SEC commissioner urges selective use of new settlement policy

The U.S. Securities and Exchange Commission should focus its new policy of seeking admissions of wrongdoing on cases such as those involving bad actors who have a high risk of being repeat offenders, SEC Republican Commissioner Daniel Gallagher said.
In an interview with Reuters this week, Gallagher for the first time publicly spoke about the changes SEC Chair Mary Jo White is making to the agency’s settlement policy and said the shift overall seems like a good step.
More on Reuters [...]

Markets, Mom and Madoff: How to avoid scams

I don’t think we need Madoff’s advice about how to keep people like him from cheating people like us. In fact, I learned more about avoiding investment scams from my mom than from anything Bernie Madoff had to say. In my last column, I referenced a MarketWatch interview with Bernie Madoff entitled “Don’t let Wall Street scam you like I did.” Apparently, the man who stole more money from investors than anyone else (so far) is now a trusted source of scam-avoiding advice for retirement investors. More on Market Watch [...]

Delamaide: Tougher SEC may lift Wall Street morals

WASHINGTON — The new head of the Securities and Exchange Commission took a small step last week toward getting tougher on Wall Street, though just how tough remains to be seen. Mary Jo White, a former prosecutor and corporate lawyer who took the helm of the SEC in April, said the agency will start making some exceptions to its standing rule to settle cases without requiring violators to admit wrongdoing. This might seem obvious when the SEC brings charges of deception, fraud, violation of securities laws and other misdeeds, but the agency typically relies on the curious legal fiction that a company can pay hundreds of millions of dollars in a settlement but doesn’t have to admit that it did all these bad things.
More in USA Today [...]

Report: Corzine to face charges in MF Global case

Federal regulators are set to file charges against former New Jersey Gov. Jon Corzine possibly later this week for his role in the collapse of MF Global. Citing law enforcement sources close to the case, The New York Times reported Tuesday that the Commodity Futures Trading Commission, which had regulatory oversight of the mammoth money management firm, is ready to approve civil charges over misuse of client funds.
More in USA Today [...]

Rajaratnam Conviction Upheld by Appeals Court

A federal appeals court has upheld the conviction of Raj Rajaratnam, the former hedge fund manager who was charged with orchestrating a vast insider trading conspiracy. “Rajaratnam’s arguments are not persuasive,” said the United States Court of Appeals for the Second Circuit in Manhattan in a decision published on Monday. The ruling validates the aggressive tactics deployed by federal prosecutors in the government’s sweeping investigation into insider trading on Wall Street, which has resulted in more than 70 convictions or guilty pleas since 2009. More in the New York Times [...]

U.S. Poised to Sue Corzine Over MF Global

Federal regulators are preparing to sue Jon S. Corzine over the collapse of MF Global and the brokerage firm’s misuse of customer money, DealBook’s Ben Protess reports. The Commodity Futures Trading Commission, the agency that regulated MF Global, plans to approve the lawsuit as soon as this week against Mr. Corzine, the former New Jersey governor who ran the firm until its bankruptcy in 2011, according to law enforcement officials with knowledge of the case. In a rare move, the agency has informed Mr. Corzine’s lawyers that it intends to file the civil case without offering him the opportunity to settle, setting up a potentially lengthy legal battle, Mr. Protess reports. “Without directly linking Mr. Corzine to the disappearance of more than $1 billion in customer money, the trading commission will probably blame the chief executive for failing to prevent the breach at a lower rung of the firm, the law enforcement officials said,” Mr. Protess writes. “If found liable, he could face millions of dollars in fines and possibly a ban from trading commodities, jeopardizing his future on Wall Street.” A spokesman for Mr. Corzine in a statement denounced the trading commission for planning to file what he called an “unprecedented and meritless civil enforcement action.”
More in the New York Times [...]

Breaking Securities Laws? You Don’t Really Need To Apologize

Just two months into her tenure as head of the Securities and Exchange Commission, Mary Jo White is making waves by questioning the agency’s long-standing policy of not requiring admissions of guilt when settling with financial wrongdoers. For many Americans, the 2008 financial crisis is the defining tragedy of their lives, as it’s resulted in millions of foreclosures, mass unemployment, and trillions of dollars in lost wealth. Yet despite all this suffering, only one senior banker – Kareem Serageldin — has been criminally convicted of mortgage-security related fraud, and the same multinational banks that dominated the landscape before the crisis still reign supreme, except now they’re bigger and more powerful than ever.
More in Time Magazine [...]

Holding Bankers Who Behave Badly Personally Accountable

Five years after the world’s financial system began melting down, consumers, homeowners and taxpayers — that is, pretty much anyone who isn’t a bank executive — remain frustrated that no banking bigwigs went to jail. The reasons are many: Specific misdeeds couldn’t be pinned on higher-ups; prosecutors got cold feet after early fraud cases resulted in acquittals; what the person on the street considered “fraud,” such as giving triple-A ratings to bonds full of shoddy mortgages, was often legal. The popular desire to put those in charge behind bars is understandable and unlikely to abate, given last week’s arrest of a former Citigroup Inc. and UBS AG trader accused of manipulating interest-rate benchmarks. At the same time, prosecutors are required to prove willful intent, beyond a reasonable doubt, to violate specific laws. Almost wrecking the world economy is a very bad thing. But it is not in and of itself illegal. More on Bloomberg [...]

Still claiming innocence, man gets 16 years in Ponzi scheme

Still insisting he was “blindsided” and pressured by prosecutors and his own attorney to plead guilty, Anthony Vassallo was ushered out of a Sacramento courtroom Friday by deputy U.S. marshals to serve a 16-year sentence in federal prison for running a Ponzi scheme that bilked investors out of millions of dollars. Vassallo, who ranks with the region’s premier fraudsters, pleaded guilty to wire fraud on Feb. 1. He then tried to withdraw his plea, claiming his residency in the Butte County jail made it impossible for him to assist in trial preparation. More in The Sacramento Bee [...]

Madoff victims can’t sue big banks, court rules

A federal appeals court dealt the trustee working to recover money for Bernard Madoff’s investors a setback Thursday, ruling that he doesn’t have legal standing to make claims against major financial institutions that Madoff’s burned customers could make themselves. The 2nd U.S. Circuit Court of Appeals in Manhattan upheld earlier district court decisions barring trustee Irving Picard from pursuing tens of billions of dollars from JPMorgan Chase, USB AG and other institutions. More on USA Today [...]