MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication
an InvestmentWires' Publication
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MutualFundWire.com
The insiders' edge for 40 Act industry executives!
an InvestmentWires' Publication |
|
Thursday, December 18, 2003 Spitzer May be Targeting Another Brokerage Next As the dust is attempting to settle around some of the mutual fund firms and brokerages already being investigated by regulators for improper trading practices, a buzz is beginning to grow around another brokerage firm. In an investigative piece printed today, USA Today highlighted the possibility that JB Oxford, a Beverly-Hills based brokerage firm, could be the next firm to be thoroughly investigated by Spitzer's office. In fact, the investigation into the troubled firm has already began. While others were paying attention to some of the more well-known firms implicated in Spitzer's original case against Canary Capital Partners, JB Oxford was quietly named as one of several firms that processed trades for the hedge fund. In Spitzer's Canary complaint, it was noted that the JB Oxford had a deal to clear the hedge fund's paperwork on afterhours trades and as compensation, received fees totalling one percent of assets traded. Recently, the firm disclosed that the SEC sent it a Wells notice, warning that civil charges and penalties might be brought against the firm. The firm has gone on record saying that it has replied to the SEC and its CEO Christopher Jarratt, said that the firm is cooperating. He also added that the firm is investigating the role of some of its employees in late trading agreements with Canary but has not reached a decision on whether they will be disciplined Meanwhile, the firm has had some problems with trading irregulaties in the past. In 1997, FBI agents raided the company's offices while the firm was under investigation for its ties to Irving Kott, a Canadian stock promoter with a history of securities fraud problems. In 1976, Kott plead guilty to scheming to defraud investors in Ontario. Two years later he was nearly murdered by mobsters after a bomb exploded under his car in Montreal. In 1990, to settle a case involving First Commerce Securities, he paid Dutch authorities $4 million. First Commerce was a boiler room brokerage caught selling fake stocks to investors worldwide. Lawsuits against JB Oxford have claimed that Kott was the controlling force behind the firm through much of the 90s. JB Oxford and Kott's lawyers have denied those accusations. However, three former Oxford employees, a government official and lawyers have said otherwise. Kott was also responsible for negotiating some of the firm's biggest deals, and was influential in a number of other schemes until the company was taken over by new management in 1997. In the mid-90s, the firm made a name for itself processing trades for micro-cap stocks, which were often sold by 'boiler room' brokerages. In a 1997 report on securities crimes by the New York Attorney General's office, clearing firms were named as 'accomplices' and 'knowing lubricants' in scams around these securities. The firm processed trades for Stratton Oakmont, Biltmore Securities, Monroe Parker Securities and Greenway Capital among others. Also, since 1996, the firm has been fined $216,000 by NASD in 10 cases. For example, in one case, hundreds of Ohio invested claimed they lost $100 million to 'pump and dump' trades run by Monroe Parker and cleared by JB Oxford. Printed from: MFWire.com/story.asp?s=6367 Copyright 2003, InvestmentWires, Inc. All Rights Reserved |