Securities Industry Commentator by Bill Singer Esq

October 22, 2018

The Blog will post
Guest Blogs
Wednesday October 24th and Thursday October 25th 
from prominent industry lawyers 
Dochtor D. Kennedy, President & Founder, AdvisorLaw, LLC 
Aegis J. Frumento, Partner, Stern Tannenbaum & Bell
Nicholas Joseph Genovese pled guilty in the United States District Court for the Southern District of New York to one count of securities fraud and agreed to forfeit more than $13 million of proceeds in connection with allegations that he had induced investments in a hedge fund that he founded, Willow Creek Investments LP by misrepresenting his qualifications and professional background and concealing that he had prior felony convictions for fraud-related crimes.
Ross McLellan, a former State Street Corp. executive, was convicted by a jury in the United States District Court for the District of Massachusetts of engaging in a scheme to defraud customers of State Street's Transition Management line of business. In that criminal case, McLellan was found guilty of applying secret commissions to billions of dollars of securities trades executed on behalf of these customers and he was sentenced to 18 months in prison . The parallel SEC civil case continues.

Ameritas Stockbroker Wins Snowball In Hell Expungement ( Blog)
What chance would you give a registered representative to win an expungement of a customer complaint that was filed in 2009 seeking $350,000 and was settled in 2012 for $85,000?  About as much of a chance as a snowball in Hell, right? You know -- every so often, and I'm not saying with any regularity, but every so often, a very, very magical, perhaps even mystical, snowball is created from a super amalgam of ice crystals and that round frozen sphere doesn't so much as sweat when tossed into the pits of Hell.
Jose Manlapaz,, who owned and operated tax preparation business JBM Financial Services (or Group) was sentenced in the United States District Court for the Eastern District of Virginia to  nine years in prison for conspiracy, aiding in the preparation of false tax returns, mail and wire fraud. Manlapaz prepared thousands of false tax returns for his clients by adding false or inflated items, including education credits, childcare expenses, and fake business expenses; and in furtherance of his scheme, he set up a document mill in the Philippines called TMendoza Accounting Services to fabricate fake receipts and tax forms to submit on behalf of his clients to the IRS. Manlapaz made money by charging higher fees for getting clients higher refunds and for preparing fraudulent responses to IRS audit notices. 

Competition: The Forgotten Fourth Pillar Of The SEC's Mission (Speech by SEC Commissioner Robert J. Jackson, Jr)
SEC Commissioner Jackson shares his views as to why the unprecedented concentration of power in the American economy is among his top concerns, and he advocates for the SEC reclaiming its purported historical role of ensuring competition in our capital markets. In part, Commissioner Jackson admonishes that:

So the concentration of power in our capital markets -- and the SEC's failure, in the past, to grapple with its implications -- has left us with a marketplace in which investors have only the slimmest menu of choices. And ordinary American investors who rely on those markets to pay for college or fund their retirement pay for it out of their hard-earned savings.

There are four steps we at the SEC can take to begin to change that.[26] First, although the economic analysis that accompanies our rulemakings technically includes, as the law requires, an assessment of the effects of the proposal on competition, that work doesn't sufficiently engage with the lack of competition in the markets we regulate. The absence of meaningful competition in certain markets ought to inform our policy choices. For example, although a fully competitive market might not need conflict of interest rules -- because investors can simply choose to work with unconflicted counterparties -- a lack of competition might require the SEC to be more aggressive about investor protection. The reason, of course, is that without competition investors have few alternatives -- and may find themselves forced to work with agents who have costly conflicts. In short, as regulators, we should recognize that the free market is less able to resolve issues on its own in the absence of real competition for investor dollars. . .