Brokerage Firms

While stock broker fraud is always a despicable crime to the victims of the fraud, the case of Joshua Gould's broker misconduct seems infinitely worse for the close relationship between victim and perpetrator, as well as the vulnerable nature of other investors. Gould, a former independent broker for Woodbury Financial Services in University City, defrauded friends, family, and investors, including the elderly, widows, and religious organizations.

Hedging and “Failure to Hedge” Claims

Not even Gould's own mother was safe, and she lost around $500,000 to her son, the bulk of her inheritance. All in all, more than 25 people were swindled out of more than $5 million. Gould spent some of the money on charitable donations to boost his reputation while at the same time spending it on strippers and entertaining them at St. Louis hotel parties. In addition, he paid the rent of at least one stripper. Gould also paid off personal debt, renovated his home, started several businesses, and facilitated a ponzi scheme.

Once the theft was discovered, Gould confessed and, according to his lawyer, has cooperated and attempted to remedy the losses of his victims. During his trial, he expressed remorse for his actions and disdain for himself.

JPMorgan is in the financial spotlight once again — this time with its second major federal settlement within a month. Whereas last month’s settlement was in connection with broker misconduct that affected investors, the more recent developments involved state governments and government organizations. In its most recent settlement, JPMorgan Chase agreed to pay $211 million for bid-rigging of municipal bond transactions. Thirty-one state governments were affected from 1997-2005 because of at least 93 tainted transactions. The $211 million settlement will be split between the Internal Revenue Service, a group of state attorneys general and the Office of the Controller of the Currency. A settlement also was reached with New York’s Federal Reserve Bank.

JPMorgan’s $211 Million Settlement Close on the Heels of $154 Million Settlement

Secret deals allowed the bank inside information about competitors’ bids and were aided by a minimum of 11 bidding agents. JPMorgan Chase maintains that any illegal actions were concealed from management as a whole and were conducted against the firm’s policies. The illegal conduct was, according to JPMorgan, made by former employees. Furthermore, the division in which these employees used to work has been shut down and the firm has increased their ethics training for staff and implemented an improved compliance program. This settlement will undoubtedly send a message to the financial world of the repercussions of tampering with the fairness of the bond market.

In addition to the most recent settlement, last month JPMorgan settled with the SEC for $154 million, paid in response to allegations that it mislead buyers of complex mortgage investments. In connection with this settlement, James Hertz, a former JPMorgan executive, pleaded guilty to criminal charges. Hertz is one of 18 financial services executives to be brought up on criminal charges, nine of which have pleaded guilty. In this case, The New York Times says “Investors harmed in the JPMorgan transaction, known as Squared CDO 2007-I, will receive all their money back,” a happy ending in financially-turbulent times for many investors.

Articles Posted in Brokerage Firms

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