The agency said many of the victims “are retired or unsophisticated in investments.”

The SEC charged and concurrently settled the case involving Sandra Venetis, along with three advisory firms she owns. She allegedly received at least $11 million from investors over the past 13 years by pitching a product that would generate annual returns of 6% to 11% from funding loans to doctors that would be backed by Medicare-reimbursement payments to those doctors.

Investors also were told the profit will be tax-free due to a loophole in the tax code. But SEC found Venetis, through Systematic Financial Services Inc., instead of investing the money used it to pay business debt as well as for personal uses. Some money was given to her relatives.

Venetis agreed to settle the charges and consent to a court order that freezes assets and requires repayment, the amount of which will be determined later. Under the settlement, Venetis also will be barred from any future investment-advising and broker-dealer activities.

Bruce Karpati, co-chief of the SEC’s asset-management unit, said that given “Venetis abused her position of trust to target older investors who were the most vulnerable to her egregious lies and misrepresentations,” the regulator will “ensure that she will never work in the securities industry again.”

Regulators has been ramping up efforts to strike down securities fraud in recent years, as Bernard Madoff’s massive Ponzi scheme that induced some $65 billion in losses has brought a spotlight to such cases.

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Rex and Sherese Glendenning, of the Celina area in Texas, originally sought $1.4 million in the case they filed in February 2009, against Raymond James & Associates, a unit of Raymond James Financial Inc. and Larry Milton, a broker associated with the firm in Fort Worth, Texas. They alleged breach of fiduciary duty, misrepresentation and civil fraud, among other things, according to a ruling by a Financial Industry Regulatory Authority arbitration panel.

The Finra panel ordered Raymond James and Mr. Milton to pay the Glendennings $925,000 in a ruling dated Aug. 20. The Glendennings must then sign the securities over to Raymond James, according to the ruling.

One of the three arbitrators on that panel that heard the case disagreed with the size of the award. “I believe the award to the Glendennings should be $1,400,000 instead of $925,000,” he wrote. Arbitration rulings, however, are generally still effective, as long as two of the three arbitrators agree.

The panel found both Raymond James and Mr. Milton liable for the couple’s damages, but didn’t include a reason for the decision—a practice that is typical of arbitration rulings.

“We’re glad that the panel found Raymond James and Mr. Milton liable, but wish the majority would have agreed with the dissenting arbitrator in terms of the money awarded,” says Howard Klatsky, a Dallas-based lawyer who represented the Glendennings. The couple, he says, opened a Raymond James account to consolidate funds in numerous certificates of deposit. An estate planner suggested the strategy to make their finances easier to manage, he said.

Mr. Milton, the broker, purchased the auction-rate securities, consisting of sewer revenue bonds, on behalf of the Glendennings in January, 2008, according to Mr. Klatsky. The couple never discussed auction-rate securities or sewer bonds with the broker and spoke only about their preference to invest their money in CDs, he says.

A Raymond James spokeswoman declined comment. Mr. Milton didn’t immediately return a call requesting comment.

The auction-rate-securities market froze in February, 2008, leaving many investors stuck with illiquid investments that they initially thought were cash-like.

Dissents in which arbitrators object to not awarding investors 100% of the amount they claimed happen “from time to time,” says Philip Aidikoff, a Los Angeles-based broker who represents investors.

It is unusual, however, to find a broker liable in an auction-rate case, says Mr. Aidikoff. His firm typically doesn’t name brokers in auction-rate cases, he says, because many didn’t know the full story behind what they were selling, he says. The ruling against Mr. Milton could reflect possible actions that were revealed through testimony, he says.

The case marks the second time in slightly more than a month that Raymond James was ordered to buy back auction-rate securities. A Finra arbitration panel on July 19 ordered the firm to buy back $2.5 million in auction-rate securities from a customer who was acting as trustee for a revocable trust.

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The two men, Juan Jose Fernandez Garcia and Luis Martin Caro Sanchez, allegedly made profits of $1.1 million on options purchased in advance of the deal. Garcia is head of research at Banco Santander, which advised BHP Billiton ( BHP - news - people ) on the deal.

Separately, BHP announced it has more than doubled its profit for its fiscal year, of $12.7 billion, compared to $5.9 billion last year.

Earnings were below analyst expectations, on a 5% increase in revenue, to $52.8 billion.

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Of course I asked him about his second quarter loss, and investors’ concerns about insider trading.

The latest charge was sparked by High Plains Investments, which is 100% owned by him, dumping 140,000 shares just nine days after the quarter ended, and prior to the earnings announcement.

Byrne believes Overstock.com is meeting what it’s set out to accomplish this year.

He said during today’s interview, “I said we’d break even in the first 9 months and would come out ahead full-year. I don’t worry about each quarter and worry about what Wall Street’s estimates are. I believe we’re right on track.”

Meantime, I offered my intern, Nicole Engelhardt, a recent Arizona State graduate, the opportunity to also ask him a few questions for her blog.

She asked him his advice for young entrepreneurs and the greatest lesson he learned in his career.  It was fascinating.

He shared how Overstock.com has experienced a big culture shift in recent years, and why.

Byrne believes Overstock.com is meeting what it’s set out to accomplish this year.

He said during today’s interview, “I said we’d break even in the first 9 months and would come out ahead full-year. I don’t worry about each quarter and worry about what Wall Street’s estimates are. I believe we’re right on track.”

Meantime, I offered my intern, Nicole Engelhardt, a recent Arizona State graduate, the opportunity to also ask him a few questions for her blog.

She asked him his advice for young entrepreneurs and the greatest lesson he learned in his career.  It was fascinating.

He shared how Overstock.com has experienced a big culture shift in recent years, and why.

Source

Mr. Montague’s working class, retirement age clients allege that he stole millions and ran a Ponzi-like scheme to defraud them.  Unfortunately, while law enforcement agencies have concentrated their efforts on criminals like Bernard Madoff and Kenneth Starr who bilked the rich and famous, while Mr. Montague has walked around a free man.  Apparently, fraudsters who prey on working class investors are low on the priority list.

While the FBI and other agencies are not devoting the proper amount of resources to investigating John Montague, Mr. Zamansky is devoted to recovering the losses suffered by the working class people (many of them elderly) that he defrauded. John Montague’s ponzi-like scheme will not stand if Mr. Zamansky has anything to say about it.

The case involves a purported “financial advisor” named John R. Montague, who was a registered representative with Questar Capital Corporation. The FBI has been investigating Montague since at least last August and possibly longer, but there appears to be no movement in the case.  I represent some elderly investors who Montague defrauded for over $1 million. Given that there are likely many other victims of  Montague’s alleged wrongdoing, it’s quite possible that Montague’s misappropriation of funds is well in excess of what  has already been documented.

Read more about John Montague defrauding investors from Jacob Zamansky.

Mr. Rajaratnam is seeking to prohibit prosecutors from using wiretaps of his cellular phone or evidence obtained as a result of those wiretaps in his criminal case, saying they were improperly obtained.

A federal judge has ordered an evidentiary hearing over whether federal prosecutors acted recklessly in seeking permission to conduct wiretap surveillance of Galleon Group founder Raj Rajaratnam in a criminal insider-trading probe.

Mr. Rajaratnam is seeking to prohibit prosecutors from using wiretaps of his cellular phone or evidence obtained as a result of those wiretaps in his criminal case, saying they were improperly obtained.

“Judge Holwell’s order is also a vindication of the principle that the government must be candid with the court when seeking permission to eavesdrop on private conversations,” said John Dowd, a lawyer for Mr. Rajaratnam.

A spokeswoman for the U.S. Attorney’s office in Manhattan declined comment.

In a separate opinion made public Friday, the judge also separately denied a bid by Mr. Rajaratnam to dismiss a conspiracy count against him. The judge also denied a motion to exclude new allegations related to improper trading involving more than 20 companies disclosed by prosecutors in the months following the filing of a new indictment in the case in February. The stocks were referred to as “other companies” in the indictment and disclosed in letters by prosecutors in March and April.

In court papers, Mr. Rajaratnam’s lawyers have said the Federal Bureau of Investigation secretly recorded more than 2,400 conversations between Mr. Rajaratnam and more than 130 colleagues, employees, friends and family over a nine-month period in 2008.

Six federal judges in total approved the wiretaps over the period, prosecutors said.

In total, 21 people have been charged criminally in the insider-trading probe, and 12 have pleaded guilty to criminal charges.

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Finra filed a regulatory notice with the Securities and Exchange Commission on Tuesday to extend the comment period for proposed changes to its arbitration discovery guide by 45 days until Oct. 8. The comment period was set to expire on Aug. 24.

The extension is subject to SEC approval.

Finra’s proposal aims, in part, to address concerns raised by investor advocates and the securities industry about an earlier version of the proposal that Finra submitted to the SEC in 2008 and later withdrew.

A Finra spokeswoman said the regulator requested the extension “to allow for a full opportunity for an expected robust comment response.”

Investor advocates said the 2008 proposal would have obliged customers to turn over too much personal information, such as years of tax returns, and could discourage claims. Some industry advocates said the terms were too broad and would require them to provide irrelevant information.

The new proposal would still require investors to submit certain in-depth information about their financial histories, such as tax returns and loan histories, among other papers. Some requirements are scaled back, however: For example, investors wouldn’t have to provide transaction confirmations or documents that illustrate steps that may have taken to limit losses.

Brokerages could also face expanded scrutiny. They would have to turn over documents related to commissions and compensation when customers allege churning, and certain internal reports in cases that allege a brokerage’s failure to supervise its adviser, according to Finra’s regulatory filing.

An SEC spokesman declined to comment.

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The Securities and Exchange Commission said Wednesday that Thomas Flanagan and his son, Patrick Flanagan, made $487,000 by trading on information that was not yet public. Thomas Flanagan had access to the information because the companies were Deloitte clients. They included Best Buy Co. Inc., Sears Holding Corp., Walgreen Co., Motorola Inc. and others.

The pair is paying a total of $1.1 million to settle the charges. People charged with insider trading typically settle by paying an amount equal to twice their illegal profits.

The settlement bars Thomas Flanagan from serving as an accountant for public companies. Neither Flanagan admitted nor denied guilt.

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Judge Rakoff proclaimed that the revised settlement represented “very modest punitive, compensatory, and remedial measures that are neither directed at the specific individuals responsible for the nondisclosures nor appear likely to have more than a very modest impact on corporate practices or victim compensation…While better than nothing, this is half-baked justice at best.”

The same “half-baked justice” Judge Rakoff described last year was evident in the SEC’s recent settlement with Citigroup. The SEC alleged Citigroup executives hid $40 billion in toxic mortgage industry assets from its shareholders. Citigroup paid a $75 million fine for what might be one of the biggest accounting scandals on record and managed to avoid using the word “fraud” to describe its actions. Carefully crafted by Citigroup’s attorneys, the terms of the settlement were clearly designed to protect executives from liability and undermine shareholder’s seeking to recover their losses.

Full Story: More Half-Baked Justice From the SEC