Financial advisers take heed: Ignore troubling signs that a client may be committing fraud in a brokerage account and you could be in trouble too. As a former adviser and his supervisor at a unit of Raymond James Financial Inc learned, it can lead to public rebuke and fines. Read more on Reuters [...]
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From the beginning, the collapse of R. Allen Stanford’s financial empire was unlike other financial scandals, and the aftermath of his alleged $7 billion fraud has been messier than normal for investors in such cases. Bernard Madoff, after all, orchestrated a Ponzi scheme almost 10 times bigger than the one Stanford is accused of running, yet Madoff pleaded guilty and is serving a lifetime prison sentence. A receiver has recovered billions that is being distributed to investors, and an insurance pool funded by the brokerage industry is covering at least some of the additional losses. The Securities and Exchange Commission is heading on a collision course with the federal judge who thinks the agency has been too lenient on big banks accused of misdeeds. The SEC’s enforcement staff is expected to recommend to the five-person commission leading the agency that it vote to appeal last month’s rejection by U.S. District Judge Jed S. Rakoff of a proposed $285 million settlement between the SEC and Citigroup Inc., according to people familiar with the situation. The Securities and Exchange Commission should not get a budget boost until it dedicates its existing resources to reforming its internal operations, two key House Republican lawmakers said on Wednesday. “The SEC has not undertaken a serious, objective self- examination of the way it does its job,” said Republican Congressman Scott Garrett, who chairs the House Financial Services capital markets subcommittee that oversees the agency. Rep. Garrett Calls for SEC to step up and protect defrauded Madoff investors. View Rep. Garrett’s comments here. [...] These have been tough times at the Financial Industry Regulatory Authority, far better known as FINRA. The nonprofit self-regulatory organization for stock brokers and stock brokerages has had to weather allegations it altered documents given to the Securities & Exchange Commission, fierce pushback from its effort to get jurisdiction over investment advisors and–still breaking–criticism of its free-pass policy to Jon Corzine before the collapse and billion-dollar-customer-funds-disappearance of his MF Global Inc. A federal appeals court ruled recently that FINRA lacks the power to go to court to collect fines assessed against ex-members. Advocates from both the left and the right think the organization has too much power and too little accountability. But you’d never know such discord from its just-released tax returns for 2010. The people at the top are ridin’ high. Read more in Forbes [...] The head of the private exchange tasked with overseeing MF Global said Tuesday that Jon Corzine may have been aware of a transfer of client funds from the firm he formerly led, possibly contradicting the former governor and senator’s statements under oath that he had no knowledge of the events that resulted in the disappearance of $1.2 billion in customer funds. In a hearing before the Senate Committee on Agriculture, Nutrition and Forestry, Terrence A. Duffy, the chief executive of CME Group, said a senior female executive of MF Global told a CME auditor that Corzine — the former chief executive officer and chairman of the firm — was aware of a $175 million loan of customer money to a European affiliate of the now-bankrupt commodities brokerage. Read Washington Post report [...] Consolidating oversight of equities, options and futures markets would help regulators stop trading aimed at defrauding investors or manipulating markets, a Financial Industry Regulatory Authority executive said. The Bernard Madoff scam will probably go down as the greatest disaster in the history of the Securities and Exchange Commission. But it may face tough competition from the alleged fraud orchestrated by R. Allen Stanford, who is scheduled to go to trial next month. Perhaps aware of the public-relations boulder rolling toward SEC headquarters, the commission filed a bizarre lawsuit this week that aims to bail out Mr. Stanford’s alleged victims even as it provides a political bailout for [...] There’s a new theory floating around Wall Street about the money missing from customer accounts at MF Global: it was Madoff-ed. According to a top executive at a larger Wall Street firm, his top guys believe that the money didn’t go anywhere. It just never existed. The idea is that the “missing” funds were phony trading profits that were booked in client accounts even though the underlying trades never really occurred. MF Global may have reported to clients that they had made profits for trades that never actually occurred. More on CNBC [...] |
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