What (If Anything) Can Fix the SEC?

When President Obama nominated former U.S. Attorney Mary Jo White to be the next Chairman of the Securities and Exchange Commission (SEC), the reaction was generally positive. White will be the first prosecutor to head the nation’s top financial regulator, and many critics of Big Finance are seeing the pick as a clear indication that the President wants to get tough on Wall Street shenanigans. More in Time Magazine [...]

Lautenberg charity, other Madoff investors try to revive claims

NEW YORK, Jan 25 (Reuters) – A federal appeals court signaled that victims of Bernard Madoff’s fraud more than four years ago might be allowed to eventually sue the swindler’s family members over their losses, if they’re willing to wait longer. The 2nd U.S. Circuit Court of Appeals in New York weighed whether investors, including a charitable foundation for Senator Frank Lautenberg, Democrat of New Jersey, and the town of Fairfield, Connecticut, could pursue claims against Madoff’s brother Peter, his son Andrew, and the estate of his late son, Mark. Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, has largely been successful in stopping lawsuits that he believes overlap his own and impair his ability to recover money for victims of the Ponzi scheme. More on Reuters [...]

SEC enforcer says another Madoff unlikely

NEW YORK (MarketWatch) — The odds of another Bernie Madoff-style financial fraud have been greatly reduced during the past four years, Wall Street’s retiring top cop said Sunday. “The chances of it happening again are very slight,” Robert Khuzami, the outgoing enforcement director of the Securities and Exchange Commission, told the Bloomberg Government Sunday show “Capitol Gains.” Bernard Madoff is serving a 150-year federal sentence for mastermind a $17.5 billion fraud. Madoff, 74, pleaded guilty in 2009 to running a $17.5 billion Ponzi scheme viewed as the largest financial fraud in U.S. history. He is serving a 150-year federal prison term. More on MarketWatch [...]

New York Says Madoff Trustee Waited Too Long to Stop Merkin Deal

New York Attorney General Eric Schneiderman told a federal judge that the Bernard Madoff brokerage trustee’s three-year delay in trying to stop a $410 million settlement with a Ponzi scheme investor is contrary to the legal principle that plaintiffs must be vigilant and not wait an “unreasonable” time while efforts are expended by other parties with claims against the alleged offender. “For over three years, the NYAG expended significant resources in pursuing and resolving the action against Merkin,” Schneiderman said in a Jan. 25 filing in federal court in Manhattan, referring to the former Madoff investor J. Ezra Merkin. “A total of ten NYAG attorneys completed the initial precomplaint investigation, leading to the filing of the complaint in April 2009. Seven NYAG attorneys invested significant portions of their time over three years in pursuing the action from filing to settlement. Hundreds of Merkin investors were contacted and interviewed during the initial investigation.” More on Bloomberg here. [...]

Suze Orman’s Take On Financial Planners

Suze Orman is a media darling in the buttoned up world of financial planning. Accordingly, it’s easy for some professionals to dismiss her as a “lightweight,” even though she does a credible job preaching financial common sense to overspending, undersaving American public. In particular, Orman has sound advice if you seek a good financial planner. It really boils down to just 5 words: Someone who doesn’t sell products. This shows tremendous integrity since Orman easily could have become a mouthpiece for powerful insurance and brokerage industry interests. Instead, she says it’s important to reduce conflicts of interest by seeking advice from professionals who do NOT want to sell you products. More in Forbes [...]

CFTC Commissioner Jill Sommers Will Resign After First Quarter

Jill E. Sommers, one of two Republican members of the U.S. Commodity Futures Trading Commission, plans to resign from the country’s top derivatives regulator after the first quarter of this year. “I’ve come to this decision after thinking about it and internally struggling about it for months,” Sommers, who has been a CFTC commissioner for five years, said yesterday in a telephone interview. “This has not been an abrupt decision.” The five-member CFTC has spent more than two years writing Dodd-Frank Act rules to bolster oversight of the $639 trillion swaps market and the futures industry after a shortfall in customer funds at failed brokerage MF Global Holdings Ltd. (MFGLQ) The agency is preparing to complete rules governing trading platforms after finishing rules for data reporting and reducing risk by having trades guaranteed at clearinghouses. More on Bloomberg [...]

Mary Jo White has record of tough prosecutions

Mary Jo White, the aggressive New York attorney nominated by President Obama Thursday to chair the Securities and Exchange Commission, is accustomed to tough legal challenges. When Sheik Omar Abdel Rahman and nine fellow Muslim militants were charged in a 1993 plot to bomb the United Nations and other New York landmarks, the Manhattan U.S. Attorney’s office headed by White turned to a little-used seditious conspiracy statute from the Civil War era to prosecute the sprawling terrorism case. More in USA Today [...]

Jed Rakoff: The judge who rules on business

Long before he sentenced Rajat Gupta to prison, U.S. District Judge Jed Rakoff had a celebrated and controversial career on the bench. His judicial opinions were thoughtful, direct, and witty. (And, on occasion, reversed by higher courts.) In 2009 he rebuked the SEC for what he found to be insufficient punishment of Bank of America for nondisclosure violations. In 2002 he — unsuccessfully — declared the federal death penalty unconstitutional.
The past year was particularly remarkable for Rakoff. In May 2012 he presided over the $163 million settlement between the owners of the New York Mets and the trustee for the victims of Bernard Madoff’s Ponzi scheme. And then, in late October, Rakoff sentenced a once highly respected business executive — Gupta, a Goldman Sachs (GS) director who used to run McKinsey & Co. — to two years in prison, plus fined him $5 million, for insider trading. Federal sentencing guidelines, which are not mandatory, called for roughly four times that; the government had recommended even more jail time.
See CNN Money report [...]

Six steps to restore investor confidence

High quality global journalism requires investment. Please share this article with others using the link below, do not cut & paste the article. See our Ts&Cs and Copyright Policy for more detail. Email to buy additional rights. These are not easy times for nervous equity investors. The May 2010 Flash Crash, the Facebook initial public offering and the trading debacle at Knight Capital Group last summer are just three examples that offer little reassurance that US equity markets are a safe place to trade or invest. While this year has brought early stirrings of renewed interest in US equities, over the past four years investors have voted with their feet, pulling more than half a trillion dollars from actively managed US equity mutual funds, according to the Investment Company Institute. More in the Financial Times [...]

SEC pick foreshadows Wall Street crackdown?

President Barack Obama on Thursday will announce his plan to nominate former federal prosecutor Mary Jo White as the next chairman of the Securities and Exchange Commission, according to a White House official. Obama’s pick would install an experienced law enforcement official to oversee Wall Street and financial markets amid criticism that the administration and the SEC have been too timid in going after bad actors from the 2008 financial crisis. It also would keep a woman as the head of a top financial regulator at a time when the administration is facing questions about the diversity of the president’s latest round of nominees for top administration jobs. More in Politico here. [...]