Many ETF Issuers Consolidating Offerings
(Aug 2012)
As inflows to ETFs have exploded over the past few years, many issuers expanded their lineup of funds to take advantage of the increased investor interest. Some have tried to compete with established funds by creating funds with very similar exposure, while others have offered highly specific investment strategies in an attempt to capture a niche market.
In general the ETF market has exhibited a 'winner take all' pattern whereby the oldest and largest funds attract by far the most investor...
Direxion to Close Several Leveraged ETFs
(Aug 2012)
Direxion Shares ETF Trust announced last week that -- upon recommendation of the trust's advisor Rafferty Asset Management, LLC -- nine daily leveraged and inverse Exchange Traded Funds will be liquidated and shares will no longer be open for purchase as of early next month. From the announcement,
Due to the Funds' inability to attract sufficient investment assets, Rafferty believes they cannot continue to conduct their business and operations in an economically efficient manner. As a result,...
SEC Litigation Releases: Week in Review - August 3rd, 2012
(Aug 2012)
SEC Settles Litigation with Former Veritas Software Corporation Chief Financial Officer
August 2, 2012, (Litigation Release No. 22432)
On July 20, 2012, a final judgment was entered against Kenneth E. Lonchar in the case SEC v. Mark Leslie, Kenneth E. Lonchar, Paul A. Sallaberry, Michael M. Cully, and Douglas S. Newton. Lonchar, the former Chief Financial Officer of Veritas Software Corporation, had been charged with inflating Veritas' reported revenues "by approximately $20 million in...
SEC Litigation Releases: Week in Review - July 27th, 2012
(Jul 2012)
SEC Charges Aider and Abettor of Penny Stock Company's Disclosure of Fake Investment
July 25, 2012, (Litigation Release No. 22424)
The SEC lodged a complaint against Ronald Feldstein who allegedly filed a false press release announcing a "fictitious $6 million investment in a penny stock company, Interlink-US Network, Ltd." Feldstein was paid by Interlink's management to play the role of a prospective investor. Feldstein, posing as President of LED Capital Corp., entered into a phony...
Buffered and Capped Closed-End Funds
(Jul 2012)
Last Friday the Wall Street Journal reported on a new product which combines features of both structured notes and closed-end funds. The eUnit 2 Year US Market Participation Trust IIwas first issued by Boston-based investment company Eaton Vance on May 30. This was the second offering by Eaton Vance of such a product: the first trust with identical name debuted on Jan 26.
Inessence, the eUnit Trust is like a structured note with capped upside potential and buffered downside loss. At the end...
SEC Litigation Releases: Week in Review - July 20th, 2012
(Jul 2012)
SEC Obtains Final Judgment in Case Involving Ponzi Scheme and Promotion of China Voice Holding Corp.
July 19, 2012, (Litigation Release No. 22418)
A final judgment was entered against Ilya Drapkin on July 6, 2012, which permanently enjoins him from violating various sections of the Securities Act and ordered Drapkin, along with his companies, MG TK Corp. and SMI Chips, to pay over $5.8 million in disgorgement and penalties. This amount represents "profits gained by Drapkin, MG TK, and SMI...
SEC Litigation Releases: Week in Review - July 13th, 2012
(Jul 2012)
Court Issues Final Judgment Enforcing Prior Order of the Commission Against Rodney R. Schoemann
July 12, 2012, (Litigation Release No. 22414)
On July 11, 2012, the District Court ordered Rodney R. Schoemann to pay over $1.3 million in disgorgement and pre-judgment interest. Rodney R. Schoemann had violated "the registration provisions of the federal securities laws in connection with his sales of stock in Stinger Systems, Inc. in November 2004" and had been ordered to pay disgorgement and...
SEC Litigation Releases: Week in Review - July 6th, 2012
(Jul 2012)
SEC Freezes Assets of Missing Georgia-Based Investment Adviser
July 3, 2012, (Litigation Release No. 22409)
According to the complaint (opens to PDF), Aubrey Lee Price has gone into hiding after allegedly "orchestrating a $40 million investment fraud." Price, who started his scam in 2008, not only raised money from more than 100 investors by "selling shares in an unregistered investment fund" but also made illiquid investments in South American real estate and a failing bank. Price then...
SEC Litigation Releases: Week in Review - June 29th, 2012
(Jun 2012)
SEC Shuts Down Mortgage Fund Ponzi-like Scheme
June 28, 2012, (Litigation Release No. 22406)
According to the complaint (opens to PDF), Small Business Capital Corp. ("SB Capital") and Mark Feathers ("Feathers"), its principal, are operating an "alleged Ponzi-like scheme." $42 million have been raised by SB Capital and Feathers through selling securities issued by their mortgage investment funds, Investors Prime Fund, LLC and SBC Portfolio Fund, LLC ("Funds"). The Funds attracted more than 400...
