Friday, May 22, 2015

SEC News - FCPA Violations and Fraud

SEC Charges BHP Billiton With Violating FCPA at Olympic Games

Global resources company BHP Billiton has been charged with violating the Foreign Corrupt Practices Act (FCPA) when it sponsored the attendance of foreign government officials at the Summer Olympics.

Co-owners of a Manhattan-based brokerage firm now face fraud charges.

An Atlanta-based investment advisory firm and two executives have been accused of selling unsuitable investments to pension funds for the city’s police and firefighters, transit workers, and other employees.

Wednesday, May 20, 2015

UBS Fined $545 Million in Forex Scandal

 

UBS will pay $545 million to U.S. authorities to end an investigation into alleged manipulation of currency rates, a settlement that will help the Swiss bank to move on after a series of trading scandals.

For more information visit UBS to pay $545 mln over forex scandal, rivals await fate

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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.

Monday, May 18, 2015

SEC News - False Claims, Fraud, Insider Trading

SEC Sues Retirement Planners for Making False Claims to Investors

A self-described retirement planning firm and its principals have been charged with falsely telling customers that interests in life settlements they offered and sold were “guaranteed,” “safe as CDs,” and “federally insured.”

Fraud charges have been announced against ITT Educational Services Inc., its chief executive officer, and its chief financial officer. 

Nationwide Life Insurance Company has been charged with routinely violating pricing rules in its daily processing of purchase and redemption orders for variable insurance contracts and underlying mutual funds.

A father and son in New York have been charged with conducting a serial insider trading scheme involving tips of key nonpublic information in coded e-mail messages disguised as discussions about golf.


Friday, May 15, 2015

Be Wary of Famous People Promoting Penny Stocks

The penny stock market has the potential for significant profits, and of course, significant losses. Investing in start-ups and small companies is speculative, and high risk, but has an allure for a certain type of investor.

One problem with this market segment is the promotion of such investments to individuals who are unsuitable for the investment,

Over the years we have seen well known individuals promote such ventures. Bloomberg Business has an article regarding four-star Army general Wesley Clark's involvement in promoting such ventures, including a Grilled Cheese Truck company, and a hydroponic lettuce company.

According to the article, Clark is one of many former governors, generals, and congressmen who’ve found second careers lending their name to  companies that are willing to pay for prestige. Since he ran for president in 2004, Clark has joined the boards of at least 18 public companies, 10 of them penny-stock outfits, whose shares trade in the “over the counter” markets, a corner of Wall Street where fraud and manipulation are common.

Clark claims that these small start-ups come to him for his global connections and enginnerin background, an area of expertise which does not seem to have any connection to a cheese truck franchise. At the same time, he denies that he is lending an endorsement to the companies, and claims that "Nobody's going to invest in a company just because General Clark is a director."

Perhaps, but if the allure is his engineering background and not an endorsement, why is he making promotional videos, recommending an investment in the company and saying things like "we'd love it if you joined us with an investment" and being filmed in a replica of the oval office?

There is no question that these companies are using Clark's name, and others, to gain legitimacy, and there is nothing wrong with that. Having a famous and respected person as your spokesperson does lend credibility. But does that mean that we should be investing in the company?

The answer to that question is in the last sentence of the article:

The bottom line: Since 2004, Clark has joined the boards of at least 10 penny-stock companies. All but one lost value during his tenure.

For more information - Wesley Clark, Penny-Stock General - Bloomberg Business

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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 and representation of investors, financial professionals and investment firms, nationwide. For more information call 212-509-6544 or send an email.

Thursday, May 14, 2015

SEC Files Charges Against ITT Educational Services

The SEC has filed charges against ITT Educational Services Inc., its chief executive officer, and its chief financial officer.   The SEC alleges that the national operator of for-profit colleges and the two executives fraudulently concealed from ITT’s investors the poor performance and looming financial impact of two student loan programs that ITT financially guaranteed.  ITT formed both of these student loan programs, known as the “PEAKS” and “CUSO” programs, to provide off-balance sheet loans for ITT’s students following the collapse of the private student loan market.  To induce others to finance these risky loans, ITT provided a guarantee that limited any risk of loss from the student loan pools.

For more information - SEC.gov | SEC Announces Fraud Charges Against ITT Educational Services

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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 and representation of investors, financial professionals and investment firms, nationwide. For more information call 212-509-6544 or send an email.

Nationwide Life Settles Charges Violating Pricing Rules for 8 Million Dollars

If you have an annuity with Nationwide Life you may want to read this. The SEC charged the company with routinely violating pricing rules in handling purchase and redemption orders for variable insurance contracts and underlying mutual funds.

Nationwide agreed to settle the charges and pay an $8 million penalty.

Pricing rules for mutual fund shares require an investment company to compute the value of its shares at least once daily at a specific time.  According to the SEC, Nationwide’s prospectuses stated that mutual fund orders received before 4 p.m. at its home office in Columbus, Ohio, would receive the current day’s price.  Orders received after 4 p.m. would receive the next day’s price.

The SEC alleges that Nationwide intentionally delayed the pickup of its mail at its PO Box, avoiding the requirement to process trades at the current day's price. It did however pick up its other mail from PO Boxes in a timely fashion.

Meanwhile, Nationwide did arrange for prompt pickup and delivery of U.S. Postal Service Priority Mail or Priority Express Mail that enabled contract owners to track an order’s time of delivery to the P.O. boxes.  Those orders were assigned the current day’s price.

 

For more than a 15-year period, Nationwide intentionally delayed the delivery of untracked mail containing orders from customers and processed them at the next day’s prices in violation of the law. - Sharon B. Binger, Director of the SEC’s Philadelphia Regional Office. 

The SEC's penalty will not compensate victims. If you have redeemed or purchased a Nationwide Life Insurance annuity and did so by regular mail, contact our office by email.

For more information - SEC Charges Nationwide Life Insurance Company With Pricing Violations

--- 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 and representation of investors, financial professionals and investment firms, nationwide. For more information call 212-509-6544 or send an email.

Tuesday, May 12, 2015

Elder Fraud Prosecutions Continue

The SEC is serious about elder fraud, and is investigating and prosecuting cases where it believes such fraud exists.  The latest case - the SEC charged a retirement planning firm and its principals with falsely telling customers that interests in life settlements they offered and sold were “guaranteed,” “safe as CDs,” and “federally insured.” The SEC also alleges that they used a bogus “net worth calculator” that improperly qualified some prospective investors for purchases by including income that investors hadn’t received, such as future pension and Social Security benefits.

Two important points - while the penalties are significant for the financial professionals, and the cost of defense high (fines and penalties are multiples of the profits) - the SEC does not obtain compensation for investors. Investors and financial professionals who are involved in elder fraud claims need an experienced securities attorney to protect their interests.

For more information visit SEC.gov | SEC Sues Retirement Planners for Making False Claims to Investors

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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.

Monday, May 11, 2015

SEC and FINRA's Compliance Outreach Program for BDs

The SEC and FINRA announced the opening of registration for their 2015 National Compliance Outreach Program for Broker-Dealers.  The program is intended to provide an open forum for regulators and industry professionals to discuss compliance practices and exchange ideas on effective compliance structures.

The SEC’s Office of Compliance Inspections and Examinations (OCIE), in coordination with the SEC’s Division of Trading and Markets, is sponsoring the program with FINRA.  The program will be held on July 14 at the SEC’s Washington, D.C., headquarters and will focus on 2015 priorities for OCIE and FINRA as well as current topics of interest including cybersecurity, anti-money laundering, and firms’ approaches to supervision and sales practices.

There is no cost to attend the event, but in-person attendance is limited to 500 on a first-come, first-served basis.  The program is targeted to compliance, audit, and risk officers of broker-dealer firms and branch offices, with a maximum of ten attendees per firm. There will also be a webcast for those who cannot attend in person.

For more information visit SEC.gov | SEC and FINRA to Hold National Compliance Outreach Program for Broker-Dealers

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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.