Remember this? (WSJ, Feb 2012)
MSCI Probes ISS Employee’s Alleged Sale of Proxy Data Read more
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
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:
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.
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…
It’s Friday quiz time! Ready? Here goes:
What do you get?
[Hint: It's America.] Read more
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
“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
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.
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
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
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.
Well, it looks like all the lobbying paid off for the money market fund industry and its backers.
Mary Schapiro, chairman of the Securities and Exchange Commission, has announced that her proposal to reform the industry would not go to a vote because three of the SEC’s five commissioners had already announced their opposition to it. (Two were already expected. Until today, the position of Luis Aguilar remained unknown.) Read more
Click the image for the full docs brought by the SEC against Harbinger Capital and Phil Falcone — containing the tax loan allegation, the client redemption restriction allegation, and the MAAX bond short squeeze allegation…
On the day the UK said goodbye to its own little unregulated shop for penny dreadfuls, the SEC has unleashed an altogether more dramatic crackdown on the US equivalent – so-called Pink Sheet stocks traded over the counter.
Washington, D.C., May 14, 2012 — The Securities and Exchange Commission today suspended trading in the securities of 379 dormant companies before they could be hijacked by fraudsters and used to harm investors through reverse mergers or pump-and-dump schemes. The trading suspension marks the most companies ever suspended in a single day by the agency as it ramps up its crackdown against fraud involving microcap shell companies that are dormant and delinquent in their public disclosures. Read more
From the SEC on Thursday:
The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to Sections 15(b) and 21C of the Securities Exchange Act of 1934 (“Exchange Act”) against Goldman, Sachs & Co. (“Respondent” or “Goldman”). Read more
As part of the Dodd-Frank Act, various types of participants in derivatives markets need to be defined. According to the jersey one ultimately gets as a trader of interest rate swaps, credit default swaps and so on, different regulations may apply.
(Where “security-based”, regulator equals SEC, otherwise CFTC.) Read more
The SEC has begun a broad examination of the private equity industry, says NYT DealBook, citing two people with direct knowledge of the matter. The regulator’s enforcement unit sent a letter late last year to several private equity funds as part of what it called an “informal inquiry” into the industry, according to the sources, but the blog said it was not clear which firms received the letter. While the SEC. emphasised that the request should not be construed as an indication that it suspected any wrongdoing, its goal in gathering information was to investigate possible violations of securities laws, the sources said. The way private equity firms value their investments and report performance was said to be one aspect of the investigation. Read more
Maybe we are making too much of this, but when the SEC is on its 30th or so figurative lynching related to the Galleon rat case, does it really need to juice up its press releases in the hope of a tabloid pickup?
From the SEC IMMEDIATE RELEASE Read more
While I will miss doing this important work, I am gratified knowing that nearly every aspect of the SEC has been significantly improved in the four years since I was named Inspector General. Read more
Hedge fund lobbyists are pushing the SEC to repeal the Depression-era regulation which officially prohibits funds from all general advertising and solicitation, the FT reports. Funds have long complained that rule 502(c) of Regulation D makes it too difficult to find out whether managers are providing enough information for their clients, or even to discover new funds. Even the largest funds have little more than basic contact information on their websites as a consequence of the rule. Rule 502 emerged after the 1929 Wall Street Crash in order to prevent private funds taking advantage of “unsuitable” investors. However, rules in the US Investment Company Act have since restricted funds to taking money only from “qualified purchasers”, leading lobbyists to argue that the older rule has become redundant. Read more
The FT says fund lobbyists have petitioned the US Securities and Exchange Commission to repeal the rule that lies behind one of the industry’s most notorious traits: its secrecy. The Managed Funds Association, which counts George Soros, John Paulson and Louis Bacon as members of its founding council, has implored the SEC to eliminate rule 502(c) of Regulation D – an arcane piece of Depression-era legislation that defines how the modern hedge fund industry operates. The rule officially prohibits all general advertising and solicitation by hedge funds. But it is so broadly defined that it means most do not communicate with unqualified outsiders, especially the press, at all. Read more
The Securities and Exchange Commission has warned that US financial institutions’ disclosures have been “inconsistent in both substance and presentation”, specifically regarding sovereign debt exposure and financial and non-financial debt exposure, reports the WSJ. In guidance released on Friday, the SEC asked banks to consider providing a breakdown of exposure to each type of debt, by country. Regulators also are seeking information on how gross exposures are hedged through instruments such as credit-default swaps, as well as a discussion of “the circumstances under which losses may not be covered by purchased credit protection”, says the newspaper. The guidance is not binding. Read more
Fortress Investment Group’s CEO Daniel Mudd has announced that he is taking a leave of absence from the hedge fund, the WSJ reports. This comes after being named as a defendant in a civil securities-fraud lawsuit brought by the SEC last Friday, with respect to his prior role as the CEO of Fannie Mae. The suit alleges that risks that the firm was taking on, with respect to mortgage holdings, were not accurately disclosed to investors. While representatives of Fortress have stated that the suit doesn’t affect their business, there was concern among executives that it could alienate investors. Read more
The US Securities and Exchange Commission has charged a subsidiary of GlaxoSmithKline and its former chief executive with defrauding employees and shareholders out of more than $100m by buying back stock from them at undervalued prices when the unit was a private company, the FT reports. The SEC on Monday alleged that Charles Stiefel and Stiefel Laboratories, which was bought by GSK in 2009, failed to tell shareholders and employees the true value of Stiefel’s stock when the company used low valuations for buy-backs from 2006 to 2009. An attorney representing Mr Stiefel could not immediately be reached for comment. GSK said it intends to “vigorously” defend itself against the charges. NYT DealBook says the civil action against Mr Stiefel, filed in federal court in Miami, is unusual because it involves privately held stock, rather than publicly traded shares. Read more