rfrankowski

The SEC charged a brokerage firm, Macquarie Capital Inc., for underwriting a public offering after receiving a due diligence report signifying that a China-based company’s offering materials contained misrepresentations. Macquarie Capital was the principal underwriter on a public stock offering in 2010 by Puda Coal, which allegedly owned a coal company in China that was traded on the NYSE.  In the offering documents as well as in marketing materials, Puda Coal claimed to own a 90 percent ownership in the Chinese coal company.  However, Puda Coal did not own any stake of the coal company.  Corporate registry filings in the PRC proved that Puda Coal’s chairman had previously transferred all of the ownership Puta Coal had to himself, then sold almost half of his interest.  After the transfers, Puta Coal no longer owned any part of the coal company. During the due diligence review, former investment banker William Fang was provided with the report showing Puda Coal’s discrepancies.  Fang read [...]

The SEC filed its first enforcement actions against 36 municipal underwriting firms under the Municipalities Continuing Disclosure Cooperation (MCDC) Initiative.  The MCDC is a voluntary self-reporting program.  It aims to correct fraudulent misrepresentations and omissions in municipal bond offering documents. For actions that spanned from 2010 to 2014, 36 firms were charged with violations of federal securities laws.  These firms sold municipal bonds with offering documents containing fraudulent compliance terms of obligations regarding continuing disclosure.  The firms also failed to conduct due diligence to discover the misrepresented material before offering and selling the bonds.  Neglecting continuing disclosure has long been a problem for investors to find information about their municipal bond holdings, such as annual financial reports. In March 2014, the SEC offered to settle in cases when underwriters and issuers volunteer to self-report securities law violations under the MCDC.  After this announcement made in March 2014, the first issuer charged under the initiative settled with the SEC in July [...]

Financial advisor was accused of stealing at least $20 million from clients to fund his own private accounts.  He then misused the majority of the money in extremely unsuccessful options trading. The SEC alleges that a private client advisor misused his position by convincing bank customers to withdraw large amounts of money from their accounts for him to purchase safe, low-risk municipal bonds in new accounts.  However, instead of purchasing the appropriate bonds, the advisor bought himself cashier’s checks and deposited all the funds into both his own private account and his wife’s account, which he controlled. Shortly after stealing and depositing each customer’s funds, the advisor traded stock options of high-profile companies such as Tesla, Apple, Google, Netflix, and others.  In most cases, the advisor lost the whole investment.  On the rare occasions that his personal brokerage accounts made a profit, he wired money to separate bank accounts either in his or his wife’s name.  The SEC found at [...]