DOJ, SEC Charge Quant at Investment Management Firm with Securities Fraud

Quant At Investment Management Firm Charged With Securities And Wire Fraud

As alleged in the Indictment:

WU was employed as a modeler at the Firm, a quantitative investment management firm in Manhattan. In his role, WU designed models for the Firm’s investment vehicles and related funds, using data to build price forecasting models that generated forecasts on stocks and other financial instruments.

Between 2021 and 2023, WU deceived the Firm by manipulating trading models he created in order to increase his own compensation. Specifically, WU designed models, which were approved and released for use, and then covertly made post-release changes to the models’ parameters, which significantly altered the models’ behavior. WU also secretly tested his models on data sets that misrepresented how the models would perform once approved and released. As a result of these changes and misrepresentations, the Firm rewarded WU with an inflated year-end compensation of approximately $23 million. WU then used a portion of his compensation to purchase a multimillion-dollar apartment in Manhattan. When the Firm uncovered WU’s scheme, WU made additional unauthorized changes to the models’ parameters in an attempt to conceal his prior tampering. The Firm fired WU in 2024.

US SEC to dismiss case against former Nikola CEO

The U.S. Securities and Exchange Commission moved on Thursday to dismiss its case againt Trevor Milton, the founder and former CEO of Nikola, a company that sought to make electric and hydrogen-powered trucks.

In the case, filed in 2021, U.S. prosecutors accused Milton of falsely claiming that Nikola had built an electric- and hydrogen-powered pickup from scratch and developed batteries in-house while knowingly sourcing them externally. […]

Nikola’s stock plummeted after Hindenburg Research, a former high-profile short-seller, targeted the company in 2020, accusing it of deceiving investors about its technological advancements.

It challenged a video Nikola produced showing its electric truck cruising at high speed, when in fact the vehicle was rolled down a hill.

SEC’s Peirce supportive of adding innovation to agency mission

SEC Commissioner Hester Peirce is supportive of adding innovation to the agency’s mission, she said Sept. 11 at the Cato Institute’s annual conference in Washington.

Jennifer Schulp, director of financial regulation studies at the Cato Institute’s Center for Monetary and Financial Alternatives, noted there have been some proposals in Congress to add innovation to the SEC’s mission, asking Peirce, “Is that something that is needed in order to allow the agency to support innovative changes in the marketplace?”

“I think it could help,” Peirce responded, contending “it is very natural for regulators to say no to people who come in and want to do things in new ways.” […]

A group of Senate Banking Committee Republicans finalized a draft of the legislation last week, as reported by Politico, which includes a directive for “modernization” of the SEC’s mission. Specifically, that means adding innovation to the list of things the agency should work to promote, alongside efficiency, competition and capital formation.

West brothers sentenced for insider trading and forced to pay £280,000

Matthew West has been sentenced to 15 months’ imprisonment, suspended for 2 years, along with an unpaid work requirement of 200 hours. Nikolas West has been sentenced to 6 months’ imprisonment, suspended for 12 months.

The brothers were both seasoned traders with over 20 years of experience within the UK and overseas, with an extensive network of contacts across the investment community.

The FCA uncovered their misconduct through its market surveillance tools used to detect suspicious behaviour. A subsequent investigation found that within minutes of receiving confidential information, the brothers had coordinated and executed trades, making a profit of £44,164.36.

However, the court has ordered them to pay back more than £280,000 – reflecting the full value of the shares traded through their criminal conduct, not just the profit they made.

The Hot Investment With a 3,000% Return? Pokémon Cards

Pokémon cards, which pay no dividends and aren’t subject to financial regulation, have seen a roughly 3,821% monthly cumulative return since 2004, according to an index by analytics firm Card Ladder tracking trading-card values through August. That trounces the S&P 500’s 483% jump over the same period. Meta Platforms, one of the Magnificent Seven, has climbed around 1,844% since the company went public in 2012. […]

While financial advisers generally caution against betting retirement savings on fictional battling critters, the cards caught fire among amateur investors during the pandemic. As some investors banded together to spark the GameStop meme stock mania, a more fringe group of traders, also stuck at home and armed with cash from government stimulus, began scooping up Pokémon cards.