A weekly roundup of other items of interest to the securities community.
ENFORCEMENT—S.D. Fla.: In connection with an SEC enforcement investigation, a district court ordered the Woodbridge Group of Companies LLC to produce the corporate documents of the company’s president and CEO, as well as several other employees. SEC staff subpoenaed the documents in January. The agency is looking into possible securities law violations in connection with Woodbridge’s receipt of more than $1 billion of investor funds.
SEC NEWS AND SPEECHES—Thomas Butler, who served as the director of the SEC’s Office of Credit Ratings (OCR), has been named an associate regional director for the investment adviser and investment company examination program in the New York regional office. Jessica Kane, the director of the Office of Municipal Securities, has been appointed as the acting director of OCR following Butler’s departure. Rebecca Olsen, the deputy director in the Office of Municipal Securities (OMS), will serve as acting director of OMS while Kane is assigned to OCR.
MUNICIPAL SECURITIES NEWS—The Municipal Securities Rulemaking Board published a primer entitled "Municipal Securities: Financing the Nation’s Infrastructure" to help interested persons understand the basics of municipal securities, how the municipal market provides access to capital for over 50,000 state and local governments that own and maintain the majority of public works, and the role of the federal government and public-private partnerships in investing in public infrastructure.
ENFORCEMENT—D. Conn.: The SEC obtained a final judgment permanently enjoining the entities used to perpetrate a massive Ponzi scheme. Highview Point Partners, LLC, and Michael Kenwood Capital Management, LLC, agreed to the judgment without admitting or denying wrongdoing. In May, the SEC won summary judgment against the fund manager, Francisco Illarramendi, who pleaded guilty in a parallel case. There is no order of disgorgement or penalties against the entities, however, based on the court-appointed receiver’s having recovered and distributed over $330 million to defrauded investors and creditors, rendering most claimants whole or nearly so.
SECURITIES OFFERINGS—The Chamber of Digital Commerce (CDC) announced the Token Alliance, an industry-led initiative designed to educate and promote responsible growth of token and digital asset issuances. While token sales or initial coin offerings can be made by startups and other businesses seeking funding through crowd sales, regulatory uncertainty and compliance issues continue to challenge the industry. Perianne Boring, CDC’s Founder and President, said that "as with all new technologies, it is important to set appropriate guidelines to curb potential abuse, while protecting innovation."
CFTC NEWS AND SPEECHES—The CFTC announced that Commissioner Brian Quintenz will sponsor the CFTC’s Technology Advisory Committee (TAC). The committee advises the CFTC on technological innovations in the markets and appropriate regulatory responses. Quintenz said that areas of focus in leading the committee will include automated trading, distributed ledger technology, data harmonization, and cybersecurity, among other topics. Quintenz said he is pleased to be joined by Dan Gorfine, CFTC’s Director of LabCFTC and Chief Innovation Officer, who is the Designated Federal Officer for the committee.
DODD-FRANK ACT—The Senate passed the Financial Stability Oversight Council Insurance Member Continuity Act (H.R. 3110), sponsored by Rep. Randy Hultgren (R-Ill), to fix an oversight by drafters of the Dodd-Frank Act. As enacted, Section 111 failed to provide for the continuation of the term of the Council’s independent member, who is one of ten voting members and must have insurance experience (the Act did provide in this regard for agency and department heads on the Council). The bill provides that absent confirmation of the independent member’s successor by the end of that person’s six-year term, the person currently serving in that role may remain on the Council until the earlier of 18 months after their term ends or a successor is confirmed. The House previously passed the bill with overwhelming support and it now awaits the president’s signature.
INVESTMENT COMPANIES—After interviewing institutional investors, the Government Accountability Office identified four key practices these firms, such as retirement plans and foundations, can use to increase opportunities for minority- and women-owned (MWO) asset managers. First, leadership should demonstrate their commitment to increasing opportunities for MWO asset managers. Institutional investors should also review investment policies and practices for barriers that limit smaller firms’ participation; reach out to MWO asset managers about investment opportunities and selection processes; and explicitly communicate expectations about inclusive practices to investment staff and consultants. Among reviewed federal entities, the Army and Air Force Exchange Service, Navy Exchange Service Command, and Tennessee Valley Authority Retirement System agreed to use key practices, while the Federal Retirement Thrift Investment Board disagreed.
ENFORCEMENT—E.D. Wis.: The SEC charged a Wisconsin man with duping investors out of nearly $4 million by falsely representing that they were investing in an eco-friendly recycling process. Victims who thought they were buying into the Green Box Process were actually buying the man Green Bay Packers tickets, the SEC’s complaint alleges. He is also charged with using investor funds to buy an Escalade and pay off his unrelated business expenses and personal debts. Some of the investors were participants in the government’s EB-5 immigrant investor program. The defendant has also been indicted in a parallel criminal proceeding.
IndustryNews: CFTCNews DoddFrankAct Enforcement FraudManipulation InvestmentCompanies MunicipalSecuritiesNews SECNewsSpeeches SecuritiesOfferings ConnecticutNews FloridaNews WisconsinNews
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