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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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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Finra Proposes Less Stringent Disclosure for Brokers Switching Firms

Wall Street’s self-regulator appears to have dropped plans to make brokers who change employers to tell all clients about any big-money signing bonuses they get as part of the move. The Financial Industry Regulatory Authority said Friday it will float a new, less stringent proposal. It would oblige the firm that hires the broker to send clients a list of suggested questions they may want to ask before deciding whether to stay with that broker and move their accounts to his or her new firm. One question would be whether the broker was getting a bonus. More in the Wall Street Journal here.

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Madoff Trustee’s Clawback Reach Cut Short

Foreign investors who are concerned about the extraterritorial application of U.S. bankruptcy law can draw some comfort from a recent decision in the liquidation case of Bernard L. Madoff Investment Securities (“BLMIS”). On July 6, 2014, United States District Court Judge Jed S. Rakoff ruled that the BLMIS Trustee could not use the Bankruptcy Code’s avoidance provisions to recover transfers made to foreign investors that had invested in foreign feeder funds, such as the Fairfield Funds. 2014-07-06_BLMIS Decision. Judge Rakoff rejected the Trustee’s contention that he could use section 550(a)(2) of the Bankruptcy Code as a mechanism to claw-back distributions that BLMIS had made to the feeder funds, which then re-distributed the funds to foreigners who were not otherwise subject to the jurisdiction of U.S. courts. The Court reasoned that that would constitute an impermissible extraterritorial application of the statute. The Court noted that although the cash that was ultimately distributed may have originated in the U.S., the subsequent transfers to foreign investors lacked sufficient contact with the U.S. to be considered “domestic.” The Court examined the language of the statute and concluded that Congress did not evidence a clear intention to give the statute extraterritorial application. More on Global Restructuring Watch.

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Rule proposal for new hire background checks moving to SEC

Finra is pushing ahead with a rule-change that would require brokerage firms to vet new hires more thoroughly. The regulatory agency sent a rule to the Securities and Exchange Commission on Wednesday that would require brokers to put in place written procedures to verify the accuracy of information contained in an applicant’s U4 form, the foundation for broker profiles on the Financial Industry Regulatory Authority Inc.’s BrokerCheck database. Firms already are expected to review job applicants. The new rule makes that requirement more stringent by forcing them to conduct a search of public records. More in Investment News here.

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U.S. urges review of investment cases

With the support of the Justice Department, two new cases on investment law are more likely to be reviewed by the Supreme Court: one on the right of investors to sue for false stock registration statements, and one on the duty of employee benefit plan managers to get rid of questionable items in plan portfolios. Asked by the Court for the government’s views, the Solicitor General urged the Court to rule on both. he Court’s docket indicates that the Justices will consider whether to grant the petitions in Moores v. Hildes, the registration statement case, and Tibble v. Edison International, the benefit plan case, at their September 29 Conference. The government’s brief in Moores is here, while its brief in Tibble is here. More on SCOTUSBlog here.

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BlackRock calls for U.S. stock market reforms

BlackRock Inc, the world’s largest asset manager, has asked regulators to force exchanges to lower their access fees and require greater transparency of broker dealer-run trading venues known as “dark pools.” The New York-based company outlined a set of proposals aimed at boosting public confidence in the equity markets in a letter on its website to the U.S. Securities and Exchange Commission dated Sept. 12. It said that while the market is “not broken or in need of large scale change,” improving current rules would help promote fairness, order and efficiency. More on Reuters here.

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Victims fume as Madoff son leaves $16 million estate

Andrew Madoff, the younger son of Ponzi schemer Bernard Madoff, died leaving a $16 million fortune, according to reports in New York City media. The extent of his wealth was unknown even to prosecutors until his will was filed Thursday in Manhattan Surrogate Court, according to the New York Post. The revelation has left some of his father’s victims angry. The younger Madoff, who died of lymphatic cancer earlier this month, was never charged and claimed he knew nothing of his father’s fraud, despite working closely with him. More in USA Today here.

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Landrieu: Stanford Ponzi Scheme Victims Deserve Justice

WASHINGTON – Last week, U.S. Senator Mary Landrieu, D-La., wrote to U.S. Securities and Exchange Commission (SEC) Chair Mary Jo White about her disappointment in the SEC’s decision to not appeal the Stanford Ponzi Scheme Victim’s case. Click here for the Senator’s Press Release and to read the letter on-line.

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SEC Targets Timing of Insiders’ Trade Notices

The Securities and Exchange Commission is stepping up its scrutiny of corporate executives who sell shares in their own companies, announcing a raft of cases Wednesday against insiders for allegedly breaking rules on disclosing stockholdings and trades. The action, on an unprecedented scale for such offenses, is part of the “broken windows” strategy SEC Chairman Mary Jo White announced almost a year ago. She said the strategy—named for policing tactics used in New York that sought to reduce serious crime by not tolerating minor violations—will mean “even the smallest infractions” are pursued. More in the Wall Street Journal here.

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New Jersey Bureau of Securities Looking for Panelist

The Bureau will be hosting a conference at Rutgers University in New Brunswick, NJ on November 13th. The target audience will be primarily NJ residents, and specifically targeting unions and pension funds. They are putting together a panel to speak about securities frauds, risk, and impact to victims. The Chief of the Bureau, Laura Posner has reached out to us to invite a Madoff victim to participate on the panel. If anyone may be interested in joining the panel or what to find out more, you can contact Laura Posner at (973) 504-3610, Laura.Posner@lps.state.nj.us

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