Blotter 2005-04-01Blotter 2005-04-01

Punk'd: The NYSE and the states of New Jersey and Connecticut fined Merrill Lynch a total of $13.5 million for failing to supervise a group of Fort Lee, N.J., brokers that market-timed mutual funds.

During the first four months of 2002, the brokers made over 3,700 short-term trades in multiple accounts held for a Merrill Lynch hedge fund client, Millennium Partners.

Promises, Promises: The SEC has filed “an emergency civil action,” including a temporary restraining order and a freeze on assets, to put an end to a fraudulent investment ring that the SEC says cost investors around $81 million. Based in Palm Beach, Fla., the group of hedge funds, unregistered investment advisors and one broker/dealer raised the money from roughly 250 investors by claiming annualized returns of 125 percent to 150 percent through aggressive trading in growth stocks and the promise of continued success.

Scam artists: Larry Schwartz and Ralph Levy, former heads of First Capital Services, a Boca Raton, Fla.-based investment firm, were sentenced to 17 1/2 years and 19 1/2 years, respectively, on March 15 for fleecing investors out of $33 million in a classic Ponzi scheme. For an investment of $25,000, the men promised a 9.25 percent return. Levy is already serving a 14-year sentence for swindling $130 million out of investors in fraudulent viaticals, the resale of death benefits.