ALERT: New York State Residents

NOW is the time to write Senator Schumer, thank him for his leadership and encourage him to engage his fellow Senators to join him in supporting S.1725, Restoring Main Street Investor Protection and Confidence Act. Submit your letter by clicking here.

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ALERT: 2 New Co-sponsors Sign on to H.R.3482 – Restoring Main Street Investor Protection and Confidence Act

Congressman Mario Diaz-Balart [R-FL25] and Congressman Tom Cotton [R-AR4] have signed on to co-sponsor H.R.3482, bringing the number of co-sponsors to 55!
Click here for a current list of co-sponsors. If your Representative is not yet a co-sponsor, please urgently call and write your representative to get them to sign on. Letters can be submitted on-line at www.fixsipcnow.org, where you can also find a Congressional directory for phone contact information.

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Madoff Scorecard, in Billions: $17.5 Lost, $10 Recovered, $1 to Do It

Unwinding the biggest Ponzi scheme in U.S. history hasn’t been cheap. Six years after Bernard Madoff’s fraud collapsed, the cost of liquidating his defunct investment advisory firm to repay thousands of victims has topped $1 billion, though the con man’s former customers aren’t footing the bill. The fees, paid by the industry-backed Securities Investor Protection Corp., or SIPC, which is managing the case, have financed a team of lawyers who this week surpassed $10 billion in recoveries for victims, or almost 60 percent of the principal that vanished after Madoff’s arrest in December 2008. More on Bloomberg here.

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Protecting Millionaires ‘Strains Logic & Reason’: SEC Commissioner

Securities and Exchange Commission Chairwoman Mary Jo White reiterated Thursday that the agency is taking a “comprehensive review” of potential changes to the accredited investor definition, but SEC Commissioner Daniel Gallagher said such an endeavor “strains logic and reason,” and that “millionaires can fend for themselves.” Both White and Gallagher made their remarks during the Government-Business Forum on Small Business Capital Formation, held at SEC headquarters in Washington. The forum delved into whether changes need to be made to the accredited investor definition as it relates to natural persons. White stated that the SEC’s goal is to “assess whether we are properly identifying the population of investors who should be able to purchase securities in a securities offering without the protection afforded by the registration requirements of the Securities Act.” More on Think Advisor here.

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$30 million award to tipster underscores banner year for SEC whistleblower program

The U.S. Securities and Exchange Commission experienced a banner year with its whistleblower program in fiscal 2014, awarding more tipsters than all previous years combined and issuing a record-setting $30 million to one individual who reported fraud. The SEC said in a report to Congress this week that it authorized a total of nine monetary awards this year to people who provided original information about violations of federal securities laws. The agency had previously handed out a combined four awards since the program began in 2011. More in the Washington Post here.

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SEC approves rules on stock exchange technology

WASHINGTON (MarketWatch) — Despite concerns of some commissioners that a rule doesn’t go far enough, the Securities Exchange Commission on Wednesday voted unanimously in favor of regulations designed to ensure the technology at stock exchanges works. The Commission voted to adopt rules on Regulation Systems Compliance and Integrity, which requires self-regulatory organizations, securities exchanges, registered clearing agencies and significant alternative trading systems, to establish policies and procedures to help ensure that systems have capacity, integrity and resiliency. SEC Chairwoman Mary Jo White said the adoption of the rule was put in place because the commission could not exercise oversight with a purely voluntary framework. More on Market Watch here.

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Madoff Fraud Recovery for Bilked Investors Tops $10 Billion

The trustee unwinding Bernard Madoff’s defunct investment firm said he surpassed $10 billion in recoveries for victims — or about 59 percent of the principal lost in the Ponzi scheme — after reaching a deal with two offshore funds that funneled money to the fraud.
Primeo Fund and Herald Fund, both based in the Cayman Islands, agreed to pay a total of $497 million to end lawsuits over their withdrawals from Madoff’s investment advisory business, the trustee, Irving Picard, said today in a statement.
If the settlement is approved, the total amount recovered by Picard’s team of lawyers over the past six years will total more than $10.3 billion of the $17.5 billion lost by thousand of investors when Madoff’s scheme unraveled in December 2008. More on Bloomberg here.

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Madoff Fraud Recovery for Bilked Investors Tops $10 Billion

Two Cayman Island financial funds that invested heavily with Ponzi scheme architect Bernard Madoff’s business have agreed to a nearly $497 million settlement with the court trustee seeking the disgraced financier’s assets on behalf of victimized customers. The tentative deal with Herald Fund SPC and Primeo Fund will add the money to a fund used to repay burned Madoff investors, raising the total recovered so far to roughly $10.3 billion, trustee Irving Picard announced Monday. The agreement, which requires U.S. Bankruptcy Court approval, “avoids the cost and delay of what could otherwise have been lengthy and contentious litigation,” said Geoffrey North of BakerHostetler LLP, Picard’s court-appointed counsel. More on Bloomberg here.

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Finra expected to adopt CARDS despite vocal industry resistance

Despite strong industry resistance, Finra is expected to adopt a controversial proposal to implement an automated tracking system to detect abusive broker conduct. “They’re going to go through with it,” said Linda Riefberg, a partner at Cozen O’Connor and a former chief counsel for Finra enforcement. “They don’t have to have firms’ approval. Finra, and presumably the [Securities and Exchange Commission], believes this is a way to strengthen their investor protection.” The Financial Industry Regulatory Authority Inc., the self-funded broker-dealer regulator, sees its Comprehensive Automated Risk Data System, or CARDS, as a way to use technology to make itself a more effective and nimble regulator. More on Investment News here.

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Madoff Trials in Geneva Loom Years After Fraudster Confessed

Almost six years after Bernie Madoff admitted his investment firm was based on “one big lie,” two European criminal cases linked to the convicted fraudster are working their way to trial in Geneva. Prosecutor Marc Tappolet is finishing an indictment of five managers at Aurelia Finance SA after the final pre-trial hearing wrapped up, said Henri Della Casa, a spokesman for the Geneva prosecutor’s office. One more witness needs to be questioned in another country before a second case can proceed against the former head of Banco Santander SA (SAN)’s Optimal Investments unit, he said. More on Bloomberg here.

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How Troubled Brokers Cluster, Often Among Elderly Investors

DELRAY BEACH, Fla.—At Burt & Max’s Bar and Grille one day this summer, stockbroker Rafael Golan gave a group of elderly people a financial seminar. After his hourlong talk on topics from real estate to annuities, the free food arrived. Dinners like this have landed him clients before. Some later lodged complaints against him, making him part of a cluster of brokers with troubled regulatory records that a Wall Street Journal analysis identified in this corner of Florida. Among those clients were Pinny and Rebecca Slotnick, octogenarians who became Mr. Golan’s customers in 2003 after a dinner and later filed a complaint with regulators alleging he mishandled their accounts. He paid them a $125,000 settlement this year. He denies any wrongdoing in this or any other case. More in the Wall Street Journal here.

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Two Republican SEC members blast SAC insider trading victims’ fund

Two Republican members of the U.S. Securities and Exchange Commission lambasted plans to compensate victims of an insider trading scandal at a unit of the hedge fund SAC Capital Advisers, calling it nothing more than a windfall for class-action lawyers. In an unusual move, SEC Commissioners Daniel Gallagher and Michael Piwowar announced their dissent for the $602 million fund in an op-ed item in the Wall Street Journal posted late Monday evening that appeared in Tuesday’s print edition. (on.wsj.com/1wga7Oa) Typically, such opinions are posted directly on the SEC’s website, or in some cases, not widely publicized. More on Reuters here.

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