Schapiro to Quit as SEC Chairman and Be Replaced by Walter

U.S. Securities and Exchange Commission Chairman Mary Schapiro, who took the agency’s helm in 2009 as it reeled from public rebukes for failing to rein in Wall Street practices that exacerbated losses from the housing market collapse, is leaving the agency. Schapiro, 57, will depart the SEC on Dec. 14, the agency said in a statement today. More on Bloomberg [...]

SEC bars adviser for faking amount of client assets

An investment adviser who federal regulators said misrepresented the amount of assets his firm managed in order to remain registered with federal, instead, of state, securities regulators, has been barred from the industry, the Securities and Exchange Commission announced Tuesday. Evens Barthelemy, founder of Barthelemy Group LLC, misrepresented his firm’s assets under management by 10 times the actual amount – $26.28 million instead of the actual $2.628 million, according to the SEC. Advisers who manage less than $25 million, such as Barthelemy, have long been required to register with state regulators.
See Reuters report [...]

Ex-hedge fund portfolio manager charged in $276 million insider trading ploy

A former hedge fund portfolio manager was arrested Tuesday on charges that he helped deliver what a prosecutor said “what might be the most lucrative inside tip of all time,” enabling investment advisers and their hedge funds to make more than $276 million in illegal profits. Mathew Martoma was charged in U.S. District Court in Manhattan with using confidential information about an Alzheimer’s disease drug trial to help his firm avoid losses and instead reap a hefty profit in a scheme that stretched from 2006 through July 2008 while he worked for CR Intrinsic Investors LLC of Stamford, Conn. He’s charged with conspiracy to commit securities fraud and two counts of securities fraud. More on CBS MoneyWatch [...]

SEC fails to revive fraud claim versus Goldman’s Tourre

The Securities and Exchange Commission cannot revive a securities fraud claim against Goldman Sachs Group Inc bond trader Fabrice Tourre over the sale of complex securities linked to subprime mortgages, a federal judge ruled on Monday. U.S. District Judge Katherine Forrest in Manhattan, who took over the case from her colleague Barbara Jones last month, rejected the SEC’s argument that a recent court decision made a $150 million note sale to Germany’s IKB Deutsche Industriebank AG sufficiently “domestic” to give her jurisdiction. Monday’s decision does not affect the rest of the SEC’s lawsuit against Tourre, which arose from charges filed against him and Goldman in April 2010. More on Reuters [...]

SEC Charges Supposed Adviser With Defrauding Investors

NEW YORK–The Securities and Exchange Commission charged a purported New York investment adviser Monday with defrauding investors in his start-up businesses by spending their money on illegal drugs, gambling and his own income taxes. The SEC alleged Stephen A. Colangelo Jr. lied about his educational background on a LinkedIn profile that he provided to some investors, hid past criminal activities, and falsely claimed to have achieved extremely high returns buying and selling securities. In one email, the SEC said, he boasted of having the best trading day of his life–being up over 400%–although he didn’t actually make any trades that day. Mr. Colangelo, 44 years old, allegedly misled investors on several occassions, while raising $3 million in investments for four start-up companies he created and persuaded three other investors to let him act as their investment adviser, receiving more than $1 million from them. Read more in the Wall Street Journal [...]

2 former Stanford executives convicted of fraud

HOUSTON (AP) — Two former associates of R. Allen Stanford have been convicted of fraud for trying to help the imprisoned Texas financier conceal a $7 billion Ponzi scheme. Prosecutors in Houston say 70-year-old Gilbert Lopez Jr. and 40-year-old Mark Kuhrt were both convicted Monday of conspiracy to commit wire fraud and nine counts of wire fraud. Each count carries a maximum 20 years in prison. More on Bloomberg Businessweek [...]

Son of Madoff’s accountant kills himself in Ohio

Authorities say the son of Bernard Madoff’s longtime accountant, who pleaded guilty to securities fraud in the scandal centered on the financier, committed suicide in central Ohio. Police say 23-year-old Jeremy Friehling was found dead of a self-inflicted gunshot wound at his Columbus apartment on Thursday. He was a second-year student at Ohio State’s medical school. Read Wall Street Journal report [...]

Lehman Trustee Ends Citigroup Fight

The trustee unwinding Lehman Brothers Inc. reached an agreement with Citigroup Inc. C -0.66% that ends a long-running legal fight over more than $1 billion that Lehman deposited at the bank the week it filed for bankruptcy protection. The deal puts $435 million in the coffers of Lehman’s brokerage unit, LBI, for distribution to customers and other creditors, according to the settlement filed Friday night in U.S. Bankruptcy Court in Manhattan. Lehman trustee James W. Giddens said in a statement that the deal, which requires court approval, credits the LBI estate with $360 million in cash plus Citigroup’s agreement to forgo another $75 million claim that was contingently paid to the estate at the beginning of the liquidation. More in the Wall Street Journal [...]

Big Boss Man

The boss is always right, because he’s the boss.
So goes the epitaph for MF Global MFGLQ 0.00% . A report released by Republican members of the House financial services committee last week concluded that the investment firm’s former chief executive, Jon Corzine, created an “authoritarian atmosphere” where “no one could challenge his decisions.” He threw MF Global’s capital at Europe’s debt crisis, and within 19 months he turned a $40 billion company into a puff of smoke. “Profitability and responsibility must go hand in hand with growing our franchise,” Mr. Corzine said in a news release when he was hired in March 2010. He promised “new levels of growth, profitability and reputation.” He delivered something on par with Enron. More in the Wall Street Journal [...]

Corzine Decisions Felled MF Global, House Republicans Say

MF Global Holdings Ltd. (MFGLQ) collapsed last year because of mistakes made by former chairman and chief executive officer Jon S. Corzine, U.S. House Republicans said in a report on the futures brokerage’s path to bankruptcy. Corzine, a Democrat who served in the U.S. Senate and as New Jersey governor before taking the helm at MF Global, pushed the firm into new areas without reviving its core commodities trading business, lawmakers led by Representative Randy Neugebauer of Texas said in a 101-page report stemming from a year-long investigation. U.S. regulators under President Barack Obama failed to coordinate oversight of the company, they said. “We found that Jon Corzine contributed greatly to the demise of this company,” Neugebauer said at a news conference in Washington. “There was a breakdown in communication in the regulatory community.” More on Bloomberg [...]