{"id":5303,"date":"2012-06-07T00:00:00","date_gmt":"2012-06-07T05:00:00","guid":{"rendered":"https:\/\/institutionalinvestorsecuritiesblog.blawgcloud.com\/2012\/06\/institutional_investor_securit"},"modified":"2022-04-28T12:36:48","modified_gmt":"2022-04-28T17:36:48","slug":"institutional-investor-securit","status":"publish","type":"post","link":"https:\/\/www.investorlawyers.com\/blog\/institutional-investor-securit\/","title":{"rendered":"Institutional Investor Securities Roundup: SEC Sues Investment Adviser Over $60M Ponzi Scam, Michigan Investment Club Manager Gets Prison Term for Defrauding Over 900 Investors, & IOSCO Seeks Comments on Report About Credit Raters\u2019 Conflicts & Controls"},"content":{"rendered":"

The SEC is suing investment adviser John Geringer for allegedly running a $60M investment fund that was actually a Ponzi scheme<\/a>. Most of Geringer\u2019s fraud victims are from the Santa Cruz, California area.<\/p>\n

According to the Commission, Geringer used information in his marketing materials for GLR Growth Fund (including the promise of yearly returns in the double digits) that was allegedly \u201cfalse and misleading\u201d to draw in investors. He also implied that the fund had SEC approval.<\/p>\n

While investors thought the fund was making these supposed returns by placing 75% of its assets in investments connected to major stock indices, per the SEC claims, Geringer\u2019s trading actually resulted in regular losses and he eventually ceased to trade. To hide the fraud, Geringer allegedly paid investors \u201creturns\u201d in the millions of dollars that actually came from the money of new investors. Also, after he stopped trading in 2009, he is accused of having invested in two illiquid private startups and three entities under his control. The SEC is seeking disgorgement of ill-gotten gains, financial penalties, preliminary and permanent injunctions, and other relief.<\/p>\n

In an unrelated securities case<\/a>, this one resulting in criminal charges, Michigan investment club manager Alan James Watson has been sentenced to 12 years behind bars for fraudulently soliciting and accepting $40 million from over 900 investors. Watson, who pleaded guilty to the criminal charges, must also forfeit over $36 million.<\/p>\n

Watson ran and funded Cash Flow Financial LLC. According to the US Justice Department, he lost all of the money on risky investments\u2014even as he told investors that their money was going to work through an equity-trading system that would give them a 10% return every month. In truth, Watson only put $6 million in the system, while secretly investing the rest in the undisclosed investments. He would go on to also lose the $6 million when he moved this money into risky investments, too. <\/p>\n

Watson ran the club as a Ponzi scam so investors wouldn\u2019t know what he was doing. He is still facing related charges in a securities case brought by the Commodity Futures Trading Commission. <\/p>\n

In other institutional investments securities news, the International Organization of Securities Commissions’ technical committee is asking for comments about a new consultation report describing credit rating agencies\u2019 the internal controls over the rating process and the practices they employ to minimize conflicts of interest. The deadline for submitting comments is July 9.<\/p>\n

The report was created following the financial crisis due to concerns about the rating process\u2019s integrity. 9 credit rating agencies were surveyed about their internal controls, while 10 agencies were surveyed on how they managed conflict. <\/p>\n

IOSCO\u2019s CRA code guides credit raters on how to handle conflict and make sure that employees consistently use their methodologies. Two of the report\u2019s primary goals were to find out how get a \u201ccomprehensive and practical understanding\u201d of how these agencies deal with conflict when deciding ratings and find out whether credit ratings agencies have implemented IOSCO\u2019s code and guiding principals.<\/p>\n

Read the SEC’s complaint against Geringer<\/a> (PDF)<\/p>\n

Investment Club Manager Sentenced To 12 Years In Prison For $40 Million Fraud<\/a>, Justice.gov, May 24, 2012 <\/p>\n

Credit Rating Agencies: Internal Controls Designed to Ensure the Integrity of the Credit Rating Process and Procedures to Manage Conflicts of Interest<\/a>, IOSCO (PDF)
\n<\/strong><\/p>\n

More Blog Posts:
\nFINRA Initiatives Addressing Market Volatility Approved by the SEC, Institutional Investor Securities Blog, June 5, 2012<\/p>\n

Several Claims in Securities Fraud Lawsuit Against Ex-IndyMac Bancorp Executives Are Dismissed by Federal Judge, Institutional Investor Securities Blog, May 30, 2012<\/p>\n

Leave The 2nd Circuit Ruling Upholding Madoff Trustee\u2019s \u201cNet Equity\u201d Method for Investor Recovery Alone, Urges SEC to the US Supreme Court<\/a>, Stockbroker Fraud Blog, June 5, 2012 <\/p>\n

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

The SEC is suing investment adviser John Geringer for allegedly running a $60M investment fund that was actually a Ponzi scheme. Most of Geringer\u2019s fraud victims are from the Santa Cruz, California area. According to the Commission, Geringer used information in his marketing materials for GLR Growth Fund (including the promise of yearly returns in […]<\/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":[3845,3792,3741],"tags":[],"class_list":["post-5303","post","type-post","status-publish","format-standard","hentry","category-credit-rating-agencies","category-ponzi-scams","category-securities-fraud"],"yoast_head":"\nInstitutional Investor Securities Roundup: SEC Sues Investment Adviser Over $60M Ponzi Scam, Michigan Investment Club Manager Gets Prison Term for Defrauding Over 900 Investors, & IOSCO Seeks Comments on Report About Credit Raters\u2019 Conflicts & Controls — Investor Lawyers Blog — June 7, 2012<\/title>\n<meta name=\"description\" content=\"The SEC is suing investment adviser John Geringer for allegedly running a $60M investment fund that was actually a Ponzi scheme. Most of Geringer\u2019s fraud — June 7, 2012\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.investorlawyers.com\/blog\/institutional-investor-securit\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Institutional Investor Securities Roundup: SEC Sues Investment Adviser Over $60M Ponzi Scam, Michigan Investment Club Manager Gets Prison Term for Defrauding Over 900 Investors, & IOSCO Seeks Comments on Report About Credit Raters\u2019 Conflicts & Controls — Investor Lawyers Blog — June 7, 2012\" \/>\n<meta name=\"twitter:description\" content=\"The SEC is suing investment adviser John Geringer for allegedly running a $60M investment fund that was actually a Ponzi scheme. Most of Geringer\u2019s fraud — June 7, 2012\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Shepherd Smith Edwards & Kantas, LLP\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Institutional Investor Securities Roundup: SEC Sues Investment Adviser Over $60M Ponzi Scam, Michigan Investment Club Manager Gets Prison Term for Defrauding Over 900 Investors, & IOSCO Seeks Comments on Report About Credit Raters\u2019 Conflicts & Controls — Investor Lawyers Blog — June 7, 2012","description":"The SEC is suing investment adviser John Geringer for allegedly running a $60M investment fund that was actually a Ponzi scheme. Most of Geringer\u2019s fraud — June 7, 2012","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.investorlawyers.com\/blog\/institutional-investor-securit\/","twitter_card":"summary_large_image","twitter_title":"Institutional Investor Securities Roundup: SEC Sues Investment Adviser Over $60M Ponzi Scam, Michigan Investment Club Manager Gets Prison Term for Defrauding Over 900 Investors, & IOSCO Seeks Comments on Report About Credit Raters\u2019 Conflicts & Controls — Investor Lawyers Blog — June 7, 2012","twitter_description":"The SEC is suing investment adviser John Geringer for allegedly running a $60M investment fund that was actually a Ponzi scheme. Most of Geringer\u2019s fraud — June 7, 2012","twitter_misc":{"Written by":"Shepherd Smith Edwards & Kantas, LLP","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.investorlawyers.com\/blog\/institutional-investor-securit\/#article","isPartOf":{"@id":"https:\/\/www.investorlawyers.com\/blog\/institutional-investor-securit\/"},"author":{"name":"Shepherd Smith Edwards & Kantas, LLP","@id":"https:\/\/www.investorlawyers.com\/blog\/#\/schema\/person\/e0240e0754684b69f7d6a7de1b9f1431"},"headline":"Institutional Investor Securities Roundup: SEC Sues Investment Adviser Over $60M Ponzi Scam, Michigan Investment Club Manager Gets Prison Term for Defrauding Over 900 Investors, & IOSCO Seeks Comments on Report About Credit Raters\u2019 Conflicts & Controls","datePublished":"2012-06-07T05:00:00+00:00","dateModified":"2022-04-28T17:36:48+00:00","mainEntityOfPage":{"@id":"https:\/\/www.investorlawyers.com\/blog\/institutional-investor-securit\/"},"wordCount":666,"articleSection":["Credit Rating Agencies","Ponzi Scams","Securities Fraud"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/www.investorlawyers.com\/blog\/institutional-investor-securit\/","url":"https:\/\/www.investorlawyers.com\/blog\/institutional-investor-securit\/","name":"Institutional Investor Securities Roundup: SEC Sues Investment Adviser Over $60M Ponzi Scam, Michigan Investment Club Manager Gets Prison Term for Defrauding Over 900 Investors, & IOSCO Seeks Comments on Report About Credit Raters\u2019 Conflicts & Controls — Investor Lawyers Blog — June 7, 2012","isPartOf":{"@id":"https:\/\/www.investorlawyers.com\/blog\/#website"},"datePublished":"2012-06-07T05:00:00+00:00","dateModified":"2022-04-28T17:36:48+00:00","author":{"@id":"https:\/\/www.investorlawyers.com\/blog\/#\/schema\/person\/e0240e0754684b69f7d6a7de1b9f1431"},"description":"The SEC is suing investment adviser John Geringer for allegedly running a $60M investment fund that was actually a Ponzi scheme. Most of Geringer\u2019s fraud — June 7, 2012","breadcrumb":{"@id":"https:\/\/www.investorlawyers.com\/blog\/institutional-investor-securit\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.investorlawyers.com\/blog\/institutional-investor-securit\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.investorlawyers.com\/blog\/institutional-investor-securit\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.investorlawyers.com\/blog\/"},{"@type":"ListItem","position":2,"name":"Institutional Investor Securities Roundup: SEC Sues Investment Adviser Over $60M Ponzi Scam, Michigan Investment Club Manager Gets Prison Term for Defrauding Over 900 Investors, & IOSCO Seeks Comments on Report About Credit Raters\u2019 Conflicts & Controls"}]},{"@type":"WebSite","@id":"https:\/\/www.investorlawyers.com\/blog\/#website","url":"https:\/\/www.investorlawyers.com\/blog\/","name":"Investor Lawyers Blog","description":"Published By Investment Fraud Attorneys \u2014 Shepherd Smith Edwards & Kantas, LLP","potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.investorlawyers.com\/blog\/?s={search_term_string}"},"query-input":{"@type":"PropertyValueSpecification","valueRequired":true,"valueName":"search_term_string"}}],"inLanguage":"en-US"},{"@type":"Person","@id":"https:\/\/www.investorlawyers.com\/blog\/#\/schema\/person\/e0240e0754684b69f7d6a7de1b9f1431","name":"Shepherd Smith Edwards & Kantas, LLP","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/secure.gravatar.com\/avatar\/c7f8f04990816cd4044977eb59908da8c8d1ae487cc919cebd7027b74a0740a3?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/c7f8f04990816cd4044977eb59908da8c8d1ae487cc919cebd7027b74a0740a3?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/c7f8f04990816cd4044977eb59908da8c8d1ae487cc919cebd7027b74a0740a3?s=96&d=mm&r=g","caption":"Shepherd Smith Edwards & Kantas, LLP"},"sameAs":["https:\/\/www.investorlawyers.com\/"]}]}},"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/pedX9K-1nx","_links":{"self":[{"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/5303","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/comments?post=5303"}],"version-history":[{"count":3,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/5303\/revisions"}],"predecessor-version":[{"id":26856,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/posts\/5303\/revisions\/26856"}],"wp:attachment":[{"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/media?parent=5303"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/categories?post=5303"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investorlawyers.com\/blog\/wp-json\/wp\/v2\/tags?post=5303"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}