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October 31, 2013 at 11:58 AM
Among recent enforcement actions were negotiations over a possible settlement between the Securities and Exchange Commission and SAC Capital.
In addition, the DOL retrieved $1.6 million for Sunkist employees and FINRA fined and censured Scottrade over failures regarding restricted stock, Tradition Asiel Securities Inc. over WSP failures and Delaney Equity Group and its principal on penny stock violations.
SAC Capital Could Plead Guilty in Criminal Case; SEC May Settle
SEC action against SAC Capital Advisors LP could result in a settlement, in the wake of the firm’s guilty plea to securities fraud in a negotiated settlement to a parallel criminal case of insider trading.
While neither the Justice Department nor the SEC has yet made an official announcement regarding a possible disposition of the case, word was that the firm was considering pleading guilty as part of that settlement.
Four units of hedge fund group SAC were indicted in the criminal case in July, and six of the eight fund managers and analysts charged pleaded guilty. The two who have not, Michael Steinberg and Mathew Martoma, are going to trial with the firm paying their legal fees. Fund manager Steven Cohen himself would still be under criminal investigation, although at present no charges are expected against him.
Under Cohen’s leadership, the firm raked in annual returns that topped 25% annually for more than 20 years. Still, as the investigation has progressed, the firm’s investors have asked for more than $5 billion back of the $15 billion it had under management as of last January. The bulk of the remaining funds belongs mostly to Cohen himself and to his employees.
The New York Times reported Wednesday that Cohen is auctioning off $80 million worth of art.
The settlement with prosecutors includes the winding down of the firm as an investment advisor and the surrender of its SEC registration.
Cohen would still be allowed to manage his own money by running a family office; discussions over when he might be permitted to resume management of outside funds are still progressing, and the SEC is expected to have the final say; its civil suit seeks to bar Cohen from the securities industry.
DOL Retrieves $1.6 Million for Sunkist Employees
The U.S. Department of Labor today announced that Sunkist Growers Inc. and fiduciaries for the company’s retirement plans were required to restore $1,620,420 in losses to employee benefit plans under the terms of a consent judgment and order.
The decision, entered in the U.S. District Court for the Central District of California, follows an investigation by the department’s Employee Benefits Security Administration that found that the citrus farming cooperative, based in Sherman Oaks, Calif., and the plans’ fiduciaries mishandled employee retirement funds in violation of the Employee Retirement Income Security Act.
“Retirement plan assets represent workers’ hard-earned savings, not a source of operating funds that companies can choose to use as they see fit,” said Assistant Secretary of Labor for Employee Benefits Security Phyllis Borzi, in a statement. “This is a case of plan fiduciaries failing in their legal and ethical duties to act solely in the interest of plan participants.”
The department previously filed a lawsuit alleging that from January 2006 through April 2011, the defendants used retirement plan assets to improperly reimburse the company for expenses including salaries and benefits for employees and managers working in various departments at Sunkist Growers.
EBSA investigators also found that the company was reimbursed by the plans based on projected expenses determined at the beginning of the year rather than on the actual expenses incurred, and that no adjustments were made to repay the plans for the overpayments that were made.
The judgment permanently enjoins the fiduciaries from violating ERISA and requires the appointment of an independent fiduciary to review and approve any future services provided by Sunkist Growers to the plans.
Scottrade Fined, Censured by FINRA for Restricted Stock Failures
Scottrade Inc. was censured by FINRA and fined $100,000 for failing to conduct an independent inquiry over shares of stock sold by a customer as freely tradable when in fact they were restricted.
