Defense counsel for disgruntled former hedge-fund manager and commodities trader Vincent P. McCrudden will argue before a judge that he should be allowed to show evidence of financial conspiracy theories at his trial next week. McCrudden has been charged with “transmission of threats to injure” after sending vicious threats to 47 current and former officials involved in financial regulation.The defendant allegedly sent menacing emails and published “execution lists” on his website, targeting prominent figures like the SEC’s Mary Schapiro and the CFTC’s Gary Gensler.

McCrudden’s lawyer, Bruce A. Barket, says that he will contextualize his client’s rage with evidence that his statements are part of a broader mainstream political debate. Government lawyers, however, have moved to preclude evidence for this argument, insisting that “the defendant offers no logical connection between his threats to kill more than 40 people and the vague beliefs of unidentified members of an undefined group.”

The source of McCrudden’s most recent outburst was a 2010 enforcement action by the CFTC, claiming that the defendant was operating as an unlicensed commodity pool operator (“CPO”). The unregistered CPO fired back by posting an execution list on his website and and allegedly writing an email to Dan Driscoll of the NFA informing him that hitmen were on the way: “It wasn’t ever a question of ‘if’ I was going to kill you, it was just a question of when.” The email was signed “Gary Gensler”, but originated from Singapore, where McCrudden was living at the time.

The defendant has a checkered regulatory history. In 2000 he was accused of masking shortfalls at his hedge fund by doctoring account statements, and he was tried (but acquitted) for mail-fraud in 2003. In 2005 he was denied NFA registration because of his criminal past, and in 2009 FINRA found that he had convinced a hedge fund where he worked to report he left voluntarily when he was actually fired.

Read more about the McCrudden case.
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CFTC LAW | Forex, Futures and Derivatives Regulatory News - Forex, Futures, and Commodities News and Analysis. Press release, rule summaries, and enforcement actions from the CFTC, NFA, SEC, FSA, and other agencies from around the world.

As part of an on-going effort to raise the public IQ on financial products, the SEC’s Office of Investor Education and Advocacy and FINRA jointly issued an investor alert called “Structured Notes with Principal Protection: Note the Terms of Your Investment” to educate potential investors of the risks associated with this particular. The retail market for structured notes has grown tremendously, and though they are often advertised as safe, they are by no means risk free.

A structured note generally combines a zero-coupon bond (a bond which pays no interest until maturity) with a related option or derivative. The asset, index, or benchmark underlying that derivative can vary widely, and the investor is liable the the change the value of that asset. However, in may instances their upside exposure (i.e. potential for profit) is capped.

Furthermore, though principal protected structured notes usually will bring the investor some return, the level of protection varies. Some guarantee is less than ten percent–and even a higher guarantee is only worth as much as the company making it.

Says the Director of the SEC’s Office of Investor Education and Advocacy: “Structured notes with principal protection contain risks that may surprise many investors and can have payout structures that are difficult to understand. This alert is a ‘must read’ for investors considering these products, especially those with the mistaken belief that these investments offer complete downside protection.”

Furthermore, the higher the potential yield, the more complex and potentially hazardous the investment. As FINRA Senior VP for Investor Education John Gannon notes, “The current low interest rate environment might make the potentially higher yields offered by structured notes with principal protection enticing to investors. But retail investors should realize that chasing a higher yield by investing in these products could mean winding up with an expensive, risky, complex and illiquid investment.”

Read more about this SEC / FINRA investor alert.

photo credit: visualpanic

CFTC LAW | Forex, Futures and Derivatives Regulatory News - Forex, Futures, and Commodities News and Analysis. Press release, rule summaries, and enforcement actions from the CFTC, NFA, SEC, FSA, and other agencies from around the world.

U.K.’s Financial Services Authority (FSA) and the U.S.’s Financial Industry Regulatory Authority (FINRA) enter into a Memorandum of Understanding (MOU) today whereby the two countries agree to facilitate exchange information on firms and individuals under their supervision, support collaboration on investigations and enforcement matters, and allow further sharing of regulatory techniques including approaches to risk-based supervision of firms.

FSA’s managing director of supervision, Jon Pain, and FINRA’s  Chairman and CEO, Richard Ketchum, signed the MOU.

(Source: http://www.fsa.gov.uk/pages/Library/Communication/PR/2010/144.shtml)

CFTC LAW | Forex, Futures and Derivatives Regulatory News - Forex, Futures, and Commodities News and Analysis. Press release, rule summaries, and enforcement actions from the CFTC, NFA, SEC, FSA, and other agencies from around the world.

Under the new cooperation agreement, FINRA and IIROC will share information on compliance and enforcement related matters, and work together on issues related to firm oversight and examinations.

CFTC LAW | Forex, Futures and Derivatives Regulatory News - Forex, Futures, and Commodities News and Analysis. Press release, rule summaries, and enforcement actions from the CFTC, NFA, SEC, FSA, and other agencies from around the world.

FINRA and IIROC remind firms of their sales practice obligations with regards to leveraged and inverse ETFs. ETFs that are designed to achieve investment objectives on a daily basis may not be suitable for many investors, and should not be marketed as if they were designed to positively or negatively track an underlying index or benchmark over a longer period of time.

CFTC LAW | Forex, Futures and Derivatives Regulatory News - Forex, Futures, and Commodities News and Analysis. Press release, rule summaries, and enforcement actions from the CFTC, NFA, SEC, FSA, and other agencies from around the world.

FINRA’s new Office of the Whistleblower will process high risk tips. The agency’s Front End Cause Unit will still handle the thousands of routine regulatory tips and customer complaints it recieves each year.

CFTC LAW | Forex, Futures and Derivatives Regulatory News - Forex, Futures, and Commodities News and Analysis. Press release, rule summaries, and enforcement actions from the CFTC, NFA, SEC, FSA, and other agencies from around the world.