EveryJoe » Mary Schapiro

Regulators Knew About Madoff Scam in 1992

Mark Ellis — Thu, 03 Sep 2009 03:11:50 +0000

In news that will undoubtedly cause victims of Bernard Madoff’s massive $150 billion Ponzi scheme to become outraged, an new report by the Securities and Exchange Commission shows that the SEC received six tips in the sixteen years leading up to Madoff’s confession concerning his scam. However, the SEC’s report alleges that the agency mishandled the inquiries and ignored several key factors in exposing Madoff’s guilt.

The SEC recently released a 450-page report that revealed the SEC’s knowledge of Madoff’s “lies and misrepresentations” dating all the way back to 1992. However, the report also revealed that the SEC failed in its duty to protect the investors that were being defrauded by Madoff for all this time.

The reports also helped to shed light on how Madoff managed to keep his scheme secret for so many years, leading agency chairman Mary Schapiro to assure everyone in her statement that steps have been taken to avoid any such scams in the future. While the sheer loss of money remains staggering, Madoff will hopefully be one of the last of his kind.

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Post from: EveryJoe

Regulators Knew About Madoff Scam in 1992

SEC Chairman: Beware Broker Bonuses

Mark Ellis — Tue, 01 Sep 2009 02:48:14 +0000

As the Securities and Exchange Commission continues to clamp down on unscrupulous Wall Street denizens, Chairman Mary Schapiro has written an open letter to U.S. investment CEOs that warns against using bonuses to compensate brokers. According to Schapiro, such a practice encourages brokers to aim for more sales at the expense of the customer’s interest.

In her letter, Schapiro took note of recent news stories that revealed many CEOs using increased commissions and upfront bonuses to hire brokers, warning that such a practice ends up benefiting the broker more than the customer. By giving brokers large bonuses, Schapiro argues, the brokers feel pressured to do whatever it takes to sell securities, potentially infringing upon their ability to be open and honest with investors.

Brokers who feel that they need to increase their sales volumes may coerce investors into purchasing suboptimal securities or encourage them to purchase more securities, simply to make larger commissions. However, brokers are only supposed to make recommendations to customers based on the customer’s best interest, not their own.

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Post from: EveryJoe

SEC Chairman: Beware Broker Bonuses

Do Some Investors Have An Unfair Advantage?

Mark Ellis — Sun, 26 Jul 2009 00:15:05 +0000

According to New York Democratic Senator Charles Schumer, many of the more prominent Wall Street firms have a significant advantage over smaller firms because of their ability to access certain information more quickly. In order to alleviate this discrepancy, Schumer has called for federal regulators to keep a more vigilant eye on these firms.

In a letter addressed to the Securities Exchange Commission’s chairman, Mary Schapiro, Schumer encouraged the SEC to take action regarding this practice. Schumer also warned the SEC that if it would not be able to do anything to remove or mitigate the advantage, he would be forced to take legislative action and try to solve the problem through Congress.

Schumer’s complaint stems from what have become known as flash orders, which are purchases that allow firms to access stock exchange information seconds before the information is made public. Many firms can use that window of time to get an unfair advantage, buying and selling at better prices, especially with the use of high-tech computer software that can make these transactions nearly instantaneously.

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Post from: EveryJoe

Do Some Investors Have An Unfair Advantage?

Former Prosecutor Becomes NY’s SEC Chief

Mark Ellis — Wed, 03 Jun 2009 02:45:11 +0000

According to the Securities and Exchange Commission, George S. Canellos will become the new director the New York regional office, based in Manhattan. Canellos is a former federal prosecutor who will bring his prosecuting experience to the office that has become so crucial in light of the Wall Street meltdown.

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Canellos, a graduate of Harvard University and Columbia University School of Law, is expected to take a more aggressive approach toward Wall Street, as his background as a prosecutor would suggest. The SEC holds the major Wall Street firms accountable to responsible business practices, something that would need to be especially prevalent in these tough times.

Although he is currently working for the law firm Milbank, Tweed, Hadley & McCloy, Canellos has extensive experience in investigating major financial crimes, mostly having to do with fraud. As part of New York’s Southern District’s U.S. Attorney’s Office, Canellos was the chief of the major crimes unit.

Post from: EveryJoe

Former Prosecutor Becomes NY’s SEC Chief