Please click here to view the SEC’s response opposing SIPC’s Motion to Strike regarding the Stanford ponzi [...]
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Third Anniversary Update Part One: Washington DC Year End Washington DC Headlines: Congressmen Garrett prepares for upcoming hearings on HR757, now tentatively expected in January GAO, in response to requests from Garrett and other Congressional members, prepares to issue preliminary info on actions of SEC, SIPC, and Trustee SEC continues to weather massive pressure from Congress on multiple fronts, and recent NY District Court judge overturns SEC settlement with Citigroup Message from the NIAP President: We recently passed yet another anniversary, the third, and [...] Testimony in a legal dispute between the U.S. and Antiguan liquidators of the Stanford Financial empire seems to bolster investors’ arguments that Stanford’s certificates of deposit were more securities than traditional bank notes. Stanford’s U.S. investors have argued that because of the unusual nature of Stanford’s CDs, some of their losses from Stanford’s 2009 collapse should be covered by the Securities Investor Protection Corp. The Securities and Exchange Commission agrees and has ordered SIPC to pay, but SIPC has refused, arguing that Stanford’s CDs weren’t securities. The two sides are now headed to court, in yet another legal standoff involving Stanford’s alleged $7 billion Ponzi scheme. Read Houston Chronicle report [...] One of the few people at the Securities and Exchange Commission who took warnings about Bernard L. Madoff seriously and tried to do something about them has been promoted. Michael E. Garrity, 54, has been named head of examinations in the agency’s Boston regional office, where he will oversee efforts in six states to scrutinize mutual funds, brokerage firms, hedge funds, and private-equity firms. His responsibility stretches from Boston, home of mutual-fund giant Fidelity, to Greenwich, Conn., the nation’s hedge-fund capital. The SEC announced the promotion Monday. Read Washington Post report [...] The Financial Industry Regulatory Authority, the securities industry’s self-policing organization, spent $280,000 in the third quarter to lobby on regulation of brokers and investment advisers, and on new rules putting the financial overhaul law into effect, a disclosure report shows. That exceeds the $170,000 that FINRA spent in the third quarter of 2010 and the $250,000 it spent in the second quarter of this year. Read Bloomberg Businessweek report [...] More than three years after Bernard Madoff’s multibillion-dollar fraud came to light, a former employee at the convicted Ponzi-scheme operator’s firm admitted to falsifying business records, which helped hide the decades-long scam. Enrica Cotellessa-Pitz, the former controller of Bernard L. Madoff Investment Securities LLC, is the sixth person, including Mr. Madoff, to admit guilt since Mr. Madoff’s arrest in December 2008. Mr. Madoff told federal authorities when he was first arrested that he carried out the scheme by himself. Read Wall Street Journal report [...] Enrica Cotellessa-Pitz, Bernard Madoff’s ex-controller, said she didn’t know her former boss was running a massive Ponzi scheme while she helped falsify the firm’s accounting for almost a decade. Cotellessa-Pitz, 53, pleaded guilty to four criminal counts at a hearing in Manhattan federal court yesterday, admitting she created phony stock records, made false entries in the firm’s general ledgers and filed untrue reports with regulators. Read Bloomberg Businessweek report [...] The top Democrat on the House Financial Services Committee said that CME Group Inc., the biggest U.S. futures exchange, should no longer be responsible for supervising its own customers in order to eliminate any potential conflicts of interest. Spinning off CME’s regulatory functions into a separate entity would help restore investors’ lost confidence in domestic futures markets, Rep. Barney Frank (D., Mass.) said in an interview Thursday. “I have no doubt about the CME’s integrity, but nobody should be in the position of having a dual role,” Rep. Frank said. “We should make sure [a conflict of interest] doesn’t arise, that the temptation isn’t there, that people are not unconsciously influenced.” The Financial Industry Regulatory Authority has levied more than $63 million in fines in 2011, a 53 percent increase over last year as the Wall Street watchdog pursued more cases and landed a few big fines. Year-end statistics released by FINRA on Friday showed an increase in enforcement activity this year, which commenced with the hiring of Bradley Bennett, a former Washington-based defense lawyer, as its enforcement chief. Read more on Reuters [...] Is Jon Corzine having a Bernie Madoff moment? By definition in the Madoff Ponzi scheme, he used one client’s money to pay off another client. Madoff commingled or pooled assets to pay redemptions. He admitted to fraud, along with 10 other federal felonies. While neither Corzine nor any other MF Global executive has been charged with any criminal wrongdoing at this point, Terry Duffy, head of CME Group, said during his congressional testimony: “The fact is that MF Global broke rules by moving customer-segregated funds out of an account over which it had control.” Read New York Post report [...] |
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