Libyan Investment Authority fails to convince court US bank duped it; Société Générale case even bigger but LIA is rudderless.

In the end, staff at the Libyan Investment Authority (LIA) just weren’t stupid enough. That’s the central conclusion in the sovereign fund’s expensive loss of a $1.2 billion legal battle with Goldman Sachs in London’s High Court in October.

The case had alleged that Goldman had taken advantage of the lack of sophistication at the fledgling Libyan fund and sold it products whose risk profile the buyer did not understand, resulting in the total loss of $1.2 billion of capital while simultaneously earning the US bank an alleged $200 million. The problem with this premise was that it required the LIA to prove that its staff in those early days were hopeless ingénues in wide-eyed thrall to the wisdom and abuse of Goldman bankers, and unable to understand what they were buying. read more »

Crisis at Venezuela’s PDVSA deepens as Caribbean debts pile up

Unpaid debts and broken promises are making Venezuelan oil giant PDVSA an outcast in several Caribbean countries where it had been a guest of honor.

The state-run company's crumbling finances are causing operational disruptions across one of its most essential regions, according to internal company documents, six sources with knowledge of its operations, and Thomson Reuters vessel-tracking data.

Business partners in the island nations of Curacao, Bonaire, Jamaica and the Bahamas are turning away from the firm as debts pile up to tugboat operators, ship brokers, maritime agencies and terminal owners. read more »

SEC Zeros In on Advisors’ Whistleblower Compliance

SEC reviewing key whistleblower provisions under Rule 21F-17

The Securities and Exchange Commission is warning advisors and broker-dealers that examiners are zeroing in on their compliance with key whistleblower provisions under Rule 21F-17 of the SEC’s whistleblower regulations.

The Commission has brought several enforcement actions recently charging violations of Rule 21F-17, the agency noted in its Oct. 24 Risk Alert.

Examiners are targeting advisors and BDs’ compliance manuals, codes of ethics, employment agreements, and severance agreements to determine whether provisions in those documents pertaining to confidentiality of information and reporting of possible securities law violations may raise concerns under Rule 21F-17, the agency said. read more »

Madoff trustee reaches $277 mln accord with money manager's family

The court-appointed trustee liquidating Bernard Madoff's firm said on Friday he has reached a settlement with the family of late Beverly Hills money manager Stanley Chais that will provide more than $277 million to victims of Madoff's Ponzi scheme.

Irving Picard, the trustee, said victims will receive $232 million of cash, and the rights to $30.7 million of assets that are expected to be sold. read more »

U.S. eyes long prison term for Wall Street scion's fraud

U.S. prosecutors on Thursday said Andrew Caspersen, the scion of a wealthy Wall Street family, should spend as long as 15-2/3 years in prison after he pleaded guilty to defrauding friends, family and a charity out of more than $38 million.

In papers filed with the federal court in Manhattan, prosecutors said Caspersen, 40, who had worked at a unit of investment banker Paul Taubman's PJT Partners Inc, abused the trust of his victims through his "long-running, significant and elaborate" fraud.

Prosecutors said the son of late Wall Street financier Finn M.W. Caspersen ran a Ponzi-like scheme from November 2014 to March 2016 to defraud more than one dozen investors, claiming he would use their funds to make loans to private equity firms.

Instead, prosecutors said Andrew Caspersen used money he raised to trade in his own accounts and pay earlier investors. read more »

A Whistle Was Blown on ITT; 17 Years Later, It Collapsed

Dan Graves, a mental health aide in San Jose, Calif., had mixed feelings when he heard that ITT Educational Services had filed for bankruptcy in mid-September.

As a former employee who had blown the whistle on ITT, an operator of some 140 for-profit schools, Mr. Graves was happy that the government had finally taken action to protect students from the company’s aggressive sales tactics, which lured them into debilitating debt and provided little in the way of an education.

Still, he wondered what had taken the government so long. After all, it has been 17 years since Mr. Graves and another former ITT employee brought a suit alleging that the company had systematically violated the law governing compensation of sales representatives.

The two former employees shared extensive documentation with a half-dozen federal prosecutors and regulators. These officials expressed keen interest, Mr. Graves said, and estimated that the government could recover $400 million in damages from the case. But by 2004, the lawsuit was dead and Mr. Graves’s effort to provide the government with damning evidence had come to naught. read more »