SEC to take baby steps with vote on ‘IPO Lite’ crowfunding idea

Nearly three years after Congress promised to open a spigot of new financing to startups, securities regulators are finally ready to allow one of two anticipated new fundraising methods to go live. In a meeting Wednesday, the Securities and Exchange Commission will vote on rules detailing what’s being called “Regulation A+,” a new equity selling path that’s been widely described as an ” IPO Lite.” Details aren’t yet certain pending the vote, but observers expect the rules to allow young companies a way to raise $50 million from regular people — and to allow those stakes to be traded freely — without having to navigate the patchwork of state securities laws or formally registering with the SEC. This is separate from the more revolutionary Title III of the JOBS Act, a section that would allow startups at all ages to advertise equity investment deals of almost any size. More in New York Business Journal here.

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A Closer Look At Madoff Victims’ PwC, Citco Suit

Plaintiffs whose monies were invested in four funds created by the Fairfield Greenwich Group — which investments FGG largely invested and lost in the Madoff Ponzi scheme — recovered over $80 million as a result of a settlement agreement with FGG defendants approved by Judge Victor Marrero of the Southern District of New York in 2013. Those plaintiffs, who moved for class certification in their case against FGG and others in January 2012, are now one step closer to tapping into another source of recovery: providers of services to those FGG funds. The providers include several entities of hedge fund management powerhouse Citco, which supplied administrator and other services to the funds, as well as two PricewaterhouseCoopers entities, as providers of independent auditing services to those funds. More on Law360 here.

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MF Global Trustee Seeks Court Permission to Repay Creditors

MF Global Inc. wants court approval to pay $461 million owed to its creditors, the second such payment now that it has paid back most of its customers. In a Wednesday filing with the U.S. Bankruptcy Court in New York, trustee James W. Giddens said he wanted to distribute the cash to unsecured creditors, who have already received $518.7 million. The latest distribution would bring unsecured creditors’ payout to 72% of what Mr. Giddens has agreed to pay. MF Global’s brokerage and commodity customers have already received 100% of the $6.7 billion they were owed. More in the Wall Street Journal here.

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Madoff Trustee Strikes $93 Million Deal with Feeder Fund

A fund that invested exclusively in Bernard Madoff’s massive Ponzi scheme has struck a deal that frees up $93 million to pay back victims of the fraud. Irving Picard, the official tasked with liquidating Mr. Madoff’s defunct firm, said in a Monday court filing that Defender Limited and related entities have agreed to return $93 million they received from investing with Mr. Madoff. Under the terms of the deal, the amount will be withheld from a $522.8 million recovery that Defender is in line to receive for money it lost from the fraud. The deal is one of several Mr. Picard has struck with so-called feeder funds, which pooled investors’ cash and then funneled the money to Mr. Madoff. Phony returns were later paid out to the feeder funds, which then distributed the money among their individual investors. More in the Wall Street Journal here.

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Compromise on insurer payments draws objections

NEW YORK — The trustee finding money for victims of Bernard Madoff’s epic fraud asked the US Supreme Court on Tuesday to overturn a court ruling that he said may prevent the recovery of nearly $4 billion, may reward those who unwittingly profited from the Ponzi scheme at the expense of those who did not, and may have far-reaching effects for future fraud victims. Lawyers for the trustee, Irving Picard, said the December ruling by the Second US Circuit Court of Appeals in Manhattan threatens a century’s worth of law that steered how courts respond to the legal aftermath of Ponzi schemes. ‘‘Denying review would only perpetuate confusion and uncertainty at a time when investors can afford neither,’’ the legal papers said, adding that the 2008 financial crisis revealed investors are victims of a remarkable number of financial frauds. More on Boston.com here.

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SIFMA claims White House figures on DOL rule flawed

The White House is using flawed methodology to assert that abusive trading practices are costing U.S. investors up to $17 billion a year in retirement savings, according to a report released Monday by a Wall Street group that opposes toughening rules on brokers. The 18-page report commissioned by the Securities Industry and Financial Markets Association said the estimate that President Barack Obama’s administration is using is “simplistic” and isn’t supported by academic literature. More on Investment News here.

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S.E.C. Wants the Sinners to Own Up

For decades, the Securities and Exchange Commission has allowed companies and individuals to make settlements without admitting any wrongdoing. Even a company committing an egregious sin that cost investors millions of dollars could walk away from the proceedings without ever acknowledging its role. But in mid-2013 the agency declared that it was doing an about-face. “Heightened accountability or acceptance of responsibility through the defendant’s admission of misconduct may be appropriate, even if it does not allow us to achieve a prompt resolution,” Andrew Ceresney, the S.E.C.’s head of enforcement, said in a June 2013 email to his lieutenants. More in the New York Times here.

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SEC Urged to Reform 12b-1 Fees, Block Risky ETFs

Consumer advocates are urging Securities and Exchange Commission Chairwoman Mary Jo White to reform a host of regulations that they say are failing to “effectively” serve retail investors’ needs. They called for the securities regulator to act now on a fiduciary rule for brokers, to reform 12b-1 mutual fund fees and to stop the approval of risky ETFs. In their March 10 letter to White, the Consumer Federation of America, Fund Democracy, AFL-CIO, Americans for Financial Reform, Consumer Action and Public Citizen say their concerns “reflect the fact that it has been some time since a comprehensive agenda of retail priorities has been clearly communicated to (or by) the Commission,” and that the Commission “can no longer afford to relegate … retail investor protection priorities to a back burner.” More on ThinkAdvisor here.

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A Split Over Protecting Investors

The Obama administration wants the Department of Labor, which oversees employee savings plans such as 401(k)s, to propose sweeping regulations that would curb conflicts of interest among brokers who handle investments for people saving for retirement. The Securities and Exchange Commission has long considered imposing similar rules on all brokers but so far shows no sign of enacting them. At issue is whether brokers should adhere to a fiduciary standard—which would require them to put clients’ interests ahead of their own. Looser rules, now in effect, only require them to recommend investments that generally fit clients’ needs and tolerance for risk. Investment advisers are already bound by the fiduciary rule. More on Bloomberg here.

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SEC Chairman White Insists Banks Not ‘Too Big to Bar’

WASHINGTON—Securities and Exchange Commission Chairman Mary Jo White defended the agency’s process of granting banks reprieves from business restrictions following securities fraud settlements, saying the firms have not become “too big to bar.” Ms. White, speaking at Georgetown University, waded into a long-simmering debate among the SEC’s five commissioners over so-called waivers, which allow financial firms and other businesses to continue certain activities—like selling stakes in hedge funds—despite being automatically barred from such activities when they settle enforcement cases with U.S. authorities. More in the Wall Street Journal here.

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