Broker Behind Bars:
Joseph Kane Jr., a 50-year-old former Dean Witter broker was sentenced to 40 months in prison and ordered to pay restitution by U.S. District Judge Colleen McMahon in White Plains, N.Y., for defrauding eight private clients and two charitable institutions out of more than $2 million. It is not clear whether Kane, who left Dean Witter in 1995 and worked for Laidlaw Equities for some time after, was even working for a firm from 1998 to 2003, the period during which he told his victims that he was investing their money but was instead using it for personal reasons and to pay off other victims.
No Millions for Whistle-Blower:
Peter Scannell, the former Putnam employee who blew open the market-timing scandal at Putnam Investments in 2003, was denied a rich $15 million reward by a judge on April 27.
Scannell approached Massachusetts Attorney General Tom Reilly in the spring of 2003 about wrongdoing at Putnam, his employer at the time. He says he was referred to the SEC, but when no action was taken he went to William Galvin, Secretary of the Commonwealth. Galvin's subsequent pursuit of information and investigation eventually resulted in the firm admitting to market-timing activity in its funds and $200 million in fines and restitution. Robert Autieri, Scannell's attorney, says his client will appeal and is now going to seek an even larger amount of money. “It's a long way from being over,” said Autieri, in a statement.
NASD Boots Violation Riddled Firm:
NASD expelled Dallas-based brokerage firm Salomon Grey Financial Corporation from the securities industry, and barred its owner and former president, Kyle Browning Rowe, for a laundry list of violations.
NASD found that from January 2000 to March 2005, Salomon Grey's supervisory failures included: allowing reps to hire their own branch managers and allowing reps with a history of discipline and regulatory actions to serve as supervisors. In addition, the firm's anti-money laundering program wasn't approved in writing by senior management, the firm had no ongoing training for appropriate personnel or independent testing and had inadequate policies for detecting and reporting suspicious activity. The firm's retention and supervision of written and electronic communication was also found to be completely lacking. Salomon Grey neither admitted nor denied the allegations. “In this unusual case, the occurrence of all these violations in a single firm calls for the most severe action: expulsion,” said James Shorris, NASD head of enforcement.