On June 22, the U.S. Securities and Exchange Commission filed securities fraud charges against a prominent California investment adviser, who allegedly oversaw three funds that invested all of their assets (nearly $1 billion) with Madoff, and a NY brokerage firm Cohmad Securities Corp. that are said to be controlled by Bernard Madoff. They are accused of funneling billions of dollars from investors into Madoff’s Ponzi scheme.
It is alleged by the SEC that, while channeling billions of dollars in investor funds to Madoff scheme, the associates together collected several hundred million dollars in fees from him. These money are said to have played great role in the success of Madoff’s $50 billion fraud scheme, and the defendants are said to get nearly all of its revenue from introducing investors into Madoff’s operations.
The SEC lawsuit widened the circle of players around Madoff who have been charged by the government in what might be one of the biggest investment frauds in history. There are some British Virgin Islands-registered companies and “feeder funds” of Madoff’s company Investment Securities LLC involved in the large-scale process. Concerning the current case, the federal regulator is seeking injunctions against the defendants, and unspecified civil fines and restitution of allegedly ill-gotten profits.
The Russian Bailiff Service prepared documents to auction off a 26.6% stake in Russian mobile operator VimpelCom, which is the subject of a long dispute between its shareholders - Norway’s telecommunications company Telenor and British Virgin Islands-based Farimex. The Norwegian company also claimed that Farimex is linked to Alfa Group - another major shareholder of VimpelCom, and in this case it becomes dispute between Telenor and Alfa Group.
The 26.6% stake currently auctioned was blocked under the court order in March, as part of the dispute. This was done when BVI company filed a lawsuit against Telenor, after which Russian Arbitration Court ordered USD 1.728 billion compensation to be paid by Norwegians, and 26.6 % of its stake in VimpelCom to be frozen. On June 3, Moscow court rejected Telenor’s appeal to suspend the order.
BVI-registered freight-logistics company UTi Worldwide reported its financial results for the first quarter of the year 2009, which appeared to be even worse that it had been expected by Wall Street. After announcing the results, the stock of the company fell down 5% - much more than average.
For the period ended April 30, 2009, the BVI company named the earning figure of US$9.8 mln on revenue of US$768.4 mln - much lower that market analysts’ expectations of nearly US$938 mln; and both these figures were much lower than a year ago - 27% and 35% respectively. Among the reasons for so dramatic fall of revenues of UTi Worldwide, there is the large slowdown in worldwide shipping volumes. The company has already reported losses for the period ended January 31, 2009, and now the downfall continued.
The company also has cut expenses during this period to about US$292 mln - 20% if compared to the same last year period.
The BVI company said its earnings figures included restructuring costs and the sale of real estate in South Africa. Also, the company blamed currency fluctuations of its losses.
CEO of UTi Worldwide, Eric Kirchner, said in a statement that he wants to heighten company’s sales efforts to improve revenue growth, but did not specify what kind of measures these could be.
Eastern Property Holdings Limited, a BVI-registered company engaged in real estate development and listed in the Real Estate Companies segment of Swiss Exchange, has to pay a fine of CHF 30,000, pronounced by the sanction commission of the SIX Swiss Exchange Ltd.
The BVI company is said to have violated the provisions governing ad hoc publicity in the publication of its 2008 semi-annual report, and have failed to fulfill its reporting requirements in a number of cases. Concerning the 2008 semi-annual report and press release related to it, the company published it during continuous trading hours, without sending notification about it to the SIX Exchange Regulation, while it is presecribed to inform of the publication 90 minutes before the public release.
The SIX Swiss Exchange Regulation also stated that Eastern Property violated its reporting requirements and did not provide the important details on the company, like its postal address and web link to enable to see ad hoc publicity notifications. The specific reporting requirements violated by the BVI company help investors to obtain information necessary of assessing the characteristics of a given security and the quality of the issuer, and are a means to ensure a properly functioning market and orderly securities trade.
The Sanction Commission took into consideration all aspects of this matter with the BVI company, as well as the fact that in 2006 it had been already fined for violating the provisions concerning the disclosure of management transactions, and imposed the CHF 30,000 fine against the company and the costs associated with the proceedings.