SEC

A&A

Firms to Pay Over $21.5 Million in Penalties to Settle SEC, NASD Charges

The Securities and Exchange Commission (SEC) and NASD announced this week enforcement and disciplinary actions against a total of 15 firms for failure to deliver mutual fund breakpoint discounts during 2001 and 2002. Breakpoint discounts are volume discounts applicable to front-end sales charges on Class A mutual fund shares (front-end loads). SEC and NASD each brought cases against a group of 7 firms, and NASD separately brought actions against the other 8 firms.

SEC Votes for Clearer Mutual Fund Cost Information

The Securities and Exchange Commission will require more frequent and more understandable reports on mutual fund costs and fund holdings under new rules approved Wednesday.The SEC agreed unanimously to require fund companies to provide semiannual reports to shareholders showing expenses in dollar terms, based on a $1,000 investment, the Wall Street Journal reported. To help investors compare costs of different funds, reports will also have to include cost figures adjusted for a hypothetical, 5 percent annual return.

Companies Finding SOX Compliance Expensive Speak Out

Accountability is expensive.
Tax

Proposed SEC Budget Would Increase Funding by 13 Percent

President Bush’s budget for next year mirrors the headlines of the day in that only Defense, Homeland Security and the Securities and Exchange Commission would see any significant increase in their budgets.The SEC has seen its workload expand significantly over the last year as it has taken civil action in cases related to Enron and WorldCom as well as conflicts of interest in a number of investment companies and trading irregularities/marketing issues in mutual funds, the Associated Press reported.

SEC Considering Changes to Best-Price Rule

The Securities and Exchange Commission may require that the New York Stock Exchange revise the rule that forces markets to get investors the best price, even if it means they have to go to a competing market to get it, the Wall Street Journal reported.

Investors Believe That Sarbanes-Oxley Will Protect Investments

Movaris, a provider of corporate compliance management software recently announced the results of a nationwide poll measuring individual investors' attitudes to the Sarbanes-Oxley Act as well as the level of penalty they would like the law to apply. The poll found that the majority of stockholders want to see punishment for those who violate the law, proving that investors are looking for good corporate governance and adherence to the Sarbanes-Oxley Act. The poll was conducted by Harris Interactive(R) and surveyed a total of 1,022 adults residing across the United States.
Tax

SEC Shuts Down Investment Company that Attracted NFL Players

Ware Enterprises and Investments Inc., which targeted blacks and Christians as well as nearly 20 NFL players, is nothing more than a Ponzi scheme, the Securities and Exchange Commission said Tuesday as it acted to shut down the Orlando-based investment firm.The SEC said the company got more than 600 people to invest about $16.5 million over three years by using religiously oriented pamphlets to attract vulnerable groups, the SEC said in its complaint.
A&A

Trader Testifies About Being Beaten at Mutual Fund Hearing

In a hearing before a Senate subcommittee considering legislation already passed by the House that aims to clean up the mutual fund industry, heard from one former trader who claims he was beaten with a brick after shining the light on abuses within his firm, Putnam Investments.Putnam has slipped from No. 5 to No.
Tax

WorldCom May be Able to Sue KPMG, Citigroup

Already under investigation by the Internal Revenue Service (IRS) for recommending questionable tax shelters, KPMG LLP could now face a lawsuit by WorldCom over what a report called "flawed advice."U.S. Bankruptcy Judge Arthur Gonzalez ordered the report by former U.S. Attorney General Richard Thornburgh, who delivered what some are calling a roadmap whereby WorldCom could potentially sue KPMG and Citigroup.

SEC Goes After Deadbeats; Considers New Fee Structure

The Securities and Exchange Commission (SEC) has set up a new unit to collect millions of dollars in unpaid fines.A team of three lawyers has been hired to find hidden money and get court orders to enforce judgements.
Tax

Former Enron Chief Accountant Faces Criminal, Civil Charges

Andrew Fastow’s alleged partner in Enron crime pleaded not guilty yesterday to six criminal charges handed up in an indictment by a federal grand jury looking into the collapse of what was the nation’s seventh largest company.Richard A. Causey, 44, who was the energy giant’s chief accountant during the years in which massive fraud allegedly occurred, is accused of five counts of securities fraud and one count of conspiracy to commit securities fraud.
Tax

Auditors Find Fraud at HealthSouth Could Total $4.6 Billion

Auditors looking into the fraud at HealthSouth have found it to be far more extensive than originally thought—as much as $4.6 billion in all.Initially, estimates put the fraud at $3.5 billion at the Birmingham, AL-based operator of rehabilitative clinics. The new number comes from a forensic audit by PricewaterhouseCoopers. Importantly, auditors found just $6 million in Medicare fraud.
Tax

Connecticut Residents Get Bogus Tax Collection Letters, Scam or Mistake?

Hundreds of Connecticut residents have received intimidating letters demanding they pay taxes owed to municipalities, even when they are not delinquent.The letters from J.K.
Community News

SEC Takes Action Against Grant Thornton, Doeren Mayhew

The Securities and Exchange Commission has filed an enforcement action charging Grant Thornton and Michigan based Doeren Mayhew with participating in the violation of antifraud and reporting provisions of federal securities law in connection with work done in 1998 for a now-defunct Michigan mortgage banking company.The SEC charges the accounting firm Grant Thornton and Doeren Mayhew & Co., along with three individuals, with "misconduct in connection with their audit of MCA Financial Corporation's financial statem
A&A

SEC Proposes New Investment Rules, Fund Firms Oppose

On Wednesday, the Securities and Exchange Commission voted to propose three regulatory initiatives designed to better protect the 95 million investors in mutual funds. Later in the day, two of the nation's largest mutual fund groups, Fidelity Investments and Vanguard Group, said they oppose the plan by the US Securities and Exchange Commission to require chairmen of mutual fund boards to be independent.
A&A

Spitzer, SEC Ponders Action in Grasso Pay Matter

New York Attorney General Eliot Spitzer said Tuesday his office may investigate whether the compensation of former New York Stock Exchange Chairman Richard Grasso was appropriate for the head of a nonprofit organization. According to the Wall Street Journal, the stock-exchange board opted to refer the Grasso inquiry to both Mr. Spitzer and the Securities and Exchange Commission, and both plan to undertake inquiries.

SEC Finds ‘Revenue Sharing’ Practices at 13 Brokerages

The Securities and Exchange Commission said Tuesday that the activity behind the scandal rocking the $7 trillion mutual fund industry is apparently quite common, with 13 out of 15 brokerages under SEC scrutiny admitting to "revenue sharing" practices.Revenue sharing occurs when mutual funds pay brokerages to promote the funds’ shares.

Film Says SEC is Ignoring Environmental, Social Liability Issues

As the Securities and Exchange Commission comes under increasing fire for failing to properly regulate the mutual fund industry, the environmental sector is now sounding off as well, claiming the commission has failed to enforce its own rules requiring companies to disclose environmental and social liabilities.Sanford Lewis, an environmental and corporate accountability attorney, has made a film about the issue with the SEC refusing to be interviewed on camera, reported SocialFunds.com.
A&A

SEC Halts $800 Million Investment Fraud

The Securities and Exchange Commission announced the filing of charges to halt a fraudulent scheme in which over 5,200 investor accounts purportedly hold investments of over $813 million through an Orange County, CA, business known as Financial Advisory Consultants (FAC). The SEC's complaint, filed last week in federal district court, names James P. Lewis, Jr., of Laguna Niguel, Calif., who allegedly has sold securities in two funds, known as the Income Fund, Ltd.
Community News

SEC, NY Reach $600 Million Settlement with Alliance

Without admitting or denying wrongdoing, Alliance Capital Management LP agreed to a record-setting $600 million cooperative settlement with the Securities and Exchange Commission and New York state, both of which had brought action against the company over market-timing practices.Alliance agreed to pay $250 million to fund shareholders who were harmed by the market-timing deals Alliance had with large investors in exchange for what is known as "sticky assets" in other Alliance products, which generated management fees for the company.Stephen Cutler, director of the SEC’s enforcement di

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