December 2005
38 posts
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Form Quest Exec Pleads Guilty to Wire Fraud
Only days after ex-Quest CEO Joe Nacchio was indicted on insider trading charges another former exec from the telecom company has been forced to pay the piper… Via BusinessWeek: Ex-Qwest exec pleads guilty to wire fraud By JON SARCHE Associated Press Writer December 28 2005 Former Qwest Communications executive Marc Weisberg pleaded guilty Wednesday to wire fraud and agreed to cooperate...
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NASD Fines Top $125 Million in 2005
Blogging remotely from the great state of Louisiana… Via Reuters: NASD collects record $125 million in fines in 2005 December 27, 2005 By Jonathan Stempel Reuters The NASD on Tuesday said it collected a record $125.4 million of disciplinary fines this year, 21 percent more than in 2004, for violations including abuses in sales of mutual funds and variable annuities. The Washington,...
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This former wishes to correct the error in...
This former wishes to correct the error in referring to Mr. Silverman as Greenburg…
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Merry Christmas to all of you who celebrate it
And seasons greetings to all the rest. I hope you find yourself in the company of family and friends. Updates will be intermittent over the next few days. TDC will be back to a regular schedule after the start of the new year. — MDT
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The NASD Makes With Some Smiting
Via Wallstreetandtech.com: NASD Goes on a $19.4 million Tear, ABA Endorses Searchspace, and more By WS&T Staff Wall Street & Technology December 22, 2005 The NASD announced that it has levied fines totaling $19.4 million against the investment management firms Merrill Lynch, Pierce, Fenner & Smith, Wells Fargo Investments and Linsco/Private Ledger Corporation. The fines were for...
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Hedge Fund Manager Pleads Guilty in Stock Manip...
Via Reuters: SEC says hedge fund manager Sacane pleads guilty December 22, 2005 Reuters The U.S. Securities and Exchange Commission said on Thursday that hedge fund manager Scott Sacane has pleaded guilty to criminal investment adviser fraud in a case being prosecuted by the U.S. Attorney’s Office in New Haven, Connecticut. Sacane, 39, was sued by the SEC in October over related...
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Hedge Funds Reach Settlement on Mutual Fund Fraud
Vi Reuters: 2 hedge funds settle SEC case, to pay over $35 mln December 22, 2005 Reuters Two hedge funds, their investment adviser and two executives agreed to pay more than $35 million to settle charges of fraudulent market timing and late trading in mutual funds, the U.S. Securities and Exchange Commission said on Thursday. Veras Capital Master Fund; VEY Partners Master Fund; their investment...
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Hedge Fund HMC International Charged with...
Perhaps it is more important to call this one a “phoney” hedge fund, as it doesn’t appear the proprietors of HMC, Robert Massimi and Bret Grebow had any intent to do anything but fund their own retirement. Curiously…news of the SEC action hasn’t yet made it to the top of the heap on HMC’s “news page.” Via Reuters: SEC charges hedge fund managers with...
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Nacchio Indicted on 42 Counts of Insider Trading
A little Happy Holidays! from Federal Prosecutors for the former Quest CEO… Via ABCNews.com: Former Qwest CEO Joe Nacchio Is Indicted By Don Mitchell The Associated Press DENVER Dec 20, 2005 — Joseph Nacchio, the former chief executive of Qwest Communications during its multibillion-dollar accounting scandal, was indicted Tuesday on 42 counts of insider trading accusing him of illegally...
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The Professionalism of Private Eyes
While the folks behind this Newsday article may still be a bit behind the times (example: far more than 15% of P.I.s are women - at least in the ranks of corporate investigators) it is nice to occaisionally see that the long running stereotypes about our industry are slowly being dispelled. Companies like our own Caveat Research produce a highly technical, extensively detailed work product that...
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Read the FT's Briefing on the Emerging Italian...
Via the venerable FinancialTimes:FT briefing: Italian insider trading scandal by James Fontanella December 16 2005 Arrest orders issued by investigative magistrates from Milan’s court of justice, obtained by the FT, accuse Gianpiero Fiorani, former president of Banca Popolare Italiana (Bpi), of criminal association related to financial fraud. Together with Mr Fiorani, four other people have...
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Phillip Morris Sees $10 Billion Verdict...
Via the WashingtonPost.com: Court Overturns $10 Billion Verdict Against Philip Morris By David A. Vise Washington Post Staff Writer December 16, 2005 Philip Morris USA won a legal victory yesterday when the Illinois Supreme Court reversed a $10.1 billion lower-court verdict that held the company, and its parent, Altria Group Inc., liable for allegedly misleading consumers about the risk of...
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One Quarter of Hedge Funds to Avoid SEC...
According to interviews conducted by MarketWatch.com, some hedge funds are planning to side-step the planned Februaru 2005 registration deadline with the SEC - either by declining new investments after the end of January or by taking advantage of other exemptions for money already under their control (hedge funds routinely lock-down investor funds for a lengthy term - up to two years). Of course,...
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Back From the Wild North
The Daily Caveat has returned from a quick trip to the frigid streets of New York City. New posts to follow throughout the day. The most fascinating article I read on the train yesterday was this one. Featured on the front page of the WSJ, (helpfully reprinted in full online by the Pittsbuirgh Post Gazette), the piece casts a new light on the notion of “activist” hedge funds. Jim...
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SEC Circling Mutual Fund Firm, Three Year...
The American Funds group, a subsidiary of Capital Group Cos. is one of the United States’ largest stock and ond holders. Seventy-five years into its existance the firm may be facing legal action. Now that new SEC boss Chris Cox has gotten a bit more comfortable in his chair some have surmised that the long brewing government probe into whether American’s trades have run afoul of...
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Tab for Consultants Triples in Endless San Diego...
The Daily Caveat has considerd writing about the continuing issues with the ongoing audit of the city of San Diego, primarily because investigative giant, Kroll has been active throughout as one of the prime contractors. But frankly, where to begin. The whole project has been plagued with semi-scandal for more than a year. In any event, the North County Times, the bill for the project may tripled...
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The Year in Hedge Funds, By Topic
Via CNNMoney.com: Top hedge fund stories of 2005 — Fines, proxy fights, rocky returns — 2005 has proved a tricky year for hedge funds December 12, 200 By Amanda Cantrell CNN/Money staff writer From fines to frauds to proxy fights to rocky returns, the press-shy hedge fund industry grabbed more headlines in 2005 than it has since 1998, when the spectacular blowup of a fund called Long...
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What Happened at that Hedge Fund Rule Hearing?
Last week The Daily Caveat wrote about the looming court challenges to the SEC’s new hedge fund regulations (between 1999 and 2004 the SEC brought 51 fraud cases relating to hedge funds) set to take effect in February 2006. A hearing was held on Friday last, allowing both sides to courteously express their views on the merits or pitfalls of the proposed SEC rules. The Washington Post has...
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Health South CFO Receives Five Year Sentence
So much for what cooperating with federal prosecutors will get you. William T. Owens assisted the Feds in making their case against his fellow executives and for his trouble received the longest jail term meted out in relation to the Health South fraud. Owen’s assumed ace-in-the-hole were his recorded conversations with Health South top dog Richard Scrushy. Scrushy was recently acquitted...
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Corporate America Learning to Love Investigators?
So says The Business Online: No risk for Kroll leaving shadows Rupert Steiner - City Editor December 11, 2005 The Business Online One of the few industries to benefit from Sarbanes-Oxley and the myriad of tighter regulations plaguing America’s Fortune 500 companies are the corporate detectives. The growth in corporate governance red tape serves as a coming of age for firms such as Kroll...
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Thanks so very much for taking your time to...
Thanks so very much for taking your time to create your blog. Excellent work
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Thanks so very much for taking your time to...
Thanks so very much for taking your time to create your blog. Excellent work
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Identity Theft Overblown?
Interesting article forwarded to us by the National Council of Investigations and Security Services, our industry lobbying group: Fears over identity theft overblown: US study – From Yahoo News Thu Dec 8,12:37 AM ET A new study suggests consumers whose credit cards are lost or stolen or whose personal information is accidentally compromised face little risk of becoming victims of identity theft....
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Shareholder Activists Seek Court Blockage of SEC...
Over the summer the business boogey-man du jour was identity theft. Like many other blogs The Daily Caveat rode that wave in part because the giant data aggregators who were some of the prime offenders are the most prominent vendors in our industry. But the business pages have subsequently moved on and identity theft concerns have filtered down to local newscasts sandwiched between lost dog...
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SEC Enforcement Action Stats for 2005
According to estimates from regulators, the SEC dealt with more than 600 enforcement actions over the last year. Approximately 30% of these actions were related to financial fraud cases, making it the number one issue. “Revenue recognition” cases were named as the most frequent of financial frauds. All that and more in this interesting piece from Reuters: More U.S. SEC book-cooking...
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Investors: Does Change Offer Hope?
In a year where a record number of named hurricanes plowed into American and neighboring shorelines, we are reminded of all that we are unable to control. The consequences from these natural disasters left victims reeling from loss of life, property and perhaps faith that things will ever be the same again. The hurricane season is finally over offering a short reprieve. In contrast and perhaps...
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Investigators Seek Langbar's Missing $633 Million
Via The Daily Telegraph: New sleuth put on the trail of Langbar’s £365m deposits By Robert Miller December 5, 2005 The Daily Telegraph Serious Fraud Office lawyer Stephen Myers will take over as case controller today of the formal investigation into Langbar International, the suspended Aim-listed company. One of his first tasks is to meet senior officials from the Stock Exchange and the...
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Refco's Bondholders Seeking Access to "Secret"...
Via the Seattle Post Intelligencer: Refco bondholders want access to data THE ASSOCIATED PRESS December 6, 2005 WASHINGTON — An investor group that holds $487.5 million in Refco Inc. bonds asked a judge to grant it direct access to secret information being gathered by a committee of creditors investigating the company’s financial collapse. The group said Refco’s official...
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Kroll Receives Homeland Security Contract for TSA...
Via WashingtonTechnology.com: DHS taps Kroll for background investigation work By Alice Lipowicz Staff Writer December 6, 2005 The Transportation Security Administration has awarded a contract to Kroll Government Services Inc. to perform preliminary background investigations of TSA screeners and other employees, the company announced today. The indefinite-delivery, indefinite-quantity contract is...
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American Indian Trusts Seeking $176 Billion in...
In what is being billed as the largest class action suit ever, the American Indian Trusts are suing the federal government for what they regard as mismanagement of fund owed to the trusts over the last 100 years. Last week legal experts and tribal reps from around the country met at Arizona State University to discuss the case and it’s legal and financial implications. According to the...
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EX-KPMG Settles in Botched Audit Case Without...
Joseph Boyle, KPMG’s “relationship partner” with Xerox from 1999-2000 has accepted a settlement with the SEC regarding his failure to disclose to KPMG’s Xerox audit committee financial irregularities Boyle uncovered during his time as liason to the eponymous imaging company. According to federal regulators, the accounting fraud at Xerox began in 1997 and amounted to one and...
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Scrushy Charges Dropped....But Civil Case Date Set
You win some, you lose some. So far former Health South SEC, Richard Scrushy has done ok for himself. As a prime target in one of the most priminent corporate scandal prosecutions of the last few years, Scrushy managed to skate, despite sworn testimony from no less than five former officers who described Scrushy’s involvement in fraudulent activites. Scrushy was found not guilty of...
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Search Terms as Murder Evidence...Interesting...
Via Legaline.com: Search terms as evidence of murder December 4, 2005 In the days leading up to his wife’s murder, Robert James Petrick used Google to search the terms “body decomposition,” “rigor mortis,” “neck” and “break.” He also went online to research the depth, currents and underwater topography of the lake in which his wife’s body...
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SEC General Counsel Resigns
Newish SEC chair Christopher Cox was only just getting comfortable in own his seat and now faces the highest profile of the many vacancies he will need to fill at America’s security regulator. Late last week SEC Gerneral Counsel, Giovanni Prezioso ammounced he would be stepping down. Here’s a run-down of the major accomplishments of the GC’s office under Prezioso’s...
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Millinium Settlement....$180 million
Via Bloomberg: Millennium Settles With Spitzer, SEC for $180 Million December 1, 2005 Bloomberg By Christopher Mumma & Katherin Burton Millennium Partners LP, a $5 billion hedge fund company accused of improper mutual fund trading, agreed to pay $180 million in a settlement with New York Attorney General Eliot Spitzer and the U.S. Securities and Exchange Commission. Millennium, run by Israel...
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Ameriprise Financial Settles with the SEC, NASD...
Via the Minneapolis Star Tribune: Ameriprise to pay $59.3 million in fines, restitution Neal Gendler, Star Tribune December 1, 2005 Ameriprise Financial Inc. and its brokerage arm, Ameriprise Financial Services Inc., have agreed to pay $59.3 million in fines and restitution to settle accusations by securities regulators that the businesses improperly favored some shareholders and mutual fund...
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Hedge Fund, Cornell Capital Partners, in SEC Pipes...
The SEC has been mulling a move in the PIPEs (private investment, public equity) market for several months. Now it looks like at least one fund has found itself in the crosshairs. Via Matthew Goldstein at The Street: Cornell Capital Partners, a hedge fund that specializes in finance for ailing penny-stock companies, is being investigated by securities regulators for its trading activity in shares...
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SEC Probing Role of Hedge Funds in Bankruptcies
Distressed debt is big, big business. Of primary interest to the SEC is whether funds are accurately representing the size of their holdings in the distressed companies in order to gain access to sensitive, and potentially lucrative, data. Via CFO.com: Hedge Fund Bankruptcy Role Seen Probed Stephen Taub November 29, 2005 CFO.com The Securities and Exchange Commission is investigating the...