Desperate to Work for Merrill, Drive a Ferrari
Steven Mandala, 29, was charged with grand larceny, money laundering, criminal possession of a forged instrument, falsifying business records and identity theft after lying about his qualifications to get a job as a broker at Merrill Lynch.
According to the Manhattan District Attorney's office, Mandala earned $100,000 as a former stockbroker with the brokerage, the Maxim Group. But when he applied to work at Merrill Lynch, he falsely told the firm he was a partner at Maxim managing $300 million in assets and producing $1.5 million. Mandala allegedly provided forged pay stubs and tax returns to back up the lies, and Merrill Lynch hired him in April 2009, giving him a $780,000 forgivable loan. With the loan Mandala bought a $245,000 Ferrari, which prosecutors asked be included in the bail package.
Mandala pleaded not guilty, and according to reports, his lawyer Franklin A. Rothman says his client may have inflated his credentials when applying to Merrill Lynch, but not to the extent that prosecutors contend. In a civil suit, a court has frozen $300,000 of Mr. Mandala's assets. He was allegedly willing to sell or turn over the 2006 Ferrari to Merrill Lynch to settle the case. Judge Daniel P. FitzGerald of State Supreme Court in Manhattan set Mandala's bail at $500,000, telling Mandala, “You get to keep the Ferrari.”
State Street Heat
The Securities and Exchange Commission charged Boston-based State Street Bank and Trust Company with misleading its investors about their exposure to subprime investments while selectively disclosing more complete information to specific investors.
According to the SEC's complaint filed in federal court in Boston and a related administrative order issued by the Commission, State Street established its Limited Duration Bond Fund in 2002 and marketed it as an “enhanced cash” investment strategy that was an alternative to a money market fund for certain types of investors. By 2007, the fund was almost entirely invested in subprime residential mortgage-backed securities and derivatives, but State Street failed to disclose the extent of the fund's concentration in subprime investments to most investors. At the same time, State Street recommended certain investors redeem their investments in the fund and related funds. These other investors included clients of State Street's internal advisory groups, including the pension plan for State Street's parent company.
State Street agreed to settle the SEC's charges by paying more than $300 million to be distributed to investors who lost money during the subprime market meltdown in 2007. This payment was in addition to nearly $350 million State Street previously agreed to pay to investors in State Street funds to settle private claims.