Free Republic

A well-connected company with close ties to a key Obama Administration official may be running afoul of the SEC by failing to report to its investors material events that significantly impact its bottom line. Just another day in Barack Obama’s Washington, DC “favor factory.” Capital Confidential has in the past covered the saga of PharmAthene, a company that produces “medical countermeasures to biological and chemical weapons” and its great fortune to have been awarded the sole-source contract from the Biomedical Advanced Research and Development Authority (BARDA). We have also learned that the firm has very close ties to Tara O’Toole,...

Judge Jed Rakoff has rejected the SEC’s proposed wrist slap of Citibank for selling mortgage-backed securities it knew to be of poor qualify. Effectively, what he did was join this complaint with SEC’s complaint–filed at the same time as they filed the proposed Citi settlement–against a Citi employee, Brian Stoker, in which the SEC explicitly alleged that Citi knew what it was doing when it dealt shitty securities it intended to short. By doing so, Rakoff imposed the same trial process on this complaint as on Stoker. Effectively, he’s saying, “If you’re prepared to prove that Stoker knew what he...

http://www.economicnoise.com/

Notre Dame football legend "Rudy" charged in alleged pump-and-dump stock schemeUpdated: Friday, December 16, 2011, 4:36 PM Daniel Ruettiger, the former walk-on football player at the University of Notre Dame who inspired the 1993 film “Rudy,” agreed to pay $382,000 to resolve U.S. regulatory claims he defrauded investors in his sports-drink company by touting fake taste tests and sales. Ruettiger and 12 others generated more than $11 million in illicit profits by artificially pumping up the stock of Rudy Nutrition, the firm Ruettiger founded, the SEC said in a complaint filed today at U.S. District Court in Las Vegas. The...

The Securities and Exchange Commission is suing six top executives of Fannie Mae and Freddie Mac for lying to the public about their subprime mortgage exposure and misleading investors. Among those named in the suit are former Fannie CEO Daniel Mudd and former Freddie CEO Richard Syron. The Wall Street Journal has details of the SEC announcement: "Fannie Mae and Freddie Mac executives told the world that their subprime exposure was substantially smaller than it really was," said Robert Khuzami, director of the SEC's Enforcement Division. "These material misstatements occurred during a time of acute investor interest in financial institutions'...

The Securities and Exchange Commission has brought civil fraud charges against six former top executives at Fannie Mae and Freddie Mac, saying they misled the government and taxpayers about risky subprime mortgages the mortgage giants held during the housing bust. Those charged include the agencies' two former CEOs, Fannie's Daniel Mudd and Freddie's Richard Syron. They are the highest-profile individuals to be charged in connection with the 2008 financial crisis. Mudd, 53, and Syron, 68, led the mortgage giants when the housing bubble burst in late 2006 and 2007. The four other top executives also worked for the companies during...

WASHINGTON -- The Securities and Exchange Commission has brought civil fraud charges against six former top executives at Fannie Mae and Freddie Mac, saying they misled the government and taxpayers about risky subprime mortgages the mortgage giants held during the housing bust. Those charged include the agencies' two former CEOs, Fannie's Daniel Mudd and Freddie's Richard Syron. They are the highest-profile individuals to be charged in connection with the 2008 financial crisis. Mudd, 53, and Syron, 68, led the mortgage giants when the housing bubble burst in late 2006 and 2007. The four other top executives also worked for the...

NEW YORK—The Securities and Exchange Commission sued several former executives of Fannie Mae and Freddie Mac, including their former chief executives, alleging they misrepresented to investors their exposure to subprime mortgage loans.

Billionaire Phil Falcone, whose cozy relationship with the Obama Administration was first exposed by NLPC, may face civil fraud charges by the Securities and Exchange Commission (SEC). According to a filing yesterday by Harbinger Group Inc., Falcone and two other directors have received "Wells Notices," meaning that they are under investigation. Falcone is the Chairman, CEO and primary investor in Harbinger Group Inc., a hedge fund. Reportedly, other Harbinger investors include Soros Fund Management. Harbinger owns LightSquared, which has received an unusual waiver from the Federal Communications Commission (FCC) to deploy a national 4G wireless network. Media reports have...

Georgia leads LSU 10 to 7 at the end of the first half. LSU has no first downs and the score really should be 10-0 since the LSU player did not cross the goal line with the football.

In an interview with Fox News this morning, Sen. Joe Lieberman (I-CT) said that the Securities & Exchange Commission believes that under existing law they can prosecute lawmakers who trade on insider information. “The Securities & Exchange Commission is going to say in testimony submitted to our committee today that under existing law they could prosecute members of Congress guilty of using insider information to make money,” he said, POLITICO reported. Lieberman is the Chairman of the Senate Homeland Security and Governmental Affairs Committee which is holding a hearing today into allegations raised on '60 Minutes' last month that lawmakers are getting...

There is a problem with the Bowl Championship Series, but it’s not the one you probably think. College football doesn’t need a playoff. A traditional playoff system – an eight-team or even four-team bracket – brings nothing in the way of advantages over the current system and probably would make things considerably worse. Don’t tell me the traditional architecture for playoffs is the only – or even most – accurate way to determine a champion. The St. Louis Cardinals just won the World Series under that system despite having fewer wins in the regular season than any other team that...

Missouri football Coach Gary Pinkel was arrested by Boone County Sheriff's Department officers Wednesday night on suspicion of driving while intoxicated. Pinkel was pulled over at 10:15 p.m. on Keene Street just north of Broadway, according to the incident report. He was stopped for lane and signal violations, Chief Deputy Major Tom Reddin said. The deputies developed probable cause that Pinkel was driving under the influence of alcohol, according to the report. He was cooperative with officers and taken into custody at the Boone County Jail. He posted $500 bond for the first-offense DWI arrest.

WASHINGTON (Reuters) - The U.S. government is not taking advantage of an enforcement tool that could potentially hold top Wall Street figures accountable for their role in the recent financial crisis, despite its prior success. Broker-dealers, investment advisers, and others regulated by the Securities and Exchange Commission are required to supervise their representatives. If a trader engages in misconduct, the SEC can sue the management with "failure to supervise." But in some of the biggest cases the SEC has brought in recent months -- against units of JPMorgan, Goldman Sachs, and Citigroup -- the agency has sued only low-level bankers....

If anything has characterized Barack Obama's presidency, it has been his fruitless efforts to make nice with constituencies he should be punishing, or at the very least, isolating. His choice of Mary Schapiro to run the Securities and Exchange Commission was just one of many such mistakes, but it is high time for the president to admit his error and show her the door. One doesn't need to do much more than watch TheStreet's interview with her (above) at the annual SIFMA Conference in New York Monday to see why Schapiro needs to go.

WASHINGTON (Reuters) - U.S. regulators are launching a broad review into the business practices of failed futures brokerage MF Global Holdings Ltd as their hunt continues for over $600 million in missing customer money. Round-the-clock shifts for examiners have become the norm as they sort through the collapse of the firm headed by former New Jersey Governor Jon Corzine. MF Global filed for bankruptcy on Monday after risky bets on European debt scared away clients and investors. "We will look at every aspect of how the firm conducted business," Mary Schapiro, chairman of the U.S. Securities and Exchange Commission, told...

RBC paying $30.4M to settle SEC chargesMARCY GORDON, AP Business Writer Wednesday, September 28, 2011 WASHINGTON (AP) — RBC Capital Markets has agreed to pay $30.4 million to settle federal civil charges of misleading five Wisconsin school districts that lost $200 million invested in risky securities. The Securities and Exchange Commission announced the settlement Tuesday with the brokerage firm, which is owned by the Royal Bank of Canada. The SEC said RBC Capital Markets didn’t fully disclose the risks in 2006, when the school districts purchased the investments. The agency said RBC is paying a $22 million fine, and $8.4...

The rest of college football formally surrendered to the Southeastern Conference Sunday, ending a decades-long war that had become hopelessly one-sided. The surrender took place just outside Appomattox, Va. SEC officials declined to explain why this site was chosen. "What began 85 years ago in Pasadena has been finished today," the SEC said in a statement, referring to Alabama's 1926 Rose Bowl victory over Washington, which established Southern schools as a threat. "This is our sport now."

"In my own business, securities regulations have prohibited me from hiring brokers for more than three years. I was even fined fifteen thousand dollar expressly for hiring too many brokers in 2008. In the process I incurred more than $500,000 in legal bills to mitigate a more severe regulatory outcome as a result of hiring too many workers. I have also been prohibited from opening up additional offices. I had a major expansion plan that would have resulted in my creating hundreds of additional jobs. Regulations have forced me to put those jobs on hold. In addition, the added cost...

The global accounting powerhouse, Deloitte, is sitting between a bullet and a target in a global battle over the future of free enterprise. In May, Deloitte China received a subpoena from the U.S. Securities and Exchange Commission demanding records related to possible accounting fraud at the Hong Kong-based Chinese financial software company, Longtop Financial Technologies.

Regulators are nearing a settlement with Fannie Mae and Freddie Mac over whether the mortgage finance giants adequately disclosed their exposure to risky subprime loans, bringing to a close a three-year investigation. The proposed agreement with the Securities and Exchange Commission, under the terms being discussed, would include no monetary penalty or admission of fraud, according to several people briefed on the case. But a settlement would represent the most significant acknowledgement

Texas Gov. Rick Perry and his family have made presidential campaign trips aboard a jet owned by a wealthy contributor who is under investigation for possible securities fraud by Texas regulators and the Securities and Exchange Commission. Perry, who has emerged in just weeks as the new frontrunner for the Republican presidential nomination, flew last weekend aboard Brian D. Pardo's Cessna Citation X jet from a remote Texas airport to various campaign events in Iowa, according to a Perry campaign aide and flight records obtained via Flightwise.com. Read more:

President Obama has enlarged and shaped the missions of agencies across the federal government to his own purposes, in pursuit of the "fundamental change" he promised voters. The resulting agency creep is creeping me out. Totalitarians have a history of recasting representative governments into reflections of their own personal madness. Whether in the case of Communists, Fascists, or modern liberals, day-to-day government is retooled into an incarnation of their dear leader's obsessions and justified by a vain and unsupportable assertion of higher intelligence. This time is no different, as is demonstrated by the multiple cases of agency creep we are...

The Securities and Exchange Commission today announced an asset freeze against a Chicago-area money manager and his hedge fund advisory firm that the SEC charged with lying to prospective investors in their startup quantitative hedge fund. A federal court today entered a preliminary injunction order in the case, which was unsealed earlier this week. The SEC alleges that Belal K. Faruki of Aurora, Ill., and his advisory firm Neural Markets LLC solicited highly sophisticated individuals to invest in the "Evolution Quantitative 1X Fund," a hedge fund they managed that supposedly used a proprietary algorithm to carry out an arbitrage strategy...

Goldman Sachs Chief Executive Lloyd Blankfein has hired Reid Weingarten, a high-profile Washington defense attorney whose past clients include a former Enron accounting officer, according to a government source familiar with the matter. Blankfein, 56, is in his sixth year at the helm of the largest U.S. investment bank, which has spent two years dodging accusations of conflicts of interest and fraud. The move to retain Weingarten comes as investigations of Goldman and its role in the 2007-2009 financial crisis continue. The U.S. Securities and Exchange Commission scored a $550 million settlement against the bank in a fraud lawsuit in...

A US senator said Wednesday that the Securities and Exchange Commission may have destroyed thousands of documents related to probes into possible violations by major banks and hedge funds. Senior Republican Senator Chuck Grassley said that "an agency whistle-blower" sent him a letter that described the SEC's allegedly unlawful destruction of records related to more than 9,000 informal investigations. The documents included cases arising from the 2008-2009 financial crisis, including Goldman Sachs, AIG, and the Bernard Madoff pyramid fund, according to the whistle-blower, Grassley said. The whistle-blower, 13-year SEC lawyer Darcy Flynn, said the destroyed records related to "matters under...

Today I am going to do something different, openly praise blatant incompetence. I will list my reasons later but first let me sing the praises of sheer incompetence at Moody's, Fitch, and the S&P (the big 3 rating agencies). Downgrade of U.S. Debt Long Overdue Many are in shock that the S&P downgraded debt of the US from AAA. Not me. It was long overdue. However, the S&P proved it was incompetent in the way it made the downgrade. Pray tell how can a rating agency make a $2 trillion error? The answer is obvious: sheer incompetence. The irony is...

WASHINGTON (MarketWatch) — The Securities and Exchange Commission may have destroyed documents and compromised enforcement cases involving activity at large banks and hedge funds during the height of the financial crisis, according to allegations made by a lawmaker on Wednesday.

Senator Chuck Grassley, Republican of Iowa, says SEC may have destroyed documents“From what I’ve seen, it looks as if the SEC might have sanctioned some level of case-related document destruction,” said Sen. Chuck Grassley, Republican of Iowa, in a letter to the agency’s chairman, Mary Schapiro. “It doesn’t make sense that an agency responsible for investigations would want to get rid of potential evidence. If these charges are true, the agency needs to explain why it destroyed documents, how many documents it destroyed over what timeframe, and to what extent its actions were consistent with the law.” Agency staff “destroyed...

A whistleblower claims that over the past two decades, the agency has destroyed records of thousands of investigations, whitewashing the files of some of the nation's worst financial criminals. Imagine a world in which a man who is repeatedly investigated for a string of serious crimes, but never prosecuted, has his slate wiped clean every time the cops fail to make a case. No more Lifetime channel specials where the murderer is unveiled after police stumble upon past intrigues in some old file – "Hey, chief, didja know this guy had two wives die falling down the stairs?" No more...

The U.S. Securities and Exchange Commission (SEC) has asked rating agency Standard & Poor's (S&P) to disclose which employees knew of its decision to downgrade U.S. debt before it was announced last week, the Financial Times said, citing people familiar with the matter. SEC's move is part of a preliminary examination into potential insider trading, the FT said. The inquiry was made by the SEC's examination staff, which has oversight of credit rating firms, one person familiar with the matter told the newspaper. However, the securities regulator is not aware of a leak from an S&P insider, nor was it...

In a remarkable development, the beleaguered Securities and Exchange Commission (SEC) actually awarded the employee who botched the investigation of the largest Ponzi scheme in history with a cash bonus for a great job performance. It marks the latest of many scandals for the famously inept federal agency charged with policing the nation’s financial industry. An SEC Inspector General probe discovered that the agency rewarded an incompetent investigator who missed Bernie Madoff’s illegal, $50 billion Ponzi scheme with a cash bonus for good work. Released this week, the IG report doesn’t name the SEC investigator but confirms that he (or...

Although this is from the Houston Chronicle, the content is Bloomberg, so I can't post it. But it is WELL worth reading the article here.

The Justice Department is considering whether to prosecute Securities and Exchange Commission employees over the agency’s handling of a $557 million lease for downtown Washington offices that it could not afford and did not need, the agency’s inspector general said Wednesday. Inspector General H. David Kotz said he recently referred the matter to the Justice Department for potential investigation. The department requested relevant documents, Kotz said. Kotz said his referral focused on the back-dating of a document that was used to justify the lease. Kotz made that disclosure at the end of a House hearing in which lawmakers lambasted SEC...

The Securities and Exchange Commission Chairwoman Mary Schapiro and her bureaucrat underlings came under fire once again in a hearing on Wednesday for the agency’s decision to lease 900,000 square feet of unneeded office space at Constitution Center in downtown Washington, D.C. The bureaucrats that pulled the trigger obligated the taxpayers to pay $556 million in lease obligations over the course of the next 10 years. Rest assured these bureaucrats are going to have some major legal problems if the Department of Justice (DOJ) pursues a criminal investigation on the $556 million lease debacle. The DOJ is most likely looking...

The auto bailouts are now being touted by President Obama as a "success" even though the taxpayer is about to take at least a $10 billion hit when the government sells its remaining GM shares. There is, however, a missing dimension in this debate. It is the moral one. Prior to General Motors filing for bankruptcy in June of 2009, I was involved as a GM bondholder advocate for a group called the Mainstreet Bondholders. Attempts were made by my group to bring about fair negotiations for creditors of GM, attempts that were ignored by the Obama Administration's Auto Task...

The leadership at the U.S. Securities Exchange Commission interpreted the Dodd-Frank financial-overhaul law last July to mean that the SEC would secure funding to spend money however the SEC saw fit. This included signing a 900,000 square foot lease with no Program of Requirements in three days for an elegant, downtown Washington DC office building. Thankfully, the money to fund the 900,000 square foot lease was shot down in the Fiscal Year 2011 Budget that passed earlier this year. However, the SEC still jumped the gun back in July 2010 by signing the 900,000 square foot lease at the taxpayers...

This is your "what the hell?" video of the morning. Treasury Secretary Geithner is asked if he knew about the "predatory atmosphere" at the IMF. He says "this is a hard question to ask a man." Except, it's not a hard question, for a man or for anyone. "Were you aware of the culture of rape at IMF" has two possible answers: "yes, I noticed" or "no, I just didn't see it." But, of course, he can't say either because if he saw abuse then the follow-up question is going to be why he didn't do anything about it. And...

Facebook is in talks to hire Robert Gibbs, President Obama’s former White House press secretary, for a senior role in helping to manage the company’s communications, people briefed on the negotiations said. Facebook is seeking out Mr. Gibbs ahead of an initial public offering planned for early 2012, these people said.

Business groups are warning that it might be impossible to comply with proposed rules requiring companies to track whether minerals came from combat-torn parts of Africa. But the two lawmakers behind the so-called "conflict minerals" provision are telling regulators to stand firm and issue strict rules as quickly as possible. The standoff played out this week in a series of comment letters filed with the Securities and Exchange Commission (SEC), which is required by the Dodd-Frank financial reform law to implement a provision forcing companies to take stock of how they obtain certain minerals. The provision is intended to make...

Chairwoman Mary Schapiro's general counsel is accused of having a conflict of interest in the Madoff affair that Schapiro knew about. Two influential congressional leaders are directly challenging Security and Exchange Commission Chairwoman Mary Schapiro as a new Bernard Madoff scandal engulfs the agency, this one involving charges of conflicts of interest by her own general counsel. Pajamas Media has obtained a copy of the letter sent to the SEC chairwoman. Rep. Darrell Issa (R-CA) and Sen. Charles Grassley (R-IA) today sent a sharply worded joint letter to the SEC chief, demanding she explain why the she appointed General Counsel...

FOR IMMEDIATE RELEASE 2011-46 Washington, D.C., Feb. 18, 2011 — The Securities and Exchange Commission today charged a group of seven individuals who perpetrated a fraudulent pump-and-dump scheme in the stock of a sham company that purported to provide products and services to fight global warming. The SEC alleges that the group included stock promoters, traders, and a lawyer who wrote a fraudulent opinion letter. The scheme resulted in more than $7 million in illicit profits from sales of stock in CO2 Tech Ltd. at artificially inflated prices. Despite touting impressive business relationships and anti-global warming technology innovations, CO2 Tech...

Financial crooks brought down the world's economy — but the feds are doing more to protect them than to prosecute them. Here's how regulation of Wall Street is supposed to work. To begin with, there's a semigigantic list of public and quasi-public agencies ostensibly keeping their eyes on the economy, a dense alphabet soup of banking, insurance, S&L, securities and commodities regulators like the Federal Reserve, the Federal Deposit Insurance Corp. (FDIC), the Office of the Comptroller of the Currency (OCC) and the Commodity Futures Trading Commission (CFTC), as well as supposedly "self-regulating organizations" like the New York Stock Exchange....

The Securities and Exchange Commission filed securities fraud charges against three former IndyMac executives—including the former CEO and two former CFOs of the company. The SEC complaint alleges that the former IndyMac executives made false and misleading claims in the company's 2007 annual report—as well as in offering materials for a $100 million stock offering. The SEC press release summarizes: "In early February 2008, IndyMac projected that it would return to profitability and continue to pay preferred dividends in 2008 without having to raise new capital. In late February 2008, Perry and Keys knew that contrary to the rosy projections...

The feds unsealed a scathing indictment this morning against two hedge fund managers as part of a larger sweep looking into insider trading, as two other men in the case pleaded guilty to the charges, authorities said. The charges against two of the portfolio managers, Samir Barai, 39, and Donald Longueuil, 34, include conspiracy to commit securities and wire fraud and obstruction of justice, the US Attorney's office in Manhattan said. Barai founded Barai Capital Management in 2008 after leaving Citigroup's hedge-fund unit. Manhattan US Attorney Preet Bharara called the charges "a sad chronicle not only of criminal conduct, but...

Shout Bits often exposes government abuse that entrenches large companies’ power by blocking small competitors. While many reports focus on the disproportionate cost of complying with government paperwork and mandates, another effect of regulation is to deny small players opportunity. Regulatory structures originally intended to protect the public invariably morph into cozy protection for the largest industry players. A recent Study in the Financial Analysts Journal shows how the SEC harms small investors by denying them access to the most profitable investments.

We read last night's news that the massively underfunded Illinois pension fund is now the subject of an SEC inquiry with little surprise: "The Securities and Exchange Commission has launched an inquiry into public statements by Illinois officials about the state's underfunded pension fund, the state's governor's office confirmed Monday night. The Illinois inquiry is focused on public statements concerning an overhaul measure passed in 2010 meant to help shore up the retirement system, said the governor's spokeswoman, Kelly Kraft." The issue at hand is nothing short of complete accounting fraud: "An issue being examined is whether Illinois was taking...

Last Week Goldman Sachs raised $1.5 billion in a private placement of Facebook shares. Goldman is famous for its wealthy clientele and its ability to put together large deals, so selling $1.5 bln of a white hot company is no surprise. Goldman did surprise its US based customers by denying them access to the Facebook shares, and the reason behind the US exclusion may point to a bleak future for US capitalism.

Goldman noted that the transaction has received heavy media attention in recent days and said "in light of this intense media coverage, Goldman Sachs has decided to proceed only with the offer to investors outside the US." "Goldman Sachs concluded that the level of media attention might not be consistent with the proper completion of a US private placement under US law," it said. US securities law bars public promotion of private offerings and the Facebook deal has already reportedly attracted the attention of the US Securities and Exchange Commission (SEC). Goldman stressed that the decision to limit the offering...

Football is one big repository of analogies for politics. Candidates “kick off” their campaigns. If they’re smart, they have a “game plan” that features a “ground game.” In the politics of Washington, Bill Bennett says, “if you’re not on offense, you’re on defense,” which is bad. In a pinch, a politician might “throw a Hail Mary.” Normally, though, politics is “played between the 40-yard lines.” An issue that’s hard to agree on becomes a “political football.” But football—big-time college football, aired on TV and played in huge stadiums—is more than a metaphor. It’s a mirror. A football team, more often...