This is a photo of the National Register of Historic Places listing with reference number 7000063
Wednesday, October 31, 2012
ALLEGED FRAUD BY KOHL'S MERCHANDISE EXECUTIVE
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
On October 24, 2012, the Securities and Exchange Commission charged Michael Johnson, a divisional merchandise manager at Kohl's, which is a national department store. The complaint alleged that Johnson assisted the financial fraud at Carter's, Inc, an Atlanta-based manufacturer of children's clothing. Specifically, the SEC alleges that Johnson assisted Joseph Elles, a former Executive Vice President of Sales at Carter's, in concealing his financial fraud from senior Carter's management. That scheme caused Carter's to materially misstate its net income and expenses in several financial reporting periods between 2004 and 2009.
The SEC's complaint, filed in the United States District Court for the Northern District of Georgia, alleges that between 2004 and 2009, Elles fraudulently manipulated the amount of discounts that Carter's granted to Kohl's, Carter's largest wholesale customer in order to induce Kohl's to purchase greater quantities of Carter's clothing for resale. In an effort to conceal the scheme, Elles persuaded Kohl's to defer subtracting the discounts from payments until later periods. Elles also persuaded Johnson, who handled the Carter's account at Kohl's to sign a false confirmation that misrepresented to Carter's accounting personnel the timing and amount of those discounts. By concealing the amount of discounts that had been promised to Kohl's, Elles and Johnson caused Carter's to materially understate it expenses in certain quarters and materially overstate its earnings in those quarters.
After conducting its own internal investigation, Carter's was required to issue restated financial results for the affected periods.
The SEC's complaint alleges that Johnson violated Rule 13b-2 of the Securities Exchange Act of 1934 ("Exchange Act"), which prohibits any person from directly or indirectly falsifying or causing to be falsified an issuer's accounting records. The complaint also alleges that Johnson aided and abetted Elles' violations of Section 13b(5) of the Exchange Act, which among other things, prohibits any person from knowingly falsifying the books, records and/or accounts of an issuer, and Rule 13b2-1 thereunder. The SEC is seeking permanent injunctive relief and financial penalties against Johnson.
This is the third case that the SEC has filed in this continuing investigation. The Commission previously charged Joseph Elles (see SEC v. Joseph Elles, Litigation Release No. 21784 / December 20, 2010) and Joseph Pacifico (see Litigation Release No. 22517 / October 19, 2012). When the Commission announced the first case, the Commission also announced that it had entered into a non-prosecution agreement with Carter's, based in part on Carter's prompt and complete self-reporting of the misconduct to the SEC, its exemplary and extensive cooperation in the investigation, including undertaking a thorough and comprehensive internal investigation, and Carter's extensive and substantial remedial actions. See Release No. 2010-252 / December 20, 2010. Pursuant to that agreement, Carter's has continued to cooperate during the Commission's continuing investigation.
On October 24, 2012, the Securities and Exchange Commission charged Michael Johnson, a divisional merchandise manager at Kohl's, which is a national department store. The complaint alleged that Johnson assisted the financial fraud at Carter's, Inc, an Atlanta-based manufacturer of children's clothing. Specifically, the SEC alleges that Johnson assisted Joseph Elles, a former Executive Vice President of Sales at Carter's, in concealing his financial fraud from senior Carter's management. That scheme caused Carter's to materially misstate its net income and expenses in several financial reporting periods between 2004 and 2009.
The SEC's complaint, filed in the United States District Court for the Northern District of Georgia, alleges that between 2004 and 2009, Elles fraudulently manipulated the amount of discounts that Carter's granted to Kohl's, Carter's largest wholesale customer in order to induce Kohl's to purchase greater quantities of Carter's clothing for resale. In an effort to conceal the scheme, Elles persuaded Kohl's to defer subtracting the discounts from payments until later periods. Elles also persuaded Johnson, who handled the Carter's account at Kohl's to sign a false confirmation that misrepresented to Carter's accounting personnel the timing and amount of those discounts. By concealing the amount of discounts that had been promised to Kohl's, Elles and Johnson caused Carter's to materially understate it expenses in certain quarters and materially overstate its earnings in those quarters.
After conducting its own internal investigation, Carter's was required to issue restated financial results for the affected periods.
The SEC's complaint alleges that Johnson violated Rule 13b-2 of the Securities Exchange Act of 1934 ("Exchange Act"), which prohibits any person from directly or indirectly falsifying or causing to be falsified an issuer's accounting records. The complaint also alleges that Johnson aided and abetted Elles' violations of Section 13b(5) of the Exchange Act, which among other things, prohibits any person from knowingly falsifying the books, records and/or accounts of an issuer, and Rule 13b2-1 thereunder. The SEC is seeking permanent injunctive relief and financial penalties against Johnson.
This is the third case that the SEC has filed in this continuing investigation. The Commission previously charged Joseph Elles (see SEC v. Joseph Elles, Litigation Release No. 21784 / December 20, 2010) and Joseph Pacifico (see Litigation Release No. 22517 / October 19, 2012). When the Commission announced the first case, the Commission also announced that it had entered into a non-prosecution agreement with Carter's, based in part on Carter's prompt and complete self-reporting of the misconduct to the SEC, its exemplary and extensive cooperation in the investigation, including undertaking a thorough and comprehensive internal investigation, and Carter's extensive and substantial remedial actions. See Release No. 2010-252 / December 20, 2010. Pursuant to that agreement, Carter's has continued to cooperate during the Commission's continuing investigation.
Monday, October 29, 2012
FORMER J.CREW EXECUTIVE CHARGED WITH INSIDER TRADING
FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
The Securities and Exchange Commission today announced that it filed an insider trading civil action in the United States District Court for the Southern District of New York against Frank A. LoBue, a former Director of Store Operations at J.Crew Group, Inc. (J.Crew). The complaint alleges that LoBue used material, nonpublic information about sales and expenses of the company’s stores to purchase J.Crew common stock in advance of earnings announcements in May and August 2009.
The Commission’s complaint alleges that in the course of his employment LoBue regularly received nonpublic information about J.Crew’s "Stores" component, which comprised approximately 70% of the company’s sales. In April and May 2009, LoBue received several reports containing information about J.Crew’s expenses, payroll costs, and store sales results for the company’s fiscal first quarter ended May 2, 2009. The reports showed results that were better than expected. The complaint further alleges that LoBue breached duties he owed to the company and its shareholders by using the information to purchase 2,300 shares of J.Crew stock in advance of the company’s May 28, 2009 quarterly earnings release. The market reacted positively to the release, with J.Crew’s stock closing up 26.4% from its prior close.
The complaint also alleges that in July and August 2009 LoBue continued to receive the reports on J.Crew stores, including stores’ sales figures, and that the information showed that the company was experiencing an improving sales trend. The complaint alleges that LoBue again breached his duties by using this information to purchase another 11,680 shares of J.Crew stock ahead of the company’s August 27, 2009 second quarter earnings release. The day following the release, J.Crew stock closed up 6.01% from its prior close. LoBue’s aggregate illicit profits from trading alleged in the complaint were at least $60,735.60. J.Crew terminated LoBue’s employment in February 2010.
Without admitting or denying the allegations in the complaint, LoBue has consented to the entry of a proposed final judgment permanently enjoining him from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; ordering him to pay disgorgement of $60,735.60, plus prejudgment interest thereon of $6,749.33; and imposing a civil penalty in the amount of $60,735.60. The proposed settlement is subject to the approval of the District Court.
The Commission acknowledges the assistance of the Financial Industry Regulatory Authority.
The Securities and Exchange Commission today announced that it filed an insider trading civil action in the United States District Court for the Southern District of New York against Frank A. LoBue, a former Director of Store Operations at J.Crew Group, Inc. (J.Crew). The complaint alleges that LoBue used material, nonpublic information about sales and expenses of the company’s stores to purchase J.Crew common stock in advance of earnings announcements in May and August 2009.
The Commission’s complaint alleges that in the course of his employment LoBue regularly received nonpublic information about J.Crew’s "Stores" component, which comprised approximately 70% of the company’s sales. In April and May 2009, LoBue received several reports containing information about J.Crew’s expenses, payroll costs, and store sales results for the company’s fiscal first quarter ended May 2, 2009. The reports showed results that were better than expected. The complaint further alleges that LoBue breached duties he owed to the company and its shareholders by using the information to purchase 2,300 shares of J.Crew stock in advance of the company’s May 28, 2009 quarterly earnings release. The market reacted positively to the release, with J.Crew’s stock closing up 26.4% from its prior close.
The complaint also alleges that in July and August 2009 LoBue continued to receive the reports on J.Crew stores, including stores’ sales figures, and that the information showed that the company was experiencing an improving sales trend. The complaint alleges that LoBue again breached his duties by using this information to purchase another 11,680 shares of J.Crew stock ahead of the company’s August 27, 2009 second quarter earnings release. The day following the release, J.Crew stock closed up 6.01% from its prior close. LoBue’s aggregate illicit profits from trading alleged in the complaint were at least $60,735.60. J.Crew terminated LoBue’s employment in February 2010.
Without admitting or denying the allegations in the complaint, LoBue has consented to the entry of a proposed final judgment permanently enjoining him from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; ordering him to pay disgorgement of $60,735.60, plus prejudgment interest thereon of $6,749.33; and imposing a civil penalty in the amount of $60,735.60. The proposed settlement is subject to the approval of the District Court.
The Commission acknowledges the assistance of the Financial Industry Regulatory Authority.
Saturday, October 27, 2012
SEC CHARGES CEO WITH INSIDER TRADING ON CONFIDENTIAL INFORMATION
FROM: SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., Oct. 26, 2012 — The Securities and Exchange Commission today charged an insurance company CEO with insider trading based on confidential information he obtained in advance of a private investment firm acquiring a significant stake in a Denver-based oil and gas company
The SEC alleges that Michael Van Gilder learned from a Delta Petroleum Corporation insider that Beverly Hills-based Tracinda — which has previously owned large portions of companies such as MGM Resorts International, General Motors, and Ford Motor Company — was planning to acquire a 35 percent stake in Delta Petroleum for $684 million. Van Gilder subsequently purchased Delta Petroleum stock and highly speculative options contracts. He tipped several others, encouraging them to do the same, including a pair of relatives via an e-mail with the subject line "Xmas present." After Tracinda’s investment was publicly announced, Delta Petroleum’s stock price shot up by almost 20 percent. Van Gilder and his tippees made more than $161,000 in illegal trading profits.
The U.S. Attorney’s Office for the District of Colorado today announced a parallel criminal action against Van Gilder.
"Michael Van Gilder crossed the line when he took advantage of highly confidential corporate information to make trades and reap illicit profits," said Sanjay Wadhwa, Deputy Chief of the SEC Enforcement Division’s Market Abuse Unit and Associate Director of the New York Regional Office. "He may have thought that he could get away with it, but he is faced today with the consequences of his actions."
According to the SEC’s complaint filed in federal court in Denver, Van Gilder is the CEO of Van Gilder Insurance Company. He obtained the confidential information about Tracinda’s proposed investment and loaded up on Delta Petroleum stock and options in November and December 2007. He then tipped his broker, a co-worker, and relatives.
The SEC alleges that a mere two minutes after speaking to his source at Delta Petroleum on December 22, Van Gilder e-mailed two relatives with the "Xmas present" subject line and stated, "my present (just kidding) is that I can’t stress enough the opportunity right now to buy Delta Petroleum." That same day, Van Gilder contacted his broker and arranged to purchase more Delta stock and options for himself. Following the public announcement, Van Gilder reaped approximately $109,000 in illegal profits and his broker, co-worker, and a relative made approximately $52,000.
The SEC’s complaint charges Van Gilder with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and seeks a final judgment ordering him to disgorge his and his tippees’ ill-gotten gains and pay prejudgment interest and a financial penalty, and permanently enjoining him from future violations of these provisions of the federal securities laws.
The SEC’s investigation, which is continuing, has been conducted by members of the SEC’s Market Abuse Unit — Michael Holland and Joseph Sansone in New York and Jeffrey Oraker and Jay Scoggins in Denver — with substantial assistance from Neil Hendelman of the New York Regional Office. Thomas Krysa, Regional Trial Counsel of the Denver Regional Office, Jeffrey Oraker and Michael Holland will handle the SEC’s litigation.
The SEC thanks the U.S. Attorney’s Offices for the District of Colorado and the Southern District of New York as well as the Federal Bureau of Investigation for their assistance in this matter.
Washington, D.C., Oct. 26, 2012 — The Securities and Exchange Commission today charged an insurance company CEO with insider trading based on confidential information he obtained in advance of a private investment firm acquiring a significant stake in a Denver-based oil and gas company
The SEC alleges that Michael Van Gilder learned from a Delta Petroleum Corporation insider that Beverly Hills-based Tracinda — which has previously owned large portions of companies such as MGM Resorts International, General Motors, and Ford Motor Company — was planning to acquire a 35 percent stake in Delta Petroleum for $684 million. Van Gilder subsequently purchased Delta Petroleum stock and highly speculative options contracts. He tipped several others, encouraging them to do the same, including a pair of relatives via an e-mail with the subject line "Xmas present." After Tracinda’s investment was publicly announced, Delta Petroleum’s stock price shot up by almost 20 percent. Van Gilder and his tippees made more than $161,000 in illegal trading profits.
The U.S. Attorney’s Office for the District of Colorado today announced a parallel criminal action against Van Gilder.
"Michael Van Gilder crossed the line when he took advantage of highly confidential corporate information to make trades and reap illicit profits," said Sanjay Wadhwa, Deputy Chief of the SEC Enforcement Division’s Market Abuse Unit and Associate Director of the New York Regional Office. "He may have thought that he could get away with it, but he is faced today with the consequences of his actions."
According to the SEC’s complaint filed in federal court in Denver, Van Gilder is the CEO of Van Gilder Insurance Company. He obtained the confidential information about Tracinda’s proposed investment and loaded up on Delta Petroleum stock and options in November and December 2007. He then tipped his broker, a co-worker, and relatives.
The SEC alleges that a mere two minutes after speaking to his source at Delta Petroleum on December 22, Van Gilder e-mailed two relatives with the "Xmas present" subject line and stated, "my present (just kidding) is that I can’t stress enough the opportunity right now to buy Delta Petroleum." That same day, Van Gilder contacted his broker and arranged to purchase more Delta stock and options for himself. Following the public announcement, Van Gilder reaped approximately $109,000 in illegal profits and his broker, co-worker, and a relative made approximately $52,000.
The SEC’s complaint charges Van Gilder with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and seeks a final judgment ordering him to disgorge his and his tippees’ ill-gotten gains and pay prejudgment interest and a financial penalty, and permanently enjoining him from future violations of these provisions of the federal securities laws.
The SEC’s investigation, which is continuing, has been conducted by members of the SEC’s Market Abuse Unit — Michael Holland and Joseph Sansone in New York and Jeffrey Oraker and Jay Scoggins in Denver — with substantial assistance from Neil Hendelman of the New York Regional Office. Thomas Krysa, Regional Trial Counsel of the Denver Regional Office, Jeffrey Oraker and Michael Holland will handle the SEC’s litigation.
The SEC thanks the U.S. Attorney’s Offices for the District of Colorado and the Southern District of New York as well as the Federal Bureau of Investigation for their assistance in this matter.
Friday, October 26, 2012
THE TENTH ANNIVERSARY OF THE INTERNATIONAL ASSOCIATION OF DEPOSIT INSURERS
FROM: U.S. FEDERAL DEPOSIT INSURANCE CORPORATION
International Association of Deposit Insurers Marks Tenth Anniversary and
Elects New President in London
The Federal Deposit Insurance Corporation (FDIC), the International Association of Deposit Insurers (IADI), the Bank Guarantee Fund of Poland and the Financial Services Compensation Scheme (FSCS) today announced that Acting FDIC Chairman Martin Gruenberg completed his five-year term as President of the IADI during the 11th Annual General Meeting (AGM) and Conference in London this week. Mr. Gruenberg also served as Executive Council Chairman of the Association. Mr. Gruenberg was first elected as IADI's President to serve a three-year term and then re-elected for a two-year term. During the meeting, Jerzy Pruski, President of the Management Board of the Bank Guarantee Fund of Poland, was elected IADI's President and Chairman of the Executive Council.
"It has been a privilege to serve as IADI's President for the past five years," said Mr. Gruenberg. "The financial crisis highlighted the importance of deposit insurance to financial stability and afforded IADI an opportunity to provide valuable leadership during this period."
During the past five years, IADI developed and brought to fruition the first internationally accepted standards for effective deposit insurance systems; and shared its vision of deposit insurance expertise and its mission to enhance deposit insurance effectiveness by promoting guidance and international cooperation. IADI is now recognized as the standard-setting body for deposit insurance by all the major public international financial institutions, including the Financial Stability Board of the Group of 20 (G-20), the Basel Committee for Banking Supervision, the International Monetary Fund and the World Bank.
IADI, which is celebrating its tenth anniversary, is a non-profit organization based in Basel, Switzerland. It contributes to the stability of financial systems around the world by promoting international cooperation and best practices among deposit insurers and other parties responsible for financial safety-net arrangements. The Association has led the effort to establish international standards for effective deposit insurance systems and has sponsored research and training to develop, launch and enhance the operations of national deposit insurance systems. IADI has grown from 26 founding members to 84 participants and partners in its first ten years.
"Jerzy Pruski is an outstanding leader who demonstrates great insight and depth of knowledge on issues related to financial stability and the role of deposit insurance in the financial safety-net. I sincerely welcome Jerzy as President of IADI and as the Chairman of the Executive Council," said Mr. Gruenberg.
Mr. Pruski said, "I am honored to lead this important international organization. I also would like to recognize the Association's new Treasurer, Ms. Rose Detho, the Director of the Deposit Protection Fund Board of Kenya, and thank outgoing Treasurer Bakhyt Mazhenova, Chairman of the Kazakhstan Deposit Insurance Fund, for her tireless service during her tenure".
Mark Neale, Chief Executive of the Financial Services Compensation Scheme (FSCS) noted the success of the week's conference and thanked all participants and speakers. "Deposit protection is a vital component of consumer confidence and financial stability. Mr. Gruenberg's leadership of IADI helped to enhance and promote deposit protection schemes internationally. More than 200 people attended the IADI conference representing all of IADI's Executive Council Members, including representatives from more than 40 countries from around the world. The quality of the speakers and the event itself show how far we have come in the last decade."
International Association of Deposit Insurers Marks Tenth Anniversary and
Elects New President in London
The Federal Deposit Insurance Corporation (FDIC), the International Association of Deposit Insurers (IADI), the Bank Guarantee Fund of Poland and the Financial Services Compensation Scheme (FSCS) today announced that Acting FDIC Chairman Martin Gruenberg completed his five-year term as President of the IADI during the 11th Annual General Meeting (AGM) and Conference in London this week. Mr. Gruenberg also served as Executive Council Chairman of the Association. Mr. Gruenberg was first elected as IADI's President to serve a three-year term and then re-elected for a two-year term. During the meeting, Jerzy Pruski, President of the Management Board of the Bank Guarantee Fund of Poland, was elected IADI's President and Chairman of the Executive Council.
"It has been a privilege to serve as IADI's President for the past five years," said Mr. Gruenberg. "The financial crisis highlighted the importance of deposit insurance to financial stability and afforded IADI an opportunity to provide valuable leadership during this period."
During the past five years, IADI developed and brought to fruition the first internationally accepted standards for effective deposit insurance systems; and shared its vision of deposit insurance expertise and its mission to enhance deposit insurance effectiveness by promoting guidance and international cooperation. IADI is now recognized as the standard-setting body for deposit insurance by all the major public international financial institutions, including the Financial Stability Board of the Group of 20 (G-20), the Basel Committee for Banking Supervision, the International Monetary Fund and the World Bank.
IADI, which is celebrating its tenth anniversary, is a non-profit organization based in Basel, Switzerland. It contributes to the stability of financial systems around the world by promoting international cooperation and best practices among deposit insurers and other parties responsible for financial safety-net arrangements. The Association has led the effort to establish international standards for effective deposit insurance systems and has sponsored research and training to develop, launch and enhance the operations of national deposit insurance systems. IADI has grown from 26 founding members to 84 participants and partners in its first ten years.
"Jerzy Pruski is an outstanding leader who demonstrates great insight and depth of knowledge on issues related to financial stability and the role of deposit insurance in the financial safety-net. I sincerely welcome Jerzy as President of IADI and as the Chairman of the Executive Council," said Mr. Gruenberg.
Mr. Pruski said, "I am honored to lead this important international organization. I also would like to recognize the Association's new Treasurer, Ms. Rose Detho, the Director of the Deposit Protection Fund Board of Kenya, and thank outgoing Treasurer Bakhyt Mazhenova, Chairman of the Kazakhstan Deposit Insurance Fund, for her tireless service during her tenure".
Mark Neale, Chief Executive of the Financial Services Compensation Scheme (FSCS) noted the success of the week's conference and thanked all participants and speakers. "Deposit protection is a vital component of consumer confidence and financial stability. Mr. Gruenberg's leadership of IADI helped to enhance and promote deposit protection schemes internationally. More than 200 people attended the IADI conference representing all of IADI's Executive Council Members, including representatives from more than 40 countries from around the world. The quality of the speakers and the event itself show how far we have come in the last decade."
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