The IG Report

The SEC inspector general issued a report on Tuesday referring the matter regarding former SEC General Counsel David Becker’s involvement with the Madoff clawback suits to the DOJ. The report also contains a number of recommendations including that the Commission take another vote on its position regarding the valuation of Madoff victim accounts. SEC Chairman Schapiro issued a brief statement noting that it would be inappropriate to comment on the criminal referral but stating that Mr. Becker was a dedicated civil servant.

The statement and the report are here.

If this were the conclusion of the Madoff debacle for the SEC it would be a sad end to a sorry tale. Unfortunately it is not. What is essential however is that the Commission continue its efforts to return to the time when it was considered one of the best agencies in government. Many dedicated people are working hard to achieve that result. Whatever the outcome of the IG’s referral it is essential for investors, the markets and the public that those efforts not just continue but succeed.

Enforcement – insider trading

The SEC brought another “suspicious trading” insider trading case against unknown traders. This one of a series of similar insider trading cases based on little more than a take-over announcement and large, timely trading. In the past the Commission has been successful with these actions.

This time it involved the shares of Global Industries, Ltd. The suit centers on the acquisition by Technip SA, of Global. Technip is a Paris based company and is Europe’s second largest oil services enterprise. Global is based in Carlyss, Louisiana. It provides oil field construction services, including pipeline construction, platform installation, diving services and construction support to the offshore oil and gas industry.

The acquisition was announced on September 12, 2011. Four days before that announcement unknown purchasers bought 285,840 shares of Global common stock. The next day, September 9, 2011, an additional 400,000 shares were acquired. The purchases were made through an omnibus account in the name of Raiffeisen Bank International AG Vienna, Austria at Brown Brothers Harriman & Co.

Following the deal announcement the share price of Global increased about 55% over its prior close. All of the shares held in the account were immediately sold at a profit of $1,728,810. Four days later on September 16, 2011 the Commission filed suit and obtained an emergency freeze order of the account. SEC v. One or More Unknown Purchasers of Securities of Global Industries, Ltd., Civil Action No. 11 Civ. 6500 (S.D.N.Y. Filed Sept. 16, 2011). The case is pending.

Program: ABA Seminar: Is the DOJ and SEC War On Insider Trading Rewriting the Rules? ABA program, live in New York City, webcast nationally. Friday September 23, 2011 from 12 – 1:30 p.m. at Dorsey & Whitney, 51 West 52 St. New York, New York 10019.
Co-Chairs: Thomas O. Gorman, Dorsey & Whitney LLP and Frank C. Razzano, Pepper Hamilton LLP.
Panelists: Christopher L. Garcia, Chief, Securities and Commodities fraud Task Force, Assistant U.S. Attorney, Southern District of New York; Daniel Hawke, Chief, Market Abuse Unit, Securities and Exchange Commission; Stuart Kaswell, Executive Vice President & Managing Director, General Counsel, Managed Funds Association; Tammy Eisenberg, Chief Compliance Officer, General Counsel and Senior Vice President, DIAM U.S.A., Inc.
For furhter information please click here.

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