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.

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.

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 -

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.

The post Three Charged in NYS Retirement Fund Pay-to-Play Scheme appeared first on BrokerDealer Blog.

There are many brokerdealers who are Finra, SEC, and FBI compliant, to find one of those click here. 

In most professions, it would take only one or two acts of egregious conduct before troubled employees were shown the door. In the case of one stockbroker who has repeatedly had complaints from investors, it took 69 customer disputes filed over the last 13 years before he was barred from the business.

The stockbroker, Jerry A. Cicolani Jr., had complaint after complaint documented in his formal record. Regulators and employers spotted red flags. Yet the organization primarily responsible for monitoring the nation’s 637,000 brokers, the Financial Industry Regulatory Authority, did not bar Mr. Cicolani until September 2014.

The Securities and Exchange Commission had already sued him, in May 2014, over his role in a Ponzi scheme. His most recent employer, PrimeSolutions Securities, based in Cleveland, fired him a day after that lawsuit was filed. And his customers had lodged complaints as far back as 2002.

To continue reading about the legal implications Mr. Cicolani is now facing, click here

The post 69 Red Flags Raised Before Action Was Taken Against Ponzi Scheme Involved Broker appeared first on BrokerDealer Blog.

Resource Horizons Group, a defunct broker-dealer that had racked up more than $4 million in unpaid damages from arbitration claims, can add another $2 million to that list.

Bruce Wilkerson, a former tackle who started for the Green Bay Packers in the 1996 Super Bowl, was awarded $2 million in damages last week after losing $650,000 in an alleged Ponzi scheme carried out by a rogue broker at the Marietta, Ga.-based firm.

Mr. Wilkerson, however, is not likely to ever recoup any of the money, which represented a substantial portion of his net worth, according to his attorney, Adam Gana.

“It’s outrageous,” said Mr. Gana of an eponymous firm. “There’s virtually no chance that [Mr.] Wilkerson is going to get paid.”

Resource Horizons Group, which had around 220 brokers, went out of business in November after accruing more than $4 million in judgments against it from two arbitration awards, which it could not afford.

“Funds for payment are not available, which is why the company is being forced to close,” the firm said on a filing in its BrokerCheck report. “The clients will have the same right as any other creditors of the company for the funds that are available.”

The Financial Industry Regulatory Authority Inc. officially suspended the firm in December for failing to comply with a $4 million award and then in January canceled Resource Horizons Group’s license, according to its public BrokerCheck record.

The firm, which had only around $500,000 in excess net capital on hand, has paid only a “very small percentage” of the $4 million award, according to the attorney in that case, John Chapman of an eponymous firm.

Mr. Chapman said Resource Horizons Group had applied for insurance coverage around the time the first complaint about the alleged Ponzi scheme cropped up, but was denied coverage because of the nature of the fraud.

“To me this underscores the question of why does Finra allow broker-dealers to operate with such incredibly thin resources?” Mr. Chapman said. “We’re sort of stuck.”

The arbitration awards are tied to an alleged rogue broker at the firm, Robert Gist. In 2013, Mr. Gist agreed to pay $5.4 million to settle charges from the SEC that he had conducted a Ponzi scheme and converted funds from at least 32 customers for personal use between 2003 and 2013. Mr. Gist could not be reached for comment.

He conducted the scheme and made false customer statements for clients through Gist, Kennedy & Associates Inc., an unregistered entity not affiliated with Resource Horizons, according to the SEC’s complaint.

Several clients, including Mr. Chapman’s, filed claims against the firm and its top two executives, David Miller and his wife, Kelly Miller, for negligence and failing to supervise Mr. Gist. They were held jointly liable along with the firm for the nearly $4 million in claims from Mr. Chapman’s case.

To read the entire article from InvestmentNews, click here.

The post Ex-NFL Player Forces Defunct Broker Dealer to Fumble But Can’t Recover appeared first on BrokerDealer Blog.

California-based RIA is in big trouble after leading investors to believe that what they were doing was given the OK from the SEC. GLR Advisors were running a basic ponzi scheme over the last ten years with no one including the SEC noticing until recently.

Most advisors know better than to oversell a product’s performance, but what about its “approval” by the SEC?

The SEC barred a California-based RIA from the industry this week after the firm was charged with misleading investors — including falsely claiming that its fund was “SEC approved.”

According to charges filed by the SEC in 2012, John A. Geringer of GLR Advisors and GLR Capital Management raised over $60 million by inflating the performance and misrepresenting the strategy of a private investment fund he told investors was “SEC approved.”

Between 2005 and 2011, the SEC says, the firm advertised its “SEC approved” GLR Growth Fund as having returns of 17%-25% during every year of its operation.

The commission says GLR’s marketing materials claimed the fund was “tied to well-known stock indices such as the S&P 500, Nasdaq and Dow Jones, as well as in oil, natural gas and technology-related companies.” But since mid-2009, the regulator says, the fund did not invest in any publicly-traded securities. Instead, funds were placed in “illiquid investments” in two private startups and used to pay back other investors and fund the “entities Geringer controlled,” the SEC says.

Beyond that, the SEC charges, “to the extent Geringer engaged in actual securities trading, far from generating high annual returns, he consistently lost money.”

Geringer could not be reached for comment. His attorney William Michael Whelan declined to comment on the case.

‘CAN’T CATCH EVERYBODY’

Needless to say, registration with the SEC does not imply endorsement by the regulator. So why were these advisors able to get away with it — not to mention the Ponzi scheme — for so long?

According to Todd Cipperman, principal at Cipperman Compliance Services, the SEC can only examine about 10% of advisors each year, making it easier for bad behavior to go undetected.

“This stuff goes on. There are bad folks out there and they lie to people,” he says. “You know, it’s just like any other law enforcement…[the SEC] can’t catch everybody and they eventually caught these guys.”

Third-party examinations could help solve this problem, Cipperman argues. “This is exactly the kind of case that it could have helped with,” he says. “A small advisor like this is not a targeted priority.”

But even advisors who aren’t using false statements or running fraudulent schemes should be careful about how they market their services — particularly when mentioning SEC registration.

Cipperman’s advice? “At the end of the day, if you have to scrunch up your nose when you make statements, it’s not a good statement to make,” he says. “We all accept a certain level of puffery in marketing, but when you’re a fiduciary, you can’t do that…you need to back up your statements with facts.”

PRISON SENTENCE

The SEC’s decision to bar Geringer comes just weeks after one of his partners in the business, Chris Luck, was sentenced to 10 years in prison and ordered to pay over $33 million in restitution for his role in the scheme.

Last year, both Luck and Geringer pleaded guilty to securities fraud, mail fraud and conspiracy to commit mail and wire fraud, according to SEC and Justice Department documents. During the trial, Luck told a California court that investor money brought in by the fund paid both his salary and bonus payments, according to the sentencing statement.

Both Geringer’s case and that of another partner, Keith Rode, are ongoing, according to court records.

The post “SEC-Approved” Ponzi Scheme Shut Down, 10 Years Later… appeared first on BrokerDealer Blog.

Firm, chief executive ordered to pay $13.7 million in restitution to 59 investors

Finra has barred a broker-dealer and its founder for allegedly defrauding a number of current and former NFL and NBA players out of nearly $14 million as part of a Ponzi scheme.

The Financial Industry Regulatory Authority Inc. expelled Success Trade Securities, an online brokerage, and its founder, Fuad Ahmed, for raising money for the company parent company, Success Trade Inc., through purportedly fake promissory notes.

The notes typically had a 12.5% interest rate and had a term of 36 months, according to Finra. Because of the financial condition of the parent company, there was little chance they would be paid back, Finra said. Instead, the funds went to pay Mr. Ahmed’s personal expenses, including the lease on a Range Rover and balances on personal credit cards and clothes, Finra alleged.

A report from Yahoo Sports last year noted that clients who bought Success Trades’ notes included Detroit Pistons guard Brandon Knight, Cleveland Browns cornerback Joe Haden, San Francisco 49ers tight end Vernon Davis, former Washington Redskins running back Clinton Portis and Chicago Bears defensive end Adewale Ogunleye.

When the notes became due, Mr. Ahmed attempted to persuade the investors to extend the terms, in some cases promising that the company would be listing on a European stock exchange soon.

Mr. Ahmed raised money for the notes through Jinesh Brahbhatt, a broker who also ran a registered investment advisory firm known as Jade Private Wealth Management. The firm targeted professional athletes who were waiting to be drafted, according to Finra.

Success Trade then paid Mr. Brahbhatt $1.25 million from the funds, according to the decision. Mr. Brahbhatt was barred in November for failing to testify in the case against Success Trade.

“There are a lot of elements about that which are in dispute, including whether those were payments or loans,” said Mr. Brahbhatt’s attorney, Alan Futerfas. “We were not participants in this proceeding, so we did not have an opportunity to put evidence before the panel or address assertions made by either Finra personnel or Fuad Ahmed.”

An attorney for Mr. Ahmed, William C. “Skee” Saacke, did not immediately return a request for comment.

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