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Trustee faulted for buying stock; former SEC chairman's purchase of 3,000 shares of bankrupt Bennett Funding unit raises eyebrows

Article Abstract:

Former SEC chairman Richard C. Breeden's purchase of stock in resort and time-sharing company Equivest Finance Inc. has raised eyebrows. Breeden had been the bankruptcy trustee of Bennett Funding Group Inc., which regulators claimed was a big pyramid scheme, and Equivest was a Bennett controlled entity. Very shortly after his Equivest purchase, Breeden requested the court to discharge of Equivest's $25mil debt to Bennett Funding by issuing Bennett Funding new Equivest stock. Breeden had failed to inform the court of his Equivest purchase, and this caused much controversy with the creditors.

Investigations, Breeden, Richard C., Equivest Finance Inc., EQUI

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'Lone traders' wreckage stems from lax controls; lawyers for Wall Street firms must look at how their clients monitor risks their 'stars' take. Profit is a 'red flag.'

Article Abstract:

Observers including SEC officials feel that much of the high-profile bond and securities fraud of the mid-1990s could have been avoided had better internal controls been in place at the affected firms. The scandals at Sumitomo Bank, Daiwa Bank and Barings PLC had in common an absence of an independent check on the traders' activity or of computer-generated profits. In 1996, the SEC added internal controls to the list of required items in the periodic examination of broker-dealers.

Management, Investment banks, Prevention, Securities fraud, Commodities industry

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