Securities: January 2007 Archives

Former NBC Officer Arrested on Fraud Charges

Victor Jung, a former treasurer at NBC Universal, was arrested on charges that he had stolen more than $800,000 in order to pay for private jet flights, expensive liquor and a vacation home in the Hamptons. Jung is charged in the indictment with two counts of wire fraud and could face a maximum jail sentence of 20 years and a fine of $250,000.

Former NBC Officer Arrested on Fraud Charges

The U.S. Attorney's office said that Jung transferred cash from General Electric Company accounts into accounts held by a fake company, NCBU Media Productions LLC. Jung used the funds for personal leisure, such as flights on private jets to Miami, Antigua, the Caicos Islands, and a rental home in the Hamptons. On these flights, Jung and his friends "consumed catered Veuve Cliquot champagne, Grey Goose vodka, Mondavi wine, and shrimp cocktail."

Posted by Patricia Bowling at 06:47 PM | Permalink

House Committee Asks SEC for Info on HP Probe

The chairman of the House Energy and Commerce Committee asked the Securities and Exchange Commission to notify him when the agency finishes its probe into Hewlett-Packard Chief Executive Mark Hurd's exercise of options. Representative John Dingell said in a letter to the SEC that he wanted the SEC's views about factual and legal issues regarding Hurd's August 25, 2006 transaction.

House committee asks SEC for info on HP probe

Dingell's letter also asked for the SEC's views on "transactions by other HP officers and directors allegedly in possession of material non-public information subsequently disclosed by the company in its SEC filings." An SEC spokesman did not comment on the letter.

Posted by Patricia Bowling at 11:35 AM | Permalink

Ex-NYSE Trader Gets 6-Months in Prison

Michael Hayward, a former New York Stock Exchange trader, was sentenced to six months in prison for securities fraud related to improper stock trades. Hayward also was fined $250,000. U.S. District Judge Sidney Stein allowed Hayward to remain free on bail while he looks into an appeal.

Ex-NYSE trader gets 6-month prison sentence

Hayward and 13 others participated in schemes to trade ahead of investor orders for stock trades, violating NYSE rules. Hayward's lawyer urged the judge not to give Hayward a prison term because his client received "almost no personal gain" from the trading activity. However, the judge disagreed, saying that Hayward "knew what he was doing." Hayward had worked at Van der Moolen Specialists USA, a unit of Amsterdam-based Van der Moolen Holding.

Posted by Patricia Bowling at 01:21 PM | Permalink

HP's Hurd Gets $8.6 Million Bonus

Hewlett-Packard Chief Executive and Chairman Mark Hurd was given a $8.6 million bonus in 2006, despite the fact that the year was marked by a company turnaround and a boardroom scandal. A Securities and Exchange Commission filings reveals that Hurd also received an annual salary of $1.4 million.

HP's Hurd collects $8.6M bonus last year

HP has a difficult 2006, when it was revealed that the company had spied on board members and journalists to identify the source of a boardroom leak to the media. The scandal led to Chairman Patricia Dunn's leaving; she allegedly initiated the investigation with several other HP employees. Hurd has denied involvement, saying that he was given a report that outlined the techniques HP investigators used to identify the source of the leak, but that he did not read it.

Posted by Patricia Bowling at 11:12 AM | Permalink

Ex-HP Head Likely to Reject Plea Deal

Ex-Hewlett Packard Chairwoman Patricia Dunn is unlikely to accept a plea deal offered to her by the California attorney general in the HP spy case "at least until there's something more concrete from the federal government," says an insider. The four other defendants in the case also are unlikely to accept the plea deal.

Ousted HP head likely to reject plea deal

In late December, all five defendants in the case were offered a plea deal in which their state felony charges would be reduced to a misdemeanor, in exchange for guilty pleas. The five defendants in the the HP spy case are Bryan Wagner, Patricia Dunn, Kevin Hunsaker, Ronald DeLia, and Matthew DePante; all were charged with multiple felonies, including conspiracy. A spokesperson for the attorney general's office refused to comment on the plea negotiations.

Posted by Patricia Bowling at 01:11 PM | Permalink

South Korea Fines Hyundai

South Korea's antitrust regulator fined Hyundai Motor Co. $25 million for unfair market practices, the latest in a series of problems for the automaker. The Fair Trade Commission said that the company issued warnings to and discontinued sales contracts with car dealerships who failed to meet "excessive" sales goals. "Hyundai Motor used its monopolistic market status to set excessive annual sales targets for car dealers," said the commission in a statement.

South Korea Fines Hyundai Motor

Additionally, Hyundai did not allow the dealers to move to other locations or to recruit salespeople to help reach goals. The regulator said that it had carried out an investigation into suspected violations of fair trading rules by Hyundai Motor between February and November of last year.

Posted by Patricia Bowling at 12:41 PM | Permalink

Former Cendant Corp. Exec Sentenced to Prison

A Connecticut federal judge has sentenced the former Cendant Corp. Chairman Walters Forbes to a 12-year prison sentence for conspiracy, mail fraud, wire fraud, securities fraud and making false statements to the SEC. The vice chairman of Cendant, E. Kirk Shelton, in 2005 received a 10-year sentence and over $3 billion USD in fines. Forbes and Shelton faced charges of exaggerating the financial earnings of Cendant’s predecessor company, CUC International. They exaggerated the company’s income by over $500 million USD for over 10 years. Forbes and Shelton planned to hide the inflated income in the larger company, HFS Inc. In 1998, after Cendant merged with HFS, they announced the inflated earnings. This resulted in a one-day stock devaluation of over $14 billion USD.

Ex-Cendant Chair Gets Huge Fraud Sentence, Fine

The US Attorney, Chris Christie, was relieved to receive a conviction after two previous hung juries. “This was the guy at the top of the food chain. It was just no acceptable to me to have him get off with no penalty,” said Christie. Forbes and Shelton’s sentences were eclipsed by that of Enron’s Chief Executive Jeffrey Skilling and World Com’s former CEO Bernard Ebbers. Ebbers and Skilling both received 25 year sentences. Cendant no longer exists as it has been split into several different independent companies.

Posted by Ryan Jardine at 11:39 PM | Permalink

Rare Coin Broker Delisted by NASDAQ

The NASDAQ stock exchange delisted the Escala Group, a rare-coin and stamp broker that prosecutors say was an "unwitting participant" in Tom Noe's theft from a $50 million state government investment. While the Escala Group was tied to a scandal that upset Ohio politics and a Spanish pyramid scheme, Escala said it was its failure to file annual and quarterly reports in a timely manner with the U.S. Securities and Exchange Commission that led to their suspension.

Rare-coin Broker is Delisted by NASDAQ

Noe's state government theft went about after he bought the shares off-market from Warren Trepp at a 36% discount in 2002. The purchase generated a $2.73 million return because of an acquisition of the stock by Afinsa Blenes Tangibles, a Madrid-based auction house. In addition to the stock purchase, emails and financial records show that Now gave $4 million in loans to the company and $6.5 million to form a subsidiary, the Spectrum Fund. Escala never mentioned Ohio's financial gifts in SEC reports and Noe used the rare coins provided by Escala as collateral for the loans to disguise his thefts. Escala's most worrisome association was with Afinsa, its major shareholder and main source of profits. Afinsa bought rare stamps from Escala at an assured 10% premium and resold $1.4 billion worth of stamps to 350,000 Spanish and Portuguese investors. Escala has appealed their delisting.

Posted by Patricia Bowling at 11:49 AM | Permalink

IDA Settles with Former Broker over Inflated Trading

The Investment Dealers Association of Canada has reached a settlement with the former RBC Dominion Securities Inc. trader Robert Faiello. Faiello was accused of not using proper diligence and learn enough about a client from whom he accepted trade orders.

IDA settles with former RBC Dominion Securities broker over inflated trading

The agreement determined that Faiello was unknowingly tied to trading of stocks in Pender International Inc., a company that has been determined by the RCMP as a part of a "pump-and-dump" scheme; companies like these are used to artificially inflate securities. The IDA settlement said, "Despite the volume of the trading and the significant increase in the price of Pender stock during this period, the respondent did not make any inquiries of his client about this trading activity." The settlement agreement blocks Faiello from working any job that requires registration by the IDA for two years. He also must pay a $20,000 fine and must pass a "conduct and practices" course and also pay the cost of the legal proceedings.

Posted by Patricia Bowling at 11:33 AM | Permalink

Jobs Could Face Uphill Court Battle

Although Steve Jobs has been cleared in Apple's internal investigation into options-timing irregularities, Jobs may not be cleared entirely from implications of the scandal. Apple already has admitted that records showing the stock options grant given to Jobs had a falsified date on which it was given. The Securities and Exchange Commission has decided to question former Wendy Howell, who is believed to have created the faked documentation, and her old boss, ex-Apple general counsel Nancy Heinen, and ex-CFO Fred Anderson.

Apple's Jobs could face uphill court battle

Heinen and Anderson are looking to be the ones who will take the blame for the scandal, but many still are in disbelief. "The idea that Nancy or Fred would've acted independently of the biggest control freak in the entire tech industry is laugh-out-loud funny," says one big Silicon Valley player.

Posted by Patricia Bowling at 05:08 PM | Permalink

Police Still Investigating Hit-And-Run

A past resident of Marina Del Rey, California pled not guilty to charges that he operated a $5 million U.S.D. investment scam. Government prosecutors believe that Steven M. Ferguson told investors that he would use their money to make bridge loans to companies, or invest in a waste-treatment plant in New Jersey. However, Ferguson used the money to fund his lavish lifestyle, which included partial ownership of a Lear jet, golfing at Pebble Beach, an expensive home, and expensive meals at the Southland.

Man Pleads Not Guilty to $5 Million Investment Scam

Investment investigators believe that Global Venture Group and Environmental Technologies International Holdings were allegedly used as front companies from which Ferguson defrauded investors. The charges levied against Ferguson include four counts of mail fraud, five counts of causing a victim to travel in relation to a fraud scheme, seven counts of money laundering, six counts of obstruction of justice and three counts of tax evasion.

Posted by Ryan Jardine at 10:25 PM | Permalink

Apple Backdating Scandal Won't Go Away

Apple's Steve Jobs is back in the headlines for the Apple's backdating mess. The Wall Street Journal reported that the company is under formal investigation by federal authorities for a stock options grants that was given to Jobs under a false October 2001 date.

The latest on Apple's options mess

Apple has admitted that records were falsified in order to make the grant and has taken a $20 million charge to reflect the difference between the grant price and the true stock price on the date it was received. The Securities and Exchange Commission still wants to question former Apple attorney Wendy Howell; Howell is believed to have created the falsified documentation. The SEC also wants to speak to Nancy Heinen, the ex-Apple general counsel, and Fred Anderson, the ex-CFO. It still is unclear whether the options problems for the company are small or whether they will prove to have major effects on Apple and eventually cost Jobs his job.

Posted by Patricia Bowling at 10:55 AM | Permalink

Siemens ex-CFO Looked at in Scandal

Siemens ex-Chief Financial Officer Heinz-Joachim Neubuerger is being questioned in connection with Siemens $544 million embezzlement scheme. Neubuerger had earlier denied involvement in the scandal and was not reachable for comment on his new status as a suspect. The scandal concerns $544 million believed to have been embezzled from Siemens and placed into foreign accounts for use as bribes to win telecom deals.

Siemens
ex-CFO Eyed in Scandal

Neubuerger told the Frankfurter Allgemeine Zeitung in December that "I have absolutely nothing to reproach myself for and I also have nothing to hide." Neubuerger left Siemens unexpectedly in May 2006 for personal reasons. The scandal has led to several arrests, including the former Siemens senior executive and telecom chief Thomas Ganswindt.

Posted by Patricia Bowling at 12:01 PM | Permalink

Private Eye in HP Case Pleades Guilty

A private investigator admitted his role in spying on Hewlett-Packard board members and news reports. Bryan Wagner was the first to plead guilty in the boardroom leak probe case; he pleaded guilty to two felony counts of aggravated identity theft and conspiracy charges in federal court and admitted that he fraudulently used Social Security numbers to collect personal phone records of reporters and of Hewlett-Packard officials.

Private Eye Pleads Guilty in HP Case

Wagner looks at a mandatory minimum prison sentence for his role in the identity theft charge and up to five years for his role in the conspiracy and will be sentenced June 20. HP admitted in September that the company had spied on board members and journalists. The scandal has lead to the resignation of many prominent HP employees, including Chairman Patricia Dunn. HP agreed to pay $14.5 million to the California attorney general's office as a part of an agreement to settle civil claims related to its leak investigation.

Posted by Patricia Bowling at 11:42 AM | Permalink

Ex-Tyco Executive Returns to Prison

After leaving jail to be hospitalized, former Tyco International chairman Dennis Kozlowski was returned to jail. Kozlowski now is staying in the Mid-State Correctional Facility's infirmary in New York. No information was provided on why Kozlowski was hospitalized in the first place.

Ex-Tyco Executive Returns to Prison

Kozlowski was convicted in June 2005 and is serving a 8-1/3 to 25 year long sentence for looting the company. Kozlowski blatantly misused company money; he threw a $2 million birthday party for his wife on the island of Sardinia and bought a $6000 shower curtain with company money. The first trial resulted in a mistrial after one juror reported receiving threats.

Posted by Patricia Bowling at 12:47 PM | Permalink

BP Chief John Browne to Resign in July

BP's Chief Executive John Browne will leave his post at the end of July, 17 months earlier than had initially been planned. BP shares rose 4% as a result of the news. Browne's spot will be taken over by CEO Tony Hayward, who currently is head of exploration and production. Browne decided that it would be in BP's best interest to name his successor in order to ensure an orderly transition.

BP Chief John Browne to Resign in July

Chairman Peter Sutherland said in a statement "having made that decision, which the board fully supports, we came to the conclusion that a six-month handover would be more appropriate than 18 months." Problems have plagued BP of late: fatal refinery accidents in Texas and sloppy maintenance of a key oil pipeline in Alaska have tarnished Brown's image.

Posted by Patricia Bowling at 11:37 AM | Permalink

New Apple Options Woes

An Apple shareholder lawsuit alleges that Apple gave four executives a big windfall by giving them options to buy almost 1 million shares of company stock the day before Apple announced a $150 million investment by Microsoft in 1997. The Los Angeles Times says that improper options timing was common at Apple for many years. The lawsuit was filed in late December 2006 and says that options were "spring-loaded;" this practice grants options soon before good company news is released to the public.

Suit charges Apple with new options woes

Apple admits that there are many instances of backdating in the company. Apple restated its earnings, lowered by $84 million, to offset the increased earnings from the backdating practices.

Posted by Patricia Bowling at 07:16 PM | Permalink

Former Broker Allegedly Defrauded Clients of $3 Million

A woman from Sandycreek Township, Penn is facing criminal charges for allegedly defrauding over $3 million USD from a former Parker-Hunter brokerage firm in Pittsburgh. Kristal Clark is being formally charged with mail fraud in U.S. District Court at Pittsburgh. Clark was an administrative sales assistant with Parker-Hunter until they let her go in March of 2005. Clark has allegedly stolen money from Parker-Hunter clients in a Ponzi-type scam. She reallocated client’s money from one account to another to hide stolen funds.

Women Charged in Massive Fraud Case

Clark used the stolen money to fund her extravagant lifestyle. She remodeled her property adding expensive additions such as an indoor basketball court with heated floor, an in-ground swimming pool, and horse stables. She also used the money for expensive cars and lavish vacations. The IRS believes that while Clark reported an income of $43,317 USD in 2001, her taxable income was closer to $299,570 USD. Even more outrageous was in 2004 her reported income was $42,208 USD, when her actual income was $1,016,841 USD. Federal officials are seeking to acquire all her property including real estate, cash and bank accounts because they were allegedly the products of fraudulent activity.

Posted by Ryan Jardine at 10:21 PM | Permalink

Marvell Technology Backdated Options

A company investigation into Marvell Technology revealed that incorrect dates were used on some grants. Marvell said that Chief Executive Sehat Sutardja and Chief Financial Officer George Hervey were a few of the executives who received backdated option grants.

Marvell Technology finds backdated options

Those who were given backdated grants agreed to change the terms of the grants back to the actual dates that they were issued. Brocade Communications and Comverse Technology are other companies that have been caught in backdating scandals recently.

Posted by Patricia Bowling at 07:07 PM | Permalink

Montana Auditor Charges Four of Securities Fraud

In Helena, Montana, the state auditor, John Morrison, has charged four people with securities fraud and selling securities without a license. The charges are being leveled against Gordon and Ann Walters of Roundup, Calvin Statelen, of Havre and Danny Kegel of Turner. They have all been charged with misleading investors by giving them incorrect information. None of those charged had registered to sell securities in Montana. Walters called the allegations, “ridiculous lies” and denied being involved in any illegal activity. Morrison said that these charges send a message, “Fraud is a serious matter, and deceptive business people need to know that Montana has zero tolerance for fraudulent dealings.”

Four Accused of Securities Fraud

Government officials believe that these investment advisors fraudulently invested money in Cascade Exploration and Cascade Water Holdings. Theses two securities never registered with the Montana Securities Department, are not listed by the stock exchange and the investors allegedly did not get any information about the company before investing. Cascade Exploration allegedly is a mineral exploration company and Cascade Water Holdings claims to produce water. Officials are still investigating this case and will determining the full extent of the fraudulent activity.

Posted by Ryan Jardine at 09:32 PM | Permalink

Montana Auditor Charges Four of Securities Fraud

In Helena, Montana, the state auditor, John Morrison, has charged four people with securities fraud and selling securities without a license. The charges are being leveled against Gordon and Ann Walters of Roundup, Calvin Statelen, of Havre and Danny Kegel of Turner. They have all been charged with misleading investors by giving them incorrect information. None of those charged had registered to sell securities in Montana. Walters called the allegations, “ridiculous lies” and denied being involved in any illegal activity. Morrison said that these charges send a message, “Fraud is a serious matter, and deceptive business people need to know that Montana has zero tolerance for fraudulent dealings.”

Four Accused of Securities Fraud

Government officials believe that these investment advisors fraudulently invested money in Cascade Exploration and Cascade Water Holdings. Theses two securities never registered with the Montana Securities Department, are not listed by the stock exchange and the investors allegedly did not get any information about the company before investing. Cascade Exploration allegedly is a mineral exploration company and Cascade Water Holdings claims to produce water. Officials are still investigating this case and will determining the full extent of the fraudulent activity.

Posted by Ryan Jardine at 09:32 PM | Permalink

Aspen Technology Former Executive Charged With Fraud

A former chief executive with Aspen Technology Inc. turned himself in on Monday after being charged with criminal securities fraud. David McQuillin of Sudbury, Massachusets is facing charges of dishonestly reporting company revenue. Aspen Technology, based in Cambridge, Mass., sells computer software to oil refineries and other similar industries. Government prosecutors believe that McQuillin and other executives recorded revenue from software licensing before the sale actually occurred. He has been charged with conspiracy to commit securities fraud and securities fraud. If he is convicted, he may spend up to 25 years in prison and over $5 million in fines.

Posted by Ryan Jardine at 09:25 PM | Permalink

Ex-Merrill Lynch Analyst Sentenced

Stanislav Shpigelman, a former Merrill Lynch analyst who pleaded guilty to having given tips to an insider trading ring, was sentenced to three years in prison. According to U.S. District Judge Kenneth Karas, Shpigelman was the "critical component" of one scheme because his tips helped generate $6.7 million in illegal gains for the ring. "Without a tipper, the tippees cannot profit a dime," Karas said. "Without his information, there would have been no insider trading."

Ex-Merrill analyst gets 3 years for scheme

Prosecutors say that Shpigelman gave tips to two former Goldman Sachs employees. Shpigelman's lawyer asked for a sentence of less than three years because Shpigelman saw profits of only $12,000 and did not realize that his actions would allow others to make millions of dollars in profits.

Skilling Ordered to Report to Prison

A U.S. appeals court ordered ex-Enron Chief Executive Jeffrey Skilling to report directly to jail to begin serving a 24-year prison sentence. Skilling had requested that he be allowed to remain free on bail while he appeals fraud and conspiracy charges. U.S. Justice Department spokesman said in a statement that "as a result of the Fifth Circuit's ruling, the government is pleased that the jury's verdict and the District Court's sentence will now be carried out for defendant Skilling."

Appeals court to Skilling: Go directly to jail

Skilling's attorney, Daniel Petrocelli, was not able to be reached for comment. An appellate attorney, who did not wish to be identified, said that the ruling does not mean that the court has an opinion on Skilling's chance for a successful appeal and does not prevent Skilling from being given bail at a later time. Skilling, 53, will spend 24 years in prison for his role in hiding Enron's financial demise from investors.

Posted by Patricia Bowling at 02:38 PM | Permalink

Tips to Avoid Stock Fraud

Stock fraud is a concern for a growing number of Americans. There is a tremendous amount of opportunities to invest, but the challenging task is to determine the best and safest investments for your situation. One possible strategy is to find investments that you can trust. Perform adequate research to ensure that your investment is not fraudulent. Look for government resources that can provide additional information about the investment that you are considering. Another strategy is to search the recent news. Look for stories about the investment and other people’s experiences. Doing a little bit of research can take a lot of the stress out of investing and can help you avoid becoming a victim of stock fraud.

Posted by Ryan Jardine at 07:43 PM | Permalink

Fannie Mae Regulator Sues Former Execs

The top regulator for Fannie Mae is suing three former executives, saying that the mortgage company used flawed bookkeeping in order to understate billions of dollars in losses. The civil suit names former Chief Executive Officer Franklin Raines, former Chief Financial Officer Timothy Howard, and former senior vice president and controller Leanna Spencer. The Office of Federal Housing Enterprise Oversight (OFHEO) filed the suit and says that there are 101 allegations in the lawsuit that are signs of "misconduct." OFHEO Director James Lockhart says that "the misconduct cost the enterprise and shareholders many billions of dollars and damaged the public trust."

Fannie Mae regulator sues former execs

The regulator is seeking penalties and bonuses that could be upwards of $215 million for the six years of wrongdoing. Raines and Howard resigned in December 2004 and Spencer left the company a year later.

Posted by Patricia Bowling at 02:26 PM | Permalink

High Court Reverses Charges Against Former Westar Executives

The 10th Circuit U.S. Circuit Court of Appeals dismissed the fraud convictions of two former Westar execs. The two men, David Wittig and Douglas Lake had been convicted of white collar criminal crimes and were sentenced by a federal jury to 18 and 15 years in prison respectively. The 10th Circuit Court overturned the convictions based upon insufficient evidence. This case had been the most aggressive white-collar prosecution ever in the Kansas City area. Wittig had been found guilty by a federal jury of 39 counts of circumventing internal accounting controls, money laundering and wire fraud. Lake was convicted of 30 counts of the same charges.

Westar Verdicts Set Aside on Appeal

On appeal, the attorneys’ for Wittig and Lake argued that the men were taking the fall for a natural decline in Westar’s stock price. They argued that they had not done anything illegal, and the government had exaggerated the charges against them. The three-judge panel on the 10th Circuit agreed with the defense and censured the government for producing no evidence that Wittig and Lake had broken any federal regulations supporting the crucial elements of their case. The government prosecutors may decide to retry the former executives on circumvention and conspiracy charges.

Posted by Ryan Jardine at 11:37 AM | Permalink

Enron's Causey Reports to Prison in Texas

One of Enron’s former chief accounting officers, Richard A. Causey, has begun his prison term of five and a half years for fraud at Bastrop, Texas. In 2005, Causey plead guilty to securities fraud. He was the 16th Enron executive to plead guilty of securities fraud. Causey said, “A lot of improper things were done at Enron. Some of those were done by me, and for that I am profoundly sorry.”

Former Accounting Chief Begins Prison Term For Securities Fraud

Causey’s prosecutor said in a report by the Washington Post, “A witness who is reluctant to acknowledge his own responsibility is of no use to the government. Without Mr. Causey’s implicit consent and explicit conduct, the fraud that occurred at Enron could not have occurred.” According to Causey’s attorney, Enron’s accounting scandal was the worst in all history but the sole accountant to spend time in prison is Rick Causey.

Posted by Ryan Jardine at 11:22 PM | Permalink

Securities Fraud Class Actions Drop in 2006

The number of securities fraud class actions suits filed in 2006 have been the lowest ever since the approval of the Public Securities Litigation Reform Act of 1995. The Securities Class Action Filings 2006 Year in Review, a report by Stanford Law School and Cornerstone Research of Boston, reported that securities fraud class actions are down 38% since 2005. This dramatic decrease in class action filings is most likely due to an increasing culture of federal enforcement. This is evident by the effort that the U.S. Securities and Exchange Commission and Department of Justice are making to prevent investment fraud.

Securities Fraud Class Actions Fall to All-Time Low in 2006

The vice president of Cornerstone Research and contributor to the study, John Gould, explained that this low rate of class action is even more impressive when calculated with market capitalization losses.

Beware Of Investment Fraud

A report in The Wall Street Journal warns investors about dishonest salespeople that con honest people into investing large amounts of money into rotten or bad investments. The seniors’ group, AARP believes that at least one fourth of all adults have been or will become victims of securities fraud at some point in their life. There are traditional tactics that dishonest salespeople use to defraud investors. An investment adviser may have led you to some good investments, but as time went on you may have been the victim of some well-intentioned manipulations. According to a psychology professor with the University of California, Santa Cruz, “In order to take somebody, you have to win their confidence and trust.” In order to win your confidence and trust, salespeople will fake friendship and act as if you have things in common.

Manipulative Financial Salespeople Can Be Trouble

Another common tactic is dishonest investment professionals will emphasize that the investment is offered for a limited time, making it seem scarce and more valuable. This causes investors to buy the investment impulsively based on instinct and emotion rather than reason. A psychology professor with Arizona State University believes that, “The reason these techniques work so well is because they tap into normal human tendencies that usually serve us well.” Another common tactic is that investment advisors will take advantage of people’s propensity to return favors. For example, the advisor may offer a free lunch in addition to investment advice. Then an investor may feel slightly obligated to invest because they feel indebted to the investment advisor. Unfortunately, in this world not all investment advisors are honest and can be trusted. According to Doug Shadel, co-author of the complimentary AARP book, Weapons of Fraud, “Con men will talk about putting people under the ether. They dangle this fantasy, and people just can’t think straight.”

Posted by Ryan Jardine at 10:59 PM | Permalink

Steve Jobs Cleared of Wrongdoing; Apple Still Under Investigation

Chief Executive of Apple Computer, Steve Jobs, has been cleared of any wrongdoing in an investigation into past stock option grants. Officials concluded that Jobs had knowledge of certain procedural irregularities, but did not receive any personal benefit or understand the accounting implications. Apple reported this information to the U.S. Securities and Exchange Commission.

Apple Clears Jobs in Options Probe, Restates Earnings

Officials determined through their investigation that Apple had issued several stock grants with grant dates selected to get a good exercise price. The investigators also expressed concerns about the way in which two Apple officers tracked stock option grants. Apple issued a statement in which the board of directors expressed “. . . complete confidence in Steve Jobs and the senior management team.” Apple is planning to implement new measures in order to guarantee an efficient and legal process of giving out stocks. In clearing Jobs from wrongdoing, questions still remain about Apple's procedures for the backdating of stock options.

Posted by Ryan Jardine at 09:44 PM | Permalink

Congress Looks at Hurd's Trading

Mark Hurd has been asked by a Members of the House investigation committee why he exercised options before Hewlett-Packard's spying tactics were revealed to the public. On August 25, Hurd cashed $1.37 million worth of options; this is the same day that lawyers began questioning Hurd about HP's board leak investigation. Hurd also was asked whether he had information about the company that could have proven damaging to the company when he cashed the options.

Congress looks into trading by HP CEO

At the time that Hurd cashed the options, HP had not yet told the public that its investigators had obtained the phone records of board members and reporters in order to determine the source of board room leaks. Such activity, known as pretexting, is illegal, and led to the resignation of HP Chairman Patricia Dunn. "A key issue in the Subcommittee's investigation is how much Hewlett-Packard Co. (HP) management knew about the board-leak investigation, when they knew it, and what actions they took in response," said a letter written by the chairman of the House Energy and Commerce Committee.

Posted by Patricia Bowling at 11:37 PM | Permalink

January 31, 2007

Former NBC Officer Arrested on Fraud Charges

January 30, 2007

House Committee Asks SEC for Info on HP Probe

January 29, 2007

Ex-NYSE Trader Gets 6-Months in Prison

HP's Hurd Gets $8.6 Million Bonus

January 26, 2007

Ex-HP Head Likely to Reject Plea Deal

January 25, 2007

South Korea Fines Hyundai

January 24, 2007

Former Cendant Corp. Exec Sentenced to Prison

Rare Coin Broker Delisted by NASDAQ

January 23, 2007

IDA Settles with Former Broker over Inflated Trading

January 22, 2007

Jobs Could Face Uphill Court Battle

January 21, 2007

Police Still Investigating Hit-And-Run

January 19, 2007

Apple Backdating Scandal Won't Go Away

January 18, 2007

Siemens ex-CFO Looked at in Scandal

January 17, 2007

Private Eye in HP Case Pleades Guilty

January 16, 2007

Ex-Tyco Executive Returns to Prison

January 15, 2007

BP Chief John Browne to Resign in July

January 12, 2007

New Apple Options Woes

January 11, 2007

Former Broker Allegedly Defrauded Clients of $3 Million

Marvell Technology Backdated Options

January 10, 2007

Montana Auditor Charges Four of Securities Fraud

Montana Auditor Charges Four of Securities Fraud

Aspen Technology Former Executive Charged With Fraud

Ex-Merrill Lynch Analyst Sentenced

January 09, 2007

Skilling Ordered to Report to Prison

January 08, 2007

Tips to Avoid Stock Fraud

Fannie Mae Regulator Sues Former Execs

January 06, 2007

High Court Reverses Charges Against Former Westar Executives

January 05, 2007

Enron's Causey Reports to Prison in Texas

Securities Fraud Class Actions Drop in 2006

Beware Of Investment Fraud

January 03, 2007

Steve Jobs Cleared of Wrongdoing; Apple Still Under Investigation

January 01, 2007

Congress Looks at Hurd's Trading