SEC and Others Feds Probe Morgan Stanley Over Client Vetting

Morgan Stanley’s Wealth Arm Probed by Multiple Federal Regulators

Multiple federal regulators are probing Morgan Stanley over how it vets clients who are at risk of laundering money through the bank’s sprawling wealth-management division.

The Securities and Exchange Commission, the Office of the Comptroller of the Currency and other Treasury Department offices are involved, according to people familiar with the matter. That is in addition to the Federal Reserve, whose similar probe The Wall Street Journal reported in November. The Fed has told the bank that supervisory action is under consideration.

The main issues regulators are looking at boil down to whether Morgan Stanley has been sufficiently investigating the identities of prospective clients and where their wealth comes from, as well as how it monitors its clients’ financial activity. Some of the probes are focused on the bank’s international clients.

SEC Obtains Final Judgment Against Zachary Horwitz in Connection With a $690 Million Ponzi Scheme

On February 14, 2024, the Securities and Exchange Commission obtained a final judgment against Zachary Horwitz, who the SEC charged with an alleged Ponzi scheme that raised over $690 million.

The complaint alleged that Horwitz falsely claimed to have a track record of successfully selling movie rights to Netflix and HBO when, in fact, he had never sold any movie rights to, or done any business with, HBO or Netflix. Horwitz allegedly showed investors fabricated agreements and emails regarding the purported deals with HBO and Netflix. The complaint alleged that Horwitz promised investors returns in excess of 35%, and for many years paid supposed returns on earlier investments using funds from new investments. The complaint further alleged that Horwitz misappropriated investor funds for his personal use, including the purchase of his multi-million dollar home, trips to Las Vegas, and to pay a celebrity interior designer.

Man Convicted for Insider Trading Scheme

A federal jury in Los Angeles convicted a California man this week for insider trading.

According to court documents and evidence presented at trial, Shahriyar Bolandian, 35, of Brentwood, Los Angeles, participated in an insider trading scheme that netted more than $650,000 in illicit profits. Between 2012 and 2013, Bolandian received material non-public information about two upcoming corporate acquisitions from his childhood friend, who was an investment banking analyst at J.P. Morgan Securities LLC. Bolandian then used the inside information to trade in advance of the public announcements of Integrated Device Technology Inc.’s April 2012 planned acquisition of PLX Technology Inc., and Salesforce.com Inc.’s June 2013 acquisition of ExactTarget Inc. As a result of his illegal trades, Bolandian personally made over $340,000, which he used, among other things, to cover previous trading losses and repay loans to family and friends.

Who controls a company?

A reader, knowing how fond I am of this sort of thing, sent me three articles in Bicycle Retailer and Industry News with the following perfect sequence of headlines:

—“Scott Sports replaces CEO ‘to refresh’ brand” (March 29)

—“Beat Zaugg says he’s still CEO of Scott Sports” (April 1)

—“Police called to Scott Sports headquarters” (April 4)

Honestly that’s all you need to know, but the details are pretty good too….

‘Bitcoin Sign Guy’ Is Auctioning His Bitcoin Sign

A piece of Bitcoin history is going on the block.

Christian Langalis, whose photo-bombing of Janet Yellen became a viral meme, is auctioning the “Buy Bitcoin” sign he held up behind the then-Federal Reserve chair during her televised Congressional testimony in July 2017.

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Asked how much he expected the memento – scribbled at a time when bitcoin (BTC) traded around $2,400 – to fetch, Langalis said, “I try not to think about it.” However, he said that in recent weeks he received a private offer to buy the sign for _______________….