A Non-traded REIT Investor Fights Back
(Jun 2015)
On June 5, 2015, I wrote that American Realty Capital's latest listing of a non-traded REIT was further evidence of the harm caused by sponsors of non-traded REITs. I also pointed out that, contrary to the common pattern in non-traded REIT listings, Schorsch and ARC used their control of the non-traded REIT version of GNL to tie the hands of shareholders and management in the subsequent GNL traded REIT and to opportunistically transfer wealth to themselves. I pointed out that similar...
Enforcement Actions: Week in Review - June 12th, 2015
(Jun 2015)
SEC ENFORCEMENT ACTIONS
SEC Names Richard R. Best as Regional Director of Salt Lake Office
June 8, 2015 (Litigation Release No. 113)
Richard R. Best will be succeeding Karen Martinez as Regional Director of the SEC's Salt Lake office. Mr. Best's qualifications include: serving as senior director and chief counsel in the Department of Enforcement for FINRA in New York, holding other supervisory and investigative positions within FINRA's Enforcement function, and having 10 years of...
Enforcement Actions: Week in Review - June 5th, 2015
(Jun 2015)
SEC ENFORCEMENT ACTIONS
Merrill Lynch Admits Using Inaccurate Data for Short Sale Orders, Agrees to $11 Million Settlement
June 1, 2015 (Litigation Release No. 105)
An SEC investigation found some of Merrill Lynch's programs to execute short sale trades were using inaccurate and old data. Merrill Lynch and other broker-dealers are required to maintain an up to date easy-to-borrow (ETB) list composed of stocks that are readily accessible to borrow for short sale orders. Merrill Lynch...
Nicolas Schorsch and American Realty Capital Lay Another Egg
(Jun 2015)
GNL: American Realty Capital Lays Another Egg
On Tuesday, non-traded REIT American Realty Capital Global Trust Inc. - rechristened Global Net Lease, Inc. - began trading on the NYSE under the ticker GNL. GNL is at least the 42nd non-traded REIT to have listed, or merged into or been acquired by another REIT since 1997 and adds to the mounting wealth toll non-traded REITs have extracted from unsophisticated investors.
My co-authors and I have determined that the non-traded REIT industry has...
Enforcement Actions: Week in Review - May 29th, 2015
(May 2015)
SEC ENFORCEMENT ACTIONS
SEC Charges Deutsche Bank With Misstating Financial Reports During Financial Crisis
May 26, 2015 (Litigation Release No. 99)
Deutsche Bank AG has agreed to pay a $55 million penalty to settle charges that they overvalued a portfolio of derivatives by failing to properly value their "gap risk". The derivatives portfolio in question contained "Leveraged Super Senior" (LSS) trades that Deutsche Bank used in order to buy protection against credit default losses. The...
Enforcement Actions: Week in Review - May 22nd, 2015
(May 2015)
SEC ENFORCEMENT ACTIONS
Peter J. Curley, Associate Director in the Division of Trading and Markets, to Leave SEC
May 18, 2015 (Litigation Release No. 91)
Peter J. Curley, Associate Director for Clearance and Settlement in the Division of Trading and Markets, will be leaving the SEC later this month. Mr. Curley has made many contributions to the division and the agency during the time of development by heading the Office of Clearance and Settlement since October 2011. Mr. Curley's had...
Enforcement Actions: Week in Review - May 15th, 2015
(May 2015)
SEC ENFORCEMENT ACTIONS
SEC Sues Retirement Planners for Making False Claims to Investors
May 11, 2015 (Litigation Release No. 85)
Novers Financial and its principals, Christopher A. Novinger and Brady J. Speers, were charged with falsely informing customers that interests in life settlements they sold were guaranteed and federally insured. Interests in life settlements are investments that are based on life insurance policies purchased by others. These interests are not risk-free or...
Enforcement Actions: Week in Review - May 12th, 2015
(May 2015)
SEC ENFORCEMENT ACTIONS
SEC Announces Outreach Programs to Help Firms Comply With Regulation Systems Compliance and Integrity
May 5, 2015 (Litigation Release No. 80)
Registration has opened for two outreach programs, created by the SEC to facilitate compliance with newly adopted technology regulations. Compliance with Regulation Systems Compliance and Integrity (Regulation SCI) will be held at the SEC's regional offices in New York and Chicago on July 16th and July 29th respectively....
Enforcement Actions: Week in Review - May 1st, 2015
(May 2015)
SEC ENFORCEMENT ACTIONS
SEC Announces Award to Whistleblower in First Retaliation Case
April 28, 2015 (Litigation Release No. 75)
The SEC has announced that the whistleblower connected with the SEC's first retaliation case will receive the maximum allowed award of 30% of amounts collected in relation to the case (~$600,000). Paradigm Capital Management was charged by the SEC for retaliating against said whistleblower once it was discovered they had reported potential conduct to the SEC....
Enforcement Actions: Week in Review - April 24th, 2015
(Apr 2015)
SEC ENFORCEMENT ACTIONS
SEC Charges BlackRock Advisors With Failing to Disclose Conflict of Interest to Clients and Fun Boards
April 20, 2015 (Litigation Release No. 71)
BlackRock Advisors LLC has been charged by the SEC for failing to disclose a conflict of interest of one of their top portfolio managers. Daniel J. Rice III founded Rice Energy, a natural gas and oil company, while managing energy sector funds and separately managed accounts at Blackrock Advisors. Rice personally invested...
