Archive for the ‘Financial Markets’ Category

NYC judge sent Wall Street hedge fund manager to jail / Siim

23/05/2010. Tags: , , , , , , , , | This post has no Comments

MSNBC wrote: A former top executive at a $1 billion hedge fund investment firm was sentenced to more than two years in prison Friday in the first sentencing to result from what prosecutors have called the largest hedge fund insider trading case in history.

Mark Kurland, 61, of Mount Kisco, N.Y., was sentenced Friday to two years and three months in prison and ordered to forfeit the $900,000 he made through illegal trades by a judge who blamed the attitudes of people like Kurland on the country’s financial collapse two years ago.

U.S. District Judge Victor Marrero said Kurland, a co-founder of New Castle Partners hedge fund in Manhattan, “frankly should have known better” than to join an inside trading scheme that led to the arrests of top executives including one-time billionaire Raj Rajaratnam.

“He had a choice as a leader of the financial industry. He could have led by example. Instead, he chose to follow. He became a joiner, surrendering to the spree of the financial market’s virtual mob mentality that nearly brought down this country’s financial industry in the quest for ever bigger and faster gains,” Marrero said.

Kurland, who had pleaded guilty to conspiracy to commit securities fraud and securities fraud, was among 11 people who have pleaded guilty in the case. Many of the others had agreed to cooperate with the government, a step which delays their sentencing.

Rajaratnam, the portfolio manager for the Galleon Group hedge fund, has pleaded not guilty and disputed government claims that he pocketed as much as $50 million through a network of cheating executives at financial firms and companies privy to inside information.

The judge criticized pleas for leniency on Kurland’s behalf on the grounds that he had a minimal role, that he did not benefit much financially, that others were more at fault and that there was no real harm to the markets.

Read the whole story >

Preventive Measures Under the Market Abuse Directive: Comparative Reality Check / Ahto

30/12/2008. Tags: , , , , | This post has no Comments

1. Introduction 

The EU Market Abuse legislation (directives, regulations and Level 3 guidelines), with the market integrity and investor confidence as its primary objectives, represents a major achievement towards integrated financial markets in EU.

As a matter of domestic legislation and other applicable rules deriving from the Market Abuse legislation, issuers are expected to have adequate preventive measures, systems, procedures and controls in place to ensure discharge of their regulatory obligations and make it as difficult as possible to commit market abuse. The higher the quality of systems and controls implemented by the issuers, the lower the likelihood that their financial instruments become subject to insider dealing or other forms of market abuse.

Given the importance of issuers’ compliance efforts under the Market Abuse regime, it is vital that substantially similar standards and compliance arrangements will evolve to protect investor confidence and market integrity within the EU. A pre-condition for such evolution is an objective understanding about issuers’ anti-market abuse systems, controls and compliance practices as applied on a daily basis.

A survey conducted between February and March 2008 among leading multinational companies listed on the Nordic Market (1)  in cooperation with the City of London, represents an effort to capture such understanding on a regional level.

The survey was conducted by means of confidential questionnaire addressed to general counsels and compliance officers of companies listed on the Nordic Market. The questionnaire focused on selected elements of preventive anti-market abuse systems and controls dealing with:

  • identification of inside information within the issuer and its group
  • ensuring fair trading by members of the management bodies and employees
  • proper handling of inside information and prevention of leaks
  • ensuring the quality and reliability of compliance procedures, techniques and record-keeping regarding the above
  • internal allocation of responsibilities and tasks regarding the above.

This article summarizes the key-findings of the survey and aims to provide useful comparative information for those in charge of legal and compliance with respect to Market Abuse rules.


Deutsche Bank trader at centre of IKB insider dealing probe / Ahto

25/04/2008. Tags: , , | This post has no Comments

Deutsche Bank is cooperating with an investigation by a German prosecutor’s office into reports of insider trading of IKB Deutsche Industriebank shares, the bank said.

Deutsche Bank said the Frankfurt prosecutor’s office had told it that a complaint had been filed accusing one of the bank’s employees of insider trading.

Deutsche Bank said that to the best of its knowledge, the inquiry did not refer to trading in the bank’s accounts but to trading on behalf of clients, and that the bank had not benefited from it.

SEC Charges Fidelity Trader with Insider Trading / Siim

24/04/2008. | This post has no Comments

The SEC has charged David Donovan, Jr., a former equity trader at Fidelity Investments, and David Hinkle, a former broker at Capital Institutional Services, with defrauding Fidelity and its advisory clients through a series of inside trades.

According to the Commission’s allegations, Donovan and Hinkle used confidential information from Fidelity’s internal order database to trade on or ahead of the firm’s orders. The SEC claims that the duo failed to inform Fidelity about the trades and that they profited through them.

The SEC’s suit seeks disgorgement with prejudgment interest and the imposition of civil penalties against Donovan and Hinkle.

The Commission’s complaint states that from July through September 2003, Donovan accessed Fidelity’s internal order database at least 107 times. While perusing the database, he allegedly learned Fidelity intended to purchase the common stock of Covad Communications Group, which traded on the OTC Bulletin Board. Donovan then asked Fidelity for permission to trade Covad stock in his personal account and was denied.

Unable to trade Covad stock on his own Donovan contacted Hinkle, an Austin, Texas-based broker, the SEC claims. Hinkle had extensive contacts with Fidelity’s equity traders in Massachusetts. During their communication, Donovan tipped Hinkle about Fidelity’s forthcoming trading activity, according to the Commission.

Based on that information, Hinkle purchased Covad shares for himself and for Donovan. The shares he purchased for Donovan, however, he placed in the account of Donovan’s mother, the SEC charges.

Read the whole story …

CESR Takes Steps To Strengthen Market Confidence / Ahto

17/04/2008. Tags: , , , | This post has no Comments

CESR welcomes the report of the Financial Stability Forum (FSF) on Enhancing Market and Institutional Resilience published 7 April, and launches work to address some of its recommendations, as well as to implement some of the decisions taken by Europe’s Ministers at the informal ECOFIN Council of 4 and 5 April 2008. This action can therefore be seen as part of the response by CESR to issues raised by the current market turmoil. This work will be undertaken, where appropriate, in close co-ordination with our fellow Level 3 Committees covering banking, insurance and pensions (namely, CEBS and CEIOPS). The Chairman of CESR, Eddy Wymeersch noted:

“Europe’s securities regulators are currently assessing and instigating action which will contribute to the efforts being made to re-establish confidence in financial markets at a global level through IOSCO and the FSF. Today, as a first instance, we announce the launch of work in a number of key areas which will include, amongst others, finalising CESR’s work on credit rating agencies and intensifying existing efforts to co-ordinate on the investigation of market abuse. Further new work will be launched in the area of valuation of assets; market transparency and risk management by investment firms. In addition, in response to the particular request of the ECOFIN Council, CESR will develop a framework for a periodic contribution which will seek to identify major sources of potential risks in financial markets for the Financial Stability Table of the Economic and Financial Committee.”

Market abuse: CESR will seek to strengthen its current efforts to increase co-operation between its members in joint-investigations on possible cases of market abuse emerging during this period of market turbulence. At present an MOU exists to facilitate the sharing of information by Members; urgent issues groups are also established to co-ordinate and conduct joint investigations; and work has been undertaken to exchange experience and share approaches to investigations to improve best practice. Further work to review additional steps which might be taken to intensify these efforts will be conducted by CESR-Pol, chaired by Kurt Pribil the Chief Executive Officer of the Financial Market Authority (FMA) in Austria.

Market transparency: CESR will review the conclusions contained in its technical advice to the Commission on “non-equities market transparency” (published 9 August 2007 Ref. CESR/07- 284b). In particular, it will focus on aspects of post trade transparency for both retail and wholesale markets. This work will be conducted by the MiFID Expert Group, chaired by Jean- Paul Servais, Chairman of the Commission Bancaire, Financière et des Assurances (the CBFA), Belgium.

Read the whole press release …

Insider Trading is Bad, Insider Buying is Good / Mait

16/04/2008. Tags: , | This post has no Comments

CNBC’s  Carlo Dellaverson has an interesting view on insiders’ trading logic.

Sometimes a stock is so hot that you want to buy it wherever you can, as soon as you can, because it’s not going to go lower anytime soon. If you see insiders buying the stock when it’s at a 52-week high, that’s a clear sign that you want in, Cramer says. It’s rare, and it’s the exception rather than the rule, but pay attention when it happens. When insiders buy at the high, it’s a pretty good indication of their confidence in the business – and who knows the business better than the people running it?

Often, insiders buy small amounts of their stock to give the impression of confidence and to create an illusion that the company is doing better than it actually is. Be weary of this, Cramer says. The way to know if the insider buying is legit is when it’s big. If you see truly colossal insider buying, even if it isn’t at the high, then you should dig deeper. It’s the volume of the insider buying that declares its sincerity. And when an insider buys a truckload of his own stock at its high, it’s definitely arrogant – but it’s bankable.

Corporate insiders aren’t going to buy at the high unless they have some unshakeable conviction about their companies. Most investors know to wait for a pullback before pulling the trigger. But when insiders buy high, that generally means they don’t think there’s going to be a pullback. There’s nothing more bullish than that, Cramer says.

Bottom Line: When you see insider buying in a stock that’s at a 52-week high, Cramer thinks you should be buying too.

FSA launches inquiry into HBOS shares plunge / Siim

19/03/2008. Tags: , , , , | This post has no Comments

The Times and The Telegraph report that The Financial Services Authority (FSA) of United Kingdom has launched an investigation into potential market abuse after shares in HBOS (Halifax Bank of Scotland) along with several other City financial institutions and the FTSE-100 index plunged sharply today causing chaos on the already volatile market.

HBOS Britain’s biggest mortgage lender reached a 10 year low on rumors and speculation about its liquidity problems and secret emergency meetings with the Central Bank which HBOS and the Bank of England promptly refuted.”Ruthless” traders and speculators are believed to be behind this “modern day bank robbery” with estimated single speculator profits form “short-selling” in excess of £100 million. UK FSA issued a strong statement and launched an extensive criminal investigation along with increased monitoring of the market.

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