Tag Archive | "securities and exchange commission"

Whistleblowers Get Cash Incentives thru US SEC’s New Rules

The U.S. Securities and Exchange Commission on Thursday adopted final rules that will govern a whistleblower program to offer incentives or cash rewards to those who will provide high-quality tips to the agency for effective enforcement actions.

The new rules, which were voted 3-2 by the SEC on Wednesday, could compel whistleblowers, including other industry insiders, to come more often and warn the agency about various securities violations.

Two Republican commissioners voted against the adoption of the new program that was authorized by a financial revamp law ratified last year. It was also opposed by large U.S. companies, saying whistleblowers should first tell their companies of any misconduct and offer them a chance to fix the errors before heading immediately to the SEC.

However, the new rules discourage employees to avoid the compliance programs posted by their companies. Employees who reported any potential misconduct to their company would be officially considered by the SEC as whistleblowers, and would be potentially entitled of rewards.

According to the SEC, the goal of the whistleblower program, which was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, is to reward individuals who expose violations and provide remarkable evidence to help the regulator achieve successful cases.

The new program awards individuals based on the timeliness and quality of the information provided. It must lead to successful actions with at least $1 million sanction.

The new SEC rules will take effect in 60 days. Also, whistleblowers that have provided tips to the agency since July 2010, when the financial overhaul law was ratified, would also be entitled to receive incentives.

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Schwab Corp to Pay $119 Million in SEC Agreement

Charles Schwab Corp agreed on Tuesday to pay $118.9 million to settle the federal regulatory charges that they concealed the risks of a short term, multibillion-dollar bond fund.

The Securities and Exchange Commission announced the agreement with two Schwab units namely, Charles Schwab Investment Management and Charles Schwab & Co. Inc.

The agency charged that Schwab advertised the fund as a conservative investment. However, the fund is somewhat riskier than a money-market fund despite the fact that half of its assets were invested in high-risk securities.

Both Schwab units did not admit or deny the assertions in the settlement with the SEC. The company called the fall of the YieldPlus Fund as the result of an unforeseeable credit crisis and market collapse during the year 2007 and 2008.

The company said in a statement that Chairman Charles Schwab, the company founder, was one of the biggest investors in the YieldPlus Fund. It also said that Schwab would never seek to profit at the expense of its clients, and that they regret that fund shareholders lost money in the YeildPlus.

The Securities and Exchange Commission also filed a civil charge against Kimon Daifotis, the former chief investment officer for fixed income at Charles Schwab Investment Management, as well as Randall Merk, an executive vice president of Charles Schwab & Co.

The lawsuit says both have committed fraud and other law violations in their offer and sale of the YieldPlus Fund. Daifotis and Merk disagreed with the SEC’s allegations and informed that they would fight them in court.

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Bank of America Agrees to Pay for Municipal Bond Case

Bank of America Corp has decided to pay $137 million to patch up allegations that helped rig the municipal bond bidding process and win several businesses from towns and cities in 20 states. This agreement is expected to cause more cases being filed in the next several weeks and months.

Federal, as well as state officials have announced the settlements on Tuesday along with the largest bank in the nation.

The bank did not admit nor deny any of the accusations in its agreement with the Justice Department, the Federal Reserve, the Securities and Exchange Commissions, and several attorneys universal for 20 states.

According to the Justice Department, the Bank of America came over and revealed that Banc of America Securities, a part of the bank that manages securities and investments, paid for information that helped the bank gain advantage with the government from the local unit that was finding to invest their proceeds from the municipal bond sales.

The Securities and Exchange Commission said the bank division paid money as “kickbacks” to bidding agents who gathered proposals for government business. In return, the bank received information regarding what other firms were bidding.

This revelation resulted from federal officials launching a widespread investigation regarding the business of reinvesting municipal bond proceeds.

Bank of America, which is the first largest U.S bank by assets, was granted amnesty from any penalties since they were the first to report the violations to regulators and they cooperated with the investigation.

A Bank of America spokesman said that the financial institution is pleased to put this matter behind them, and they have already voluntarily undertaken several remediation efforts.

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