As many stockbrokers in Miami and around the country know all too well, the profession involves big potential risks. Government agencies keep a close eye on the industry and a small mistake can turn into serious criminal allegations.
Earlier this week, federal authorities announced a 23-count criminal case against a high-profile Miami businessman. The suit claims that the businessman and his accountant lied to investors and used their funds to finance a luxurious lifestyle.
In another example of the high stakes involved in federal criminal prosecutions, the U.S. Attorney for South Florida filed charges against a well-regarded and high-profile Miami businessman this week. Authorities allege that the businessman took more than $40 million from investors by deceiving them about his company, spending much of it on a lavish lifestyle.
With the massive resources available to the FBI and Department of Justice, it should come as no surprise that federal authorities are opening a big new door in their search for fraud cases. Reuters is reporting that the FBI is focusing a new investigative effort on Twitter and other social networks.
Steven Cohen and his legendarily successful firm, SAC Capital Advisors, have attracted attention from government agencies for years. As the Wall Street Journal reported, "regulators have suspected that [Cohen's] success partly stemmed from insider trading." SAC Capital has been in the news twice in the last week. Just days after federal authorities announced a criminal case against one of its former portfolio managers named Matthew Martoma, the firm disclosed that the SEC is also considering a civil case against it for fraud.
Over a year ago, in September 2011, authorities arrested a trader at UBS's London offices, accusing him of massive fraud and claiming that he caused the bank to lose $2.3 billion. This week after two months of trial, a jury in the United Kingdom convicted him on two of the British government's six charges.
This is the second post covering an ongoing trial that accuses two financial professionals of using insider information to illegally earn $67 million in profits. The last post briefly explained insider trading charges and this one will look at the use of wiretap devices in large fraud cases.
A massive criminal prosecution is going to trial this week in a case that started two years ago with the FBI's raids on several prominent hedge funds. Authorities are accusing two fund co-founders of earning more than $67 million by engaging in illegal insider trading.
This week, the case of a South Florida fraud defendant serves as a reminder of the need to consult carefully with experienced counsel at every step of a government investigation. Although the defendant tried to plead guilty to the government's charges and asked to remain free on bail until sentencing in February, the judge sent him to jail immediately. This decision involved a separate civil case against the same defendant.
Efforts by federal prosecutors led to the indictment of seven individuals last week. The white collar criminal case surrounds the actions of a stock analyst and several of his friends. The group obtained inside information about Dell and its financial results and used that information to obtain roughly $62 million in illegal gains on the stock market.