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Post Frequency: 38.1/day

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

SEC Cautions Rating Agencies about Deceptive Ratings Conduct and Internal Controls

Posted on August 31, 2010
The SEC today issued a report cautioning credit rating agencies about deceptive ratings conduct and the importance of sufficient internal controls over the policies, procedures, and methodologies the firms use to determine credit ratings. The SEC's Report of Investigation stems...

Treasury Releases Data on U.S. Holdings of Foreign Securities

Posted on August 31, 2010
Treasury released preliminary data from an annual survey of U.S. portfolio holdings of foreign securities at year-end 2009. Final survey results, which will include additional detail as well as revisions to the data, will be reported on October 29, 2010...

Former Dell Chief Accounting Officer Settles Accounting Fraud Charges

Posted on August 30, 2010
The SEC today charged former Dell Inc. ("Dell") Chief Accounting Officer Robert W. Davis for his role in the company's accounting fraud. Last month, the SEC charged Dell with fraud for materially misstating its operating results from fiscal year 2002...

SEC Approves Rule Change on RR's Outside Business Activities

Posted on August 30, 2010
The SEC granted approval to FINRA Rule 3270 (Outside Business Activities of Registered Persons). As part of the process of developing a new consolidated rulebook, FINRA proposed to adopt NASD Rule 3030 (Outside Business Activities of an Associated Person) as...

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Ribstein on Jones v. Harris Associates

Posted on August 28, 2010
Federal Misgovernance of Mutual Funds, by Larry E. Ribstein, University of Illinois College of Law, was recently posted on SSRN. Here is the abstract: In Jones v. Harris Associates, the Supreme Court interpreted investment advisers? fiduciary duty regarding compensation for...

Murdock on The Financial Reform Act

Posted on August 28, 2010
The Financial Reform Act: Will it Succeed in Reversing the Causes of the Subprime Crisis and Prevent Future Crises?, by Charles W. Murdock, Loyola University Chicago School of Law; Loyola University of Chicago, was recently posted on SSRN. Here is...

Partnoy on Credit Default Swaps As Substitutes for Credit Ratings

Posted on August 28, 2010
Credit Default Swap Spreads as Viable Substitutes for Credit Ratings, by Frank Partnoy, University of San Diego School of Law, was recently posted on SSRN. Here is the abstract: We evaluate the viability of credit default swaps (CDS) spreads as...

Hoffman & Steinberg on Milberg Weiss

Posted on August 27, 2010
The Ongoing Milberg Weiss Controversy, by Lonny Sheinkopf Hoffman, University of Houston Law Center, and Alan F. Steinberg, Department Political Science, was recently posted on SSRN. Here is the abstract: In this paper we revisit the ongoing controversy surrounding the...

Raymond James Pays $3.5 Million to ARS Purchasers in Arbitrations

Posted on August 26, 2010
Since July 2010, FINRA arbitrators have ordered brokerage units of Raymond James Financial to buy back from customers auction rate securities (ARSs) totalling $3.5 million (3 separate proceedings). By way of contrast, ARS purchasers have not generally been successful in...

SEC Alleges Insider Trading in Advance of BHP Tender Offer for Potash

Posted on August 25, 2010
Just as night follows day, so the announcement of a big tender offer is followed by allegations of insider trading. The SEC charged two residents of Madrid, Spain with insider trading and obtained an emergency court order to freeze their...

SEC Releases Final Rules on Proxy Access

Posted on August 25, 2010
The SEC released today the much-anticipated final rules on proxy access and directors' nominations. I set forth below the release's introduction; I will analyze the new rules in a subsequent post. We are adopting changes to the federal proxy rules...

The Cheat Sheet on the New Directors' Nominations Proxy Rules

Posted on August 25, 2010
Here is the SEC's Announcement about the new Directors' Nominations Rules (Proxy Access) that includes a Fact Sheet with a basic description of new rules (for those who don't have time to read the 400 page release): The new rules...

FINRA Fines Zions Direct for Not Disclosing Conflicts in Online CD Auctions

Posted on August 25, 2010
FINRA fined Zions Direct, Inc. $225,000 for failing to disclose the potential conflict of interest created by the participation of its affiliate, Liquid Asset Management (LAM), in online CD auctions conducted by Zions involving certificates of deposit (CDs) issued by...

Will SEC Issue Proxy Access Rules Tomorrow?

Posted on August 24, 2010
SEC's Open Meeting Agenda for August 25, 2010: Item 1: Proxy Access Adoption The Commission will consider whether to adopt changes to the federal proxy and other rules to facilitate director nominations by shareholders.

SEC Charges Former Countrywide CEO with Approving Special Loans

Posted on August 24, 2010
The SEC has already charged Angelo Mozilo, the former CEO of Countrywide, with fraud and insider trading. Now it charges, in a filing opposing the motions to dismiss by Mozilo and other executives, that Mozilo personally approved mortgages for favored...

SEC Republishes FINRA Rule Proposal on Suitability, Know Your Customer

Posted on August 23, 2010
On August 13, 2010, the SEC sent to the Federal Register for publication Release No. 34-62718 - a Notice that the Financial Industry Regulatory Authority, Inc. (?FINRA?) had proposed rule changes to adopt FINRA Rules 2090 (Know Your Customer) and...

Seventh Circuit Rejects Tightening of Class Certification Requirements in FOM Class Actions

Posted on August 23, 2010
The Seventh Circuit, in an opinion authored by Judge Esterbrook, recently reaffirmed the fraud-on-the-market theory of reliance and disapproved of the Fifth Circuit's Oscar Private Equity opinion that held that proof of loss causation is essential at the class certification...

Eighth Circuit Holds that Brokerage Firm can be Liable for RR's Ponzi Scheme

Posted on August 23, 2010
The Eighth Circuit recently held, in Lustgraf v. Behrens (Aug. 20, 2010)(Download LustgrafvBehrens), that investors stated controlling person claims under federal and state securities laws against a broker-dealer firm whose registered representative allegedly perpetrated a Ponzi scheme and misappropriated their...

Boyfriend of Former Disney Employee Pleads Guilty to Attempt to Sell Earnings Information

Posted on August 23, 2010
The boyfriend of a former Walt Disney administrative assistant settled federal criminal charges that he offered to sell hedge funds early access to Disney's earnings reports. Yonni Sebbag pleaded guilty to conspiracy to commit securities and wire fraud and one...

Caskey on Pricing of Shares with Securities Class Actions

Posted on August 22, 2010
The Pricing of Shares in Equity Markets with Securities Class Action Lawsuits, by Judson A. Caskey, University of California at Los Angeles - Anderson School of Management, was recently posted on SSRN. Here is the abstract: This study develops an...

Koebel on Regulation of Investment Advisory Industry

Posted on August 22, 2010
Trust and the Investment Adviser Industry: Congress? Failure to Realize Finra?s Potential to Restore Investor Confidence, by James T. Koebel, Catholic University of America (CUA) - Columbus School of Law; Council, Baradel, Kosmerl & Nolan, P.A., was recently posted on...

BofA Deny Fraud Charges in New York AG's Action

Posted on August 20, 2010
Bank of America Corp. and its former CEO Ken Lewis filed aggressive responses to the New York AG's civil fraud suit involving the BofA-Merrill Lynch merger, calling the merger "an unmitigated financial and strategic success." Defendants did not make a...

Former Ernst & Young Partner Settles Insider Trading Charges

Posted on August 19, 2010
On August 16, 2010, the United States District Court for the Southern District of New York entered final judgments against James E. Gansman and Donna B. Murdoch in SEC v. Gansman et al., 08-CV-4918, an insider trading case the Commission...

SEC Takes up Proxy Access on August 25

Posted on August 19, 2010
The SEC announced that its next open meeting will be August 25, at which the agenda item is: The Commission will consider whether to adopt changes to the federal proxy and other rules to facilitate director nominations by shareholders.

FiNRA Fines HSBC Securities (USA) for Unsuitable Sales of Risky CMOs

Posted on August 19, 2010
FINRA fined HSBC Securities (USA) Inc. $375,000 for recommending unsuitable sales of inverse floating rate Collateralized Mortgage Obligations (CMOs) to retail customers. HSBC failed to adequately supervise the suitability of the CMO sales and fully explain the risks of an...

FINRA Fines Merrill Lynch $500,000 for UIT Sales Discounts Failures

Posted on August 18, 2010
FINRA fined Merrill Lynch $500,000 for failing to provide sales charge discounts to customers on eligible purchases of Unit Investment Trusts (UITs). FINRA also found that Merrill Lynch failed to have an adequate supervisory system in place to ensure customers...

New Jersey Settles SEC Charges of Misleading Disclosures about Pension Funding

Posted on August 18, 2010
The SEC today charged the State of New Jersey with securities fraud for misrepresenting and failing to disclose to investors in billions of dollars worth of municipal bond offerings that it was underfunding the state's two largest pension plans. New....

Treasury Named as Selling Shareholder in GM Registration Statement

Posted on August 18, 2010
The U.S. Department of the Treasury today announced that it has agreed to be named as a selling shareholder of common stock in General Motors Company's (GM) registration statement on Form S-1 filed with the Securities and Exchange Commission (SEC)...

Third Circuit: Fraud Created the Market Theory Makes No Sense

Posted on August 17, 2010
The Third Circuit rejected the fraud-created-the market theory of presumed reliance in federal securities class actions, holding that it "lacks a basis in common sense, probability, or any of the other reasons commonly provided for the creation of a presumption...

How Independent is Funded Academic Research?

Posted on August 16, 2010
The WSJ's Personal Finance section has an article on academic financial research sponsored by industry and focuses, in particular, on a study of annuities conducted by University of Pennsylvania's Wharton School and funded by New York Life; Beware of 'Independent'...

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