTimes, Madoff?s Bail Revoked After Guilty Pleas to All Charges. The DOJ website has a transcript of today's hearing. Besides...
SEC Will Reconsider Uptick Rule
Posted on March 11, 2009The Wall St. Journal reports that the SEC will consider reinstating the "uptick rule," or some revised version of it, as early as next month. The uptick rule prohibited short sales unless the stock price was higher than its previous...
Government Files Information in Madoff Case
Posted on March 11, 2009Here is the Information filed by the U.S. Attorney in the Bernard Madoff case. It does not contain much new information about how Madoff conducted his fraud. It alleges that Madoff's ponzi scheme began at least as early as the...
Schapiro Testifies before House Subcommittee
Posted on March 11, 2009Chairman Schapiro's Testimony Before the House Subcommittee on Financial Services and General Government Committee on Appropriations on March 11, 2009
Court Enjoins Promoter in Internet Pump and Dump Scheme
Posted on March 11, 2009On March 6, 2009, the United States District Court for the District of Colorado, entered a final judgment against Jonathan Curshen, finding him liable for securities fraud for acting as a promoter in an internet "pump and dump" scheme. Based...
iBiz Technology and Officers Settle "Pump and Dump" Charges
Posted on March 11, 2009On February 20, 2009, the United States District Court for the District of Arizona entered judgments by consent against iBIZ Technology Corp. formerly based in Phoenix, Arizona, its Chief Executive Officer Kenneth W. Schilling and its Executive Vice President H...
Merrill Lynch Settles "Squawk Box" Violations
Posted on March 11, 2009The SEC charged Merrill Lynch, Pierce, Fenner & Smith Inc. with securities laws violations for having inadequate policies and procedures for controlling access to institutional customer order flow. Merrill Lynch agreed to settle the SEC?s charges and pay a $7...
Yet Another Ponzi Scheme
Posted on March 11, 2009The SEC charged Northern California residents Anthony Vassallo and Kenneth Kenitzer for orchestrating a multi-million dollar investment fraud. Vassallo agreed to a court order freezing his assets. The SEC is seeking an emergency court order to also freeze the assets...
GAO Releases Testimony on TARP Transparency and Accountability Issues
Posted on March 11, 2009The United States Government Accountability Office released Testimony Before the House Subcommittee on Domestic Policy, Committee on Oversight and Government Reform, on the TROUBLED ASSET RELIEF PROGRAM: Status of Efforts to Address Transparency and Accountability Issues (Statement of Richard J...
SEC Takes Action Against Alleged Ponzi Scheme in Virginia
Posted on March 11, 2009The SEC filed a complaint today in the United States District Court for the Western District of Virginia against John M. Donnelly (Donnelly), a resident of Charlottesville, Virginia, and his firms, Tower Analysis, Inc., Nasco Tang Corp., and Nadia Capital...
SEC Settles with Two Defendants in Peregrine Systems Fraud
Posted on March 11, 2009The SEC announced settlements with two defendants in connection with the accounting fraud at Peregrine Systems, Inc. ("Peregrine"). On March 4, 2009, United States District Judge John A. Houston entered an Amended Final Judgment by consent against Michael D...
Stanford Refuses to Testify in SEC Probe
Posted on March 11, 2009The Wall St. Journal has posted on its website a court filing from Allen Stanford in the SEC's action against him, asserting his privilege against self-incrimination and refusing to testify, provide an accounting or produce any documents. WSJ, Stanford Spurns...
Cuomo Says Merrill Misled Congress about Bonuses
Posted on March 11, 2009The Wall St. Journal reports that the New York State Attorney General accuses Merrill Lynch of "misleading" Congress about the timing of the company's decision to pay $3.6 billion in bonuses. In a court filing, the AG includes a Nov....
Bernanke Speaks on Financial Reform
Posted on March 10, 2009Chairman Ben S. Bernanke gave a speech today at the Council on Foreign Relations, Washington, D.C. on Financial Reform to Address Systemic Risk:At the same time that we are addressing such immediate challenges, it is not too soon for policymakers...
FINRA Settles Short-Selling Violations with First New York Securities
Posted on March 10, 2009FINRA announced that it has fined First New York Securities L.L.C. $170,000 for improperly covering short positions with secondary offering shares and related oversight failures. The firm was also ordered to disgorge more than $171,000 in trading profits earned from...
HS3 Technologies Settles Reverse Merger Charges
Posted on March 10, 2009The SEC issued an Order Instituting Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933, Making Findings, and Imposing a Cease-and-Desist Order against HS3 Technologies, Inc. (HS3). The Order finds that, prior to a November 2005 reverse...
Former CEO and CFO of AstroPower, Inc. Settle Fraud Charges
Posted on March 10, 2009The SEC filed a settled civil fraud action in the United States District Court for the District of Columbia against Allen Barnett, the former CEO, and Thomas Stiner, the former CFO, of AstroPower, Inc., a manufacturer of solar electric power...
Schapiro on New Era of Responsibility
Posted on March 10, 2009Excerpts from SEC Chairman Schapiro's speech at 2nd Annual CCOutreach BD National Seminar, Mar. 10, 2009:At a time when investor confidence may be at an all-time low, the most effective way to raise that confidence, and invigorate our capital markets,...
Madoff Expected to Plead Guilty This Week
Posted on March 10, 2009At a hearing today to consider whether Ira Sorkin, Bernard Madoff's attorney, could continue to represent Madoff despite possible conflicts, Mr. Sorkin told the judge that Madoff is expected to plead guilty later this week to charges that would result...
Cuomo and Frank Demand BofA Reveal Names of $1 Million Bonus Recipients
Posted on March 09, 2009New York State Attorney General Andrew Cuomo and Congressman Barney Frank, Chairman of the House Financial Services Committee, sent today a letter to Bank of America CEO Kenneth Lewis regarding bonuses paid to top executives at BofA and Merrill Lynch...
FINRA Proposes Expansion in TRACE Reporting
Posted on March 09, 2009FINRA proposes a major expansion of its Trade Compliance and Reporting Engine (TRACE) to include debt issued by federal government agencies, government corporations and government sponsored enterprises (GSEs), as well as primary market transactions in new issues...
Senior Supervisors Group Releases Report on Management of CDS Activity
Posted on March 09, 2009The Senior Supervisors Group (which comprises senior financial supervisors from seven countries --United States, Canada, France, Germany, Japan, Switzerland, United Kingdom) today issued a report that assesses how firms manage their credit default swap activities related to the settlement of...
SEC Charges Investment Adviser Made Up Billion-Dollar Client
Posted on March 09, 2009The SEC filed a civil injunctive action against Locke Capital Management, Inc., an investment adviser, and Leila C. Jenkins, its founder and sole owner who currently serves as its President, Chief Executive Officer, and Chief Investment Officer. The Complaint alleges...
Surpreme Court Accepts Cert in 36(B) Excessive Fee Case
Posted on March 09, 2009The U.S. Supreme Court accepted certiorari today in an important case involving a mutual fund holder's ability to challenge the investment adviser's fees as excessive under section 36(b) of the Investment Company Act. In Jones v. Harris Associates, 527 F...
Mitchell on Public Shareholders
Posted on March 08, 2009The Legitimate Rights of Public Shareholders, by Lawrence E. Mitchell, George Washington University - Law School, was recently posted on SSRN. Here is the abstract:In recent years there has been significant ongoing academic debate over the expansion of public shareholders'...
Schwarcz on Financial Safety Net
Posted on March 08, 2009Too Big to Fail?: Recasting the Financial Safety Net, by Steven L. Schwarcz, Duke University - School of Law, was recently posted on SSRN. Here is the abstract:Government safety nets in the United States and abroad focus, anachronistically, on problems...
Bullard on Money Market Funds
Posted on March 08, 2009Federally-Insured Money Market Funds and Narrow Banks: The Path of Least Insurance, by Mercer Bullard, University of Mississippi - School of Law, was recently posted on SSRN. Here is the abstract:In September 2008, the Treasury created a temporary insurance program...
Roe on Washington & Delaware
Posted on March 08, 2009Washington and Delaware as Corporate Lawmakers, by Mark J. Roe, Harvard Law School; European Corporate Governance Institute (ECGI), was recently posted on SSRN. Here is the abstract:American corporate law scholars have long focused on state-to-state jurisdictional competition as a powerful...
SEC Announces Roundtable on Credit Rating Agencies
Posted on March 06, 2009The SEC will hold a roundtable on April 15 relating to its oversight of credit rating agencies. Discussion topics will include issues related to recent SEC rulemaking initiatives, such as conflicts of interest, competition, and transparency. Since Congress enacted the...
Court Unfreezes Many Stanford Accounts
Posted on March 06, 2009On March 5, 2009, the federal district court overseeing the Stanford matter issued an order at the request of Stanford court-appointed receiver Ralph S. Janvey unfreezing approximately 12,000 Stanford investor accounts held at Pershing LLC. The court?s order applies to...
SEC Charges Former Officers of CSK Auto with Accounting Fraud
Posted on March 06, 2009The SEC filed a civil injunctive action in the United States District Court in Phoenix, Arizona against two former senior officers, Martin G. Fraser and Don W. Watson, the former controller, Edward W. O'Brien, and a former supervisor, Gary M....
SEC Sanctions Brokerage Firm for RR's Manipulation
Posted on March 06, 2009The SEC issued administrative Orders against Newbridge Securities Corp (Newbridge) and Eric M. Vallejo. The Orders find that in 2003 and 2004, Newbridge and Vallejo failed reasonably to supervise Newbridge registered representative Daniel M. Kantrowitz while Kantrowitz was engaged in...
SEC Approves ICE US Trust's Operation as CDS Central Counterparty
Posted on March 06, 2009The SEC took action to help improve transparency in the multi-trillion dollar credit default swap market by approving conditional exemptions that will allow ICE US Trust LLC to operate as a central counterparty for clearing credit default swaps. In December...
SEC Obtains Freeze on Los Angeles Firms Alleging Real Estate Investment Fraud
Posted on March 05, 2009NYSE Files Amendment to Rule Change Eliminating Broker Discretionary Voting in Uncontested Elections
Posted on March 02, 2009SEC Sanctions Investment Adviser for Taking Warrants from Hedge Fund Clients
Posted on March 02, 2009NYSE Extends Lowering of Market Cap Standard and Application of Stock Price Criteria
Posted on February 27, 2009Two individuals Settle Insider Trading Charges in Engineered Support Systems Stock
Posted on February 26, 2009The U. S. District Court for the Eastern District of Missouri entered a Final Judgment by consent against Defendants Matthew E. Kopsky and Ronald W. Davis, resolving charges of insider trading in the securities of Engineered Support Systems, Inc. ("ESSI")...
Former Zomax CEO Settles Insider Trading Charges
Posted on February 26, 2009On February 17, 2009, the U.S. District Court for the District of Minnesota entered a Final Judgment against James T. Anderson, the co-founder and former CEO of Zomax, Inc. The Commission's complaint, which was filed on June 6, 2005, alleged...
SEC Charges New York Resident with "Funds of Funds" Fraud
Posted on February 26, 2009The SEC charged Mark Bloom and his firm North Hills Management LLC with securities fraud and obtained an emergency court order to freeze their assets and halt an alleged investment scheme involving the marketing of a "fund of funds" investment...
C2 Options Exchange Files Application for National Securities Exchange
Posted on February 26, 2009The SEChas published for public comment C2 Options Exchange, Incorporated's application (File No. 10-191) for registration as a national securities exchange under Section 6 of the Securities Exchange Act of 1934. Rel. 34-59441
SEC Expected to Get 13% Increase in 2010 Budget
Posted on February 26, 2009The Wall St. Journal reports that the SEC will receive a 13% increase in funding in the 2010 budget, bringing it to just over $1 billion. The funds will be used to beef up staff and use of technology to...
SEC Adjusts Civil Penalties for Inflation
Posted on February 25, 2009The SEC adopted a final rule adjusting the maximum amounts of the civil monetary penalties for the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, the Investment Advisers Act of 1940, and...
Obama Calls for Regulatory Reform
Posted on February 25, 2009President Obama calls for a sweeping reform of Wall St. regulations to avoid a repeat of the financial meltdown. According to the President, the economy cannot sustain 21st century markets with 20th century regulation. The question is, of course, what...
SEC Charges Two with Misappropriating Over $500 Million in Investors' Assets
Posted on February 25, 2009The SEC took emergency action and obtained an asset freeze against two New York residents and their three affiliated entities, who, it charges, orchestrated an investment fraud involving the misappropriation of as much as $554 million in investor assets...
SEC Charges Suspended Broker with Running Fraudulent Hedge Funds
Posted on February 25, 2009The SEC charged Westgate Capital Management, LLC, a Pearl River, N.Y., investment management firm, and its managing member, James M. Nicholson, with operating a large-scale scheme that defrauded hundreds of investors of millions of dollars by providing them with misleading...
Ketchum Appointed FINRA CEO
Posted on February 24, 2009As expected, Richard G. (Rick) Ketchum has been appointed FINRA's Chief Executive Officer, replacing the new SEC Chair Mary Schapiro. Ketchum currently serves as CEO of New York Stock Exchange (NYSE) Regulation and as Chairman of FINRA's Board of Governors,...
Former Employees at Leumi and Oppenheimer Settle Order Flow Allegations
Posted on February 24, 2009The SEC settled charges alleging that two former registered representatives, Victor P. Machado, a former fixed income trader at two related entities, Leumi Investment Services Inc. ("LISI"), a registered broker-dealer, and Bank Leumi USA ("BLUSA") (collectively "Leumi"), and Frank Lu,...
Court Says Thain Can Name Recipients of Merrill Bonuses
Posted on February 24, 2009A New York State judge ruled that former Merrill Lynch CEO John Thain could identify the Merrill employees who received the largest bonuses last year before the securities firm was acquired by Bank of America. At a deposition before the...
NASAA Requests Comment on Policy Statement on Multi-State Review of Requests for Interpretive Opinions
Posted on February 23, 2009The NASAA Coordinated Interpretations Project Group requests comment from the public on the adoption of a new Statement of Policy Regarding Multi-State Review of Requests for Interpretative Opinions and No-Action Letters. The comment period begins February 20, 2009 and will...
New York AG Seeks More Information from Thain on ML Bonuses
Posted on February 23, 2009The New York Attorney General's office asked a state judge to order former Merrill Lynch CEO John Thain to provide more information about those bonuses paid before Merrill's merger with Bank of America last year. In a court filing, the...
Diamondback Capital Management Settles Reg M Charges
Posted on February 23, 2009On February 20, the Commission settled administrative charges against Diamondback Capital Management, LLC. The Order finds that from August 2005 until October 2005, Diamondback willfully violated Rule 105 of Regulation M on four occasions. On each occasion, in connection with...
Dunbar & Sen on Causation and Damages
Posted on February 22, 2009Counterfactual Keys to Causation and Damages in Shareholder Class Actions, by Frederick C. Dunbar, NERA Economic Consulting, and Arun Sen, NERA Economic Consulting, was recently posted on SSRN. Here is the abstract:Introducing quantitative rigor into the legal process has been...
Arbitration Filings Up 54% in 2008
Posted on February 20, 2009New cases filed in FINRA arbitration increased in 2008 by 54% over 2007 -- 4962 cases compared with 3238 in the previous year. This is the highest number of new filings since 2005.
SEC Obtains Emergency Relief Against Hedge Fund, Paramount Partners
Posted on February 20, 2009On February 18, 2009, the SEC filed an emergency civil action in the U.S. District Court of Minnesota charging Paramount Partners, LP ("Paramount"), a hedge fund, Crossroad Capital Management, LLC ("Crossroad"), Paramount's investment adviser, and John W...
SEC Suspends Former UnitedHealth Group GC From Practicing Before SEC
Posted on February 20, 2009On February 19, the SEC, pursuant to Rule 102(e) of its Rules of Practice, issued an order (the Rule 102(e) Order) suspending former UnitedHealth Group, Inc. General Counsel David J. Lubben from appearing or practicing before the Commission as an...
SEC's Statement on Robert Allen Stanford
Posted on February 20, 2009The SEC today made the following statement regarding its enforcement action against Robert Allen Stanford:"At the request of the SEC, Special Agents of the Federal Bureau of Investigation's Richmond Division today located and identified Stanford Financial Group chairman Allen Stanford...
Robert Khuzami Named SEC Director of Enforcement
Posted on February 19, 2009As expected, Chair Schapiro announced today that former federal prosecutor Robert Khuzami has been named Director of the Division of Enforcement. As the SEC release emphasizes, Mr. Khuzami previously served as a federal prosecutor for 11 years with the United...
SEC Takes Action Against Ponzi Scheme Targeting Deaf Community
Posted on February 19, 2009On February 18, 2009, the SEC obtained a court order halting an alleged $4 million Ponzi scheme perpetrated by Hawaii-based Billion Coupons, Inc. ("BCI") and its CEO Marvin R. Cooper. The Complaint alleges that BCI and Cooper raised $4.4 million...
The SEC and the Stanford Group Fraud
Posted on February 19, 2009The fallout over the SEC's failure to uncover earlier the Stanford fraud begins. The New York Times reports that both the SEC and FINRA previously found violations at the Stanford Group, but let it off the hook with small fines....
Insurance and Index Annuity Groups File Brief Challenging SEC Authority to Regulate Index Annuities
Posted on February 18, 2009In a brief filed with the D.C. Court of Appeals, the National Association of Insurance Commissioners and the National Conference of Insurance Legislators joined a group of equity index annuity companies and argued that the SEC exceeded its authority when...
Study Reports Companies Did Not Write Down ARS
Posted on February 18, 2009Nearly 30% of public companies holding auction rate securities are reporting them at full par value, according to a study conducted by researchers at Pluris Valuation Advisers and Villanova University, and many companies that did write them down did not...
FINRA Fines Robert W. Baird & Co. for Fee-Based Accounts Violations
Posted on February 18, 2009FINRA announced that it has fined Robert W. Baird & Co. $500,000 for supervisory violations relating to its fee-based brokerage business. FINRA also ordered Baird to return $434,510 in fees, plus interest, to 154 customers. Those customers either paid fees...
SEC Commissioner Walter Speaks on Corporate Governance Issues
Posted on February 18, 2009SEC Commissioner Elisse B. Walter spoke today in New York on "Restoring Investor Trust through Corporate Governance." Topics included proxy access, enhanced disclosure on director nominees, e-proxies, broker votes and say-on-pay.
SEC Charges Former Colorado Broker with Running a Ponzi Scheme
Posted on February 18, 2009The SEC filed securities fraud charges against former registered representative, William L. Walters for operating a Ponzi scheme promising annual returns ranging from 20% to 40%. According to the Complaint, from 2003 through 2006, Walters raised approximately $16...
UBS Settles SEC Charges It Facilitated Clients' Tax Avoidance
Posted on February 18, 2009The SEC filed an enforcement action against UBS AG, charging the firm with acting as an unregistered broker-dealer and investment adviser. According to its complaint, UBS's conduct facilitated the ability of certain U.S. clients to maintain undisclosed accounts in Switzerland...
Research in Motion Limited Settles Backdating Charges with SEC
Posted on February 17, 2009The SEC charged Ontario, Canada, BlackBerry maker Research in Motion Limited (RIM) and four of its senior executives with stock option backdating. The SEC's complaint alleges that RIM, its former Chief Financial Officer Dennis Kavelman, former Vice President of Finance...
SEC Charges Stanford Int'l Bank with $8 Billion Fraud
Posted on February 17, 2009On February 16, 2009, the federal district court in the Northern District of Texas, at the request of the SEC, entered a TRO against Robert Allen Stanford and three of his companies, the Antiguan-based Stanford International Bank (SIB), Houston based...
Chamber of Commerce Releases Report to Improve SEC
Posted on February 17, 2009The U.S. Chamber of Commerce's Center for Capital Markets Competitiveness recently released a report, Examining the Efficiency and Effectiveness of the U.S. Securities and Exchange Commission. While recent criticisms of the agency have focused on agency's failures to prevent the...
Should the SEC be more like the CIA?
Posted on February 16, 2009Professor Donald Langevoort, Georgetown University Law School, recommends that the SEC "has a lot to learn" from the CIA's methods of gathering information. His comments were part of a program on the future of financial regulation presented last week at...
First Circuit Affirms Dismissal of Fraud Charges Against Three Former Employees of Putnam Fiduciary Trust
Posted on February 16, 2009The SEC recently announced that on February 6, 2009, the United States Court of Appeals for the First Circuit affirmed a federal district court decision dismissing a civil fraud action against three former executives of Putnam Fiduciary Trust Company (PFTC),...
Morgan Stanley and Citigroup Will Pay Big Bucks to Brokers
Posted on February 16, 2009Morgan Stanley and Citigroup will pay $3 billion in retention payments to top-producing brokers to keep them from being lured away from the firm, reports the Wall St. Journal. Morgan Stanley, Citigroup to Give Brokers Big Retention Fees
Niemeier for SEC Chief Accountant?
Posted on February 16, 2009The CFO Blog reports the rumor that current PCAOB member Charles Niemeier will be appointed the SEC's Chief Accountant. This is important because Niemeier opposed past Chair Cox's accelerated timetable for adoption of IFRS. Mary Schapiro has already distanced herself...
Frankel on Examinations of Market Intermediaries
Posted on February 15, 2009Regulating the Financial Markets by Examinations, by Tamar Frankel, Boston University School of Law, was recently posted on SSRN. Here is the abstract:This Essay proposes changing future government examinations of market intermediaries and focusing on bubbles and crashes as the...
Greenfield on Choice in Corporate Law
Posted on February 15, 2009Corporate Law and the Rhetoric of Choice, by Kent Greenfield, Boston College Law School, was recently posted on SSRN. Here is the abstract:Rhetorically, the notion of choice has always been a powerful one in politics and law. This essay is...
Colombo on Secondary Actors in Securities Fraud
Posted on February 15, 2009Cooperation with Securities Fraud, by Ronald J. Colombo, Hofstra University - School of Law, was recently posted on SSRN. Here is the abstract:Secondary actors, such as lawyers, accountants, and bankers, are oftentimes critical players in securities fraud...
Krawiec on the Rogue Trader
Posted on February 15, 2009The Return of the Rogue, by Kimberly D. Krawiec, University of North Carolina at Chapel Hill - School of Law, was recently posted on SSRN. Here is the abstract:The rogue trader - a figure that captured public attention in the...
Brokerage Pay Under Government Scrutiny
Posted on February 13, 2009The House Committee on Oversight and Government Reform is looking into pay practices, such as retention bonuses and recruitment packages, at the retail brokerage units of financial institutions that have received federal bailout money. InvNews, House committee explores payouts at...
SEC Fines SG Americas Securities for Failure to Supervise Former Managing Director
Posted on February 13, 2009In the Matter of SG Americas Securities, LLC and Francois O. Barthelemy: On February 13, the SEC issued an Order Imposing Remedial Sanctions (Order) against SG Americas Securities, LLC (SGAS) and Francois O. Barthelemy (Barthelemy). The Order finds that SGAS...
Ruth Madoff Withdrew $15.5 Million before Husband's Arrest
Posted on February 12, 2009Ruth Madoff, Bernard's wife, reportedly withdrew $15.5 million from a brokerage account in the weeks before her husband's arrest, $10 million of it the day before. NYTimes, Wife Withdrew Millions Before Madoff?s Arrest.
FINRA Fines Wachovia For Mutual Fund and UIT Suitability Violations
Posted on February 12, 2009FINRA announced today that it has fined two Wachovia units more than $4.5 million for violations related to the sales of mutual funds and Unit Investment Trusts (UIT). Wachovia Securities was fined $4.41 million for its failure to provide investors...
SEC Enjoins Meridian Holdings from Fraud, Books & Records Violations
Posted on February 12, 2009The SEC announced today that the United States District Court for the Central District of California entered final judgments, by consent, permanently enjoining Meridian Holdings, Inc. ("Meridian"), Anthony C. Dike ("Dike") and Michelle V. Nguyen ("Nguyen") from future violations of...
SEC Issues Final Rule on Interactive Data for Mutual Fund Risk/Return
Posted on February 12, 2009The SEC issued its final rule on INTERACTIVE DATA FOR MUTUAL FUND RISK/RETURN Here is the summary:We are adopting rule amendments requiring mutual funds to provide risk/return summary information in a form that is intended to improve its usefulness to...
SEC Charges Canadian with Manipulating Stocks of Four Companies
Posted on February 12, 2009The SEC announced that today it charged George Georgiou, of Toronto, Ontario, with manipulating the market in four separate microcap stocks ? Avicena Group, Inc., Neutron Enterprises, Inc., Hydrogen Hybrid Technologies, Inc., and Northern Ethanol, Inc...
ITT Settles FCPA Charges Involving Chinese Contracts
Posted on February 11, 2009The SEC filed a settled civil injunctive action in the U.S. District Court for the District of Columbia against ITT Corporation ("ITT"), a New York-based global multi-industry company, alleging violations of Section 13(b)(2)(A) and (B) of the Securities Exchange Act...
SEC Settles with Four Individuals Charged with Insider Trading in Dick's Sporting Goods Stock
Posted on February 11, 2009The SEC announced that on February 6, the U.S. District Court Judge for the Western District of Pennsylvania entered Final Judgments against four individuals charged with insider trading in advance of Dick's Sporting Goods Inc.'s June 21, 2004, announcement that...
KBR and Halliburton Settle FCPA Charges Involving Nigerian Contracts
Posted on February 11, 2009The SEC announced settlements with KBR, Inc. and Halliburton Co. to resolve SEC charges that KBR subsidiary Kellogg Brown & Root LLC bribed Nigerian government officials over a 10-year period, in violation of the Foreign Corrupt Practices Act (FCPA), in...
Cuomo Says Nearly 700 Merrill Lynch Employees Received at least $1 Million Bonus Payments
Posted on February 11, 2009In a letter to Barney Frank, Chairman of the House Committee on Financial Services, New York State Attorney General Andrew Cuomo states that, "in a surprising fit of corporate irresponsibility," Merrill Lynch decided secretly to move up the planned date...
SEC Settles Financial Fraud Charges Against Former MetLife Officer
Posted on February 10, 2009The SEC announced that on February 9, 2009, the United States District Court for the District of Massachusetts entered a final judgment by consent against Thom A. Faria, the last defendant in a financial fraud case filed in April 2006....
SEC Charges Three with Pump and Dump Scheme
Posted on February 10, 2009The SEC filed a civil enforcement action against Tulsa attorney George David Gordon; Dallas, Texas resident Joshua Lankford; and Canadian Dean Sheptycki for their roles in a scheme to defraud the public by manipulating the share prices of three penny...
SEC Charges Hedge Fund Managers with Fraud
Posted on February 10, 2009The SEC filed a civil injunctive action in the United States District Court for the Southern District of New York charging Grant Ivan Grieve, Finvest Asset Management, LLC ("FAM") and Finvest Fund Management, LLC ("FFM") with fraud in connection with...
SEC Charges Spokane Washington Man with Ponzi Scheme
Posted on February 09, 2009The SEC filed securities fraud and other charges against Quest Holdings, Inc. and its principal, Craig T. Jolly, of Spokane, Washington, for operating an internet-based Ponzi scheme promising monthly returns of up to 19.5 percent. According to the complaint, defendants...
SEC Approves FINRA Arbitration Rule on Explained Decisions
Posted on February 09, 2009The SEC approved a proposed rule change (SR-FINRA-2008-051) filed by FINRA relating to amendments to the Codes of Arbitration Procedure to require arbitrators to provide an explained decision upon the joint request of the parties. Publication is expected in the...
Madoff Consents to Permanent Injunction in SEC Action
Posted on February 09, 2009The SEC announced that on February 9, 2009, it submitted to the federal court in the Southern District of New York the consent of Bernard L. Madoff to a proposed partial judgment imposing a permanent injunction and continuing relief previously...
Changes in Leadership at SEC
Posted on February 09, 2009A change in leadership in the SEC's Enforcement Division was probably inevitable after the Madoff scandal, the Congressional anger at the SEC staff expressed during recent hearings, and SEC Chair Schapiro's promise to get tough. Today the SEC announced that...
Kaufman & Wunderlich on Confidential Informants in Securities Litigation
Posted on February 08, 2009Congress, the Supreme Court, and the Proper Role of Confidential Informants in Securities Fraud Litigation, by Michael J. Kaufman, Loyola University of Chicago - School of Law, and John M. Wunderlich, was recently posted on SSRN. Here is the abstract:Confidential...
Franklin on Chamber of Commerce's Success at Roberts Court
Posted on February 08, 2009What Kind of Business-Friendly Court? Explaining the Chamber of Commerce's Success at the Roberts Court, by David L. Franklin, DePaul University - College of Law, was recently posted on SSRN. Here is the abstract:Since the Roberts Court was formed in...
Chair Schapiro on SEC Priorities
Posted on February 06, 2009Excerpts from SEC Chairman Mary Schapiro's Address to Practising Law Institute's "SEC Speaks in 2009" Program, Feb. 6, 2009: As a first, but significant, step in empowering our Enforcement staff, I am this week taking action to end the Commission's...
Schapiro Apologizes to House Committee
Posted on February 05, 2009After four senior staff members of the SEC were unable to answer the House Subcommittee's questions about Madoff, citing ongoing invetigations, SEC Chair Mary Schapiro sent a letter to the committee, stating that ?Today's testimony before your subcommittee could not...
SEC Brings Prime Bank Offering Fraud Charges in Colorado
Posted on February 05, 2009The SEC charged Brian V. Prendergast of Castle Rock, Colorado, and his entity Enterprises, LLC, a Colorado limited liability company, with conducting a fraudulent prime bank offering scheme in coordination with Donald R. Smith of Aurora, Colorado, Yuail I...
SEC and NYAG Announce Wachovia ARS Settlement
Posted on February 05, 2009The SEC and the New York Attorney General separately announced the finalization of the settlement with Wachovia Securities, LLC that will provide more than $7 billion in liquidity to thousands of customers who invested in auction rate securities (ARS) before...
SEC Charges 7 in Insider Trading Ring That Generated $11.6 Million in Profits
Posted on February 05, 2009The SEC filed complaints in the United States District Court for the Southern District of New York alleging that seven individuals engaged in insider trading, which generated a combined total of over $11.6 million in illegal profits and losses avoided...
SEC Extends Comment Period for IFRS Roadmap
Posted on February 04, 2009The SEC has extended the comment period for a release proposing a Roadmap for the potential use of financial statements prepared in accordance with International Financial Reporting Standards (?IFRS?) as issued by the International Accounting Standards Board by U...
House Subcommittee Holds Hearing on Madoff
Posted on February 04, 2009A House subcommittee of the Financial Services Committee held a hearing today on the SEC's failure to uncover the Madoff ponzi scheme. Here is a link to the webcast. The star witness was Harry Markopolos, an independent fraud investigator, who...
Former Biovail CEO Settles 13(d) Charges
Posted on February 04, 2009The SEC announced that the United States District Court has entered a stipulated judgment against Eugene Melnyk, Biovail Corporation's former chairman and chief executive officer, with respect to violations of the stock accumulation disclosure provisions of the federal securities laws...
SEC Charges Private Fund Manager with Misappropriation, Obtains Emergency Relief
Posted on February 04, 2009The SEC filed an emergency enforcement action against Scott M. Ross, charging that Ross fraudulently obtained at least $10 million from approximately 300 investors. The SEC has obtained an emergency court order freezing Ross's assets and appointing a receiver from...
SEC Obtains Emergency Relief Against International Boiler Room Operation
Posted on February 04, 2009The SEC took emergency action to stop what it describes as "a massive and ongoing international boiler room scheme" that allegedly sold penny stocks to investors located in Europe by misrepresenting that investors paid no sales commissions. The SEC alleges...
SEC Approves FINRA Rule to Raise Amount for Single Arbitrator to $100,000
Posted on February 03, 2009The SEC approved a proposed rule change submitted by FINRA to amend the Code of Arbitration Procedure for Customer Disputes and the Code of Arbitration Procedure for Industry Disputes to raise the amount in controversy that will be heard by...
SEC Issues Final Rules on NRSROs and Proposing Additional Rules
Posted on February 03, 2009The SEC is adopting rule amendments that impose additional requirements on nationally recognized statistical rating organizations (?NRSROs?) in order to address concerns about the integrity of their credit rating procedures and methodologies. The effective date is April 10, 2009...
Markopoulos Expected to Testify Tomorrow on Madoff
Posted on February 03, 2009Henry Markopoulos, an independent fraud investigator who warned the SEC repeatedly since 2000 of Madoff's fraud, to no avail, is expected to testify tomorrow before the House Financial Services Committee. The Wall St. Journal has posted his written testimony.
SEC Charges Three with Selling Unregistered Shares in Shell Company
Posted on February 02, 2009The SEC announced that it filed a complaint in the United States District Court for the Southern District of New York alleging that Forest Resources Management Corp. ("Forest"), Chaim Justman ("Justman"), William J. Reilly ("Reilly"), and Pinchus Gold ("Gold") defrauded...
Former Lumenis CFO Consents to Fraud Judgment
Posted on February 02, 2009The SEC announced that a final judgment by consent was entered on September 9, 2008 by the United States District Court for the Southern District of New York against Kevin Morano, the former Chief Financial Officer of Lumenis, Ltd., in...
Former RenRe CEO Found Liable for Sham Reinsurance Transaction
Posted on February 02, 2009On January 27, 2009, after a six-day bench trial, the Hon. Gerard E. Lynch of the U.S. District Court for the Southern District of New York issued an opinion and order that held defendant James N. Stanard, the former chief...
Nagy on Insider Trading
Posted on February 01, 2009Insider Trading and the Gradual Demise of Fiduciary Principles, by Donna M. Nagy, Indiana University School of Law-Bloomington, was recently posted on SSRN. Here is the abstract: Recent SEC enforcement actions, such as the case filed against Dallas Mavericks' owner...
Booth on Future of Securities Litigation
Posted on February 01, 2009The Future of Securities Litigation, by Richard A. Booth, Villanova University School of Law, was recently posted on SSRN. Here is the abstract: In this article, I analyze the implications of the Supreme Court's 2008 decision in Stoneridge Investment Partners...
SEC Issues Final Rules on Interactive Data
Posted on January 30, 2009The SEC released its final rules on Interactive Data to Improve Financial Reporting. Here is the summary: We are adopting rules requiring companies to provide financial statement information in a form that is intended to improve its usefulness to investors...
SEC Obtains Preliminary Relief Against Gen-See Capital
Posted on January 30, 2009Yet another ponzi scheme: On January 28, 2009, the United States District Court for the Western District of New York entered an order granting the SEC's motion for preliminary injunction and other relief against defendants, Gen-See Capital Corporation a/k/a Gen...
SEC Sustains NASD Disciplinary Action for Failure to Respond to NASD Requests for Information
Posted on January 30, 2009The SEC sustained NASD disciplinary action against CMG Institutional Trading, LLC, a former NASD member firm, and Shawn D. Baldwin, the firm's president and chief executive officer. The Commission also sustained NASD's imposition of two-year suspensions on CMG and Baldwin...
Merrill Lynch Settles Charges It Failed to Disclose Conflict of Interests in Pension Consulting Business
Posted on January 30, 2009The SEC charged Merrill Lynch, Pierce, Fenner & Smith, Inc. and two of its former investment adviser representatives with securities laws violations for misleading pension consulting clients about its money manager identification process and failing to disclose conflicts of interest...
Speculation over Future FINRA CEO
Posted on January 29, 2009Who will be the next CEO of Finra? According to Investment News, the leading contenders are Rick Ketchum, CEO, NYSE Regulation, Inc., Annette Nazareth, former SEC Commissioner, and Douglas Shulman, IRS Commissioner.
NASAA Releases Its Legislative Agenda
Posted on January 29, 2009NASAA outlined its legislative agenda for the 111th Congress aimed at strengthening investor protection, restoring state authority in certain areas, and providing greater transparency and accountability for those in the financial services industry and in government who share responsibility for...
UK Appeals Court Upholds SEC Freeze on Assets of UK Citizen
Posted on January 28, 2009On January 28, 2009, the Supreme Court of Judicature Court of Appeal in the United Kingdom dismissed the appeal of Glenn Manterfield, a citizen of the United Kingdom, of an order by a British court freezing Manterfield's assets. The High...
SEC Suspends under Rule 102(e) Attorney Suspended under State Law for Non-Payment of Dues
Posted on January 28, 2009A cautionary tale: On January 27, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings, and Imposing Remedial Sanctions against Arthur P. Hipwell. The Order finds that Hipwell has...
SEC Alleges Nashville Financial Planner Told Customers They Invested in TARP Program
Posted on January 28, 2009On January 28, 2009, the SEC filed a complaint seeking emergency relief ("Complaint") in the United States District Court for the Middle District of Tennessee against Gordon B. Grigg ("Grigg") and ProTrust Management, Inc., d/b/a ProTrust Management Group, LLC d/b/a...
SEC Enforcement and OCIE Directors Testify on Madoff
Posted on January 27, 2009Both Linda Chatman Thomsen, SEC Director of Enforcement, and Lori Richards, Director of OCIE, testified today before the United States Senate Committee on Banking, Housing and Urban Affairs about the Madoff scandal. In her written statement, Ms. Thomsen does not...
Schapiro is new SEC Chair
Posted on January 27, 2009Mary Schapiro was sworn in today as the SEC Chair. She has a tough job ahead of her, and I wish her the best.
Cuomo Issues Subpoenas to Thain on Merrill Lynch Bonuses
Posted on January 27, 2009STATEMENT FROM ATTORNEY GENERAL ANDREW CUOMO REGARDING NEW DEVELOPMENTS IN INVESTIGATION OF MERRILL LYNCH BONUSES AND BANK OF AMERICA: "Today, as part of our ongoing inquiry into executive compensation issues at institutions who have received TARP funds, my Office issued...
FINRA's Interim CEO Testifies on Madoff
Posted on January 27, 2009Stephen Luparello, Finra's Interim CEO, also testified at the Senate hearing on the Madoff scandal. In his remarks, he emphasized that Finra only regulated Madoff's broker-dealer firm and has no regulatory authority over investment advisors. He also stated they received...
Aguilar on the Future of the SEC
Posted on January 27, 2009SEC Commissioner Luis A. Aguilar spoke at the Investment Company Institute?s Board of Governor?s Winter Meeting on Jan. 26. In his remarks, he addressed the need for independent funding for the agency and the need to close loopholes in regulation,...
Schapiro's Responses to Some Questions by Senator Levin
Posted on January 26, 2009Senator Carl Levin has posted on his website Mary Schapiro's responses to a list of questions the Senator submitted to her about her vision for the SEC. Here are some excerpts: Current SEC Chair Christopher Cox has indicated that he...
SEC Staff Releases Revised Interpretations on Rule 13e-3
Posted on January 26, 2009The SEC's Division of Corporation Finance posted on the SEC website Compliance and Disclosure Interpretations (?C&DIs?) that comprise the Division?s interpretations of Exchange Act Rule 13e-3 as it applies to ?going private? transactions and related Schedule 13E-3...
SEC Staff Compliance & Disclosure Interpretations -- Securities Act
Posted on January 26, 2009SEC Division of Corporation Finance posted on the SEC website its Compliance and Disclosure Interpretations (?C&DIs?) that comprise the Division?s interpretations of the rules adopted under the Securities Act. Some of these C&DIs were first published in prior Division publications...
Former Enron Inhouse Counsel Settle SEC Charges
Posted on January 26, 2009On January 20, 2009, the U.S. District Court in Houston entered final judgments in the SEC's civil action against Jordan H. Mintz, a former Enron Vice President and General Counsel of Enron's Global Finance group, and Rex R. Rogers, Enron's...
Davidoff on Regulatory Reform
Posted on January 25, 2009Filling Gaps and Black Holes: Restructuring the Financial Regulatory Apparatus for the Next Crisis (Written Testimony for the Senate Homeland Security and Governmental Affairs Committee Hearing o