The Securities and Exchange Commission has signaled that it was now taking a harder line on securities settlements, as it extracted its first admission of wrongdoing under a new policy, DealBook’s Alexandra Stevenson reports. The S.E.C. said on Monday that the hedge fund manager Philip A. Falcone had agreed to admit wrongdoing and to be barred from the securities industry for at least five years to settle accusations of market manipulation. He and his fund, Harbinger Capital Partners, must also pay more than $18 million. The deal comes after the S.E.C. had, in a rare move, overruled its own enforcement staff to reject a previous settlement with the hedge fund manager. The original agreement, which had called for a two-year ban from raising new capital and no admission of wrongdoing, “had irritated the S.E.C.’s new chairwoman, Mary Jo White, people briefed on the matter said, and frustrated many others within the agency who saw that deal as too lax,” Ms. Stevenson reports. More in the New York Times [...]
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People invest to make money, and always will. But getting the biggest returns is not the top concern for investors in choosing whom they want to handle their money, says a new survey from the CFA Institute. The new bottom line? Trust. The growing emphasis on integrity over absolute returns follows a series of cases in which customers lost large sums from supposedly reputable firms getting outstanding results for clients. More on US News World & Insight [...] Authorities are investigating whether JPMorgan Chase’s Chinese offices hired young workers from prominent Chinese families that in turn offered the bank business. The bank made a passing reference to a Securities and Exchange Commission investigation in its quarterly filing earlier this month, and The New York Times fanned the fire by reporting on a confidential U.S. government document that went into greater detail. More on CNN Money [...] It would be criminal to tarnish an elegant 87-year-old New York City penthouse with guilt by association, unfair to imply that it is haunted by the ghosts of white-collar crooks or burdened by bad karma and negative vibes. But the classically proportioned seven-room duplex at 133 East 64th Street where the serial swindler Bernard L. Madoff once lived is poised to enter the marketplace yet again. He bought it for a song in 1984 compared with what his fellow financiers were spending on tonier Park and Fifth Avenues, and had lived there until 2009, when he traded his final weeks of high-end house arrest for a 150-year prison term in bucolic North Carolina. This time the seller of the inviting aerie, PHA, is not the federal Justice Department seeking restitution funds for victims of Mr. Madoff’s $65 billion Ponzi scheme, and the asking price is not $9.9 million (later trimmed to $8.9 million, a reduction that prompted a spate of offers despite the building’s ho-hum location on a busy corner at Lexington Avenue). The current seller is the post-Madoff owner, and the asking price is $17.25 million, but as before, the circumstances are tinged with bitterness. More in the New York Times [...] An alleged extortion and bribery scandal involving a former Arkansas state treasurer and a local brokerage firm is bringing attention to the way the Financial Industry Regulatory Authority (FINRA) elects members to its board. The self-regulator reserves three of its 22 positions for representatives of small brokerage firms. And that can cause problems, because at those firms, there are fewer degrees of separation between top executives and underlings. When one of those executives gets named to the FINRA board and a lower-level employee gets into trouble, it can reflect on the board member – and on FINRA as a whole. More on Reuters [...] U.S. prosecutors have charged two former JPMorgan Chase employees, Javier Martin-Artajo and Julien Grout, for their role in the “London Whale” scandal. The charges are a milestone in the government’s response to what has been an embarrassing and costly episode for the biggest U.S. bank, which still faces the prospect of civil charges. But it once again places the heaviest legal burden on players fairly low in the bank’s hierarchy. The bank and its top executives will likely suffer relatively small financial penalties, at worst. More in the Huff Post [...] A U.S. Senate Democrat is developing legislation that would double from five to 10 years the amount of time that federal securities regulators have to seek penalties, in an effort to help buy them more time to investigate complex cases. Rhode Island Senator Jack Reed, a high-ranking member of the Senate Banking Committee, has been working with officials at the U.S. Securities and Exchange Commission and expects to introduce the measure some time this fall, his staffer confirmed. More on Reuters [...] NEW YORK — Two former JPMorgan Chase traders Wednesday became the first suspects hit with criminal allegations in the $6.2 billion “London whale” investigation of derivatives losses. Javier Martin-Artajo, a former JPMorgan Chase managing director and trading supervisor in the global bank’s London office, and Julien Grout, another former trader there, were charged with conspiracy, falsifying books and records, wire fraud and making false filings with the Securities and Exchange Commission. More in USA Today [...] You probably don’t remember Marc Dreier, and that’s a loss to the annals of white collar crime lore. A once-prominent New York lawyer sentenced in 2009 to 20 years in prison, Dreier ripped off a bunch of hedge funds and wealthy investors to the tune of $700 million. Not too shabby, until you compare it with the tens of billions taken by convicted Ponzi king Bernard Madoff, whose near-simultaneous and even more spectacular implosion eclipsed Dreier’s. The New York tabloids added insult to injury, nicknaming Dreier “mini-Madoff.” Now, though, Dreier can claw back some notoriety by dint of the fact that the remnants of his prosecution have produced one of the great lines in modern American jurisprudence. “Fraud is the dysentery of crime,” U.S. District Judge Jed Rakoff wrote in a recent decision (pdf) disposing of Dreier’s $33 million personal art collection. “Even after the infection is contained, the unpleasant after-effects linger interminably.” More on Bloomberg BusinessWeek [...] NEW YORK — The London whale isn’t the only thing weighing on JPMorgan Chase these days. In fact, the nation’s largest bank has a long list of legal challenges beyond the $6 billion trading loss with the memorable nickname. It faces a swirl of investigations and lawsuits, among them accusations that it is too quick to sue credit card customers over late payments and that it should have caught on to Bernie Madoff’s giant Ponzi scheme. The bank has only recently cleared away other legal problems, including settling regulators’ accusations last month that it manipulated energy prices. More in The Boston Globe [...] |
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