BrokerDealers Plead Guilty to Bribery

Posted on December 19, 2014 by admin

Brokerdealer.com blog update courtesy of Reuters.

Two Brokerdealer executives based out of New York have plead guilty to being a part of a Venezuelan bribery scheme.

Two former executives of a defunct New York broker-dealer pleaded guilty on Wednesday to charges stemming from their involvement in a foreign bribery scheme involving their employer and a Venezuelan state economic development bank.

Benito Chinea, the former chief executive of Direct Access Partners LLC, and Joseph Demeneses, a onetime managing director at the firm, each pleaded guilty to a conspiracy count in federal court in Manhattan.

Chinea, 48, admitted that in 2011 discussed how to make a bribe payment to the head trader at state-owned Banco de Desarrollo Económico y Social de Venezuela, known as Bandes.

“I knew it was improper and wrong and in violation of U.S. laws to make an agreement with others to make a bribe payment,” he said.

The pleas by Chinea and Demeneses, 46, were the latest to stem from a broad U.S. investigation into foreign bribery involving Direct Access Partners and Venezuelan state economic development banks.

Prosecutors said the men participated in a scheme from 2008 through 2012 involving payments to the head trader and senior official at Bandes, Maria de los Angeles Gonzalez de Hernandez.

Prosecutors have previously said the kickback scheme generated more than $60 million in fees for Direct Access through the bond trading business Gonzalez directed to the firm in exchange for $5 million in kickbacks.

Direct Access’s parent company filed for bankruptcy after charges were first unveiled in May 2013.

For brokerdealers who follow the rules and are guilty free, check out Brokerdealer.com’s database and join today.

Ex-Sterne Agee CEO Didn’t Know His Corporate Card Wasn’t Meant To Be Used On Boats, Trucks, Condos, Yachts, Etc

Posted on December 15, 2014 by admin

Brokerdealer.com Blog update courtesy of Dealbreaker.com and Birmingham Business Journal

For some brokerdealers, like James Holbrook, it is hard to play by the rules, luckily, there are many who do follow the rules.

Ex CEO James Holbrook

Sterne Agee Group Inc., one of the fastest-growing brokerages in the South, sued its former chief executive officer over claims he took his corporate credit card on a decade-long spending spree for fishing boats, a yacht, a vacation condominium and ownership in a luxury ski chalet. The complaint against James S. Holbrook Jr., ousted as CEO in May, follows revelations that he’s being investigated by the U.S. Justice Department over the claims… “Holbrook wasted SAG’s corporate assets and used them for his own personal benefit,” the Birmingham, Alabama-based brokerage said in the complaint. His conduct “was beyond how a reasonable person might act in his position,” according to the filing…

Holbrook, starting in 2003, used corporate assets to buy two fishing boats and a Chevrolet Suburban through an entity he formed called Birmingham Broward LLC, according to the complaint. Over the next few years, the executive used company resources in a similar manner to invest in the ski chalet in Deer Valley, Utah, and acquire an interest in Five Star Plantation LLC, a hunting club in Kellyton, Alabama, according to the complaint. The most recent purchase described in the complaint was in March, when Holbrook allegedly diverted company resources to buy a 68-foot (21-meter) luxury fishing yacht.

Holbrook’s lawyer continues to argue, “There is nothing newsworthy about this lawsuit. It simply rehashes the same baseless allegations that have been pending against Sterne Agee and Mr. Holbrook for almost two years and chronicled ad nauseum. In my opinion, Sterne Agee’s time and money would be better spent focused on its clients, employees and shareholders rather than on an attempt to intimidate Mr. Holbrook with these stale allegations. This filing demonstrates that anyone with a typewriter and a law degree can file a suit.”

FINRA makes it clear for Brokerdealers, Their Rules Aren’t Toys

Posted on December 12, 2014 by admin

Brokerdealer.com Blog update courtesy of Investment News.

FINRA, Financial Industry Regulatory Authority, fined 10 banks on Thursday for total of $43.5 million for promising positive analyst coverage after initial public offering.

Citigroup Inc. and Goldman Sachs Group Inc. were among 10 banks fined for failing to shield analysts from pressure to promote stocks a decade after a U.S. crackdown sought to end Wall Street conflicts of interest.

MW-BX587_toys_r_MG_20140326121052 The investment banks promised favorable research to Toys “R” Us Inc.
and its private-equity owners in 2010 to win roles in its initial public offering, the Financial Industry Regulatory Authority said Thursday in a statement. The regulator fined the firms a total of $43.5 million, faulting them for “implicitly or explicitly” making promises that their analysts would give positive coverage. Six of the 10 firms didn’t have adequate supervisory procedures to prevent the practice.

Citigroup, Goldman Sachs, Credit Suisse Group AG, Barclays Plc and JPMorgan Chase & Co. were fined $5 million each. Deutsche Bank AG, Bank of America Corp., Morgan Stanley and Wells Fargo & Co. will pay $4 million. Needham & Co. will pay $2.5 million. The firms didn’t admit or deny wrongdoing, according to FINRA.
“The firms’ rush to assure the issuer and its sponsors that research was in sync with the pitch being made by their investment bankers caused them to overstep the prohibitions against analyst solicitation and the promise of favorable research,” Brad Bennett, FINRA’s chief of enforcement, said in the statement.

FINRA said Thursday that Toys “R” Us and its owners demanded that analysts and bankers agree on valuation. For example, the owners told Barclays that they were interviewing analysts “after having been burned” on other deals in which they learned too late about analysts’ negative sentiments, according to FINRA.

Brokerdealer.com offers many databases full of brokerdealers who choose to abide by the rules of FINRA and you can find them here.

For the entire article from Investment News, click here.

The Holidays will Come Late for Some BrokerDealers this Year

Posted on December 10, 2014 by admin

BrokerDealer.com blog update courtesy of extract from Investment News

For employees at American Realty Capital, a nontraded real estate investment trust, were notified by email that their annual holiday would be postponed.

“As you know, we ordinarily throw our holiday party in January,” according to the email from Mr. Schorsch. “This year, however, we have decided to move the celebration to warmer times, likely May or June.”

“We have not yet decided on a venue for the event, but rest assured, as always, it will be memorable,” according to the email, a copy of which was obtained by InvestmentNews. “We will keep you advised of our plans as we get closer to the date.”

wall-st-xmas-tree The email was signed by Mr. Schorsch and his three partners at ARC: Bill Kahane, Mike Weil and Peter Budko.

Andrew Backman, a spokesman for ARC, said the email was accurate but declined to comment as to the specifics of why the holiday party was delayed.

Wall Street has a history of canceling holiday celebrations for fear of drawing criticism during stressful times.

Wall Street has a history of canceling holiday celebrations for fear of drawing criticism during stressful times. In an attempt to keep a low profile, The Goldman Sachs Group Inc. in 2009 told its employees it would not host a corporate Christmas party; the investment bank also prohibited its employees from funding their own parties.

ARC and RCS Capital Corp., the broker-dealer holding company of which Mr. Schorsch is executive chairman, have faced intense scrutiny since a related company, American Realty Capital Properties Inc., at the end of October revealed a $23 million accounting error over the first half of the year that was intentionally not corrected.

Most other BrokerDealers will be celebrating the holidays on Wall Street this season.

For the full story from Investment News click here

Fortune Cookie Says: Outlook Bright For Asia BrokerDealers

Posted on December 3, 2014December 3, 2014 by admin

Brokerdealer.com blog update with coverage of the Asian Market courtesy of ETF Trends’ Todd Shriber

Following some bullish data points that boosted sentiment during Tuesday’s Asian session, exchange traded funds offering access to China’s onshore A-shares markets are soaring Tuesday.

With local investors warming to equities over property, Goldman Sachs forecasts an estimated 400 billion yuan will depart China’s property market next year with the destination being A-shares equities.

“The Shanghai Stock Exchange Composite Index(symbol: SHCOMP, +3.11%) is showing the largest positive risk adjusted return across regions and assets. In absolute terms, the SHCOMP increased by the most in 15-months and extended its YTD performance to over 30%,” said Rareview Macro founder Neil Azous in a research note out Tuesday.

News that home sales in China’s 54 largest metro areas surged nearly 9% last month is fueling gains for already high-flying U.S.-listed A-shares ETFs.

After ranking as one of November’s top-performing non-leveraged ETFs, the Deutsche X-trackers Harvest CSI 300 China A-Shares Fund (NYSEArca: ASHR), the largest U.S.-listed A-shares ETF, is higher by 5.5% today on volume that has already exceeded the daily average. Joining ASHR in the all-time high club is the KraneShares Bosera MSCI China A-Shares ETF (NYSEArca: KBA), which is higher by 4.7% on volume that is more than 30 times above the daily average.

ASHR and KBA are two of just 11 ETFs to hit all-time highs to this point in Tuesday’s session.

The Market Vectors ChinaAMC A-Share ETF (NYSEArca: PEK), the oldest U.S.-listed A-shares ETF, is soaring by 5.4% on heavy volume and is trading at its highest levels in nearly three and a half years. Although the A-shares ETFs do not feature the excessive financial services sector exposure found in the iShares China Large-Cap ETF (NYSEArca: FXI), the trio is still levered to investor sentiment to China’s largest financial services firms. The average weight to the financial services sector across ASHR, KBA and PEK is 38.7%.

“Trading values in the Shanghai Composite rose to a record 401.6 billion yuan ($65.3 billion) last week, boosting the profit outlook of brokerages relying on trading commissions as the main source of their revenue,” according to Azous.

For the entire article from ETFtrends.com please click here