Date: 10/22/2008 3:07 PM
By MARCY GORDON
AP Business Writer
WASHINGTON (AP) _ The Securities and Exchange Commission said Wednesday it brought 671 enforcement cases in the fiscal year that ended Sept. 30, with the number of market manipulation cases up more than 45 percent over the prior year.
The SEC also said it has more than 50 pending investigations related to the subprime mortgage market.
The agency, working in conjunction with the FBI and federal prosecutors, has been investigating whether mortgage lenders or Wall Street firms participated in fraud.
The 671 cases initiated in the latest fiscal year represent the second-highest number of enforcement actions in the SEC’s history, the agency said. The number of insider trading cases set a new record high.
For the second straight year, the SEC returned more than $1 billion to aggrieved investors collected in settlements with individuals and companies.
Still, some lawmakers have criticized the SEC’s enforcement efforts. Sen. Jack Reed, D-R.I., chairman of the Senate Banking subcommittee that oversees the agency, has said the SEC should have asked Congress for more money for its budget for 2009 “given that increased demands are being placed on staff and the agency during this critical time.”
And the SEC’s inspector general, H. David Kotz, recently reported that an official in the agency’s enforcement division failed to properly enforce securities laws in the investigation of investment bank Bear Stearns’ valuation of complex securities.
SEC Chairman Christopher Cox has defended the agency and its enforcement program, citing actions against market manipulation and other initiatives.
Major fraud cases brought by the SEC during the fiscal year included:
— A lawsuit against two former Bear Stearns managers alleging they deceived investors by concealing the troubles of a hedge fund that bet heavily on subprime mortgages before the market collapsed. The two also were charged criminally by federal prosecutors.
— A suit against five former San Diego city officials over a 2002 pension scandal.
— An insider trading case against a former Dow Jones & Co. board member and three other prominent Hong Kong residents for an alleged scheme to trade ahead of news of a $5 billion takeover offer for the financial news company by Rupert Murdoch. They agreed in a settlement to pay $24 million.
The SEC and state regulators also recently signed agreements with major banks to buy back a total of more than $50 billion in auction-rate securities from investors who bought the risky securities before the market for them collapsed in February. But those settlements, with Citigroup Inc., Morgan Stanley, JPMorgan Chase & Co., Wachovia Corp., Merrill Lynch & Co., Goldman Sachs Group Inc. and others, are not included in the fiscal 2008 enforcement results.
Copyright 2008 The Associated Press.