FROM: U.S. DEPARTMENT OF LABOR
Judge orders A.B.D. Tank & Pump Co. to restore $2.7 million to worker retirement plan following US Labor Department investigation
ELMHURST, Ill. — Following an investigation by the U.S. Department of Labor's Employee Benefits Security Administration and resulting lawsuit, a federal court has issued a default judgment against Elmhurst-based A.B.D. Tank & Pump Co. to restore $2,767,051 to the company's retirement plan. Keith Davis, the company's president and sole owner, allegedly depleted the assets of the plan through a series of withdrawals and transfers to himself and the company from Dec. 6, 2006, through Nov. 4, 2010, in violation of the Employee Retirement Income Security Act.
"The Labor Department is committed to holding accountable those who are entrusted with the assets of workers' retirement plans," said Phyllis C. Borzi, assistant secretary of labor for employee benefits security. "We will continue to help workers obtain their rightful benefits when plan fiduciaries violate the law."
The A.B.D. Tank & Pump Co. 401(k) & Profit Sharing Plan & Trust, a retirement plan for the company's employees funded by employer contributions, was established in 1992. Davis is the plan's trustee.
The court order requires A.B.D. Tank & Pump Co. to restore all losses, including lost opportunity costs, to the retirement plan, and permanently bars A.B.D. Tank & Pump Co. from serving as a fiduciary or service provider to any employee benefit plan governed by ERISA in the future. The complaint against Davis remains pending.
Friday, August 31, 2012
Thursday, August 30, 2012
JAPANESE AUTOMOBILE PARTS MANUFACTURER AGREES TO PLEAD GUILTY TO PRICE FIXING
FROM: U.S. DEPARTMENT OF JUSTICE
ON PARTS INSTALLED IN US CARS
Company Agrees to Pay $1 Million Criminal Fine
WASHINGTON — Nagoka, Japan-based Nippon Seiki Co. Ltd. has agreed to plead guilty and to pay a $1 million criminal fine for its role in a conspiracy to fix prices of instrument panel clusters, commonly known as meters, installed in cars sold in the United States and elsewhere, the Department of Justice announced today.
According to a one-count felony charge filed today in the U.S. District Court for the Eastern District of Michigan in Detroit, Nippon Seiki engaged in conspiracies to rig bids for, and to fix, stabilize and maintain the prices of instrument panel clusters sold to an automaker in the United States and elsewhere. According to the court document, Nippon Seiki’s involvement in the conspiracy lasted from at least as early as April 2008 until at least February 2010.
Nippon Seiki manufactures and sells a variety of automotive parts, including instrument panel clusters. Instrument panel clusters are the mounted array of instruments and gauges housed in front of the driver of an automobile. The department said that Nippon Seiki and its co-conspirators carried out the conspiracy by agreeing, during meetings and conversations, to rig bids for, and to fix, stabilize and maintain the prices of instrument panel clusters, sold to an automaker in the United States and elsewhere, on a model-by-model basis.
As part of the plea agreement, which will be subject to court approval, Nippon Seiki has agreed to cooperate with the department’s investigation.
"For nearly two years, Nippon Seiki conspired to sell instrument control panels at collusive and noncompetitive prices, affecting the prices of many automobiles sold in the United States," said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. "The division will continue to hold companies accountable for these types of anticompetitive practices that harm American consumers."
Including Nippon Seiki, eight companies and 11 executives have been charged in the department’s ongoing investigation into price fixing and bid rigging in the auto parts industry. Furukawa Electric Co. Ltd., DENSO Corp., Yazaki Corp., G.S. Electech Inc., Fujikura Ltd. and Autoliv Inc. pleaded guilty and were sentenced to pay a total of more than $785 million in criminal fines. In July 2012, TRW Deutschland Holding GmbH agreed to plead guilty and is awaiting sentencing. Additionally, seven of the individuals – Junichi Funo, Hirotsugu Nagata, Tetsuya Ukai, Tsuneaki Hanamura, Ryoki Kawai, Shigeru Ogawa and Hisamitsu Takada – have been sentenced to pay criminal fines and to serve jail sentences ranging from a year and a day to two years each. Makoto Hattori and Norihiro Imai have pleaded guilty and await sentencing. Kazuhiko Kashimoto and Toshio Sudo have also agreed to plead guilty.
Nippon Seiki is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations. The maximum fine for the company may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
ON PARTS INSTALLED IN US CARS
Company Agrees to Pay $1 Million Criminal Fine
WASHINGTON — Nagoka, Japan-based Nippon Seiki Co. Ltd. has agreed to plead guilty and to pay a $1 million criminal fine for its role in a conspiracy to fix prices of instrument panel clusters, commonly known as meters, installed in cars sold in the United States and elsewhere, the Department of Justice announced today.
According to a one-count felony charge filed today in the U.S. District Court for the Eastern District of Michigan in Detroit, Nippon Seiki engaged in conspiracies to rig bids for, and to fix, stabilize and maintain the prices of instrument panel clusters sold to an automaker in the United States and elsewhere. According to the court document, Nippon Seiki’s involvement in the conspiracy lasted from at least as early as April 2008 until at least February 2010.
Nippon Seiki manufactures and sells a variety of automotive parts, including instrument panel clusters. Instrument panel clusters are the mounted array of instruments and gauges housed in front of the driver of an automobile. The department said that Nippon Seiki and its co-conspirators carried out the conspiracy by agreeing, during meetings and conversations, to rig bids for, and to fix, stabilize and maintain the prices of instrument panel clusters, sold to an automaker in the United States and elsewhere, on a model-by-model basis.
As part of the plea agreement, which will be subject to court approval, Nippon Seiki has agreed to cooperate with the department’s investigation.
"For nearly two years, Nippon Seiki conspired to sell instrument control panels at collusive and noncompetitive prices, affecting the prices of many automobiles sold in the United States," said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. "The division will continue to hold companies accountable for these types of anticompetitive practices that harm American consumers."
Including Nippon Seiki, eight companies and 11 executives have been charged in the department’s ongoing investigation into price fixing and bid rigging in the auto parts industry. Furukawa Electric Co. Ltd., DENSO Corp., Yazaki Corp., G.S. Electech Inc., Fujikura Ltd. and Autoliv Inc. pleaded guilty and were sentenced to pay a total of more than $785 million in criminal fines. In July 2012, TRW Deutschland Holding GmbH agreed to plead guilty and is awaiting sentencing. Additionally, seven of the individuals – Junichi Funo, Hirotsugu Nagata, Tetsuya Ukai, Tsuneaki Hanamura, Ryoki Kawai, Shigeru Ogawa and Hisamitsu Takada – have been sentenced to pay criminal fines and to serve jail sentences ranging from a year and a day to two years each. Makoto Hattori and Norihiro Imai have pleaded guilty and await sentencing. Kazuhiko Kashimoto and Toshio Sudo have also agreed to plead guilty.
Nippon Seiki is charged with price fixing in violation of the Sherman Act, which carries a maximum penalty of a $100 million criminal fine for corporations. The maximum fine for the company may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.
Wednesday, August 29, 2012
CFTC SETTLES CHARGES WITH A BANK AND AN INVESTMENT COMPANY
FROM: U.S. COMMODITY FUTURES TRADING COMMISSION
CFTC Orders Foreign Traders SMP Bank and Epaster Investments, Ltd. to Pay $980,000 for Engaging in a Wash Sale Scheme in the CME’s Japanese Yen Options Contract
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against SMP Bank (SMP), headquartered in Moscow, Russia, and Epaster Investments, Ltd. (Epaster), an investment company located in Nicosia, Cyprus, for engaging in wash sales and causing the execution of non-competitive pre-arranged trades in the Japanese Yen options contract traded on the Chicago Mercantile Exchange (CME).
The CFTC Order requires SMP and Epaster to pay civil monetary penalties of $700,000 and $280,000 respectively, and to cease and desist from violating the Commodity Exchange Act and CFTC regulations governing wash sales and non-competitive pre-arranged trading, as charged.
The CFTC Order finds that on three occasions SMP traded with itself in the March 2012 Japanese Yen options contract listed on the CME, and that SMP and Epaster were on opposite sides of two additional trades in same contract.
The CFTC's Order finds that SMP intentionally negated price competition in each of these trades, as follows. The same SMP employees controlled SMP’s and Epaster’s trading accounts. Each of the orders in question was equal and offsetting in size and price, and was initiated at or near the same time. The orders were entered and the trades executed in an illiquid market at prices higher than any bids and offers in the market at the time. As a result, the SMP employees knew when placing the relevant orders that another SMP or Epaster account would be the counterparty to the ensuing transaction. Moreover, SMP knew that these transactions were riskless and further that each of the three transactions SMP executed with itself resulted in a financial nullity and therefore achieved a wash result.
According to David Meister, the Director of the CFTC's Enforcement Division, "The Commission will not tolerate wash sales or other riskless trading schemes. Such schemes undermine the integrity of futures and options markets. Today’s Order is a message to traders of the serious consequences that will result from such violations."
CFTC Division of Enforcement staff members responsible for this case are Susan Gradman, Joseph Patrick, Scott Williamson, Rosemary Hollinger, and Richard Wagner. In addition, Division of Market Oversight staff member Sia Papadapoulous assisted with this case.
CFTC Orders Foreign Traders SMP Bank and Epaster Investments, Ltd. to Pay $980,000 for Engaging in a Wash Sale Scheme in the CME’s Japanese Yen Options Contract
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and settling charges against SMP Bank (SMP), headquartered in Moscow, Russia, and Epaster Investments, Ltd. (Epaster), an investment company located in Nicosia, Cyprus, for engaging in wash sales and causing the execution of non-competitive pre-arranged trades in the Japanese Yen options contract traded on the Chicago Mercantile Exchange (CME).
The CFTC Order requires SMP and Epaster to pay civil monetary penalties of $700,000 and $280,000 respectively, and to cease and desist from violating the Commodity Exchange Act and CFTC regulations governing wash sales and non-competitive pre-arranged trading, as charged.
The CFTC Order finds that on three occasions SMP traded with itself in the March 2012 Japanese Yen options contract listed on the CME, and that SMP and Epaster were on opposite sides of two additional trades in same contract.
The CFTC's Order finds that SMP intentionally negated price competition in each of these trades, as follows. The same SMP employees controlled SMP’s and Epaster’s trading accounts. Each of the orders in question was equal and offsetting in size and price, and was initiated at or near the same time. The orders were entered and the trades executed in an illiquid market at prices higher than any bids and offers in the market at the time. As a result, the SMP employees knew when placing the relevant orders that another SMP or Epaster account would be the counterparty to the ensuing transaction. Moreover, SMP knew that these transactions were riskless and further that each of the three transactions SMP executed with itself resulted in a financial nullity and therefore achieved a wash result.
According to David Meister, the Director of the CFTC's Enforcement Division, "The Commission will not tolerate wash sales or other riskless trading schemes. Such schemes undermine the integrity of futures and options markets. Today’s Order is a message to traders of the serious consequences that will result from such violations."
CFTC Division of Enforcement staff members responsible for this case are Susan Gradman, Joseph Patrick, Scott Williamson, Rosemary Hollinger, and Richard Wagner. In addition, Division of Market Oversight staff member Sia Papadapoulous assisted with this case.
Monday, August 27, 2012
SEC FILES SUIT ALLEGING COMBINED PONZI AND PYRAMID SCHEME
FROM: SECURITIES AND EXCHANGE COMMISSION
On August 17, 2012, the Securities and Exchange Commission filed suit in the United States District Court for the Western District of North Carolina against Rex Venture Group LLC d/b/a ZeekRewards.com and Paul R. Burks, alleging that the defendants had been operating a combined Ponzi and Pyramid scheme. According to the Complaint, online marketer Paul Burks of Lexington, N.C. and his company Rex Venture Group raised more than $600 million from more than one million Internet customers nationwide and overseas through the website ZeekRewards.com, which they began in January 2011.
The Complaint alleged that defendants solicited investors through the Internet and other means to participate in the ZeekRewards program, a self-described "affiliate advertising division" for the companion website, Zeekler.com, through which the defendants operated penny auctions. The ZeekRewards program offered customers several ways to earn money, two of which – the "Retail Profit Pool" and the "Matrix" – involved purchasing securities in the form of investment contracts. These securities offerings were not registered with the SEC as required under the federal securities laws.
According to the Complaint, defendants promised investors a share of the company’s daily net profits in the form of daily profit share awards. The defendants represented that those daily awards were calculated by dividing up to 50 percent of the company’s "net profits" by the number of "profit points" outstanding among all "qualified affiliates," with those purported calculations consistently resulting in daily dividends averaging approximately 1.5 percent per day, fraudulently conveying the false impression that the company was extremely profitable. In fact, the investor payouts bore no relation to the company’s net profits. Most of ZeekRewards’ total revenues and the "net profits" paid to investors were comprised of funds received from new investors in classic Ponzi scheme fashion.
The Complaint further alleged that the scheme was teetering on collapse with investor funds at risk of dissipation without its emergency enforcement action. Last month, ZeekRewards brought in approximately $162 million while total investor cash payouts were approximately $160 million. If customers had continued increasingly to elect to receive cash payouts rather than reinvest their money to reach higher levels of rewards points, ZeekRewards’ cash outflows would have quickly exceeded its total revenue.
The Commission alleged that the defendants offered and sold securities in violation of the registration and antifraud provisions of the federal securities laws. The Complaint requested permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties against the defendants. In addition, the Commission filed motions asking the Court to freeze Rex Venture’s assets and appoint a receiver over the company and its assets.
Without admitting or denying the Commission’s allegations, and simultaneously with the filing of the Complaint, the defendants consented to permanent injunctions against future violations of the registration and antifraud provisions. Burks also agreed to relinquish his interest in the company and its assets, and to pay a $4 million civil penalty. On Friday afternoon, August 17, 2012, the Court entered the consented-to judgments imposing the foregoing relief, and also ordered an emergency asset freeze and appointed a receiver, both as requested by the Commission. According to the Complaint, ZeekRewards holds approximately $225 million in investor funds in 15 foreign and domestic financial institutions. Those funds have been ordered frozen under the emergency asset freeze granted by the court at the SEC’s request. Additionally, under the Court’s order, the receiver has been tasked to collect, marshal, manage and distribute remaining assets for return to harmed investors.
On August 17, 2012, the Securities and Exchange Commission filed suit in the United States District Court for the Western District of North Carolina against Rex Venture Group LLC d/b/a ZeekRewards.com and Paul R. Burks, alleging that the defendants had been operating a combined Ponzi and Pyramid scheme. According to the Complaint, online marketer Paul Burks of Lexington, N.C. and his company Rex Venture Group raised more than $600 million from more than one million Internet customers nationwide and overseas through the website ZeekRewards.com, which they began in January 2011.
The Complaint alleged that defendants solicited investors through the Internet and other means to participate in the ZeekRewards program, a self-described "affiliate advertising division" for the companion website, Zeekler.com, through which the defendants operated penny auctions. The ZeekRewards program offered customers several ways to earn money, two of which – the "Retail Profit Pool" and the "Matrix" – involved purchasing securities in the form of investment contracts. These securities offerings were not registered with the SEC as required under the federal securities laws.
According to the Complaint, defendants promised investors a share of the company’s daily net profits in the form of daily profit share awards. The defendants represented that those daily awards were calculated by dividing up to 50 percent of the company’s "net profits" by the number of "profit points" outstanding among all "qualified affiliates," with those purported calculations consistently resulting in daily dividends averaging approximately 1.5 percent per day, fraudulently conveying the false impression that the company was extremely profitable. In fact, the investor payouts bore no relation to the company’s net profits. Most of ZeekRewards’ total revenues and the "net profits" paid to investors were comprised of funds received from new investors in classic Ponzi scheme fashion.
The Complaint further alleged that the scheme was teetering on collapse with investor funds at risk of dissipation without its emergency enforcement action. Last month, ZeekRewards brought in approximately $162 million while total investor cash payouts were approximately $160 million. If customers had continued increasingly to elect to receive cash payouts rather than reinvest their money to reach higher levels of rewards points, ZeekRewards’ cash outflows would have quickly exceeded its total revenue.
The Commission alleged that the defendants offered and sold securities in violation of the registration and antifraud provisions of the federal securities laws. The Complaint requested permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties against the defendants. In addition, the Commission filed motions asking the Court to freeze Rex Venture’s assets and appoint a receiver over the company and its assets.
Without admitting or denying the Commission’s allegations, and simultaneously with the filing of the Complaint, the defendants consented to permanent injunctions against future violations of the registration and antifraud provisions. Burks also agreed to relinquish his interest in the company and its assets, and to pay a $4 million civil penalty. On Friday afternoon, August 17, 2012, the Court entered the consented-to judgments imposing the foregoing relief, and also ordered an emergency asset freeze and appointed a receiver, both as requested by the Commission. According to the Complaint, ZeekRewards holds approximately $225 million in investor funds in 15 foreign and domestic financial institutions. Those funds have been ordered frozen under the emergency asset freeze granted by the court at the SEC’s request. Additionally, under the Court’s order, the receiver has been tasked to collect, marshal, manage and distribute remaining assets for return to harmed investors.
Sunday, August 26, 2012
CO. AGREES TO PAY $1.27 MILLION TO RESTORE FUNDS TO PENSION PLANS
FROM: U.S. DEPARTMENT OF LABOR
USI Advisors of Glastonbury, Conn., agrees to pay $1.27 million to 13 defined benefit pension plans following US Labor Department investigation
BOSTON — USI Advisors Inc. has agreed to pay $1,265,608.70 to 13 pension plans to resolve alleged violations of the Employee Retirement Income Security Act.
An investigation by the U.S. Department of Labor's Employee Benefits Security Administration found that the Glastonbury, Conn.-based fiduciary investment adviser made investments in mutual funds on behalf of ERISA-covered defined benefit plan clients and received 12b-1 fees from those funds. A 12b-1 fee is paid by a mutual fund out of fund assets to cover certain expenses. USI Advisors failed to fully disclose the receipt of the 12b-1 fees, and to use those fees for the benefit of the plans either by directly crediting the amounts to the plans or by offsetting other fees the plans would be obligated to pay the company.
"If you, as an investment adviser, are a fiduciary under ERISA with respect to plan investments in mutual funds, you cannot use your fiduciary authority to receive an additional fee or to receive compensation from third parties for your own personal account in transactions involving plan assets. We are very pleased that this settlement addresses the problems we identified with USI's practices and restores funds to the plans and their participants," said Phyllis C. Borzi, assistant secretary of labor for employee benefits security. "We are also very pleased that recently finalized fee disclosure regulations issued by the Labor Department will require fiduciaries like USI to be more transparent about the fees they receive when dealing with their plan clients."
Under the terms of the settlement, USI Advisors has agreed not to provide bundled investment advisory and actuarial services to any ERISA-covered defined benefit plan client without first entering into a written agreement, contract or letter of understanding that specifies the services provided and whether the company or its affiliates will act as a fiduciary to those plans. USI Advisors also will provide to clients a description of all compensation and fees received, in any form, from any source, involving any investment or transaction related to them.
The alleged violations in this case occurred between 2004 and 2010. USI Advisors is a wholly owned subsidiary of USI Consulting Group, a Goldman Sachs Capital Partners Co.
The investigation was conducted by EBSA's Boston Regional Office as part of the agency's Consultant/Adviser Project, which focuses on the receipt of improper or undisclosed compensation by employee benefit plan consultants and other investment advisers. The settlement was reached with the assistance of the Labor Department's Regional Office of the Solicitor in Boston.
USI Advisors of Glastonbury, Conn., agrees to pay $1.27 million to 13 defined benefit pension plans following US Labor Department investigation
BOSTON — USI Advisors Inc. has agreed to pay $1,265,608.70 to 13 pension plans to resolve alleged violations of the Employee Retirement Income Security Act.
An investigation by the U.S. Department of Labor's Employee Benefits Security Administration found that the Glastonbury, Conn.-based fiduciary investment adviser made investments in mutual funds on behalf of ERISA-covered defined benefit plan clients and received 12b-1 fees from those funds. A 12b-1 fee is paid by a mutual fund out of fund assets to cover certain expenses. USI Advisors failed to fully disclose the receipt of the 12b-1 fees, and to use those fees for the benefit of the plans either by directly crediting the amounts to the plans or by offsetting other fees the plans would be obligated to pay the company.
"If you, as an investment adviser, are a fiduciary under ERISA with respect to plan investments in mutual funds, you cannot use your fiduciary authority to receive an additional fee or to receive compensation from third parties for your own personal account in transactions involving plan assets. We are very pleased that this settlement addresses the problems we identified with USI's practices and restores funds to the plans and their participants," said Phyllis C. Borzi, assistant secretary of labor for employee benefits security. "We are also very pleased that recently finalized fee disclosure regulations issued by the Labor Department will require fiduciaries like USI to be more transparent about the fees they receive when dealing with their plan clients."
Under the terms of the settlement, USI Advisors has agreed not to provide bundled investment advisory and actuarial services to any ERISA-covered defined benefit plan client without first entering into a written agreement, contract or letter of understanding that specifies the services provided and whether the company or its affiliates will act as a fiduciary to those plans. USI Advisors also will provide to clients a description of all compensation and fees received, in any form, from any source, involving any investment or transaction related to them.
The alleged violations in this case occurred between 2004 and 2010. USI Advisors is a wholly owned subsidiary of USI Consulting Group, a Goldman Sachs Capital Partners Co.
The investigation was conducted by EBSA's Boston Regional Office as part of the agency's Consultant/Adviser Project, which focuses on the receipt of improper or undisclosed compensation by employee benefit plan consultants and other investment advisers. The settlement was reached with the assistance of the Labor Department's Regional Office of the Solicitor in Boston.
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