Brazil’s Top Investment Banker Busted; BTG Pactual Chief in Bribe Probe

Posted on by admin
andre esteves

Andre Esteves, Brazil’s top billionaire investment banker and until this past Sunday, Chairman and CEO of brokerdealer Grupo BTG Pactual SA, submitted his resignation this weekend after being busted last week by federal prosecutors for purported bribery charges.

47 year old Esteves  is not only Brazil’s top investment banker, he is one of the top ‘cool kids’ across the global investment banking industry. Esteves, who many have likened to being Brazil’s version of Lloyd Blankfein, is also the controlling shareholder of Brazil’s equivalent of Goldman Sachs. The finance industry star delivered his resignation from a Sao Paulo jail cell, where he is being held without bail consequent to his arrest on purported bribery charges relating to a probe of Petrobas aka Petróleo Brasileiro SA, Brazil’s largest state-controlled energy company. Though expected to have been released this weekend, the Supreme Court of Brazil ruled to make the arrest “preventative”—which in layman terms means that Esteves will be cooling his Gucci-covered heels for an indefinite period.

Prosecutors suspect the billionaire dealmaker, along with a senior senator, tried to obstruct a long-running graft probe involving Petrobras. Esteves, through his lawyer, has denied the allegations. Shares and bonds in Latin America’s largest independent investment bank were bashed further on Monday, reflecting concerns about the impact of the investigation on operations after the Supreme Court extended the financier’s detention indefinitely.

It was the first time the bank, which has long been synonymous with Esteves, has been directly implicated in the bribery scandal. Prosecutor General Rodrigo Janot used evidence and other suspects’ testimony to persuade the country’s Supreme Court to extend Esteves’ detention on a preventive basis.

Documents obtained by Brazil prosecutors purportedly suggest BTG Pactual had paid 45 million reais ($12 million) to Eduardo Cunha, speaker of the lower house of Congress, in exchange for passing legislation favoring the bank, the newspapers said.

BTG Pactual denied making such payments in a statement on Sunday, and pledged to cooperate with authorities. Cunha also denied the allegations.

BTG Pactual named two founding partners, Chief Operating Officer Roberto Saloutti and Chief Financial Officer Marcelo Kalim, as co-CEOs. Persio Arida, who became acting CEO after Esteves’ arrest, is now chairman, with Huw Jenkins, head of the bank’s international arm, becoming vice chairman.

The full article from Reuters is at this link

Finra Takes Aim At MetLife BrokerDealer Unit

Posted on by admin
finra metlife

(Bloomberg) — MetLife Inc., the largest U.S. life insurer, said the Financial Industry Regulatory Authority’s staff has indicated the agency will seek a “significant fine” from the company’s broker-dealer unit as part of a probe into possible violations tied to variable annuities.

The company is cooperating in this investigation, MetLife said Thursday in its quarterly regulatory filing. The probe focuses on potential violations “regarding alleged misrepresentations, suitability, and supervision in connection with sales and replacements of variable annuities and certain riders on such annuities,” MetLife said in the filing.

Finra, the brokerage industry’s regulator, is among government watchdogs seeking to guard against abuses in the sale of retirement and savings products in the U.S. The authority told the insurer on Sept. 25 that it would recommend disciplinary action, according to the filing.

“We strongly disagree with the conclusions reached by Finra, and we will defend ourselves vigorously,” John Calagna, a spokesman for the New York-based insurer, said in an e-mailed statement. “MetLife is reserved for this matter.”

The insurer said in the filing that its estimate for reasonably possible legal costs in excess of reserves was as much as $425 million. That compares with an upper range of $410 million at the end of the second quarter.

 

SEC Cites Frmr Wells Fargo Analyst With Insider Trading

Posted on by admin
nasdaq: adpi

What’s worse than going to a dentist for anything more than a teeth cleaning? Being a broker-dealer and getting hit with insider trading allegations by the SEC in connection with trading activity in American Dental Partners Inc. (NASDAQ:ADPI). What’s worse than that? Finding members of the FBI on your doorstep who really want to pull your teeth out of your head and bring a criminal case against you based on the allegations made by the SEC.

(Reuters) Nov 2 U.S. securities regulators on Monday accused a former Wells Fargo & Co analyst of engaging in an insider trading scheme that enabled her then-boyfriend to make over $220,000.

In a lawsuit filed in federal court in Boston, the U.S. Securities and Exchange Commission said Shirmila Doddi, the analyst, tipped Vlad Spivak off to a deal involving a dental practice management company in 2011.

The SEC said Spivak, 39, had been unemployed and supported himself day trading when he bought shares in American Dental Partners Inc ahead of its $398 million acquisition by private equity firm JLL Partners Inc.

The SEC said Spivak learned that the company was going to be involved in a deal from Doddi, who became his romantic partner after meeting him salsa dancing.

At the time, she was living in Boston and working at Wells Fargo, which had been advising American Dental Partners on potential transactions, the SEC said.

Her tips about American Dental Partners in October 2011 marked an exception for Doddi, the SEC said, who had otherwise rejected repeated requests for tips from Spivak, who the regulator said considered insider trading “not a big deal.”

“Although Doddi did not trade on the information, in tipping Spivak, she conferred a gift upon a romantic partner,” the SEC said in its lawsuit.

After the deal was announced, the price of American Dental Partners’ stock rose by 75 percent, the SEC said, enabling Spivak to realize $222,357 in profits.

Doddi, 27, agreed to a partial settlement without admitting or denying wrongdoing, with financial penalties to be determined at a later date. A lawyer for Doddi, who now lives in San Diego, did not respond to a request for comment.

A lawyer for Spivak, who lived in Medford, Massachusetts, did not respond to requests for comment.

The case is U.S. Securities and Exchange Commission v. Spivak, U.S. District Court, District of Massachusetts, No. 15-cv-13704. (Reporting by Nate Raymond in New York; Editing by Alan Crosby)

 

Fidelity Brokerage Arm Is Broken Says Regulator

Posted on by admin
brokerdealer.com-fidelity-galvin

Fidelity Brokerage Services was charged in an administrative complaint by State of Massachusetts’s  top securities cop Thomas Galvin with “dishonest and unethical behavior” for allowing unregistered investment advisers to make trades through the Fidelity broker-dealer platform, thereby generating fees for both the firm and the unregistered advisers.

At least 13 unregistered Massachusetts investment advisers used Fidelity’s platform, according to a statement from secretary of the commonwealth William Galvin.

For those advisers, “Fidelity served as a haven from regulatory oversight as it ignored blatant unregistered investment advisory activity,” according to a statement from Mr. Galvin’s office.

“We do not believe that Fidelity has violated any laws or regulations in connection with this matter,” said Adam Banker, a Fidelity spokesman. “We look forward to reviewing the details of this matter and addressing them appropriately.”

“Fidelity, of all companies, knows full well the range of investor protection provisions resulting from regulatory oversight,” Mr. Galvin said in the statement. “For them to knowingly allow unregistered activity on their broker-dealer platform is a profound failure of their regulatory obligations.”

In one instance, more than 20 Fidelity customers paid one unregistered investment adviser who was trading on their behalf $732,000 in advisory fees over a 10-year period, according to the complaint. The complaint alleges that Fidelity had knowledge that the individual was acting as an adviser during that entire period and encouraged his trading activity by providing the purported adviser, who made thousands of trades in the accounts of his clients, with gifts such as frequent flyer miles and tickets to a professional sporting event.

Fidelity had policies in place since 2011 that specified red flag risk warnings for certain levels of third-party trading, but those were ignored until recently, according to the statement from Mr. Galvin.

BrokerDealer Chat Service Symphony Sings Dow Jones News

Posted on by admin

With merely a few days in advance of its launch, Symphony Communications, the instant-message platform backed by a consortium of Wall Street’s biggest brokerdealers and whose strategy is to undercut the seemingly irreplaceable Bloomberg-powered IM announced that it has inked a deal with Dow Jones & Co to feed streaming News Corp.-owned Dow Jones News and Wall Street Journal content into the Bloomberg-killer service.

BrokerDealer.com is the host to the financial industry’s most comprehensive database of broker-dealers and provides information on brokerdealers across more than 30 countries worldwide.

According to the latest WSJ coverage, Symphony has won backing on Wall Street because it has been viewed as a potential lower cost alternative to a popular messaging service on Bloomberg LP’s terminals. The company has also made its encryption technology a key selling point for financial firms wary about sensitive data falling into the wrong hands.

The Palo Alto, Calif., company has secured $66 million in financing from 14 firms including Goldman Sachs Group Inc., Morgan Stanley, J.P. Morgan Chase & Co. and BlackRock Inc.