Trader Jett Asked to Pay Up, Again
Joe Jett, the young bond trader at Kidder Peabody, who was the central figure in one of Wall Street's most high-profile trading scandals, has been told to pay up — to the tune of $8.4 million. Jett, who now runs Jett Capital Management and a hedge fund called Cambridge Matrix Funds, once was in charge of a portfolio of government bonds worth more than $30 billion while at Kidder Peabody. He was fired in 1994 amid allegations that he committed securities fraud, and violated books and records rules when he exploited an anomaly in Kidder's automated trading records to book more than $300 million in fake profits over two years. The result was a loss of $75 million to the firm, which ultimately sank it. He was cleared of the securities fraud charges (though the judge acknowledged he had “fraudulent intent”), but was sanctioned for books and records violations. Jett, who is black, wrote a book about his experience called Black and White on Wall Street: The Untold Story of the Man Wrongly Accused of Bringing Down Kidder Peabody. In the end, Jett was barred from the brokerage industry, and ordered by the SEC to pay a $200,000 civil penalty, and fork over more than $8 million in bonuses he received.
That was in 1998. In 2006, the SEC brought an action to enforce its own order against Jett. And this September, a U.S. District Court for the Southern District of New York issued a judgment enforcing the order — meaning Jett finally has to pay up.
Senior Fraud in Paradise
The SEC recently announced a securities fraud filing against Mark Teruya, a Honolulu-based investment adviser representative and his firm, Senior Resources of Hawaii. According to the complaint, since at least 2004 and until as recently as August, Teruya induced clients who attended his seminars to sign multiple fill-in-the blank forms during one on one “consultations” they received for being attendees. The complaint alleges Teruya then used the forms to sell the individuals' existing securities without their knowledge or authorization. (Currently, the SEC and FINRA, as well as state regulators, are cracking down on “free lunch” seminars that take advantage of senior citizens.)
The complaint goes on to allege that Teruya, a licensed insurance agent, then used the proceeds of the sales of their securities to buy equity-indexed annuities-raking in an estimated $2 million in commissions. According to the complaint, each month the defendants used eye-catching advertisements (“7 Seldom Heard, Significant Financial Opportunities [That] May be Available to Many Retirees,”) in local newspapers, and through direct mail invitations to lure 75 seniors each month to the lunch seminars.