Securities and Exchange Commission (SEC) recently released a report highlighting key statistics relating to enforcement actions they have taken against individuals and entities regarding “Misconduct that Led to or Arose from the Financial Crisis,” through Feb 1, 2013.
The major topics covered in the report include:
- Concealing from investors risks, terms and improper pricing in collateralized debt obligations (CDOs) and other structured products.
- Making misleading disclosures to investors about mortgage-related risks and exposure.
- Concealing the extent of risky mortgage-related investments in mutual funds and other financial products.
- Other financial misdeeds.
According to the report the SEC has charged 154 entities and individuals for misconduct that led to or arose from the nation’s financial crisis that hit in 2008.
The SEC states that it has ordered or agreed to penalties that amount to approximately $1.53 billion.
Many of the charges relate to losses covered up or omitted entirely from investors by well know agencies such as Citigroup and Commonwealth Advisors. Mizuho Securities USA, a U.S. subsidiary of Japan-based Mizuho Financial Group, was charged with creating “dummy assets” in order to inflate the company’s credit rating while the rest of the market was plummeting.
In an incredibly complex case that defrauded five Wisconsin school districts, the SEC reports that the Royal Bank of Canada Capital Markets has agreed to pay $30.4 million equally divided to the Wisconsin schools districts, in restitution for “misconduct in the sale of unsuitable CDO investments.” (CDOs are collateralized debt obligations).
The SEC further states that Goldman Sachs was hit with the largest penalty for and will pay a record $550 million to settle the charges of defrauding investors and withholding information.
Another very large proposed settlement would require Citigroup to pay $285 million for “misleading investors about a $1billion CDO tied to the housing market.” However, the SEC release states that the Citigroup settlement has yet to be approved by the courts.
According to the report, Citigroup also paid $75 million to settle charges involving company executives misleading investors.
Finally, the SEC report indicates that in addition to the 1.53 billion in penalties, $400milion was “obtained for harmed investors,” through settlements with Evergreen, J.P. Morgan, State Street, TD Ameritrade, and Claymore Advisors.
To read the report in full, click here.
The foregoing information, which is publicly available, is being provided by The White Law Group. The White Law Group is a national securities fraud, FINRA arbitration, and investor protection law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, visit https://www.whitesecuritieslaw.com, or call the firm’s Chicago office at 312/238-9650 for a free consultation.