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Archive for the ‘SEC’ Category

The New York Times
By , NEIL GOUGH and
Published: August 13, 2012

When Sheldon Adelson, the casino magnate, needed something done in China, he often turned to his company’s “chief Beijing representative,” a mysterious businessman named Yang Saixin.

Mr. Yang arranged meetings for Mr. Adelson with senior Chinese officials; acted as a frontman on several ambitious projects for Mr. Adelson’s company, the Las Vegas Sands Corporation; and intervened on the Sands’s behalf with Chinese regulators. Mr. Yang even had his daughter take Mr. Adelson’s wife, Miriam, shopping when she was in Beijing.

“Adelson and I had a good relationship,” Mr. Yang said in a recent interview in Hong Kong. “He should thank me.”

Mr. Yang joined the Sands in 2007 as the company worked to protect its interests in Macau, where its gambling revenues were mushrooming, and pressed ahead with plans for a resort in mainland China. Boasting of ties to the People’s Liberation Army and China’s security apparatus, Mr. Yang was hired for his guanxi, that mixture of relationships and favors that is critical to opening doors in China, according to former executives.

But today, Mr. Yang, along with tens of millions of dollars in payments the Sands made through him in China, is a focus of a wide-ranging federal investigation into potential bribery of foreign officials and other matters in China and Macau, according to people with direct knowledge of the inquiries.

The investigations are unfolding as Mr. Adelson has become an increasing presence in this year’s presidential election, contributing at least $35 million to Republican groups. On Tuesday, Mitt Romney’s running mate, Representative Paul D. Ryan, is to appear at a fund-raiser at the Sands’s Venetian casino in Las Vegas; Mr. Adelson is likely to attend, a person close to him said.

In the political arena, Mr. Adelson is perhaps best known as a hawkish defender of Israel. But whatever the outcome of the inquiries involving his businesses in China, an examination of those activities suggests a keen interest in Washington’s China policy and highlights the degree to which politics and profits are often intertwined for Mr. Adelson.

The Sands has faced a conundrum in China as a casino company whose fortunes are heavily dependent on its operations in a country where gambling is illegal, except in Macau. The company relies on the good will of Chinese officials, who mete out approvals and have the power to curtail the flow of mainland visitors. As a result, Mr. Adelson has sought to use financial clout and connections to exert political influence at the highest levels of government.

On the front lines of those efforts was Mr. Yang, who was paid $30,000 a month by the company before he was fired in 2009, he said. At times, he acted as Mr. Adelson’s personal guide to the Chinese establishment. Among the dignitaries he took Mr. Adelson to see was Wan Jifei, a leading international trade official whose father had been vice premier. That led to a lunch with other trade officials at the Great Hall of the People on Tiananmen Square.

The Sands later hired Mr. Wan’s daughter, Bao Bao, a socialite and jewelry designer, to do public relations. And the trade agency Mr. Wan ran became a partner in the Sands’s biggest venture, the Adelson Center for U.S.-China Enterprise.

Mr. Yang denies resorting to bribery and says he actually lost money on his dealings with the Sands.

“I’m really being bullied because I helped Venetian and Adelson do so many things,” he said. “I’m in the middle, and on both sides everybody’s pointing at me.”

The broad outlines of the mainland China investigation were reported last week by The Wall Street Journal. But a review of more than a thousand pages of corporate records in China, as well as interviews with former Sands executives and others, provides a more detailed picture.

The documents show that the Sands paid out more than $70 million to companies tied to Mr. Yang for the trade center and for a Chinese basketball team the Sands sponsored. But several million dollars appear to be unaccounted for after the projects were suddenly shut down by the company, The New York Times found.

What became of any missing money and whether any of it wound up in the hands of Chinese officials are among the questions being examined by the Federal Bureau of Investigation, the Justice Department and the Securities and Exchange Commission.

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Nine SEC filings submitted by four different business entities after February 1999 describe Romney as Bain boss.

Firm’s 2002 filings identify him as CEO, though he said he left in 1999

By Callum Borchers and Christopher Rowland |  Globe Correspondent | Globe Staff July 12, 2012

Government documents filed by Mitt Romney and Bain Capital say Romney remained chief executive and chairman of the firm three years beyond the date he said he ceded control, even creating five new investment partnerships during that time.

Romney has said he left Bain in 1999 to lead the winter Olympics in Salt Lake City, ending his role in the company. But public Securities and Exchange Commission documents filed later by Bain Capital state he remained the firm’s “sole stockholder, chairman of the board, chief executive officer, and president.”

Also, a Massachusetts financial disclosure form Romney filed in 2003 states that he still owned 100 percent of Bain Capital in 2002. And Romney’s state financial disclosure forms indicate he earned at least $100,000 as a Bain “executive” in 2001 and 2002, separate from investment earnings.

The timing of Romney’s departure from Bain is a key point of contention because he has said his resignation in February 1999 meant he was not responsible for Bain Capital companies that went bankrupt or laid off workers after that date.

Contradictions concerning the length of Romney’s tenure at Bain Capital add to the uncertainty and questions about his finances. Bain is the primary source of Romney’s wealth, which is estimated to be more than $25o million. But how his wealth has been invested, especially in a variety of Bain partnerships and other investment vehicles, remains difficult to decipher because of a lack of transparency.

The Obama campaign and other Democrats have raised questions about his unwillingness to release tax returns filed before 2010; his offshore assets, which include investment entities based in Bermuda and the Cayman Islands and a recently closed bank account in Switzerland; and a set of “blind trusts” that meet the Massachusetts standards for public officials but not the more rigorous bar set by the federal government.

Romney did not finalize a severance agreement with Bain until 2002, a 10-year deal with undisclosed terms that was retroactive to 1999. It expired in 2009.

Bain Capital and the campaign for the presumptive GOP nominee have suggested the SEC filings that show Romney as the man in charge during those additional three years have little meaning, and are the result of legal technicalities. The campaign declined to comment on the record. It pointed to a footnote in Romney’s most recent financial disclosure form, filed June 1 as a presidential candidate.

“Since February 11, 1999, Mr. Romney has not had any active role with any Bain Capital entity and has not been involved in the operations of any Bain Capital entity in any way,’’ according to the footnote. Romney made the same assertion on a financial disclosure form in 2007, during his first run for president.

According to a statement issued by Bain Wednesday, “Mitt Romney retired from Bain Capital in February 1999. He has had no involvement in the management or investment activities of Bain Capital, or with any of its portfolio companies, since that time.”

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America must face up to the dangers of derivatives

George Soros | Financial Times | April 22, 2010

The US Security and Exchange Commission’s civil suit against Goldman Sachs will be vigorously contested by the defendant. It is interesting to speculate which side will win; but we will not know the result for months. Irrespective of the eventual outcome, however, the case has far-reaching implications for the financial reform legislation Congress is considering.

Whether or not Goldman is guilty, the transaction in question clearly had no social benefit. It involved a complex synthetic security derived from existing mortgage-backed securities by cloning them into imaginary units that mimicked the originals. This synthetic collateralised debt obligation did not finance the ownership of any additional homes or allocate capital more efficiently; it merely swelled the volume of mortgage-backed securities that lost value when the housing bubble burst. The primary purpose of the transaction was to generate fees and commissions.

This is a clear demonstration of how derivatives and synthetic securities have been used to create imaginary value out of thin air. More triple A CDOs were created than there were underlying triple A assets. This was done on a large scale in spite of the fact that all of the parties involved were sophisticated investors. The process went on for years and culminated in a crash that caused wealth destruction amounting to trillions of dollars. It cannot be allowed to continue. The use of derivatives and other synthetic instruments must be regulated even if all the parties are sophisticated investors. Ordinary securities must be registered with the Securities and Exchange Commission before they can be traded. Synthetic securities ought to be similarly registered, although the task could be assigned to a different authority, such as the Commodity Futures Trading Commission.

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Angelo Mozilo Fraud Charges: SEC Charges Former Countrywide CEO

MARCY GORDON and GREG RISLING | June 4, 2009 05:43 PM EST | AP

WASHINGTON — Federal regulators on Thursday charged Angelo Mozilo, the former chief executive of mortgage lender Countrywide Financial Corp., and two other company executives with civil fraud.

The Securities and Exchange Commission‘s civil lawsuit, filed in federal district court in Los Angeles, also accuses Mozilo of illegal insider trading.

Countrywide was a major player in the subprime mortgage market, the collapse of which in 2007 touched off the financial crisis that has gripped the U.S. and global economies.

Mozilo, 70, is the most high-profile individual to face formal charges from the federal government in the aftermath of the crisis. He has denied any wrongdoing and Mozilo’s attorney on Thursday called the SEC’s allegations “baseless.”

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Prosecutors target assets of Madoff’s wife

Federal prosecutors in New York and the US Securities and Exchange Commission (SEC) are preparing to file a legal action against Ruth Madoff, wife of jailed fraudster Bernie, amid fears that she will try to flee the United States or move her $70m fortune beyond their reach.

Department of Justice sources told the Observer that prosecutors were “working around the clock” to build a criminal complaint against Mrs Madoff in an effort to ask a judge to freeze her bank accounts, which they believe are filled with the proceeds of her husband’s crimes.

The SEC, America’s top financial regulator, is understood to be liaising with the US Attorney’s Office for the Southern District of New York to help prepare the asset freezing order.

“What will happen,” one SEC source said, “is that the US attorneys will be in court in the next week or so to tell a judge that they believe Mrs Madoff’s assets are derived from ill-gotten gains and that they should be frozen for a certain period of time while the investigation is ongoing.”

The judge will then decide whether there is sufficient reason to believe Mrs Madoff’s assets were the proceeds of her husband’s $64bn Ponzi scheme.

After Madoff confessed his crimes to the FBI on 11 December, the Department of Justice moved quickly to file a criminal complaint against him while the SEC issued an order to freeze his assets. SEC sources indicated that Mrs Madoff would soon experience something similar.

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Is Madoff Probe Expanding?

Bernard Madoff is set this week to plead guilty to orchestrating a massive Ponzi scheme. But could we be in line for more guilty pleas before this is all over?

The Daily Beast reports:

[T]he [Madoff] investigation … has broadened to include a number of suspected co-conspirators, according to federal officials involved in the case.

The Daily Beast story — written by Lucinda Franks, whose byline identifies her as a Pulitzer-Prize winning journalist who was formerly on the staff of the New York Times — also reports that, according to sources, “several members of Madoff’s inner circle transferred assets to their wives, transactions thought to be laundered through an English bank.”

There are said to be three groups of possible co-conspirators, who could potentially be charged either criminally by the Justice Department, or civilly by the SEC.

In the first group are employees of Madoff’s firm who concocted false trades and sent out phony statements to thousands of unsuspecting clients.The second group is comprised of principals in feeder funds such as Cohmad Securities Corp. and Fairfield Greenwich Group, which funneled investor dollars to Madoff and received large fees for steering this business. If they were aware of Madoff’s fraud, they could face criminal charges; if they were not, they could be hit with civil charges for a lack of due diligence.

The third group is the target of an investigation that’s still in its early stages into money laundering through British banks, in which US and British authorities are cooperating. This group consists of solicitors, accountants, and others in London who may have assisted Madoff in transferring funds from client accounts to a Madoff entity that lists Ruth Madoff, brother Peter Madoff, and sons Mark and Andrew Madoff among its board members.

It’s not clear from any of this that any specific members of Madoff’s family, or his inner circle, are in immediate legal jeopardy.

But the Wall Street Journal appears to be thinking along similar lines (sub req). It notes:

Prosecutors alleged Tuesday that Mr. Madoff hired numerous employees with “little or no prior pertinent training or experience in the securities industry” and caused them to “communicate with clients and generate false and fraudulent documents.”

Its report doesn’t go as far as the Daily Beast‘s. The Journal says it’s still unclear whether prosecutors believe these people knew they were involved in a fraudulent scheme, and doesn’t explicitly say that the investigation has broadened beyond Madoff himself.

But it’s noticeable that the paper does take the time to lay out what’s known about the possible involvement in the scheme of five of Madoff’s relatives and associates — including his wife Ruth, who has hired her own lawyer, and his brother Peter, who was the chief compliance officer for Madoff’s firm.

With Madoff’s guilty plea soon to be safely in the bag, are these reports an indication of where prosecutors are going next?

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Is Allen Stanford The 21st Century’s Jay Gatsby?

It looks like Allen Stanford, the billionaire Texan banker whose investment firm is being probed by the Feds, has a positively Gatsbyesque yearning to be accepted into high society.

As we knew, Stanford calls himself “Sir” Allen Stanford, on account of a knighthood he was awarded by the former prime minister of Antigua, where his business is based. But it looks like maybe that wasn’t quite good enough for Stanford, since until recently he was claiming, falsely, that the knighthood was presented by the British Royal family.

Check out this report (via Nexis), from last November in the Mail on Sunday of London:

Texan-born billionaire Sir Allen Stanford’s corporate website claims that, after he became a citizen of the Commonwealth territory of Antigua, it appointed him a ‘Knight Commander of the Most Distinguished Order of the Nation’.’He was presented [with] this honour by His Royal Highness Prince Edward, Earl of Wessex,’ states the website.

However, The Mail on Sunday has learned that the Prince had nothing to do with the honour and that it was not approved by the Queen.

A Buckingham Palace spokesman said it was a coincidence that the knighthood ceremony, conducted by an Antiguan political appointee, took place during a celebration of the island’s independence, at which Prince Edward was a guest.

‘It is incorrect to say that the Earl of Wessex knighted this person while in Antigua,’ said the spokesman.

Stanford’s personal web site now says only that the Earl of Wessex attended the ceremony at which the “royal knighthood” was bestowed. (Though the “royal” part still seem dubious, since Buckingham Palace has disavowed any role in the proceeding.)

The whole tale is reminiscent of Stanford’s claim to be descended from the founder of Stanford University. The school has denied the link.

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Scenes from the Great Gatsby movie:

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