The Daily Caveat is written by Michael Thomas, a recovering corporate investigator in the Washington, DC-area. [More]
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3/22/2007
Investigator Involved in Usana Stock Manip Flap?
Nortel Execs Face Fraud Charges
The Guardian Sits Down With Gary Aguirre
UBS Employee Faces Charges for Selling Tips to Hedge Funds
Monster Lawyer Expected to Pleade Guilty in Stock Options Case
Two From Brokerage Firm, Ferris Baker Watts Take Leave of Absense in Response to SEC Investigation
Morningstar Gives the Rundown on the SEC's Frontrunning Investigation
Senate Sides With Aguirre, Against SEC in Review of Pequot Investigation
Actor's Mom (and Hedge Fund Manager) Busted in Fraudulent Trading Scheme
SEC Proposes New Hedge Fund Regs
The Matrix (forgive me...) Reloaded?
Investigator Involved in Usana Stock Manip Flap?
Usana Health Sciences filed a lawsuit on March 15 2007 against Private Investigator, Barry Minkow and his firm, the (if I may suggest, deceptively named) Fraud Discovery Institute for defamation. Usana's suit relates to indications that Minkow attempted to manipulate the price of Usana stock, as per a recent Wall Street Journal article. In a recent news release about the case, Usana reps had this to say:
The SEC recently began an informal investigation of Usana. Usana President, David Wentz said of the SEC probe, "We believe that this is a routine inquiry made in response to a series of false and defamatory statements about our company that have appeared on the Internet and in the mass media."
More here on Usana, Minkow and the SEC.
-- MDT
3/13/2007
"USANA believes Mr. Minkow's statements are part of a coordinated public relations program financed by a paying client and from which Mr. Minkow will profit personally. According to reporting in the March 15, 2007 edition of The Wall Street Journal, Mr. Minkow "...has bought 'put' options on USANA's shares in a bet the price will fall." Mr. Minkow admits that he has been paid to conduct his "investigation" against USANA. Further, he has engaged a public relations firm to propagate his false and misleading statements about USANA to the mediaMinkow, not one to take things lying down or miss a chance to keep his name in the papers, responded with the following (via BloggingStocks):
We disclosed to 4 law enforcement agencies in writing back in February when we submitted the report our put option positions and we also disclosed our put option positions to Usana directly as well as the Wall Street Journal. Meaning we made full disclosure up front.See the full BloggingStocks post for a link to the full Fraud Discovery Institute report on Usana.
We have never charged a victim of fraud a fee to uncover their case nor are we paid by the government. However, this case involved so much time and effort and lab reports and experts that we had to off set these expenses. But it means nothing if our information is wrong.
The Wall Street Journal does not print a thing if they do not first corroborate everything we write -- and they did for several weeks. I can short any company I want to and if they are legit, they will Bury me with reasoned answers. Usana cannot, so they attack the person and ignore the arguments.
The SEC recently began an informal investigation of Usana. Usana President, David Wentz said of the SEC probe, "We believe that this is a routine inquiry made in response to a series of false and defamatory statements about our company that have appeared on the Internet and in the mass media."
More here on Usana, Minkow and the SEC.
-- MDT
Labels: Barry Minkow, homeland security, investigation, supplement industry, Usama Health Sciences
Nortel Execs Face Fraud Charges
Both U.S. and Canadian regulators have filed charges against a group of former Nortel executives over illegal activities that included lying to investors and reporting false numbers to the SEC. Canada's Ontario Securities Commission and the U.S. SEC are alleging that former Nortel execs conspired to "fix" earnings between 2000 and 2004.
Amongst the group facing charges are former chief executive Frank Dunn, former finance chief Douglas Beatty, and former controller Michael Gollogly. Former controller MaryAnne Pahapill also faces charges from the SEC. Further details on the Nortel charges here, via the FT.
-- MDT
2/28/2007
Amongst the group facing charges are former chief executive Frank Dunn, former finance chief Douglas Beatty, and former controller Michael Gollogly. Former controller MaryAnne Pahapill also faces charges from the SEC. Further details on the Nortel charges here, via the FT.
-- MDT
Labels: accounting fraud, Douglas Beatty, Frank Dunn, homeland security, MaryAnne Pahapill, Michael Gollogly, Nortel, Ontario Securities Commission, securities
The Guardian Sits Down With Gary Aguirre
What a stir Gary Aguirre created when he began making noise that his investigation into insider trading at Pequot Capital was quashed by SEC higher-ups when Aguirre suggested that the scheme may have involved Wall Street heavyweight, John Mack, patriarch of Morgan Stanley.
Aguirre claimed that he was told in no uncertain terms to leave Mack alone, a course of action he was disinclined to accept.. In the ensuing flap saw a fired (and fired-up Aguirre) turn whistleblower and testify before congress about conflict of interest issues at his former employer.
Well, Mr Aguirre is still hitting hard on what he believes are serious issues with the SEC's enforcement regime. Characteristically, he doesn't pull any punches in this interview with The Guardian.
For more background on Aguirre, try the tags below...
-- MDT
Aguirre claimed that he was told in no uncertain terms to leave Mack alone, a course of action he was disinclined to accept.. In the ensuing flap saw a fired (and fired-up Aguirre) turn whistleblower and testify before congress about conflict of interest issues at his former employer.
Well, Mr Aguirre is still hitting hard on what he believes are serious issues with the SEC's enforcement regime. Characteristically, he doesn't pull any punches in this interview with The Guardian.
For more background on Aguirre, try the tags below...
-- MDT
Labels: corruption, Gary Aguirre, homeland security, John Mack, whistleblower
UBS Employee Faces Charges for Selling Tips to Hedge Funds
The skinny....via BusinessWeek:
-- MDT
2/15/2007
...BusinessWeek has learned federal authorities are on the verge of busting a scheme in which at least one employee of UBS (UBS) was allegedly selling information about upcoming changes in analyst ratings on stocks to traders not affiliated with the Swiss investment firm.Read the rest.
Sources says federal prosecutors in New York and securities regulators in Washington will soon file charges against a number of individuals caught up in the investigation, which has been going on since last fall. Criminal and civil charges could be filed as soon as Tuesday.
Investigators have found that traders working for at least two unidentified hedge funds were paying a UBS employee in New York for the information about impending ratings changes on stocks. But other traders were also buyers...
-- MDT
Labels: bribery, hedge fund, homeland security, investigation, UBS
Monster Lawyer Expected to Pleade Guilty in Stock Options Case
Myron Olesnyckyj, former general counsel for jobsite, Monster.com is expected to plead guilty in relation to the stock options lawsuit filed by regulators against his former firm. Olesnyckyj (say it ten times fast - hell, say it once!) cut a deal with prosecutors that will see him testify against his former boss, Andrew McKelvey, Monster.com's founder and former CEO.
We've already seen a wave of GCs quietly or quite publicly dumped by firms under investigation by the SEC in relation to stock option backdating irregularities. How many will flip, like Olenyckyj, to testify against their former bosses...time will tell.
-- MDT
2/14/2007
We've already seen a wave of GCs quietly or quite publicly dumped by firms under investigation by the SEC in relation to stock option backdating irregularities. How many will flip, like Olenyckyj, to testify against their former bosses...time will tell.
-- MDT
Labels: backdating, homeland security, Monster.com, stock options
Two From Brokerage Firm, Ferris Baker Watts Take Leave of Absense in Response to SEC Investigation
Two executives from Baltimore-based brokerage firm, Ferris Baker Watts will be taking some time off in response to an ongoing SEC investigation. Louis Akers, director of Ferris's private client group, and Patrick Vaughan, director of retail sales will both be taking leaves of absence pending the results of an SEC investigation into trading activities at FBW.
More from the Washington Business Journal.
-- MDT
More from the Washington Business Journal.
-- MDT
Labels: Ferris Baker Watts, homeland security, investigation
Morningstar Gives the Rundown on the SEC's Frontrunning Investigation
Have brokers been tipping off hedge funds about pending mutual fund trades to help the hedgies (who have supplanted benefit mutual funds as brokers biggest client base) benefit from pending trades? Undoubtably this frontrunning practice exists and the SEC aims to find out exactly how endemic it has become. Morningstar's got the deets on the pending SEC investigation.
-- MDT
2/06/2007
-- MDT
Labels: front running, hedge fund, homeland security, investigation, SEC
Senate Sides With Aguirre, Against SEC in Review of Pequot Investigation
And they ain't happy. Back in July the Senate began looking into the SEC's insider trading investigation of hedge fund, Pequot Capital after complaints from former SEC investigator, Gary Aguirre,
Aguirre alleged that he was discouraged by agency higher ups from pursing information from John Mack, Morgan Stanley grand poo-bah and good buddy to Pequot founder, Arthur Samburg. Aguirre was eventually fired by the SEC and turned whistleblower, telling his tale loud and long for anyone who would listen.
The Senate listened and after extensive hearings, they've filed a report highly critical of the SEC. The NYT has a summary.
Try clicking on the tags below for further background...
-- MDT
2/02/2007
Aguirre alleged that he was discouraged by agency higher ups from pursing information from John Mack, Morgan Stanley grand poo-bah and good buddy to Pequot founder, Arthur Samburg. Aguirre was eventually fired by the SEC and turned whistleblower, telling his tale loud and long for anyone who would listen.
The Senate listened and after extensive hearings, they've filed a report highly critical of the SEC. The NYT has a summary.
Try clicking on the tags below for further background...
-- MDT
Labels: Arthur Samberg, Gary Aguirre, homeland security, insider trading, investigation, John Mack, Pequot Capital
Actor's Mom (and Hedge Fund Manager) Busted in Fraudulent Trading Scheme
Directors Financial Group, an Illinois hedge fund operated by Sharon Vaughn has been ordered to distribute its assets to investors - some $25 million - based on an SEC complaint filed last March.
The SEC accused Vaughn of defrauded clients in the by investing in a fraudulent prime-bank trading scheme, noting that Vaughn failed to perform adequate due diligence and neglected to disclose her trading strategy to investors. She followed this up by withholding and then submitting fraudulent documents to the SEC.
-- MDT
1/04/2007
The SEC accused Vaughn of defrauded clients in the by investing in a fraudulent prime-bank trading scheme, noting that Vaughn failed to perform adequate due diligence and neglected to disclose her trading strategy to investors. She followed this up by withholding and then submitting fraudulent documents to the SEC.
In addition to the order to dispense DFG's assets Vaughn will also pay a $200,000 penalty. The U.S. Attorney's Office for the Northern District of Illinois has also put forth indictments for the two promoters who sold Vaughn on the dodgy bank trading scheme in the first place.
Interestingly, Sharon Vaughn is the mother of actor Vince Vaughn.More here on Vaughn, via Financial Alternatives.
-- MDT
Labels: Directors Financial Group, Fraud, hedge fund, homeland security, Sharon Vaughn, Vince Vaughn
SEC Proposes New Hedge Fund Regs
Institutional Investor Daily has the coverage on new proposals from the SEC for how the agency will handle hedge fund regulation. The securities regulator faced a setback in this arena several months back when it came out on the losing side of a court battle over its existing hedge fund regs.
Check out the dailyii post for more details on what hedge funds and their burgeoning numbers of investors can expect from the SEC in the new year. You can also check out the SEC proposed rules here.
-- MDT
5/01/2006
Check out the dailyii post for more details on what hedge funds and their burgeoning numbers of investors can expect from the SEC in the new year. You can also check out the SEC proposed rules here.
-- MDT
Labels: hedge fund, homeland security, Phillip Goldstein, regulations
The Matrix (forgive me...) Reloaded?
Recall this story from last summer about the Federal government's abandoned plans for The Matrix, (or The Multistate Anti-Terrorism Information Exchange) a proposed database that would aggregate public records and commercially obtained data (read, credit headers, cell phone numbers and whatever else commerical firms can get their hands on) and make the information available to local law enforcement.
While the Feds discontinued their plans for the database, much to the relief of privacy advocates, Florida, for its part is apparently continuing to develop a similar system that would be powered by Lexis Nexis's Seisint. It is worth noting that Seisint was affilicated by a major personal info heist that touched off last summer's tidal wave of data breach news coverage and increased governmental, media and consumer attention to the issues surrounding personal data security.
-- MDT
While the Feds discontinued their plans for the database, much to the relief of privacy advocates, Florida, for its part is apparently continuing to develop a similar system that would be powered by Lexis Nexis's Seisint. It is worth noting that Seisint was affilicated by a major personal info heist that touched off last summer's tidal wave of data breach news coverage and increased governmental, media and consumer attention to the issues surrounding personal data security.
-- MDT
Labels: data breech, database, homeland security, Lexis Nexis, Matrix, Seisint, terrorism
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