The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
March 18, 2019
Merrill Lynch Wins A Round Against Former Employees in FINRA Arbitration (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/4493/merrill-lynch-finra/
For some four decades from 1959 until his retirement in 1998, James A Billington was an associated person of Respondent Merrill Lynch and its former Western Regional Director. During his tenure at what was once called "Mother Merrill" or "The Thundering Herd," Billington got Merrill stock and stock options, which he put into his Trust. Alas, mom didn't age that well and the herd got thinned out. In January 2008, during the onslaught of the Great Recession, Bank of America acquired Merrill Lynch. Shortly after his Merrill stock was swapped out for Bank of America stock, Billington sold his holdings and took a proverbial bath. In September 2014, Billington died, but that only begins the saga of his Trust's lawsuit against his former employer.
Without admitting or denying the findings in SEC Orders, registered investment advisor Talimco LLC and its former Chief Operating Officer Grant Gardner Rogers entered into settlements whereby they were found to have violated Section 206(2) of the Investment Advisers Act. In the Talimco Order https://www.sec.gov/litigation/admin/2019/ia-5202.pdf the firm consented to a cease-and-desist order, a Censure, disgorgement of its fees of $74,000 plus prejudgment interest of $8,758.80 and a penalty of $325,000. In the Rogers Order https://www.sec.gov/litigation/admin/2019/ia-5201.pdf, he consented to a cease-and-desist order, a 12-month industry suspension, and a $65,000 fine. As set forth in part in the SEC Release:
[I]n or about April 2015 while selling a commercial real estate asset on behalf of a collateralized debt obligation client, Talimco and Rogers were aiming to acquire the asset for another client, a private fund. Talimco and Rogers owed its selling client a fiduciary duty, which included an obligation to take steps to use its best efforts to maximize the price obtained for the asset by identifying willing bidders. However, rather than seek out multiple bona fide bidders, the order finds that Rogers used the firm's affiliated private fund client for one bid and convinced two unwilling bidders to participate in the auction by giving assurances that the bidders would not win the auction. As a result of this manipulation, Talimco's private fund client was the highest bidder and acquired the asset, only to then later sell it for a substantial profit. Talimco and Rogers's conduct deprived the selling client of the opportunity to obtain multiple bona fide bids for the asset and maximize their profit.
SEC Charges Former Municipal Officer with Fraud in Connection with Public Pension Funds (SEC Release)
https://www.sec.gov/litigation/litreleases/2019/lr24424.htm
https://www.sec.gov/litigation/litreleases/2019/lr24424.htm
Without admitting or denying the allegations in an SEC Commplaint filed in the United States District Court for the Middle District of Georgia
https://www.sec.gov/litigation/complaints/2019/comp24424.pdf, former County manager of Macon-Bibb County, GA, Dale M. Walker consented to the entry of a final judgment permanently enjoining him from violating the antifraud provision of Section 206(2) of the Investment Advisers Act of 1940 and ordering him to pay a $10,000 civil penalty. Further, Walker is enjoined from participating on behalf of a government entity in the decision to select or retain an investment adviser or broker-dealer, any involvement with managing any public pensions or making investment recommendations to such entities, and from participating in the selection of underwriters or municipal advisers for any offering of municipal securities. As set forth in part in the SEC Release, Walker allegedly had:
https://www.sec.gov/litigation/complaints/2019/comp24424.pdf, former County manager of Macon-Bibb County, GA, Dale M. Walker consented to the entry of a final judgment permanently enjoining him from violating the antifraud provision of Section 206(2) of the Investment Advisers Act of 1940 and ordering him to pay a $10,000 civil penalty. Further, Walker is enjoined from participating on behalf of a government entity in the decision to select or retain an investment adviser or broker-dealer, any involvement with managing any public pensions or making investment recommendations to such entities, and from participating in the selection of underwriters or municipal advisers for any offering of municipal securities. As set forth in part in the SEC Release, Walker allegedly had:
improperly provided an unfair competitive advantage to one investment adviser due to his romantic interest in an individual associated with the adviser. According to the complaint, Walker provided the confidential proposals of other investment adviser candidates to the adviser and asked the associated individual to analyze and rank the candidates. The completed analysis ranked the adviser first above all other applicants. The complaint further alleges that Walker attached the analysis to his memo recommending the adviser to the three pension fund boards, falsely representing that he prepared the analysis. Neither the adviser nor Walker disclosed the conflict of interest inherent in the adviser's preparation of those materials. The complaint alleges that each of the pension fund boards followed Walker's recommendation and selected the adviser as the investment adviser for their respective pension funds.
The SEC's investigation was conducted by Michael J. Adler, and supervised by Peter J. Diskin in the Public Finance Abuse Unit and the Atlanta Regional Office.
https://www.justice.gov/usao-ma/pr/boston-woman-sentenced-27-million-bank-fraud-scheme
In the United States District Court for the District of Massachusetts in May 2017, Alexis Forde was indicted along with co-conspirators Palestine Ace, a/k/a Pam Ace (a former Senior Vice President of Bank of America's Global Wealth & Investment Management Division), and her husband, Jonathan R. Ace. In November 2018, Forde pled guilty to one count of conspiracy to commit wire fraud. Forde was sentenced in the to four months in prison plus two years of supervised release (includes six months of home detention); and she was ordered to pay $778,000 in restitution to Bank of America. After pleading guilty to one count of conspiracy to commit bank fraud, five counts of wire fraud, and 12 counts of bank fraud, Palestine Ace was sentenced to one year and one day in prison plus two years of supervised release ; and she was ordered to pay $2,778,000 restitution. After pleading guilty to after previously pleading guilty to one count of conspiracy to commit bank fraud, three counts of wire fraud, and one count of engaging in an unlawful monetary transaction, Jonathan Ace was sentenced to two years in prison plus two years of supervised release; and he was ordered to pay $1,855,000 restitution. As set forth in part in the DOJ Release:
In the United States District Court for the District of Massachusetts in May 2017, Alexis Forde was indicted along with co-conspirators Palestine Ace, a/k/a Pam Ace (a former Senior Vice President of Bank of America's Global Wealth & Investment Management Division), and her husband, Jonathan R. Ace. In November 2018, Forde pled guilty to one count of conspiracy to commit wire fraud. Forde was sentenced in the to four months in prison plus two years of supervised release (includes six months of home detention); and she was ordered to pay $778,000 in restitution to Bank of America. After pleading guilty to one count of conspiracy to commit bank fraud, five counts of wire fraud, and 12 counts of bank fraud, Palestine Ace was sentenced to one year and one day in prison plus two years of supervised release ; and she was ordered to pay $2,778,000 restitution. After pleading guilty to after previously pleading guilty to one count of conspiracy to commit bank fraud, three counts of wire fraud, and one count of engaging in an unlawful monetary transaction, Jonathan Ace was sentenced to two years in prison plus two years of supervised release; and he was ordered to pay $1,855,000 restitution. As set forth in part in the DOJ Release:
From approximately October 2010 to April 2015, the defendants engaged in an embezzlement and kickback scheme to defraud Bank of America of approximately $2.7 million using fraudulent donations to non-profit organizations. As part of the scheme, Palestine Ace used her position as a Senior Vice President at Bank of America to misappropriate funds from a marketing budget and transfer the money to non-profit organizations. Specifically, Palestine Ace authorized 75 transactions, each under $50,000, to non-profit organizations in Boston and Atlanta. Then, the defendants, either directly or indirectly, informed the non-profit organizations that a substantial portion of the donated funds must be returned in order to ensure that Bank of America would continue to fund the organization. The non-profit organizations either wrote a check to Jonathan Ace or Forde, or they returned funds to a Bank of America account, to which the defendants had access. On various occasions, Jonathan Ace pressured the recipients of the donated funds to return a higher percentage of the funds to him, by using intimidation and threats of public humiliation.Palestine and Jonathan Ace used a portion of the funds they embezzled from Bank of America to support their lifestyle and pay for personal expenses, including lavish birthday parties and the purchase of a $17,000 Kawasaki motorcycle. Forde personally received over $200,000 for her role in the scheme.
Forum To Be Held on May 31 at SEC Headquarters (SEC Release)
https://www.sec.gov/news/press-release/2019-35
https://www.sec.gov/news/press-release/2019-35
Organized by the SEC's Strategic Hub for Innovation and Financial Technology (FinHub), on May 31, 2019, the SECwill host a public forum at its headquarters (with live webcast) focusing on distributed ledger technology (DLT) and digital assets. Panelists will explore such topics as initial coin offerings, digital asset platforms, DLT innovations, and how these technologies impact investors and the markets.
Court Enforces SEC Subpoenas Ordering Witnesses to Produce Documents and Appear for Testimony (SEC Release)
https://www.sec.gov/litigation/litreleases/2019/lr24423.htm
https://www.sec.gov/litigation/litreleases/2019/lr24423.htm
The United States District Court for the Central District of New York ordered upon consent that Christina Marie Daniels, Kim Bennett, and Valentino Moca comply with SEC investigative subpoenas for documents and testimony. The SEC is allegedly investigating, among other things, whether certain individuals or entities engaged in the offer and sale of unregistered securities; and, accordingly, the SEC asserts that it has reason to believe that Daniels, Bennett, and Moca, who each purportedly personally invested in the unregistered securities, may have been involved in raising substantial amounts of money from others.