Goldman Sachs Group Inc. executive Adam Storch has been tapped by the Securities and Exchange Commission to serve as its chief operating officer of the enforcement division. Storch will be the first person to ever hold the position as the SEC continues to shift its personnel in order to enhance its operations.
Robert Khuzami, the SEC’s Enforcement Division Director, announced earlier this year that his division would be undergoing a major restructuring effort, one that included the creation of Storch’s new post. Storch’s responsibilities will include overseeing the division’s budget, information technology, and administrative services. He will also be in charge …read more

The financial crisis has led the Securities and Exchange Commission to keep an even closer eye on businesses to make sure that the nation’s economy does not suffer because of immoral practices on the part of a small group of people. Homebuilder KB Home has become the latest company to come under the SEC’s magnifying glass due to “possible accounting and disclosure issues,” a potentially serious situation for KB Home.
KB Home is no stranger to such proceedings, as the company’s former CEO, Bruce Karatz, is currently awaiting trial concerning federal charges that the executive fraudulently manipulated stock options. Karatz resigned …read more

As the Securities and Exchange Commission continues to clamp down on unscrupulous Wall Street denizens, Chairman Mary Schapiro has written an open letter to U.S. investment CEOs that warns against using bonuses to compensate brokers. According to Schapiro, such a practice encourages brokers to aim for more sales at the expense of the customer’s interest.
 
In her letter, Schapiro took note of recent news stories that revealed many CEOs using increased commissions and upfront bonuses to hire brokers, warning that such a practice ends up benefiting the broker more than the customer. By giving brokers large bonuses, Schapiro argues, the brokers …read more

It’s a little depressing that there are so many Ponzi schemes to report. The bright spot I suppose is that the Securities and Exchange Commission is on the case. This week the SEC charged Moises Pacheco, Advanced Money Management, Inc. (AMM), and Business Development & Consulting Co. (BD&C) with fraudulently raising $14.7 million from more than 200 investors over a 3½-year period.
According to the SEC’s complaint, Pacheco told investors that he had developed a lucrative investment strategy involving the purchase and sale of covered call options, and that the hedge funds exclusively relied upon this strategy to generate trading profits …read more

The Securities and Exchange Commission this week charged two Oklahoma City residents with securities fraud and other violations related to misappropriating millions of dollars from Quest Resource Corporation, Quest Energy Partners, L.P. and their affiliates while they were executives at the company.

The SEC alleges that Jerry D. Cash and David E. Grose caused Quest to make a series of transfers to a separate company that Cash controlled. Cash tried to conceal the transfers by, among other things, ostensibly transferring the funds back to Quest at the end of each quarter. The progressively greater amounts taken from Quest over time are …read more

A new report from the Investor Environmental Health Network (IEHN) warns that billions of dollars in potential asbestos-like litigation risks for nanotechnology companies and investors are now hidden due to weak regulations governing disclosures of liabilities. According to the report, some of the nanotechnologies are now commonly found in sunscreen, cosmetics, food, clothing, sporting goods and packaging are showing signs of posing serious hazards to human health and the environment.

The good news for investors is that the U.S. Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB) are now in the process of examining disclosure requirements and …read more

Securities and Exchange Commission Mary Schapiro yesterday spoke out on executive compensation. She stated that while the role of the SEC is not to set or cap compensation, but to ensure that investors are able to make the best possible decision based on accurate and pertinent information about a company’s stock.
Because the methods and types of executive compensation have become diverse and complex, the SEC frequently revises disclosure requirements to reflect that compensation in the company’s financial statements. The SEC is currently new set of proxy disclosure rules to provide further insight into the effects of compensation decisions. While these proposals …read more

The Securities and Exchange Commission last week announced the formation of an Investor Advisory Committee. The committee is intended to allow investors to have a greater impact on the Commission’s work. SEC Commissioner Luis A. Aguilar will serve as the Commission’s primary sponsor of the Committee. Chairman Mary Schapiro said:
“Through this well-respected and diverse group, we are reaching out to investors in a new and significant way. I look forward to hearing their views on new products, trading strategies, fee structures, and the effectiveness of disclosure, among other issues. Investors need a greater voice at the Commission. The Commission’s traditional role as …read more

The Securities and Exchange Commission Wednesday obtained an emergency court order to freeze the assets of Texas A&M finance professor Robert D. Watson. The accounts of Houston lawyer and CPA Daniel J. Petroski was also frozen, along with two firms. Watson and Petroski are charged with forging bank records to trick investors into believing they were earning excessively high returns in foreign exchange trading.
The Players & The Crime
Watson and Petroski are alleged to have raised over $19 million from investors using the following entities:

Alpha One: This foreign-currency trading software program was purportedly owned by their firm.
PrivateFX Global One Ltd.: Owned …read more

The Securities and Exchange Commission this week charged employment search provider Monster Worldwide, Inc. with secretly backdating stock options granted to thousands of Monster officers, directors and employees. Monster agreed to pay a $2.5 million penalty to settle the charges.
The SEC charged that Monster defrauded investors by granting backdated, undisclosed ‘in-the-money’ stock options without recording the required non-cash charges for option-related compensation expenses.
“Monster misled investors by failing to report hundreds of millions of dollars of expenses. Backdating stock options made the company look like it had more money than it really did,” said James Clarkson, Acting Regional Director of the …read more