To settle Financial Industry Regulatory Authority allegations that it committed numerous violations involving dealings between investment banking and research functions, Rodman & Renshaw LLC has agreed to pay a $315,000 fine. According to the SRO, from January 2008 to March 2012, the financial firm did not have an adequate supervisory system in place to properly monitor these interactions. Rodman & Renshaw also allegedly did not keep research analysts from soliciting investment banking business, compensated one analyst for such contributions, and did not stop Rodman’s CEO (he was on its Research Analyst Compensation Committee while taking part investment banking activities) from having control or influence over research analyst evaluations and compensation.
Also fined over this matter are ex-Rodman & Renshaw CCO William A. Iommi Sr., who must pay $15,000, is suspended from serving in a principal capacity for 90 days, and has to requalify as a general securities principal, research analyst Lewis B. Fan, who must pay $10,000 fine and is suspended for 30 business days for allegedly trying to solicit investment banking business from public companies, and research analyst Alka Singh, who must pay $10,000 and is suspended for six months for allegedly trying to set up a concealed fee from a public company that she provided with research coverage. Although all of the parties have consented to an entry of FINRA’s findings, they have not denied or admitted to the securities charges.
In an unrelated securities case, a California jury has found ex-Rodman & Renshaw broker and investment adviser William Ferry and former real estate investment manager Dennis Clinton guilty of conspiracy, wire fraud, and mail fraud in a high-yield investment fraud scam that involved efforts to bilk a rich investor of $1 billion. The investor was actually someone who was working undercover for the Federal Bureau of Investigation.
Ferry, Clinton, and others are accused of promoting a high yield investment program that promising very high returns at little or no risk to principal. They allegedly presented their HYIP as a “Fed trade program” that abided by strict Fed guidelines, was regulated by the Federal Reserve Bank, and made money not just for investors but also for humanitarian programs.
In a securities case involving investors who were bilked, the SEC is suing Wwebnet Inc. and its CEO Robert L. Kelly for allegedly defrauding investors of at least $2.1 million. The Commission is accusing them of making material misrepresentations and omissions to company investors between 2005 and 2008, including not disclosing a related-party transaction that allowed Kelly to give himself investors’ money, making the false representation that the video software company had made revenue pursuant to contracts with entertainment companies, and not disclosing that Wwebnet paid about $9,000 in rent for Kelly’s personal New York apartment.
The SEC wants disgorgement plus prejudgment interest, permanent injunctive relief, civil penalties, and penny stock and officer/director bars against Kelly.
Meantime, settling an SEC case is ex-hedge fund manager Gary Marks. He has consented to pay $421,702 in civil penalties and disgorgement over allegations that he made unsuitable investment recommendations related to hedge funds that he recommended and managed through Sky Bell Asset Management Inc. between at least 2005 and September 2007.
Marks is accused of misrepresenting the level of diversification and correlation among certain funds. He also allegedly made unsuitable investment recommendations to advisory clients, was negligent in giving certain investors misleading information about liquidity problems involving one of the funds, and did not disclose that his co-manager had also made a huge investment in one purported subadviser’s fund.
FINRA Fines Rodman & Renshaw $315,000 for Supervisory and Information Barrier Violations; Former Chief Compliance Officer and Two Research Analysts Sanctioned, FINRA, August 22, 2012
Two Investment Advisors Convicted in California of High Yield Investment Fraud, US DOJ, August 28, 2012
SEC v. Wwebnet Inc. (PDF)
SEC Charges Former Sky Bell Hedge Fund Manager With Making Misrepresentations In Selling And Recommending His Hedge Funds, SEC.gov, August 27, 2012
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Texas Securities Roundup: Morgan Stanley Smith Barney Sued Over Financial Adviser’s Ponzi Scam, Judge Dismisses Ex-GE Executive Whistleblower’s Lawsuit Over His Firing, & Ex-Stanford Financial Group CIO Pleads Guilty to Obstructing the SEC’s Probe, Stockbroker Fraud Blog, July 3, 2012
Ex-MF Global CEO John Corzine Says Bankruptcy Trustee’s Bid to Join Investors’ Class Action Securities Litigation is Hurting His Defense, Institutional Investor Securities Blog, September 5, 2012
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