SEC Compliance Seminar Scheduled for Jan. 31st

Entering a year of intensifying scrutiny on illegal tips on Wall Street amid implementation of the Dodd-Frank financial reform law, the U.S. Securities and Exchange Commission has scheduled its annual compliance outreach seminar Jan. 31.

The free webinar is intended to help chief compliance officers and other business leaders minimize the odds of employees sharing or benefiting from insider trades following tips.

In the past few years, U.S. and New York prosecutors have zeroed in on so-called expert networks, essentially rings in which well-placed executives share tips that get disbursed to a wider range of traders.

In sentencing a California hedge fund consultant last month, U.S. District Judge Jed Rakoff said insider trading appears to be on the rise despite jail terms and monetary fines for perpetrators. Raj Rajaratnam, who was convicted of leading the largest-ever insider trading ring via his Galleon Group hedge fund, began serving an 11-year prison sentence in a Massachusetts federal prison.

Authorities are catching up. In December, a Bloomberg News report detailed a federal probe called “Perfect Hedge,” a reference to investigators’ term for hedge fund managers receiving advance information on moves that swing markets, allowing them to buy or sell securities and maximize profits.

Multiple people who live in Fairfield County or worked for companies here have received jail terms for profiting on insider tips.

In July, a judge froze the assets of three Swiss companies after they bought more than a million shares of Norwalk-based Arch Chemicals Inc. on the eve of an announcement the company would be acquired by Lonza Group Ltd., which is based in Switzerland.

The smallest money managers today are spending 8 percent of their budget on compliance, according to a March 2010 survey co-sponsored by Greenwich-based Financial Tracking Technologies L.L.C. and the compliance trade news publisher IA Watch, with the average cost at 6 percent across all companies.

Greenwich-based Financial Tracking Technologies (FTT) is among the companies that sell software designed to raise the red flag on insider trading.

Founded in 1999 by Anthony Turner, FTT sells a software module that tracks news and other publicly disclosed information on companies, then analyzes trades made by an employee to see if they occur prior to the news going public.

By allowing companies to proactively address such scenarios and take action, FTT says it can help companies hedge their exposure to illicit trading activity.

Government regulators number among FTT’s customer base, according to the company, as well as a third of the largest publicly traded money managers and insurers.

FTT has numerous other software modules, including those to track portfolio pumping, account dumping, and money laundering; and one allowing companies to track “pay to play” schemes involving political contributions by their employees.

Source

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SEC Changees ‘Confirm Nor Deny’ Policy

The Securities and Exchange Commission said on Friday that it was making a major change in how it settles some securities fraud cases, telling companies that they will no longer be allowed to neither admit nor deny the commission’s civil charges when, at the same time, they admit to or have been convicted of criminal violations.

The change will also apply to cases where a company enters an agreement with criminal authorities to defer prosecution or to not prosecute as part of a settlement.

Robert Khuzami, the director of enforcement at the S.E.C., said the agency would continue to use the “neither admit nor deny” settlement process when it alone reaches a deal with a company in a case of civil securities law violations. Those types of cases make up a large majority of its settlements.

The S.E.C. has been sharply criticized, in federal court and on Capitol Hill, for allowing companies to repeatedly settle fraud cases without admitting or denying the charges. Until last week, that policy has been applied even when a company acknowledges the same conduct to another government agency, often the Justice Department.

For example, the S.E.C. and the Justice Department announced on the same day last month that Wachovia bank would pay $148 million to settle charges that the bank reaped millions of dollars in profits by rigging bids in the municipal securities market, one of several such settlements announced last year by the two agencies.

In the Justice Department settlement, Wachovia said it “admits, acknowledges and accepts responsibility for” manipulating the bidding process in the sale of derivatives on tax-exempt bonds to institutional investors like cities, hospitals and pension plans over a six-year period ending in 2004.

But in fashioning a settlement with the S.E.C. based on the same facts, Wachovia agreed to settle the charges “without admitting or denying the allegations.” Wachovia is now part of Wells Fargo.
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Zamansky Files Class Action Lawsuit on Behalf of MF Global Employees

Zamansky & Associates has filed a federal class action lawsuit on behalf of MF Global employees who purchased MF Global shares .

View Class Action Complaint Here

The suit is brought against the firm’s former Chief Executive Jon Corzine, other senior executives and directors on behalf of current and former employees who acquired stock in the company while Corzine led the firm. The complaint alleges that the defendants provided false information regarding the company’s financial condition and made statements that artificially inflated the stock price.

Plaintiffs are seeking class action status for all employees who acquired MF Global shares between May 20, 2010 and Nov. 3, 2011 through company-supported plans. Describing the case theory, Jacob Zamansky said, “Jon Corzine and the board breached their fiduciary duty to their employees and destroyed their careers and retirement savings.” At the time of the company’s bankruptcy Oct. 31, the firm had close to 2,900 employees.

Zamansky & Associates is working with co-counsel Girard Gibbs LLP on this matter.

Source: NY Securities Lawyer

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JinkoSolar Class Action

Zamansky & Associates LLC and Sianni & Straite LLP Announce Class Action Lawsuit Against JinkoSolar Holding Co., Ltd., Credit Suisse Securities (USA) LLC and Other Related Defendants

October 11, 2011 (New York) - View Complaint

Notice is hereby given that a class action lawsuit has been filed today, October 11, 2011 in the United States District Court for the Southern District of New York by an investor individually and on behalf of all other investors who purchased or otherwise acquired JinkoSolar New York Stock Exchange-traded American Depositary Shares [NYSE: JKS], CUSIP 47759T100, between May 13, 2010 and September 21, 2011 (the “Class Period”). The Class Action Complaint alleges that JinkoSolar and certain of its officers and/or directors have violated sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Sections 11, 12(a)(2) and 15 of the Securities Act of 1933, and includes a claim for equitable assessment of attorneys’ fees.  The Complaint also asserts Section 11 and 12(a)(2) claims against lead underwriter Credit Suisse Securities (USA) LLC and other investment banks that underwrote JinkoSolar’s May 13, 2010 IPO.

A copy of the Class Action Complaint filed in this action can be viewed on the firms’ websites at www.zamansky.com or www.siannistraite.com.

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Should Corporate Political Spending Be Disclosed?

Investors are highly interested in information regarding corporate political spending, says Hillary Sale, JD, securities and corporate governance expert and the Walter D. Coles Professor of Law at Washington University in St. Louis.

“The SEC should address the need for transparency in political spending to better inform shareholders and allow them to protect themselves from hidden political agendas in corporate campaign spending,” she says.

Sale has written extensively on securities and corporate governance matters, including redesigning the Securities and Exchange Commission (SEC), independent directors as securities monitors, derivative litigation, and corporate law and governance.
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Ex-NASDAQ Official Sentenced for Insider Trading

A former managing director of the NASDAQ Stock Market has been sentenced to 3 1/2 years in prison after making hundreds of thousands of dollars on insider trades.

Fifty-seven-year-old Donald L. Johnson of Ashburn pleaded guilty in May in federal court to stock fraud. He admitted earning $641,000 on eight separate insider trades between 2006 and his retirement in 2009.

As a managing director, Johnson regularly consulted with companies when they had news that could potentially move markets. He was legally barred from profiting on that information.

Johnson apologized for his actions.

The 42-month sentence was roughly in line with what prosecutors sought and much longer than the 18-month sentence requested by Johnson’s attorney.

Source

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SEC Whistleblower Program Set To Start Friday

The Securities and Exchange Commission’s new whistleblower program that starts Friday won’t conflict with companies’ internal efforts to gather information about potential problems, the head of the program said Thursday.

“The whistleblower program will bolster not hamper internal compliance programs,” said Sean McKessy, head of the SEC’s whistleblower office, in a speech at Georgetown University.

The program offers monetary awards to individuals who come forward with new information that leads to a successful SEC case that results in penalties of at least $1 million. The awards can be from 10% to 30% of the total collected and the amount is based on several factors, including whether the whistleblower tried to report the wrongdoing within the company before coming to the SEC.

Whistleblowers aren’t required to report the problem internally first, which many companies have complained creates a conflict of interest that weakens their internal efforts to monitor for fraud and other problems.

McKessy said that the SEC’s new program will create an incentive for companies to make sure that they have robust and attractive internal programs that encourage employees to come to them first.

The U.S. Chamber of Commerce has raised the prospect of challenging the whistleblower rules in court, but a spokesman said no decision has been made yet.

Friday is the official start of the program, but any whistleblower who reported information that meets the requirements since July 2010 when the Dodd-Frank financial overhaul law passed is eligible for an award.

Source

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Christie Hefner’s Husband Accused of Insider Trading

The husband of former Playboy Enterprises CEO Christie Hefner was accused Wednesday of using inside information in trading Playboy stock, and has agreed to pay almost $170,000 to settle the case.

The Securities and Exchange Commission said William A. Marovitz made trades in the magazine publisher’s shares between 2004 and 2009 based on non-public information and despite instructions from his wife and the company’s attorney not to do so. The agency said the five trades helped him either make profits or avoid losses of $100,952.

The civil case, filed Wednesday in federal court in Illinois, said Marovitz bought and sold Playboy shares based on information from his wife about the company’s earnings, stock offerings and a potential acquisition.

Hefner, the daughter of company founder Hugh Hefner, was CEO until January 2009. Christie Hefner and Marovitz were married in 1995.

The complaint said the trades involved the purchase or sale of shares, in some cases Marovitz’ entire stake in the company, on days surrounding events that impacted the stock price.

For instance, the government said Marovitz bought 9,000 shares of Playboy stock on Nov. 10, 2009, two days before news broke that the company was in talks about a sale of the company to Iconix Brand Group Inc. News of the talks sent Playboy shares up 42 percent and netted Marovitz unrealized gains of $44,745.

The government also said Marovitz told his broker at Chicago’s Mesirow Financial to sell all 35,200 shares of Playboy that he owned on Dec. 15, 2009 at about 2:40 p.m. Central time, a few hours after Hefner received emails from Iconix saying it was ending acquisition efforts. The broker was able to sell 23,752 shares before the market closed, according to the complaint.
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GOP Lawmaker Wants To Reform, Restructure SEC

The Dodd-Frank law needs to be amended to reform the organization and management of the Securities and Exchange Commission, one Republican lawmaker said Tuesday.

“The SEC is structurally flawed and suffers from operational inefficiencies and organizational incoherence,” House Financial Services Chairman Spencer Bachus (R., Ala.) said Tuesday in a statement announcing that he’s working on legislation to restructure the SEC.

“This legislation will be a comprehensive restructuring of the SEC. It will make the SEC more efficient, consolidate duplicative offices, enable the agency to use better technology, and strengthen ethical safeguards to avoid conflicts of interest,” Bachus said.

According to the statement, the draft legislation would make several changes to the Dodd-Frank financial overhaul passed last summer to mandate changes to the SEC’s structure, such as the consolidation of certain offices.

Securities and Exchange Commission Chairman Mary Schapiro has argued that her agency needs more funding to fulfill the greater responsibilities given it by Dodd-Frank.

Bachus said without fundamental changes, the agency won’t improve.

“Simply providing yet more funding to the SEC without first correcting its flaws will do nothing but prolong these inefficiencies and structural failures,” said Bachus.

Source

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WSJ: Hong Kong to Name New Head of Securities Regulator

The Hong Kong government plans to name lawyer Ashley Alder as the new head of the city’s securities watchdog, a person familiar with the situation said Friday, filling a position critical for the regulation of China’s capital markets.

Mr. Alder, currently head of Asia corporate at U.K. law firm Herbert Smith in Hong Kong, will take up the top job at the Securities and Futures Commission as scrutiny of accounting practices and allegations of fraud at some overseas-listed Chinese businesses rise with trading of several U.S.-, Hong Kong- and Toronto-listed Chinese companies suspended amid claims of improprieties.

Questions about accounting and corporate governance at Chinese-listed companies are crucial in Hong Kong, where China-related securities account for more than 70% of the trading volume on the Hong Kong exchange.

Mr. Alder is set to replace Martin Wheatley, who left as chief executive of the SFC in June after six years to take up another regulatory job in his native U.K. On his last day at the regulator, Mr. Wheatley warned investors against rushing headlong to buy shares in Chinese companies, calling China “the new dot-com” of the investment world. His comments were perceived as bold and indicative of the challenges that lie ahead of his successor.

During his time in Hong Kong, Mr. Wheatley, a former deputy chief executive of London Stock Exchange Group PLC, earned a reputation as a proactive enforcer, combating insider trading and other market misconduct, as well as boosting the commission’s standing in Hong Kong and abroad.
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