The following speech by Assistant Attorney General Thomas Perez discusses the settlements made by Bank of America and Saxon Mortgage with American servicemen these banks allegedly harmed. This excerpt is from the Department of Justice web site:
"Washington, D.C. ~ Thursday, May 26, 2011
Good afternoon. Thank you for joining us today to hear about two settlements that will provide critical relief for some of the men and women who serve our nation in the armed forces, and their families. I want to thank our partners at the Department of Defense for their help in these cases and in protecting the rights of servicemembers.
The Civil Rights Division enforces several laws designed to protect the rights of members of the military – so that their brave and selfless service doesn’t put them at risk of losing their jobs at home; so that they don’t have to forfeit their right to vote; so that they can be assured they and their families in the consumer context will not be penalized for their courageous decision to serve our nation.
The Servicemembers Civil Relief Act, or SCRA, provides critical additional consumer and other protections to the men and women serving our nation in the military – it was a recognition that those who are making great sacrifices to protect us deserve to know that we have their backs at home.
The law postpones, suspends, terminates, or reduces the amount of certain consumer debt obligations so that members of the armed forces can focus their full attention on their military responsibilities without adverse consequences for themselves or their families. This means that a soldier won’t have to worry that his or her car will be repossessed while they’re on the front lines overseas. It means that instead of worrying that their spouse and children will be evicted while they’re deployed, they can focus on the critical role they play in protecting our nation.
Among these protections is a prohibition on foreclosure of a servicemember’s property without first getting approval from the court if the servicemember purchased the property prior to entering military service. In the course of our investigations that led to the settlements we’re announcing today, we’ve seen the consequences that can occur when this provision is violated.
For example, we encountered a case involving a servicemember who was severely injured by an Improvised Explosive Device while serving in Iraq, breaking his back and causing traumatic brain injury. The servicer foreclosed on him, despite receiving notice on multiple occasions that he was serving in Iraq. He returned to the United States in a wheelchair with the prognosis that he would never walk again. He spent two years in recovery, during which time he re-learned how to walk and eventually run; however, he still suffers from the impact of the traumatic brain injury.
In another case, we encountered a victim who suffers from Post-Traumatic Distress Syndrome after a tour in Iraq in 2003-2004. Consequently, he regularly receives counseling and takes medication to address his nightmares and nervous condition. In an attempt to avoid foreclosure on his home, he notified the servicer of his active duty status and provided copies of his orders. However, the servicer foreclosed on him twice despite notice of his protected status. In addition, his credit score has been negatively impacted and he has been unable to obtain credit.
We cannot allow the members of our military – who have made great personal sacrifices on our behalf – to attempt to transition to civilian life only to find their credit ruined and their homes in danger because of their willingness to serve in the armed forces.
Today’s settlements will provide relief to men and women who were victims of such violations.
I am pleased to announce first that BAC Home Loans Servicing, LP, formerly known as Countrywide Home Loans Servicing, LP, a subsidiary of Bank of America Corporation, has agreed to pay a minimum of $20 million to settle a lawsuit alleging that the Bank foreclosed, without court orders, on the properties of about 160 servicemembers, in violation of the SCRA. This is by far the largest amount ever obtained by the Department in an SCRA case.
In addition, Saxon Mortgage Services, Inc. has agreed to pay $2.35 million in damages to servicemembers to settle similar allegations, providing relief for 18 servicemembers.
From at least January 1, 2006 through mid 2009, Bank of America/Countrywide and Saxon both failed to determine consistently whether the borrowers on whom they foreclosed were in military service or were otherwise protected by the SCRA, or foreclosed on properties despite having been informed by the servicemember of his or her military status. They have also agreed as part of these settlements to identify and compensate any servicemember wrongfully foreclosed upon from mid-2009 through the end of 2010.
In addition to actual monetary damages, Bank of America/Countrywide and Saxon will repair any servicemember’s negative credit reports and not pursue any remaining amounts owed under the mortgage.
Just as significant is that these settlements, moving forward, will put in place a number of measures to prevent violations including training and policy modifications, such as requiring that the servicer check the Department of Defense website and their own files to determine the military status of a person before they foreclose on him or her. These measures will not only prevent SCRA violations at Bank of America/Countrywide and Saxon, but will set an industry gold standard for all other servicers that to follow in meeting their obligations.
The case against Countrywide resulted from a referral by the United States Marine Corps three days prior to Countrywide’s scheduled foreclosure of a servicemember’s mortgage, despite the fact that the servicemember had sent Countrywide copies of his military orders. The servicemember was a reservist called to active duty and deployed to Iraq at the time of the threatened foreclosure. Countrywide cancelled the foreclosure sale after the United States opened its investigation.
The Department initiated its investigation of Saxon in response to an inquiry from counsel for Sergeant James Hurley, who resolved his claims against Saxon earlier this year in a confidential settlement.
On average, each victim in the Saxon case will receive $130,555 in monetary damages; in the Countrywide settlement, each victim will receive approximately $125,000 in monetary damages. However, the United States will distribute the funds based on the nature of each individual violation and the harm experienced by the servicemember. We will conduct a thorough review of the particular facts and circumstances of each case to determine the precise amount of relief due each servicemember.
These settlements hold the lenders responsible for ensuring that the rights of our men and women in the military are protected while they defend our country. They should send a strong message to lenders and services that they will be held accountable for their own unlawful practices, as well as the practices of others who serve as their agents, in conducting foreclosures in violation of the SCRA.
Although no one case can rectify the multitude of unlawful practices in the housing and lending market that proliferated over the last decade, this settlement represents an important piece of the Department’s comprehensive efforts to address the nationwide housing crisis. It is yet another example of the great work being done in coordination with the President’s Financial Fraud Enforcement Task Force. The Civil Rights Division, along with HUD and the Federal Reserve, chair the Task Force’s non-discrimination working group, and these settlements are an example of the work being done on behalf of victims of fair lending violations.
We will continue to aggressively enforce the law to protect all homeowners from unlawful lending practices, and to protect the rights of servicemembers who put their lives on the line on our behalf. They have our backs, and they need to know that we have theirs."
This is a photo of the National Register of Historic Places listing with reference number 7000063
Friday, June 3, 2011
Thursday, June 2, 2011
SEC CHARGES AIC INC OF PONZI SCHEME INVOLVING THE ELDERLY
Anyone with elderly parents has to worry that they might become a victim of a financial fraudster. This is especially so because the elderly who have any savings at all, often receive unsolicited phone calls, e-mails and, land mail from people purporting to be from their bank, stock broker, insurance company etc. The following case is an excerpt from the sec web site. In it the SEC is alleging that a financial services company and others had set up a Ponzi scheme with many of the victims being the elderly:
April 18, 2011
“The Securities and Exchange Commission announced today that it filed a civil action in the United States District Court for the Eastern District of Tennessee against AIC, Inc., a financial services holding company for three broker-dealers and an investment adviser based in Richmond, Virginia, and its President and CEO, Nicholas D. Skaltsounis. The Complaint alleges that Skaltsounis devised and orchestrated an offering fraud and Ponzi scheme by offering and selling more than $7.7 million in AIC promissory notes and stock. Also named in the Complaint are AIC’s subsidiary, Community Bankers Securities, LLC (“CB Securities”), a broker-dealer, along with associated stockbrokers John B. Guyette, of Greeley, Colorado, and John R. Graves, of Pensacola, Florida, who was also an investment adviser.
The Complaint alleges that, from at least January 2006 through November 2009, Skaltsounis, directly and through registered representatives associated with CB Securities, including Guyette and Graves, fraudulently offered and sold AIC promissory notes and stock to at least 74 investors in at least 14 states, many of whom were elderly, unsophisticated brokerage customers of CB Securities. Skaltsounis, Guyette, and Graves misrepresented and omitted material information to investors relating to, among other things, the safety and risk associated with the investments, the rates of return on the investments, and how AIC would use the proceeds of the investments.
The Complaint also alleges that AIC promised to pay interest and dividends ranging from 9 to 12.5 percent on the promissory notes and stock knowing that it did not have the ability to pay those returns. AIC and its subsidiaries were never profitable. AIC earned de minimis revenue and its subsidiaries did not earn sufficient revenue to meet its expenses. Skaltsounis used the money raised from new investors to pay back principal and returns to existing investors in the nature of a Ponzi scheme. By early December 2009, Skaltsounis’ scheme collapsed when he could no longer solicit investments and recruit new investors to pay back existing investors.
The Commission seeks permanent injunctions and civil penalties against Skaltsounis, AIC, CB Securities, Guyette, and Graves for violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission also charged Graves with violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Commission also seeks disgorgement plus prejudgment interest against Skaltsounis, AIC, CB Securities, and Guyette. In addition, the Commission has charged AIC subsidiaries, Allied Beacon Partners, Inc. (f/k/a Waterford Investor Services, Inc.), Advent Securities, Inc., and CBS Advisors, LLC, as relief defendants seeking disgorgement of funds received from the fraudulent scheme.”
April 18, 2011
“The Securities and Exchange Commission announced today that it filed a civil action in the United States District Court for the Eastern District of Tennessee against AIC, Inc., a financial services holding company for three broker-dealers and an investment adviser based in Richmond, Virginia, and its President and CEO, Nicholas D. Skaltsounis. The Complaint alleges that Skaltsounis devised and orchestrated an offering fraud and Ponzi scheme by offering and selling more than $7.7 million in AIC promissory notes and stock. Also named in the Complaint are AIC’s subsidiary, Community Bankers Securities, LLC (“CB Securities”), a broker-dealer, along with associated stockbrokers John B. Guyette, of Greeley, Colorado, and John R. Graves, of Pensacola, Florida, who was also an investment adviser.
The Complaint alleges that, from at least January 2006 through November 2009, Skaltsounis, directly and through registered representatives associated with CB Securities, including Guyette and Graves, fraudulently offered and sold AIC promissory notes and stock to at least 74 investors in at least 14 states, many of whom were elderly, unsophisticated brokerage customers of CB Securities. Skaltsounis, Guyette, and Graves misrepresented and omitted material information to investors relating to, among other things, the safety and risk associated with the investments, the rates of return on the investments, and how AIC would use the proceeds of the investments.
The Complaint also alleges that AIC promised to pay interest and dividends ranging from 9 to 12.5 percent on the promissory notes and stock knowing that it did not have the ability to pay those returns. AIC and its subsidiaries were never profitable. AIC earned de minimis revenue and its subsidiaries did not earn sufficient revenue to meet its expenses. Skaltsounis used the money raised from new investors to pay back principal and returns to existing investors in the nature of a Ponzi scheme. By early December 2009, Skaltsounis’ scheme collapsed when he could no longer solicit investments and recruit new investors to pay back existing investors.
The Commission seeks permanent injunctions and civil penalties against Skaltsounis, AIC, CB Securities, Guyette, and Graves for violations of Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Commission also charged Graves with violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Commission also seeks disgorgement plus prejudgment interest against Skaltsounis, AIC, CB Securities, and Guyette. In addition, the Commission has charged AIC subsidiaries, Allied Beacon Partners, Inc. (f/k/a Waterford Investor Services, Inc.), Advent Securities, Inc., and CBS Advisors, LLC, as relief defendants seeking disgorgement of funds received from the fraudulent scheme.”
Wednesday, June 1, 2011
INVESTOR BULLETINS FROM THE SEC
The following SEC Investor Bulletins are excerpts from the SEC web site:
Investor Bulletin: Indexed Annuities
Tuesday, April 26, 2011, 10:17:39 AM
An indexed annuity is a type of contract between you and an insurance company. During the accumulation period, when you make either a lump sum payment or a series of payments, the insurance company credits you with a return that is based on changes in a securities index, such as the S&P 500 Composite Stock Price Index.
Investor Bulletin: Say on Pay and Golden Parachute Votes
Wednesday, April 13, 2011, 10:17:39 AM
The Office of Investor Education and Advocacy is issuing this Investor Bulletin to help investors understand new rules about shareholder votes on Say on-Pay and golden parachutes. The rules concern three separate non-binding shareholder votes on executive compensation: Say-on-Pay Votes, Frequency Votes and Golden Parachute Disclosures.
Investor Alert: Pre-IPO Investment Scams
Friday, March 18, 2011, 10:17:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to warn you about investment scams that purport to offer investors the opportunity to buy pre-IPO shares of Facebook, Twitter, Groupon, or other popular companies.
Investor Bulletin: Trading Basics
Tuesday, March 08, 2011, 11:17:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors about the different types of orders they can use to buy and sell stocks through a brokerage firm. The following are general descriptions of some of the common order types and trading instructions that investors may use to buy and sell stocks. Please note that some of the order types and trading instructions described below may not be avail-able through all brokerage firms. Furthermore, some brokerage firms may offer additional order types and trading instructions not described below. Investors should contact their brokerage firms to determine which types of orders and trading instructions are available for buying and selling as well the brokerage firms’ specific policies regarding such available orders and trading instructions.
Investor Bulletin: Margin Rules for Day Trading
Tuesday, February 08, 2011, 11:17:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors regarding the margin rules that apply to day trading in a Regulation T margin account and to respond to a number of frequently asked questions we have received.
Investor Bulletin: New Rules Give Customers Option of All Public Arbitration Panels
Thursday, February 03, 2011, 11:17:39 AM
Investor Bulletin: New Rules Give Customers Option of All Public Arbitration Panels
Money Market Funds: Staff Responses to Questions about Information Filed on Form N-MFP
Monday, January 31, 2011, 11:17:39 AM
Money Market Funds: Staff Responses to Questions about Information Filed on Form N-MFP
Investor Bulletin on Life Settlements
Thursday, January 20, 2011, 10:17:39 AM
The Office of Investor Education and Advocacy is issuing this Investor Bulletin to highlight information about life settlements and some of the risks these types of transactions may pose for investors. Individual investors considering a life settlement transaction may wish to keep the following points in mind and seek guidance from an unbiased financial professional who will not receive a commission or any other financial benefit from the transaction.
Trading in Cash Accounts
Tuesday, January 11, 2011, 11:56:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors regarding the rules that apply to trading securities in cash accounts and to highlight the 90-day account freeze which may arise with certain trading activities in these type of accounts.
Top 11 Tips for 2011
Wednesday, December 22, 2010, 10:56:39 AM
It’s that time of year -- the time to ring out the old and ring in the new, to ditch bad habits and replace them with good ones. We can’t guarantee you’ll lose weight, or become a better human being, but we can give you some suggestions to help you whip your finances into shape.
Investor Alert: BP Payout Recipients: Be on the Lookout for Investment Scams
Wednesday, October 13, 2010, 10:56:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to help educate investors, including individuals and small businesses receiving lump sum payouts from BP related to the oil spill in the Gulf, about potential investment frauds that target recipients of lump sum payouts.
Investor Alert: Investor Warning Regarding Web-Based Scheme Defrauding Deaf Investors
Wednesday, October 06, 2010, 10:56:39 AM
The Securities and Exchange Commission ("SEC") has charged an Internet-based investment company, Imperia Invest IBC ("Imperia"), with securities fraud for soliciting several million dollars from U.S. investors and promising guaranteed annual returns in excess of 300% while in reality siphoning the funds into foreign bank accounts and not paying any returns back to investors.
Investor Alert: Investors Beware of Government Impersonators
Tuesday, October 05, 2010, 10:56:39 AM
The staff of the United States Securities and Exchange Commission (SEC) is issuing this Investor Alert about an individual who is falsely representing to be an employee of the SEC and offering to provide assistance with settling federal tax obligations with the United States Internal Revenue Service.
Investor Bulletin: New Stock-by-Stock Circuit Breakers
Wednesday, September 22, 2010, 10:56:39 AM
The Securities and Exchange Commission approved rules on Sept. 10, 2010, to expand the existing circuit breaker program that currently is triggered by large, sudden price moves in an individual stock.
Investor Bulletin: Focus on Municipal Bonds
Monday, September 20, 2010, 10:56:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors about municipal bonds. For additional assistance, investors can call the SEC's Office of Investor Education and Advocacy at 1-800-SEC-0330, or ask a question using ours online form.
Investor Bulletin: Trading in Stock After an SEC Trading Suspension -- Be Aware of the Risks
Monday, August 30, 2010, 1:56:39 PM
Investors should be very cautious when considering trading in stock after the SEC has suspended trading in the shares. An SEC trading suspension is a "red flag", often indicating the SEC has concerns about the information that the company has been providing to the public. By law, an SEC suspension usually ends after ten business days, even if the company has not provided current, accurate information about itself. However, when a company does not provide current, reliable information about itself and its finances, trading its shares can be very risky.
Investor Bulletin: New Rule to Curb “Pay to Play” Practices
Thursday, July 29, 2010, 1:56:39 PM
The Securities and Exchange Commission approved a new rule on June 30, 2010 to curb so-called "pay to play" practices in which investment advisers make campaign contributions to elected officials in order to influence the award of contracts to manage public pension plan assets and other government investment accounts.
Investor Bulletin on Life Settlements
Thursday, July 29, 2010, 1:56:39 PM
We are issuing this Investor Bulletin to highlight information about life settlements and some of the risks these types of transactions may pose for investors. Individual investors considering a life settlement transaction may wish to keep the following points in mind and seek guidance from an unbiased financial professional who will not receive a commission or any other financial benefit from the transaction.
Investor Bulletin: Amendments to Form ADV – New Disclosure Requirements for Investment Advisers
Thursday, July 29, 2010, 1:56:39 PM
Investment advisers provide a wide range of advisory services and play an important role in helping individuals and institutions make significant financial decisions. To allow clients and prospective clients to evaluate the risks associated with a particular investment adviser, its business practices, and its investment strategies, it is essential that clients and prospective clients have clear disclosure that they are likely to read and understand. That is why the Securities and Exchange Commission (SEC) has adopted amendments to Part 2 of Form ADV to require investment advisers to provide new and prospective clients with a brochure and brochure supplements written in plain English. These amendments are designed to provide new and prospective clients with clearly written, meaningful current disclosure of the business practices, conflicts of interest, and background of the investment adviser firm and the firm’s employees who provide advice.
Investor Bulletin: Indexed Annuities
Tuesday, April 26, 2011, 10:17:39 AM
An indexed annuity is a type of contract between you and an insurance company. During the accumulation period, when you make either a lump sum payment or a series of payments, the insurance company credits you with a return that is based on changes in a securities index, such as the S&P 500 Composite Stock Price Index.
Investor Bulletin: Say on Pay and Golden Parachute Votes
Wednesday, April 13, 2011, 10:17:39 AM
The Office of Investor Education and Advocacy is issuing this Investor Bulletin to help investors understand new rules about shareholder votes on Say on-Pay and golden parachutes. The rules concern three separate non-binding shareholder votes on executive compensation: Say-on-Pay Votes, Frequency Votes and Golden Parachute Disclosures.
Investor Alert: Pre-IPO Investment Scams
Friday, March 18, 2011, 10:17:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to warn you about investment scams that purport to offer investors the opportunity to buy pre-IPO shares of Facebook, Twitter, Groupon, or other popular companies.
Investor Bulletin: Trading Basics
Tuesday, March 08, 2011, 11:17:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors about the different types of orders they can use to buy and sell stocks through a brokerage firm. The following are general descriptions of some of the common order types and trading instructions that investors may use to buy and sell stocks. Please note that some of the order types and trading instructions described below may not be avail-able through all brokerage firms. Furthermore, some brokerage firms may offer additional order types and trading instructions not described below. Investors should contact their brokerage firms to determine which types of orders and trading instructions are available for buying and selling as well the brokerage firms’ specific policies regarding such available orders and trading instructions.
Investor Bulletin: Margin Rules for Day Trading
Tuesday, February 08, 2011, 11:17:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors regarding the margin rules that apply to day trading in a Regulation T margin account and to respond to a number of frequently asked questions we have received.
Investor Bulletin: New Rules Give Customers Option of All Public Arbitration Panels
Thursday, February 03, 2011, 11:17:39 AM
Investor Bulletin: New Rules Give Customers Option of All Public Arbitration Panels
Money Market Funds: Staff Responses to Questions about Information Filed on Form N-MFP
Monday, January 31, 2011, 11:17:39 AM
Money Market Funds: Staff Responses to Questions about Information Filed on Form N-MFP
Investor Bulletin on Life Settlements
Thursday, January 20, 2011, 10:17:39 AM
The Office of Investor Education and Advocacy is issuing this Investor Bulletin to highlight information about life settlements and some of the risks these types of transactions may pose for investors. Individual investors considering a life settlement transaction may wish to keep the following points in mind and seek guidance from an unbiased financial professional who will not receive a commission or any other financial benefit from the transaction.
Trading in Cash Accounts
Tuesday, January 11, 2011, 11:56:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors regarding the rules that apply to trading securities in cash accounts and to highlight the 90-day account freeze which may arise with certain trading activities in these type of accounts.
Top 11 Tips for 2011
Wednesday, December 22, 2010, 10:56:39 AM
It’s that time of year -- the time to ring out the old and ring in the new, to ditch bad habits and replace them with good ones. We can’t guarantee you’ll lose weight, or become a better human being, but we can give you some suggestions to help you whip your finances into shape.
Investor Alert: BP Payout Recipients: Be on the Lookout for Investment Scams
Wednesday, October 13, 2010, 10:56:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Alert to help educate investors, including individuals and small businesses receiving lump sum payouts from BP related to the oil spill in the Gulf, about potential investment frauds that target recipients of lump sum payouts.
Investor Alert: Investor Warning Regarding Web-Based Scheme Defrauding Deaf Investors
Wednesday, October 06, 2010, 10:56:39 AM
The Securities and Exchange Commission ("SEC") has charged an Internet-based investment company, Imperia Invest IBC ("Imperia"), with securities fraud for soliciting several million dollars from U.S. investors and promising guaranteed annual returns in excess of 300% while in reality siphoning the funds into foreign bank accounts and not paying any returns back to investors.
Investor Alert: Investors Beware of Government Impersonators
Tuesday, October 05, 2010, 10:56:39 AM
The staff of the United States Securities and Exchange Commission (SEC) is issuing this Investor Alert about an individual who is falsely representing to be an employee of the SEC and offering to provide assistance with settling federal tax obligations with the United States Internal Revenue Service.
Investor Bulletin: New Stock-by-Stock Circuit Breakers
Wednesday, September 22, 2010, 10:56:39 AM
The Securities and Exchange Commission approved rules on Sept. 10, 2010, to expand the existing circuit breaker program that currently is triggered by large, sudden price moves in an individual stock.
Investor Bulletin: Focus on Municipal Bonds
Monday, September 20, 2010, 10:56:39 AM
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to help educate investors about municipal bonds. For additional assistance, investors can call the SEC's Office of Investor Education and Advocacy at 1-800-SEC-0330, or ask a question using ours online form.
Investor Bulletin: Trading in Stock After an SEC Trading Suspension -- Be Aware of the Risks
Monday, August 30, 2010, 1:56:39 PM
Investors should be very cautious when considering trading in stock after the SEC has suspended trading in the shares. An SEC trading suspension is a "red flag", often indicating the SEC has concerns about the information that the company has been providing to the public. By law, an SEC suspension usually ends after ten business days, even if the company has not provided current, accurate information about itself. However, when a company does not provide current, reliable information about itself and its finances, trading its shares can be very risky.
Investor Bulletin: New Rule to Curb “Pay to Play” Practices
Thursday, July 29, 2010, 1:56:39 PM
The Securities and Exchange Commission approved a new rule on June 30, 2010 to curb so-called "pay to play" practices in which investment advisers make campaign contributions to elected officials in order to influence the award of contracts to manage public pension plan assets and other government investment accounts.
Investor Bulletin on Life Settlements
Thursday, July 29, 2010, 1:56:39 PM
We are issuing this Investor Bulletin to highlight information about life settlements and some of the risks these types of transactions may pose for investors. Individual investors considering a life settlement transaction may wish to keep the following points in mind and seek guidance from an unbiased financial professional who will not receive a commission or any other financial benefit from the transaction.
Investor Bulletin: Amendments to Form ADV – New Disclosure Requirements for Investment Advisers
Thursday, July 29, 2010, 1:56:39 PM
Investment advisers provide a wide range of advisory services and play an important role in helping individuals and institutions make significant financial decisions. To allow clients and prospective clients to evaluate the risks associated with a particular investment adviser, its business practices, and its investment strategies, it is essential that clients and prospective clients have clear disclosure that they are likely to read and understand. That is why the Securities and Exchange Commission (SEC) has adopted amendments to Part 2 of Form ADV to require investment advisers to provide new and prospective clients with a brochure and brochure supplements written in plain English. These amendments are designed to provide new and prospective clients with clearly written, meaningful current disclosure of the business practices, conflicts of interest, and background of the investment adviser firm and the firm’s employees who provide advice.
Tuesday, May 31, 2011
FAMILY TRUST LIABLE FOR DISCLOSURE VIOLATIONS UNDER EXCHANGE ACT
The following is from the Sec web site:
" SEC v. ALFRED S. TEO, SR. AND M.A.A.A. TRUST, 04 Civ. 1815 (DNJ) (SW)
JURY FINDS ALFRED S. TEO, SR., LIABLE FOR SECURITIES FRAUD
On Wednesday, May 25, 2011, a jury in federal court in Newark, New Jersey, returned a verdict in favor of the U.S. Securities and Exchange Commission finding Alfred S. Teo, Sr. liable for securities fraud and disclosure violations under the Securities Exchange Act of 1934. The jury also found the M.A.A.A. Trust, a trust for Teo’s children, liable for disclosure violations under the Exchange Act. The Commission had charged that Teo and the M.A.A.A. Trust made false public filings with the Commission, and failed to make required filings, thereby materially misrepresenting their ownership of stock in the Musicland Stores Corporation.
The jury found that Teo violated Sections 10(b) and Rule 10b-5 thereunder and 13(d) of the Exchange Act. The jury also found that the M.A.A.A. Trust violated Sections 13(d) and 16(a) of the Exchange Act. The jury found the M.A.A.A. Trust not liable for violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. United States District Court Judge Susan D. Wigenton, who presided over the trial, previously granted the Commission’s motion for summary judgment with regard to Teo’s liability pursuant to Section 16(a) of the Exchange Act.
Teo, age 65, is a resident of Kinnelon, New Jersey and Fisher Island, Florida. The M.A.A.A. Trust is a resident of New Jersey.
Judge Wigenton will determine the relief. The Commission is seeking an injunction, disgorgement, prejudgment interest and civil penalties.”
" SEC v. ALFRED S. TEO, SR. AND M.A.A.A. TRUST, 04 Civ. 1815 (DNJ) (SW)
JURY FINDS ALFRED S. TEO, SR., LIABLE FOR SECURITIES FRAUD
On Wednesday, May 25, 2011, a jury in federal court in Newark, New Jersey, returned a verdict in favor of the U.S. Securities and Exchange Commission finding Alfred S. Teo, Sr. liable for securities fraud and disclosure violations under the Securities Exchange Act of 1934. The jury also found the M.A.A.A. Trust, a trust for Teo’s children, liable for disclosure violations under the Exchange Act. The Commission had charged that Teo and the M.A.A.A. Trust made false public filings with the Commission, and failed to make required filings, thereby materially misrepresenting their ownership of stock in the Musicland Stores Corporation.
The jury found that Teo violated Sections 10(b) and Rule 10b-5 thereunder and 13(d) of the Exchange Act. The jury also found that the M.A.A.A. Trust violated Sections 13(d) and 16(a) of the Exchange Act. The jury found the M.A.A.A. Trust not liable for violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. United States District Court Judge Susan D. Wigenton, who presided over the trial, previously granted the Commission’s motion for summary judgment with regard to Teo’s liability pursuant to Section 16(a) of the Exchange Act.
Teo, age 65, is a resident of Kinnelon, New Jersey and Fisher Island, Florida. The M.A.A.A. Trust is a resident of New Jersey.
Judge Wigenton will determine the relief. The Commission is seeking an injunction, disgorgement, prejudgment interest and civil penalties.”
SEC CHIEF SPEAKS AT SEC OPEN MEETING
Most people who have lived through fascism, socialism, communism and various forms of strong man governments and feudalistic states know that the free enterprise system can do the most good for the most people in the long run unless, criminal minds run both business and government. Criminal minds believe in fixed enterprise. They believe that the government is there to protect those who pay off public officials. The funny thing is that criminals will almost always call those who point out their criminal pursuits, a communist, socialist or, fascist. In truth, the free enterprise system works best when there is true competition free of politicians picking winners and losers in the market placed based solely upon political contributions. The following speech by Mary Schapiro is in regards to companies who use felons and bad actors in their commerce:
"Speech by SEC Chairman:
Opening Statement at SEC Open Meeting: Item 1 — Felons and Bad Actors
By
Chairman Mary L. Schapiro
U.S. Securities and Exchange Commission
Washington, D.C.
May 25, 2011
Good morning. This is an Open Meeting of the Securities and Exchange Commission on May 25, 2011.
Today, the Commission will consider two actions.
First, we will consider proposing a rule that would deny certain securities offerings from qualifying for an exemption from registration if the offerings involve certain “felons and other bad actors.”
And second, we will consider adopting a rule to create a whistleblower program that would reward individuals who provide the agency with high-quality tips leading to successful enforcement actions.
Both sets of rules are required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
* * *
We begin with the “bad actor” rule — a rule that would deny securities offerings the benefit of one of the most commonly used exemptions from SEC registration if a felon or other bad actor is involved in the offering.
To understand the rule, one first must appreciate that federal law generally requires securities offerings to be registered with the SEC — unless of course an exemption is available.
Regulation D of the Securities Act of 1933 provides three exemptive rules that a company can use to avoid having to register an offering.
The most widely used provision of Regulation D is Rule 506. More than 90 percent of all offerings made under Regulation D are done under that rule.
If an offering qualifies for Rule 506, issuers can raise an unlimited amount of capital from an unlimited number of “accredited investors” and up to 35 non-accredited investors.
Section 926 of the Dodd-Frank Act requires the Commission to adopt rules that would make this safe harbor unavailable if a “felon and other ‘bad actor’” is involved in the offering.
When the section was added, Senator Dodd noted that the disqualification provision would “reduce the danger of fraud in private placements,” and expressed his belief that it would “protect investors from … unscrupulous persons while encouraging capital formation.” One important consequence of this change is that private offerings that include felons and other bad actors would no longer automatically qualify for state securities law preemption.
The proposal before us would advance these goals by implementing the requirements of the Act in a balanced and tailored way.
The proposed rule would apply to a wide swath of persons, including issuers; directors and officers of the issuer; and, placement agents. Bad actor disqualification would apply if any of them has been convicted of — or is subject to court or administrative sanctions for — securities fraud or other specified violations.
Meredith Cross and her Division of Corporation Finance staff will speak in greater detail about the proposed rule, but I would like to address one important aspect. Under the proposal, the new rules would take account of all disqualifying events, regardless of whether they occurred before or after the new rules come into effect.
I believe that taking into account disqualifying events that occurred prior to the effective date of the new rules fulfills Congress’ mandate to protect investors from felons and other bad actors. Nonetheless, I recognize that there may be concerns about the effects of applying the proposed rules to pre-existing convictions and sanctions.
That is why we are seeking comment on this approach.
We also are seeking comment on whether, and if so how, we should make these “bad actor” provisions uniform with the “bad actor” provisions contained in other Securities Act exemptions.
Further, we are seeking comment on whether to extend the proposed bad actor provision to all offerings under Regulation D, not just those under Rule 506.
Through such uniformity, we could potentially make our exemptive rules easier to understand and apply.
At the same time, we are mindful of the need to consider the relative costs and benefits of such an approach. For that reason, we are also very interested in public comment on the many questions posed in the release on this topic.
Before I turn to Meredith Cross, the Director of the Division of Corporation Finance, I would like to thank her and other staff including Lona Nallengara, Mauri Osheroff, Gerry Laporte, Karen Wiedemann, Johanna Losert and Jennifer Zepralka from the Division of Corporation Finance for their hard work in preparing the recommendations before us.
I also appreciate the contributions from Rich Levine, David Fredrickson and Bob Bagnall from the Office of the General Counsel; Emre Carr, Scott Bauguess and Ayla Kayhan from the Division of Risk, Strategy, and Financial Innovation; Hunter Jones, Barbara Chretien-Dar, Amy Miller and Martin Kimel from the Division of Investment Management; Lourdes Gonzalez, Daniel Fisher and Robert Cushmac from the Division of Trading and Markets; and Charlotte Buford and Laurita Finch from the Division of Enforcement.
And thank you to my colleagues on the Commission and to our counsels.
Now, I turn the meeting over to Meredith to hear more about the Division’s recommendations.”
"Speech by SEC Chairman:
Opening Statement at SEC Open Meeting: Item 1 — Felons and Bad Actors
By
Chairman Mary L. Schapiro
U.S. Securities and Exchange Commission
Washington, D.C.
May 25, 2011
Good morning. This is an Open Meeting of the Securities and Exchange Commission on May 25, 2011.
Today, the Commission will consider two actions.
First, we will consider proposing a rule that would deny certain securities offerings from qualifying for an exemption from registration if the offerings involve certain “felons and other bad actors.”
And second, we will consider adopting a rule to create a whistleblower program that would reward individuals who provide the agency with high-quality tips leading to successful enforcement actions.
Both sets of rules are required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.
* * *
We begin with the “bad actor” rule — a rule that would deny securities offerings the benefit of one of the most commonly used exemptions from SEC registration if a felon or other bad actor is involved in the offering.
To understand the rule, one first must appreciate that federal law generally requires securities offerings to be registered with the SEC — unless of course an exemption is available.
Regulation D of the Securities Act of 1933 provides three exemptive rules that a company can use to avoid having to register an offering.
The most widely used provision of Regulation D is Rule 506. More than 90 percent of all offerings made under Regulation D are done under that rule.
If an offering qualifies for Rule 506, issuers can raise an unlimited amount of capital from an unlimited number of “accredited investors” and up to 35 non-accredited investors.
Section 926 of the Dodd-Frank Act requires the Commission to adopt rules that would make this safe harbor unavailable if a “felon and other ‘bad actor’” is involved in the offering.
When the section was added, Senator Dodd noted that the disqualification provision would “reduce the danger of fraud in private placements,” and expressed his belief that it would “protect investors from … unscrupulous persons while encouraging capital formation.” One important consequence of this change is that private offerings that include felons and other bad actors would no longer automatically qualify for state securities law preemption.
The proposal before us would advance these goals by implementing the requirements of the Act in a balanced and tailored way.
The proposed rule would apply to a wide swath of persons, including issuers; directors and officers of the issuer; and, placement agents. Bad actor disqualification would apply if any of them has been convicted of — or is subject to court or administrative sanctions for — securities fraud or other specified violations.
Meredith Cross and her Division of Corporation Finance staff will speak in greater detail about the proposed rule, but I would like to address one important aspect. Under the proposal, the new rules would take account of all disqualifying events, regardless of whether they occurred before or after the new rules come into effect.
I believe that taking into account disqualifying events that occurred prior to the effective date of the new rules fulfills Congress’ mandate to protect investors from felons and other bad actors. Nonetheless, I recognize that there may be concerns about the effects of applying the proposed rules to pre-existing convictions and sanctions.
That is why we are seeking comment on this approach.
We also are seeking comment on whether, and if so how, we should make these “bad actor” provisions uniform with the “bad actor” provisions contained in other Securities Act exemptions.
Further, we are seeking comment on whether to extend the proposed bad actor provision to all offerings under Regulation D, not just those under Rule 506.
Through such uniformity, we could potentially make our exemptive rules easier to understand and apply.
At the same time, we are mindful of the need to consider the relative costs and benefits of such an approach. For that reason, we are also very interested in public comment on the many questions posed in the release on this topic.
Before I turn to Meredith Cross, the Director of the Division of Corporation Finance, I would like to thank her and other staff including Lona Nallengara, Mauri Osheroff, Gerry Laporte, Karen Wiedemann, Johanna Losert and Jennifer Zepralka from the Division of Corporation Finance for their hard work in preparing the recommendations before us.
I also appreciate the contributions from Rich Levine, David Fredrickson and Bob Bagnall from the Office of the General Counsel; Emre Carr, Scott Bauguess and Ayla Kayhan from the Division of Risk, Strategy, and Financial Innovation; Hunter Jones, Barbara Chretien-Dar, Amy Miller and Martin Kimel from the Division of Investment Management; Lourdes Gonzalez, Daniel Fisher and Robert Cushmac from the Division of Trading and Markets; and Charlotte Buford and Laurita Finch from the Division of Enforcement.
And thank you to my colleagues on the Commission and to our counsels.
Now, I turn the meeting over to Meredith to hear more about the Division’s recommendations.”
Monday, May 30, 2011
SUBPRIME AUTO LOAN EXECUTIVES CHARGED WITH FRAUD
It seems like the allegations against sub-prime lenders will never stop. Although it might be a good thing that the SEC et. al. have been agresively pursuing these cases it is very sad that there are so many of them. The following is an alleged fraud scheme which has been excerpted fromt SEC web site:
April 14, 2011
"The Securities and Exchange Commission announced that it filed a civil injunctive action today in federal district court in Massachusetts charging Massachusetts-based subprime auto loan provider Inofin Inc. and three company executives with misleading investors about their lending activities and diverting millions of dollars in investor funds for their personal benefit. The SEC also charged two sales agents with illegally offering to sell company securities without being registered with the SEC as broker-dealers.
The SEC alleges that Inofin executives Michael Cuomo of Plymouth, Mass., Kevin Mann of Marshfield, Mass., and Melissa George of Duxbury, Mass., illegally raised at least $110 million from hundreds of investors in 25 states and the District of Columbia through the sale of unregistered notes. Investors in the notes were told that Inofin would use the money for the sole purpose of funding subprime auto loans. As part of the pitch, Inofin and its executives told investors that they could expect to receive returns of 9 to 15 percent because Inofin loaned investor money to its subprime borrowers at an average rate of 20 percent. But unbeknownst to investors, and starting in 2004, approximately one-third of investor money raised was instead used by Cuomo and Mann to open four used car dealerships and begin multiple real estate property developments for their own benefit.
Inofin is not registered with the SEC to offer securities to investors.
According to the SEC’s complaint filed in federal court in Boston, Inofin and the executives materially misrepresented Inofin’s financial performance beginning as early as 2006 and continuing through 2011. Inofin had a negative net worth and a progressively deteriorating financial condition caused not only by the failure of Inofin’s undisclosed business activities, but also by management’s decisions in 2007, 2008, and 2009 to sell some of its auto loan portfolio at a substantial discount to solve ever-increasing cash shortages that Inofin concealed from investors. Nonetheless, Inofin and its principal officers continued to offer and sell Inofin securities while knowingly or recklessly misrepresenting to investors that Inofin was a profitable business and sound investment.
The SEC further alleges that beginning in 2006 and continuing to April 2010, Inofin’s executives defrauded investors while maintaining Inofin’s license to do business as a motor vehicle sales finance company by preparing and submitting materially false financial statements to its licensing authority, the Massachusetts Division of Banks. The SEC’s complaint charges Cuomo, Mann, and George with violating the antifraud and registration provisions of the federal securities laws, and seeks civil injunctions, the return of ill-gotten gains plus prejudgment interest, and financial penalties.
The SEC’s charges against the two sales agents — David Affeldt and Thomas K. (Kevin) Keough — allege that they promoted the offering and sale of Inofin’s unregistered securities. They were unjustly enriched with more than $500,000 in referral fees between 2004 and 2009. Affeldt and Keough are charged with selling the unregistered Inofin securities and failing to register with the SEC as a broker-dealer, and the SEC seeks civil injunctions, the return of ill-gotten gains plus prejudgment interest, and financial penalties. Keough’s wife Nancy Keough is named in the complaint as a relief defendant for the purposes of recovering proceeds she received as a result of the violations.
The Commission’s complaint alleges that Inofin, Cuomo, Mann, and George violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Sections 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and that Kevin Keough, and David Affeldt violated Sections 5(a), and 5(c) of the Securities Act and Section 15(a) of the Exchange Act. The Commission seeks the entry of a permanent injunction, disgorgement of ill-gotten gains plus pre-judgment interest, and the imposition of civil monetary penalties against Inofin, Cuomo, Mann, George, Kevin Keough, and David Affeldt. Keough’s wife Nancy Keough is named in the complaint as a relief defendant for the purposes of recovering proceeds she received as a result of the violations.
The SEC appreciates the assistance of the Secretary of the Commonwealth of Massachusetts William F. Galvin, who today filed charges against Inofin, Cuomo, Mann, George, Affeldt, Kevin Keough, and Nancy Keough based on the same conduct. The SEC also appreciates the assistance of the Massachusetts Division of Banks, which previously took action requiring Inofin to surrender its license to operate as a subprime auto lender in Massachusetts.”
April 14, 2011
"The Securities and Exchange Commission announced that it filed a civil injunctive action today in federal district court in Massachusetts charging Massachusetts-based subprime auto loan provider Inofin Inc. and three company executives with misleading investors about their lending activities and diverting millions of dollars in investor funds for their personal benefit. The SEC also charged two sales agents with illegally offering to sell company securities without being registered with the SEC as broker-dealers.
The SEC alleges that Inofin executives Michael Cuomo of Plymouth, Mass., Kevin Mann of Marshfield, Mass., and Melissa George of Duxbury, Mass., illegally raised at least $110 million from hundreds of investors in 25 states and the District of Columbia through the sale of unregistered notes. Investors in the notes were told that Inofin would use the money for the sole purpose of funding subprime auto loans. As part of the pitch, Inofin and its executives told investors that they could expect to receive returns of 9 to 15 percent because Inofin loaned investor money to its subprime borrowers at an average rate of 20 percent. But unbeknownst to investors, and starting in 2004, approximately one-third of investor money raised was instead used by Cuomo and Mann to open four used car dealerships and begin multiple real estate property developments for their own benefit.
Inofin is not registered with the SEC to offer securities to investors.
According to the SEC’s complaint filed in federal court in Boston, Inofin and the executives materially misrepresented Inofin’s financial performance beginning as early as 2006 and continuing through 2011. Inofin had a negative net worth and a progressively deteriorating financial condition caused not only by the failure of Inofin’s undisclosed business activities, but also by management’s decisions in 2007, 2008, and 2009 to sell some of its auto loan portfolio at a substantial discount to solve ever-increasing cash shortages that Inofin concealed from investors. Nonetheless, Inofin and its principal officers continued to offer and sell Inofin securities while knowingly or recklessly misrepresenting to investors that Inofin was a profitable business and sound investment.
The SEC further alleges that beginning in 2006 and continuing to April 2010, Inofin’s executives defrauded investors while maintaining Inofin’s license to do business as a motor vehicle sales finance company by preparing and submitting materially false financial statements to its licensing authority, the Massachusetts Division of Banks. The SEC’s complaint charges Cuomo, Mann, and George with violating the antifraud and registration provisions of the federal securities laws, and seeks civil injunctions, the return of ill-gotten gains plus prejudgment interest, and financial penalties.
The SEC’s charges against the two sales agents — David Affeldt and Thomas K. (Kevin) Keough — allege that they promoted the offering and sale of Inofin’s unregistered securities. They were unjustly enriched with more than $500,000 in referral fees between 2004 and 2009. Affeldt and Keough are charged with selling the unregistered Inofin securities and failing to register with the SEC as a broker-dealer, and the SEC seeks civil injunctions, the return of ill-gotten gains plus prejudgment interest, and financial penalties. Keough’s wife Nancy Keough is named in the complaint as a relief defendant for the purposes of recovering proceeds she received as a result of the violations.
The Commission’s complaint alleges that Inofin, Cuomo, Mann, and George violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Sections 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and that Kevin Keough, and David Affeldt violated Sections 5(a), and 5(c) of the Securities Act and Section 15(a) of the Exchange Act. The Commission seeks the entry of a permanent injunction, disgorgement of ill-gotten gains plus pre-judgment interest, and the imposition of civil monetary penalties against Inofin, Cuomo, Mann, George, Kevin Keough, and David Affeldt. Keough’s wife Nancy Keough is named in the complaint as a relief defendant for the purposes of recovering proceeds she received as a result of the violations.
The SEC appreciates the assistance of the Secretary of the Commonwealth of Massachusetts William F. Galvin, who today filed charges against Inofin, Cuomo, Mann, George, Affeldt, Kevin Keough, and Nancy Keough based on the same conduct. The SEC also appreciates the assistance of the Massachusetts Division of Banks, which previously took action requiring Inofin to surrender its license to operate as a subprime auto lender in Massachusetts.”
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