Government enforcers always need to be watched, especially when their business targets are politically unpopular. Then the feds think they can get away with anything. So it was reassuring to hear Supreme Court Justices on the left and right express skepticism Tuesday about the Securities and Exchange Commission’s attempt to obliterate the statute of limitations. The oral arguments in Gabelli v. SEC concerned a civil case against money managers Marc Gabelli and Bruce Alpert for inadequate disclosure of an investor’s “market timing” in mutual fund shares. The SEC’s crack gumshoes alleged that the bad behavior had taken place between 1999 and 2002, yet they didn’t bring their complaint until 2008. This is the kind of enforcement acumen we’ve come to expect from the folks who missed Bernie Madoff, but it gets worse.The SEC brought the complaint long after the five-year statute of limitations for such charges had expired. The agency claimed that the five-year clock should have begun only in 2003, because that is when the agency had discovered the alleged misconduct. (The defendants deny any wrongdoing.)
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A bankruptcy judge on Tuesday rejected a bid by former MF Global customers to depose the collapsed brokerage’s former chief, Jon Corzine. The Securities and Exchange Commission said Monday that Geoffrey Aronow would take over as its general counsel. Aronow, a lawyer in the Washington office of Bingham McCutcheon, has previous government experience, having served as head of the enforcement division at the Commodity Futures Trading Commission. The SEC’s new top lawyer also has counseled clients about issues before the commission and the CFTC, and becomes one of the first top appointments from the SEC’s new chairwoman, Elisse Walter. Read more in The Hill [...] A crackdown on complex products and conflicts of interests led to greater scrutiny of large brokerages in 2012, the head of Wall Street’s industry-funded watchdog said on Tuesday. The Financial Industry Regulatory Authority levied a total of $68 million in civil fines during 2012, according to statistics released by FINRA on Tuesday. The regulator imposed $5 million more in fines than in 2011, including a string of high-profile enforcement cases against large brokerages. Those cases accounted for about one-third of total fines in 2012. FINRA also ordered brokerages to repay harmed investors a record $34 million. More on Reuters [...] Judge Rakoff issues Opinion & Order. Click here for court [...] One of the biggest financial scandals of our time was the Bernie Madoff scandal. Madoff promised consistent returns to clients, taking their money, and then cooking the books so that it appeared as though he was offering amazing results. However, as the financial crisis came to a head in 2008, and as the markets began collapsing, more clients began trying to cash out their gains. By December 2008, Madoff had admitted that he didn’t have the money to meet client obligations and that the whole thing was a big Ponzi scheme. Read more on MarketWatch [...] Four years ago, Michael De Vita and his mother, Emma, were part of a rather robust and energized survivors’ group. Mother and son were victims of the Bernie Madoff financial scandal and, like thousands of others, watched their hard-earned savings and retirement plans go up in smoke. In those early days, the De Vitas, of New Britain Township, would receive 100 emails daily from some of the other victims as they tried to support each other and exchange information. More in the Philly Burbs [...] LOS ANGELES — To Philip Horn, the Braemar Country Club was not just a golf course, it was an extension of his office. Most weeks, Mr. Horn, a financial adviser at Wells Fargo, chatted up potential clients between holes at the upscale club set against the backdrop of the Santa Monica Mountains. “I always thought, ‘This is a great guy and a straight shooter,’ ” said Barry Zelner, one of several country club members who invested with Mr. Horn. Now, those same clients are wondering what went wrong. More in the New York Times [...] The 724 victims were mostly retirees, people with nest eggs to invest but not enough to gamble with their money. The people who sold them were radio pitchmen and financial advisers, good talkers all, who spun a $195 million currency investment scheme out of the Van Dusen mansion in downtown Minneapolis. Three major players behind the state’s second-largest Ponzi scheme were sentenced Thursday to a total of 57 1/2 years in prison and ordered to pay more than $155 million in restitution. Jason “Bo” Beckman, described as a kingpin, received 30 years in prison. Co-conspirator Gerald Durand got 20 years. And Christopher Pettengill, who testified for the prosecution against his former colleagues, got 7 1/2 years instead of the 20 to 30 years the judge said he would have faced if he’d gone to trial like the others. More in the Star Tribune [...] SHERLOCK HOLMES once remarked that: “It is my business to know what other people don’t know.” These days, detective work is a huge business. Thanks to globalisation, there is a lot that companies would like to know but don’t, such as: is our prospective partner in Jakarta a crook? Corporate detectives sniff out the facts, analyse them, share them with clients and pocket fat fees. Yet, oddly for a multi-billion-dollar industry devoted to discovering the truth, little is known about private investigators. So your correspondent took up his magnifying glass and set off in pursuit of the bloodhounds of capitalism. More in The Economist [...] |
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