FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission announced that on Friday, September 21, 2012, it filed an injunctive action in the United States District Court for the Eastern District of Pennsylvania against David L. Rothman of Richboro, PA, a registered representative, Vice President, and minority owner of Rothman Securities, Inc., a registered broker-dealer, for conducting a fraud by issuing false account statements and misappropriating investor funds.
The Commission alleges that from 2006 to 2011, Rothman created and issued false account statements to certain elderly and unsophisticated investors that materially overstated the value of their investment accounts. The Commission's Complaint further alleges that when the investors discovered that Rothman had misrepresented the value of their investments, Rothman engaged in a scheme to conceal his fraudulent conduct by agreeing to pay those investors the investment returns he reported on the false account statements. When Rothman could no longer afford to make those payments, he misappropriated funds from another elderly and unsophisticated investor and from two trust accounts for which he serves as trustee. Rothman also used a substantial portion of the misappropriated funds for his personal benefit.
As a result of the conduct described in the Complaint, the Commission alleges that Rothman violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The Complaint seeks a permanent injunction, disgorgement together with prejudgment interest, and civil penalties from Rothman. Criminal charges have also been filed against Rothman in a parallel criminal case.
The Commission thanks the United States Attorney for the Eastern District of Pennsylvania and the Federal Bureau of Investigation for their assistance in this matter.
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
SEC CHARGES FOUR DEFENDANTS IN FRAUDULENT INVESTMENT SCHEME
The Securities and Exchange Commission today filed a complaint in the United States District Court for the Southern District of Indiana, charging Rudolf D. Pameijer, Lindsay R. Sayer, Ryan W. Koester and his entity Rykoworks Capital Group, LLC ("Rykoworks") with running a fraudulent investment scheme. The complaint alleges that the defendants in this scheme misappropriated nearly $1.7 million from investors.
As alleged in the complaint, Koester held himself out as an expert foreign currency trader, and falsely represented to investors that his unique trading strategy offered investors a principal guaranteed investment opportunity. As alleged in the complaint, Koester and Pameijer, a career insurance salesman, agreed to a profit sharing arrangement for clients Pameijer brought to Rykoworks. The complaint alleges that, starting in 2010, Pameijer and his daughter, Sayer, began soliciting clients to invest with Rykoworks through promissory notes which purported to guarantee investor principal while offering risk free returns from forex trading.
As alleged in the complaint, Pameijer and Sayer misappropriated the majority of funds they raised from investors for personal use. The complaint alleges that Pameijer used investor money to pay for luxury automobiles, a motorcycle, a boat, home renovations, his son’s college tuition, and Sayer’s wedding and honeymoon in St. Lucia. The complaint further alleges that Sayer used investor money to pay rent and wedding expenses, and for other personal expenditures. According to the complaint, the remaining investor funds Pameijer and Sayer transferred to Koester and Rykoworks, and additional funds Koester raised from investors directly, Koester depleted through trading losses and misappropriation of funds for personal expenses. The SEC alleges that, as part of the scheme, each of the proposed defendants made materially false representations to investors, including providing investors with false account statements and information.
By engaging in this conduct, the SEC alleges that each of the defendants violated Section 17(a) of the Securities Act of 1933 ("Securities Act"), Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. In addition, the complaint alleges that Pameijer and Sayer violated Section 15(a) of the Exchange Act by acting as unregistered brokers. The SEC action seeks injunctions, disgorgement with prejudgment interest, and civil monetary penalties.
Pameijer and Sayer have agreed to judgments, which are subject to Court approval, that permanently enjoin them from violating Section 17(a) of the Securities Act, and Sections 15(a) and 10(b) of the Exchange Act and Rule 10b-5 thereunder, and provide that upon subsequent motion the Court will determine issues relating to monetary relief. In addition, Pameijer and Sayer each have consented to a Commission order, pursuant to Section 15(b)(6) of the Exchange Act, barring them from future association with any investment adviser, broker, dealer, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization; and barring them from participating in any offering of a penny stock.
Koester and Pameijer also are subject to pending Indiana state criminal charges. The SEC thanks the Indiana Division of Securities for its assistance in this matter.
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
U.S. Securities and Exchange Commission
Commissioner Daniel M. Gallagher
SIFMA Regional Conference
Charlotte, N.C.
September 24, 2012
Thank you, Ken, for that kind introduction. It is a true honor to be here with you today.
As you all expect, I must tell you that my remarks today are my own, and they do not necessarily represent the views of the Commission or of any other Commissioner.
I would like to talk today about regulatory distraction. By that, I mean a state of affairs in which a regulatory body is so inundated with external mandates that it risks losing focus of its core responsibilities. Given the mandates flowing from Congress, in particular those in the massive, 2319 page Dodd-Frank legislation, this is a condition that we at the Commission must be very careful to avoid.
As the newest Commissioner at the SEC – I started just over ten months ago, I knew I was coming back to the agency during an intensely regulatory and reactive period, given the Dodd-Frank mandates, the response to the Madoff and Stanford Ponzi schemes, and the reaction to allegations of policy failures leading up to the crisis. Indeed, I was on the Staff before and during the crisis, and later during the negotiation of what eventually became Dodd-Frank, so this was no surprise. I assumed I would be faced with two major tasks – evaluating and voting on regulations responsive to the financial crisis, and working to ensure that the Commission maintains a clear focus on its core responsibilities. To be sure, we are busy working on many of these activities, but the balance is not what you might have expected it to be.
Dodd-Frank was enacted to, among other things "promote the financial stability of the United States by improving accountability and transparency in the financial system, to end "too big to fail," and to protect the American taxpayer by ending bailouts." These are all extremely laudable goals. However, the statute's goals and its mandates are often unrelated.
All-told, Dodd-Frank contains approximately 400 specific mandates to be implemented by agency rulemaking. A conservative estimate assigns almost 100 Dodd-Frank mandates to the SEC for implementation by rule. Many of those have statutory deadlines. The SEC has adopted final rules implementing nearly a third of those statutory mandates. So while the SEC, like other financial sector agencies, will be busy implementing Dodd-Frank for a long time to come, it is equally true that one immediate effect of Dodd-Frank was to increase dramatically both the volume and pace of SEC rulemaking. It is not an exaggeration to say that the Commission is handling ten times the normal rulemaking volume. And "normal" was the post Sarbanes-Oxley normal, which was a marked increase from the pace before that law’s enactment. Any one of the rules we promulgated in the last three months would have been considered the "rule of the year" just five or six years ago. The pace is unrelenting, and the substance is critically important to the U.S. capital markets. We need to get a lot done fast – no question about it – but it’s even more important that we get it right.
Some Dodd-Frank mandates are more responsive to the financial crisis than others. Some are not responsive at all, derived instead from long-held ambitions of policymakers, bureaucrats, and special interest groups. For example, the mandate in Dodd-Frank Section 939A for federal agencies to remove references to credit ratings from their rulebooks may well be the clearest, most direct mandate we at the SEC have been given. It has the virtue of being responsive to one of the core problems underlying the financial crisis – over reliance on credit ratings by investors and regulators during a time when the rating agencies were falling down on the job.
On the other side of the coin, a majority of the Commission - which I was not part of - just approved final rules under Sections 1502 and 1504 of Dodd-Frank, which mandated unprecedented new disclosure rules relating to conflict minerals from the Congo, and extractive resource payments made by U.S. listed oil, gas and mining companies. These statutory provisions and the rules based on them were meant to serve laudable humanitarian and geo-political purposes. Specifically, they are aimed at curtailing armed violence in the Congo and increasing the accountability of governments worldwide to their citizens. I wholeheartedly support those goals, but I believe that the SEC is the wrong tool with which to accomplish them.
Even so, given the extreme costs associated with both these new rules, I very much hope they somehow have the desired effect. It is, nevertheless, undeniable that these two rules have nothing whatever to do with the goals of the Dodd-Frank Act, which I quoted to you earlier. These new rules don’t address the crisis; they don’t make a future crisis less likely. Indeed, these new rules have nothing to do with the SEC’s statutory mission. It is appropriate to be skeptical of our prospects in achieving objectives the SEC was not designed or staffed to achieve. But laws are laws, so we spent a very significant amount of time working on the final rules – certainly as much - and likely more - than we did on any other rules we have handled since I arrived.
And now the key difference between the 939A credit rating removal and 1502 and 1504 social mandates is that the latter are completed, while the former remains substantially unfinished over a year after the congressional deadline. This raises the question of whether our priorities are as they should be. Given that the Commission has been analyzing the removal of rating agency references since former Chairman Cox and the Commission proposed removing them in 2008, I hope the staff will put forward a recommendation soon on the two most significant SEC rules embedded with such references - the so-called net capital rule, and the money market fund rule. Action on these matters would not only satisfy a Dodd-Frank congressional mandate, but it would be a long-delayed and much needed step towards addressing a core problem infecting the U.S. financial markets and regulatory system. More than any other action the Commission has taken since Congress took bold action to give the SEC formal oversight authority over credit rating agencies, fulfillment of the 939A mandate, if done properly, would serve to protect investors and markets alike from the failures of the credit rating agency industry.
* * *
There are, of course, several other similarly stark comparisons one could just as readily draw from among the SEC’s Dodd-Frank mandates. We have Title VII mandates that require us to create a regulatory regime for OTC derivatives, and at the same time we have a Title IX mandate to create, along with the MSRB, an entirely new regulatory program for municipal advisors. One of these things is not like the other. While there is a debate about whether OTC derivatives were a cause of the financial crisis, few would doubt that they exacerbated many of the problems faced by regulators and market participants during the crisis. In particular, because of the opacity of those markets, they presented a significant unknown to regulators. Putting aside the wisdom of some of the more complicated Title VII mandates, moving towards transparency in this area makes good sense. Regulation of municipal advisors, on the other hand, is an area wholly outside the context of the crisis. I support efforts by the Commission to gain a more sophisticated understanding of the municipal securities markets - directly as well as through MSRB efforts. I am skeptical, however, that a mandated set of rulemakings to regulate a broad category of municipal advisors is the most appropriate use of regulatory resources at this time.
It’s all about priorities and relative priorities. Because of these disparate statutory mandates, many of which are not grounded in the crisis, the SEC is left with a long list of decisions to make. Decisions about how to prioritize and sequence the rulemakings, decisions about how to give effect to each separate mandate as we tackle them, and decisions about the utility of pursuing certain mandates instead of going back to Congress to seek reconsideration when the mandates simply don’t make sense given our statutory mission.
At the same time, it is important that we recognize that there are areas that are crisis-related, but are not addressed or even referenced in Dodd-Frank. They nevertheless warrant Commission time and resources – perhaps on a considerably more pressing basis than certain of the Dodd-Frank mandates. The number one issue at the SEC that falls into that bucket is – still today – money market fund reform. Believe it or not, money markets funds, despite being called by some the third rail of systemic risk, and despite featuring prominently in the financial crisis, were not addressed in 2319 pages of financial crisis legislation. And now this, as most of you have probably seen, has become a highly contentious issue at the Commission. Despite recent headlines, I hope and expect that the Commission will make a decision on appropriate reforms in this area soon after our economists have conducted an analysis of the key issues Commissioners Aguilar, Paredes, and I have raised. Acting without the benefit of such an analysis - in the context of a $2.5 trillion industry critical to investors, municipalities, and other issuers - would, quite frankly, be irresponsible.
There are, in addition, other areas within the SEC’s jurisdiction that were subjected to stresses during the crisis, but certainly were not, in any sense, causes of the crisis. They, too, beg for our attention. In that bucket, a primary concern for me is the Securities Investor Protection Act, or SIPA. As many of you know, SIPA, which authorized the creation of SIPC, was enacted by Congress after the back office crisis of the late ‘sixties. Although it is relatively young compared to some of the statutes we are charged with implementing, SIPA is in serious need of reconsideration given problems that have arisen following the failure of Lehman Brothers, the Madoff Ponzi scheme, the Stanford Ponzi scheme, and still other, lesser failures. As it stands now, SIPA is a mystery not only to investors, but arguably even for SIPC members.
And there is a laundry list of other areas of basic "blocking and tackling" to which the Commission needs to pay considerably more attention. In that bucket, I would place updating our rules regarding transfer agents, final rules for the 17h broker-dealer risk assessment program, and hopefully soon a final rulemaking implementing the so-called Onnig amendments, which contain important net capital and customer protection rule amendments. And on a topic near and dear to this audience, I continue to believe that the Commission needs to provide guidance to the industry regarding failure to supervise liability for legal and compliance personnel, and I hope we can find the right vehicle to do that in the near future.
And, of course, we need to finally move forward with considering rules that will update and formalize the Automation Review Policy, or ARP. The ARP program has been voluntary since it was created in response to the 1987 market crash. Recent events in the equities markets have raised concerns about exchange controls, and it is my hope that the upcoming technology roundtable and related interaction with stakeholders will provide the Commission with sufficient data to thoroughly evaluate our options, and ultimately allow the Commission to make appropriate policy choices in an ARP rulemaking process.
* * *
So we come back to the purpose of the SEC as an expert independent agency. The SEC’s mission is threefold: "protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation."
And that brings us to the key question: Given that threefold mission, given the conditions we are actually experiencing four years after the 2008 crisis, is the SEC spending its time as it should? Do the priorities reflected in the SEC’s current rulemaking agenda stem from our expert appreciation of current market conditions and the most pressing problems within them? Do they, moreover, reflect the SEC’s proper situation in the regulatory constellation? By what criteria or standards do we seem to set our priorities? To what extent do our apparent priorities stem from other agencies’ policy preferences or institutional mandates?
Those questions seem to me well worth critical consideration. After all, the SEC can’t do everything. The Commission and its staff’s time and attention are more limited commodities than are policy options in Washington – especially if our solutions need not address any demonstrable problem. And we, as an agency, no less than individually, find ourselves surrounded with many superficially attractive ways to distract ourselves.
* * *
Our agenda is necessarily shaped by legislation. Dodd-Frank and the JOBS Act are the current headline-grabbers. But, we must not forget the fundamentals; we must not lose sight of our core mission.
And when we engage in any rulemaking, we must heed the statutory requirements that seek to ensure that our rules are based on sound analytic foundations, rather than policy preferences alone. When we write rules, we are required to consider how the rule will protect investors, as well as whether it will promote efficiency, competition, and capital formation." When the Commission engages in Exchange Act rulemaking, we must consider the "effect on competition" of the proposed rule, with the proviso that we may not adopt the rule if the burden it would impose on competition is not "necessary or appropriate in furtherance of the purposes of the act." And we are subject to the generally applicable "notice and comment" rulemaking process established under the Administrative Procedure Act of 1946, which not only requires us to put out our proposed rules for public notice and comment, but also provides that our rules may be set aside if they are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." The SEC is subject to a rigorous economic analysis requirement, and we must ensure that we, in turn, apply the same rigor to substantive SRO rule filings.
* * *
So where does all this leave me? What lesson do I find in the Commission’s scatter-shot menu of short-term and reactive priorities? Largely this: It’s important for the SEC to prioritize the basics – the "blocking and tackling" under our original statutory mandate, but in the context of the new realities of our markets. And with respect to the JOBs Act, we must understand that each of the congressional mandates involves a core area of SEC oversight.
Where Congress has seen fit to send us to exercise discretion in novel areas, we should carefully assess the facts and all relevant data in their full context, including potential knock-on effects of our possible responses before we act. Where Congress gives us a simple direction to act in a precise manner not susceptible to discretionary quibbling – like removing the ban on general solicitation pursuant to section 201(a) of the JOBS Act – we should use our full procedural armory to do so without delay.
And all the while, let's not forget common sense: foreign policy should be left to the State Department, and economic analysis to economists. And, for that matter, environmental science to the scientists. The Commission should not be afraid to use its exemptive authority as necessary to ensure that our rules don’t have needlessly burdensome or counterproductive effects as applied. That is why Congress gave it to us. And where job creation and capital formation are at issue, the Commission should be doing everything in its power to fulfill its statutory obligation to facilitate positive change. That, too, is our job.
Thank you all for your attention. I wish you a successful and educational conference.
FROM: U.S. COMMODITY FUTURES TRADING COMMISSION
September 21, 2012
CFTC Orders Infinity Futures LLC, an Introducing Broker, to Pay $340,000 for Supervision Violations
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today issued an order filing and settling charges against Infinity Futures LLC (Infinity), a Chicago-based registered Introducing Broker, for failing to supervise diligently the handling of certain trading accounts by its officers, employees, and agents.
The CFTC order finds that Infinity’s officers, employees, and agents ignored warning signs that third party customer funds were improperly being deposited in a proprietary trading account. The order also finds that an Infinity customer was holding himself out to the public as a Commodity Trading Advisor and trading individual client accounts, without being registered with the CFTC or obtaining a power of attorney, as required.
Additionally, according to the order, Infinity did not have an adequate system of supervision in place, its compliance manual was outdated, no written policies or procedures were provided to its associated persons, and Infinity did not follow or enforce its compliance procedures. Infinity also did not adequately train its employees, officers, and agents regarding detection of suspicious account activity and fraud prevention, the order finds.
The CFTC order requires Infinity to pay a $300,000 civil monetary penalty, disgorge $40,000 in ill-gotten gains, and cease and desist from violating CFTC regulation 166.3, as charged. The order also requires Infinity to comply with certain undertakings including hiring an outside compliance consulting firm to assist in training staff and reviewing and updating its current compliance procedures.
CFTC Division of Enforcement staff members responsible for this case are Robert Howell, Joseph Patrick, Susan Gradman, Brigitte Weyls, Scott Williamson, Rosemary Hollinger, and Richard Wagner.
FROM: U.S. DEPARTMENT OF JUSTICE
Monday, October 1, 2012
Investor Fraud Summits Across the Country Arm Consumers with Information to Protect Retirement Funds and Life Savings
Summits to be held in Connecticut, Tennessee, California, Colorado, Ohio and Florida
Attorney General Eric Holder and the Department of Justice’s U.S. Attorneys’ offices together, with the department’s Criminal and Civil Divisions, representatives from the FBI, Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC), the Department of Treasury’s Financial Crimes Enforcement Network (FinCEN), the Commodity Futures Trading Commission, the Bankruptcy Trustees, the Financial Industry Regulatory Authority (FINRA), AARP and the Better Business Bureau are holding investor fraud summits across the country to help consumers protect their hard-earned money from fraud. These summits will take place in Stamford, Conn.; Nashville, Tenn.; San Francisco; Denver; Cleveland and Miami and are a part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s (FFETF) Securities and Commodities Fraud Working Group.
The FBI reports an unprecedented rise in investment fraud schemes, involving thousands of victims and staggering losses. Since 2011, the Justice Department’s Criminal Division and 85 U.S. Attorneys’ offices have reported that approximately 800 defendants have been charged, tried, pleaded or sentenced in approximately 500 federal prosecutions involving investor fraud. The total reported amount cheated from victims for this time period tops more than $20 billion. This staggering number includes cases where the total amount victims lost range from tens of thousands of dollars to hundreds of millions, and, in some cases, billions in hard-earned savings.
"Investor fraud crimes can erode faith in our financial markets, threaten our nation’s ongoing economic recovery, and undermine the fabric of our communities," said Attorney General Eric Holder. "That’s why protecting the American people from fraud is a top priority for today’s Justice Department. And through the Investor Fraud Summits we announce today, we’ll take our anti-fraud efforts to a new level - by raising awareness about these devastating offenses, educating consumers on how to report suspected fraud schemes and empowering members of the public to fight back."
Although the defendants in these federal prosecutions used a variety of tactics and schemes, they often took the same approach, guaranteeing high returns and, in many instances, providing falsified investment documents to victims. As a result, those victims lost retirement savings, military survivor benefits, family death settlements and money set aside for college tuition and mortgage payments. While the Justice Department has already obtained prison sentences for many of these scammers, including one sentence of up to 50 years, for many of the more 100,000 victims the damage to their families is irreparable.
Since 2011, the SEC, a FFETF partner agency, has charged 887 individuals and entities in 359 actions involving retail investor fraud. Nearly $9.7 billion have been alleged lost by over 1.2 million investors in those cases.
"Whether a cold-call, polished website, or email solicitation, fraudsters will use every means at their disposal to convince investors to part with their money," said SEC Director of Enforcement Robert Khuzami. "That is why investor education is so critical -- in maintaining financial health as much as physical health, an ounce of prevention is worth a pound of cure."
In addition to the investor fraud summits across the country, in the coming weeks the Victims’ Rights Committee of the Financial Fraud Enforcement Task Force will host an unprecedented event, in partnership with the Justice Department, the Certified Financial Planner Board and the Foundation for Financial Planning, to offer free financial consulting services to 8,000 victims of an investment fraud scheme that was indicted in Chicago. In this case, the defendant falsely guaranteed high rates of return in a Ponzi scheme that caused the loss of more than $300 million of investors’ funds. Many of the victims were retirees who found the promised high rates of return, coupled with other false promises, an attractive investment alternative for their individual retirement account (IRA) and other retirement-type investments.
The first investor fraud summit is taking place today in Stamford, from 9:00 a.m. to 1:00 p.m. EDT at the University of Connecticut - Stamford Campus. The summit is hosted by U.S. Attorney for the District of Connecticut David Fein, who is joined by Deputy Assistant Attorney General John Buretta, U.S. Attorney for the District of New Jersey Paul Fishman, U.S. Attorney for the Eastern District of New York Loretta Lynch, U.S. Attorney for the District of Massachusetts Carmen Ortiz, U.S. Attorney for the Middle District of Pennsylvania Peter Smith, U.S. Attorney for the District of Delaware Charles Oberly and U.S. Attorney for the District of Maine Thomas Edward Delahanty II, as well as Deputy Director of the SEC Division of Enforcement George Canellos. Several additional federal, state and local law enforcement and regulatory officials, as well as consumer protection experts, are on hand to educate members of the community to help identify instances of fraud or abuse and help them protect their investments. For more information on the summit in Stamford, please contact Thomas Carson at 203-821-3722 or thomas.carson@usdoj.gov.
The second investor fraud summit will take place in Nashville, on Thursday, Oct. 4, 2012, from 8:45 a.m. to 12:30 p.m. EDT at Vanderbilt University Law School’s Flynn Auditorium located at 131 21st Avenue South. The summit will be hosted by U.S. Attorney for the Middle District of Tennessee Jerry E. Martin. Guest speakers include FFETF Executive Director Michael Bresnick, U.S. Attorney for the Western District of Virginia Timothy Heaphy, U.S. Attorney for the Northern District of Georgia Sally Yates, U.S. Attorney for the Western District of North Carolina Anne Tompkins, U.S. Attorney for the District of South Carolina Bill Nettles and Assistant Director for the Office of Legal & Victim Programs in the Executive Office of U. S. Attorneys Kristina Neal. These speakers will be joined by other U.S. Attorneys from neighboring states, Enforcement Attorney for the SEC Atlanta Regional Office William Dixon as well as representatives from the Financial Crimes Division of the FBI, the SEC and the Better Business Bureau. The summit will focus on educating the investing public on how to avoid falling prey to investment fraud schemes. For more information on the summit in Nashville, please contact David Boling at 615-736-5956 or david.boling2@usdoj.gov.
The third investor fraud summit will take place Tuesday, Oct. 9, 2012, in Walnut Creek, Calif., from 9:00 a.m. to 1:00 p.m. PDT at the Rossmoor Retirement Community - Gateway Complex located at 1001 Rain Road. The event will be hosted by U.S. Attorney for the Northern District of California Melinda Haag. Guest speakers include U.S. Attorney for the Eastern District of California Ben Wagner, U.S. Attorney for the Central District of California André Birotte, U.S. Attorney for the Southern District of California Laura Duffy and Director of the SEC San Francisco Regional Office Marc Fagel. Other U.S. Attorneys who will be present include U.S. Attorney for the District of Oregon Amanda Marshall, U.S. Attorney for the District of Alaska Karen L. Loeffler and U.S. Attorney for the District of Hawaii Florence T. Nakakuni. Representatives from FinCEN, FBI, Google and CNBC will also participate in informative panels highlighting the rise in investment fraud schemes in the United States; useful strategies to identify fraudsters; and new, proactive approaches to help protect your savings and investment. This event is open to residents of the Rossmoor Retirement Community and the media only. For more information on the summit in Walnut Creek, please contact Jack Gillund at 415-436-6599 or jack.gillund@usdoj.gov.
The fourth investor fraud summit will take place in Denver on Wednesday, Oct. 10, 2012, from 8:00 a.m. to 12:00 p.m. MDT at the Tivoli Building - Turnhalle Auditorium located at 900 Auraria Parkway, Suite 150. The summit, lead by U.S. Attorney for the District of Colorado John Walsh, will feature U.S. Attorney for the District of Utah David Barlow, U.S. Attorney for the District of Montana Michael Cotter, U.S. Attorney for the Western District of Oklahoma Sanford Coats, U.S. Attorney for the District of New Mexico Kenneth Gonzalez, U.S. Attorney for the District of Kansas Barry Grissom and Colorado Attorney General John Suthers. Multiple federal, state and local officials, including Director of the SEC’s Denver Regional Office Donald Hoerl, as well as representatives from consumer and business groups will be on hand for informative and interactive panels. Participants will learn what steps are being taken by law enforcement to help protect them from fraud, warning signs and how to outsmart scams and protect their hard-earned money. For more information on the summit in Denver, please contact Matt Kirsch at matthew.kirsch@usdoj.gov or 303-454-0100.
The fifth investor fraud summit will take place Thursday, Oct. 11, 2012, in Beachwood, Ohio, from 8:30 a.m. to 12:30 p.m. EDT at the Montefiore Senior Living Center located at 1 David Myers Parkway. The summit will be hosted by U.S. Attorney for the Northern District of Ohio Steven Dettelbach and attendees will include U.S. Attorney for the Eastern District of Michigan Barbara McQuade, U.S. Attorney for the Southern District of Ohio Carter Stewart and U.S. Attorney for the Western District of Pennsylvania David Hickton. Federal, state and local law enforcement officials, including Director of the SEC’s Chicago Regional Office Merri Jo Gillette, along with representatives from consumer groups will discuss investor and consumer fraud, with a particular focus on scams that target senior citizens and the elderly. These experts will offer advice, discuss fraud trends and detail the best ways to protect yourself and your savings. For more information on the summit in Beachwood, please contact Jena Suhadolnik at 216-622-3695.
The sixth and final investor fraud summit will take place in Miami on Friday, Oct. 12, 2012, from 9:00 a.m. to 1:00 p.m. EDT at the Miami Dade College – in the Chapman Conference Center, located at 245 N.E. Fourth Street, Bldg. 3, Room 3210. U.S. Attorney for the Southern District of Florida Wifredo Ferrer will host the summit that will feature Attorney General Eric Holder. They will be joined by U.S. Attorney for the Middle District of Florida Robert O’Neill, U.S. Attorney for the Northern District of Florida Pamela Marsh, U.S. Attorney for the Northern District of Alabama Joyce Vance, Director of the SEC’s Miami Regional Office Eric Bustillo and representatives from the Florida Office of Financial Regulation, FBI, FTC, the Better Business Bureau, AARP, FINRA and others to discuss issues associated with investment fraud schemes and help educate investors on how to avoid falling victim to such schemes. The summit will focus on recent investment fraud prosecutions, fraud trends and will include testimonies from victims of investment fraud and a discussion of preventive measures. For more information on the summit in Miami, please contact Lilian Cruz at 305-961-9393.
President Obama established the interagency Financial Fraud Enforcement Task Force (FFETF) to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force, chaired by Attorney General Eric Holder, includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets and recover proceeds for victims of financial crimes.
FROM: COMMODITY FUTURES TRADING COMMISSION
September 28, 2012
Federal Court Orders Martin B. Rosenthal to Pay $1.2 Million for Aiding and Abetting the Making of False Statements to the NFA, Failing to Register as a Commodity Trading Advisor, and Violating a Previous CFTC Order
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained a federal court order requiring Martin B. Rosenthal of Fort Lauderdale, Fla., to pay a civil monetary penalty of $598,000 and disgorgement of $598,000 for aiding and abetting the willful concealment of material facts and the making of false statements to the National Futures Association (NFA), violating a previous CFTC order, and acting as an unregistered Commodity Trading Advisor (CTA). The order also imposes permanent trading and registration bans against Rosenthal and permanently prohibits him from further violations of the Commodity Exchange Act, as charged.
The consent order for permanent injunction, entered on September 27, 2012, by Judge James I. Cohn of the U.S. District Court for the Southern District of Florida, stems from a CFTC complaint filed on March 12, 2012 (see CFTC Press Release 6203-12, March 12, 2012).
The order finds that Rosenthal aided and abetted the willful concealment of material facts and the making of false statements to the NFA about a business relationship that Angus Jackson of Florida maintained with Rosenthal, by creating fake invoices purporting to show consulting expenses incurred by Rosenthal’s company that were, in fact, compensation paid to Rosenthal for trading client accounts.
Additionally, the order finds that from approximately January 2000 to at least December 2008, Rosenthal traded futures and options for his clients at Angus Jackson, while failing to register as a CTA and in violation of a trading prohibition for failing to comply with a previous CFTC order. An earlier CFTC order prohibited Rosenthal from trading on registered entities because he failed to pay a 1988 CFTC reparations award.
The CFTC thanks the NFA for its cooperation and assistance in this matter.
CFTC Division of Enforcement staff members responsible for this case are Brian M. Walsh, Elizabeth L. Davis, Kenneth McCracken, Rick Glaser, and Richard Wagner.
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