Let's see now - large fees for stock loans - no "services" actually provided. Wonder how this will affect the "no such thing as -----" crowd??
U.S. to indict more in stock loan probe - sources
Thu Oct 18, 2007 4:26pm EDT
By Paritosh Bansal
reuters.com
NEW YORK, Oct 18 (Reuters) - More people are expected to be charged in the coming months in a U.S. probe over phony finders' fees and illegal kickbacks in the stock loan industry, according to people familiar with the investigation on Thursday.
Federal prosecutors in Brooklyn, New York already have charged 17 people, including former stock-loan traders at Morgan Stanley (MS.N: Quote, Profile, Research) and Janney Montgomery Scott, with participating in a scheme to skim profits from stock loan transactions. The U.S. Securities and Exchange Commission has also filed civil charges against more than three dozen people.
Stock loans are made as part of short sale or other transactions that require the investor to borrow shares. Finders are third parties who, for a fee, locate a counterparty for stock loans.
A federal grand jury in the Eastern District of New York is conducting an investigation into "the participation of other unindicted individuals in the illegal conduct," according to a court filing by the U.S. attorney's office in Brooklyn earlier this week.
It was not clear how many people are under investigation or where they worked.
The additional indictments are not expected soon, one person familiar with the matter said on condition of anonymity. "It might be a couple of months."
The U.S. attorney's office and the Federal Bureau of Investigation declined to comment, although prosecutors have said previously that the probe was ongoing.
So far, 10 people have pleaded guilty, prosecutors said. They include former stock loan traders at A.G. Edwards and Sons Inc (WB.N: Quote, Profile, Research), Oppenheimer & Co Inc; National Investors Services, also known as TD Waterhouse; Nomura Securities International, a unit of Nomura Holdings (8604.T: Quote, Profile, Research); Van der Moolen Specialists (VDMN.AS: Quote, Profile, Research); and Kellner Dileo & Co Inc.
Some of the people who have pleaded guilty have also entered into cooperation agreements with the government, according to court papers.
Last month, while announcing securities fraud conspiracy and related charges against five of the defendants, prosecutors said traders at several large brokerage firms funneled millions of dollars in fraudulent finders' fees to co-conspirators, often when no services had been provided. In exchange, they received cash bribes or payments to the traders' relatives, prosecutors said.
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