H.R. 6695 — REVISED SIPC BILL INTRODUCED!
GARRETT EMPHASIZES COMMITMENT TO LEGISLATION IN 2013
HR.6695 To amend the Securities Investor Protection Act of 1970 to confirm that a customer’s net equity claim is based on the customer’s last statement and that certain recoveries are prohibited, to change how trustees are appointed, and for other purposes.
On December 20, House Sub-Committee Chairman Scott Garrett introduced to the House of Representatives “a revised and strengthened version of H.R. 757.” According to the Congressman, “The introduction of this bill before the adjournment of the 112th Congress is to post a marker of our intentions for the work of the 113th Congress.” Based on Garrett’s October letter to NIAP members, this marker legislation is the first of a series of steps toward passage of SIPC legislation in the 113th Congress designed to assist both Madoff and Stanford victims.
Mr. Garrett concludes his remarks by saying “This will be the opening step in educating the Congress, the public and the media of the sadly mistaken course be pursued by the SIPC and the failure of adequate judicial review.”
Needless to say, we are extremely pleased that Congressman pressed forward with this legislation, particularly given the other pressing issues Congress is currently facing. It is especially welcome news at this time, and it lays an important foundation for movement early next year. More information, including language, will follow. Please also look for our forthcoming Anniversary Update.
A new film has been accepted by the Tribecca Film Festival in NY. The title is “In God We Trust” and it “stars” the private secretary for Bernard Madoff. The secretary has been co-operating with the Justice Department and has been a useful source for tracking those who met with Madoff over the years. The film crew has interviewed a number of Madoff victims. Click here for more information.
A Dale Chihuly chandelier that once belonged to convicted Ponzi-scheme operator R. Allen Stanford will go on the auction block next week. The approximately 7-foot-tall cobalt chandelier, made of hand-blown glass and steel, is valued at between $60,000 and $80,000. The proceeds raised from the chandelier’s sale at a May 22 public auction will eventually make their way to the pockets of Stanford’s cheated investors, who are relying upon a court-appointed receiver to track down their stolen funds. The receiver also is putting a Terence Main sculpture up for sale at the same auction. The 10-piece, 42-foot-long piece is called “Terrestial Tale” and has an estimated value of $20,000 to $30,000. More in the Wall Street Journal here.
The U.S. Securities and Exchange Commission on Wednesday said it has reached settlements with the last two defendants in an insider trading probe known as the “Golden Goose” case, which had been based on secrets stolen from an executive at a public relations firm. Jamil Bouchareb agreed to pay about $1.05 million and fellow trader Daniel Corbin agreed to pay about $191,000 in disgorged profit plus interest to settle the SEC’s civil cases, after having previously pleaded guilty to related criminal charges. Federal investigators accused the men of making trades based on tips about pending mergers between 2005 and 2008 from Matthew Devlin, a former Lehman Brothers Holdings Inc broker. Investigators said Devlin misappropriated the information by listening to conversations of his wife Nina, an executive at public relations firm Brunswick Group LLC who worked on mergers, and assessing her travel schedule. More on Reuters here.
Yesterday we spoke about the price pressure that U.S. Treasury bonds, particularly longer dated issues, have seen in recent sessions and today we investigate the High Yield Corporate Bond space. The two biggest entries in the space, JNK (SPDR Barclays High Yield Bond, Expense Ratio 0.40%) and HYG (iShares High Yield Corporate Bond) have both seen notable outflows in recent sessions, totaling about $500 million collectively. With twenty seven ETPs currently classified in the High Yield Bond category, it is not terribly surprising to see some portfolio re-shuffling at these levels given the strong run that both JNK and HYG have had in the past year. More on ETF Trends here.
An outspoken freshman U.S. senator with a record of taking on Wall Street wants financial regulators and federal prosecutors to provide an economic justification for allowing big banks to settle investigations without admitting any wrongdoing. In a May 14 letter to the heads of the Federal Reserve, the Securities and Exchange Commission and the Justice Department, Massachusetts Democratic Senator Elizabeth Warren asks the agencies to provide her with details of how they weigh the costs and benefits of settling versus trying cases. “If a regulator reveals itself to be unwilling to take large financial institutions all the way to trial – either because it is too timid or because it lacks resources – the regulator has a lot less leverage in settlement negotiations and will be forced to settle on terms that are much more favorable to the wrongdoer,” Warren wrote. More in The Insurance Journal here.
REDDING, Calif. — A man accused of cheating North Coast residents out of hundreds of millions of dollars in what prosecutors characterized as one of the largest real estate Ponzi schemes in state history has been convicted by a Shasta County jury. The Santa Rosa Press Democrat reports 60-year-old James Stanley Koenig of Redding was found guilty on 35 of 36 felony counts, including securities fraud and first-degree burglary. Koenig faces 50 years in prison when he’s sentenced in June. More in the Sacramento Bee here.
The head of the Securities and Exchange Commission, Mary Jo White, is on board with calls for a broad review of the framework of the U.S. equity market, which has been roiled by software glitches over the past year, an SEC commissioner said on Monday. White, who took over the SEC in February, has not discussed the issue in detail and nothing concrete has been decided, Commissioner Daniel Gallagher said after 20 industry officials discussed equity market structure at a roundtable. “We haven’t talked too much in depth on market structure issues,” Gallagher said. “I know that she is on board with the idea that it is a huge issue and we need to resource it and come up with a plan. More on Fox Business News here.
Federal watchdogs are preparing to exert more control over costs in big bankruptcy cases. In the initial push, the first overhaul of guidelines intended to keep costs in check in about 17 years is expected to be unveiled by July 1. It aims to tamp down on fee and expense applications submitted by attorneys for corporate debtors and sometimes creditors. Next in line: revisions of existing guidelines for other bankruptcy professionals, such as financial advisers and bankers. No timeline has yet been set for those efforts. The challenges come from the U.S. Trustee Program, the wing of the Department of Justice that monitors bankruptcy cases and that is handling the guidelines, as well as some bankruptcy judges. More in the Wall Street Journal here.
As a young man growing up in St. Louis, Norm Champ became interested in investing. By the time he was in college, he knew he wanted to be a securities lawyer. After a stint in London as a Fulbright scholar, Mr. Champ headed to law school. His career path after law school took a detour when he accepted a clerkship with U.S. District Judge Charles S. Haight Jr. in New York. “That was a lot of fun,” said Mr. Champ. “You get more securities law cases there than anywhere else (and) it was my first experience in federal service.” He got back on the corporate law track in 1993, joining Davis Polk & Wardwell LLP in New York, where he specialized in mergers and acquisitions, and rose to partner. More in Pensions and Investments here.
When federal regulators sued the high-flying money manager Philip A. Falcone last summer, they claimed his actions “read like the final exam in a graduate school course in how to operate a hedge fund unlawfully.” By Thursday, the agency appeared to be softening its tone. Nearly a year after the Securities and Exchange Commission accused him of manipulating the market, using hedge fund assets to pay his own taxes and “secretly” favoring select customers at the expense of others, Mr. Falcone disclosed in a public filing that he had “reached an agreement in principle” to settle the two cases with the agency. The S.E.C. also struck a deal with Harbinger Capital Partners, Mr. Falcone’s flagship hedge fund. More in the New York Times here.
The top U.S. securities regulators on Thursday warned individual investors about pension purchasing companies that persuade retirees and military veterans to sign over pension checks in return for lump-sum payments, as regulatory concerns about the practice mount. Individuals who receive monthly pension payments could be targets of salespeople offering an immediate lump sum in exchange for some or all of their future pension payments, the U.S. Securities and Exchange Commission and Financial Industry Regulatory Authority wrote in a joint alert. Pension recipients who sign over their payments to so-called “factoring” or “pension advance” companies, will almost always receive lump-sum payments that are lower than the present value of their future income streams, the SEC and FINRA wrote. The companies also target individuals who are receiving payments for settlements of personal injury lawsuits, according to the regulators.
More on Reuters here.