One of the great mysteries of the financial crisis of 2008 was where was the SEC while this catastrophe evolved? It wasn’t just Bernie Madoff, it was the complete failure to require publicly held companies to make full disclosures. Maybe with the change in Administrations, the SEC will remember its mandate to regulate publicly held companies.
Attorney Gordon Johnson
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Date: 7/15/2009 4:25 PM
WASHINGTON (AP) — The Securities and Exchange Commission on Wednesday said it charged 11 people in connection with separate insider trading schemes related to acquisition deals at two different companies.
Three of the 11 have reached agreements on financial settlements with SEC, while the SEC said it’s seeking injunctions against further violations, the return of ill-gotten gains with prejudgment interest and financial penalties from the other eight.
According to the SEC, five people illegally tipped off others or traded on private information ahead of Liberty Mutual Insurance Co.’s 2008 announcement that it would acquire Seattle-based insurance company Safeco Corp.
One of those five charged is Anthony Perez of Maitland, Fla., a former Goldman Sachs investment banker, who the SEC says illegally tipped off his brother, Ian C. Perez of Orlando, Fla.
Ian Perez bought Safeco call options one day ahead of the public announcement and later sold them for a profit of more than $152,000, the SEC said.
As part of a deal with the SEC, Anthony Perez will pay a penalty of $25,000 and Ian Perez will pay disgorgement and prejudgment interest totaling $152,992. Neither brother will admit or deny the charges, the SEC said.
The three other people charged in relation to the Liberty Mutual acquisition include Math J. Hipp of Seattle. Hipp received confidential information from his wife, an executive assistant at Safeco, bought Safeco call options ahead of the public announcement and later sold them for a profit of more than $118,000, the SEC said.
Under a settlement agreement, Hipp will pay $239,770 without admitting or denying the allegations.
The SEC also charged Peter E. Talbot of Springfield, Mass., a financial analyst, and his nephew, Carl E. Binette of Ludlow, Mass. The pair bought Safeco call options ahead of the public announcement and later sold them for a profit of more than $615,000, the SEC said.
The SEC also charged six other people for illegally trading on private information ahead of private equity firm Odyssey Investment Partners’ 2005 announcement that it would acquire Neff Corp.
The SEC claims that Thomas L. Borell, a Miami-based lawyer, obtained access to confidential information through his friendship with a Neff director. He then used information to buy more than $1.3 million of Neff stock ahead of the announcement and later sold it for nearly $1 million in profits, the SEC said.
Also charged in connection with the Odyssey acquisition are Sebastian De La Maza of Miami, along with brothers Alberto Perez and Jose G. Perez, also of Miami. The SEC also charged Kevan D. Acord of Overland Park, Kan., and an accountant who works for him, Philip C. Growney of Kansas City, Mo.
Copyright 2009 The Associated Press.
Sen. seeks info from SEC on Bear Stearns deal
Date: 10/22/2008 11:39 PM
By MARCY GORDON
AP Business Writer
WASHINGTON (AP) _ A key senator is examining whether a top Securities and Exchange Commission official gave sensitive information to a former colleague working at JPMorgan Chase & Co. when the bank was considering whether to buy Bear Stearns.
Sen. Charles Grassley of Iowa, the senior Republican on the Senate Finance Committee, has asked the SEC for information concerning its investigations of investment bank Bear Stearns & Cos., which nearly collapsed into bankruptcy in March and was purchased by JPMorgan Chase with a $29 billion federal backstop.
Grassley, in a letter to SEC Chairman Christopher Cox dated Tuesday, also requested records of communications between SEC staff and representatives of JPMorgan Chase concerning the investigations.
Grassley’s interest was first reported by The Washington Post in Wednesday’s editions.
He said his inquiry was prompted by an anonymous tip alleging that SEC Enforcement Director Linda Thomsen provided information about the agency’s investigation of Bear Stearns around March to JPMorgan Chase’s general counsel, Stephen Cutler. Cutler was Thomsen’s predecessor as enforcement director, and the two worked together on the prosecution of a number of big companies embroiled in corporate scandals.
According to the anonymous complaint on Oct. 7, the information Cutler obtained from Thomsen could have enabled JPMorgan Chase to make a lower bid for Bear Stearns.
“Such conduct would reinforce the appearance that (SEC) enforcement decisions, and disclosures of information about them, are sometimes based not on the merits but rather on access to senior officials by influential representatives of power brokers on Wall Street,” Grassley said in his letter to Cox.
SEC spokesman Kevin Callahan declined to comment Wednesday.
Joseph Evangelisti, a spokesman for JPMorgan Chase, said allegations that officials of the bank had any improper communications with the SEC “are wholly untrue.”
In March, the agency didn’t rule out legal action over potentially misleading comments about Bear Stearns’ financial health made days before JPMorgan Chase arranged to buy the investment bank.
The SEC enforcement division said its lawyers would “favorably” factor in the circumstances of the Bear Stearns takeover in deciding whether to act against its new owner. The division wrote a letter to JPMorgan Chase that discussed “investigations and potential future inquiries into conduct and statements by Bear Stearns” before the announcement of the takeover, the SEC said in March.
Copyright 2008 The Associated Press.
SEC: market manipulation cases jump in fiscal 2008
Date: 10/22/2008 3:07 PM
By MARCY GORDON
AP Business Writer
WASHINGTON (AP) _ The Securities and Exchange Commission said Wednesday it brought 671 enforcement cases in the fiscal year that ended Sept. 30, with the number of market manipulation cases up more than 45 percent over the prior year.
The SEC also said it has more than 50 pending investigations related to the subprime mortgage market.
The agency, working in conjunction with the FBI and federal prosecutors, has been investigating whether mortgage lenders or Wall Street firms participated in fraud.
The 671 cases initiated in the latest fiscal year represent the second-highest number of enforcement actions in the SEC’s history, the agency said. The number of insider trading cases set a new record high.
For the second straight year, the SEC returned more than $1 billion to aggrieved investors collected in settlements with individuals and companies.
Still, some lawmakers have criticized the SEC’s enforcement efforts. Sen. Jack Reed, D-R.I., chairman of the Senate Banking subcommittee that oversees the agency, has said the SEC should have asked Congress for more money for its budget for 2009 “given that increased demands are being placed on staff and the agency during this critical time.”
And the SEC’s inspector general, H. David Kotz, recently reported that an official in the agency’s enforcement division failed to properly enforce securities laws in the investigation of investment bank Bear Stearns’ valuation of complex securities.
SEC Chairman Christopher Cox has defended the agency and its enforcement program, citing actions against market manipulation and other initiatives.
Major fraud cases brought by the SEC during the fiscal year included:
— A lawsuit against two former Bear Stearns managers alleging they deceived investors by concealing the troubles of a hedge fund that bet heavily on subprime mortgages before the market collapsed. The two also were charged criminally by federal prosecutors.
— A suit against five former San Diego city officials over a 2002 pension scandal.
— An insider trading case against a former Dow Jones & Co. board member and three other prominent Hong Kong residents for an alleged scheme to trade ahead of news of a $5 billion takeover offer for the financial news company by Rupert Murdoch. They agreed in a settlement to pay $24 million.
The SEC and state regulators also recently signed agreements with major banks to buy back a total of more than $50 billion in auction-rate securities from investors who bought the risky securities before the market for them collapsed in February. But those settlements, with Citigroup Inc., Morgan Stanley, JPMorgan Chase & Co., Wachovia Corp., Merrill Lynch & Co., Goldman Sachs Group Inc. and others, are not included in the fiscal 2008 enforcement results.
Copyright 2008 The Associated Press.
—–By MARCY GORDON
AP Business Writer
WASHINGTON (AP) _ The Securities and Exchange Commission said Wednesday it brought 671 enforcement cases in the fiscal year that ended Sept. 30, with the number of market manipulation cases up more than 45 percent over the prior year.
The SEC also said it has more than 50 pending investigations related to the subprime mortgage market.
The agency, working in conjunction with the FBI and federal prosecutors, has been investigating whether mortgage lenders or Wall Street firms participated in fraud.
The 671 cases initiated in the latest fiscal year represent the second-highest number of enforcement actions in the SEC’s history, the agency said. The number of insider trading cases set a new record high.
For the second straight year, the SEC returned more than $1 billion to aggrieved investors collected in settlements with individuals and companies.
Still, some lawmakers have criticized the SEC’s enforcement efforts. Sen. Jack Reed, D-R.I., chairman of the Senate Banking subcommittee that oversees the agency, has said the SEC should have asked Congress for more money for its budget for 2009 “given that increased demands are being placed on staff and the agency during this critical time.”
And the SEC’s inspector general, H. David Kotz, recently reported that an official in the agency’s enforcement division failed to properly enforce securities laws in the investigation of investment bank Bear Stearns’ valuation of complex securities.
SEC Chairman Christopher Cox has defended the agency and its enforcement program, citing actions against market manipulation and other initiatives.
Major fraud cases brought by the SEC during the fiscal year included:
— A lawsuit against two former Bear Stearns managers alleging they deceived investors by concealing the troubles of a hedge fund that bet heavily on subprime mortgages before the market collapsed. The two also were charged criminally by federal prosecutors.
— A suit against five former San Diego city officials over a 2002 pension scandal.
— An insider trading case against a former Dow Jones & Co. board member and three other prominent Hong Kong residents for an alleged scheme to trade ahead of news of a $5 billion takeover offer for the financial news company by Rupert Murdoch. They agreed in a settlement to pay $24 million.
The SEC and state regulators also recently signed agreements with major banks to buy back a total of more than $50 billion in auction-rate securities from investors who bought the risky securities before the market for them collapsed in February. But those settlements, with Citigroup Inc., Morgan Stanley, JPMorgan Chase & Co., Wachovia Corp., Merrill Lynch & Co., Goldman Sachs Group Inc. and others, are not included in the fiscal 2008 enforcement results.
Copyright 2008 The Associated Press.
Editor’s Comment: I began my career as a court room lawyer in the front lines of real estate misrepresentation cases. Fundamental to any legitimate business transaction is that no “material misrepresentation” be made in the sale of any asset, which would include stocks and bonds. Not only has the SEC been asleep at the switch of the lights on Wall Street, but American Trial Lawyers have not taken the leadership role that they should have. Misrepresentation is not just a crime, it is a civil cause of action. Our fundamental basis for existence as advocates is the belief that through civil litigation, we cannot only compensate those harmed, but also deter corporate wrongdoing and greed.
The below story talks about a “jump” in Market Manipulation cases. This shouldn’t be a jump, it should be a rocket shot. It is time that my fellow Trial Lawyers use their investigative skills, commitment and talents to bring Wall Street criminals to the only type of justice they understand: Civil money damages.