Federal securities regulators on Tuesday fined a municipal debt issuer for the first time ever, charging the seller of bonds used to finance an ice rink that ultimately fell into default with misleading investors about the project’s viability. In the strongest signal yet that it is serious about clamping down on misbehavior by municipal bond issuers, the U.S. Securities and Exchange Commission extracted a $20,000 penalty from a special facilities district in the city of Wenatchee, Washington, about 140 miles east of Seattle. More on Reuters [...]
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Two years after $1.6 billion vanished from their accounts, MF Global’s customers are now all but assured to collect every last penny. A federal bankruptcy court judge approved a plan on Tuesday that would close the remaining shortfall for some 20,000 customers, many whose lives were derailed when their money disappeared in the firm’s final days. More in the New York Times [...] Five ex-employees of Bernard Madoff on trial accused of aiding his $17 billion fraud seek to “embarrass” U.S. Securities and Exchange Commission witnesses by asking about bungled Madoff audits, prosecutors say. The questions, to be asked on cross-examination, should be barred because the SEC employees who will testify began probing only after Madoff’s arrest on Dec. 11, 2008, and weren’t involved in earlier reviews that failed to uncover the Ponzi scheme, prosecutor Randall Jackson said yesterday at a hearing. More on Bloomberg [...] JPMorgan Chase & Co. said that the U.S. Department of Justice is conducting at least eight separate investigations into the bank’s activities, ranging from recruitment in Asia to its relationship with Ponzi scheme operator Bernard Madoff. The largest U.S. bank disclosed for the first time in a filing yesterday that the Justice Department is examining its energy-trading practices, which were subject to a $410 million civil settlement with the Federal Energy Regulatory Commission in July. Investigations are also focusing on mortgage-bond sales, interest-rate rigging, the credit-derivatives market, and the bank’s trading loss last year, according to the filing. More on Bloomberg [...] SAC Capital Advisors has agreed to plead guilty to insider trading violations and pay a record $1.2 billion penalty, becoming the first large Wall Street firm in a generation to confess to criminal conduct. The move caps a decade-long investigation that turned a once mighty hedge fund into a symbol of financial wrongdoing. The guilty plea and fine paid by SAC, which is owned by the billionaire investor Steven A. Cohen, are part of a broader plea deal that federal prosecutors in Manhattan announced on Monday. It also will impose a five-year probation on the fund and require SAC to terminate its business of managing money for outside investors, though the firm will probably continue to manage Mr. Cohen’s fortune. More in the New York Times [...] David Kugel, a trader at Bernard Madoff’s brokerage for 38 years, told a jury the con man let him use backdated trades to boost profit in his personal investment account, as long as they didn’t look “ridiculous.” Kugel testified yesterday in Manhattan federal court at the trial of five former Madoff employees that most of the fake trading data he created was used for customer accounts managed by defendants Annette Bongiorno and Joann Crupi, who ran the investment business at the center of Madoff’s $17 billion Ponzi scheme. Using fake trades for himself was a “bonus,” he said. More on Bloomberg BusinessWeek [...] A federal judge has made it easier for the trustee seeking money for Bernard Madoff’s victims to pursue more than $8 billion of claims against banks and other financial firms that received money from “feeder funds” that profited from the swindler’s massive Ponzi scheme. U.S. District Judge Jed Rakoff said federal bankruptcy law did not require the trustee, Irving Picard, to obtain final court orders against the feeder funds before pursuing claims against third parties to which those funds transferred money. More on Reuters [...] David Kugel, who was hired as a trader by Bernard Madoff in 1970 and pleaded guilty to fraud two years ago, told a jury he helped create fake trades with two ex-colleagues accused of aiding Madoff’s $17 billion Ponzi scheme. Kugel, who joined Madoff’s firm a year after graduating from Pace University in New York, engaged in securities fraud for three decades with two of the trial’s defendants, Annette Bongiorno, who ran the investment advisory unit at the center of the fraud, and Joann Crupi, who managed large accounts, he testified today in federal court in Manhattan. More on Bloomberg [...] The U.S. House of Representatives passed a controversial bill on Tuesday that would delay two government regulators from adopting rules requiring stock brokers and retirement account financial advisers to put their customers’ interests ahead of their own. The bill, which was approved in a 254-166 vote, has virtually no chance of becoming law, after the White House late Monday threatened to veto the measure. The trustee liquidating Bernard Madoff’s investment company to repay victims won a court ruling easing his ability to sue customers of feeder funds that profited from the con man’s $17 billion Ponzi scheme. The trustee, Irving Picard, doesn’t need specific rulings against the funds in order to go after banks to which the funds transferred their Madoff cash, according to U.S. District Judge Jed Rakoff in New York. Picard also didn’t miss a two-year deadline to file such lawsuits, Rakoff said. More on Bloomberg BusinessWeek [...] |
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