If you experience an insured loss and the insurance company doesn’t pay, you know you’ve been scammed. As I’ve discussed in a series of columns posted at www.kotlikoff.net, SIPC (the Securities Investor Protection Corporation) is running an enormous scam in claiming to insure our brokerage accounts against fraud. SIPC’s refusal to pay the legitimate claims of most Madoff victims and all Stanford victims makes this abundantly clear. Even worse, SIPC is placing all brokerage account holders at enormous additional risk by standing ready to sue them if they earn a return on their investments and spend the proceeds. In fact, thanks to precedents SIPC established in the Madoff case, SIPC can declare the loss of your securities to be the result of a Ponzi scheme and sue you for up to every dollar you withdrew in the up to six years prior to the fraud’s discovery! More on Forbes [...]
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WASHINGTON—The Securities and Exchange Commission plans to abandon its legal battle to require a brokerage industry insurance fund to pay investors in R. Allen Stanford’s $7 billion Ponzi scheme, two months after an appellate court rejected the SEC’s arguments in the case. The U.S. Court of Appeals for the District of Columbia Circuit in July ruled the SEC failed to prove victims of the Ponzi scheme were “customers” eligible for compensation by the Securities Investor Protection Corp. under the narrow definition of the law. The ruling upheld a district-court decision from 2012. “After very careful deliberation, the commission determined not to seek further review” of the decision, said SEC spokesman John Nester, in a brief statement Friday. “We remain committed to the victims of the Stanford fraud and will continue to work with the Stanford Receiver, Justice Department, and other interested parties to maximize recovery to harmed investors.” More in the Wall Street Journal [...] The U.S. Securities and Exchange Commission will not appeal a recent court decision that thousands of victims of financier Allen Stanford’s Ponzi scheme were ineligible under federal law to file claims to recoup their losses, a SEC spokesman said on Friday. On July 18, a federal appeals court in Washington rejected the SEC’s bid to force the Securities Investor Protection Corp to start paying an estimated 7,800 former customers of Stanford Group Co. More on Reuters [...] WASHINGTON (Reuters) – A group of activists stood outside of the U.S. Securities and Exchange Commission’s Washington headquarters on Thursday to scold the regulator for failing to advance a rule requiring companies to disclose their political contributions. In an hour-long press conference on the SEC’s doorstep, the Corporate Reform Coalition said that more than a million comments in support of a corporate political spending disclosure rule have been sent to the SEC, a number they called “record breaking.” More on Reuters [...] The Department of Labor is on the precipice of unveiling a tough fiduciary standard for professionals giving advice on pension plans, predicted Dennis Kelleher, the president and CEO of Better Markets, a consumer advocacy group, on Thursday. The department is “serious about proposing a rule that is not loophole ridden,” he said during a telephone press conference held by the Institute for the Fiduciary Standard. More on Financial Advisor [...] At the center of the financial crisis was the corrupted process by which bad mortgages were packaged into toxic securities with stellar credit ratings. The credit rating agencies that gave out those high grades were paid by the banks, which securitized the loans and sold them to investors. The Securities and Exchange Commission recently issued two rules, required by the Dodd-Frank financial reform law, to overhaul this process. Unfortunately, the new rules are only modest improvements to a process that requires substantial reform. More in the New York Times [...] Linda Fienberg, head of the Financial Industry Regulatory Authority’s arbitration unit, plans to leave the self-regulator at the end of November. Fienberg, president of FINRA Dispute Resolution and chief hearing officer, joined FINRA (then the National Association of Securities Dealers) in June 1996 and has responsibility for FINRA’s dispute resolution and disciplinary hearing programs. More on ThinkAdvisor [...] “We’ll be out of compliance” is still the major reason that financial services firms block the use of social media for regulated users. However, that fear is contrary to the evolving regulatory landscape. Both the Security and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) state that they see a value in social media as an educational tool for investors. This appreciation for social media was reinforced recently at the LIMRA / LOMA 2014 Social Media Conference for Financial Services, at the “Ask the Regulators!” session. Owen Donley, Chief Counsel, Office of Investor Education and Advocacy and Thomas Selman, Senior Vice President, FINRA discussed how their respective organizations seek to protect investors and generally view social media in a positive light. More on Forbes [...] US regulatory and law-enforcement authorities are engaged in discussions about how to stop the worldwide spread of Internet pyramid schemes, following criminal indictments in Massachusetts against the owners of TelexFree Inc., who allegedly conducted a $1 billion global fraud. The talks involve creating a coalition of federal and state securities regulators, as well as law-enforcement agencies, who would in turn reach out to their counterparts abroad, according to two US officials with knowledge of the effort. The Department of Justice is among the parties participating in the process. More in the Boston Globe [...] The official who is winding down Bernard Madoff’s investment firm wants another opportunity to sue defendants that benefited from his Ponzi scheme after two major district court rulings “substantially altered the legal landscape.” Trustee Irving Picard said two rulings handed down by the U.S. District Court in Manhattan earlier this year changed the burdens he must meet to recover money from certain institutions that profited from Mr. Madoff’s fraud. So he is seeking another chance for himself and his team of lawyers. More in the Wall Street Journal [...] |
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