Securities Fraud

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.

As Facebook shares continued their slide, regulators launched inquiries into whether privileged Wall Street insiders were alerted to the company's weakening financial projections, leading them to shun the stock or dump shares just as buying was opened to the public. Morgan Stanley, which led the Wall Street effort to bring the social network public, came under fire following reports that the bank had told some favored clients that the bank was cutting its revenue estimates for Facebook.

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.

Former IndyMac Bancorp Chief Executive Michael W. Perry has won dismissal of much of the fraud lawsuit brought against him by the Securities and Exchange Commission. U.S. District Judge Manuel Real in L.A. tossed out five of the seven SEC filings by IndyMac that the agency's suit listed as grounds for action. Real ruled Monday that the filings from the giant Pasadena thrift contained no false or misleading statements to investors about IndyMac's deteriorating condition as the housing markets melted down.

As Facebook shares continued their slide, regulators launched inquiries into whether privileged Wall Street insiders were alerted to the company's weakening financial projections, leading them to shun the stock or dump shares just as buying was opened to the public. Morgan Stanley, which led the Wall Street effort to bring the social network public, came under fire following reports that the bank had told some favored clients that the bank was cutting its revenue estimates for Facebook.

The state of California accused Wells Fargo & Co. of fraud Thursday for the company's role in an investment meltdown that has been compared to the Bernard Madoff scandal in magnitude. Atty. Gen. Jerry Brown sued three Wells Fargo investment subsidiaries, alleging they committed securities fraud by telling California investors that $1.5 billion of risky securities sold to them were as safe as cash.

A former Cruttenden & Co. stockbroker pleaded guilty Wednesday to receiving gifts, including a $50,000 Jaguar luxury car, from Spectrum Information Technologies in return for helping the wireless data company manipulate its stock price. Federal prosecutors said Reagan Richmond, 34, of Tustin, conspired to manipulate Spectrum stock between 1992 and 1994 while working as a broker at Irvine-based Cruttenden, now known as Cruttenden Roth, and at Regency Capital Group Inc. in Glendale.

A federal judge has ordered Lewis Allen Rivlin, a former Justice Department attorney, to pay about $6.5 million for defrauding investors, including an Ecuadorean charity for underprivileged girls. Ruling in a civil case brought by the Securities and Exchange Commission in 1999, U.S. District Judge Royce Lamberth said Thursday that Rivlin violated federal securities laws in 1997-98 by selling $6.2 million worth of phony securities to four groups of investors.

Federal regulators on Monday accused Sunwest Management Inc., one of the nation's largest operators of assisted-living facilities, and its former chief executive with securities fraud in connection with real estate investments that turned sour. The Securities and Exchange Commission announced the charges against Sunwest, based in Salem, Ore.

The boyfriend of an assistant to a top Walt Disney Co. executive pleaded guilty Monday to conspiracy to commit securities fraud and wire fraud in federal court in New York in an insider trading scheme that garnered notoriety for its lack of sophistication. Yonni Sebbag was arrested in May along with Bonnie Hoxie, a former aide to Zenia Mucha, the head of corporate communications for Disney. Both were charged with conspiracy to commit securities fraud and wire fraud by selling inside information to investment companies.

In a new FBI ad, actor Michael Douglas says his Gordon Gekko character was wrong -- greed is not good after all. As part of a campaign to fight securities fraud, the FBI released a public service announcement on Monday featuring Douglas. It begins with a clip from his Academy Award-winning role in 1987's "Wall Street. " " The point is, ladies and gentlemen, greed, for lack of a better word, is good," Gekko, a corporate raider, says at a shareholder meeting of a company he his trying to take over, in a line that become legendary.

As Barry Minkow prepared to be sentenced a second time for securities fraud, he appeared in a familiar role: repentant, apologetic, acknowledging deep character flaws and expressing hope he can transform himself for the better yet again. "The truth about me is I am a 45-year-old loser, and I am so very sorry for what I have done," Minkow wrote in a letter to U.S. District Judge Patricia A. Seitz of Miami, who was to sentence him early Thursday for conspiring to manipulate the stock of home builder Lennar Corp.

California won a court order reviving a stalled fraud lawsuit against Alfred J.R. Villalobos, a former board member at the California Public Employees' Retirement System accused of plying pension fund officials with luxury trips and gifts to influence investment decisions. A federal judge said the state's action should not have been shelved when Villalobos filed a bankruptcy petition in June 2010. California can use its police powers to "protect the public safety and welfare" even though Villalobos is seeking protection from creditors under bankruptcy laws, said U.S. District Judge Edward C. Reed in Reno.

A former Nasdaq executive has pleaded guilty to securities fraud for using insider information that, regulators allege, helped him net $755,000 trading stocks on the exchange. Donald Johnson admitted Thursday in a federal court in Virginia that he made trades on eight separate occasions from 2006 to 2009 using information he was given as part of his work for Nasdaq's market-intelligence unit in New York. "This case is the insider trading version of the fox guarding the henhouse," Robert Khuzami, the director of enforcement at the Securities and Exchange Commission, said in a statement.

A resounding guilty verdict in the insider-trading trial of a high-flying hedge fund magnate represents the biggest victory against Wall Street wrongdoing in two decades — and could invigorate the government's effort to stamp out a crime that's existed for as long as stocks have changed hands. To win the conviction of Raj Rajaratnam, prosecutors relied on extensive electronic wiretaps, marking the first time illegal trading has been pursued with a tool more commonly employed against organized crime.

Intensifying a crackdown on alleged insider trading by hedge funds, federal prosecutors have brought criminal charges against four more people, two of whom have already pleaded guilty. The actions in federal court in New York are the latest in a widening investigation by a special hedge fund task force created by the Securities and Exchange Commission and coordinated by the Obama administration that is designed to stem financial crimes. Two of those charged had connections to Primary Global Research of Mountain View, Calif.

The owners of companies that managed hundreds of millions of dollars for universities and charities were arrested Wednesday on suspicion of looting their investment funds. Paul Greenwood, 61, of North Salem, N.Y., and Stephen Walsh, 64, of Sands Point, N.Y., appeared in U.S. District Court in Manhattan on charges of conspiracy, securities fraud and wire fraud.

How do we break this to Ponch? Federal regulators on Thursday brought securities fraud charges against more than a dozen penny-stock promoters ? including Larry Wilcox, who played California Highway Patrol officer Jonathan "Jon" Baker on the hit TV show "CHiPs" in the late 1970s and early '80s. The Securities and Exchange Commission said it caught the promoters in "various illicit kickback schemes to manipulate the volume and price of microcap stocks and illegally generate stock sales.

Larry Wilcox, the former "CHiPs" TV star accused by federal regulators of securities fraud, has agreed to plead guilty to criminal charges in the stock manipulation case. Wilcox, 63, could face five years in prison on one count of conspiracy to commit securities fraud under a plea bargain reached with the U.S. attorney's office in Miami on July 2 and released publicly this week. The Justice Department filed criminal charges against Wilcox and nine other penny stock promoters on Thursday in Miami at the same time that the Securities and Exchange Commission filed civil securities fraud charges.