Morgan Stanley to Pay $275 Million for Misleading Investors in Subprime RMBS Offerings
The Securities and Exchange Commission today charged three Morgan Stanley entities with misleading investors in a pair of residential mortgage-backed securities (RMBS) securitizations that the firms underwrote, sponsored, and issued. Morgan Stanley agreed to settle the charges by paying $275 million to be returned to harmed investors. In an asset-backed securities offering, federal regulations under the securities laws require the disclosure of delinquency information for the mortgage loans serving as collateral. An SEC investigation found that Morgan Stanley misrepresented the current or historical delinquency status of mortgage loans underlying two subprime RMBS securitizations that came against a backdrop of rising…
Read MoreSEC Adopts Money Market Fund Reform Rules
The Securities and Exchange Commission today adopted amendments to the rules that govern money market mutual funds. The amendments make structural and operational reforms to address risks of investor runs in money market funds, while preserving the benefits of the funds. Today’s rules build upon the reforms adopted by the Commission in March 2010 that were designed to reduce the interest rate, credit and liquidity risks of money market fund portfolios. When the Commission adopted the 2010 amendments, it recognized that the 2008 financial crisis raised questions of whether more fundamental changes to money market funds might be warranted. The…
Read MoreSEC Charges Investor Relations Executive With Insider Trading While Preparing Clients’ Press Releases
The Securities and Exchange Commission today charged a partner at a New York-based investor relations firm with insider trading on confidential information he learned about two clients while he helped prepare their press releases. The SEC alleges that Kevin McGrath sold his shares in Misonix Inc. upon learning that the company was set to announce disappointing financial results. The SEC further alleges that McGrath bought stock in Clean Diesel Technologies Inc. when he learned about the company’s impending announcement of positive news, and he profited when its stock price nearly doubled. McGrath’s illicit profits and avoided losses from insider trading…
Read MoreMark J. Flannery Named SEC Chief Economist and Director of Economic and Risk Analysis Division
The Securities and Exchange Commission today announced it has named Mark J. Flannery as its chief economist and director of its Division of Economic and Risk Analysis (DERA), which provides interdisciplinary analysis to help inform the Commission’s policymaking, rulemaking, enforcement, and examinations. Dr. Flannery, currently a finance professor at the University of Florida’s Warrington School of Business Administration, will begin his new post in September. He replaces Craig M. Lewis who returned as a professor of finance at Vanderbilt University’s Owen Graduate School of Management. Since Dr. Lewis left in May, deputy directors Scott Bauguess and Jennifer Marietta-Westberg have acted…
Read MoreSEC Charges Penny Stock Company CEO and Purported Business Partner for Defrauding Investors With False Press Releases
The Securities and Exchange Commission today charged a serial con artist and a penny stock company CEO with misleading investors in a supposed vaccine development company by issuing false press releases portraying it as a successful venture when it was in fact a failing enterprise. The SEC alleges that Christopher Plummer teamed up with the CEO of CytoGenix, Lex M. Cowsert, to defraud investors with extravagant claims about the microcap company’s revenue and other benefits flowing from a “shared revenue agreement” with Franklin Power & Light, an electricity provider supposedly operated by Plummer. However, Plummer’s entity was a complete sham,…
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