A top U.S. securities regulator blasted a council of financial-industry overseers established by Congress, comparing it to a firing squad and a death panel. Securities and Exchange Commission member Michael Piwowar described the Financial Stability Oversight Council as a “Firing Squad on Capitalism,” alternatively referring to it as part of the “vast left wing conspiracy to hinder capital formation” and “The Dodd-Frank Politburo.” The comments are the latest in a continuing turf battle between SEC officials and the FSOC, with Mr. Piwowar and other SEC members warning that their agency has been undercut by the council. The 2010 Dodd-Frank financial regulatory overhaul created FSOC—and charged it with deciding which large financial firms should be labeled as systemically risky and subject to stricter oversight from the Federal Reserve. More in the Wall Street Journal [...]
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Your broker has a duty to disclose all risks from investing with him and his company. He also has an obligation to tell the truth. If he misleads you, including failing to disclose a major risk to your investment, you can sue him personally. There is one huge investment risk that your broker is surely not disclosing. It’s the risk arising from SIPC, the so-called Securities Investor Protection Corporation. And there is one extremely serious misrepresentation he surely is making, namely that your brokerage account is insured by SIPC. Falsely claiming that you are insured represents financial fraud. Let’s start with three basic facts. More on Forbes [...] The bankruptcy trustee for Bernard L. Madoff’s investment firm filed an amended lawsuit against Mr. Madoff’s two sons on Tuesday, again claiming they were aware the operation was a fraud and seeking the return of more than $153 million they took in the form of what are described as inflated salaries, bonuses, sham loans and fabricated trading profits. After Mr. Madoff confessed the fraud to his sons in 2008, they contacted law-enforcement officials and turned him in. They weren’t criminally charged, but said they were owed tens of millions of dollars in deferred compensation by the brokerage firm, where they worked as senior executives. Mark Madoff claimed he was owed about $45 million and Andrew claimed more than $40 million, according to the suit by the bankruptcy trustee, Irving Picard. More in the Wall Street Journal [...] A Bremen couple who filed a lawsuit in 2010 against their former financial adviser for persuading them to invest in a fund that was tied to infamous stockbroker Bernie Madoff have finally gotten their day in court. Daniel and Suzanne Goldenson, formerly of New Jersey, have sued John “Launny” Steffens, founder of Spring Mountain Capital, as well as Gregory Ho, the firm’s chief operating officer, for securities fraud, fraudulent misrepresentation and nine other counts. They are seeking unspecified damages but allege they lost more than $1 million. The complex jury trial began Thursday in U.S. District Court in Portland and continued Friday with lengthy testimony from Suzanne Goldenson. More in the Portland Press Herald [...] Most brokers and trading firms now use high-speed computers to fire off thousands of orders in the blink of an eye, and the acceleration is hindering regulators’ ability to know precisely when buyers and sellers are matched up. The Financial Industry Regulatory Authority and Securities and Exchange Commission—the primary overseers of US stock markets—and the UK’s Financial Conduct Authority are tightening rules to impose stricter time-keeping standards. More on Financial News [...] When the money was rolling in from investors, Scott W. Rothstein, a lawyer in Fort Lauderdale, Fla., bought his wife, Kimberly, more than $1 million in jewelry, including an opulent 12-carat yellow diamond ring. He lived in a multimillion-dollar waterfront mansion and regularly wrote big checks to charities and politicians. More in the New York Times [...] WASHINGTON—U.S. regulators are poised to complete long-awaited rules intended to prevent a repeat of the investor stampede out of money-market mutual funds that threatened to freeze corporate lending during the 2008 financial crisis. The Securities and Exchange Commission is expected to vote on a plan as early as this month that would require certain money funds catering to large, institutional investors to abandon their fixed $1 share price and float in value like other mutual funds, these people said. The plan also would allow money funds to temporarily block investors from withdrawing their money in times of stress, or require a fee to redeem shares. Other regulators, including members of the Financial Stability Oversight Council, have said such redemption restrictions could spur, rather than curb, investor stampedes. More in the Wall Street Journal [...] A sweeping blueprint designed by the U.S. Securities and Exchange Commission to reduce conflicts of interest in the stock market won support today from leaders of exchanges and large money managers. Chief executives from the New York Stock Exchange to institutional investors including Citadel LLC and Invesco Ltd. (IVZ) backed the commission’s call to rein in some high-frequency trading and make secretive trading venues known as dark pools disclose more about how they work. The SEC also should move forward with a plan to require that brokers provide investors with detailed maps of how their orders are filled, the executives said at a hearing of the Senate Banking Committee. The testimony signaled industry support for SEC Chair Mary Jo White’s agenda even as some market participants have pressed the agency to do more. White has said the agency would consider new rules in the coming months as it weighs claims that high-frequency traders enjoy systematic advantages over long-term investors. More on Bloomberg [...] WASHINGTON—The Financial Industry Regulatory Authority is pressing retail brokers for details about how they route customer orders amid mounting concerns some brokers might be sending orders to venues that provide the highest payments but not the best price for investors. Finra is sending “sweep letters” to about 10 brokers this week after studying routing patterns by the firms on its Order Audit Trail System, which tracks stock-market trading action, said Tom Gira, executive vice president of Finra’s market regulation department, in an interview. Mr. Gira said Finra has notified the firms that they’ll be receiving the letter. The letter asks brokers for information about how they determine where to route orders so that the price is “as favorable as possible for its customer under prevailing market conditions,” based on a copy of the letter posted on Finra’s website. Finra is focusing on so-called nonmarketable limit orders, or orders that will only trade if a stock reaches a specific price. Retail brokers often route such orders to exchanges, giving them the opportunity to collect a rebate exchanges offer. More in the Wall Street Journal [...] The passage — or failure — of a single piece of legislation is going to tell us a lot about whether Congress represents the people of the United States or just its financial service industry donors. The legislation is the Restoring Main Street Investor Confidence and Protection Act, HR 3482 and Senate bill S.1725. The website govtrack.us gives the bill only a 23 percent chance of passage. So we have a good test, right now, of whether the folks we vote for actually represent us. Here’s the story: The Restoring Main Street Investor Confidence and Protection Act would define the value of a person’s brokerage account — the net equity — as the value of the account based on the last statement from the brokerage house. More on Chron.com [...] |
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