Court Affirms Arb Award Against Madoff Feeder Fund

We have always been of the opinion that Madoff feeder funds have potential exposure to investor claims for not disclosing or monitoring the feeder funds investments with Madoff. That exposure is heightened in some instances, where the feeder fund simply turned over the funds to Madoff, took a piece of the management fees, and did little else.

A New York court has confirmed a AAA arbitration award against Ascot Partners in favor of an Ascot investor for failing to disclose Madoff's exclusive role in managing the investor's assets.

Professor Jill Gross, at the ADR Blog, has an analysis of the decision. The arbitration panel, which rendered a 23 page decision in the arbitration, was chaired by none other than David Robbins, a well known investor attorney.

State of NJ Settles Securities Fraud Charges

Well, here is something I have never seen. The State of New Jersey has settled securities fraud charges brought against it by the SEC. But there is a reason why I have never seen it; it has never happened before. According to the NJ Star Ledger, the State was accused of securities fraud for failing to tell bond investors it was underfunding its pension funds. The charges were settled immediately, without fines or penalties. Nice outcome for a securities fraud case. More...

SEC Looking Into Insider Trading in BP Shares

Reuters is reporting that the SEC is investigatingwhether people may have illegally profited from trading on nonpublic information at BP Plc (BP.L) (BP.N) in the weeks and months following the disastrous Gulf of Mexico oil spill.  More>>>

Advisors Win $2 Million Award Against NRP

Two financial advisors won $2 million in arbitration from a retirement-plan advisory firm they left Merrill Lynch to join in 2008, only to be let go the following year.

According to this article in FA Magazine, National Retirement Partners sought to have the Indianapolis advisors, Wade Walker and Jeffrey Bafs, return funds the company said they owed through a corporation NRP purchased to buy their practice. It also accused them of violating transition agreements. But a panel of the Financial Industry Regulatory Authority ruled that the claims by the company and two subsidiaries were "frivolous, unreasonable, groundless, and made in bad faith," according to the award document.

The panel awarded a total of $2 million to the two advisors, who had filed their own claim accusing the company, based in San Juan Capistrano, Calif., of defamation, theft of clients, disclosure of confidential information and other offenses. More...

SEC To Distribute $106 Million in HealthSouth Fraud

The Securities and Exchange Commission today announced a Fair Fund distribution of more than $106 million to investors harmed in a financial fraud at HealthSouth Corporation.

The Fair Fund for HealthSouth Corporation fraud victims resulted from an SEC enforcement action in March 2003 after which HealthSouth paid $100 million to settle SEC charges that it falsely inflated earnings to meet Wall Street expectations. The U.S. District Court of the Northern District of Alabama entered a final judgment against HealthSouth in June 2005, and the court approved the establishment of the Fair Fund in April 2006.

This Fair Fund distribution to 67,695 individual investors, pension plans and other victims represents the entirety of the money HealthSouth paid to settle the SEC's fraud charges, plus interest.

Questions regarding the Fair Fund distribution should be directed to the Claims Administrator, Rust Consulting, Inc. at www.HLSSettlement.com More...

Madoff Trustee Ready to Sue Investors

rving Picard, the court-appointed trustee overseeing the liquidation of Bernard Madoff's investment firm, is preparing to file new lawsuits to recover funds from investors who were also duped by the Ponzi scheme, the Wall Street Journal said.
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Goldman Agrees to Pay $550 Million to Settle SEC Charges

The Securities and Exchange Commission today announced that Goldman, Sachs & Co. will pay $550 million and reform its business practices to settle SEC charges that Goldman misled investors in a subprime mortgage product just as the U.S. housing market was starting to collapse.

In agreeing to the SEC's largest-ever penalty paid by a Wall Street firm, Goldman also acknowledged that its marketing materials for the subprime product contained incomplete information. More...