Retrial Starts for Jefferies’ Former Bond Trader

Posted on January 4, 2017January 4, 2017 by admin

U.S. Federal Prosecutors Hope that Second Time is Charm in Case Against Bond Trader Alleged to Have Deceived Savvy Clients

(Reuters) Jan 3 – A former Jefferies Group Inc bond trader is going back on trial in federal court in Connecticut over whether he lied to customers about mortgage bond prices to boost profit. (Photo/Douglas Healey for Bloomberg)

The retrial of Jesse Litvak, with jury selection set for Wednesday and opening arguments for Thursday, comes 13 months after a federal appeals court voided his original conviction and two-year prison sentence.

But it gives U.S. prosecutors a fresh chance to crack down on alleged deceptive Wall Street sales tactics in the bond market, and could bolster cases against several other traders.

“The retrial will clear the air over whether bond traders can increase margins by falsely representing prices, which can distort trading and capital formation,” said James Cox, a Duke University law professor. “Whether someone relied on the information is irrelevant to prosecutions; it’s all about whether the underlying conduct is condemnable.”

C.J. Mahoney, a lawyer for Litvak, declined to comment, as did a spokesman for U.S. Attorney Deirdre Daly in Connecticut.

Litvak, who worked for Jefferies in Stamford, Connecticut, was charged in January 2013 with misleading customers about bond prices from 2009 to 2011.

Prospectus.com team of capital markets experts and international securities lawyers specialize in preliminary offering prospectus, secondary offering prospectus and full menu of financial offering memorandum document preparation.

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This allegedly boosted the Leucadia National Corp unit’s profit by about $2.25 million, and his own pay.

Litvak has said his customers were sophisticated investors who were “inherently skeptical” of what counterparties tell them, and would have known if he were cheating them.

Convicted in March 2014, Litvak won a reprieve from the 2nd U.S. Circuit Court of Appeals in December 2015.

That court threw out fraud accusations related to the federal bailout known as the Troubled Asset Relief Program, and said Chief Judge Janet Hall, who oversaw the trial, wrongly excluded expert testimony for the defense.

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2017 Best Practices for Private Placement Memorandums

Posted on December 30, 2016February 15, 2017 by admin

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With 2017 just hours away, Broker-Dealers anticipate the new year will include a resurgence of IPO activity as well as a material uptick in private placement offerings, stimulated in part by initiatives led by the Trump Administration. With this refreshing outlook, BrokerDealer.com curators will be providing a series of thought-leadership articles submitted by financial industry experts and professional service providers who counsel industry innovators and accomplished entrepreneurs. Below “2017 Best Practices for Private Placement Memorandums” is the first of weekly articles that will be posted via BrokerDealer.com..

Private Placement Memorandum: A Startup’s best friend for attracting investment.

If you are looking to raise capital for your business, you will inevitably need to utilize a document known as a private placement memorandum (PPM). This is a legal document that you can use to list down disclosures and selling points of your business for prospective investors. It is also known as offering document or offering memorandum.

When do you use a Private Placement Memorandum?

When it comes to selling equity in your company or raising capital via a debt offering for private enterprises in the United States, one needs to be more than familiar with and to follow the rules set forth by the Securities Act of 1933. This requires you to register yourself with the Securities and Exchange Commission (SEC). One of the core elements of the documents you must submit is to explain why the offering made by the business complies with SEC Regulation D, which allows exemption for some companies from registering with the SEC. Regulators in Europe and other regions typically impose similar and sometimes more rigorous standards.

Paul Azous, the Founder/CEO of Broker Dealer LLC, which operates private placement advisory firm Prospectus.com “The PPM lists down the securities being sold, the terms set by the company and numerous other elements. Also included are the disclosures according to the exemptions used, investor profiles and detailed information of the terms. It will however not include a general offer for investment, making it the perfect tool for attracting investment.”

Where to start from?

Believe it or not, many businesses that rely on PPMs tend to work with templates found online, such as the PPM library, which contains more than 10,000 actual offering documents from companies in more than 100 countries and dozens of industries. Noted Azous, “In many cases, entrepreneurs seeking to raise capital will find themselves engaging a law firm that will charge anywhere from USD $25000 to upwards of USD $50,000 to create a PPM; but those legacy fees often prove to be out-sized when considering the deliverables.”

A PPM is a serious invitation for thoughtful and focused investors who want to know about your business, its future and most important, the profits that they can earn from it. If you go for ready-to-use templates from unreliable sources, you will likely end up with a dry, conventional PPM that will have numerous legal loopholes, which in turn can get you into trouble.

There are a variety of professional services focused on creating a bespoke PPM. This document will be tailored for your business and its prospective investors. The writer will work with you directly and use the information that you provide, ensuring that the final product highlights your company, its potential and why investors should take it seriously.

When you enlist professional PPM writing services, your business will be thoroughly analyzed by experts who will have a full understanding about your enterprise, along with identification of all the legal risks that can be obstacles for investment. They will also be able to identify the best possible approach for your business under the Regulation D of the SEC.

Will my lawyer help me in creating PPM?

A Private Placement Memorandum is a legal document. Using an experienced securities lawyer or a professional service provider specializing in the creation of investor documents makes good sense. However, while the PPM serves as a legal document; it is also a business marketing tool for you to attract investors. A lawyer should be able to draft a foolproof legal document, but in many cases they will lack in the creative thinking that is required to make your PPM attractive.

Professional service providers who specialize in private offerings should offer you advice, consultancy and insight about the best practices when it comes to attracting investors. They have presumably worked on PPMs for companies across a variety of industries, and ideally have cross-border experience to address the needs of Issuers based not only in the United States, but in multiple global jurisdictions as well. By choosing the right professional consultant, you will be working with people who actually know how to leverage a PPM document to raise equity for your company.

Contributor Samuel Goldberg is a 20 year private finance and investment banking veteran who currently serves as an independent consultant and a Board Advisor to PPM Group, a global advisory with offices in New York, London, Hong Kong and Tel Aviv. His knowledge base with respect to private placement documentation, capital formation and business consulting is based on dozens of projects in which he helped negotiate term sheets for multiple public offerings and private issuances that have raised nearly USD $2.5billion for a broad spectrum of companies. Mr. Goldberg’s area of expertise encompasses Reg D, Reg S and 144A issuance, stock exchange listing services, as well as the EB5 market.

2017 Best Practices for Private Placement Memorandums

Three Charged in NYS Retirement Fund Pay-to-Play Scheme

Posted on December 21, 2016December 21, 2016 by admin

Two former bond brokers for broker-dealer Sterne Agee and an ex-PM overseeing fixed income investing for the NYS Retirement Fund were named as defendants in a pay-to-play scheme that had the brokers plying former fixed income portfolio manager with plenty of partying and prostitutes in exchange for millions of dollars in fixed income commission fees, according to the office of US Attorney Preet Bharara.

The indictment says that there was an agreement among ex PM Kang, and Sterne Agee executives Deborah Kelley and Gregg Schonhorn to pay Kang bribes in the form of “entertainment, travel, lavish meals, prostitutes, nightclub bottle service, narcotics, luxury gifts, and cash payments” among other things, in exchange for fixed-income business.

Prospectus.com team of capital markets experts and securities lawyers specialize in preliminary offering prospectus, secondary offering prospectus and full menu of financial offering memorandum document preparation. More information via this link – See more at: http://brokerdealer.com/blog/finra-trying-transparent-easy-trick/#sthash.rckLtkFf.dpuf

us_v._kang_and_kelley_indictment.pdf by Chris Bragg

The value of the alleged bribe was more than $1 million, Bharara’s office said, including such gifts as trips to New Orleans and Montreal, a ski trip to Park City, Utah, a $17,400 luxury wrist watch, tickets to Broadway shows and the U.S. Open, cocaine and crack cocaine, as well as thousands of dollars for strippers and prostitutes.

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Kang steered more than $2 billion in fixed-income business to the brokers, the indictment says, which resulted in millions in commissions.

(Reuters)-Dec 21 U.S. prosecutors on Wednesday accused a former portfolio manager at New York state’s retirement fund of steering $2 billion in trades in exchange for bribes from brokerage employees, in the latest pay-to-play case to rock the fund.

Navnoor Kang

Navnoor Kang, the ex-director of fixed income at the New York State Common Retirement Fund, was charged in an indictment filed in Manhattan federal court along with Deborah Kelley, a former Sterne Agee Group Inc managing director. Gregg Schonhorn, another broker-dealer whom prosecutors said paid bribes, was charged in related court filings (Reporting by Nate Raymond and David Ingram)

More Securities law news courtesy of Law360.com ….

BREAKING: Ex-Blackrock Exec Jailed In UK For Insider Trading

A former Blackrock investment manager was sentenced to 12 months in prison by a London court on Wednesday for insider dealing stemming from trades in energy companies in 2011, in another win for the Financial Conduct Authority.
December 20, 2016

Texas Man Charged With Bilking Investors In Ponzi Scheme

A Texas financial adviser was arrested Monday on charges he cheated investors out of $6 million by selling unregistered securities in a purported digital advertising company that was really a Ponzi scheme, the Texas State Securities Board said.
December 20, 2016

Chancery Mulls Largest Incentive Award Ever In Occam Case

The Delaware Chancery Court opened a rare trial Tuesday for a so-called incentive award for the lead plaintiff in the class action that challenged Occam Networks Inc. merger with Calix Inc., which proposed at roughly $3 million is believed to be largest of its kind in the court’s history.
December 20, 2016

RPM International Can’t Move SEC Suit Over $61M Deal

A Washington, D.C., federal judge refused to move the U.S. Securities and Exchange Commission’s suit accusing government contractor RPM International Inc. of failing to account for a nearly $61 million settlement, saying Tuesday the Ohio company hadn’t proven it would be more conveniently heard elsewhere.
December 20, 2016

SEC, MSRB Fight GOP’s Challenge To New Pay-To-Play Rule

The U.S. Securities and Exchange Commission and the Municipal Securities Rulemaking Board told the Sixth Circuit on Monday that it doesn’t have jurisdictional standing to consider the Republican Party’s challenge to new rules that increase pay-to-play restrictions on municipal advisers, saying the rules were created “by congressional will” and not by a final SEC order that can be appealed.
December 20, 2016

Neustar Settles SEC Investigation Over Severance Clause

Technology company NeuStar Inc. has agreed to pay $180,000 to end allegations that it violated a whistleblower protection rule by restricting what former employees were allowed to say about the company, the Securities and Exchange Commission announced Monday.
December 20, 2016

Energy Co. To Pay SEC $1.4M Over Whistleblower Firing

The U.S. Securities and Exchange Commission reached its first settlement over internal-whistleblower retaliation Tuesday, with an Oklahoma energy company agreeing to pay $1.4 million, subject to a bankruptcy plan, to resolve claims it fired a worker for whistleblowing and used restrictive separation agreements.
December 20, 2016

SIFMA, ABA Air Worries Over CFTC Cross-Border Swaps Rule

The Securities Industry and Financial Markets Association, the American Bankers Association and other swap market interest groups urged the U.S. Commodity Futures Trading Commission on Monday to hit the brakes on proposed definitions for U.S. and foreign entities under cross-border swap rules, underscoring potential harm to the U.S economy and potential regulatory overreach.
December 20, 2016

Schulte Roth Withdraws As Patriarch’s Counsel In Zohar Suit

Schulte Roth & Zabel LLP told a New York federal judge Tuesday that it will no longer represent Lynn Tilton’s Patriarch Partners in a breach of contract case against investment funds previously managed by Patriarch, citing “irreconcilable differences.”
December 20, 2016

Chancery Won’t Revive Suit Over OM Group’s $1B Apollo Sale

Delaware’s Chancery Court has said it will not allow OM Group Inc. shareholders to reargue their recently dismissed suit targeting the company’s board members over its $1 billion buyout by Apollo Global Management, finding that the court adequately considered the evidence at hand.
December 20, 2016

Tokai Hopes To Move $97M Suit Over IPO To Mass. Fed. Court

Tokai Pharmaceuticals Inc. Monday sought to move a putative class action by investors claiming it withheld important drug testing information prior to its $97 million initial public offering to a Massachusetts federal court Monday.
December 20, 2016

4th Circ. Says FINRA Challenge Must Go To SEC First

The Fourth Circuit on Tuesday found microcap broker-dealer Scottsdale Capital Advisors Corp. can’t challenge the Financial Industry Regulatory Authority’s power in federal court, because Congress gave exclusive review of FINRA rules and decisions to the U.S. Securities and Exchange Commission.
December 20, 2016

Citibank Renews Bid To Dodge $2.3B RMBS Class Action

Citibank NA on Tuesday again asked a New York judge to toss a proposed class action accusing the bank of ignoring pervasive problems with residential mortgage-backed securities, saying precedent from a recent state appellate ruling supports its contention that the suit is inadequately pled.
December 20, 2016

Bondholders Dismissed From Bank Libor Conspiracy MDL

A New York federal judge Tuesday dismissed a class of bondholders from multidistrict litigation accusing big banks of rigging the London Interbank Offered Rate, saying their alleged antitrust injuries were not caused by the banks.
December 20, 2016

Bankrupt Oil Co. Gives Preferred-Share Action The Slip

A Manhattan federal judge dismissed a class action lawsuit against New Source Energy Partners LP and underwriters over the company’s $40 million 2015 preferred-share offering Monday, finding that the bankrupt oil and gas portfolio’s risk-disclosures were “precise” and “exhaustive” and did not run afoul of the securities laws.
December 20, 2016

Morgan Stanley Pays $7.5M For Customer Protection Offenses

Morgan Stanley & Co. LLC agreed to pay $7.5 million Tuesday to settle allegations it violated the U.S. Securities and Exchange Commission’s Customer Protection Rule when using customer cash as collateral on loans used to finance hedging swap trades.
December 20, 2016

Del. Supreme Court Upholds Chancery On TC Pipeline Case

Bare claims of unfairness cannot overcome a partnership’s valid “special approval” shields for company decisions, Delaware’s Supreme Court said Monday in a ruling that rejected a master limited partnership member’s appeal of a losing challenge to a $446 million TransCanada Pipelines deal.
December 20, 2016

$2.5M CFTC Spoofing Settlement Gets Green Light

An Illinois federal judge on Tuesday signed off on a deal that settles a yearlong legal dispute between the U.S. Commodity Futures Trading Commission and a Chicago-based trader accused of placing spoof bids on futures markets and who has now agreed to pay $2.5 million to resolve the suit before a trial.

Overstock.com’s Patrick Byrne To Launch Blockchain ATS for Stocks

Posted on September 9, 2016September 9, 2016 by admin

(MarketsMuse) 09 Sept–“What’s Next? Well, for those familiar with Patrick Byrne, the controversial and innovative founder of Overstock.com, one of the first online retailers to embrace the use of bitcoins, it should not be a surprise that Overstock’s chief honcho would ‘get the joke’ and realize its all about the underlying technology that powers cryptocurrency applications, known as distributed ledger. While bitcoin currency continues to encounter challenges in terms of mass embracement, the real grease that makes the makes the wheels turn is under the hood. With that, Overstock subsidiary “T0” (T-zero) is taking a page from both the industry consortium formed by R3 and the Senahill-backed Symbiont –both of which target institutional capital markets usage–and aiming it’s own sights on retail investors by setting to launch an equities-centric Alternative Trading System aka ATS powered by their own blockchain formula.

A distributed ledger is a consensus of replicated, shared, and synchronized digital data geographically spread across multiple sites, countries, and/or institutions.

A blockchain is a type of distributed ledger, comprised of unchangable, digitally recorded data in packages called blocks.

Rob Daly of MarketsMedia (not related to MarketsMuse) provides the scoop..

Online retailer Overstock.com expects trading to begin on its blockchain-based alternative trading system before the end of the year, according to company officials.

The ATS will be operated by Overstock.com subsidiary TO as part of the company’s Medici Project, and it will only handle trades in the company stock, at least at first. So while it’s not an immediate competitive threat to the existing field of 13 U.S. stock exchanges plus several dozen ATSs, the initiative will be closely watched as a gauge of the potential of distributed-ledger technology in capital markets.

The ATS will write completed trades to its blockchain instead of routing them to the National Securities Clearing Corp., a subsidiary of Depository Trust & Clearing Corp., for clearing.

Overstock.com plans to prime the liquidity on the ATS through a new issue of corporate shares to existing shareholders the day before trading commences on the new trading venue.

T0 officials plan to formally announce its partnership with a broker-dealer on Sept. 12. “For those who want to trade on the ATS, they will have to create an account with the broker-dealer,” said Overstock’s man-in-charge Judd Bagley, who declined to name the brokerage firm.

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Deutsche Bank Steps in Doo-Doo, Again!

Posted on August 10, 2016August 10, 2016 by admin

Germany’s Biggest Bank Banged $12.5 mil by Finra for Hooting and Hollering via Firm’s Squawk Box

For those not following the travails of Germany’s biggest investment bank and broker-dealer Deutsche Bank, suffice to say this bank has had its full share of comeuppance throughout the past many months. If nothing stings more than getting hit with a big fat fine from Finra, the sting is more palpable when its a $12.5 million smack for hooting and hollering confidential information over a company-wide ‘squawk box.’ Below courtesy of Business Insider columnist Portia Crowe:

(Business Insider) Aug 8-Deutsche Bank allowed potentially confidential research and trading information to be broadcast over internal speakers, according to the Financial Industry Regulatory Authority, or Finra.

That body fined Deutsche Bank $12.5 million after finding that the German bank was aware that broadcasts, known as “hoots” or “squawks,” contained potentially confidential or price-sensitive information but “repeatedly ignored red flags” suggesting it wasn’t adequately supervising the loud systems.

Traders regularly communicate across desks over internal speaker systems known as “squawk boxes.”

Global consultant Private Placement Services LLC offers a full suite of professional consulting and offering document preparation services for those seeking to raise money via a private placement of debt, equity or convertible securities. To learn more, visit PPM.co

At least one registered representative of the firm communicated potentially confidential and/or material nonpublic information to customers as a result of the supervisory deficiencies, according to a filing from Finra.

That provided the recipients with a potential informational advantage over other customers.

“Deutsche Bank’s disregard of years of red flags including internal audit findings, risk assessments, and compliance recommendations was particularly egregious given the risk that material nonpublic information could be communicated over squawk boxes,” Finra’s chief of enforcement, Brad Bennett, said in a statement.

Deutsche Bank neither admitted to nor denied the charges. The full story via this link to Business Insider