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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$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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SEC Chair Mary Jo White close to revealing her position on fiduciary duty

Securities and Exchange Commission Chairman Mary Jo White is poised to reveal what she believes is the best way for the agency to address the issue of raising investment-advice standards for brokers. “The commission has not made a decision whether to do something or what to do,” Ms. White said Monday at the Securities Industry and Financial Markets Association annual meeting in New York. “But in the short-term, there will be more clarity on that in terms of my own position.” Ms. White has not said whether she supports writing a rule or enhancing disclosures related to investment-advice standard of care. She has played her cards close to her vest in part because the controversial issue has divided the five-member commission. More on Investment News here.

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Finra survey shows investors want more regulatory protection

Investors want more regulatory protection and are willing to pay higher brokerage costs to get it, a new Finra survey shows. On Thursday, the Financial Industry Regulatory Authority Inc., the industry-funded broker-dealer regulator, released a study showing that 92% of investors say it’s important to have a “cop on the beat” to protect them from malfeasance in the markets and that 74% support “additional regulatory protections.” More than half (56%) would favor enhanced regulation even if it resulted in “a minimal increase” in costs that brokerage firms pass on to investors. The rest of the study participants split between opposing additional regulation if it meant higher costs (22%) and having no opinion (22%). More on Investment News here.

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