An irreverent Wall Street Blog
BrokeAndBroker.com Blog by Bill Singer WEEK IN REVIEW
April 18, 2015
On April 16, 2015, the United States Attorney for the Southern District of New York announced that Michael Oppenheim, 48, Livingston, NJ had been charged in a Criminal Complaint with one count each of wire fraud, embezzlement, securities fraud, and investment adviser fraud in connection with his alleged conversion of $20 million in client funds from March 2011 to March 2015. If convicted, in addition to a maximum fine of $5 million or twice the gross gain/loss, Oppenheim faces up to 30 years in prison on the embezzlement count; 20 years on the wire and securities fraud counts; and 5 years on the investment adviser fraud count. In a parallel action, the Securities and Exchange Commission filed a civil Complaint. The FULL-TEXT Complaints are online at BrokeAndBroker.com Blog. READ
In a Financial Industry Regulatory Authority ("FINRA") Arbitration Statement of Claim filed in September 2013, Clamant Ishii Family Trust asserted breach of fiduciary duty; failure to supervise; negligent Misrepresentation; and respondeat superior in connection with Respondents Chan and Sagepoint Financial's alleged failure to purchase securities, among which were Apple, Goldman Sachs, Berkshire Hathaway, Kinder Morgan Energy, Ford and Lennar. In addition to fees, interest, and costs, Claimant sought compensatory and consequential damages for the loss of of opportunity and portfolio value. At the close of the hearing, Claimant sought damages in the range of $47,000 to $93,000. In the Matter of the FINRA Arbitration Between Ishii Family Trust dated 12/2/93,Claimant, vs. Jason Chan and SagePoInt Financial, Inc., Respondents(FINRA Arbitration 13-02750, April 9, 2015). READ
As readers of the BrokeAndBroker.com Blog know, I frequently take Wall Street's regulators to task when they fail to do their jobs. Frankly, I've been a busy boy the past few decades. That being said, I recently came across an example of why, at times, the Securities and Exchange Commission ("SEC") gets bogged down -- but this time, it's not the SEC's fault. Ironically, the SEC itself is the victim of federal bureaucracy and idiotic rules. READ
On April 14, 2015, Securities and Exchange Commissioner ("SEC") Kara Stein delivered a speech at the SIFMA Operations Conference. As Commissioner Stein so aptly warns:
For hundreds of years, physical paper documents and human beings dominated our securities operations. Today, data dominates. Digital data is part of every aspect of our markets. And this new reality is challenging all of us. The proliferation and reliance on data has disrupted our markets - oversight and regulation need to evolve to keep pace. In this new world, we need new tools.
Stein's remarks are by no means comprehensive or granular; rather, they present a snapshot of the emerging role of data and rightly suggest that human beings are barely keeping pace (if at all) with the explosion. As she perfectly captures in her remarks:
This "Flash Crash" should have been a wake-up call to all of us. It demonstrated that our markets had, in some ways, outpaced their keepers. This was the largest, but not the last flash crash. Other mini flash crashes continue to occur in our markets.A recent example that demonstrates some of the potential pitfalls of over reliance on technical and algorithmic trading occurred on April Fools' Day this year. A Tesla press release jokingly announced a new "W" model for a watch. It was clearly intended as a joke. However, it was taken all too seriously by computers dutifully executing their algorithms in response to the press release. The algorithms didn't quite get the joke, trading hundreds of thousands of shares and spiking the stock price within one minute of the issuance of the release.
The BrokeAndBroker.com Blog reprints Commissioner Stein's SIFMA comments in full-text. READ
More often than not, a Securities and Exchange Commission's ("SEC's) Administrative Law Judge's ("ALJ's") Initial Decision flies through to finality untouched. If you are a respondent in an SEC matter, however, there may be aspects of an Initial Decision that you think are wrong -- be that the calculation of damages or references to dates and events. There is a sense that once the Initial Decision has left the station that there's not much point in complaining because that train's on its way and gone. As an ALJ's recent Order demonstrates, it may still pay to take a shot at moving for reconsideration. READ
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For many years I have warned about so-called Standby Letters of Credit, Bank Guarantees, and Trading Platform scams. These frauds are nothing than more than unadulterated bull-shit. Nonetheless, there are flocks of pigeons eagerly following the breadcrumbs into the arms of scam artists. Sadly, many victims of these frauds refuse to do their due diligence and abandon all logic and commonsense. Today's BrokeAndBroker.com Blog is meant as a warning. As such, I am posting a Securities and Exchange Commission's ("SEC's") Administrative Law Judge's ("ALJ's") "Findings of Fact" from her Initial Decision on Default. READ