Archive for September, 2008

SEC Stops Offspring of Earlier Scam

Tuesday, September 30th, 2008

The U.S. Securities and Exchange Commission (”SEC”) has charged Delta Onshore Management, LLC, Jerry P. Jackson, a principal of Delta Management, and Peter J. Brooks, Jason Hertz, and Daniel Cohen, all of whom were unlicensed salesmen of the Delta Venture.  According to the SEC the defendants raised $2.8 million from 50 investors nationwide in what the SEC described as an “off-shoot of a previously filed massive securities oil-and-gas related offering fraud case, SEC v. Michael J. McNaul, II, et al., pending in the United States District Court for the District of Kansas, Wichita Division. (more…)

World Financial Turmoil Means Increased Risk for Investors

Monday, September 29th, 2008

This morning I spoke to a reporter for a worldwide business publication.  She is doing a story on the up tick of complaints against brokers in the wake of the world financial turmoil.  She may be the first print reporter - but won’t be the last - to cover what will someday be described in history books as the “golden age of investment fraud.”  Credit markets have collapsed.  The bail out package has failed once.  Even if a version of it is passed by Congress and signed into law by the President, it will not head off an economic decline that may cross the line from recession into depression.  Not all sectors of the economy will suffer, though.  (more…)

SEC Tags Seven with Stupidity Tax

Friday, September 26th, 2008

In the wake of the continuing financial disaster another reminder that a big-name is no guarantee of integrity is probably unnecessary.  We have been warning the investing public of that fact for the past year.  But, a recent enforcement action by the U.S. Securities and Exchange Commission (”SEC”), gives us more evidence to support the conclusion.  The SEC has settled insider trading charges against seven individuals, including two who were professionals working for UBS and Morgan Stanley.  Read more about the case here. (more…)

SEC Obtains Judgment Against Massachusetts Hedge Fund Manager

Thursday, September 25th, 2008

The U.S. Securities and Exchange Commission (”SEC”) has obtained a judgment against Evan K. Andersen, of Boston, Massachusetts - formerly the head of a hedge fund called Lydia Capital, LLC - for defrauding more than 60 people out of more than $30 million. According to the SEC’s press release: (more…)

SEC Shuts Down Bogus PIPE Promoters

Wednesday, September 24th, 2008

The U.S. Securities and Exchange Commission (”SEC”) has charged attorney Jeanne M. Rowzee, James R. Halstead of Santa Ana, Calif., and Robert T. Harvey of Prosper, Texas with promoting a Ponzi scheme structured as a PIPE investment.  PIPE stands for private investment in public equity and is a way for small to medium sized companies to raise capital by selling shares to private investors at a discount to the current market price. (more…)

SEC Charges Pasta Company with Cooking More than Italian Food

Tuesday, September 23rd, 2008

The SEC has charged American Italian Pasta and several of its former officers with overstating the company’s revenue from 2002 to 2004 to keep the company’s stock price artificially inflated.  In addition, the United States Attorney’s Office for the Western District of Missouri has accepted guilty pleas from former chief executive officer Timothy S. Webster and former chief financial officer Warren B. Schmidgall to one count each of conspiracy to commit wire fraud in connection with the scheme.  (more…)

McCain Blasts Cox

Monday, September 22nd, 2008

Businessweek quotes John McCain as saying that if he were president he would fire U.S. Securities and Exchange Commission Chairman Christopher Cox for being asleep at the switch and allowing the failure of investment banks to surprise us all.  Would the person McCain appoints to replace Cox do any better?  Laying aside the substantial issue of whether the SEC had the authority to oversee the conduct that led us into this mess, investors should consider which candidate is likely to appoint someone who would do a better job of protecting investors.   (more…)

What it Means (Part 3)

Friday, September 19th, 2008

You remember telling him that you could not afford to lose this money.  “I need it to produce a lifetime income for me,” you said.  He assured you - and likely everyone else who bought this hedge fund or limited partnership - that this fund was uniquely designed to provide a perfect combination of safety and steady growth.  You are now watching the mailbox for your next monthly statement, concerned that the value of the account will have fallen along with the broader market.  Emotions compete for dominance.  You are glad that you chose a fund so geared toward protecting your principal.  At the same time, you wonder how any fund could possibly withstand the worst blow to the world financial system since 1929.  The statement arrives and the stress evaporates as you see that your account value has actually risen slightly.  (more…)

What it Means (Part 2)

Thursday, September 18th, 2008

What do you do for a living?  If you are retired, how did you earn your living before you retired?  Can you recall the thoughts and feelings that you had each morning when you went to work?  Lists of tasks to complete.  Perhaps decisions regarding capital expenditures or hiring?  At the very least, you probably had a sense of determination to make progress today, to be closer to your goal at the end of the day. (more…)

What it Means (Part 1)

Wednesday, September 17th, 2008

For almost a year now, Investor’s Watchdog has been blogging on the tsunami of financial fraud breaking over the world’s senior citizens and baby boomers.  In the months to come, hundreds of thousands, if not millions, of investors will lose everything they’ve worked for, not necessarily from market forces, but from the reckless conduct of stockbrokers desperate to generate commissions and from scam artists taking advantage of the market turmoil to sell cleverly-disguised scams as alternatives to traditional investments.  The recent troubles of seemingly unsinkable firms like Lehman Brothers, Merrill Lynch, and AIG, mean that a bad problem is about to get much, much worse.  In this three-part series, we’ll explore how the world’s financial troubles are likely to exacerbate investor protection problems that will endanger the nest eggs of tens of millions of investors. (more…)