Posts tagged 'SEC'

Swimming with sharks

A great piece on the US bond market by Tracy Alloway and Mike Mackenzie has plenty to consider on Monday. Some will be familiar to those in the market — there have been a ton of inflows and liquidity has dried up — but ponder also some of the behaviour described when it comes to allocating bond sales.

Because rules for bond allocations are not set in stone, most bankers and fund managers do not believe they are doing anything illegal, though some expressed misgivings about a practice they describe as more art than science.

A long boom, insatiable demand for what banks are selling, possible different treatment of the large and the small buyer. Any of it starting to sound familiar? Read more

Who me? Oh, I’m just your average insider trader nabbed by the SEC

I’m a man, 43 years old, pretty successful work wise. I invest about $200,000 and earn about $72,000 per tip. Mergers are my trade of choice.

I’m probably richer than you and I have friends and family who like me enough to get illegal alongside — 23 per cent of those who who tip me or get tipped are family members, 35 per cent are friends, and 35 per cent are business associates. Mostly they live pretty close, like 26 miles close. Which is nice. Read more

Slaughter of the shells

Officials from the SEC have been out with axes and clubs across 24 states and also Canada, effectively putting 128 inactive penny dreadfuls or Pink Sheets out of their corporate misery.

Trading suspensions on Monday brought the number of micro cap companies suspended since the regulator began Operation Shell-Expel in 2012 to 800 — some 8 per cent of the OTC market, where all these previously traded. Read more

Anti-Abacus, anti-BISTRO and anti-balance sheet synthetic securitisation


Close your eyes, lay back and imagine yourself as a regulator at the US Securities and Exchange Commission (do we have to? -ed). Read more

The belated Michael Lewis effect?

The five and a half months since this book was published have not been an easy one for the high frequency trading community, certainly in the US…

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The wonky, absurd scales of (insider dealing) justice

On Monday…

Mathew Martoma, the former SAC Capital portfolio manager who refused to co-operate with authorities targeting his old boss Steve Cohen, was sentenced to nine years in prison for insider trading on Monday. Sentencing guidelines indicated Mr Martoma, 40, could serve between 15 and 20 years in prison because of the size of the illicit profits. Read more

Bonfire of the bond funds

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Dear stoned investor…

The SEC on Friday suspended another marijuana-related “pink sheet” stock — its fifth in the space of two months — and issued a generalised warning to investors who might be suckered by dope-related frauds as marijuana usage becomes progressively less illegal in the US.

FusionPharm of Denver claims to have been selling what look like re-sprayed shipping containers called FarmPods to would-be cultivators… Read more

Guest post: The SEC could find new uses for an old law

It is probably too late to change the number of individuals charged in relation to the financial crisis, even if US regulators reconsider their treatment of offending corporations, but there may be a route to more aggressive enforcement by dusting off a little used part of a 1934 statute. Jordan Thomas, a former SEC Enforcement Director and chairman of the whistleblower representation practice at Labaton Sucharow, outlines a way the Commission could go after malign managers in the future.

Since the Financial Crisis, the Securities and Exchange Commission has been criticized for not holding senior executives accountable for corporate wrongdoing. But Wall Street’s top cop has now signaled that it will begin using a statute that has been off the radar for decades to pursue charges against parties who violate the securities laws “through or by means of any other person.” Read more

A coming bubble in whistleblowing?

There were a few gasps late on Tuesday when the SEC declared that it was awarding more than $14m to an unnamed whistleblower, whose information had helped the US authorities recover “substantial” investor funds in an unnamed case.

That’s quite a prize and will no doubt encourage other would-be latter-day bounty hunters. But there is evidence that the SEC really didn’t want to set this sort of precedent at all. Read more

Jobs for twits, by twits

We are sure this is exactly what the wise legislators of the US had in mind when they passed the Jumpstart Our Business Startups Act last year.

A small internet start-up gets to raise a little bit of capital from private investors without all that cumbersome regulation and public scrutiny so it can invest and hire people. You know, JOBS! Read more

Compliant Twits, or…


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Fed Presidents are not going to let Money Market Funds off the hook

A letter lands from the 12 Presidents of the Federal Reserve, led by consistent money market fund critic Eric Rosengren. Reform has been a marathon and they are going to run along behind the SEC waving a big stick until it is finished: Read more

“Edge”, SEC v Steve Cohen edition

Friday was a very very hot day on the East Coast. We wonder if they’re staying cool on SAC’s trading floor this afternoon…

Click for the SEC’s order alleging that Steve Cohen “failed reasonably to supervise” two SAC traders involved in trading Elan and Dell stock. It’s not the kind of claim against Cohen which many could really have been expecting in this sprawling, almost absurdly diffident insider-trading investigation. Read more

How about that, SEC & CBOE edition

From the SEC’s order setting out a $6m fine in a settlement with the Chicago Board Options Exchange, over some serious failings relating to this probe of an online broker’s obligations under Regulation SHO (on short-selling)…

Self-regulation is a unique and fundamental component of federal securities regulation in the United States…

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Nasdaq’d, SEC edition

We’re glad we kept a screenshot of this moment in stock-market history:

It (ultimately) landed Nasdaq with a $10m fine — the biggest ever for an exchange — and serious egg on its face on Wednesday, after a settlement with the SEC over securities law charges relating to Facebook’s botched IPO. From the releaseRead more


Remember this? (WSJ, Feb 2012)

MSCI Probes ISS Employee’s Alleged Sale of Proxy Data Read more

The short arm of the SEC

So, there was evidence this week that the US authorities might finally be getting to grips with the Chinese reverse merger scandal, whereby a string of Chinese companies exploited lax listing rules to shake down naive American investors.

Executives at RINO International, a steel industry supplier, have been charged by the SEC with inflating revenues 15 fold in their US filings, while some of the proceeds from a reverse merger and $100m cash raising in 2007 were diverted to buy a house in Orange County, two Mercedes Benz cars and also funded shopping trips to the Chanel and Valentino stores in Beverley Hills. Most of the rest of the money was dispatched to China. Read more

Sin City, SEC edition

And so to Victorville. Nothing to do with FT Alphaville maybe winning some debate, but a real live city, east of LA, beyond the mountains where the desert starts, near Apple Valley. It’s what American friends would call an “ex-urb” and here’s the welcome sign:

Victorville Read more

The SEC vs Scott London

What moves people to give out insider trading tips?

That’s the allegation which the SEC has levied at Scott London, the former KPMG partner embroiled in a scandal over audits of companies including Herbalife and Skechers.

Here’s the full 17-page civil complaint (also alleging that Bryan Shaw used London’s info to trade shares): Read more

SAC settles for $600m

Washington, D.C., March 15, 2013 — The Securities and Exchange Commission today announced that Stamford, Conn.-based hedge fund advisory firm CR Intrinsic Investors has agreed to pay more than $600 million to settle SEC charges that it participated in an insider trading scheme involving a clinical trial for an Alzheimer’s drug being jointly developed by two pharmaceutical companies…

That’s the largest insider trading settlement ever. And is more than Goldman paid to settle Abacus. Read more

What do you want? The Volcker Rule! When do you want it? Last summer when you said we’d have it!

It’s Friday quiz time! Ready? Here goes:

  • Take a couple of clued-up Brooklynites in their 30s.
  • Add section §619 of Dodd-Frank, aka the “Volcker Rule”.
  • Now throw in a lawyer.

What do you get?

[Hint: It's America.] Read more

The SEC charges the (Chinese) Big Four

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“We’re from the SEC. Now give us all the money.”

Just make sure you check their badges first. SEC people carry badges, right? …

SEC staff is issuing this updated Investor Alert because we are aware of continuing fraudulent solicitations that purport to be affiliated with or sponsored by the Securities and Exchange Commission, Commission staff, as well as particular Commissioners (including a recent bogus email scam using the name of Commissioner Daniel Gallagher). Read more

Schapiro steps down

After nearly four years in office, SEC Chairman Mary L. Schapiro today announced that she will step down on Dec. 14, 2012.

A big announcement today from the SEC. Read more

SEC v CR Intrinsic

“This is an insider trading case where affiliated investment advisers and their hedge funds made over $276m in illegal profits…”

Click for the full SEC civil complaint against CR Intrinsic, hedge fund manager Mathew Martoma and neurology professor Dr Sidney Gilman: Read more

Barclays’ new investigations

What do you get when you reveal two new regulatory investigations as part of your slightly disappointing quarterly results? Answer: a 4.4 per cent drop in share price, as Barclays is finding out on Wednesday morning.

From the FT (our emphasis):

Barclays has warned investors that it is facing another fine in the US, this time over its conduct in power trading.

It has also disclosed that it is under investigation by the US Department of Justice and the US Securities and Exchange Commission over whether its relationships with certain third parties breached corruption rules.

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On those alleged Yorkvillians

Since the end of last year, the SEC has been using a proprietary risk analytics system called Aberrational Performance Inquiry. Basically, the plan has been to spot fund managers and hedgies whose outperformance points to potential fraud – the sort of fraud they missed in the case of Bernie Madoff.

Performance that is flagged as inconsistent with a fund’s investment strategy or other benchmarks forms a basis for further investigation and scrutiny by the SEC. Read more

Whistleblowing incentives just got international

This is a guest post from Clive Howard, a senior principal lawyer in RJW Slater & Gordon’s employment department. His high-profile cases include acting for Paul Moore in a whistleblowing case against HBOS, and Brodie Clark, former head of the UK Border Force, against the Home Office.

Whistleblowing incentives just got international Read more

MMFs still fleeing eastwards

The rivals rely on each other in potentially unstable ways. The US Treasury estimates that 105 money market funds with total assets of $1tn could fail in the same way as Reserve Primary if any of their top 20 counterparties defaulted. The latter include many European banks – 30 per cent of the assets of money market prime funds are European bank debt.

That’s from John Gapper’s column on the failure of the Securities and Exchange Commission to tame the $2.6tn US money market fund industry. Cardiff also has a few words to say on the topicRead more