FORMER EXECUTIVE AT PITNEY BOWES IS CHARGED WITH INSIDER TRADING

The following excerpt is from the SEC website:

The Securities and Exchange Commission filed a civil injunctive action today in the United States District Court for the District of Columbia charging Howard B. Wildstein, a former Pitney Bowes, Inc. executive, with insider trading in the stock of MapInfo Corporation in advance of the March 15, 2007 public announcement that Pitney Bowes had entered into a definitive agreement to acquire MapInfo.
According to the SEC's complaint, Wildstein acquired material nonpublic information concerning the acquisition through his employment at Pitney Bowes. In particular, as alleged in the complaint, in late February 2007, Wildstein learned that MapInfo was a potential target of Pitney Bowes and that executives of Pitney Bowes who were responsible for mergers and acquisitions had recently visited MapInfo. On March 1 and March 2, 2007, based on this material nonpublic information, Wildstein purchased 8,000 shares of MapInfo common stock. After the acquisition was publicly announced, Wildstein sold all 8,000 shares, realizing an unlawful profit of $51,177.
Without admitting or denying the allegations in the complaint, Wildstein has consented to the entry of a final judgment that permanently enjoins him from violating Sections 10(b) and 14(e) of the Securities and Exchange Act of 1934, and Rules 10b-5 and 14e-3 thereunder, and requires him to pay a total of $114,848 in disgorgement, prejudgment interest, and civil penalties. The settlement is subject to approval by the court.”

ALLEGED SECURITIES FRAUDSTERS HELD ACCOUNTABLE: MAYBE?

Sometimes those who are found to have committed a crime don't go to prison. In the case below an alleged fraudster does not get much from the actions taken by the SEC however, he may get some prison time from a parallel case that was prosecuted by the U.S. Attorneys Office. Of course the SEC does not have the power to prosecute individuals in a way that leads to prison time like the U.S. Attorneys Office. Only civil penalties can come from the SEC. The following case is an excerpt from the SEC website:

"July 14, 2011
JUDGMENT OF PERMANENT INJUNCTION AND OTHER RELIEF ENTERED AGAINST DEFENDANTS ROBERT C. BROWN, JR. AND TREBOR COMPANY AND ORDERS INSTITUTING ADMINISTRATIVE PROCEEDINGS, MAKING FINDINGS AND IMPOSING SANCTIONS AGAINST ROBERT C. BROWN, JR.
Securities and Exchange Commission v. Robert C. Brown, Jr., et al., Civil Action No. 3:08-cv-03517-EMC (N.D. Ca.)
The United States Securities and Exchange Commission (“Commission”) announced that on July 1, 2011, the Honorable Edward M. Chen, United States District Court Judge for the Northern District of California, entered judgments of permanent injunction against Defendants Robert C. Brown, Jr. and Trebor Company.

The final judgment against Brown and Trebor Company enjoins them from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and Sections 206(1) and 206(2) of the Investment Advisers of 1940 (“Advisers Act”).

On July 23, 2008, the Commission filed its complaint against the Defendants alleging that they violated the anti-fraud provisions of the federal securities laws by, among other things, offering a variety of investment programs that falsely promised astronomical returns. One program promised, for example, to double investor money in eight months. The complaint also alleged that Brown raised more than $20 million. Instead of investing that money, however, Brown transferred millions of dollars to himself and spent the money on lavish personal expenses.

On April 6, 2010, Brown pleaded guilty to one count of wire fraud in a parallel criminal action brought by the United States Attorney’s Office for the Eastern District of California. Later this year, Brown will be sentenced to prison and ordered to pay restitution to the victims of his fraud.

In addition to the relief described above, Brown consented to the entry of an order, without admitting or denying any of the findings in the Order, except he admitted entry of the injunction and conviction, in a separate Commission administrative proceeding barring him permanently, pursuant to Section 203(f) of the Advisers Act, from associating with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical ratings organization."

SENIOR WHITE HOUSE ADVISOR EVALUATES ANNIVERSARY OF WALL STREET REFORM BILL

The following e-mail was sent out today by White House Senior Advisor David Plouffe. In the e-mail Mr. Plouffee discusses the reason for the Wall Street Reform Bill which was signed into law by President Obama one year ago. “Good afternoon, One year ago today, after a tough battle with the special interests in Washington, President Obama signed Wall Street Reform into law. That law does three important things. First, it brings to an end taxpayer funded bailouts, so taxpayers will never again be left paying the bill if a big bank fails. Second, it stops the reckless risk-taking by Wall Street that put consumers in jeopardy and led to the economic crisis. And third, this law puts in place the strongest consumer protections in history. And to make sure you can count on those consumer protections, we put a first-ever consumer watchdog in charge. It’s a new bureau – a new cop on the beat – with just one job: looking out for families in the financial system. The President faced a lot of opposition when we fought for this bill. An army of lobbyists and lawyers were looking to preserve the status quo, and one year later, they’re still at it. The special interests are trying to water down what we passed, and spending tens of millions of dollars to get their way. And they’ve got friends in high places. But President Obama has made it clear: he’s not going to let them win. He’ll veto any effort to weaken or repeal Wall Street Reform. He’s not going to let them take us backward. We can’t afford to go back to the days when consumers were ripped off by misleading fees and deceptive lending and our economy was vulnerable to greed and recklessness -- not when we know that millions of middle class families are still hurting because of the damage that was done. So we have a lot of work to do to rebuild this economy. We’ve got to rein in the deficit to put our economy on stronger footing and ensure that seniors and middle-class families aren’t bearing the entire burden when millionaires and billionaires, oil companies, hedge fund managers and corporate jet owners are let off the hook. We’ve got to keep money in your pockets by preventing payroll taxes from going up for working people. We’ve got to continue to make smart investments in clean energy, innovation and technology to create the good paying jobs of the future. But we’ve also got to keep up the fight to solve the problems that led us into this economic mess in the first place. It comes down to this. You shouldn’t need to have lobbyists on the payroll to have your voice heard in Washington. And in your financial dealings, you deserve a basic measure of protection against abuse. You should have the freedom to buy a home or open a credit card or take out a student loan with confidence that you’re getting a fair deal. That’s what these consumer protections will do. That’s why Wall Street Reform matters. Sincerely, David Plouffe
 Senior Advisor to the President”

PRESIDENT OF TECH COMPANY SENTENCED FOR DEFRAUDING E-RATE PROGRAM

The following is an excerpt from the Department Of Justice website:

“MONDAY, JULY 18, 2011

WASHINGTON — The president and part owner of a Michigan-based Internet and technology services company was sentenced today to serve 15 months in prison for defrauding the federal E-Rate program, the Department of Justice announced.
Jeremy R. Sheets was also sentenced by Judge Paul L. Maloney of U. S. District Court in Kalamazoo, Mich., to pay a $12,000 criminal fine and to pay $115,534 in restitution for engaging in wire fraud in connection with the E-Rate applications of two school districts his company serviced in western Michigan. Sheets was charged with wire fraud on Dec. 9, 2010, and pleaded guilty on Jan. 24, 2011.
As a result of the Antitrust Division's investigation into fraud and anticompetitive conduct in the E-Rate program, a total of seven companies and 24 individuals have pleaded guilty, been convicted at trial or entered civil settlements. Those companies and individuals have been sentenced to pay criminal fines and restitution totaling more than $40 million. Eighteen individuals, including Sheets, have been sentenced to serve prison time.
According to the charge, Sheets violated E-Rate program rules by compensating two school districts for their share of E-Rate expenses. In addition, Sheets utilized E-Rate funds to purchase undisclosed items, some of which were not eligible for E-Rate funding. Sheets concealed his violation of E-Rate program rules from the E-Rate program by fraudulently misrepresenting that the schools had been billed for their E-Rate expenses when, in fact, Sheets had reimbursed the schools for their share of expenses. The department said Sheets engaged in the wire fraud beginning in or about December 2001 and continuing until about December 2007.
The E-Rate program was created by Congress in the Telecommunications Act of 1996 and is administered by the Universal Service Administrative Company, under the auspices of the Federal Communications Commission (FCC). The program provides subsidies to economically disadvantaged schools and libraries. Depending on the financial needs of the applicant schools, the program pays 20 to 90 percent of the cost for Internet access and telecommunications services, as well as internal computer and communications networks.
Today's sentencing resulted from an investigation by the Department of Justice Antitrust Division's Chicago Field Office, with the assistance of the U.S. Attorney's Office in Grand Rapids, the FBI's Grand Rapids Office of its Detroit Division and the FCC's Office of Inspector General. “

ALLEGED PYRAMID SCHEMER TO PAY OVER $1.254 MILLION

The following is an excerpt from the SEC website:

July 15, 2011
The Commission announced that the Honorable John Antoon II, Senior District Judge of the United States District Court for the Middle District of Florida granted the Commission’s Motions to Set Disgorgement and Civil Penalty Amounts as to Defendant Darrel West. The Court ordered West to pay disgorgement of $606,413.31 (representing profits gained as a result of the conduct alleged against him in the Complaint) together with prejudgment interest thereon in the amount of $42,148.81. The Court also ordered West to pay a civil penalty in the amount of $606,413.31 for a total liability of $1,254,975.43. West controlled Defendant Own My Travel, LLC. Previously, the Court entered Judgments of Permanent Injunction against West and Own My Travel. The Judgments, entered by consent, enjoin West and Own My Travel from violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934. The Commission voluntarily dismissed with prejudice its previous claims for disgorgement and civil penalties against Own My Travel and disgorgement against Professionally Assisted Marketing, Inc. as both companies are currently defunct.
The Commission filed its complaint on August 14, 2009, against West, Own My Travel and Professionally Assisted Marketing, LLC as a relief defendant. The complaint alleged the defendants misrepresented Own My Travel as a legitimate multi-level marketing company when it was actually a fraudulent pyramid scheme premised on the sale of memberships and thus destined to collapse, leaving investors with substantial losses. The complaint also alleged that West and Own My Travel misled investors about Own My Travel’s business structure and how it generated revenue, the future commissions investors would purportedly receive on a monthly basis, the risks associated with the Own My Travel investment, and West’s failures running a similar predecessor company.”

CFTC CHAIR MAKES REMARKS

The following is an excerpt from the CFTC website:

Remarks Before the Financial Stability Oversight Council
Chairman Gary Gensler
July 18, 2011

Good morning. I thank Secretary Geithner for calling today’s meeting of the Financial Stability Oversight Council (FSOC). I also thank my fellow regulators and FSOC members for their coordination and consultation on the rule-writing process to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Lastly, I want to thank the staffs of all the agencies – and particularly the Treasury staff – for their efforts in coordinating amongst eight agencies.

This week is the one-year anniversary of the Dodd-Frank Act. And on this anniversary, it is important to remember why the President and Congress came together to pass this historic law.

The 2008 financial crisis occurred because the financial system failed the American public. The financial regulatory system failed as well. When large financial firms, such as AIG and Lehman Brothers faltered, we all paid the price.

The Dodd-Frank Act includes critical swaps market reforms to protect the American people. The law brings much-needed transparency to this marketplace and lowers the risk of the swaps market to the overall economy. It lowers the possibility of taxpayers standing behind large financial institutions.

The Dodd-Frank Act also included the establishment of this Council, which is an opportunity for regulators – now and in the future – to ensure that the financial system works better for all Americans.

Though the crisis had many causes, it is clear that the swaps market played a central role. Swaps added leverage to the financial system with more risk being backed by less capital. They contributed, particularly through credit default swaps, to the bubble in the housing market and helped to accelerate the financial crisis. They contributed to a system where large financial institutions were thought to be not only too big to fail, but too interconnected to fail.

At the CFTC, working with our partners at the SEC, we have been working diligently to write rules to implement swaps provisions in the Dodd-Frank Act that will ensure swaps no longer operate in the shadows and financial institutions pose less risk to taxpayers. We have substantially completed the proposal phase of the rule-writing process and have now turned toward final rules. Tomorrow, we are holding the second public commission meeting to consider approving final rules, and in the coming months, we will continue considering final rules. But until the CFTC completes its rule-writing process and implements and enforces these new rules, the public remains unprotected.

Final Rulemaking on Designating Financial Market Utilities as Systemically Important

I support the final rulemaking on the Authority to Designate Financial Market Utilities as Systemically Important. This is a significant rulemaking that will enable the Financial Stability Oversight Council (FSOC) to identify and designate systemically important financial market utilities, including clearinghouses.

Comprehensive and robust regulatory oversight of clearinghouses, in particular their risk management activities, is essential to our country’s financial stability. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act, standardized swaps between financial entities must be brought to clearinghouses.

The Commodity Futures Trading Commission (CFTC) has overseen clearinghouses for decades. The Dodd-Frank Act provides for enhanced oversight of these clearinghouses. In close consultation with our fellow domestic and international regulators, including the Federal Reserve Board and the Securities and Exchange Commission, the CFTC proposed rulemakings on risk management for clearinghouses. These rulemakings take into account relevant international standards, particularly those developed by the Committee on Payment and Settlement Systems and the International Organization of Securities Commissions (CPSS-IOSCO).

The Dodd-Frank Act gives both the Council and the Federal Reserve Board important roles in clearinghouse oversight by authorizing the Council to designate certain clearinghouses as systemically important and by permitting the Federal Reserve Board to recommend heightened prudential standards in certain circumstances.

The Council’s final rulemaking complements the CFTC’s rulemaking efforts and enhances the regulation of systemically important financial market utilities, which will mitigate systemic risk and promote financial stability.

Report to Congress on Secured Creditor Haircuts

I will vote to approve the Report to Congress on Secured Creditor Haircuts. The report appropriately addresses the arguments in favor of and against legislation to mandate secured creditor haircuts, and also provides a helpful analysis of the academic literature on this subject.

The report also covers the issues Congress specified, including a comparison of the relevant aspects of resolution under the Bankruptcy Code, Federal Deposit Insurance Act, and Dodd-Frank Title II Orderly Liquidation Authority. And it discusses other means to promote market discipline."