SEC GETS NEARLY 180 MILLION BACK FOR INVESTORS

The SEC has forced Millennium Partners to return 178 million dollars to investors. Unfortunately this distribution of funds fraudulently obtained by Millennium was from an enforcement action started way back in 2005. Can the wheels of justice turn any more slowly when it comes to financial crimes? The following is an excerpt of the action taken by the SEC and posted on their government web site:

“Washington, D.C., May 21, 2010 — The Securities and Exchange Commission today announced the completion of a distribution of more than $178 million to investors affected by improper market timing by Millennium Partners and its related entities. The Millennium Fair Fund distributions went to more than 1,000 mutual funds and annuities.

“The total distribution of more than $178 million in this case further demonstrates the SEC’s commitment to holding wrongdoers accountable and recovering funds for injured investors from illegal activity,” said George Canellos, Director of the SEC’s New York Regional Office.

The Sarbanes-Oxley Act of 2002 gave the SEC authority to increase the amount of money returned to injured investors by allowing civil financial penalties to be included in distributions. Prior to Sarbanes-Oxley, only ill-gotten gains could be returned to investors.

In 2005, the SEC brought an enforcement action charging Millennium Partners, L.P., Millennium Management, L.L.C., Millennium International Management, L.L.C., and several individuals with devising and carrying out a fraudulent scheme to avoid detection and circumvent restrictions that mutual funds imposed on market timing. The Millennium Fair Fund distribution fully reimburses the recipient mutual funds and annuities for their injury from the market timing. Pursuant to the Plan of Distribution, any remaining funds will be sent to the U.S. Treasury."

It appears that in this case the Sarbanes-Oxley Act that was mentioned so prevalently in the press when it was passed in 2002, made a difference in regards to the amount of the recovery for investors. Under Sarbanes-Oxley civil financial penalties were increased which allows for increased compensation for the parties who were harmed by criminal activities.