Concerns have been expressed for some time about whether FINRA will be
able to handle the deluge of customers' complaints against brokers
resulting from the financial meltdown. The Wall St. Journal, for
example, reports today that FINRA is reaching out... Posted on Sunday, February 7, 2010 at 3:27 pm

The SEC announced that it has dropped its case involving stock options
backdating against current and former Broadcom officers. Last year one
defendant was acquitted of criminal charges, and the charges were
dismissed against another. In addition, the presiding judge... Posted on Sunday, February 7, 2010 at 3:27 pm

In a major speech today, the SEC's Chair Schapiro reviews the agency's
accomplishments of the past year and looks ahead to future actions.
Among those she identified of particular interest to retail investors
are: Point of Sale: Retail investors should... Posted on Sunday, February 7, 2010 at 3:27 pm

Bank of America has agreed to pay a $150 million fine and adopt
governance reforms, including an annual advisory vote on compensation,
to resolve the U.S. Securities and Exchange Commission's probe over
its Merrill Lynch acquisition. However, the Charlotte-based banking
giant faces a new lawsuit from New York's attorney general over its
disclosures to investors before the December 2008 transaction. The SEC
settlement, announced today, appears to be the first time in years
that the commission has sought Posted on Saturday, February 6, 2010 at 10:55 am

Shareholders and management are set for a face-off at a Feb. 11
meeting of German chipmaker Infineon Technologies, as activist fund
manager Hermes' campaign to oust chairman-designate Klaus Wucherer
picks up steam. Several prominent institutional investors--including
DWS, Germany's largest mutual fund--have voiced some measure of
support for a proposal to install Willi Berchtold as chairman, whose
candidacy was put forward by a group of investors, including BNY
Mellon and Legal & General. German Posted on Wednesday, February 3, 2010 at 11:03 pm

More than a dozen U.S. hedge funds have sued Porsche and two former
executives alleging the company misrepresented its intentions with
respect to automaker Volkswagen, leading to a "short squeeze of
historic proportions." The funds are seeking $1 billion in damages.
The complaint, filed in U.S. District Court in New York on Jan. 25,
contends that Porsche, maker of the iconic 911 sports car, obfuscated
its holdings in Volkswagen while misrepresenting its intent to acquire
Europe's largest carmaker. When Posted on Wednesday, February 3, 2010 at 11:03 pm

When a company files a document with the SEC at 5:10 on a Friday
evening, it's a little like waving a red cape at the footnoted staff
and yelling, "Look at me!" (although, thankfully, there's no blood and
gore involved). At least, that was the metaphor that came to mind when
we saw the 8-K that KBW, Inc., the parent company of full-service
investment bank Keefe, Bruyette & Woods, Inc., filed late last
Friday. It was a meaty filing in several ways, starting off with the
announcement that its top five Posted on Tuesday, February 9, 2010 at 10:43 am

For the past 6 1/2 years, we've written frequently about various
mergers and acquisitions. Today, we have some M&A news of our own:
Morningstar (MORN) has acquired footnoted.org. You can download the
official press release here, but I wanted to personally share with you
why I'm so excited about this deal and why I think Morningstar, which
is already well known for its independent research, is the perfect
partner to help me continue growing footnoted. Whether you're a
longtime reader or a recent convert Posted on Tuesday, February 9, 2010 at 10:43 am

Yesterday, Jones New York (JNY) filed an 8-K that disclosed the terms
of its new employment agreement with fashion wunderkind Richard
Dickson. Next Monday, Dickson, who's only 41, will become the
President and CEO - Branded Businesses of the Company for Jones
Apparel Group, Inc. He'll report to Wesley Card, who is giving up the
title of President but will remain the company's CEO. Dickson's
agreement, which runs through the end of 2012, states that he'll earn
a base salary "of not less than" $1,000,000 and Posted on Sunday, February 7, 2010 at 1:09 am

New Rules: "Lightning Fast" Adjudication of New Cases Filed in
Delaware Chancery Court Below is some news from Francis Pileggi of Fox
Rothschild, as excerpted from this alert: A new voluntary expedited
procedure for new cases - under these new rules - is coming to the
Delaware Court of Chancery. It will provide a new streamlined,
"lightning fast" litigation timetable for the adjudication of certain
types of business disputes that fit within the parameters of the new
rules. Highlights of the new rules were Posted on Monday, February 8, 2010 at 9:34 am

The SEC: 12% Budget Hike Coming for 2011? It was good to see SEC Chair
Schapiro's statement about President Obama's request for the SEC's
budget, with a 12% increase for 2011 so that the agency's total would
be nearly $1.3 billion. As one former Staffer emailed me: "I remember
when they struggled to pass $500 million!" They will need the
resources to implement the coming reforms, as well as continue they
tasks they have already been performing. Here's the SEC's
justification report for the budget request. Posted on Friday, February 5, 2010 at 11:27 pm

BofA Settles with SEC Over Merger Disclosures: Novel Governance
Reforms Included Yesterday, the SEC announced that it has settled its
two actions against Bank of America regarding alleged disclosure
deficiencies in connection with BofA's acquisition of Merrill Lynch
(one action regarding bonus amounts; the other over operating losses).
Not only will BofA pay $150 million to the SEC (to be distributed to
harmed shareholders), it will adopt seven governance reforms - if
Judge Rakoff approves the settlement Posted on Friday, February 5, 2010 at 11:27 pm

The lawyers who represented a class of Wachovia shareholders in the
lawsuit over Wachovia's merger last year with Wells Fargo have gotten
a ruling on their application for $1,975,000 in fees. Judge Diaz
knocked that application down by over a million dollars -- or more
than half of the fees sought -- to $932,621.98. The Order today in
Ehrenhaus v. Baker ruled that "the time spent by counsel on the case
appears to be somewhat excessive," and that "the hourly rates of
Plaintiff's New York counsel [of $750 per Posted on Sunday, February 7, 2010 at 7:24 am

What is a "dynasty trust"? And what does that have to do with business
litigation? To answer the second question first, not much. But a case
decided today by the North Carolina Court of Appeals, which affirms
the validity of a 2007 statute which permits dynasty trusts,
originated in the North Carolina Business Court. So it gets mentioned
on this blog. A dynasty trust is a trust designed to exist for
multiple generations of a family, potentially forever, usually
avoiding generation skipping tax. The North Posted on Thursday, February 4, 2010 at 8:02 pm

Only a handful of new cases were designated to the Business Court in
January 2010. That may be a function of the cold weather, or perhaps
it's a different kind of chilling effect, the $1,000 fee to designate
a case to the Court. In any event, here are the six new cases: Air
Systems and Equipment Co. v. Sullair Corp.: (Catawba)(Diaz): Plaintiff
claims that the Defendants used its confidential trade secret
information to raid its workforce and hire several of its employees in
violation of the North Carolina Posted on Thursday, February 4, 2010 at 8:02 pm

As investigations continue into the business dealings of Tim Durham
and Fair Finance, a motion has been filed on behalf of some Fair
Finance investors to appoint a receiver in the case. The motion was
filed Feb. 4 by the law firms of Maddox Hargett & Caruso and David
P. Meyer and Associates. "The remaining Fair Finance assets are in
imminent danger of being siphoned away by [Tim] Durham and [Jim]
Cochran now that their Ponzi scheme has been exposed," said David
Meyer of David P. Meyer and Associates, in Posted on Monday, February 8, 2010 at 3:30 am

David McFadden, a former broker for Securities America, has been
sentenced to five years in prison for running a securities fraud
scheme that cost at least 150 clients - many of whom were retired or
living on a fixed income - tens of millions of dollars in losses.
McFadden headed a company called Diversified Financial Services and
was a registered representative for Securities America. And while he
touted himself as a certified public accountant, he neglected to tell
clients that he hadn't been a licensed Posted on Friday, February 5, 2010 at 5:11 pm

Botched financial planning is the accusation facing Northern Trust
Company, which has been sued by the Chicago Teachers' Pension Fund
over claims that the investment company breached its fiduciary duty
and made unsuitable investments in risky, long-term securities that
ultimately plummeted in value. The lawsuit - which seeks class-action
status - was filed by Public School Teachers' Pension and Retirement
Fund of Chicago and the city of Atlanta Firefighters' Pension Plan. It
also names Northern Trust Posted on Friday, February 5, 2010 at 5:11 pm

The tiny auditor of Bernard Madoff's Wall Street firm, at the center
of an alleged $50-billion Ponzi scheme, is being investigated by the
district attorney in a New York City suburb. Friehling & Horowitz
had signed off on the annual financial statement for Bernard L. Madoff
Investment Securities LLC, according to Bloomberg News. CFO.com's
calls to the auditing firm's headquarters in New City, N.Y., were not
answered yesterday. "We're trying to determine if there have been any
state crimes here," Posted on Tuesday, December 16, 2008 at 6:29 pm

Noteworthy language in the relief regarding market transparency,
oversight and audit, and mark-to-market (MTM) FAS157 treatment:
Section 114. Market Transparency. 48-hour Reporting Requirement: The
Secretary is required, within 2 business days of exercising authority
under this Act, to publicly disclose the details of any transaction.
Section 116. Oversight and Audits. Requires the Comptroller General of
the United States to conduct ongoing oversight of the activities and
performance of TARP, and to report Posted on Monday, September 29, 2008 at 3:33 am

Free report from Gartner on leading GRC applications, courtesy of
MetricStream. Posted on Saturday, August 9, 2008 at 4:45 pm

The Securities and Exchange Commission filed securities fraud charges
against an Austin, Texas investment advisor and two of his businesses
alleging he conducted a "multi-million dollar scam" that used former
professional football players to promote its offerings. The SEC
alleged in a filing Tuesday that Kurt B. Barton and Triton Financial
LLC, raised more than $8.4 million from approximately 90 investors by
selling "investor units" in an affiliate, Triton Insurance, and
telling investors that their money Posted on Friday, January 8, 2010 at 4:46 pm

A Salem County investment broker has been sentenced to 15 years in
prison for defrauding clients through a Ponzi scheme. Jeffrey J.
Southard, 45, of Pittsgrove also must pay restitution of $1.8 million
to his victims, said the state Division of Criminal Justice. Southard
pleaded guilty in June to state charges of securities fraud and money
laundering. The sentence handed down Friday will be served at the same
time as an eight-year term that Southard received for federal charges
last month. Authorities said Posted on Monday, December 7, 2009 at 7:15 am

A broker accused of helping disgraced lawyer Marc Dreier carry out a
scheme to sell millions of dollars in fake promissory notes pleaded
guilty to criminal charges on Monday. Kosta Kovachev pleaded guilty to
conspiracy to commit securities fraud and wire fraud, as well as a
wire fraud charge, at a hearing before U.S. District Judge Naomi Reice
Buchwald in Manhattan. Mr. Kovachev, 58 years old, admitted to
pretending to be an inside accountant for Solow Realty &
Development at Mr. Dreier's request in a Posted on Monday, December 7, 2009 at 4:30 am

Big news, dear readers. Today I'm bidding a bittersweet farewell to
Proxyland and launching a new blog called The Big Do-Over: Fixing
Financial Regulation. Why would anyone leave Proxyland, with its lush
golf courses and private runways? Well, I started this blog back in
2006 because I saw that the folks supposedly monitoring America's
boardrooms and C-suites (institutional investors, regulators and the
mainstream media) suffered from an acute cynicism deficiency. Since
they don't sell cynicism supplements Posted on Wednesday, March 4, 2009 at 5:01 am

Everyone knows about the freaky fireball that plummeted through the
Texas sky last weekend. In an unrelated development, a fireball
suddenly appeared in the skies over Proxyland on Friday. That one,
however, has been identified: it's Title VII of the stimulus bill, and
it's zooming straight toward Wall Street's compensation structure. The
administration, stunned by the amount of heat Congress packed into
these compensation provisions, would like to tone them down. But as
Fox News gleefully reported, Barney Posted on Tuesday, February 17, 2009 at 4:27 am

C'mon now, everyone. Cheer up. At least Tim Geithner is easier on the
eyes than Hank Paulson, whose face seemed to have the words "we're all
gonna die" written on it no matter what he was saying. Yesterday's
stock market plunge, everyone says, was about the plan's vagueness and
skimpiness and not its content. As we've all heard a gazillion times,
the markets yearn for certainty, which the administration cluelessly
dangled but didn't deliver. Still, I wish the markets would just grow
up and accept the fact Posted on Wednesday, February 11, 2009 at 3:10 am

Yesterday, the Committee on Payment and Settlement Systems (CPSS) and
the International Organization of Securities Commissions (IOSCO)
announced the launch of a comprehensive review of financial market
infrastructure standards, including payment systems, securities
settlement systems and central counterparties. The review, which will
be led by CPSS members (consisting of central banks, including the
Bank of Canada), members of the IOSCO Technical Committee (which
includes the OSC and AMF), the IMF and World Posted on Friday, February 5, 2010 at 3:44 pm

On February 1, the Canadian Securities Administrators (CSA) released
its 2009 Enforcement Report. According to the report, 141 enforcement
cases were concluded in 2009, resulting in over $153 million in fines
and administrative penalties ordered and over $92 million in
restitution, compensation and disgorgement. The fines and penalties
assessed in 2009 represented a large increase from the $12 million
ordered in 2008. The report also discusses the preventative measures
employed by the CSA as well as the Posted on Friday, February 5, 2010 at 3:44 pm

Silver v. IMAX Corporation et al. [2009] O.J. Nos. 5573 and 5585
(S.C.J.) Simon Bieber and Jennifer Imrie On December 14, 2009, Justice
van Rensburg of the Ontario Superior Court of Justice handed down two
related rulings in the Silver v. IMAX Corporation litigation. The
first (the "Leave Decision") granted the plaintiffs leave to proceed
with their class action against IMAX Corporation and certain
individual respondents (collectively, the "IMAX Defendants") under
section 138.8 of Ontario's Securities Act Posted on Friday, February 5, 2010 at 3:44 pm

As usual, NERA Economic Consulting and Stanford Law School, in
cooperation with Cornerstone Research, have released reports looking
back at the year's securities fraud class action activity (NERA press
release, report; Stanford press release, report). In its latest annual
report, NERA does not separately track or comment on filings against
foreign issuers, except for a footnote on the Vivendi trial (p. 11).
Stanford does. (Both reports are discussed in-depth by learned friends
at the 10b5 Daily (here and Posted on Friday, January 22, 2010 at 2:10 pm

After following the action from the sidelines for a while I finally
caved in and created a Twitter account about a fortnight ago now. (See
my first 'tweet', as posts are called there.) Twitter is a
'micro-blogging' site where one can post messages for others to
'follow'; a message may contain just 140 characters, much like a text
message. The aim of the dual blogging destinations - WV&Z/Twitter
- is to add a short, quick-fire message function to the more in-depth,
long form With Vigour and Zeal. (So Posted on Monday, March 2, 2009 at 12:12 pm

It's been a few months since Lovells LLP has published its latest
Class Actions Bulletin but it's still the latest one and still packed
with interesting articles, so it's still revelant to post here. Topics
include the EU Commission's collective action benchmarks and recent
studies, the latest on collective actions in France and the
Netherlands, alternative forms of collective actions in Germany (other
than the KapMuG), a piece on 'corporate responsibility - a step in the
right direction or towards Posted on Sunday, March 1, 2009 at 4:41 pm

I wonder what the monks would think about the iPad? Thanks to Steve
Blank for finding this. Posted on Sunday, February 7, 2010 at 9:36 pm

It's been a few years since I have been actively involved in film
financing. I left LA in 1995 and have only been back since for
weddings and funerals. However, recently I've been seeing some term
sheets for films again and it has reminded me that the basic structure
of a speculative film financing is quite different than what you see
in a VC or PE style investment in an emerging growth company.
Typically, the first thing you would do for an independent film
investment vehicle is set up an LLC for each Posted on Sunday, February 7, 2010 at 9:36 pm

Recently, I've come across a phenomenon that I thought was long dead
and buried -- free stock. That is, start-up companies that are giving
away stock in return for a customer signing up for a mailing list or
in return for recommending some number of friends. The deal seems too
good to be true -- all you have to do is sign up and you get 10 shares
of stock! In 5 years when the company IPOs, you'll be fabulously
wealthy. Or something like that. The problem with this arrangement is
that the stock is not really Posted on Friday, February 5, 2010 at 11:01 am

Last week, the Massachusetts Securities Division's Enforcement Section
filed a complaint against Securities America, Inc. (Securities
America) claiming that the company omitted information and mislead
investors. In the complaint, Massachusetts claims that Securities
America violated a state securities act in connection with the sale of
millions of dollars worth of Medical Notes to investors. According to
the state of Massachusetts, Securities America sold investors roughly
$697 million worth of Medical Posted on Monday, February 1, 2010 at 6:56 pm

Disbarred lawyer, Scott Rothstein admitted to masterminding a Ponzi
scheme that defrauded investors of $1.2 billion. In a Ft. Lauderdale
courtroom, Rothstein pleaded guilty to five federal charges, including
wire fraud, money laundering, and racketeering. This scheme is the
largest financial fraud case in South Florida history. According to
federal officials, the highly successful Ponzi scheme lasted roughly
four years. In the process, Rothstein swindled $1.2 billion from
countless investors ranging from Posted on Friday, January 29, 2010 at 11:58 am

David Brooks, a founder and ex-chief executive officer of DHB
Industries (DHB), a contracting company for the U.S. military and
other agencies, is accused of looting the company of $185 million.
According to a federal prosecutor, Mr. Brooks allegedly used the
looted money to fund "lavish" personal expenditures. Along with Sandra
Hatfield, DHB's former chief operating officer, Mr. Brooks is accused
of securities fraud, insider trading, manipulating financial records,
and a bevy of additional charges. Brooks Posted on Friday, January 29, 2010 at 11:58 am

Courts can be skeptical about statements from confidential witnesses.
One way to express that skepticism is to wonder why, if the witness
knows so much about what went on at the company, he or she is unable
to provide details... Posted on Saturday, February 6, 2010 at 4:11 pm

The big news today is the plaintiffs' victory in the Vivendi trial. A
few key points about the verdict have already emerged: (1) The jury
agreed with the plaintiffs that Vivendi made 57 false or misleading
statements concerning its financial... Posted on Monday, February 1, 2010 at 12:17 am

A couple of items related to the National Australia Bank case. The
case is pending before the U.S. Supreme Court and concerns the
extraterritorial application of the antifraud provisions of the
federal securities laws. Oral argument has been scheduled for... Posted on Friday, January 22, 2010 at 11:52 am

According to the Securities and Exchange Commission (SEC), a
father-son investment team has been charged with securities fraud for
their role in an extensive hedge fund fraud. It is alleged by the SEC
that these men, Neil V. Moody and his son, Christopher Moody, both
investment advisers in Sarasota, Florida, mislead investors concerning
the financial condition of the three hedge funds they managed. The
three hedge funds were, Valhalla Investment Partners L.P., Viking IRA
Fund LLC and Viking Fund LLC. Posted on Saturday, January 30, 2010 at 6:12 pm

Our firm receives many calls with questions about discrimination
claims. However, unfortunately, some individuals miss the time limits
for filing a charge of discrimination with the Equal Employment
Opportunity Commission, EEOC. Prior to filing a job discrimination
lawsuit against your employer, relating to the laws enforced by the
EEOC, you are required to file a Charge of Discrimination with the
EEOC. It is important to know that you only have a limited amount of
time to file this Charge of Posted on Thursday, January 21, 2010 at 4:03 pm

According to the New York Times, U.S. Attorney General Eric Holder has
announced that a new inter-agency task force has been created to
address and "(halt) fraud involving mortgages, securities, economic
stimulus programs and government bailouts." In a speech to a civic
group in West Palm Beach, Florida, Attorney General Holder had a
message for those who commit fraud of this kind. He promised
fraudsters that "if (they) fabricate a financial statement, if (they)
propagate an investment scheme, if (they) are Posted on Saturday, January 9, 2010 at 3:49 pm

Massachusetts Securities Regulators Have Sued Securities America, Inc.
for Securities Fraud Associated with the Recommendation and Sale of
Medical Capital Notes On January 26, 2010, the Enforcement Section of
the Massachusetts Securities Division of the Office of the Secretary
of the Commonwealth ("Massachusetts Regulators") sued Securities
America, Inc., accusing the brokerage firm of committing securities
fraud on a massive scale in course of recommending and selling Medical
Capital notes. Posted on Wednesday, January 27, 2010 at 9:33 pm

In December 2009, the United States Securities and Exchange Commission
("SEC") charged a Houston-based broker with unauthorized and
unsuitable trading on behalf of two Florida municipalities. According
to the SEC, the trading put the municipalities at risk of losing
millions of dollars while the broker reaped commissions of more than
$14 million. Posted on Friday, January 22, 2010 at 12:43 am

The Securities and Exchange Commission ("SEC") announced on January
11, 2010 that it has charged Beverly Hills, California-based NewPoint
Financial Services, Inc. and its co-owners and controller for
conducting an unregistered securities offering fraud aimed at
Iranian-Americans in the Los Angeles area. The SEC obtained an
emergency court order to freeze their assets and preserve remaining
funds that were collected from investors. Posted on Friday, January 22, 2010 at 12:43 am

The Securities Lawyer Blog has followed the Bank of America's troubled
settlement with the SEC in its acquisition of Merrill Lynch. The
matter is finally moving towards resolution. Maybe. Last week, the Am
Law Daily Blog reported that BofA has settled with the SEC. Again.
Both the SEC and BofA are hopeful that this time Judge Rakoff will
approve the settlement. As previously reported, the original
settlement of $33 million in fines was dismissed by Judge Rakoff as
"trivial" for BofA's alleged failure to Posted on Monday, February 8, 2010 at 11:51 am

If Shakespeare were alive today, he might be seeking out an interview
with Judge Jack Weinstein. Or perhaps invite him up to Stratford for a
weekend of discussion on the human condition and its intersection with
the sub-prime crisis. Last week, the Judge sentenced Eric Butler, a
securities dealer who formerly worked for Credit Suisse. Think of all
the good work he could have done in five years on Wall Street.
Instead, he will be in prison and he will pay $5 million dollars in
fines. He will also be Posted on Wednesday, February 3, 2010 at 8:03 am

The Financial Industry Regulatory Authority (FINRA) recently announced
that its Investor Education Foundation is again teaming up with the
American Library Association (ALA) to help Americans learn about
financial matters. Over the past three years, this program has awarded
$3.2 million to public libraries and library networks nationwide. The
ALA's initiative -- Smart investing@your library® -- is targeted at
public education with effective, unbiased financial education
resources. The initiative supports Posted on Sunday, January 24, 2010 at 7:45 pm

"Aunty Entity" from Mel Gibson's post-apocalyptic tour de force Mad
Max Beyond Thunderdome was not a securities regulator. I suspect,
though, that had she been one, her reaction to the unexpected failure
of the Reserve Primary Fund would have been similar to the reaction
she did have to those who broke the rules in Bartertown - "Bust a
deal, face the wheel". First, as background, money market mutual funds
- or "money funds" or "money market funds" - invest in very
short-term, high-quality debt instruments Posted on Friday, February 5, 2010 at 6:33 pm

The February 2010 issue of SmartMoney magazine notes that Congress
continues to debate whether to change the law to hold financial
advisors to a fiduciary standard of care. (See Is Your Broker Putting
You First?) As noted in previous posts, FINRA's Mea Culpa & More
On The Proposed Fiduciary Standard and Initial Thoughts on the
Proposed Fiduciary Standard for Brokers, this is one of the more
important issues that Congress is considering as it overhauls the
financial regulatory scheme in the wake of the Posted on Friday, February 5, 2010 at 6:33 pm

With each passing day, the so-called "social media" applications -
Facebook, Twitter and LinkedIn - become more and more a part of our
collective day-to-day existence. Have you ever "friended", "fan'd",
"linked" or "followed" someone or something? Do you know what a
"virtual drink" or a "virtual hug" is? Have you "tweeted" some thought
or news item? If so, you are just one of tens of millions that log
onto these sites on a regular basis. FINRA, the brokerage industry's
self-regulatory body, seems to agree Posted on Saturday, January 30, 2010 at 9:51 pm

On January 27, 2010, the SEC will hold an open meeting to consider
publishing an interpretive release to provide guidance to public
companies regarding the Commission's current disclosure requirements
concerning matters relating to climate change. Current SEC
requirements are unclear as to what, if any, climate change issues
must be disclosed in SEC filings such as the annual report on Form
10-K. Many companies do not mention climate change in their filings;
however, a growing number are disclosing Posted on Tuesday, January 26, 2010 at 7:27 pm

As the 2010 proxy season gets started, below are changes implemented
in 2009 that will affect proxy statements filed in 2010 (and a few
changes likely to occur in 2010): NYSE Rule 452. Under new NYSE Rule
452, brokers are no longer permitted to vote for the election of
directors without instructions from their clients. The rule is
effective for all shareholder meetings held in 2010 and beyond and
affects all public companies because it applies to all brokers
regulated by the New York Stock Exchange Posted on Wednesday, January 6, 2010 at 5:25 pm

Last month the SEC voted to issue rules to increase transparency of
"dark pools" of liquidity. Dark pools are a way of trading securities
without publicly displaying quotes or orders. Dark pools exist because
many securities traders do not want to publicly display their desire
to sell or purchase large amounts of shares for fear of significantly
moving stock prices before being able to execute the order. When an
order is placed on an exchange, the exchange makes the order publicly
available. Historically, Posted on Wednesday, December 16, 2009 at 1:00 am

On Tuesday, the Commonwealth of Massachusetts filed a regulatory
action against Securities America, Inc., accusing the brokerage firm
of committing securities fraud on a massive scale. Specifically,
Securities America sold approximately $697 million in promissory notes
that were issued by entities wholly owned by Medical Capital Holdings,
Inc. ("Medical Capital"). Unfortunately for Securities America's
customers and other investors, the notes were part of an alleged Ponzi
scheme, Medical Capital has Posted on Saturday, January 30, 2010 at 4:19 am

According to the Financial Industry Regulatory Authority (FINRA),
7,137 arbitration cases were filed by investors last year, up 43
percent from 2008 and more than doubling the number of cases filed in
2007. The volume of cases increased in every category, with the
exception of online trading. The increased type of controversies
include margin calls, churning, unauthorized trading, failure to
supervise, negligence, omission of facts, breach of contract, breach
of fiduciary duty, unsuitability and Posted on Wednesday, January 27, 2010 at 1:01 am

The court-appointed receiver for the Medical Capital fraud filed his
sixth status report on January 11, 2010. As with the receiver's
earlier reports, this report outlines the various fraudulent aspects
of the Medical Capital entities. The report also reveals the
unchanging fact that investors are unlikely to recover much money from
the receivership. Specifically, the report discloses that Medical
Capital investors are owed $1.7 billion, which is far greater than the
assets available to pay the investors. Posted on Wednesday, January 27, 2010 at 1:01 am

From SecuritiesArbitrationBlawg.com: FINRA recently reported its
December 2009 arbitration statistics. For the year ended December 31,
2009, 7,137 claims had been filed. This represents an increase of 43%
as compared to the number of cases filed in 2008 (4,982). The average
turnaround time for cases that go to an arbitration hearing has
declined by 11% (14 months from 15.7 months). The most frequent
securities and investment claims/controversies involved in arbitration
continue to be breach of fiduciary Posted on Friday, January 22, 2010 at 4:10 pm

From the Securities Arbitration Blawg: InvestmentNews recently
pubished two articles discussing recently filed securities disputes.
First, on August 19, Jeff Benjamin and Sue Asci reported that NBA star
Carmelo Anthony filed a lawsuit in federal court against California
adviser Larry W. Hamilton. The claim alleges that the adviser
transferred $1.75 million of Mr. Anthony's assets and invested an
additional $265,000 with other companies without consent. The
complaint seeks an accounting of the adviser's Posted on Wednesday, December 23, 2009 at 7:42 pm

From SecuritiesArbitrationBlawg.com: Helen Kearney, of
bankinvestmentconsultant.com recently reported that as of August 2009,
more arbitration claims had been filed than in all of 2009. Although
there was a slight downturn in the number of claims filed in August,
it is unclear whether this trend will continue. In large part, the
number of claims will likely depend on what happens in the markets
over the next few months. In addition, there are different types of
investments that have been the subject of Posted on Wednesday, December 23, 2009 at 7:42 pm

The SEC announced that it will continue to pursue its civil
enforcement case against former Bear Stearns High Grade Fund portfolio
managers Ralph Cioffi and Matthew Tannin, after the recent acquittal
of criminal charges against Messrs. Cioffi and Tannin. According to
recent news reports, Robert Khuzami, head of enforcement at the SEC,
told Reuters TV, "We filed a case based on the evidence from our
investigation." Mr. Khuzami added, "we have a different standard of
proof." The SEC's complaint (available on Posted on Saturday, December 5, 2009 at 11:00 pm

Lehman Brothers Holdings Inc. filed a lawsuit against Barclays Capital
in New York federal court alleging the British bank took control of
excess assets in collusion with Lehman executives when it bought its
U.S. brokerage business in 2008. The Lehman bankruptcy is the largest
U.S. bankruptcy in history. The claim alleges that Barclays Capital
received a $8.2 billion "windfall profit" due to an undisclosed $5
billion discount on the sale of certain securities. The complaint
alleges, "The windfall to Posted on Saturday, December 5, 2009 at 11:00 pm

I'm often asked what I read on a regular basis regarding securities
and investment fraud. Back in the day (say, pre-Enron), there was
limited print and online coverage of investment misconduct. In fact,
when I told people what I did for a living, some would actually
question whether our niche practice was even viable, "you mean there's
fraud going on on Wall Street?" Ah, how the world has changed. First
Sam Israel, then the Bear Stearns High Grade Funds, and finally, the
big whale of the Bernie Madoff Posted on Saturday, December 5, 2009 at 11:00 pm