Archive

Archive for the ‘U.S. Securities and Exchange Commission’ Category

Federal Reserve Board releases action plans for supervised financial institutions to correct deficiencies in residential mortgage loan servicing and foreclosure processing

March 3, 2012 Comments off

Federal Reserve Board releases action plans for supervised financial institutions to correct deficiencies in residential mortgage loan servicing and foreclosure processing
Source: Federal Reserve Board

The Federal Reserve Board on Monday released action plans for supervised financial institutions to correct deficiencies in residential mortgage loan servicing and foreclosure processing. It also released engagement letters between supervised financial institutions and independent consultants retained by the firms to review foreclosures that were in process in 2009 and 2010.

The action plans are required by formal enforcement actions issued by the Federal Reserve last year. The enforcement actions direct mortgage loan servicers regulated by the Federal Reserve to submit acceptable plans that describe, among other things, how the institutions will strengthen communications with borrowers by providing each borrower the name of a primary point of contact at the servicer; establish limits on foreclosures where loan modifications have been approved; establish robust, third-party vendor controls; and strengthen compliance programs.

The Federal Reserve enforcement actions also require the parent holding companies of mortgage servicers to submit acceptable plans that describe, among other things, how the companies will improve oversight of servicing and foreclosure processing conducted by bank and nonbank subsidiaries.

The enforcement actions further require the mortgage servicing subsidiaries to provide appropriate remediation to borrowers who suffered financial injury as a result of errors by the servicers. The engagement letters describe the procedures that will be followed by the independent consultants in reviewing servicers’ foreclosure files to determine whether borrowers suffered financial injury as a result of servicer error.

+ Action plans and engagement letters

Investor Bulletin: Social Media and Investing – Understanding Your Accounts

February 13, 2012 Comments off
Source:  U.S. Securities and Exchange Commission
The SEC’s Office of Investor Education and Advocacy is issuing this Investor Bulletin to provide investors with tips they should consider when establishing an account on a social media website. Investors’ use of Facebook,Twitter and other social media websites as an investing tool has increased substantially in recent years. Investors who use social media websites for investing should be mindful of the various features on these websites in order to protect their privacy and help avoid fraud.

SEC OIG — Allegations of Enforcement Staff Misconduct in Insider Trading Investigation (8/22/11)

November 1, 2011 Comments off

Allegations of Enforcement Staff Misconduct in Insider Trading Investigation (PDF)
Source: U.S Securities and Exchange Commission, Office of Inspector General

On January 30, 2009, complainant Mark Cuban, through his counsel at the law firm Dewey & LeBoeuf, filed a compliant with the Securities and Exchange Commission (“SEC” or “Commission”) Office of Inspector General (“OIG), outlining various allegations of misconduct by the SEC Division of Enforcement (“Enforcement”) staff. Mr. Cuban, a well-known entrepreneur and owner of the Dallas Mavericks basketball team, alleged Enforcement staff engaged in misconduct in the course of its investigation of Mr. Cuban for insider trading the connection with the sale of all of his Mamma.com stock before the company publicly announced a private investment in public equity (“PIPE”) transaction in 2004. Generally, Mr. Cuban alleged that: (1) the Enforcement staff violated SEC policy when they notified Mr. Cuban that they intended to recommend insider trading charges against him before the investigation was substantially complete; (2) Enforcement staff showed a bias and predetermined agenda against Mr. Cuban and the investigation appeared to have been motivated by political bias because an SEC Fort Worth Regional Office (“FWRO”) Enforcement staff “used the clopsure of [an earlier] investigation to attempt to induce Mamma.com’s executives to cooperate with the staff and perhaps even to depart from the testimony they previously had provided” to Mr. Cuban’s counsel during their own investigation of the matter; and (4) a senior Enforcement official failed to properly report the misconduct of the FWRO Enforcement attorney who was e-mailing Mr. Cuban from his SEC e-mail account during the ongoing investigation into Mr. Cuban’s trading.

In all, the OIG concluded that there was insufficient evidence to substantiate Mr. Cuban’s claims that the SEC Enforcement staff engaged in misconduct in conducting their investigation into Mr. Cuban’s sale of his Mamma.com stock shares. Specifically, the OIG investigation found that there was insufficient evidence to substantiate the claim that Enforcement improperly provided Mr. Cuban with a “Wells” notice before the investigation was substantially complete. The OIG investigation also did not find sufficient evidence to substantiate Mr. Cuban’s claim that an earlier investigation into Mamma.com was closed as a quid pro quo for the investigation relating to Mr. Cuban.

SEC — CF Disclosure Guidance: Topic No. 2 – Cybersecurity

October 21, 2011 Comments off

CF Disclosure Guidance: Topic No. 2 – Cybersecurity
Source: U.S. Securities and Exchange Commission

This guidance provides the Division of Corporation Finance’s views regarding disclosure obligations relating to cybersecurity risks and cyber incidents.

Full Text of Complaint: “SEC Charges Bank Executives With Hiding Millions of Dollars in Losses During 2008 Financial Crisis”

October 11, 2011 Comments off

Direct to SEC News Release

Direct to Full Text of SEC Complaint (26 Pages; PDF)

The Securities and Exchange Commission today charged former bank executives with misleading investors about mounting loan losses at San Francisco-based United Commercial Bank during the height of the financial crisis in 2008 and 2009.

The SEC alleges that the bank’s former chief executive officer Thomas Wu, chief operating officer Ebrahim Shabudin, and senior officer Thomas Yu concealed losses on loans and other assets from the bank’s auditors, causing the bank’s public holding company UCBH Holdings Inc. (UCBH) to understate 2008 operating losses by at least $65 million (approximately 50 percent). A few months later, continued declines in the value of the bank’s loans led the bank to fail, and the California Department of Financial Institutions closed the bank and appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. United Commercial Bank was one of the 10 largest bank failures of the recent financial crisis, causing a loss of $2.5 billion to the FDIC’s insurance fund.

“Today’s charges reflect an all too familiar pattern – corporate executives once seen as rising stars embrace deception to avoid losses and conceal negative news, with investors and the FDIC insurance fund left to pick up the pieces,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “But accountability for these executives begins today.”

[Clip]

According to the SEC’s complaint filed in federal court in San Francisco, UCBH and its subsidiary United Commercial Bank grew rapidly, doubling in size after an initial public offering in 1998. It was the first U.S. bank to acquire a bank in the People’s Republic of China, and Wu was considered a rising star in the banking industry. By 2009, however, Wu found himself at the helm of a bank on the brink of failure.

The SEC alleges that Wu, Shabudin, and Yu deliberately delayed the proper recording of loan losses, and each committed securities fraud by making false and misleading statements to investors and UCBH’s independent auditors. During December 2008 and the first three months of 2009 as the company prepared its 2008 financial statements, Wu, Shabudin, and Yu were aware of significant losses on several large loans. Among other things, these executives allegedly learned about dramatically reduced property appraisals and worthless collateral securing the loans, yet they repeatedly hid this information from UCBH’s auditors and investors.

Read the Complete SEC News Release

Direct to Full Text of SEC Complaint (26 Pages; PDF)

Investigation of Conflict of Interest Arising from Former General Counsel’s Participation in Madoff-Related Matters

September 23, 2011 Comments off

Investigation of Conflict of Interest Arising from Former General Counsel’s Participation in Madoff-Related Matters (PDF)
Source: U.S. Securities and Exchange Commission, Office of Inspector General

The OIG conducted an extensive investigation of the facts and circumstances surrounding the SEC’s former General Counsel and Senior Policy Director David Becker’s participation in issues in the Madoff Liquidation and other Madoff-related matters, notwithstanding his interest in the Madoff account of his mother’s estate. During the course of its investigation, the OIG obtained and searched over 5.1 million e­ mails for a total of 45 current and former SEC employees for various time periods pertinent to the investigation, ranging from 1998 to 2011. The OIG also obtained and analyzed internal SEC documents, documentation provided by the Madoff Trustee, Irving H. Picard, Esq., court filings, and press reports. In addition, the OIG conducted testimony or interviews of 40 witnesses with knowledge of facts or circumstances surrounding the Madoff Liquidation and Becker’s work at the SEC.

Overall, the OIG investigation found that Becker participated personally and substantially in particular matters in which he had a personal financial interest by virtue of his inheritance of the proceeds of his mother’s estate’s Madoff account and that the matters on which he advised could have directly impacted his financial position. We found that Becker played a significant and leading role in the determination of what recommendation the staff would make to the Commission regarding the position the SEC would advocate as to the determination of a customer’s net equity in the Madoff Liquidation. Under the Securities Investor Protection Act of 1970 (“SIPA”), where SIPC has initiated the liquidation of a brokerage firm, net equity is the amount that a customer can claim to recover in the liquidation proceeding. The method for determining the Madoff customer’s net equity was, therefore, critical to determining the amount the Trustee would pay to customers in the Madoff Liquidation. Testimony obtained from SIPC officials and numerous SEC witnesses, as well as documentary evidence reviewed, demonstrated that there was a direct connection between the method used to determine customer net equity and clawback actions by the Trustee, including the overall amount of funds the Trustee would seek to clawback and the calculation of amounts sought in individual clawback suits. In addition to Becker’s work on the net equity issue, we also found that Becker, in his role as SEC General Counsel and Senior Policy Director, provided comments on a proposed amendment to SIPA that would have severely curtailed the Trustee’s power to bring clawback suits against individuals like him in the Madoff Liquidation.

Report on the Implementation of SEC Organizational Reform Recommendations

September 13, 2011 Comments off

Report on the Implementation of SEC Organizational Reform Recommendations (PDF)
Source: U.S. Securities and Exchange Commission

The Dodd–Frank Act directed the U.S. Securities and Exchange Commission (SEC) to engage an independent consultant to conduct a broad and independent assessment of the SEC’s internal operations, structure, funding, and the agency’s relationship with Self-Regulating Organizations (SROs). Issued in March 2011, the consultant’s study provided 16 optimization initiative recommendations designed to increase the SEC’s efficiency and effectiveness. In the six months since the study was issued, the SEC has developed the necessary program management and oversight infrastructure to address the next step in the agency’s on-going multi-year change initiative: conducting a thorough analysis of each recommendation and designing appropriate approaches for those recommendations selected for implementation.

Over the next six months, significant work will have been done within each workstream to analyze the Boston Consulting Group’s (BCG) recommendations and recommend what, if any, actions should be taken. While the agency has made progress, the path forward is still long. As the analysis completes, the agency will develop implementation options, then create a time-phased, multi-year implementation plan that accounts for constraints in the agency budget, management time, and agency priorities. The agency will focus on assessing the schedule, costs, and management bandwidth required for each initiative; identifying cross-work-stream integration points; and developing a detailed prioritization and implementation plan that sequences the various implementation activities. It is at that time that trade-offs and hard decisions must be made about how to best expend resources, time and funding.

The SEC recognizes that successful implementation of many of the ideas in the BCG study will require a long-term commitment and sustained effort over several years. While still in the early stages of considering the BCG recommendations, the SEC is committed to an open and transparent process. Consistent with the statute, the agency intends to report to Congress on a regular basis on the actions taken in response to the study.

SEC — Report of Review of Economic Analysis Performed by the Securities and Exchange Commission in Connection with Dodd-Frank Act Rulemakings

June 17, 2011 Comments off

Report of Review of Economic Analysis Performed by the Securities and Exchange Commission in Connection with Dodd-Frank Act Rulemakings (PDF)
Source: U.S. Securities and Exchange Commission, Office of Inspector General
From Bloomberg BusinessWeek:

U.S. financial regulators have in general properly estimated the costs and benefits of new rules required under the Dodd-Frank Act, according to internal agency watchdogs.

The Federal Deposit Insurance Corp., Office of the Comptroller of the Currency, Securities and Exchange Commission and Federal Reserve have adequate procedures to estimate the costs of rules, such as new capital and margin requirements for the $601 trillion swaps market, the inspectors general concluded in reviews sought by Senate Republicans.

Follow

Get every new post delivered to your Inbox.

Join 361 other followers