daily notes and stories
» Friday, August 20, 2010
Should someone in New Jersey have paid?
This week, the Securities and Exchange Commission announced that it had settled a securities violation with New Jersey and issued a cease and desist order -- the first ever against a state. Ashby Jones at the Wall Street Journal says the SEC has more states in it sights over disclosures regarding weakened financies in the economic downturn over the last several years. Then he said the fact that the SEC didn't even name the state treasurer or any one else who helped New Jersey's bonds go to market in its order was disappointingto some people, and he singled out a comment from a former SEC accountant in a New York Times piece about the case: "There's no fine, and no accountability on the part of any individuals."
» Wednesday, August 18, 2010
SEC charges New Jersey with securities violations
The cease and desist order, issued today, is the first ever by the SEC against a state. New Jersey agreed to settle the charges without admitting or denying any wrong doing, according to the agency. The SEC says the state misrepresented and failed to disclose to investors in billions of dollars worth of municipal bond offerings that it was underfunding the state's two largest pension plans.
» Friday, August 13, 2010
Aetna Inc. securities suit stays dead after appeals court ruling
The 3rd Circuit Court of Appeals recently refused to revive most of the claims made by investors who sued the insurance company because they believed it made false statements about its supposedly "disciplined" investment strategy. The plaintiffs claimed the assurances were actually designed to enrich company executives at the expense of investors. The court said the statements were just forward looking and accompanied by the appropriate cautionary language -- which means they were covered by Safe Harbor provisions in U.S. securities laws. The ruling upholds an earlier district court ruling. | More at Law.com
Sons of Christian talk show founder named in Canadian securities suit
The two, Ronald and Reynold Mainse, aren't accused of fraud, but the government of Ontario says they broke trading rules by failing to register before promoting two investment schemes to dozens of their friends and receiving over $250,000 (U.S) in commissions. The investments turned out to be little more than ponzi schemes masterminded by an American man named Gordon Driver. Driver settled charges with the SEC last year over the same scheme. The Mainse's father, David Mainse, founded 100 Huntley Street, a Christian talk show akin to the 700 Club in the United States, in 1977. Crossroads Christian Communications Inc., the charity that runs the Toronto-based show, said the brothers were themselves victims of the scheme and were probably targeted by Driver because of their ability to reach trusting, Christian investors, according to the Globe and Mail. Crossroads said no donations from the public were ever invested.
» Wednesday, August 11, 2010
Securities fraudster knows when to hold 'em -- he hopes
Poker pro and former stockbroker Samuel McMaster Jr. pleaded guilty to 26 counts of securities fraud earlier this month in exchange for a chance to win his freedom, literally. A prosecutor in Arizona agreed that if McMaster could win enough money playing poker to pay back his victims, they won't press for prison time. "McMaster has to make restitution payments of $7,500 a month for the next six months while he throws card in tournaments. If he's not able to prove he's got the poker skills he needs to make $440K, he'll be back before the judge and off to jail he goes," Kashmir Hill, at Above the Law, says. Prosecutors say McMaster sold half a million dollars in worthless promissory notes to unsuspecting investors, some who lost their life savings in the scam.
» Monday, August 2, 2010
SEC Transparency Act introduced in Congress
The idea is to undo the potential secrecy provisions in the recently passed financial reform Act, says Rep. Ron Paul (R-Texas), who introduced the bill on the heels of a Fox Business News report about a little-noticed section of the law that appears to give the SEC broad authority to withhold records. "It is unfortunate, yet not unexpected, that legislation touted as fixing problems with the banking system actually makes them worse and provides more cover and power for organizations that failed us like the SEC and the Fed," Paul said in introducing the bill. || Fox Business on the secrecy at the SEC
» Friday, July 30, 2010
Wealthy brothers sued by the SEC for alleged insider trading
Sam and Charles Wyly, of Dallas, made more than $550 million in undisclosed profits through 13 years of insider trading, according to a complaint filed in New York by the SEC this week. The SEC alleged that the brothers used an elaborate network of offshore entities to conceal their buying and selling of shares in companies on whose boards they served. If the SEC proves its allegations, the case would rank as one of the biggest insider-trading scandals in history. The Los Angeles Times says Sam Wyly, a member of the Forbes 400 list of richest Americans, and his brother are known for their support of conservative candidates and causes -- both Presidents Bush received campaign donations. Sam Wyly''s net worth was estimated at $950 million in the latest Forbes rankings. The SEC's suit also listed as defendants the brothers' attorney, Michael C. French, and their broker, Louis J. Schaufele III.
» Wednesday, July 28, 2010
A new veil of secrecy at the SEC?
Lawyers for the agency apparently are arguing that a barely-noticed portion of the new financial reform act--signed last week by President Obama--exempt it from virtually all requests for public records under the Freedom of Information Act. Fox Business Network said in an article today that it had sued the SEC in 2009 seeking access to records of the agency's failed investigations into Bernie Madoff and R. Allen Stanford. The SEC had turned down its initial FOIA requests. Fox Business Network said the agency has indicated that it will block further requests by invoking the new law, which says it can withhold records from the public pertaining to "surveillance, risk assessments, or other regulatory and oversight activities."
» Monday, July 26, 2010
Navigating the SEC's new whistleblower bounty program
"Certainly, the prospect of a cash bounty could result in the SEC's being inundated with tips, valid or not," says Sarah Johnson at CFO.com. Navigating the new law will be tricky for public companies, she added. They should remind their employees how to report suspicions internally, so that potential problems can be dealt with before the SEC gets involved, Johnson wrote. However, public companies should also be careful to not discourage reporting to the feds at the same time because it could end up being fodder for lawyers in later litigation. || More from Compliance Week on the new bounty program
Virginia ponzi schemer sentenced to prison
Gregory Vincent Cronin, of Innovative Investment Advisors Inc., told investors he was buying them blue-chip stocks, but instead was using the money to buy and sell stock index options. He lost $6.8 million but kept the scheme going by paying out previous investors with funds from new ones. He was sentenced in federal court this week to more than 12 years in prison for securities and mail fraud.
» Saturday, July 24, 2010
Sharesleuth.com Entries Feed
When we redesigned Sharesleuth recently, a few files were moved around. One of them was our RSS / Atom feed. We're sorry for any inconvenience. You can now find the feed here, at http://sharesleuth.com/atom.xml.
» Monday, July 19, 2010
State court might be an investor's best bet
Several Supreme Court decisions generally bar investors from suing third-parties in federal court securities fraud cases. But with many mortgage lenders now out of business, investors hurt by the housing market crash are increasingly turning toward the banks and Wall Street firms that packaged and sold mortgage-backed securities, and they're finding some successes in state courts, says Gretchen Morgenson of the New York Times.
» Wednesday, July 14, 2010
SEC sues penny stock promoter Investsource
The Securities and Exchange Commission complaint says Songkram Sahachaisere sent emails to millions of people through his California-based company, Investsource Inc., promoting penny stocks without disclosing that he was being compensated by the companies in question. The complaint also said that Sahachaisere was selling shares of some of those companies at the same time he was recommending them to investors. The SEC says Sahachaisere's alleged fraud netted him $276,000 in illegal profits.
» Tuesday, July 13, 2010
New federal prosecutor in Connecticut takes aim at white collar crime
David Fein is new to the job, having just started as U.S Attorney for Connecticut in May. But he plans to make financial fraud prosecutions a top priority. "David and his team are determined to bring this district's pursuit of white collar crime to the next level," Attorney General Eric Holder said at his swearing in at Yale Law School Monday (July 12), according to Bloomberg Business Week.
» Monday, July 12, 2010
Investment fund goes after banks over subprime mortgage losses
Cambridge Place Investment Partners, a fund based in Boston, has sued about a dozen banks over subprime loans, in what could become a test case for investors seeking to recover mortgage losses. "Driven to profit from the lucrative securitisation business, the defendants demanded enormous volumes of loans, leading to erosion in lending standards," the lawsuit says, according to the London Telegraph.