Goldman Sachs sued by ex-managing director who said he was whistleblower

Goldman Sachs Group Inc was sued on Thursday by a former managing director who said the Wall Street bank retaliated against him and fired him after he complained about its dealings with an unidentified, “notorious European businessman.”

Christopher Rollins, now chief executive of BTIG Ltd, a London-based unit of investment banking and trading firm BTIG LLC, is seeking at least $50 million plus punitive damages in his complaint filed with the U.S. District Court in Manhattan.

The 2000 Harvard University graduate accused Goldman and Jim Esposito, promoted this week to global co-head of its trading business, of violating his rights as a whistleblower under the federal Dodd-Frank law, and also accused Goldman of defamation.

“The suit is without merit and we intend to vigorously contest it,” Goldman spokesman Michael DuVally said in an email, responding to a request for comment on behalf of the defendants and several bankers named in the complaint. read more »

SEC Files Charges in Municipal Bond “Flipping” and Kickback Schemes

The Securities and Exchange Commission today charged two firms and 18 individuals in a scheme to improperly divert new issue municipal bonds to broker-dealers at the expense of retail investors.  According to the SEC’s complaint, the defendants – known in the industry as “flippers” – purchased new issue municipal bonds, often by posing as retail investors to gain priority in bond allocations. The defendants then “flipped” the bonds to broker-dealers for a fee. The SEC also charged a municipal underwriter for accepting kickbacks from one of the flippers.

The SEC alleges that from at least 2009 to 2016, Core Performance Management LLC, RMR Asset Management Co., their principals, and certain of their associates, misrepresented their identities to gain priority in new issue municipal bond allocations. Municipal issuers typically require underwriters to give retail investor orders the highest priority when allocating new issue bonds, particularly retail investors within the municipal issuer’s jurisdiction. According to the SEC’s complaint, these defendants used fictitious business names, falsely linked their orders to ZIP codes within the issuer’s jurisdiction, and split orders among dozens of accounts. After acquiring the bonds, the SEC alleges that the defendants quickly resold them to broker-dealers, typically for a fixed, pre-arranged commission, and often sought to hide the flipping activity from issuers and underwriters by manipulating sales tickets.

“More than a dozen of the individuals charged today are alleged to have engaged in plainly deceptive conduct,” said Stephanie Avakian, Co-Director of the Enforcement Division. “We are committed to investigating and charging individuals, especially where, as here, the alleged misconduct by many of these industry professionals harmed retail investors.”  

“By improperly placing retail orders on behalf of broker-dealers, we allege the flippers prevented true retail investors from receiving priority in municipal bond offerings,” said LeeAnn G. Gaunt, Chief of the Division of Enforcement’s Public Finance Abuse Unit.  “We are continuing our investigation to determine whether other market professionals had a role in these improper practices.” read more »

New York sues OxyContin maker Purdue Pharma over opioids

New York state on Tuesday said it has sued Purdue Pharma LP, accusing the OxyContin maker of widespread fraud and deception in the marketing of opioid products, contributing to a nationwide epidemic that has killed thousands.

The state blamed Purdue for running what it called a reckless, decades-long scheme to mislead doctors and patients by overstating the ability of opioids to improve bodily function, while downplaying the risk of addiction.

This enabled privately held Purdue to boost prescriptions and profits, at the cost of lost lives and “devastation” in communities now “awash” with the painkillers, according to the complaint filed in the state supreme court in Suffolk County.

“The opioid epidemic was manufactured by unscrupulous distributors who developed a $400 billion industry pumping human misery into our communities,” Governor Andrew Cuomo said in a statement.

“This lawsuit sends a clear message (to those) who mislead the public to increase their profit margins that we will hold you accountable,” he added.

In a statement, Purdue denied New York’s allegations but said it shared the state’s concerns about the “opioid crisis.”

The Stamford, Connecticut-based company said the U.S. Food and Drug Administration “continues to approve” of scientific and medical information it has provided to doctors.

New York is seeking to impose civil fines, recoup profits and obtain other damages, including for creating an alleged “criminal nuisance.” read more »