SEC Category Archives — Page 22 of 24 — Investor Lawyers Blog Published By Investment Fraud Attorneys

SEC and FINRA Announce Plan to Help Broker-Dealer CCO’s with Compliance Controls

Published on: November 7, 2007 | by Shepherd Smith Edwards & Kantas, LLP

The Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) have introduced an initiative that will assist broker-dealer chief compliance officers in maintaining compliance controls that work, creating effective communications about compliance risks, and implementing solid compliance programs at brokerage firms.

Regional and national seminars will be designed to focus on increased compliance practices at brokerage firms to increase investor protection. FINRA and SEC said that this new initiative is similar to the SEC’s current CCOutreach Program for investment company chief compliance officers and investment advisers.

A national compliance seminar is tentatively scheduled for March 2008 at the SEC headquarters in Washington D.C. Regional seminars will be held in cities across the United States.

SEC Commissioner Annette Nazareth’s Departure Leaves Agency With No Democrats On Panel

Published on: October 14, 2007 | by Shepherd Smith Edwards & Kantas, LLP

Annette Nazareth, the only Democratic commissioner left on the Security and Exchange Commission’s five-member panel is leaving her post for the private sector.

Her departure is the second one in the past month and leaves the panel with three members-all of them Republicans. Roel Campos, also a Democrat, left in September. The remaining panel members are SEC Chairman Christopher Cox and Commissioners Paul Atkins and Kathleen Casey.

The SEC released a statement saying that Nazareth had requested that she not be renominated for the position. Nazareth has been a member of the SEC panel for nine years. The SEC cited her contributions to include modernizing national market system regulations and working on issues affecting the securities markets and investor protection.

SEC Provides Brokerage Firms with New Loophole to Avoid Breach of Duty to Investors

Published on: September 20, 2007 | by Shepherd Smith Edwards & Kantas, LLP

As discussed in earlier postings, after a court overturned the “Merrill Rule,” which exempted brokerage firms from duties of Investment Advisors Act of 1940, brokerage firms say they will cease “fee based” accounts rather than assume duties to clients mandated my that legislation. However, as predicted, regulators and legislators will instead come to their rescue.

The Securities and Exchange Commission fought hard to exempt brokerage frims from the advisors act, but lost, and is now busily helping Wall Street with new enforcement loop holes. For example, the SEC has now decided to permit non-discretionary advisory accounts to be exempt from certain principal trading restrictions. A principal trade is an order a broker-dealer executes for its own account rather than one it simply executes in the market for its client.

Under the new rule, brokerage firms must first provide written notice and obtain blanket consent from these clients. They are then exempt from breach of fiduciary duty for self-serving actions as they profit on sales of securities to these clients sold from the firms’ inventories.

SEC and FINRA Say “Free Lunch” Seminars are Investment Scams Targeting Seniors

Published on: September 16, 2007 | by Shepherd Smith Edwards & Kantas, LLP

FINRA, SEC, and state regulators are saying that the “free lunch” investment seminars for senior citizens are actually high-pressure sales pitches, involving fraud and misleading claims about financial products that are not suitable for its elderly audience. A report of these findings will be issued to the public this week.

Alabama, California, North Carolina, Florida, Texas, Arizona and South Carolina are the U.S. states with the largest numbers of retirees. All seven states were included in the probe. The investigation took place from April 2006 to 2007 and concentrated on 110 investment firms and branch offices that held “free lunch” seminars for seniors.

The report blames investment firms for failing to properly supervise the employees that conducted the senior seminars.

Fraud is Cause of Financial Loss! Say One in Five Older Americans

Published on: September 13, 2007 | by Shepherd Smith Edwards & Kantas, LLP

“Mr. Chairman, there is no doubt financial fraud aimed at older Americans is real.”

This astounding statement was made at the SEC’s Senior Summit by Mary L. Schapiro, the Chief Executive Officer of the Financial Industry Regulatory Authority (FINRA), the regulatory body formed by the merger of the National Association of Securities Dealers and the regulatory arm of the New York Stock Exchange.

Ms. Schapiro backed her statement with the results of a recent FINRA survey which found that, of the 55 percent of respondents who said they lost money on an investment, 19 percent-almost one in five-attribute that loss to being misled or defrauded. While this is cause for concern, she added, it’s also an opportunity for creative collaboration by regulators.

Money Manager Sentinel Management Group is Missing $505 Million from Accounts

Published on: September 12, 2007 | by Shepherd Smith Edwards & Kantas, LLP

Sentinel Management Group, the Chicago-based money manager that the Securities and Exchange Commission has accused of misappropriating client assets and defrauding clients, is reportedly missing $505 million in its accounts. The National Futures Association found the shortfall during a recent investigation.

The missing funds could bring up questions regarding a settlement that Sentinel made to creditors and Citadel Investment Group.

According to the SEC, the money manager allegedly mixed up funds from clients with its own funds. The Financial Times says that creditors from one account were given their money back after Citadel bought a number of assets. The SEC was opposed to the transfer, however, saying that the refunded assets likely belonged to creditors from a different account.

Business Optimism over SEC ‘Reforms’ – That is, to Dismantle Securities Regulations!

Published on: August 5, 2007 | by Shepherd Smith Edwards & Kantas, LLP

Washington lawyer Peggy Blake, who recently joined Winston & Strawn as a corporate partner, reports her foreign financial services clients are “very optimistic” about the movement afoot at the Securities and Exchange Commission to adopt a mutual recognition regime.

Yet, during recent trips to London and Geneva, she found a number of her foreign bank clients have some reservations about “how the whole thing will play out.” Blake advises clietns on application of U.S. securities laws to non-U.S. financial service providers. As part of her practice, she works with clients to design their compliance programs.

Her goal, along with those on Wall Street, in the White Houst and at the SEC, is to dismantle U.S. securities regulations governing corporations, their executives, securities firms, accounting firms and others.

SEC Bows to Pressure – Pulls List of Those Linked to Terrorists

Published on: August 4, 2007 | by Shepherd Smith Edwards & Kantas, LLP

A month ago the SEC rolled out a list of companies officially linked to countries designated by the U.S. Secretary of State as state sponsors of terrorism. The SEC’s published list, which included Halliburton and other large companies, received more than 150,000 Internet hits. It also stirred a firestorm from business groups and lobbyists.

Under such pressure, the SEC has suspended publication of the controversial list indefinitely. In a release, SEC Chairman Christopher Cox said that, while the agency “received many positive comments” over its listing, it also received negative comments regarding the lack of updated information.

Cox justified removal of the list by citing the agency’s commitment to “complete, accurate, and timely disclosure,” rather than simply admitting it succumbed to political pressure. Cox also questioned the need for a SEC list, stating that the issuers’ disclosures regarding their business contacts in the five named countries–Cuba, Iran, North Korea, Sudan, and Syria–“will continue to be available through the SEC’s EDGAR database.”

Wall Street Wars VII: SEC Chairman to RIAs – “Greetings” – A Regulator on Steriods?

Published on: July 25, 2007 | by Shepherd Smith Edwards & Kantas, LLP

As a review: Instead of charging commissions to sell investments and products to their clients, as do brokerage firms, investment advisors charge a small percentage to advise clients how to invest their money. Wall Street decided this would be a lucrative addition to their business, but did not want to owe a fiduciary duty (of good faith) to their clients as required by the Investment Advisors Act of 1940. They therefore had their politically appointed friends at the SEC exempt them from registering as advisors. This was called the “Merrill Rule.”

Investment advisors then cried foul and their largest association filed suit against the SEC. A few months ago, they won! After brooding for a few weeks but realizing the SEC had no power to exempt anyone from the law, the SEC’s Chairman decided not to appeal. Instead, the Wall Street-friendly former Congressman began his retaliation.

The SEC Chairman first, without waiting for others at the SEC, personally asked Congress to investigate certain practices of investment advisors. The SEC then sprung a hasty investigation of some investment advisors and soon reported only one had properly disclosed facts in its performance claims.

Enron Victims, Now Victims of Their Own Government, Finally Find Friends in Former Regulators

Published on: July 19, 2007 | by Shepherd Smith Edwards & Kantas, LLP

Defrauded Enron shareholders recently lost again, this time as victims of federal judges who seem intent on helping Wall Street crooks rather than Wall Street victims. With their case before the U.S. Supreme Court, the Enron shareholders lost yet again when the SEC and Bush Administration, who had indicated they would intervene, missed a deadline. Now, three former SEC Commissioners are asking the Supreme Court to allow them to intervene to help.

In 2001, the total value of Enron shares plummeted from over $80 billion to almost zero. Enron officials and its auditors were indicted, several persons were convicted and some are now serving jail terms. The auditing firm of Arthur Anderson was forced to close. The scandal then turned to several Wall Street firms which are claimed ot have played a large role in assisting Enron to falsify its books.

Several individuals and firms were accused – and four former Merrill Lynch Brokers were convicted of by a jury – for arranging loans to appear as sales in order for Enron to book the loans as profits. Yet, just as the Enron shareholders’ claims against Merrill Lynch were headed for trial, business-friendly appointed appellate judges dismissed the case.