More information coming out from the Wall Street Journal’s article on the failure of defendants to get a fair trial before the SEC’s own administrative law judges.According to the article, one former SEC judge said she thought the system was slanted against defendants at times.Lillian McEwen, who was an SEC judge from 1995 to 2007, said she came under fire from Ms. Murray for finding too often in favor of defendants. “She questioned my loyalty to the SEC,” Ms. McEwen said in an interview, adding that she retired as a result of the criticism.
Category Archives: SEC Enforcement
SEC Charges Investment Firm of Defrauding Police and Firefighter Pension Funds
The Securities and Exchange Commission today announced fraud charges against an Atlanta-based investment advisory firm and two executives accused of selling unsuitable investments to pension funds for the city’s police and firefighters, transit workers, and other employees.The SEC’s Enforcement Division alleges that Gray Financial Group, its founder and president Laurence O. Gray, and its co-CEO Robert C. Hubbard IV breached their fiduciary duty by steering these public pension fund clients to invest in an alternative investment fund offered by the firm despite knowing the investments did not comply with state law. Georgia law allows most public pension funds in the state to purchase alternative investment funds, but the investments are subject to certain restrictions that Gray Financial Group’s fund allegedly failed to meet.
Parking Stock Is Common Practice, But Illegal
It seems that every once in a while securities professionals need to be reminded that conduct that they think is done in the “ordinary course of business” is actually a securities law violation, with significant consequences.
Today’s reminder is directed at Wall Street traders – arranging for another trader at another firm to take your position for a few days, with an agreement to buy it back is illegal.
Traders have been doing this for years, and apparently the practice is so widespread that many traders do not give it a second thought – until the trade blows up. A few years ago I represented a trader who agreed to hold a position for a fellow trader over the end of the month. The friend needed to reduce his position for month end. The trader-friend asked my client to buy the position, and agreed to purchase it back in four days at a small increase in price.
Read more at The Securities Law Blog – http://seclaw.blogspot.com/2014/04/reminder-parking-stock-is-illegal.html
With 100% Success Rate, SEC’s Use of In-House Judges Questioned by Commissioner Piwowar
The SEC’s increased use of administrative proceedings as the forum for its enforcement actions has come under fire in recent months, with many of the respondents in those cases filing lawsuits arguing (unsuccessfully) that administrative proceedings are actually unconstitutional.
In a speech on Friday SEC Commissioner Michael Piwowar acknowledged that as a matter of “fairness,” the SEC should draft guidelines to establish “which cases are brought in administrative proceedings and which in federal courts.”
For more information, go to SEC’s Piwowar Seeks Guidelines Governing When SEC Will Bring Cases as APs . (Hat tip to Securities Docket for alerting us to the speech.