Platinum Partners Executives Become Most Predictable Arrests Ever

It seemed that Platinum Partners had the perfect, if somewhat morally dubious, strategy: Invest in the scandal-plagued and the Biblically usurious and the dying (the latter without their knowledge), and sextuple your clients’ money. It was, one delightfully understated Reuters source said, rather “aggressive,” perhaps not for the faint of heart, but all quite “within the limits of the law.”

It turns out, however, that such returns are not built only on legitimate scumminess, nor even mere kickbacks for union pension money. No, accomplishing Platinum Partners’ achievements allegedly required some more extra-legal means. Specifically, making up returns.

Unfortunately for Nordlicht, et. al., simply goosing performance gains wasn’t quite enough, either, as allegedly overcharging investors based on purely aspirational returns and asset levels still didn’t leave enough money around to avoid recourse to a Ponzi scheme. read more »

Feds Seek Penalty From Wells Fargo For $1.25B Tax 'Sham'

The United States urged a Minnesota federal court Friday to impose a 20 percent negligence penalty on Wells Fargo for a $1.25 billion securities transaction with Barclays PLC, claiming the transaction served no purpose other than to act as a tax shelter.

After a jury in November upheld the Internal Revenue Service’s $76 million tax bill on the transaction involving structured trust advantaged repackaged securities, or STARS, the U.S. is pursuing an additional offset negligence penalty against Wells Fargo, telling U.S. District Judge Patrick Schlitz in a brief that the bank has offered no evidence the transaction served an economic purpose other than as a vehicle for tax avoidance or that it made a good-faith effort to determine its proper tax liability on the transaction. read more »

Diamonds, Big Mining and George Soros The Fall of Beny Steinmetz, Once Israel's Richest Man

Years-long dispute over rights to massive African iron ore deposits have been replete with charges and counter-charges of bribery. read more »

SEC Charges Morgan Stanley With Customer Protection Rule Violations

The Securities and Exchange Commission today announced that Morgan Stanley & Co. LLC has agreed to pay $7.5 million to settle charges it used trades involving customer cash to lower the firm’s borrowing costs in violation of the SEC’s Customer Protection Rule.

The Customer Protection Rule is intended to safeguard customers’ cash and securities so that they can be promptly returned should the broker-dealer fail.  The SEC order finds that from March 2013 to May 2015, Morgan Stanley’s U.S. broker-dealer used transactions with an affiliate to reduce the amount it was required to deposit in its customer reserve account.  According to the order, the transactions violated the Customer Protection Rule, which prohibits broker-dealers from using affiliates to reduce their customer reserve account deposit requirements. read more »

Company Violated Rule Aimed at Protecting Potential Whistleblowers

The SEC’s order finds that Virginia-based NeuStar Inc. violated a whistleblower protection rule in the federal securities laws by routinely entering into severance agreements that contained a broad non-disparagement clause forbidding former employees from engaging with the SEC and other regulators “in any communication that disparages, denigrates, maligns or impugns” the company.  Former employees could be compelled to forfeit all but $100 of their severance pay for breaching the clause.  These severance agreements were used with at least 246 departing employees from Aug. 12, 2011 to May 21, 2015. read more »

CFTC Orders Convergent Wealth Advisors LLC to Pay an $800,000 Civil Monetary Penalty for Fraudulent Omissions and False Statements in Connection with an Employee’s Commodity Pool

David Zier made fraudulent representations and issued false statements to clients in connection with a commodity pool he operated as an outside business activity, while acting as an agent of Convergent read more »