A Labor Department proposal designed to reduce conflicts of interest for brokers working with retirement accounts would create overlapping regulations that would baffle financial advisers and investors, Finra said Friday. The rule would require brokers to act in the best interests of their clients in 401(k) and individual retirement accounts, a standard investment advisers currently meet. Although the Financial Industry Regulatory Authority Inc. supports the DOL’s goal, it said the measure does not incorporate existing securities laws and introduces ambiguous new concepts. More on Investment News here.
U.S. regulators called on top exchange officials two years ago to strengthen the plumbing that underpins the stock market after a series of trading disruptions. The exchanges did an analysis and concluded they needed a backup plan for the crucial 15-minute closing auction each day when traders are guaranteed they’ll get the final price. Yet when the New York Stock Exchange suspended trading for hours on Wednesday, there were unanswered questions. More on Bloomberg here.
The Securities and Exchange Commission has ratcheted up its punishment of individuals, more than doubling the typical fine over the past decade amid pressure to prove the agency is tough on Wall Street. The SEC has stepped up its enforcement activity across the board. The agency levied more civil penalties in the first half of this fiscal year, October through March, than over any comparable period since at least 2005, according to an analysis by The Wall Street Journal of the 4,443 penalties imposed by the SEC since October 2004. More in the Wall Street Journal here.
The New York Stock Exchange ground to a halt for nearly four hours Wednesday because of what officials said was a technical glitch, spooking investors and raising new worries about the soundness of the world’s complex financial markets. The nation’s oldest exchange went dark from 11:32 a.m. to 3:10 p.m., its longest computer-related closure to date, freezing orders and redirecting trades through a sprawling network of other exchanges. But the outage, the latest in a series of alarming glitches since the turbulent 2010 “flash crash,” has led to new questions about weaknesses in the technical underpinnings of some of the world’s most critical exchanges. More in the Washington Post here.
Securities regulators have launched a broad investigation into whether hedge funds and other investors are improperly selling hot private technology stocks amid a boom in the trading of such shares, people close to the probe say. The regulatory scrutiny, which is at an early stage, follows a March article in The Wall Street Journal that delved into the role of middlemen in the burgeoning market for private shares. The investigation, by the Securities and Exchange Commission, is focused on a burst of new activity recently by people selling pre-IPO shares as valuations of private tech companies have exploded and companies have opted to remain private for longer. More in the Wall Street Journal here.
European victims of Bernard L. Madoff’s Ponzi scheme can’t directly sue custodian banks such as UBS Group AG, Luxembourg’s highest court said. Luxembourg’s Cour de Cassation, in a ruling Thursday, upheld a 2010 decision by a lower court that blocked hundreds of individual claims by investors, telling them they had to rely instead on liquidators’ efforts to recover lost funds. More on Bloomberg Business here.
The fiduciary debate is dominating the political agenda in the financial advisory world, but it isn’t the only unsettled business in the industry. An equally important issue is making sure that fiduciary investment advisors—who are required to always act in the best interests of their clients—are actually doing that. More on CNBC here.
Yesterday, the Supreme Court denied two petitions for certiorari filed by Irving H. Picard—the Trustee for the estate of Bernard L. Madoff Investment Securities (“Madoff Securities”)—and the Securities Investor Protection Corporation (“SIPC”). Specifically, the Trustee and SIPC sought review of the Second Circuit’s holding that Bankruptcy Code Section 546(e) bars the Trustee’s attempts to recover innocent investor withdrawals from Madoff Securities made more than two years before Madoff Securities’ liquidation. Picard, Irving H. v. Ida Fishman Revocable, et al. (14-1129); Securities Investor Prot. Corp. v. Ida Fishman Revocable, et al. (14-1128). The Trustee has stated that the application of Section 546(e) will prevent him from recovering more than $4 billion from innocent customers of Madoff (i.e., investors with no knowledge of Madoff’s fraudulent scheme). More on JDSupra Business Advisor here.
The court-appointed trustee pursuing Ponzi scheme mastermind Bernard Madoff’s assets won’t be allowed to claw back money from hundreds of former customers who profited from the infamous scam. Ruling without comment, the U.S. Supreme Court Monday left intact a lower court decision that blocked trustee Irving Picard from seeking the funds on behalf of the thousands of other former Madoff customers who collectively lost as much as $20 billion in one of history’s largest frauds. Picard had hoped to recover an estimated $2 billion from so-called net winners, former Madoff customers who withdrew more than the principal they’d invested before the scam’s December 2008 collapse. More on USA Today here.
Bernard Madoff’s victims shouldn’t expect to recover all $17 billion they lost now that the U.S. Supreme Court has refused to hear a case involving money that went to some customers more than two years before his scam collapsed. Irving Picard, the trustee unwinding Madoff’s firm, was seeking to reverse a December decision by the Manhattan-based U.S. Court of Appeals that shut off some older recoveries. In a June 22 order, the justices declined to take the case. They gave no explanation. More on Bloomberg here.