Madoff, Stanford fraud victims refused appeals by U.S. top court

Victims of the Ponzi schemes of Bernard Madoff and Allen Stanford, two of the largest in U.S. history, suffered setbacks on Monday as the U.S. Supreme Court refused to hear appeals in two cases seeking to recoup more money for them. In the Madoff case, the court rejected a request by Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, to review the dismissal of his claims against banks he accused of enabling Madoff’s fraud. Separately, the court rejected a request by Ralph Janvey, a receiver unwinding Stanford’s businesses, to review a ruling that blocked him from pursuing claims against Stanford employees on behalf of the receivership’s creditors, not the businesses themselves. More on Reuters [...]

The Sterner, Stricter SEC

As Mary Jo White sees it, the Securities and Exchange Commission’s job is to patrol Wall Street and Main Street and catch financial fraudsters. Since becoming the agency’s chair in April 2013, White, a former federal prosecutor and defense attorney, has repeatedly stressed that the agency will get tougher on financial crime and that, as she said in October 2013, “the SEC is, in very important part, a law enforcement agency.” For some CFOs, that characterization conforms exactly with how they think of the 80-year-old securities regulator. But it’s “not the way the SEC thought of itself in years past,” says Stephen Crimmins, a former senior SEC enforcement official and now a partner at K&L Gates. “It thought of itself as a regulator that also did very important enforcement work. But increasingly, over the last 10 or 20 years, we’ve seen a much greater focus on enforcement as part of the SEC’s program.” More on [...]

Why brokerage account insurance is a bigger scam than Madoff

Stephen P. Harbeck, president and CEO of the Securities Investor Protection Corporation (SIPC), has written a strongly worded response to my Forbes column entitled “Close Your Brokerage Account.” A longer version of that column, entitled “Why No One Should Use Brokerage Accounts,” was published on the Making Sen$e page. Mr. Harbeck claims that my columns in Forbes and on the Making Sen$e pages are “misleading in the extreme.” I omitted no facts that were relevant to the point that investing funds in brokerage accounts runs the extreme risk of a) paying taxes each year on the reported appreciation and b) withdrawing those funds, spending them on a legitimate purpose (charity, supporting older parents, tuition, etc.), and then being sued by a SIPC-appointed trustee because it turns out that your broker, or the broker at the next desk, was a crook. If you are sued, you will potentially have to pay back every penny you withdrew in the last two years (six years if the trustee gets his way in federal court). More on PBS [...]

‘New Round’ of Fiduciary Feedback May Be Needed: SEC Markets Chief

The road to a uniform fiduciary standard, if there will be one, remains long. The list of options that the Securities and Exchange Commission will consider in crafting a uniform fiduciary standard for brokers and advisors is still being developed, Stephen Luparello, head of the SEC’s Division of Trading and Markets, told lawmakers Thursday, and once that list is solidified the agency may request feedback on those options. More on Think Advisor [...]

Barclays claims of investor protection a ’sham’: NY AG

Investors thought they were diving into “safe waters” when using the so-called dark pool at Barclays, but those waters were “full of predators,” New York Attorney General Eric Schneiderman told CNBC on Thursday. “Dark pools theoretically are places where large investors will go to protect themselves from high-frequency traders because there’s less disclosure,” he said. “A lot of these are big funds that are, in fact, trading for average people on the street. They’re trading for pension funds.” Schneiderman announced Wednesday a lawsuit against Barclays—accusing the British bank of giving an unfair edge in the U.S. to high-frequency trading clients, even as it claimed to be protecting large investors from such traders. See CNBC report [...]

Senior U.S. Prosecutor Who Fought Wall St. Is Departing

After five years of tussling with Goldman Sachs, JPMorgan Chase and the giant hedge fund SAC Capital Advisors, Lorin L. Reisner is ready for a change. Mr. Reisner, who helped overhaul the Securities and Exchange Commission’s enforcement unit before heading the criminal division of the United States attorney’s office in Manhattan, will soon leave the government for the private sector. He is expected to join a law firm, though it is unclear which one. Mr. Reisner announced his decision on Wednesday afternoon in an email to the United States attorney’s office, where he has been the criminal division chief since January 2012. More in the New York Times [...]


H.R. 3482 – New Co-sponsor

Congressman Alcee Hastings [D-FL20] has signed onto H.R. 3482 – Restoring Main Street Investor Protection and Confidence Act.

If your representative is not currently a co-sponsor (click here for a list of current co-sponsors), please call or write them to urge them to join in supporting this legislation. You can use our letter writing tool at to submit your letter [...]

SEC Is Gearing Up to Focus on Ratings Firms

The government’s top credit-rating watchdog has kept a low profile since taking the job two years ago to help prevent another financial crisis. That may be about to change. Thomas J. Butler, head of the Securities and Exchange Commission’s Office of Credit Ratings, said he has referred multiple cases to the agency’s enforcement division and is helping complete several industry regulations to address quality and transparency in how big debt deals are rated. Those moves signal a potential flurry of regulatory activity involving ratings firms, which have been largely untouched as government oversight has increased in most other financial sectors in recent years. More in theWall Street Journal [...]

The Huge Hidden Risks To Your Brokerage Account — Reply To SIPC’s CEO

Stephen P. Harbeck, President and CEO of the Securities Investor Protection Corporation (SIPC) has written a strongly worded response to my Forbes column entitled “Close Your Brokerage Account.” A longer version of this column entitled, Why No One Should Use Brokerage Accounts was published by PBS NEWSHOUR. I respond below to each of Mr. Harbeck’s statements on a line-by-line basis. I indicate my response with my initials, LJK. I indicate his statements by the initial H. Mr. Harbeck claims that my article entitled “Close Your Brokerage Account!” (Forbes, June 30, 2014) is misleading in the extreme. More in Forbes [...]

Finra Withdraws Proposal Requiring Brokers to Disclose Big Recruitment Bonuses

Wall Street’s self-regulator has pulled back a plan to make brokers tell clients about big-money bonuses they get for changing firms, saying the proposal needs changes. The move follows criticism from the brokerage industry, which questioned some of the details of the Financial Industry Regulatory Authority’s proposed rule, including how much it would cost firms to comply. The said it needed more study and possible revision. Finra sent its plan to the Securities and Exchange Commission earlier this year for review and approval. But in light of the industry’s criticism it now needs some reworking, Finra said Monday. Because of time constraints built into the Dodd-Frank law, Finra decided to formally withdraw its proposal and file a new version later this year, it said. More in the Wall Street Journal [...]