2013 October | Network For Investor Action & Protection

Jury Selection To Begin For Trial Of Madoff Employees

Almost five years after Bernie Madoff was arrested for fraud, some of his former employees are about to go on trial in New York. The case is expected to focus on how much the employees knew about Madoff’s Ponzi scheme.

RENEE MONTAGNE, HOST:

Nearly five years after Bernie Madoff was arrested for fraud, some of his former employees are about to go on trial in New York. The trial is expected to focus on how much the employees knew about Madoff’s multibillion dollar Ponzi scheme. Jury selections gets under way today.

STEVE INSKEEP, HOST:

NPR’s Jim Zarroli reports.

JIM ZARROLI, BYLINE: The five former Madoff employees all had lucrative jobs at Madoff’s firm. For instance, Daniel Bonventre was director of operations in the back office, while Joanne Crupi and Annette Bongiorno managed client accounts. All five have pleaded not guilty and maintain they didn’t know about the fraud taking place at the firm. And Madoff himself has backed them up in interviews from the federal prison in North Carolina where he now lives. But a lot of people are skeptical about that.

Ron Stein is president of the Network for Investor Action and Protection, which represents Madoff victims. He says many of them have trouble understanding how Madoff could have pulled off such a complex scheme by himself.
More on NPR [...]

Shutdown Stirs Investor Anxiety

Signs of investor anxiety multiplied on Tuesday, as the U.S. government shutdown stretched into an eighth day and traders jockeyed to profit from wagers on a U.S. debt default. The rate the government pays to borrow for a month rose to its highest level in five years, following a $30 billion Treasury bill auction that Bank of America Merrill Lynch head of U.S. rates strategy research Priya Misra deemed “awful.” The cost of hedging for a year against a possible U.S. default via credit default swaps rose as much as 10%. The price of one-year U.S. CDS has risen 10-fold since Labor Day. More in the Wall Street Journal [...]

SEC launches new website for market analysis

The Securities and Exchange Commission on Wednesday launched a site on market structure to serve as a central location to share data and research. It’s a gold mine of information on how the market is trading. SEC Chief Mary Jo White touted the recent acquisition of a trade-information system called Midas, which the SEC bought from Tradeworx last year. The system allows participants to see much more information about what is trading than is normally available. What kind of data? Today most traders can see only price and volume. This information will likely be much more robust: you’ll be able to see total number of new orders, and the total number of cancellations….all broken down by exchange. See CNBC report [...]

U.S. justices divided in Allen Stanford Ponzi scheme case

On the first day of its new term on Monday, the U.S. Supreme Court appeared divided over whether lawyers, insurance brokers and others who worked with convicted swindler Allen Stanford could avoid lawsuits by investors seeking to recoup losses incurred in his $7 billion Ponzi scheme. New York-based law firms Chadbourne & Parke and Proskauer Rose and insurance brokerage Willis Group Holdings Plc were all sued by former Stanford investors. They are part of a consolidated case along with two other defendants, financial services firm SEI Investments and insurance company Bowen, Miclette & Brittin, for which the Supreme Court heard a one-hour argument on Monday. More on Reuters [...]

The Five Things You Need to Know About the Madoff Trial

When Supreme Court justices return to the bench Monday after a three-month summer break, R. Allen Stanford’s $7 billion Ponzi scheme will await them. The court will hear oral arguments on the first day of its 2013-14 term to decide whether Mr. Stanford’s victims should be allowed to sue third parties such as law firms and insurance brokers on allegations that they aided Mr. Stanford’s scheme. Advocates for the defendants warn that allowing such lawsuits could compromise congressional efforts to curb unwarranted litigation that affects securities markets. More in the Wall Street Journal [...]

On Eve of Trial, Issue Concerning Madoff Video Surfaces

Bernie Madoff will be at the back of everyone’s’ mind when a handful of his underlings go to trial in federal court in Manhattan Tuesday. But whether or not the disgraced financier will literally be on display remains unclear. Lawyers for one of the defendants want to play a 2007 video of a conference Mr. Madoff participated in entitled “The Future of the Stock Market” during their opening statement. Prosecutors don’t want the video played. More in the Wall Street Journal [...]

FINRA mulls insurance for brokerage firms: WSJ

The U.S. Financial Industry Regulatory Authority may require brokerage firms to carry insurance to cover the payment of arbitration awards to investors, the Wall Street Journal reported on Saturday. FINRA, Wall Street’s industry-funded watchdog, will consider whether brokerage firms should be required to have “errors and omissions” insurance, which can cover legal claims, said Susan Axelrod, FINRA’s executive vice president of regulatory operations, according to the newspaper. More on Reuters [...]

Stanford Ponzi Scheme Opens Supreme Court Term

Former Madoff lieutenants on trial

Top lieutenants of convicted Ponzi schemer Bernard Madoff will testify for the first time publicly about their involvement in one of the greatest investment scams in history as the trial of five former employees begins this week. The trial of two former portfolio managers and three back-office employees will examine allegations that they backdated trades, created second sets of books and enriched themselves while evading detection and dodging close calls with regulators over decades. More on FT.COM [...]

SEC Chairman: Congress, Courts Crowding in on Regulator’s Role

Securities and Exchange Commission Chairman Mary Jo White Thursday criticized attempts to encroach on the agency’s independence, saying recent moves by Congress and the courts inappropriately circumvent the SEC’s expertise and judgment. In a dig at judges who have questioned the SEC’s rules and its historic practice of allowing firms to settle cases without admitting wrongdoing, Ms. White suggested the courts were acting beyond the scope of their roles and should instead “defer to the agency’s reasoned judgments.” More in the Wall Street Journal [...]

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