Last week, on April 28, 2010, SEC Chairman Mary Schapiro testified before the Senate’s Subcommittee on Financial Services and General Government in support of the President’s FY 2011 budget request of $1.258 billion for the Securities and Exchange Commission.
During her testimony, Chairman Schapiro discussed the SEC’s progress on various initiatives undertaken during the past year as well as the agency’s continuing work to further improve investor protections.
The Securities and Exchange Commission announced that Richard A. Levine has been named an Associate General Counsel for Legal Policy in the agency’s Office of the General Counsel.
According to the SEC, Mr. Levine will provide legal and policy advice to the Commission on a wide range of matters, with a particular emphasis on enforcement, corporate disclosure, and accounting.
Said SEC General Counsel David Becker:
Rich is known to the public and across the Commission as a splendid lawyer. He has extensive knowledge of the securities laws and superb judgment. Rich has been a valued advisor to me and to the Commission for many years. I am delighted that he has agreed to serve in this new capacity.
Mr. Levine has held numerous positions in the SEC’s Office of General Counsel, most recently as the SEC’s Assistant General Counsel for Enforcement. Before joining the SEC, Mr. Levine was a litigation associate at Cahill Gordon & Reindel in New York City. He earned his JD in 1980 from Michigan Law School and his BA, summa cum laude, from the State University of New York at Albany in 1977.
Said Mr. Levine:
I have been fortunate in my career to have worked with and learned from so many talented and dedicated SEC staff. I know how vital the SEC’s work is for America’s investors, and I am honored to have this opportunity to continue to advance the SEC’s mission.
Mr. Levine will begin his new role immediately.
As reported in the Financial Times, the US Securities and Exchange Commission is touting a new brain trust in response to an oft-cited criticism that its staffers do not have the necessary level of industry knowledge and experience to effectively regulate the business.
The SEC’s new asset management unit is part of a broader reorganisation at the agency designed to make it a more efficient and effective regulator. The unit will focus on investment advisers, investment companies, hedge funds and private equity funds. Read the rest of this entry »
Gene A. Gohlke, the Associate Director of the SEC’s Office of Compliance Inspections and Examinations (OCIE), recently spoke on a panel at the Practicing Law Institute’s investment management seminar, where he made some interesting statements regarding the SEC’s current examination strategies — more specifically, the resurgence of the “surprise” exam. Read the rest of this entry »
The Securities and Exchange Commission is shaking up its enforcement division, establishing five priority areas, including one pointed directly at hedge funds and private equity firms.
One year ago today, Bernard Madoff was arrested and charged with securities fraud in a $50 billion Ponzi scheme that affected thousands of investors. It was an investment scandal that rocked Wall Street and raised concerns and awareness on all levels. As a result, stricter regulations and much needed reforms and due diligence on how the Securities and Exchange Commission intends to respond to and review allegations of fraud have been implemented.
Briefly stated those reforms include:
The SEC is clearly continuing their interest in insider trading as they have reportedly sent dozens of subpoenas to hedge fund managers and brokers. From FINalternatives:
The regulator has sent at least three dozen such subpoenas to hedge funds and brokerages, The Wall Street Journal reports. According to the newspaper, at least some of the managers receiving the subpoenas were surprised by their scope and is causing fear that the SEC may come down hard on what have become common practices in the industry.
Raj Rajaratnam seems to have a lot in common with his brother, Rengan Rajaratnam. They have the same initials R.R., both have managed their own hedge funds and BOTH have been involved with investigations for insider trading. Based on papers filed yesterday in New York federal court, Raj disclosed that he was deposed by federal authorities in 2007 in an insider-trading investigation involving “an unrelated hedge fund”, which was Sedna Capital Management and happened to be managed by the other R.R., Rengan Rajartnam as noted in an article in the Wall Street Journal.
Rengan managed Sedna Capital Management until late 2007, which is said to have been shut down after suffering losses and the costs of complying with the SEC investigation. It appears that the Galleon Group was requested to provide documents (about four million of them) in conjunction with the 2007 SEC investigation of Sedna Capital Management. The Wall Street Journal article also states that the status on the investigation of Sedna Capital Management isn’t clear, but based on what we know about Raj, it is probably not good.
The Wall Street Journal is reporting that the government’s investigation into insider-trading is being built on information from five cooperating witnesses, some of whom received information from investors and companies that haven’t been originally charged in the probe, potentially broadening the case.
The complaint released Thursday named two additional cooperating witnesses in the government’s insider-trading case against Raj Rajaratnam, founder of hedge fund Galleon Group: Steven Fortuna, of Boston hedge fund S2, and Gautham Shankar, a proprietary trader at Shottenfeld. Mr. Rajaratnam has denied wrongdoing. The men, join three others — Roomy Khan, Ali Far and Richard Choo-Beng Lee — who were previously identified as cooperating witnesses in the case and have admitted to engaging in illegal insider trading for many years. The cooperators have pleaded guilty to charges including conspiracy and insider trading and are cooperating in the hope of getting lighter penalties, investigators say.
Mr. Lee’s Cooperation Agreement suggests that he engaged in illegal insider trading while working at Steven Cohen’s SAC Capital, the Connecticut-based hedge fund. Coincidentally, Mr. Cohen is said to be “out of the country” until Monday in the midst of all of this. Stay tuned …
Last week’s big enforcement news was that Galleon Group founder, Raj Rajaratnam, was charged with insider trading in the stocks of several companies, including Advanced Micro Devices, Clearwire and Akamai, earning millions of dollars in the process.
Federal prosecutors for the Southern District of New York accused Raj Rajaratnam with illegally obtaining and trading on information on these companies, which also included Polycom, Hilton Hotels, Google and People Support. He has been charged with four counts of conspiracy and eight counts of securities fraud. Others charged by prosecutors include Rajiv Goel, an executive Intel Capital, the venture capital arm of Intel, and Anil Kumar, an executive at McKinsey & Company.
You can view the full complaint here.
According to FINalternatives, this is just the tip of the Insider-Trading Iceberg:
Other hedge fund managers are among those expected to be charged, according to Bloomberg News, the result of a two-year-long investigation. Among those likely to be charged are individuals who came up during the surveillance of Rajaratnam, which included wiretaps. Authorities are also being helped by at least three former Rajaratnam colleagues, including California-based hedge fund managers Ali Far and Choo Beng Lee, according to The Wall Street Journal.
