Friday, February 5, 2016

SEC Charges Company Executive With Insider Trading

The Securities and Exchange Commission today charged an executive at Stamford, Conn.-based electronics company Harman International Industries with insider trading in the company’s stock.

The SEC alleges that Dennis Wayne Hamilton made more than $130,000 in illegal profits by trading on nonpublic information he learned on the job in advance of Harman’s release of its fiscal year 2014 first quarter earnings.  

In a parallel action, the U.S. Attorney’s Office for the District of Connecticut today announced criminal charges against Hamilton.

“We allege that Hamilton traded on details known only to company insiders and took advantage of the stock market’s fair and level playing field,” said Sharon B. Binger, Director of the Philadelphia Regional Office. 

According to the SEC’s complaint filed in U.S. District Court for the District of Connecticut:

  • In his role as Harman’s vice president of tax, Hamilton reviewed Harman’s earnings and learned the company would report stronger-than-expected results for its FY14 first quarter, which spanned from July 1 to Sept. 30, 2013. 
  • The day before Harman publicly released the financial results, Hamilton purchased 17,000 shares of Harman stock at a cost of more than $1.2 million.  He liquidated his position when the quarterly results were publicly announced. 
  • Harman’s stock price rose more than 12 percent on the news and Hamilton’s illicit trading produced one-day profits in excess of $130,000.

The SEC’s continuing investigation is being conducted by Suzanne C. Abt, Jacquelyn King, Daniel Koster, and Scott A. Thompson of the Philadelphia Regional Office.  The case is being supervised by G. Jeffrey Boujoukos.  The SEC’s litigation will be led by David L. Axelrod and Mark Sylvester.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of Connecticut and the Federal Bureau of Investigation.    



SEC Press Release

--- If you need help with a securities litigation, arbitration or litigation issue, email Mark Astarita or call 212-509-6544 to speak to a securities lawyer.

Federal Court Says You Can Waive FINRA Arbitration

Firms can force employees to waive FINRA rules and arbitrate before a private arbitrator.



We have held in several cases that an SRO's arbitration provisions are default rules which may be overridden by more specific contractual terms. See, e.g., Ameriprise Fin. Servs., Inc. v. Beland (In re Am. Express Fin. Advisors Secs. Litig.), 672 F.3d 113, 132 (2d Cir. 2011) ("In particular, as relevant here, different or additional contractual arrangements for arbitration can supersede the rights conferred on a customer by virtue of a broker's membership in a self-regulating organization such as FINRA.") (alterations and quotation marks omitted).


'CREDIT SUISSE SECURITIES (USA) LLC v. Tracy, Court of Appeals, 2nd Circuit 2016

Thursday, February 4, 2016

SEC: Miami Firm Broke Anti-Money Laundering Protocols

The Securities and Exchange Commission today announced that a Miami-based brokerage firm agreed to pay a $1 million penalty to settle charges that it violated anti-money laundering rules by allowing foreign entities to buy and sell securities without verifying the identities of the non-U.S. citizens who beneficially owned them.

During SEC examinations of E.S. Financial Services, which is now named Brickell Global Markets, the firm twice failed to provide required books and records identifying certain foreign customers whom they were soliciting directly and providing investment advice.  Federal law requires all financial institutions to maintain an adequate customer identification program (CIP) to ensure financial institutions know their customers and do not become a conduit for money laundering or terrorist financing.  An ensuing SEC investigation found that E.S. Financial’s CIP failed to obtain and maintain documentation to verify the identities of certain non-U.S. customers who traded through a brokerage account opened by a Central American bank affiliated with the firm.

As part of the settlement, E.S. Financial agreed to retain an independent monitor to directly review its anti-money laundering/CIP policies, procedures, and practices for the next two years.

“While no fraud occurred in this instance, our investigation found there were significant holes in the framework of E.S. Financial’s CIP that left the firm susceptible to illegal activity by customers who were not fully known,” said Eric Bustillo, Director of the SEC’s Miami Regional Office.  “Firms must stick to the CIP rules that require a broker-dealer to establish, document, and maintain procedures for identifying all customers and verifying their identities.”

According to the SEC’s order instituting a settled administrative proceeding:

  • During approximately a decade, E.S. Financial maintained a brokerage account for a Central American bank that was purportedly trading for its sole benefit.
  • E.S. Financial allowed 13 non-U.S. corporate entities and, in turn, 23 non-U.S. citizens who were their beneficial owners, to execute more than $23 million in securities transactions through the Central American bank’s brokerage account.
  • E.S. Financial worked directly with these non-U.S. citizens as if they were E.S. Financial customers, but did not collect, verify, or document any information regarding their identities as required under anti-money laundering/CIP regulations. 

The SEC’s order finds that E.S. Financial willfully violated Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8, which require a broker-dealer to comply with the reporting, recordkeeping, and record retention requirements in regulations implemented under the Bank Secrecy Act, including the requirements in the CIP rule applicable to broker-dealers. The order also finds that E.S. Financial willfully violated Exchange Act Rules 17a-3 and 17a-4 which require broker-dealers to create and maintain customer account records and furnish them to SEC representatives upon request. Without admitting or denying the findings, E.S. Financial consented to the order and agreed to cease and desist from committing or causing any future violations. 

The SEC’s continuing investigation has been conducted by Scott A. Lowry, under the supervision of Thierry Olivier Desmet.  The examination that led to the investigation was conducted by Ileana Rodriguez and Debra Williamson, and supervised by Nicholas A. Monaco and John C. Mattimore of the Miami Regional Office.  The SEC appreciates the assistance of the Financial Industry Regulatory Authority.



SEC Press Release

--- If you need help with a securities litigation, arbitration or litigation issue, email Mark Astarita or call 212-509-6544 to speak to a securities lawyer.

SEC Announces Advisory Committee on Small and Emerging Companies Members

The Securities and Exchange Commission today announced the members of its Advisory Committee on Small and Emerging Companies.  The advisory committee was established in 2011 and has been renewed twice for additional terms.  The renewed committee will hold its first meeting on Thursday, February 25.

“Small businesses play a crucial role in our nation’s economy,” said SEC Chair Mary Jo White.  “The advisory committee members have a wealth of experience and ideas that will help inform the Commission on the many important issues affecting small and emerging businesses.”

Stephen M. Graham, Managing Partner of Fenwick & West LLP’s Seattle office, and Sara Hanks, CEO of CrowdCheck in Alexandria, Virginia, will serve as co-chairs of the committee.  Voting members of the committee, in addition to the co-chairs, are:

  • Robert Aguilar, CFO and Chief Operating Officer, Cabrera Capital Markets LLC, Chicago
  • Xavier Gutierrez, President and Chief Investment Officer, Meruelo Investment Partners, Downey, California
  • Brian Hahn, CFO, GlycoMimetics Inc., Rockville, Maryland
  • Kyle Hauptman, Executive Director of the Main Street Growth Project, Washington, D.C.
  • Jenny Kassan, owner, Jenny Kassan Consulting, Fremont, California
  • Catherine V. Mott, founder and CEO, BlueTree Capital Group, Wexford, Pennsylvania
  • Jonathan Nelson, founder and CEO, Hackers/Founders, Mountain View, California
  • Patrick Reardon, owner, The Reardon Firm, Fort Worth, Texas
  • Lisa Shimkat, State Director, America’s Small Business Development Center at Iowa State University, Ames, Iowa
  • Tisha R. Tallman, President and CEO, the Georgia Hispanic Chamber of Commerce, Atlanta
  • Annemarie Tierney, Vice President and Head of Strategy and New Markets, NASDAQ Private Market, New York
  • Gregory C. Yadley, Partner, Shumaker, Loop & Kendrick LLP, Tampa, Florida
  • Laura Yamanaka, President and Co-Founder, teamCFO, Inc., Los Angeles

The committee also will include as non-voting members:

  • Michael Pieciak, Deputy Commissioner, Securities Division, State of Vermont Department of Financial Regulation, and Chair of the Corporation Finance Section of the North American Securities Administrators Association
  • Mark Walsh, Associate Administrator, Office of Investment and Innovation, U.S. Small Business Administration

The appointments to the renewed committee are effective until Sept. 24, 2017.  

More information about the advisory committee, including prior committee recommendations, is available at:  http://ift.tt/165pBPJ



SEC Press Release

--- If you need help with a securities litigation, arbitration or litigation issue, email Mark Astarita or call 212-509-6544 to speak to a securities lawyer.

Tuesday, February 2, 2016

SEC and FINRA to Hold Regional Compliance Outreach Programs for Broker-Dealers

The Securities and Exchange Commission and the Financial Industry Regulatory Authority (FINRA) today announced the opening of registration for their 2016 Regional Compliance Outreach Programs for Broker-Dealers that will take place in New York, Atlanta, Dallas, Boston, Chicago, and San Francisco, beginning in the spring.

The SEC's Office of Compliance Inspections and Examinations, in coordination with the SEC's Division of Trading and Markets, is partnering with FINRA to sponsor the programs.  Similar to the 2015 National Compliance Outreach Program for Broker-Dealers, each regional program will provide a forum for regulators and industry professionals of broker-dealer firms to discuss current regulatory issues and exchange ideas for effective compliance practices.

“The regional programs illustrate our continued commitment to foster an open dialogue among broker-dealers and regulators,” said Kevin Goodman, National Associate Director of the SEC’s Broker-Dealer Examination Program.  “These outreach programs are an opportunity to discuss current compliance topics of regional and national importance.” 

Susan Axelrod, FINRA’s Executive Vice President of Regulatory Operations, added: “The financial markets are evolving rapidly and the industry must continually assess risk, exposure, and how brokers interact with customers.  Each year, these direct dialogues between regulators and compliance leaders yield new insights about how we can best achieve our mutual goal of investor protection in this dynamic environment.”

There is no cost to attend the regional programs, which will be held in New York on April 7; Atlanta, April 20; Dallas, June 7; Boston, June 14; Chicago, July 25; and San Francisco, August 18.   Registration is open to risk, audit, legal and compliance professionals employed by broker-dealers, with limited seating available on a first-come, first-served basis.  CPE credits will be available at each program.

For registration and additional details about the regional programs, please visit the SEC website or the FINRA website.  



SEC Press Release

--- If you need help with a securities litigation, arbitration or litigation issue, email Mark Astarita or call 212-509-6544 to speak to a securities lawyer.

SEC Completes Muni-Underwriter Enforcement Sweep

The Securities and Exchange Commission today announced enforcement actions against 14 municipal underwriting firms for violations in municipal bond offerings.  The actions conclude charges against underwriters under the Municipalities Continuing Disclosure Cooperation (MCDC) Initiative.  In all, 72 underwriters have been charged under the voluntary self-reporting program targeting material misstatements and omissions in municipal bond offering documents.

The MCDC Initiative, announced in March 2014, offered favorable settlement terms to municipal bond underwriters and issuers that self-reported violations.  The first enforcement actions against underwriters under the initiative were brought in June 2015 against 36 municipal underwriting firms.  An additional 22 underwriting firms were charged in September 2015.  All of the firms settled the actions and paid civil penalties up to a maximum of $500,000.

The initiative is continuing with respect to issuers who may have provided investors with inaccurate information about their compliance with continuing disclosure obligations.  The SEC’s 2012 Municipal Market Report identified issuers’ failure to comply with their continuing disclosure obligations as a major challenge for investors seeking important information about their municipal bond holdings.

“The settlements obtained under the MCDC initiative have brought much-needed attention to disclosure obligations in municipal bond offerings,” said Andrew J. Ceresney, Director of the SEC’s Enforcement Division.  “As part of the settlements, 72 underwriting firms – comprising approximately 96% of the market share for municipal underwritings – have agreed to improve their due diligence procedures and we expect that investors will benefit from those improvements.”

In today’s actions, the SEC found that between 2011 and 2014, the 14 underwriting firms sold municipal bonds using offering documents that contained materially false statements or omissions about the bond issuers’ compliance with continuing disclosure obligations. The SEC also found that the underwriting firms failed to conduct adequate due diligence to identify the misstatements and omissions before offering and selling the bonds to their customers.

The 14 firms, which did not admit or deny the findings, agreed to cease and desist from such violations in the future.  Under the terms of the MCDC Initiative, they will pay civil penalties based on the number and size of the fraudulent offerings identified, up to a cap based on the size of the firm.  In addition, each firm agreed to retain an independent consultant to review its policies and procedures on due diligence for municipal securities underwriting.   

The MCDC Initiative is being coordinated by Kevin Guerrero of the Enforcement Division’s Municipal Securities and Public Pensions Unit.  The cases announced today were investigated by members of the unit, including Michael Adler, Robert Barry, Joseph Chimienti, Kevin Currid, Peter Diskin, Robbie Mayer, Heidi Mitza, William Salzmann, Ivonia K. Slade, Jonathan Wilcox, Monique C. Winkler, and Deputy Unit Chief Mark R. Zehner, with assistance from Ellen Moynihan of the Boston Regional Office. 

*  *  *

The SEC’s orders and penalty amounts are:



SEC Press Release

--- If you need help with a securities litigation, arbitration or litigation issue, email Mark Astarita or call 212-509-6544 to speak to a securities lawyer.

Monday, February 1, 2016

SEC Charges Software Company With FCPA Violations

The Securities and Exchange Commission today announced that software manufacturer SAP SE has agreed to give up $3.7 million in sales profits to settle charges that it violated the Foreign Corrupt Practices Act (FCPA) when procuring business in Panama.

An SEC investigation found that SAP’s deficient internal controls allowed a former SAP executive to pay $145,000 in bribes to a senior Panamanian government official and offer bribes to two others in exchange for lucrative sales contracts.  The SEC charged the SAP executive, Vicente E. Garcia, in a separate enforcement action last year that included a parallel criminal action.  Garcia has been sentenced to 22 months in prison.

“SAP’s internal controls failed to flag Garcia’s misconduct as he easily falsified internal approval forms and disguised his bribes as discounts,” said Kara Brockmeyer, Chief of the SEC Enforcement Division’s FCPA Unit. 

According to the SEC’s order instituting a settled administrative proceeding:

  • SAP is headquartered in Germany and executes most of its sales through a network of worldwide corporate partners, including a partner in Panama.
  • The bribery scheme involved providing large discounts of up to 82 percent to SAP’s Panamanian partner, who used the excessive discounts to create a slush fund out of which to pay bribes to Panamanian officials on Garcia’s behalf so SAP could sell software.
  • SAP had no requirements for heightened anti-corruption scrutiny for such large discounts.
  • SAP falsely recorded the slush fund as legitimate discounts on the books of SAP’s Mexican subsidiary, and the figures were subsequently consolidated into SAP’s financial statements.
  • SAP failed to devise and maintain a sufficient system of internal accounting controls to provide reasonable assurances that the discounts were recorded in accordance with U.S. Generally Accepted Accounting Principles. 

The SEC’s order finds that SAP violated the internal controls provisions and the books and records provisions of the FCPA.  Without admitting or denying the findings, SAP consented to the entry of the cease-and-desist order and agreed to pay disgorgement of $3.7 million in profits from SAP’s software sales to the Panamanian government plus prejudgment interest of $188,896.  The settlement reflects SAP’s cooperation and remedial measures.

The SEC’s investigation was conducted by Ansu Banerjee and supervised by Alka Patel.  The SEC appreciates the assistance of the U.S. Department of Justice, U.S. Attorney’s Office for the Northern District of California, and Federal Bureau of Investigation. 



SEC Press Release

--- If you need help with a securities litigation, arbitration or litigation issue, email Mark Astarita or call 212-509-6544 to speak to a securities lawyer.

SEC News - Investor Losses, Overcharged Fees, and Whistleblower Award

Hedge Fund Manager Agrees to Reimburse Investor Losses
A Manhattan-based investment advisory firm and its Toronto-based hedge fund manager have agreed to settle charges that they misled investors about a fund’s investment strategy and historical performance. They will reimburse investors $2.877 million in losses.

Ocwen Paying Penalty for Misstated Financial Results
Ocwen Financial Corp. has agreed to settle charges that it misstated financial results by using a flawed, undisclosed methodology to value complex mortgage assets.

Alternative Fund Manager Overcharged Fees, Misled Investors
A Denver-based alternative fund manager has agreed to settle charges that the firm overcharged management fees and misled investors about how it valued certain assets.

SEC Awards Whistleblower More Than $700,000 for Detailed Analysis
The SEC announced a whistleblower award of more than $700,000 to a company outsider who conducted a detailed analysis that led to a successful SEC enforcement action.

Goldman Sachs Charged With Improper Securities Lending Practices
Goldman, Sachs & Co. has agreed to pay $15 million to settle charges that its securities lending practices violated federal regulations.



The attorneys at Sallah Astarita & Cox include veteran securities litigators and former SEC Enforcement Attorneys. We have decades of experience in securities litigation matters, including the defense of enforcement actions. We represent investors, financial professionals and investment firms, nationwide. For more information call 212-509-6544 or send an email.

FINRA Funding Portal Rules Approved

United States Securities and Exchange Commission

The SEC approved new FINRA Rule 4518 as part of FINRA’s proposal to establish the new Funding Portal Rules and related forms.

This Notice provides further guidance on new Rule 4518, which applies to registered broker-dealer members of FINRA that contemplate acting as intermediaries in transactions involving the offer or sale of securities pursuant to the crowdfunding provisions of Title III of the JOBS Act and the SEC’s Regulation Crowdfunding.

Under the new rule, registered broker-dealer members must provide notification to FINRA, as specified in the rule and as discussed further in this Notice, prior to engaging in such activities.

FINRA Rule 4518 will become effective on January 29, 2016.


Regulatory Notice 16-07 | FINRA.org:

Sunday, January 31, 2016

Barclays, Credit Suisse Charged With Dark Pool Violations

The Securities and Exchange Commission today announced that Barclays Capital Inc. and Credit Suisse Securities (USA) LLC have agreed to settle separate cases finding that they violated federal securities laws while operating alternative trading systems known as dark pools and Credit Suisse’s Light Pool.

The New York Attorney General’s office is announcing parallel actions against the two firms.

Barclays agreed to settle the charges by admitting wrongdoing and paying $35 million penalties to the SEC and the NYAG for a total of $70 million. 

Credit Suisse agreed to settle the charges by paying a $30 million penalty to the SEC, a $30 million penalty to the NYAG, and $24.3 million in disgorgement and prejudgment interest to the SEC for a total of $84.3 million. 

“These cases are the most recent in a series of strong SEC enforcement actions involving dark pools and other alternative trading systems,” said SEC Chair Mary Jo White. “The SEC will continue to shed light on dark pools to better protect investors.”

“Dark pools have a significant role in today’s equity marketplace, and the firms that run these venues must ensure that they do not make misstatements to subscribers about their material operations,” said Andrew Ceresney, Director of the SEC’s Enforcement Division.  “These largest-ever penalties imposed in SEC cases involving two of the largest ATSs show that firms pay a steep price when they mislead subscribers.” 

According to the SEC’s order instituting a settled administrative proceeding against Barclays:

  • Barclays said that a feature called Liquidity Profiling would “continuously police” order flow in its LX dark pool and that the firm would run “surveillance reports every week” for toxic order flow. 
  • In fact, Barclays did not continuously police LX for predatory trading using the tools it said it would, and it also did not run weekly surveillance reports.
  • Barclays did not adequately disclose that it sometimes overrode Liquidity Profiling by moving some subscribers from the most aggressive categories to the least aggressive.  The result was that subscribers that elected to block trading against aggressive subscribers nonetheless continued to interact with them. 
  • Barclays at times misrepresented the type and number of market data feeds that it used to calculate the National Best Bid and Offer in LX.  For example, Barclays represented that it “utilize[d] direct feeds from exchanges to deter latency arbitrage” when in fact Barclays used a combination of direct data feeds and other, slower feeds in the dark pool.

“Barclays misrepresented its efforts to police its dark pool, overrode its surveillance tool, and misled its subscribers about data feeds at the very time that data feeds were an intense topic of interest,” said Robert Cohen, co-chief of the Market Abuse Unit.  “Investors deserve fair and equitable markets without this misbehavior.”

According to the SEC’s orders instituting settled administrative proceedings against Credit Suisse:

  • Credit Suisse misrepresented that its Crossfinder dark pool used a feature called Alpha Scoring to characterize subscriber order flow monthly in an objective and transparent manner.  In fact, Alpha Scoring included significant subjective elements, was not transparent, and did not categorize all subscribers on a monthly basis. 
  • Credit Suisse misrepresented that it would use Alpha Scoring to identify “opportunistic” traders and kick them out of its electronic communications network, Light Pool. In fact, Alpha scoring was not used for the first year that Light Pool was operational. Also, a subscriber who scored “opportunistic” could continue to trade using other system IDs, and direct subscribers were given the opportunity to resume trading.
  • Credit Suisse accepted, ranked, and executed over 117 million illegal sub-penny orders in Crossfinder.
  • Credit Suisse failed to treat subscriber order information confidentially and failed to disclose to all Crossfinder subscribers that their confidential order information was being transmitted out of the dark pool to other Credit Suisse systems.
  • Credit Suisse failed to inform subscribers that the Credit Suisse order router systematically prioritized Crossfinder over other venues in certain stages of its dark-only routing process.
  • Finally, CSSU also failed to disclose that it operated a technology called Crosslink that alerted two high frequency trading firms to the existence of orders that CSSU customers had submitted for execution.

“Two Credit Suisse ATSs failed to operate as advertised, and failed to comply with numerous regulatory requirements over a multi-year period,” said Joseph Sansone, Co-Chief of the Market Abuse Unit. “The Commission’s action today sends a strong message that the agency will continue to scrutinize ATSs for compliance with the securities laws.” 

The SEC’s order finds that Barclays violated Section 17(a)(2) of the Securities Act, Securities Exchange Act Section 15(c)(3), Rules 15c3-5(c)(1)(i) and 15c3-5(b) of the SEC’s Market Access Rule, and Rules 301(b)(2) and (10).  The order requires Barclays to pay a $35 million penalty, to cease and desist from these violations, censures Barclays, and requires Barclays to engage a third-party consultant to review its marketing of LX, its Market Access Rule compliance, and its compliance with certain requirements of Regulation ATS.

The SEC’s orders find that Credit Suisse violated Section 17(a)(2) of the Securities Act, Rules 301(b)(2), (5) and (10) of Regulation ATS, and Rules 602(b) and 612 of Regulation NMS.  The orders require Credit Suisse to cease and desist from these violations, censure Credit Suisse, and require Credit Suisse to pay $30 million in total penalties, disgorgement of $20,675,510.52, and prejudgment interest of $3,639,643.39.

The SEC’s investigation of Barclays was conducted by Jason Burt, Charu Chandrasekhar, John Marino, Mandy Sturmfelz, and Jay Scoggins of the SEC Enforcement Division’s Market Abuse Unit, and trial attorneys Stephan Schlegelmilch and James Smith, with assistance from Ilan Felix in the New York Regional Office’s examination program.  The case was supervised by Mr. Cohen and Mr. Sansone. 

The SEC’s investigations of Credit Suisse were conducted by Thomas P. Smith Jr. and Nancy A. Brown of the New York office along with Simona Suh, Charles D. Riely, Mandy B. Sturmfelz, and Mathew Wong, Dee O’Hair, Darren Boerner, and Kathryn Pyszka of the Market Abuse Unit and Jonathan Polish of the Chicago Regional Office.  The case was supervised by Mr. Cohen, Mr. Sansone, and Timothy Warren of the Chicago office.  The SEC examiners who conducted an examination that led to the investigation were Simone Celio, Michael McAuliffe, Sean O’Brien, Richard Heaphy, and Mr. Felix. 

The SEC appreciates the assistance of the NYAG.



SEC Press Release

--- If you need help with a securities litigation, arbitration or litigation issue, email Mark Astarita or call 212-509-6544 to speak to a securities lawyer.

Friday, January 29, 2016

SEC Announces Agenda for February 2 Meeting of the Equity Market Structure Advisory Committee

The Securities and Exchange Commission will hold the third meeting of the Equity Market Structure Advisory Committee on February 2, beginning at 9:30 a.m. EST.  The Commission established the advisory committee to provide a formal mechanism through which the Commission can receive advice and recommendations on equity market structure issues. 

The meeting will focus on the events of August 24, 2015 and certain issues affecting customers in the current equity market structure. 

The meeting will be held at the SEC’s headquarters at 100 F Street, N.E., Washington, D.C., and is open to the public.  It also will be webcast live on the SEC’s website, www.sec.gov, and will be archived on the website for later viewing.

Members of the public who wish to provide their views on the matters to be considered by the advisory committee may submit comments electronically or on paper.  Please submit comments using one method only.  Information that is submitted will become part of the public record of the meeting. 

Electronic submissions:

Use of the SEC’s Internet submission form or send an e-mail to rule-comments@sec.gov

Paper submissions:

Send paper submissions in triplicate to Brent Fields, Secretary, Securities and Exchange Commission, 100 F Street, N.E., Washington, D.C. 20549-1090.

All submissions should refer to File Number 265-29, and the file number should be included on the subject line if e-mail is used. 

###

Agenda

  9:30 a.m.       Welcoming Remarks 

  • Chair White, Commissioners, and Director of the Division of Trading and Markets Stephen Luparello 

10:00 a.m.       Presentation on Market Volatility by SEC staff

10:10 a.m.       Presentation and Q&A on Market Volatility

  • Stacey Cunningham, Chief Operating Officer, NYSE
  • Hubert De Jesus, Co-Head Market Structure & Electronic Trading, BlackRock
  • Frank Hatheway, Chief Economist, NASDAQ
  • Paul O’Donnell, Managing Director, Morgan Stanley

11:00 a.m.       Committee Discussion on Market Volatility

12:00 p.m.       Lunch 

 1:00 p.m.         Presentation on Customer Issues by SEC staff 

 1:10 p.m.         Presentation and Q&A on Customer Issues

  • Jeffrey Brown, Senior VP-Legislative & Regulatory Affairs, Charles Schwab
  • Frank Childress, Managing Director, Wells Fargo Advisors
  • Dennis Dick, Member - Capital Markets Policy Council, CFA Institute
  • Christine Parlour, Professor of Finance & Accounting, Haas School of Business, UC Berkeley

 2:00 p.m.         Committee Discussion on Customer Issues

 3:00 p.m.         Break

 3:15 p.m.         Subcommittee Updates

 4:15 p.m.         Discussion of Next Steps/Adjournment



SEC Press Release

--- If you need help with a securities litigation, arbitration or litigation issue, email Mark Astarita or call 212-509-6544 to speak to a securities lawyer.

Thursday, January 28, 2016

Hedge Fund Manager Agrees to Reimburse Investor Losses

The Securities and Exchange Commission today announced that a Manhattan-based investment advisory firm and its Toronto-based hedge fund manager have agreed to settle charges that they misled investors about a fund’s investment strategy and historical performance.  They will reimburse investors $2.877 million in losses.

According to the SEC’s order instituting a settled administrative proceeding, QED Benchmark Management LLC and its founder/fund manager Peter Kuperman avoided disclosing heavy trading losses to investors by using a misleading mixture of hypothetical and actual returns when providing the fund’s performance history.  After obtaining millions of dollars from investors based on these misrepresentations, QED Benchmark and Kuperman deviated from their stated investment strategy and poured most of the fund’s assets into a single penny stock.  They went on to make misleading and incomplete disclosures to fund investors about the value and liquidity of this penny stock investment.

“Investment advisers must be completely candid when disclosing two key features that investors rely upon when making investment decisions: investment strategy and historical performance.  This settlement enables investors in the QED Benchmark LP hedge fund to receive full monetary relief for losses suffered when they were misled on both fronts,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.

The SEC’s order finds that Kuperman and QED Benchmark Management violated the antifraud provisions of the Securities Act of 1933, Securities Exchange Act of 1934, and Investment Advisers Act of 1940.  They consented to the order without admitting or denying the findings.  In addition to making the $2.877 million payment to fully reimburse fund investors for their losses, Kuperman has agreed to pay a $75,000 penalty and be barred from the securities industry.

The SEC’s investigation was conducted by Karen E. Willenken and Thomas P. Smith Jr. of the New York office.  The case has been supervised by Sanjay Wadhwa.



SEC Press Release

--- If you need help with a securities litigation, arbitration or litigation issue, email Mark Astarita or call 212-509-6544 to speak to a securities lawyer.