NYAG Seeks to Question BofA Lawyers on Merger

In a move that has the potential to impact the attorney-client privilege, New York Attorney General Andrew Cuomo asked Bank of America Corp. to allow his office to question the institution's lawyers in its ongoing probe into last year's merger with Merrill Lynch. Cuomo's office said it cannot adequately explore whether to bring charges against Bank of America officers because of the bank's "indiscriminate invocation of the attorney-client privilege. More>>>

Fuld on Lehman's Anniversary

The demise of Lehman Brothers is coming up on an anniversary, and Reuters spoke to the man who led Lehman at the time - Richard Fuld. Most will recall that Fuld was blamed for the downfall of Lehman, and was then humiliated before a Congressional panel last October. He was told by one politician that he was the designated "villain" of the day and screamed at by protesters who called for him to be jailed. Reuters found him at his home in Idaho.  More>>>

SEC Charges Biotech Company With Fraudulently Hyping Stem Cell Breakthrough

The SEC has filed charges CellCyte Genetics Corporation its former CEO, and its former Chief Scientific Officer for falsely telling investors that the company's cutting-edge stem cell technology had been proven successful and was headed for human trials. More>>>

Stifel to sell 1.2 million shares in offering

Stifel Financial Corp. said Wednesday it plans to launch a public offering of 1.2 million shares of common stock. According to a regulatory filing, the company plans to use the proceeds from the offering for general corporate purposes. The company will have 29.8 million shares outstanding after the offering. More>>>

What Next? Performance Fees for SEC Staffers?

Sen. Charles Schumer intends to propose legislation that would allow the SEC to keep any fines it levies against wrongdoers and to pocket the $1.5 billion in transaction and other fees it is expected to collect for the fiscal year that begins Oct 1, 2009. This is the first we are hearing of such a proposal, but it sounds like a huge potential problem for the Commission, and one that it does not need.

Self funding is a great idea, if implimented correctly, and having the SEC keep its filing fees, or a portion of those fees to fund its operations is probably sound fiscal policy. But once you start giving them the fines and penalties, you open the doors for conflicts, potential conflicts, or simply perceptions of conflicts. The SEC is having enough image problems these days.  More>>>

SEC Asset Freeze in $32 Million Scheme

The SEC announced fraud charges and obtained an order freezing assets of the defendants of an alleged investment scheme that the Commission alleges defrauded investors of $32 million dollars. According to the press release, the SEC alleges that Sidney S. Hanson and his wife Charlotte M. Hanson solicited investors at church gatherings and in other face-to-face meetings, persuading them to cash out their retirement funds and invest in so-called private loan agreements that the Charlotte couple offered through a dozen companies they controlled (collectively, Queen Shoals Entities). Through their Web site and a widespread sales force of at least 45 "consultants," the Hansons falsely promised investors that the investment contracts they were offering would generate them yearly returns ranging from 8 to 30 percent, and that their funds would be safe in a diversified portfolio of treasury bills, precious metals, and foreign currency.

Returns of 8 to 30% a year? Investors need to spend some more time conducting due diligence to avoid spending much more time with their securities attorney pursuing their losses. Most securities attorneys will conduct a due diligence review of an investment BEFORE you make the investment. They will do it afterwards as well, when attempting to retrieve your money, but it costs quite a bit more. More>>>

SEC Files Another Ponzi Scheme Complaint

Ponzi schemes have become a popular topic at the SEC these days. Hardly a week goes by without the Commission announcing charges against someone for running a Ponzi scheme.

While it is well known that bull markets will disguise losses, bad investments and even frauds, it is interesting to note that most of these schemes have been operating for years, at least according to the SEC's allegations. We know that Madoff ran his Ponzi scheme for decades, in the latest complaint the Commission alleges that a Brooklyn man ran a $40 million Ponzi scheme since 1999.

Similar to Madoff, from reading the complaint is appears that the operation was at one time a legitimate one. The complaint alleges that in 1999 the defendant stopped investing his investor's funds and began using incoming investor money to repay existing investors. The Commission also alleges that the defendant diverted investors' fund for his own use, purchasing real estate in his own name, paying expenses of another business entity and to support his lifestyle.


More>>>