{"id":5117,"date":"2010-12-11T00:00:00","date_gmt":"2010-12-11T06:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2010\/12\/sec_ig_investigating_whether_e"},"modified":"2022-04-04T12:52:56","modified_gmt":"2022-04-04T17:52:56","slug":"sec-ig-investigating-whether-e","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/sec-ig-investigating-whether-e\/","title":{"rendered":"SEC IG Investigating Whether Examiners Were Told by Regional Official to Ignore “Red Flags” Indicating Massive Fraud"},"content":{"rendered":"

Securities and Exchange Commission Inspector General H. David Kotz says that his office is looking into a complaint that a regional official told examiners to not go after \u201cred flags\u201d that were found in an exam of an investment adviser where a \u201cmassive fraud\u201d was discovered. The official in question reportedly played a significant part in an earlier exam of the investment firm, and although the securities fraud<\/a> was going on then, it was not uncovered at the time.<\/p>\n

The anonymous complaint also claims that the regional office had a hostile work environment because management failed to discipline the official even after an earlier OIG investigation found that the person had watched pornography on an SEC computer. In his semiannual report to Congress, Kotz says that the OIG is almost done with its probe and will present its findings.<\/p>\n

The OIG also determined that Bank of America<\/a> Inc.\u2019s Troubled Asset Relief Program fund’s status played a role in the \u201cfavorable\u201d $33 million settlement that SEC staffers had initially recommended to resolve charges that the investment bank issued misleading proxy disclosures related to its Merrill Lynch acquisition. U.S. District Judge Jed S. Rakoff, however, refused to approve that settlement, and Bank of America eventually settled the case for $150 million.<\/p>\n

Kotz says that the OIG has probed into allegations from an ex-Enforcement attorney that the division was negligent in how it handled an insider trading probe. A report of its findings will be issued during the next semiannual reporting period.<\/p>\n

Other pending OIG investigations involve:<\/strong>
\n\u2022 Allegations that attorneys at a regional office did not properly investigate a law firm for alleged obstruction of justice related to an SEC case. Improper preferential treatment may have been a factor.
\n\u2022 Allegations that an SEC official violated ethics rules while providing testimony to a congressional committee.
\n\u2022 Allegations that a staff member acted in an abusive and intimidating manner toward contract staff.
\n\u2022 Complaints that SEC staff leaked information about an investigation of an examination to the media.
\n\u2022 Allegations that at least one contractor worked at the SEC before a background probe had been completed.<\/p>\n

Related Web Resources:<\/strong><\/p>\n

Bank of America To Settle SEC Charges Regarding Merrill Lynch Acquisition Proxy-Related Disclosures for $150 Million<\/a>, Stockbroker Fraud Blog, February 15, 2010<\/p>\n

Bank of America Agrees to settle SEC Charges of Merrill Lynch Bonuses for $33 Million But Judge Blocks Settlement<\/a>, Stockbroker Fraud Blog, August 6, 2009<\/p>\n

Continue Reading \u203a<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Securities and Exchange Commission Inspector General H. David Kotz says that his office is looking into a complaint that a regional official told examiners to not go after \u201cred flags\u201d that were found in an exam of an investment adviser where a \u201cmassive fraud\u201d was discovered. The official in question reportedly played a significant part […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[3760,3761,3741],"tags":[],"class_list":["post-5117","post","type-post","status-publish","format-standard","hentry","category-sec-enforcement","category-securities-and-exchange-commis","category-securities-fraud"],"yoast_head":"\nSEC IG Investigating Whether Examiners Were Told by Regional Official to Ignore "Red Flags" Indicating Massive Fraud — Investor Lawyers Blog — December 11, 2010<\/title>\n<meta name=\"description\" content=\"Securities and Exchange Commission Inspector General H. 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