SEC says companies may announce key data on social media

WASHINGTON, Wed Apr 3, 2013 — Regulators said on Tuesday that companies can use Twitter, Facebook and other social media to make key announcements as long as they tell investors which sites they will use, an effort to help companies navigate the new media age.

The guidance from the Securities and Exchange Commission seeks to clarify disclosure rules after the agency opened an inquiry into a post made last July on the personal Facebook page of Netflix’s chief executive, Reed Hastings.

The SEC investigated whether his announcement that the movie and TV streaming service had hit 1 billion hours viewed in June violated a rule that requires important information to be disclosed to investors at the same time.

The SEC said on Tuesday that it did not initiate an enforcement action or allege wrongdoing in that situation.

But it said staff learned that there was uncertainty about how disclosure rules apply to social media channels.

“One set of shareholders should not be able to get a jump on other shareholders just because the company is selectively disclosing important information,” George Canellos, acting director of the SEC’s enforcement division, said in a statement.

SEC charges China affiliates of top accounting firms

WASHINGTON, Mon Dec 3, 2012 — Regulators on Monday charged the Chinese affiliates of five top accounting firms with violations of U.S. securities laws, alleging that they refused to produce audit documents in connection with accounting fraud investigations into Chinese companies.

The Securities and Exchange Commission began proceedings against the Chinese units of Deloitte & Touche, Ernst & Young, KPMG, PricewaterhouseCoopers and BDO. The companies violated laws that require foreign public accounting firms to provide the SEC with audit work papers involving any company trading on U.S. markets, the SEC said.

An administrative law judge will schedule a hearing to determine potential sanctions against the firms, the SEC said.

SEC Chairman Mary Schapiro to step down

WASHINGTON, Mon Nov 26, 2012 – The head of the U.S. Securities and Exchange Commission, Mary Schapiro, announced on Monday that she would step down from the agency on Dec. 14.

SEC Commissioner Elisse Walter will be designated to succeed Schapiro upon her departure, the White House said in a statement.

“The SEC is stronger, and our financial system is safer and better able to serve the American people – thanks in large part to Mary’s hard work,” President Barack Obama said.

Speculation had swirled for months that Schapiro would leave soon after the November presidential election. The announcement marks one of the first departures of Obama’s financial regulation team in the aftermath of the election.

Schapiro led the SEC through a major overhaul in the wake of the financial crisis, as it bore the brunt of criticism for its oversight leading up to the crisis and for failing to catch now-convicted Ponzi schemers Bernard Madoff and Allen Stanford.

In the past two years, the agency has logged record enforcement actions, including 735 in the 2011 fiscal year and 734 in 2012, it said in a statement announcing Schapiro’s departure.

The SEC has also been bogged down with major rules that the 2010 Dodd-Frank financial regulation law required it to write, many of which are still in process.

“I’ve been so amazed by how hard the men and women of the agency work each and every day and by the sacrifices they make to get the job done,” Schapiro said in the statement.

JPMorgan reaches deal with SEC staff on two mortgage probes

NEW YORK, Thu Nov 8, 2012 – JPMorgan Chase & Co has reached an agreement in principle with the staff of the U.S. Securities and Exchange Commission to resolve two previously disclosed investigations related to mortgage-backed securities, the company disclosed in a quarterly filing on Thursday.

The company did not say how much the settlements could cost. One of the cases is related to disclosures by JPMorgan of delinquencies involving one mortgage-backed securitization. The other case is over multiple securitizations done by Bear Stearns, the failed investment bank that JPMorgan took over in March 2008 during the financial crisis.

The company faces numerous other government investigations and private lawsuits stemming from the financial crisis and from its $6.2 billion trading loss this year on credit derivatives.

SEC probes some Wall Street trades after 2008 meet with Henry Paulson: WSJ

NEW YORK, Fri Sep 14, 2012 – The U.S. Securities and Exchange Commission (SEC) is probing possible insider trading activities by Wall Street professionals who were present in a private meeting with the then Treasury Secretary Henry Paulson in 2008, the Wall Street Journal reported, citing people familiar with the investigation.

The SEC is trying to find out if Paulson suggested in the meeting that the government was willing to bail out struggling mortgage-finance companies Fannie Mae and Freddie Mac, the WSJ said.

Subsequently, the federal government took over Fannie and Freddie amid heavy losses less than two months after the meeting.

SEC recently sent subpoenas to parties who were present at the July 2008 meeting, the Journal said adding that Paulson hasn’t been handed one.

Parties present at the meeting included Taconic Capital Advisors, GSO Capital Partners, now part of Blackstone Group LP, Lone Pine Capital LLC, Och-Ziff Capital Management Group LLC and TPG-Axon Management LP, WSJ said.

Taconic confirmed the receipt of a subpoena and declined any wrongdoing, the Journal said.

SEC may order Nasdaq to upgrade trading systems: WSJ

NEW YORK, Fri Jun 29, 2012 – U.S. securities regulators may force Nasdaq OMX Group Inc. to upgrade its trading systems following last month’s glitch-ridden IPO of Facebook Inc., the Wall Street Journal reported.

The Securities and Exchange Commission is looking into what caused the glitches that left the market makers – who facilitate trades for brokers – in the dark for hours as to which trades had gone through.

As part of the deepening investigation, regulators are weighing whether to demand Nasdaq to revamp its processes for developing, changing, testing and implementing the computer code used in initial public offerings and other exchange functions, the newspaper said, citing people familiar with the matter.

The SEC hasn’t decided yet whether to take any enforcement action against Nasdaq, the paper said.

The news comes more than six weeks after Facebook’s $16 billion initial public offering on May 18, where technology glitches and a communication breakdown marred the trading of the stock.

The exchange’s executives are also reviewing its management structure, focusing on the operations and technology areas overseen by Anna Ewing, the Journal said, citing people familiar with discussions inside Nasdaq.

Ewing could not be reached for comment outside regular U.S. business hours.

Nasdaq’s board first discussed potential ways to restructure its operations and technology unit, including possibly replacing Ewing as the supervisor over both areas, more than four weeks ago, the newspaper said, citing one person with direct knowledge of the discussions.

Neither the SEC nor the Nasdaq could be immediately reached for comment.

S&P’s procedures under SEC review, according to report

NEW YORK – Mon Jun 25, 2012 – A last-minute decision by Standard & Poor’s Ratings Services to pull its ratings on a deal backed by commercial real estate loans is being examined by the Securities and Exchange Commission, the Wall Street Journal reported, citing employees questioned by the regulator.

The inquiry relates to the credit rating agency’s July 2011 decision to pull its ratings on a new, $1.5 billion commercial-mortgage-backed security, or CMBS, issued by Goldman Sachs Group and Citigroup.

The SEC’s scrutiny is part of its annual review of S&P and other credit rating firms, but in the rating agency’s case the regulators are examining whether S&P used more lenient standards to rate new CMBS deals than on other outstanding deals, the Journal said, citing employees. S&P has not been accused of any wrongdoing, the article added.

The SEC last year targeted S&P for a possible civil lawsuit over its ratings of a collateralized debt obligation backed by mortgage securities.

Standard & Poor is a unit of the McGraw-Hill Cos Inc.

Neither the regulator nor the rating agency could be reached for comments outside regular business hours.

SEC sues ex-Detroit officials, adviser on ‘lavish gifts’ conflicts of interest

WASHINGTON, Wed May 9, 2012 – U.S. securities regulators on Wednesday charged the former Detroit mayor and treasurer along with the city’s public pension investment adviser with devising a secret exchange of “lavish gifts” to influence the pension fund’s investments.

The Securities and Exchange Commission’s case, filed in a U.S. district court in Michigan, alleges that ex-Mayor Kwame Kilpatrick and former Treasurer Jeffrey Beasley solicited $125,000 worth of perks paid for by advisory firm MayfieldGentry Realty Advisors LLC.

The SEC claims that MayfieldGentry’s CEO, Chauncey Mayfield, in turn recommended $117 million worth of investments in a real estate investment trust controlled by his firm.

The SEC said these alleged conflicts of interest were never disclosed.

SEC-Citigroup $285 million fraud settlement gets new life

NEW YORK, Thu Mar 15, 2012 – A federal appeals court stopped just short of throwing out a judge’s controversial rejection of the U.S. Securities and Exchange Commission’s $285 million settlement with Citigroup Inc. in a fraud case.

The 2nd U.S. Circuit Court of Appeals said that U.S. District Judge Jed Rakoff in Manhattan appeared to have failed to give proper deference to the SEC, and may have overlooked the potential that Citigroup did nothing wrong.

While saying it needed to hear further arguments, the 2nd Circuit said there was a “strong” likelihood that Rakoff’s decision would be overturned.

The accord, announced in October, was intended to resolve civil fraud charges that Citigroup sold $1 billion of risky mortgage-linked securities in 2007 without telling investors that it was betting against the debt, resulting in more than $700 million of losses.

Rakoff rejected the settlement on Nov. 28. He said the SEC’s failure to require Citigroup to admit or deny the charges left him no way to know whether the settlement was fair.

That part of the ruling called into question the SEC’s decades-long practice of not requiring settling companies to admit or deny its charges.

He also called the $285 million payout “pocket change” for the third-largest U.S. bank, and said the accord did not serve the public interest.

The SEC and Citigroup had no immediate comment. Rakoff, who is sitting with the 2nd Circuit this week to hear cases, was also not immediately available for comment.

JPMorgan says may face SEC action on mortgage bonds

NEW YORK – JPMorgan Chase & Co. said it may face federal enforcement actions stemming from two investigations into mortgage-backed securities that went bad in the financial crisis.

The largest U.S. bank, in a regulatory filing on Wednesday, said Securities and Exchange Commission staff told the company in January that they may recommend the commission bring cases against the company.

One possible case involves the bank’s scrutiny and disclosure of facts behind two sets of mortgage securities, JPMorgan said.

A second investigation involves loans used in mortgage securities created by Bear Stearns, the investment bank that collapsed and was sold to JPMorgan in 2008.

The JPMorgan statements, included in an annual filing to the SEC, follow similar disclosures on Tuesday by Goldman Sachs Group Inc. and Wells Fargo & Co.

The SEC staff frequently notifies subjects of investigations that it is weighing allegations of civil wrongdoing and offers them a chance to argue against legal actions.

The disclosures are the latest sign that government officials are stepping up action against banks that packaged home loans into bonds during the housing boom. The underlying mortgages later soured, spurring billions in losses for investors.