Rulebook

The Blotter Report: It's Never Over

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Don’t Mess with the Family

A former Merrill Lynch advisor learned this lesson the hard way when a Philadelphia district judge sentenced him to over a year for attempting to swindle members of the Scripps Media family out of $3.6 million.

Richard Gleeson colluded with Michael Scripps to embezzle millions from Scripps mother and uncle, according to prosecutors. Gleeson—who previously pled guilty to wire fraud—helped Scripps obtain fraudulent authorizations and transfer his uncle’s and mother’s money to his own account at Merrill Lynch.

Gleeson, a self-described gambling addict, netted only about $300,000 from the scheme. Meanwhile Scripps allegedly gained $3.6 million—which he spent to maintain his playboy lifestyle, purchasing high-end jewelry, cars, luxury travel and houses according to the U.S. Attorney’s office.

 

Going After Gupta…Again

Rajat K. Gupta—convicted of insider trading in June 2012—won’t get another chance to pass along confidential information. The SEC stripped the former Goldman Sachs board member of his ability to act as a company’s officer or director and slapped himwith a $13.9 million fine on Wednesday for his alleged role in Raj Rajaratnam’s massive insider trading ring.

Gupta—who is out on bail pending an appeal of his conviction—allegedly tipped off Rajaratnam to Berkshire Hathaway Inc.’s $5 billion investment in Goldman Sachs, as well as nonpublic details about the firms financials.

In addition to the fine, the regulator also barred Gupta from associating with any broker, dealer or investment advisor.

 

Mounting Legal Problems

Last time we checked on the former Wells Fargo advisor Adorean Boleancu, FINRA had sent him packing for his alleged role in swindling an elderly widow through a series of forged checks.

Now the former advisor has been indicted by a California federal grand jury for allegedly defrauding that same widow of $1.8 million, according court documents unsealed Wednesday.

Boleancu's lawyer, Ethan Balogh—who has called the allegations “false”—identified the victim as Donna Treadwell, according to Reuters.  Boleancu first interacted with the widow while with Morgan Stanley in 2007, opening a brokerage account and establishing a home equity line of credit. The relationship continued after Boleancu moved to Wells Fargo in 2008. Neither Wells Fargo nor Morgan Stanley are charged in the case.

 

Running Short 

National Securities Corp. had its wrist slapped Monday when FINRA fined the brokerage $40,000 for running its business while net capital deficient.

Starting in October 2009, NSC periodically fell below necessary net capital requirements because it failed to properly and timely input entries in the general ledger such as expenses, receivables, payroll, commissions and clearing fees according to FINRA.

These late entries—some of which were entered as late as 232 days—led to inaccuracies in the firm’s net capital notifications and FOCUS reports. As a result, NSC's excess net capital ranged from about $78,000 to $3.5 million sporadically between October 2009 and September 2010. 

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Compliance, regulatory and legal issues, with a fair amount of cops and robbers for fun.

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