According to the Securities and Exchange Commission, Brocade Communications will pay a $7 million penalty to settle charges that they performed fraudulent stock option backdating. Brocade agreed to pay to settle the charges without admitting guilt. The SEC alleges that Brocade’s former chief executive and other former executives backdated stock options, misstated compensation expenses, and hid the misconduct by creating false documents.
Brocade to pay $7 mln to settle stock option fraud

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John Whittier, the founder of now-defunct hedge fund Wood River Capital Management, pleaded guilty to defrauding investors of $88 million. Whittier pleaded guilty to securities fraud and to having not filed stock holding disclosures with the U.S. Securities and Exchange Commission. Whittier could have spent more than 20 years in jail, but likely will only spend between 15 and 19 years in prison. Whittier also will lose $5.5 million.
Hedge Fund Manager Pleads Guilty to Fraud

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Lorene Schaefer, a female attorney at General Electric Co., is filing a lawsuit against GE for underpaying and underpromoting its female employees. 13 GE officers and directors also are named in the lawsuit, including Chairman and Chief Executive Jeff Immelt. Schaefer’s suit is hoping for class-action status and seeks $500 million on behalf of 1,500 to 1,700 female GE employees.
GE Gets Sued by Employee for Gender Discrimination

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David Colby, WellPoint Inc.’s chief financial officer, has been released from the company for having violated the health insurer’s code of conduct. However, Colby’s policy violations were not related to the company’s business and were not illegal. Because of the “non-business nature” of the actions, WellPoint did not provide any additional information. Joe Francis, a Bank of America analyst, said of Colby’s departure: “The market will be upset initially about Mr. Colby’s departure, because he is such a fixture in the industry, but we expect it will soon forget all this.”
WellPoint CFO Out Amid Conduct Violations

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U.S. prosecutors charged four current and past Ernst & Young accountants with promoting fraudulent tax shelters. Prosecutors did not bring criminal charges against the accounting firm; however, the firm has been under criminal investigation since at least mid-2004.
Tax-Fraud Charges for 4 From Ernst & Young

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China’s Securities Regulatory Commission plans to classify securities trading accounts as “restricted” in suspected market manipulation and insider trading cases. Accounts of this classification will be suspended for 15 days, which then can be renewed for another 15 days, depending on the regulator’s approval. China’s stock market has been the focus of a major insider trading investigation earlier in the month.
China to Restrict Securities Accounts in Suspected Stock Trading Fraud Cases

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Joya Williams, a former secretary for Coca-Cola, was convicted of conspiracy to steal trade secrets from Coca-Cola and has been sentenced to eight years in federal prison. Williams and Ibrahim Dimson plotted to sell Coca-Cola’s recipe secrets to Pepsi for at least $1.5 million. U.S. District Judge J. Own Forrester said that “this is the kind of offense that cannot be tolerated in out society.”
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Mark Kaiser, the former chief marketing officer of one of the largest food products distributors in the country, was sentenced to seven years in prison for his role in a widespread securities fraud. He also was fined $50,000. Kaiser said that he was “never fueled or driven by greed in anything he has ever done.”
Seven Years for Former US Foodservice Exec in Securities Fraud

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Nature’s Sunshine Products’ motion to dismiss a class action lawsuit has been denied. U.S. District Judge Ted Stewart decided on Monday that there was adequate evidence that the company might be guilty of allegations of securities fraud, cover-up, and insider trading. Stewart ruled against Nature’s Sunshine on all counts, except he did decide to limit the scope of claims to those occurring on or after March 15, 2005.
Securities Fraud Class-Action Suit Meets Legal Test

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The North American Securities Administrators Association, NASAA, has compiled a list of the top ten way that investors get involved in investment scams. It is important for all investors to be aware of the variety of scams that are out there. Bob Webster, a spokesman for NASAA, says “no one is immune to these schemes. We put out this list every year to try to keep one step ahead of the con artists. We want people to remain vigilant.”
Before Choosing an Investment, Check Securities Fraud Watch List

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