Securities Fraud

A Santa Ana federal judge on Monday barred Medical Capital Holdings Inc. from selling additional securities in an offering that has raised at least $76.9 million, in response to a complaint alleging fraud against the Tustin company filed by the Securities and Exchange Commission. In addition to prohibiting the financial services company from taking in more investor money, U.S. District Judge David O.

A San Marino businessman with long-standing connections to Los Angeles City Hall has pleaded guilty to criminal securities fraud as part of a probe of alleged pay-to-play corruption at a New York state government pension fund, prosecutors said Tuesday. Julio Ramirez Jr., a former employee of Wetherly Capital Group, a Los Angeles investment marketing firm, allegedly gave kickbacks to a top political advisor of former New York Controller Alan Hevesi.

The U.S. Securities and Exchange Commission said it had stopped a $29.5-million severance package from being paid to Gemstar-TV Guide International Inc.'s former chief executive, who was charged with securities fraud. The agency said Wednesday that it stopped the payment from the Los Angeles company to Henry Yuen through a provision in the Sarbanes-Oxley corporate reform law. The provision lets the SEC seek a temporary order from a federal district court requiring a company to hold "extraordinary payments" likely to be made to any officer or affiliate of the company charged with violating securities laws.

The former chief executive of Refco Inc., blamed for the collapse of one of the world's largest commodities brokerages, was sentenced to 16 years in prison by a judge who decried the "staggeringly arrogant" greed of white-collar criminals. Phillip Bennett, 59, a British citizen living in Gladstone, N.J., had previously pleaded guilty to conspiracy to commit securities fraud and other charges for the eight-year fraud. U.S. District Judge Naomi Reice Buchwald in Manhattan said the 20 separate crimes Bennett admitted he had committed and the $1.5 billion in losses he had caused were enough to explain her ruling.

In a major ruling on securities law, the Supreme Court on Tuesday effectively capped the penalties for aiding and abetting the kind of fraud that Enron made infamous. Now it's up to Congress to create a meaningful deterrent to such schemes before Wall Street bankers try again to make foundering money pits look like fast-growing businesses. The case in question, Stoneridge Investment Partners vs. Scientific-Atlanta Inc.

The Supreme Court on Tuesday sharply limited the reach of securities fraud lawsuits by shielding bankers, accountants and others from being held liable for participating in a scheme to inflate a company's stock. The 5-3 ruling came in a case involving Charter Communications and Scientific Atlanta, but it has broader implications for securities litigation. It is a big win for Wall Street investment bankers accused of aiding other schemes such as those that brought down Enron and WorldCom.

Former Brocade Communications Systems Inc. Chief Executive Gregory Reyes, the first CEO convicted by a jury for manipulating stock options, was sentenced Wednesday to 21 months in prison and ordered to pay a $15-million fine. Prosecutors had sought a 33-month sentence. In giving the lesser term, U.S. District Judge Charles Breyer in San Francisco said he took into account Reyes' contributions to charity.

Consumer data provider ChoicePoint Inc. said Tuesday that Securities and Exchange Commission staffers had closed their investigation of stock sales involving the company's top two executives without recommending the filing of any charges. The Alpharetta, Ga.-based company said it had received notification from the SEC that its probe of the stock sales, as well as possible identity theft, had been completed and that no enforcement action had been recommended.

Massachusetts' top securities regulator Friday accused Merrill Lynch & Co. of fraud and misrepresentation, a day after the world's largest brokerage agreed to reimburse the city of Springfield $13.9 million in a dispute over an investment that soured. An administrative complaint by Secretary of State William Galvin alleges that Merrill Lynch made unsuitably risky investments on behalf of Springfield without the western Massachusetts city's permission -- investments that dwindled from $13.

A French securities trader was ordered into custody Friday while investigations continued into the billions of dollars in losses he allegedly caused at Societe Generale bank. A probe into the case broadened as well, with police taking into custody a brokerage employee who reportedly had been in contact with Jerome Kerviel, the 31-year-old trader.