SEC SUES WALTER MORALES AND COMMONWEALTH ADVISORS FOR HIDING LOSSES FROM MORTGAGE-BACKED SECURITIES

The Securities and Exchange Commissions (SEC) has sued Walter Morales and his firm, Commonwealth Advisors, for swindling investors by concealing millions of dollars in losses suffered during the financial crisis from investments tied to residential mortgage backed securities (RMBS). The SEC accused the hedge fund manager of purchasing the lowest and riskiest tranches of collateralized debt obligation (CDO) called Collybus. Even though they Mr. Morales and Commonwealth were familiar with the facts that the RMBS market had declined sharply, they sold mortgage-backed securities into the CDO at prices they had obtained four months earlier. Because of the continuous poor performance of the CDO, management orders its firm to carry 150 deceptive cross-trades between the hedge funds they advised in order to hide a $32 million loss suffered by one of the funds in its Collybus investment. The firm even presented bogus documents to justify and certify their false valuations about the amount and value of mortgage backed assets held in hedge funds.
A mortgage-backed security is an asset-backed security that represents a claim on the cash flows from mortgage loans through a process known as securitization. Collateralized debt obligations are a type of structured asset-backed securities with multiple risk "tranches" that are issued by special purpose entities and collateralized by debt obligations including bonds and loans. With the real estate market collapse in 2008, many of these investments plummeted and investors lost billions.
The SEC charged Mr. Morales and Commonwealth Advisors with breaching various sections of the Securities Acts of 1933 and the Securities and Exchange Act of 1934 as well as Rule 10b-5. SEC Division of Enforcement Director Robert Khumazi said, "Morales and Commonwealth Advisors concealed significant hedge fund losses from investors, including pension fund investors, instead of owning up to them and facing the consequences." Mr. Khumazi also stated that "investors put their fundamental trust in the hands of their investment adviser, and they deserve better than being manipulated and lied to through deceptive trades and phony documents."
Have you suffered losses in mortgage-backed securities resulting from Commonwealth Advisors' concealment scheme? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

THE SEC HITS ICP ASSET MANAGEMENT AND THOMAS C. PRIORE WITH BIG FINES FOR FRAUDULENT PRACTICES RELATED TO COLLATERALIZED DEBT OBLIGATIONS

ICP Asset Management and its founding President, Thomas C. Priore, have reached a settlement agreement with the Securities and Exchange Commission (SEC) for charges alleging that ICP defrauded numerous collateralized debt obligations (CDO) they managed. The SEC argued that ICP and Mr. Priore engaged in fraudulent practices and misrepresentations that cause the CDOs to overpay for securities, which caused losses of millions of dollars. Also, ICP and Mr. Priore obtained fees and undisclosed profits at the expense of the CDOs and their investors. ICP, Priore, and ICP related companies have agreed to pay $23 million to settle the case, which was filed against them in June 2010.
CDOs are a type of structured asset-backed securities with multiple risk "tranches" that are issued by special purpose entities and collateralized by debt obligations including bonds and loans. With the real estate market collapse in 2008, many of these investments plummeted and investors lost billions.
The judgment orders ICP and its holding company, Institutional Credit Partners LLC, to pay disgorgement of $13,916,005.00 and prejudgment interest of $3,709,028. ICP must also pay a penalty of $650,000.00. ICP Securities LLC, an affiliated broker-dealer, is ordered to pay disgorgement of $1,637,581.00, prejudgment interest of $301,893, and penalty of $1,939,474.00. Mr. Priore will pay disgorgement of $797,337.00, prejudgment interest of $215,045.00, and a penalty of $487,618.00. Mr. Priore has also agreed to settle an administrative proceeding against him and be barred from any association with an investment adviser, broker, dealer, transfer agent, and from participating in any penny stock offerings. He is eligible to re-apply for association after a five-year period.
Did you suffer losses resulting from ICP Asset Management's fraudulent practices? If so, call Robert Pearce at the Law Offices of Robert Wayne Pearce, P.A. for a free consultation.
The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.

MASSACHUSETTS FINES STATE STREET CORP OVER CARINA CDO

According to reports, the Massachusetts Secretary of State has fined a unit of State Street Corp. $5 million for its role in a mortgage-backed debt obligation.

State Street is a Boston-based financial services company registered with FINRA. According to Secretary of State's office, State Street Global Advisors failed to disclose a hedge-fund's involvement in a $1.56 billion collateralized debt obligation known as Carina CDO Ltd. State Street purportedly acted as the investment manager of Carina.

Apparently the Carina CDO consisted primarily of mortgage-backed securities and subsequently defaulted.
The settlement order censures State Street and requires it to pay a civil administrative penalty of about $1.4 million to the Commonwealth of Massachusetts and to disgorge to the Commonwealth an additional $3.5 million.

Collateralized debt obligations (CDOs) are a type of structured asset-backed securities with multiple risk "tranches" that are issued by special purpose entities and collateralized by debt obligations including bonds and loans. With the real estate market collapse in 2008, many of these investments plummeted and investors lost billions.

The most important of investors' rights is the right to be informed! This Investors' Rights blog post is by the Law Offices of Robert Wayne Pearce, P.A., located in Boca Raton, Florida. For over 30 years, Attorney Pearce has tried, arbitrated, and mediated hundreds of disputes involving complex securities, commodities and investment law issues. The lawyers at our law firm are devoted to protecting investors' rights throughout the United States and internationally! Please visit our website, www.secatty.com, post a comment, call (800) 732-2889, or email Mr. Pearce at pearce@rwpearce.com for answers to any of your questions about this blog post and/or any related matter.