Blog by Bill Singer WEEK IN REVIEW

January 17, 2015

Stockbroker Clocked For Untimely Reporting of Bankruptcy

It's bad enough when your affairs have gotten so dire that you are required to file for bankruptcy.  Thankfully, the laws are somewhat forgiving and seem largely designed to help folks piece their shattered lives together and get a fresh start.  The devastation of the Great Recession still lives with us to that extent.  On the other hand, just when you think you've gotten out of the mess and put your life back together, the intricacies and vagaries of Wall Street's regulatory scheme may bite you in the ass. Consider this recent case in which one registered person failed to timely disclose his bankruptcy filing. READ

Some civil Complaints seem destined to become  "landmark" or "historic." You read through the pleading and it hits you that this dispute may change the regulatory landscape, for better or worse. In Metlife,Inc. v. Financial Stability Oversight Council (Complaint, DDC, 15-45, January 13, 2015), we are presented with one such likely candidate for posterity.

The gist of this lawsuit is that Plaintiff Metlife is challenging the decision by the Financial Stability Oversight Council's (the "FSOC's") designation of Plaintiff as a "nonbank systemically important financial institution" (a "nonbank SIFI"). Plaintiff argues that the FSOC did not act properly under the Dodd-Frank Act when it designated the firm as a nonbank SIFI and, further, the allegedly arbitrary and capricious conduct deprives Plaintiff of its Due Process rights. READ.

In the movies, they throw tacks on the highway in order to slow down the pursuing bad guys. On Wall Street, well, you know, there's this similar thing where stockbrokers, how should I put this, sometimes they inadvertently transpose customers' telephone numbers before saving them to their firm's official computer database, and, well, geez, if you were, you know, to leave your current firm and join a new one, well, hmmmm, imagine what might happen if, for example, just sayin', your old firm diced and sliced your book of business and gave out your accounts to your former colleagues, who, omigod, they telephoned the numbers stored in the firm's customer database and each and every one was wrong. Tough to trash your good name and steal your customers if you can't get through on the phone . . . inadvertently, of course. READ

According to a criminal Complaint unsealed on January 13, 2015, in the District of New Jersey, Aleksandr Milrud, 50, Ontario, Canada, and Aventura, FL, was charged with one count of conspiracy to commit securities fraud and one count of wire fraud in the first federal securities prosecution involving the high-frequency trading ("HFT") strategy of "Layering" or "Spoofing."  The conspiracy purportedly targeted U.S. securities markets with the assistance of  traders based in China and Korea.United States of America v. Aleksandr Milrud (Complaint, DNJ, 15-7001, January 13, 2015).  

In a separate action, the Securities and Exchange Commission ("SEC") filed a civil Complaint charging Milrud with violating and aiding and abetting violations of anti-fraud provisions of federal securities laws and the SEC's antifraud rule, and with liability for the conduct of the traders under his management. Also see Securities and Exchange Commission, Plaintiff, v. Aleksandr Milrud, Defendant (Complaint, 15-CV-00237,DNJ, January 13, 2015). READ

FULL-TEXT Supreme Court and 8th Circuit Opinions Online. Oral Argument and Transcript Online Too.

On February 23, 2007, Larry and Cheryle Jesinoski borrowed $611,000 from Countrywide Home Loans, Inc. pursuant to the refinance of their home mortgage. On February 23, 2010, the Jesinoskis mailed Countrywide a letter notifying that they were rescinding the loan pursuant to their rights under the under the Truth in Lending Act ("TILA"), On appeal, the United States Supreme Court reversed and remanded. READ

Stockbroker, Compliance, Legal, and Regulatory Jobs at Employment Page. READ

With a new year upon us, it's often helpful to re-visit lessons that should have been learned from prior years; and what better place to start than what happens when a registered representative fails to report disclosable events. In this first such case of 2015, we find the old combo of liens and judgments, and, for good measure, an added dose of willfulness. READ

To clean it up a bit: stuff happens.  Everyday we make mistakes, and many, perhaps most of them, are "inadvertent." A lot of crap that goes wrong isn't the result of some nefarious plan for world domination engineered by some brilliant but corrupt bad guy. All too often, when things go off the tracks and into a ditch, it's because some idiot just had a brain fart and screwed up. Unfortunately, when we try to apportion blame and seek redress for something that was unintended and accidental, it often devolves into a morality play of sorts. On Wall Street, regulation frequently comes off as little more than a sanctimonious, hypocritical speed-trap because far too many enforcement cases appear to be of the gotcha variety. Which is not -- and let me repeat that -- which is NOT to suggest, not even remotely, that there aren't lots of bad guys in the biz who intentionally do lots of wrong things and hurt lots of innocent folks. The challenge here is for balance. I applaud all the fervor that goes into investigating, charging, and bringing to justice the crooks. On the other hand, I also caution against excessive regulation because it cultivates a subculture where the dangerous lesson learned is that it's best to cover-up mistakes. Consider Bill Singer's concerns with this recent FINRA settlement. READ