Articles Posted in Miscellaneous

A company owner and his two corporations have the right to sue their accountants for alleged defalcations at a third company because, at the time, the three companies were affiliated and only severed ties because of the misconduct at issue. The decision regarding whether or not the owner had standing was decided by the Wisconsin Court of Appeals last month when Judge Patricia S. Curley reversed the trial court’s grant of summary judgment.

Judge Curley found that plaintiffs do not have to be shareholders at the corporation where the alleged fraudulent accounting took place. She also said that the plaintiffs are trying to recover damages they had allegedly suffered, not damages sustained by another party.

Michael Vilione and Henry J. Krier were co-owners of three separate companies that were affiliated with each other. The companies, EOG Disposal Inc, EOG Environmental Inc, and Vil-Kri Investments LLC are involved in the hazardous waste storage business. Vilione and Krier became involved in a dispute over Vilione’s alleged personal use of corporate assets. In mediation, the two men decided to split the enterprise. Vilione got full ownership of EOG Environmental, while Krier took full possession of the other two companies.

On October 23, The House of Representatives passed Bill H.R. 2868, which allows the American Stock Exchange (Amex) to move forward with plans to create a second tier market for smaller companies that have less restrictive listing standards. The plan will hopefully improve the global competitiveness of U.S. financial markets.

H.R. 2868 was introduced by New York Representatives Vito Fossella and Gregory Meeks. Both men claim that the bill is intended to slow down the flow of U.S. initial public offerings from U.S. exchanges to foreign exchanges.

The proposed Small Cap Competitive Listing Act would take away the “inadvertent” legal impediment brought about by the 1996 National Securities Markets Improvement Act (NSMIA) and allow for developmental listing tiers on the three major U.S. stock exchanges.

The North American Securities Administrators Association announced a series of investment adviser best practices that it is recommending after it conducted investment adviser tests that showed 2135 deficiencies in 13 compliance areas. 418 investment advisers in 43 states and provinces participated in the tests, which were overseen by NASAA’s Investment Adviser Operations Project Group.

Five of the categories that had the largest amount of deficiencies included supervisory compliance (174 deficiencies), registration (504 deficiencies), books and records (384 deficiencies), unethical business practices (318 deficiencies) and privacy (142 deficiencies).

The leading three deficiencies in the category of registration involved:

MERRILL LYNCH: The firm’s retail brokerage revenues increased 13% to $3.3 billion, and new profits were up 23.7 %. Its broker count rose to 16,200 and it claims “net positive recruiting against all our major competitors, along with its lowest turnover of top producers in years. The firm also reported a rise in fee-based business, as it and other Wall Street firms operate on a short reprieve from the SEC to either register its representatives under the Investment Advisor’s Act, reassign the accounts to those already registered or restructure those accounts.

BEAR STEARNS: The firm continues to suffer the slings and arrows of critics over its CMO hedge fund debacle. Meanwhile, head manager of those funds was previously reported to have maintained his golf scores at the climax of the funds. Or did he? It has been reported that a three-member committee at the Hollywood Country Club in Deal, N.J., is investigating his victory at a July 4 golf tournament, to determine whether he changed his scores. Apparently, allegations of such cheating by executives at the club are frequent.

“We’re FINRA – the Financial Industry Regulatory Authority”, announced the old NASD, plus the NYSE’s regulatory functions. As we reported weeks ago, it was the third try at names for the NASD. First it offended 1.4 billion Islamic persons, then embarrassed itself with an acronym that sounded like a disease. Finally, it chose FINRA, which brought criticism from those in the financial industry that it doesn’t regulate. As we predicted, the NASD was much too arrogant to make yet another change. As well, it was intent on replacing “association” with “authority,” so it would not appear to be a fox in charge of a henhouse, despite its structure being similar to a country club (see above).

For more almost forty years I could fell safe knowing that if a company’s stock symbol had three letters it was listed on the New York Stock Exchange or possibly the American Stock Exchange. If the symbol had four or five letters, it was listed on the NASDAQ.

Delta Financial Corp. (DFC) recently transferred its listing to from the Amex to Nasdaq and sought to use the same symbol. Despite numerous (well-founded, I hasten to add) objections, the SEC decided to approved a rule change to permit an issuer to keep its three-character ticker symbol if it transfers its listing to Nasdaq from another domestic listing market.

The SEC says it approved the change to avoid the anti-competitive effect of the prior ban. It added that there was little reason to impose the costly and disruptive burden involved in changing a company’s ticker symbol if it simply wants to list on another exchange.