All Along The Wall Street Watchtower

Bob Dylan wrote the lyrics. Jimi Hendrix turned it into an anthem for a generation. And as each successive generation has interpreted the song, we still wonder whether there is, in fact, some kind of way outta here. Bill Singer walks the Wall Street ramparts and climbs up the steps to the watchtower, where he sits at his desk and pens yet another edition of the BrokeAndBroker.com Blog, but all the while, he hears, in the cold distance, the wind howling. Consider a recent contest of sorts between an incarcerated felon and the Securities and Exchange Commission.  Bill has been following this mess and brings it to your attention. Sadly, Bill is too old to get excited and much of what he is watching strikes him as a joke. At the end of the article, however, enjoy some wonderful music videos. READ

Coscia Sentenced To 3 Years In FIrst Spoofing Case

On October 1, 2014, Michael Coscia, a registered commodities trader since 1988, and the manager and sole owner of Panther Energy trading LLC, which he formed in 2007, was indicted in the Northern District of Illinois ("EDIll") on 6 Counts of Commodities Fraud and 6 Counts of "Spoofing." This Indictment was the first federal prosecution under the Anti-Spoofing provisions of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. United States of America v. Michael Coscia (Indictment, NDIll, October 1, 2014). On July 13, 2016, Coscia was sentenced. READ the FULL TEXT Indictment.

Secret Customer Settlement Gets Stockbroker Fined And Suspended

It's one of those moments. You got a problem. You got two choices: Do the right thing or do the wrong thing. Except, you know, that wrong thing ain't so wrong and who the hell is gonna know if you do it . . . or so you think, at a time when you're mind is racing a million miles a second because you're figuring that your job is on the line. Looking back, you realize that you probably shouldn't have made such a decision without stepping back and taking a breather. Unfortunately, what's done is done and, wow, how the hell this all blew up on you is still a mystery. It all seemed so simple. The customer complained about losses. You didn't want to go through the whole compliance disclosure thing. You paid off the customer to keep quiet. Who was gonna find out? How would anyone get wise? READ

SEC Put Writing And Swap Case Slogs To Federal Courts

In today's BrokeAndBroker.com Blog we wrestle with an ongoing Securities and Exchange Commission case. It is, in fact, a struggle to digest the various allegations and parse the misconduct among four different respondents. Ultimately, however, it seems that the SEC got it right and to the federal regulator's credit, there is ample content and context in its various decisions, orders, and opinions to allow readers to draw conclusions. That being said, we are also confronted with some interesting procedural disputes involving an attempt to stay the sanctions imposed. 

By way of brief introduction, during 2007 and 2008, Mohammed Riad was a Managing Director and Senior Portfolio Manager at Fiduciary Asset Management, LLC and Portfolio Manager of the closed-end investment company Fiduciary/Claymore Dynamic Equity Fund ("HCE"). Kevin Timothy Swanson was a FAMCO Portfolio Manager and a Co-Portfolio Manger of HCE with Riad. FAMCO was the sub-adviser to HCE and received a 5% sub-advisory fee. And from here, we enter the fray. 

In the three OIPs filed on December 19, 2012, the SEC alleged that the investment advisory firms and portfolio managers failed to inform investors of the use of purportedly risky derivative strategies (including writing out-of-the-money Puts and shorting variance swaps) that were among the factors resulting in the collapse of the closed-end fund HCE. The OIPs alleged that the non-disclosed strategies contributed to losses in excess of 45% of HCE's net assets or $45 million in September and October 2008 -- resulting in the fund's liquidation in 2009.

In announcing the OIPs on December 19th, the SEC noted that both Respondent Claymore Advisors and sub-adviser/manager Respondent FAMCO, had settled the charges without admitting or denying the findings and had agreed to a Censure and to a Cease-And-Desist from securities law violations. Additionally, Respondent Claymore agreed to distribute up to $45 million in compensation to investors, and Respondent FAMCO agreed to pay $644,951 disgorgement with $134,976 interest and a $1.3 million penalty. READ