This week the SEC proposed new rules regarding asset backed
securities while Chairman Mary Schapiro, in an op-ed article in the Washington
Post, called for the Senate financial reform bill to be strengthened. SEC
enforcement saw another of its proposed settlements held by Judge Rakoff in the
Southern District of New York. The Commission also brought another action
against broker for fraudulent calculation of NAV and concluded its long running
financial fraud case with against Symbol Technologies.
Legislation: SEC Chairman Mary Shapiro, in an op-ed article in the
Washington Post (here,
registration required), called for Congress to take three key steps to
strengthen the current Senate bill on financial reform: 1) create clearer lines
of regulation; 2) have more transparency in the swaps market; and 3) maximize
the use of clearinghouses and exchanges in transactions involving swaps where
Uniform fiduciary standard: Commissioner Louis Aguilar, in recent remarks,
strongly advocated harmonizing the standards, discussed here. Investment
advisers, the Commissioner noted, owe their clients an affirmative duty of the
utmost good faith and fair disclosure. They are required to serve their clients
with undivided loyalty. This standard has served advisory clients well over the
years. This standard, and not a variation of it, should apply to all, according
to Commissioner Aguilar.
Judge Rakoff, in an step reminiscent of the Bank of America
case, discussed here, has requested
more evidence before accepting a settlement in an insider trading case. The
case is against Schottenfeld Group, discussed here,
and is related to the Galleon insider trading action as discussed here.
SEC enforcement actions
Offering fraud: SEC v. Kelly, Case No. 1:07-CV-4979 (N.D. Ill.
Filed Apr. 8, 2010) is an action against Michael Kelly and twenty-five other
defendants. It alleges a massive fraud through the sale of universal leases.
The lease investments were structured as timeshares in several hotels. From
1999 through 2005, Defendant Kelly and others, raised at least $428 million
through the Universal Lease scheme. Investors were told they would profit from
an arrangement under which the leases would generate guaranteed income. The
court entered a final judgment against John Tencza and American Elder Group,
LLC, his business. The entry enjoined Mr. Tencza and his company from violating
there registration and antifraud provisions of the securities laws. The court
also order the payment of disgorgement in the amount of about $1.6 million
along with interest and a civil penalty of $600,000. ....
This Week In Securities Litigation (April 9, 2010) in its
entirety on SEC Actions, a blog by Thomas Gorman.