| From: scion | 4/24/2012 8:27:34 PM | | | | | | Exclusive: SEC probes movie studios over dealings in China
4/24/2012
newsandinsight.thomsonreuters.com
WASHINGTON, April 24 (Reuters) - U.S. regulators are investigating major U.S. movie studios' dealings with China as the entertainment companies try to get a greater foothold in one of the fastest-growing movie markets in the world.
The Securities and Exchange Commission has sent letters of inquiry to at least five movie studios in the past two months, including News Corp's 20th Century Fox, Disney, and DreamWorks Animation, a person familiar with the matter said.
The letters ask for information about potential inappropriate payments and how the companies dealt with certain government officials in China, said the person, who was not authorized to speak publicly about the letters.
The Chinese film market is seen as one of the largest potential markets for Hollywood, but it has also historically been tightly controlled by the state-owned China Film Group.
China Film Group had limited foreign films to 20 per year, but it eased some control in February of this year, after China's leader-in-waiting Xi Jinping, who is known to admire some American movies, spent a week in Washington.
Vice President Joe Biden and U.S. Trade Representative Ron Kirk hailed the deal, which allows 14 premium format films, such as IMAX or 3D, to be exempt from the quota, as will the 2D versions of the films.
Also in February, DreamWorks Animation announced a landmark deal of its own in which it will build a production studio in Shanghai with some of China's biggest media companies.
DreamWorks Animation found success in China last year with "Kung Fu Panda 2," which became the highest-grossing animated movie in China with ticket sales of about $100 million.
China Film Group did not respond to repeated requests for comment. Representatives of DreamWorks, Disney, and News Corp declined to comment.
A spokesman for the SEC declined to comment.
The inquiry reflects stepped-up scrutiny from the SEC and Justice Department into potential violations of the Foreign Corrupt Practices Act, a 1970s law that bars U.S. companies and individuals from paying bribes to officials of foreign governments.
U.S. authorities have active bribery investigations into high-profile companies including Avon Products and Hewlett-Packard Co. News Corp is also separately under investigation for alleged bribery at its UK media properties.
Wal-Mart Stores, the world's largest retailer, has disclosed to the SEC and DOJ an internal investigation, and lost $10 billion of its market value on Monday after the New York Times reported on allegations of widespread bribery in Mexico. All of the companies have previously said they are cooperating with federal authorities and investigating the allegations.
EASING THE MARKET OPEN
While U.S. box office sales dropped some 5 percent to around $10 billion last year, Chinese box office revenue grew roughly 35 percent to $2.1 billion.
Much of the revenue came from 3D titles, a rapidly growing sector of the film industry, making China an even more desirable market.
U.S. movie studios have long been frustrated with China's tight restrictions on foreign films, which they say helps fuel demand for pirated DVDs that are widely available in China.
But recently the dynamics within the Chinese market have shifted.
China's booming middle class is increasingly willing to pay tickets prices for a cinema experience, forgoing cheap pirated DVDs and free internet downloads.
Also, Xi's visit to Washington and then Los Angeles in February was quickly followed by the deal that loosened China's annual quota on foreign film imports.
That pact also strengthens opportunities to distribute films in China through private enterprises rather than the state film monopoly.
Hollywood has struck a flurry of deals since the deal was reached.
Besides DreamWorks Animation's plan to build a production studio in Shanghai, Disney announced last week that the next "Iron Man" film will be co-produced in China under a joint agreement between Disney, its Marvel Studios arm and China's DMG Entertainment.
Disney had also announced earlier this month that it would work with China's Ministry of Culture and Tencent Holdings to promote the animation industry in China.
SWEEPS
U.S. anti-corruption regulators have specifically focused their interest in countries like China, where much of the economy is state-run.
Since 2002, the United States has brought around four dozen FCPA enforcement actions related to corruption in China, second only to those involving Nigeria.
The SEC has also initiated several so-called industry sweeps for potential foreign bribery across an industry. Last year, for example, it sent letters to a handful of banks and private equity funds and said it was investigating possible FCPA issues in their dealings with sovereign wealth funds.
"Typically those (sweeps) arise where the agencies, most commonly the SEC, see a situation in a particular company that it believes for some reason may reflect a broader practice or pattern in the industry," said Homer Moyer, a partner with Miller & Chevalier who has worked on FCPA issues for decades.
But U.S. regulators have brought few cases in the entertainment industry. In one of the few actions targeting the movie industry, the Justice Department in 2008 charged Gerald and Patricia Green, a husband and wife pair of film producers, of bribing government officials in Thailand in order to run a film festival there.
The Greens were convicted in 2009 and served six months in jail.
(Reporting By Aruna Viswanatha; Additional reporting by Lisa Richwine, Ben Blanchard and Michael Martina)
Follow us on Twitter: @ReutersLegal
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| From: scion | 4/25/2012 8:52:07 AM | | | | | | Source's Cover Blown by SEC
Updated April 25, 2012, 6:50 a.m. ET
By SCOTT PATTERSON And JENNY STRASBURG
online.wsj.com
Federal securities regulators, in a sensitive breach, inadvertently revealed the identity of a whistleblower during a probe of a firm that ran a stock trading platform.
The gaffe by the Securities and Exchange Commission occurred during an investigation of Pipeline Trading Systems LLC when an SEC lawyer showed an executive who was being questioned a notebook from the whistleblower filled with jottings about trades, calls and meetings. The executive says he recognized the handwriting.
Pipeline, the operator of an alternative trading system known as a "dark pool," reached a settlement in October with the SEC, which asserted in findings released at the time that Pipeline had misled investors about how their orders were filled.
Pipeline, which didn't admit or deny the allegations, was the subject of a page-one Wall Street Journal article earlier this month. The article didn't name the whistleblower, but he has now agreed to be publicly identified. He is Peter C. Earle, 41, a former employee of a Pipeline trading affiliate. Mr. Earle said he was "disappointed" the SEC took steps in its probe that ended up disclosing his identity to Pipeline.
The SEC confirmed showing the notebook to an executive of the business it was investigating. SEC officials said there is always a risk a whistleblower's identity might be disclosed during an investigation, but its practice has been to avoid unnecessarily revealing an informant's identity.
"Our review of the facts confirms that we followed this practice in this case," an SEC spokesman said in a statement. "While we utilize evidence from all witnesses, we do not reveal which witnesses may be cooperating with the government except as required by law or the governing rules of civil procedure."
The SEC is encouraging whistleblowers to come forward under the 2010 Dodd-Frank regulatory overhaul. A provision lets tipsters claim up to 30% of penalties collected by the U.S. for their help in unearthing improper practices—which some market watchers see as a growing issue in the modern age of computerized, opaque markets.
The SEC has received more than 1,000 tips from people seeking to collect under the law since it took effect in August, and it is expected to announce its first recipient within weeks, according to people familiar with the matter. Mr. Earle isn't eligible because he contacted the SEC before the law took effect.
The notebooks in the Pipeline matter, which Mr. Earle said he gave to SEC lawyers in early 2010, helped frame questions the agency asked during the probe of Pipeline, according to people familiar with the investigation.
The person shown the notebook (in a November 2010 SEC interview), Gordon Henderson, was the head of Pipeline's trading affiliate, Milstream Strategy Group. He said in an interview that he previously suspected Mr. Earle was an SEC informant. Mr. Henderson's desk was near Mr. Earle's in Milstream's New York office, and he said he recognized Mr. Earle's handwriting in the notebook.
Mr. Henderson said he was allowed to go through it and look at details on its pages. He said he discussed the matter with others at Pipeline, saying: "Pete's the whistleblower."
The SEC lawyer who showed him the notebook was Daniel Walfish, according to people familiar with the matter. Mr. Walfish declined to comment.
For years, whistleblowers sought rewards from the SEC of up to 10% of regulatory penalties for passing along information pertaining to insider-trading cases. (The Pipeline matter didn't involve insider trading.)
The Dodd-Frank law broadened this and raised the bounty to as much as 30% of penalties collected by the government if original information from a whistleblower leads to enforcement actions and sanctions totaling more than $1 million.
SEC enforcement chief Robert Khuzami said at a conference last week the agency is getting about six or seven tips a day under the new program, some of "particularly high quality." That is up from roughly six applications for remuneration per year filed by tipsters in the much narrower rewards arrangement prior to Dodd-Frank's adoption.
The program reflects the reality that employees may put their jobs or careers at risk by speaking with their bosses or regulators about their concerns. "This is why you pay…bounties, so there's an incentive," said Reuben Guttman, a lawyer who represents tipsters. "You would hope there are certain precautions taken by the agency to protect confidentiality."
In a list of frequently asked questions about the law, the SEC says it is "committed to protecting your identity to the fullest extent possible" but may be required to disclose it in certain instances, such as an administrative or court proceeding. The agency adds, "We may use information you have provided during the course of our investigation" and "in appropriate circumstances, we may also provide information, subject to confidentiality requirements, to other governmental or regulatory entities."
Michael Rubenstein for The Wall Street Journal
The identity of whistleblower Peter C. Earle, pictured near his Kinnelon, N.J., home, was inadvertently revealed by an SEC lawyer who showed one of his notebooks filled with jottings about trades, phone calls and meetings, to an executive at the trading business the agency was investigating
Mr. Earle, a West Point graduate, began trading stocks on Wall Street in the 1990s. He worked at several day-trading firms. In 2005 he joined Pipeline's trading affiliate, eventually named Milstream.
Pipeline ran a platform designed to fill stock investors' buy or sell orders privately, without disclosing them to the wider world of Wall Street—the dark pool system. The idea, as advertised by Pipeline, was software would privately match one customer's order to buy shares with another customer's sell order.
Because Pipeline didn't have enough customers to ensure quick order execution when it started up in 2004, its parent company, also bearing the Pipeline name, created a trading unit to fill orders. To fill a Pipeline customer's buy order, for instance, this affiliate could first buy shares of the stock on the open market and then use these to fill the customer's order.
Pipeline hoped to attract enough trading clients so it wouldn't need this affiliate forever. However, the SEC said in outlining its findings when it settled with Pipeline, the trading affiliate continued to fill most orders, even as Pipeline was telling customers their orders were being filled via a matchup with other customers. A spokesman for Pipeline acknowledged to the Journal that it had "misinformed" clients.
Mr. Earle said he and other employees were told that Pipeline's long-term goal was to turn the trading affiliate into an operation that could operate independently of the Pipeline dark pool.
Mr. Earle said that a few months after he joined the trading affiliate, he raised concerns internally about Milstream's trading activities. During trading days, he also began writing notes, which included observations about trading activities and conversations at the affiliate.
In December 2005, he emailed Mr. Henderson that an incentive system used to reward traders had "the potential for perverse incentives," according to a copy of the email reviewed by the Journal. Mr. Henderson said he didn't recall the email.
Mr. Earle said he made other internal complaints about trading, and was fired on April 3, 2009. Mr. Henderson said the reasons for dismissal included poor performance and a belief Mr. Earle was having an affair with the wife of another Milstream trader at the time. Mr. Earle denied both allegations, calling the notion of poor performance "ridiculous."
Mr. Earle first told the SEC about Pipeline's activities in an April 6, 2009, email. In it, he said he had "extensive information" about "an ongoing situation of which I have first hand knowledge, having worked at the firm for several years."
Mr. Earle said he never told any Pipeline employee about his involvement with the SEC. But soon after he contacted the regulators, he said, he told them that some Pipeline employees were suspicious he had spoken to the agency.
"Pipeline's efforts at all junctures have been to malign me. That's one of the reasons I went to the SEC in the first place," Mr. Earle said. Pipeline, which this year changed its named to Aritas Securities LLC, declined to comment on Mr. Earle's remark.
Mr. Earle said he has been the target of ire from current and former Pipeline employees. He said he ran into a Pipeline executive while walking in New York's Times Square in early December, a little over a month after the SEC fined Pipeline $1 million and two of its executives $100,000 each for failing to disclose Milstream's activities to clients.
Mr. Earle said he asked the executive, Reid Curley, how he was doing. "Just trying to clean up your wreckage," he said Mr. Curley responded. Mr. Curley declined to comment.
Write to Scott Patterson at scott.patterson@wsj.com and Jenny Strasburg at jenny.strasburg@wsj.com
A version of this article appeared April 25, 2012, on page A1 in some U.S. editions of The Wall Street Journal, with the headline: Source's Cover Blown By SEC.
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| To: scion who wrote (114663) | 4/25/2012 8:58:35 AM | | From: scion | | | | | SEC enforcement chief Robert Khuzami said at a conference last week the agency is getting about six or seven tips a day under the new program, some of "particularly high quality." That is up from roughly six applications for remuneration per year filed by tipsters in the much narrower rewards arrangement prior to Dodd-Frank's adoption. |
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| From: scion | 4/25/2012 9:40:59 AM | | | | | | US regulator warns investors against pre-IPO fraud
Tue Apr 24, 2012 7:11pm EDT
reuters.com
* SEC alerts public about pre-IPO investment scams
* Says is aware of "a number of complaints"
* Alert comes weeks after capital-raising law passed
By Alexandra Alper
WASHINGTON, April 24 (Reuters) - The U.S. securities regulator warned investors on Tuesday to beware of scams offering shares of hot tech companies such as Twitter and Facebook that have not yet gone public.
The alert, posted on the Securities and Exchange Commission's website, said that, while legitimate offerings of pre-IPO shares are not uncommon, they generally are limited to sophisticated investors.
The SEC said it is "aware of a number of complaints and inquiries about these types of frauds, which may be promoted on social media and internet sites, by telephone, email, in person, or by other means."
The SEC pointed to pre-IPO schemes in recent years as reason for concern.
Earlier this month, the U.S. District Court for the Southern District of Florida in Miami i ssued an order in a bid to halt an allegedly fraudulent sale of securities of an investment vehicle that purportedly held pre-IPO shares of Facebook.
The SEC's warning also comes just weeks after President Barack Obama signed into a law a bill making it easier for firms to raise capital and solicit investors.
Some SEC officials, Democrats, and industry watchdogs have sharply criticized the law for rolling back critical shields that protect unsophisticated investors from securities fraud.
The law, which was held up as a job-creation bill, will make it easier for companies to solicit private investors and relaxes filing requirements associated with initial public offerings.
It also allows startup companies to engage in crowdfunding, in which investors take small stakes in companies over the Internet.
reuters.com |
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| From: scion | 4/25/2012 12:38:49 PM | | | | | | Attorney, Wall Street Trader, and Middleman Settle SEC Charges in $32 Million Insider Trading Case
FOR IMMEDIATE RELEASE
2012-77
Washington, D.C., April 25, 2012 — The Securities and Exchange Commission today announced a settlement in a $32 million insider trading case filed by the agency last year against a corporate attorney and a Wall Street trader.
Additional Materials
SEC Complaint
sec.gov
The SEC alleged that the insider trading occurred in advance of at least 11 merger and acquisition announcements involving clients of the law firm where the attorney — Matthew H. Kluger — worked. He and the trader — Garrett D. Bauer — were linked through a mutual friend now identified as Kenneth T. Robinson, who acted as a middleman to facilitate the illegal tips and trades. Kluger and Bauer used public telephones and prepaid disposable mobile phones to communicate with Robinson in an effort to avoid detection. Robinson, now also charged, cooperated in the SEC’s investigation.
Bauer, Kluger, and Robinson each agreed to give up their ill-gotten gains plus interest in order to settle the SEC’s charges. Those amounts under the terms of their consent agreements are approximately $31.6 million for Bauer, $516,000 for Kluger, and $845,000 for Robinson.
"Bauer, Kluger and Robinson schemed to outsmart law enforcement by structuring their relationships and communications to avoid detection and frustrate insider trading detection mechanisms," said Robert Khuzami, Director of the SEC's Division of Enforcement. "They were ultimately unsuccessful due to the SEC's sustained efforts to combat hard-to-detect insider trading, particularly among lawyers and other gatekeepers who have solemn duties to maintain the confidentiality of information entrusted to them."
In parallel criminal actions brought by the U.S. Attorney’s Office for the District of New Jersey, Bauer, Kluger, and Robinson have all pled guilty and are scheduled to be sentenced on June 4, 2012.
Acknowledging the facts to which they have admitted as part of their guilty pleas, Bauer, Robinson, and Kluger consented to final judgments in the SEC’s civil actions that are subject to court approval. In the proposed final judgments, Bauer would be ordered to disgorge $30,812,796 plus prejudgment interest of $859,135; Kluger would be ordered to disgorge $502,500 plus prejudgment interest of $14,010; and Robinson would be ordered to disgorge $829,129 plus prejudgment interest of $16,106. They also would be permanently enjoined from future violations of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. Each of the orders of disgorgement will be deemed partially satisfied and offset on a dollar-for-dollar basis by assets seized at the direction of the U.S. Attorney’s Office for the District of New Jersey based upon orders of forfeiture.
Bauer also has agreed to settle a related SEC administrative proceeding by consenting to the entry of an order that would bar him from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and from participating in any offering of a penny stock. Kluger agreed to settle a related administrative proceeding by consenting to the entry of an order which would permanently suspend him from appearing or practicing before the SEC as an attorney pursuant to Commission Rule of Practice 102(e).
The terms of the proposed settlement with Robinson reflect credit given to him by the SEC for his substantial assistance and cooperation in the investigation.
The SEC’s investigation was conducted by Colleen K. Lynch, David W. Snyder and John S. Rymas, members of the Market Abuse Unit in the Philadelphia Regional Office, under the supervision of Daniel M. Hawke, Chief of the Market Abuse Unit and Regional Director, and Elaine C. Greenberg, Associate Regional Director for Enforcement in the Philadelphia Regional Office. G. Jeffrey Boujoukos and Scott A. Thompson have been handling the litigation.
The SEC brought this enforcement action in coordination with the U.S. Attorney’s Office for the District of New Jersey. The SEC also appreciates the assistance of the Federal Bureau of Investigation, Financial Industry Regulatory Authority, and Options Regulatory Surveillance Authority.
# # #
sec.gov |
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| From: StockDung | 4/25/2012 5:27:04 PM | | | | | | SEC secures $4.8-million (U.S.) penalty for Glisson
2012-04-25 14:25 ET - Street Wire
Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
Also Street Wire (U-CMKX) CMKM Diamonds Inc
by Mike Caswell
The U.S. Securities and Exchange Commission has secured $4.8-million in disgorgement and fines for Marco Glisson, a Las Vegas man who sold shares in Saskatchewan diamond explorer CMKM Diamonds Inc. after the stock was deregistered in 2005. (All figures are in U.S. dollars.) Mr. Glisson agreed to the penalties as part of a negotiated settlement, without admitting any wrongdoing. He also agreed to a permanent penny stock ban and to an order barring future violations.
The penalties stem from an odd scheme in which the SEC said Mr. Glisson arranged to buy and sell shares of CMKM through chat forums. He would agree to purchase large volumes of the stock for a fraction of a cent, and then arrange a sale for a slightly higher price. In this manner he made $2.7-million, the SEC claimed.
The "trades" took place after the SEC had deregistered the stock in 2005, citing a massive fraud run by Canadian promoter Urban Casavant and others. (In a separate case, the SEC claimed that Mr. Casavant and British citizen John Edwards dumped billions of the company's shares while promoting the non-existent "Casavant diamond brand" from 2002 to 2004. They touted the stock at drag racing events, and found around 40,000 buyers, the SEC said. Both men face criminal charges in the U.S., for which they have not yet answered.)
SEC's complaint against Glisson
The SEC named Mr. Glisson in a civil complaint filed in the District of Nevada on Jan. 15, 2009. It identified him as a 53-year-old automobile worker who had never been registered as a broker or dealer.
In December, 2005, after the SEC had deregistered CMKM (meaning it could no longer be lawfully traded), Mr. Glisson set himself up as a dealer of the company's shares, the complaint stated. He frequented Internet chat rooms where current and prospective CMKM shareholders still exchanged information and propagated rumours about the company. (During the promotion, CMKM developed a substantial group of followers that remained interested even after the SEC had deregistered the stock.)
Mr. Glisson, who used the name "Deli dog" or "Deli," posted messages stating that he was willing to buy and sell the stock, and provided contact information to interested parties. Typically, he offered sellers 0.01 cent per share, although he sometimes paid as much as 0.05 cent, the SEC said. He usually sold at prices between 0.03 cent and 0.025 cent.
As the prices were small, he purchased billions of CMKM shares from individuals throughout Canada and the United States, according to the SEC. Between December, 2005, and May, 2006, he sold stock in at least 100 transactions, grossing $850,000, the SEC claimed.
Essential to his scheme, according to the complaint, was the assistance of CMKM's transfer agent, 1st Global Stock Transfer LLC. The firm agreed to confirm the validity of CMKM stock certificates that Mr. Glisson bought, and then to cancel and reissue those certificates in accordance with his instructions, the SEC said. (The regulator has since revoked 1st Global's registration for its role in the CMKM promotion. The firm repeatedly issued stock for Mr. Edwards or Mr. Casavant based on fraudulent or flimsy paperwork, the SEC claimed.)
In June, 2006, after being contacted by the SEC, Mr. Glisson agreed to stop dealing in CMKM shares. He suspended the buying and selling for about three months, but resumed in September, 2006, according to the complaint. He then commented in Internet forums that he would not stop until ordered to do so by a court.
Mr. Glisson did take some steps to avoid detection after resuming, the complaint stated. Initially he started routing wire transfers from his buying and selling through an account in his wife's name. He then stopped using wire transfers altogether, and relied on payments exclusively by mail, the SEC said.
The scheme came to an end in April, 2007, when 1st Global stopped performing transfer agent services for Mr. Glisson. The SEC said he tried to keep the scheme alive by entering into private contractual arrangements with prospective buyers, but that effort was unsuccessful.
Mr. Glisson's penalty is contained in a consent judgment handed down on April 11, 2012. His $4.8-million fine includes disgorgement of $2.76-million in profits, interest of $670,000 and a $1.4-million civil penalty. The disgorgement portion includes a provision that allows the SEC to seek a contempt of court order if Mr. Glisson fails to pay within 14 days.
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| To: StockDung who wrote (114667) | 4/25/2012 5:54:13 PM | | From: scion | | | | SEC Charges Former Morgan Stanley Executive with FCPA Violations and Investment Adviser Fraud
FOR IMMEDIATE RELEASE
2012-78
Washington, D.C., April 25, 2012 — The Securities and Exchange Commission today charged a former executive at Morgan Stanley with violating the Foreign Corrupt Practices Act (FCPA) as well as securities laws for investment advisers by secretly acquiring millions of dollars worth of real estate investments for himself and an influential Chinese official who in turn steered business to Morgan Stanley’s funds.
Additional Materials
SEC Complaint
sec.gov
The SEC alleges that Garth R. Peterson, who was a managing director in Morgan Stanley’s real estate investment and fund advisory business, had a personal friendship and secret business relationship with the former Chairman of Yongye Enterprise (Group) Co. – a Chinese state-owned entity with influence over the success of Morgan Stanley’s real estate business in Shanghai. Peterson secretly arranged to have at least $1.8 million paid to himself and the Chinese official that he disguised as finder’s fees that Morgan Stanley’s funds owed to third parties. Peterson also secretly arranged for him, the Chinese official, and an attorney to acquire a valuable Shanghai real estate interest from a Morgan Stanley fund. Peterson was acquiring an interest from the fund but negotiated both sides of the transaction. In exchange for offers and payments from Peterson, the Chinese official helped Peterson and Morgan Stanley obtain business while personally benefitting from some of these same investments. Peterson’s deception, self-dealing, and misappropriation breached the fiduciary duties he owed to Morgan Stanley’s funds as their representative.
Peterson agreed to a settlement of the SEC’s charges in which he will be permanently barred from the securities industry, pay more than $250,000 in disgorgement, and relinquish his interest in the valuable Shanghai real estate (currently valued at approximately $3.4 million) that he secretly acquired through his misconduct. The U.S. Department of Justice has filed a related criminal case against Peterson.
“Peterson crossed the line not once, but twice. He secretly bribed a government official to illegally win business for his employer and enriched himself in violation of his fiduciary duty to Morgan Stanley’s clients,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “This case illustrates the SEC’s commitment to holding individuals accountable for FCPA violations, particularly employees who intentionally circumvent their company's internal controls.”
Kara Novaco Brockmeyer, Chief of the SEC Enforcement Division’s FCPA Unit, added, “As a rogue employee who took advantage of his firm and its investment advisory clients, Peterson orchestrated a scheme to illegally win business while lining his own pockets and those of an influential Chinese official.”
According to the SEC’s complaint filed in U.S. District Court for the Eastern District of New York, Peterson’s violations occurred from at least 2004 to 2007. His principal responsibility at Morgan Stanley was to evaluate, negotiate, acquire, manage and sell real estate investments on behalf of Morgan Stanley’s advisers and funds. He was terminated in 2008 due to his FCPA misconduct.
The SEC alleges that Peterson led Morgan Stanley’s effort to build a Chinese real estate investment portfolio for its real estate funds by cultivating a relationship with the Chinese official and taking advantage of his ability to steer opportunities to Morgan Stanley and his influence in helping with needed governmental approvals. Morgan Stanley thus partnered with Yongye on a number of significant Chinese real estate investments. At the same time, Peterson and the Chinese official expanded their personal business dealings both in a real estate interest secretly acquired from Morgan Stanley as well as by investing together in Chinese franchises of well-known U.S. fast food restaurants. Peterson failed to disclose these investments in annual disclosures that Morgan Stanley required him to make as part of his employment.
According to the SEC’s complaint, Peterson openly credited the Chinese official with helping obtain approvals required from other Chinese government entities for a deal to close. He wrote to several Morgan Stanley employees in response to an e-mail discussing the terms of one of Yongye’s purported investments, “Everyone pls keep in mind the big picture here. YY gave us this deal. ... So we owe them a favor relating to this deal. ... This should be very easy and friendly.” In another e-mail a week later, Peterson described “YYI” as “our friends who are coming in because WE OWE THEM A FAVOR.”
The SEC alleges that a Morgan Stanley compliance officer specifically informed Peterson in 2004 that employees of Yongye, a Chinese state-owned entity, were government officials for purposes of the FCPA. Peterson also received at least 35 FCPA compliance reminders from Morgan Stanley, but nonetheless committed the FCPA violations.
The SEC’s complaint charges Peterson with violations of the anti-bribery, books and records and internal control provisions of the FCPA, and with aiding and abetting violations of the anti-fraud provisions of the Investment Advisers Act of 1940. Peterson consented to a court order requiring him to disgorge $254,589 and relinquish to a court-appointed receiver the interest he secretly acquired from Morgan Stanley’s fund in the Jin Lin Tiandi Serviced Apartments. Peterson’s interest has a current estimated value of approximately $3.4 million. The proposed settlement is subject to court approval. Peterson also has consented to permanent industry bars based on the anticipated entry of the injunctions against him and his criminal conviction.
The SEC acknowledges the assistance of the Fraud Section of DOJ’s Criminal Division, the U.S. Attorney’s Office for the Eastern District of New York, and the Federal Bureau of Investigation. Morgan Stanley, which is not charged in the matter, cooperated with the SEC’s inquiry and conducted a thorough internal investigation to determine the scope of the improper payments and other misconduct involved.
The SEC’s investigation was conducted by David Neuman of the Asset Management Unit and Assistant Director Greg Faragasso, and the litigation was led by Richard Hong.
# # #
sec.gov |
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| From: peter michaelson | 4/26/2012 10:46:16 AM | | | | | | Can anyone tell me what happened in the end with Monk's Den at iHub? Were there legal consequences or were they simply kicked out of iHub? Or something else.....
seattletimes.nwsource.com
Penny stock falls despite campaign
Cascadia Investments, a Tacoma-based penny-stock company, has been championed for a year by a website that claims it can organize traders to "lock up" all available shares in a company and cause its price to go through the roof.
Egged on by Monk's Den and its financial guru, Jerry Williams, they've banked on the theory that their group can buy up all the freely trading shares of CDIV.
Then, the story goes, short-sellers who've bet against the stock will have to pay dearly to obtain the shares needed to cover their obligations.
"It really doesn't matter what the company does," a Monk's Den leader under the screen name Lone Grey wrote last fall on the InvestorsHub website, which has accumulated an astonishing 158,000 posts cheerleading for CDIV. "While I feel Cascadia is fundamentally sound and will grow nicely, take a peek at what we did with two worthless companies."
He went on to describe scenarios where "a group of disciplined investors" bought up all the freely trading shares of companies and supposedly drove up the price short-sellers had to pay.
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| From: scion | 4/26/2012 8:08:04 PM | | | | | | Six Charged in Financing-Fraud Case
Updated April 26, 2012, 7:12 p.m. ET
By PETER LOFTUS
online.wsj.com
PHILADELPHIA—The Justice Department said Thursday that it indicted six men on charges of tricking investors into paying upfront fees to connect them with lenders, without delivering. Prosecutors say the men defrauded more than 800 people of at least $10 million.
The men charged are either current or former employees of Remington Financial Group, later renamed Remington Capital, or had ties to the company. The Scottsdale, Ariz., firm describes itself on its website as a financing specialist that helps secure commercial loans for business ventures, particularly those unable to get bank financing.
The U.S. Attorney's Office in Philadelphia, where the company operated a branch office, said the men fraudulently induced hundreds of people to pay Remington advance fees of more than $10,000 apiece, based on allegedly false representations that Remington would line up investors or lenders to fund real-estate and other business projects. Prosecutors said the vast majority of Remington's business was fraudulent, but there may have been some legitimate transactions.
Prosecutors say Remington failed to provide or arrange the purported funding, and in some cases cited problems with the proposed projects so that Remington could blame its failure to provide financing on the victims. The alleged fraud took place between 2005 and 2011, prosecutors said.
"In this circumstance, the reality was Remington did not have the money or the backing to finance the projects," Zane David Memeger, U.S. attorney for the Eastern District of Pennsylvania, said at a news conference in Philadelphia on Thursday. Remington didn't return a call seeking comment.
Andrew Bogdanoff, of Scottsdale, Remington's founder and chairman, was charged with conspiracy to commit mail and wire fraud, and related charges.
The others charged in connection with the case were: Matthew McManus, of Glenside, Pa., Remington's former president who ran its Philadelphia office; Shayne Fowler, of Scottsdale, Ariz., who worked as a Remington account executive; Joel Nathanson, of San Diego, who also worked as an account executive at the company; Frank Vogel, of Rochester Hills, Mich., a broker who allegedly referred customers to Remington; and Aaron Bogdanoff, who is the son of Andrew Bogdanoff and who occasionally worked for Remington.
The six men couldn't immediately be reached. Lawyers for three of the men didn't return calls seeking comment; the Justice Department said Mr. Vogel doesn't have an attorney.
Mr. McManus's attorney, Lisa Mathewson, said her client intends to fight the charges. "The charges appear to relate to Mr. McManus's relationship with a former business associate in Arizona," she said. "They do not reflect on Mr. McManus's own Philadelphia-based business, nor on his excellent reputation for closing successful business deals with integrity."
Mr. Fowler's attorney, Michael Piccarreta, said he hadn't seen the indictment.
None of the men are in custody and no court date has been set, prosecutors said. All of the men except Aaron Bogdanoff were charged with conspiracy to commit mail and wire fraud, committing mail and wire fraud, and related charges. Aaron Bogdanoff was charged with conspiracy to defraud the U.S. and filing false tax returns.
If convicted, all except Aaron Bogdanoff could face prison terms of at least 10 years under federal sentencing guidelines. Aaron Bogdanoff could face two years in prison under guidelines, Mr. Memeger said.
The Wall Street Journal reported in June 2008 that federal and state authorities in Pennsylvania and California were investigating Remington over allegations of advance-fee fraud.
One of the alleged victims was the former acting mayor of San Diego, Ed Struiksma, who said he paid $25,000 in fees to Remington, but received no financing for land he wanted to buy for a housing development.
Write to Peter Loftus at peter.loftus@dowjones.com
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