SEC’s Top Violator List

SEC’s Top Violator List

“All types of organizations can be in violation and investors are the ones that typically pay.”


As an investors, it is important to do your due diligence before investing into any deal.  Many investors think they are safe if they work with a reputable company, broker, investment group, or invest in municipal bonds.  If that’s you – think again.  According to the SEC all types of organizations can be in violation and investors are the ones that typically pay.

Here is the top violator list for the SEC (this is only a sampling of the people and companies that have recently been in violation for defrauding or misleading investors).

Citigroup (aka your bank)

That’s right; even banks can be in violation of the SEC.  In this particular case, it was a subsidiary of Citigroup that was charged with misleading investors.  This broker dealer division (known for issuing private offerings) was charged with misleading investors over a CDO that was tied to the housing market.  There is a proposed settlement that would require Citigroup to pay $285 million to investors.

Stifel, Nicolaus & Co. and RBC Capital Markets

These two companies were involved in a scheme where five Wisconsin school districts purchased unsuitable CDO investments.  As a result, RBC Capital Markets had to pay $30.4 million to the school districts through a Fair Fund.

JP Morgan Securities

According to the SEC, this reputable investment advisory firm mislead investors as part of a complicated mortgage securities transaction.  J.P. Morgan has agreed to pay investors their money back to the tune of $153 million.

Mizuho Securities USA

This U.S. subsidiary of Japan based Mizuho Financial Group was charged with misleading investors by inflating a deals credit rating by using dummy assets.  Several employees were also charged, and Mizuho settled by paying a $127.5 million fine.

Wells Fargo

Their brokerage firm and a Vice President was charged with selling mortgage-backed securities without fully disclosing information to investors.  They settled by paying over $6.5 million.

UBS Securities

The SEC charged them with violating securities laws by failing to disclose that it retained upfront cash. This cash should have gone to the CDO and since it did not they settled by paying $50 million.

Sometimes the most “reputable” companies are the riskiest.

These are only some of the companies that have violated securities laws in the past couple of years.  The SEC fields violation complaints on a daily basis and routinely investigates people. A lesson can be learned from this list.  Sometimes the most trusted companies will place investors in harms way by using their reputation to their advantage.  Investors should take the time to research deals, read the disclosure statements, and conduct market research.  Investigate things for yourself to make sure that what is being presented looks and feels right.  There is no way to protect yourself 100%.  The best thing you can do is to take the time to research so that you can be confident in your investment decisions.  Don’t assume that your bank or investment advisor has it right.  Ask questions, and if it’s a good deal, they will be happy to answer them.

 

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