Securities Fraud

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.

Scott London, the auditor fired by KPMG, appeared before a federal judge Thursday to answer to accusations that he helped orchestrate an insider-trading scheme that racked up $1.3 million in ill-gotten gains. A somber expression on his face, London entered the Roybal Federal Courthouse in downtown Los Angeles shortly after 1 p.m. His attorney, Harland W. Braun, did not answer questions posed by a reporter. By 2 p.m., London's case had not been called. His arraignment may be scheduled for later Thursday afternoon.

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.

NEW YORK - The federal government has filed charges against a California hedge-fund analyst and a former tech executive in its continuing crackdown on insider trading on Wall Street. Federal prosecutors accused Matthew Teeple, 41, of San Clemente, with passing along illicit information he allegedly received from David Riley, a former chief information officer at Foundry Networks Inc. Riley, 47, lives in San Jose. Teeple, an analyst for a firm that provided information to a San Francisco-based hedge fund, allegedly passed along the illicit information in 2008.

ACLN Ltd., a Belgian-based company that maintained its U.S. investor relations office in Los Angeles, was charged Tuesday with "an exceptionally bold and elaborate financial fraud" in a Securities and Exchange Commission suit.

The Securities and Exchange Commission said Thursday that it has charged two executives of American Telephone & Telecommunications Corp. with fraud for selling securities in the firm that purportedly was set up to offer long-distance telephone service via the Internet. The company is not related to telecommunications giant AT&T Corp.

Once high-flying broker Rooney, Pace Inc. agreed Monday to leave the securities industry after an investigation by the Securities and Exchange Commission found numerous violations in three of its public stock offerings. The firm was a major player in the business of IPOs, or initial public offerings, a segment of the brokerage industry that also included First Jersey Securities Inc., which earlier reached a settlement with the SEC over fraud charges dating back to 1984.

A judge temporarily barred a national penny-stock brokerage house from soliciting new business in New York state Tuesday after the state attorney general said there was evidence that it had defrauded millions of dollars from thousands of investors. Atty. Gen. Robert Abrams said records showed that Power Securities Corp. of Las Vegas participated in "a massive fraud and swindle" that involved manipulating stock prices, creating artificial markets and marking up stock prices by 100% or more.

Former Lincoln Savings & Loan boss Charles H. Keating Jr. won a final victory Monday before the U.S. Supreme Court, defeating attempts to reinstate his 1991 state court conviction on charges of swindling elderly investors. Without comment, the high court refused to reopen the case, leaving intact lower court rulings that Los Angeles Superior Court Judge Lance Ito had allowed a flawed prosecution.

An Internal Revenue Service ruling, vindicating a municipal bond market whistle-blower, means that the Los Angeles Metropolitan Transportation Authority and more than 100 local agencies nationwide will have to pay the federal government as much as $2.5 billion within a year or risk even more dire consequences.

The Securities and Exchange Commission charged Illinois with securities fraud, accusing the state of misleading municipal investors over pension fund obligations, the regulatory agency said Monday. An investigation determined the state failed to inform investors about the impact of problems with its pension funding schedule, the agency said. Between 2005 and 2009, Illinois sold more than $2.2 billion in municipal bonds but neglected to tell investors that pension obligations were underfunded, the agency said.

Now that Ben Affleck has shaved his good-luck Oscar beard, we believe it's safe to officially close the book on the 2012-13 awards season so we can cast a small peek at the treasures that await. What will the coming best picture race look like? Here are 10 candidates: "The Great Gatsby" (May 10): Director, Baz Luhrmann; cast, Leonardo DiCaprio, Carey Mulligan, Tobey Maguire. Delayed from last year and, like all of Luhrmann's high-style, high-wire movies, guaranteed to be divisive, "Gatsby" could well be this year's "Les Miserables" (without the singing)

Sports Illustrated celebrated this year's swimsuit edition with a launch party Tuesday night in NYC. Models from the issue chatted about the differences in their kind of modeling and that of the runway models taking part in New York Fashion Week. For one thing, the girls in swimsuits tend to be shorter (several of them are around 5-9). For another, they are much, much curvier. "I don't really focus on other girls," cover girl Kate Upton said. "I think everyone has a different body type.

A former Los Angeles police detective who lost millions of dollars given to her by fellow officers and other investors was charged with theft and fraud this week by the California attorney general's office. It is the second time Darcey Greenfield has faced allegations that she misled investors in a real estate investment scheme. Last year, prosecutors in San Bernardino County brought similar charges. Prosecutors in the attorney general's white collar crime unit began investigating Greenfield, 41, several months ago, after LAPD investigators presented them with the findings of their own inquiry, according to the attorney general's office.

WASHINGTON -- Federal prosecutors on Tuesday charged a former hedge fund portfolio manager with securities fraud in connection with what they said was the most lucrative insider-trading case ever prosecuted. In complaints filed in New York, authorities said investment advisors and hedge funds made more than $276 million in illegal profits or avoided losses by trading before the announcement in 2008 of negative results from clinical trials for an Alzheimer's disease drug being developed by Elan Corp.

NEW YORK -- Rajat Gupta, a former director of Goldman Sachs, will spend two years in jail and an additional year on supervised release for his role in a sprawling insider-trading scheme on Wall Street. U.S. District Judge Jed Rakoff ordered Gupta to report to prison Dec. 11 and pay $5 million in fines. A jury convicted Gupta of securities fraud and conspiracy in June. Federal prosecutors had sought a prison sentence of as long as 10 years. Gupta's lawyers asked Rakoff for a term of community service, helping homeless youth in New York or rural poor in Rwanda.  Gupta is the highest-profile figure in the federal government's campaign against insider-trading, which Preet Bharara, the U.S. attorney in Manhattan, has called rampant on Wall Street.

Hawaii state prosecutors said Wednesday they are investigating an Orange County company to determine if its sales of how-to kits to would-be travel agents constitute an illegal pyramid scheme. In addition, World Class Network in Irvine faces a securities probe by another Hawaii agency to determine if it is selling unregistered securities in the form of distributorships.

The Securities and Exchange Commission charged Illinois with securities fraud, accusing the state of misleading municipal investors over pension fund obligations, the regulatory agency said Monday. An investigation determined the state failed to inform investors about the impact of problems with its pension funding schedule, the agency said. Between 2005 and 2009, Illinois sold more than $2.2 billion in municipal bonds but neglected to tell investors that pension obligations were underfunded, the agency said.

WASHINGTON -- Promises made to investors by Bear Stearns & Co. about the quality of mortgage-backed securities during the subprime housing boom were "a sham," New York Atty. Gen. Eric Schneiderman said Tuesday in detailing the first suit by a task force investigating misconduct by banks in the run-up to the financial crisis. The securities fraud suit "goes to the heart of the misconduct that created the housing bubble and caused the crash of 2008," Schneiderman told reporters a day after filing a securities fraud suit related to the sale of mortgage bonds by Bear Stearns & Co., which was later acquired by JPMorgan Chase & Co. The suit against JPMorgan alleged that Bear Stearns misled investors that the bank had carefully evaluated the quality of mortgages it packaged into securities from 2005-2007 and that it had monitored the originators of those loans to make sure they were following guidelines designed to ensure that borrowers could repay the loans.

WASHINGTON - Phil Angelides , who chaired the government commission that investigated the financial crisis, said the Justice Department should pursue more criminal cases against Wall Street executives to restore the faith of average Americans in U.S. markets. "Restoring that faith will require bringing a renewed sense of urgency to the mortgage securities fraud investigation, and a willingness to follow the evidence wherever it leads - even to criminal prosecutions of bank executives and mortgage lenders of any size," Angelides, the former California state treasurer, wrote in an opinion article Tuesday in Politico . "Americans need to know that law breaking at the highest levels will not be countenanced or allowed to jeopardize our financial system and economy," he said.