Last year, Oracle (ORCL, Fortune 500) CEO Lawrence Ellison made $96.1 million, Exxon Mobil (XOM, Fortune 500)’s R. W. Tillerson made $40.2 million and Wal-Mart (WMT, Fortune 500)’s Michael Duke made $20.7 million. Soon, the SEC might require those companies to say how those salaries compare with the folks who work for them. Although it’s not clear when the SEC will finalize its proposal, the decision is expected soon. After that, it might take another year to implement. More on CNNMoney [...]
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With the changing legal landscape for pot at the state level, marijuana-related stock scams may be on the rise, according to the Financial Industry Regulatory Authority. FINRA, the largest independent regulator of U.S. securities firms, first issued a warning to investors last month. Last year, the recreational use of marijuana was legalized in Colorado and Washington for those over 21. Medicinal use is permitted in about 20 states. More on ABC News [...] FINRA fines are down so far, despite massive LPL penalty in May. Despite whacking Boston’s LPL Financial with a $7.5 million fine in May, the Financial Industry Regulatory Authority (FINRA) is on pace to issue the fewest fines it has since 2010. In the first half of the year, FINRA issued $23 million in fines, including the large LPL penalty. In the first half of 2012, the Wall Street-sponsored agency issued $39 million in fines on its way to hitting broker-dealers and others with $78 million in fines. If the agency continues its first-half pace, this year’s total would be about 40 percent less than 2012’s, according to an analysis by Atlanta law firm Sutherland Asbill & Brennan. More in The Boston Business Journal [...] Class-action lawsuits are the bane of most financial firms, and many recoil at the prospect of paying out millions to groups of clients if investments go sour. Now, the discount brokerage firm Charles Schwab & Company finds itself at odds with regulators as it seeks to eliminate the option of such suits for its clients. For Wall Street, the skirmish has inadvertently brought fresh and unwelcome attention to the investor arbitration process and its flaws, and could severely curtail efforts by investors hurt by widespread problems, including claims of being marketed unsuitable investments by brokers who gave a deceptive sales pitch. More in the New York Times [...] Among the big news at the Securities and Exchange Commission this summer was a reported change in the agency’s long-standing policy of allowing accused wrongdoers to settle charges without admitting misconduct. Last month’s settlement with Philip Falcone and his Harbinger Capital hedge funds, in which Mr. Falcone admitted wrongdoing, has been heralded as the first concrete proof that the agency will sometimes require admissions of culpability. Media reports suggest other cases may be coming. But if a major policy change is under way, it is unusual that the agency has said nothing publicly about it. While recent media reports have quoted unofficial comments and internal emails of individual SEC officials, the agency has consistently defended no-admit settlements before courts and Congress. It has said—correctly—that no-admit settlements are the civil law-enforcement norm across all federal agencies and essential to the prompt and effective resolution of cases. More in the Wall Street Journal [...] JPMorgan Chase & Co and former Bear Stearns Cos managers Ralph Cioffi and Matthew Tannin won the dismissal of a lawsuit in which Bank of America Corp accused them of causing heavy losses by lying in a desperate bid to prop up two failing hedge funds. U.S. District Judge Alison Nathan in Manhattan on Tuesday rejected Bank of America’s fraud and breach of fiduciary duty claims, and said the bank failed to prove damages that could be traced to Bear’s concealing of market-moving information. The case was distinctive because it pitted the two largest U.S. banks against each other, over a mid-2007 event that was among the earliest high-profile signs of market stress that culminated in the 2008 global financial crisis. More on Reuters [...] J. Ezra Merkin, the son of a major Jewish philanthropist, was one of the major factors in Bernie Madoff’s — well, one doesn’t want to call it a “success,” does one? Let’s say his “scale.” Merkin ran a fund of funds that funneled money into Madoff’s Ponzi scheme. He was also, thanks to his father’s legacy, well-ensconced in the boards and fundraising networks of many major Jewish institutions. Those institutions gave him their money, and in turn, he exposed their endowments to a devastating blow. In the immediate aftermath of Madoff’s collapse, pretty much everyone I knew who was involved with some Jewish institution in New York had to cope with the evaporation of millions of dollars they needed for operating expenses. It’s never been quite clear how much J. Ezra Merkin knew. Did he understand that he was funneling money into a scam, or was he merely a lazy and credulous git who wanted to rake a percentage off the top for passively handing his clients’ income to Bernie Madoff to manage? In some sense, I argued at the time, whether he’d harmed his clients through horrifying negligence or deliberate fraud didn’t matter. Either way, the trustee handling the Madoff case was going to seize all his money and hand it back to Madoff’s victims, which is as it should be. More on Bloomberg [...] These days the SEC wants some defendants not merely to pay, but also to admit guilt. Admitting guilt in a civil case rubs many defendants the wrong way. Besides, it is an about-face from the SEC’s longstanding practice of settling civil litigation without requiring the defendant to admit wrongdoing. Exactly which cases will merit this special treatment will be determined case-by-case. But requiring admissions of guilt in stand-alone civil cases is a worry. Apart from public image issues, isn’t private civil litigation (often from shareholders) a certainty after such an admission? It would seem so. "external">More in Forbes [...] In 2003, a research company met with J. Ezra Merkin, a prominent Wall Street financier who had earned a fortune investing his clients’ money with Bernard L. Madoff. During the meeting, according to a new court filing, Mr. Merkin admitted that he did not fully understand Mr. Madoff’s business and questioned its legitimacy. He warned the unnamed company never to “go long in a big way” with Mr. Madoff. He joked that “Charles Ponzi would lose out because it would be called the ‘Madoff scheme,’ ” according to notes from the meeting. More in the New York Times [...] Proxy access may be dead in the United States, but it lives in Israel, to the great regret of Taro Pharmaceutical Industries. Taro is facing a proxy battle involving two external directors nominated by the asset management firm BlueMountain Capital Management. While unfortunate for Taro, it all shows an alternative universe of what, for better or worse, could have happened had proxy access been in place in the United States. More in the New York Times [...] |
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