Articles Posted in SEC

Galleon Group LLC ex-hedge fund trader Craig Drimal pleaded guilty to six counts of conspiracy and securities fraud in April. He has now been sentenced to five-and-a-half years in prison. Drimal admitted to insider trading based on information from lawyers at Ropes & Gray LLP, a firm based in Boston. The transactions involved Axcan Pharma…

High-frequency trading — a process in which computer algorithms are used to trade shares, foreign exchange and derivatives at superfast speeds — earns profits by extricating tiny price differences thousands of times a day, across trading platforms. The algorithms being used are treated by their owners as top secret; in fact, many have taken legal…

Though investors who have already been “burned” by stock broker fraud or broker misconduct may have a perfectly understandable fear of getting back into the securities game, there are ways investors can help protect themselves in the future. One of the most significant protective measures an investor can take is to look into the background…

Financial advisers are bound by their fiduciary duty. Put simply, fiduciary duty is when one party (in this case, the financial adviser) must, by law, act in the best interest of another party (in this case, the client). Financial advisors have a legal obligation to act in the best interest of their client as they…

The SEC’s new whistleblower office, which officially opened August 12, hopes to have a significant effect on corporate and stock broker fraud. Under this new program, cash awards will be issued to corporate employees who report fraud to the SEC in order to expose corporate crime. Individuals who report fraud under this program could receive…

As is required by the Dodd-Frank Act, the SEC has adjusted rule 205-3’s performance fee eligibility thresholds for inflation. These adjustments were announced by the SEC on July 12. The order will be published in the Federal Register and will go into effect 60 days post-publication, or September 19, 2011. The revised dollar amounts take…

Janney Montgomery Scott, a broker-dealer from Philadelphia, and his firm, Janney Montgomery Scott LLC, will pay $850,000 in his settlement with the Securities and Exchange Commission for not taking proper precautions to prevent insider trading. According to securities regulators, Janney didn’t establish proper policies and, in some cases, didn’t enforce what policies were in place,…

Steven T. Kobayashi, a former financial adviser for UBS, was charged by the SEC on March 3, 2011. He was charged with misappropriating investors’ funds totaling $3.3 million. Allegedly, Kobayashi established a pooled life insurance policy investment fund, Life Settlement Partners LLC, and then solicited funds from many of his UBS customers. The problem, however,…

The nature of “churning” within an investor’s account is difficult to prove. According to the S.E.C., “churning refers to the excessive buying and selling of securities in your account by your broker, for the purpose of generating commissions and without regard to your investment objectives.” In short, churning is a form of broker misconduct in…