Retirement Funds Among Targets of Securities Fraud

Brokers serving retirement plans and other institutional investors were accused of routing orders for equities to an offshore affiliate in Bermuda that “executed them on a riskless basis and opportunistically boosted profits by adding a mark-up or mark-down on the price of a security.”

The former head of ConvergEx Group’s transition management business has agreed to be barred from the securities industry and has consented to a judgment ordering him to pay more than $975,000 to settle fraud charges the Securities and Exchange Commission (SEC) filed in 2016.

The SEC’s complaint alleged that Khaled Bassily “participated in a fraudulent scheme to hide from charities, religious organizations, and retirement funds that they paid substantially higher amounts than disclosed for the execution of trading orders.”

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Without admitting or denying the SEC’s allegations, Bassily has consented to the entry of a final judgment that ordered him to pay a total of $988,414 in disgorgement, prejudgment interest and a civil penalty. The order also permanently enjoined him from violating Sections 10(b) and 15(c)(1) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933. Bassily further consented to the entry of an SEC order that barred him from the securities industry. Final judgment was entered on December 21, 2017, and the industry bar was imposed January 3, 2018.

The SEC’s successful charges here follow those announced in August 2014 against Anthony G. Blumberg, a former executive of a ConvergEx Group subsidiary, who remains involved in a federal action currently pending in Newark, New Jersey, and charges announced in December 2013 against three ConvergEx Group subsidiaries that agreed to pay more than $107 million and admitted wrongdoing to settle related charges. The SEC’s complaint filed against Blumberg says one university customer paid about $93,000 in disclosed commissions and about $543,000 in undisclosed trading profits. In another case, $1.6 million in fees allegedly went undetected. 

According to the SEC’s order instituting settled administrative proceedings, the ConvergEx brokerage firms represented to customers that they charged explicit commissions to execute equity trading orders. “However, they routinely routed orders, including orders for U.S. equities, to an offshore affiliate in Bermuda that executed them on a riskless basis and opportunistically boosted their profits by adding a mark-up or mark-down on the price of a security,” SEC charged. “The offshore affiliate often consulted with the client-facing brokers to assess the risk of customer detection before taking the extra money on top of the disclosed commissions. The mark-ups and mark-downs caused many customers to unknowingly pay more than double what they understood they were paying to have their orders executed.”

According to the SEC, customers affected by the wrongdoing included funds managed on behalf of charities, religious organizations, retirement plans, universities, and governments.

“The ConvergEx brokerages believed they would lose business if customers became aware of their mark-ups and mark-downs, so they engaged in specific acts to hide the scheme,” SEC reported. “Typically, they only took mark-ups and mark-downs on top of the disclosed commissions in situations where they believed that the risk of detection was low. They also made false and misleading statements to customers who inquired about their overall compensation, even providing certain customers with falsified trading data to cover up the fact that the offshore affiliate had taken mark-ups or mark-downs on their orders.  The practice of executing orders through the offshore affiliate was not adequately disclosed to customers and was inconsistent with ConvergEx’s advertised conflict-free agency model.  Using this practice, the ConvergEx brokers failed to seek best execution for their customers’ orders.”

In the end, according to the SEC, the subsidiary firms agreed to pay disgorgement and prejudgment interest totaling $87,424,429 and a penalty of $20 million. In determining the penalty amount, the SEC considered ConvergEx’s “substantial cooperation after the agency commenced its investigation.” The SEC also considered the company’s significant remedial measures, including the closure of the Bermuda affiliate and the discharge of a number of employees in management and other positions as it ended the practice of routing U.S. securities offshore for order handling.

SURVEY SAYS: Productivity at Work

Some folks are just not morning people, and it takes them a while to get going at work, while others may start the work day off with a bang and slow down as the work day goes on.

Last week, I asked NewsDash readers, “Which period of the day are you most productive at work, and how many hours of sleep do you need to feel rested and productive for the work day?”

 

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The majority of responding readers (53.8%) work in a plan sponsor role, while 14.1% are advisers/consultants and 32% are TPAs/recordkeepers/investment managers.

 

Most appear to be morning people as 25.6% cited early morning and 23.2% cited mid-morning as the period of the day they are MOST productive at work. Mid-day and late-afternoon were the least productive periods among respondents, with each chosen by 3.7%. Late afternoon was selected by 14.6% of responding readers, while 17.1% said they were good all morning, and good all afternoon and good all day were chosen by 6.1% each.

 

The majority of readers (86.4%) reported they need six to eight hours of sleep to feel rested and productive for the work day, while 3.7% selected less than six hours, and 9.9% chose more than eight hours.

 

Among respondents who chose to leave verbatim comments, a few explained why they are most productive at certain times of the day. Quite a few said they were most productive after hours. Several noted that sleep is not the only thing that affects work productivity, with one charming reader noting, “Productivity is all about staying focused on the task at hand. It is these pesky emails with tempting headlines and surveys that ruin my efficiency. :)” Editor’s Choice goes to the reader who said: “We all need to understand that everyone, at least occasionally, goes thru ‘who cares’ moments.”

 

Thanks to all who participated in the survey!

 

Verbatim

If I could sleep – given the things I think I haven’t done or might have done with an element of risk involved -I would let you know how many hours of sleep I need to feel rested.

Early morning is quiet, introspective and productive in a way I wish more parts of the day would be.

I am most productive after 5 pm when the staff leaves and the interruptions stop. I need 7 to 8 hours of sleep, but I am lucky if I get 6.

Get more done early in the morning with no one around to bother me

If I don’t get at least 7 hours sleep, I’m in the Twilight Zone by late morning. Whoever said old people need less sleep was wrong. Lack of enough quality sleep will ruin your health.

I am most productive between 6:00 and 8:00pm, after everyone else has gone home.

While I am most productive in the mornings and when I feel my best, it is rare that I get to use this time for projects and my work. This time is spent mostly in meetings, getting updates from my team and responding to various issues. I actually get the most work done after everyone leaves at 5. Between 5 and 7 I get more actual work done than any other time of day.

I am NOT a morning person, but I wish I were. I’m jealous of all those that talk about how much they get done in the morning. But, my wife IS a morning person, so it works well in sharing duties on the kids. I get them to school while she’s already at work, and then she picks them up while I’m finishing things at work in the afternoon and early evening.

Just because one is rested does not mean one can be productive. If I have enough sleep and only answer staff questions all day, but do not get my own work done, they can potentially be productive but I wouldn’t be.

I hate to say I work best under pressure, but do find I’m most productive when under a deadline.

I have a 5 minute commute but get to work 2 hours early. I like the quiet morning hours but don’t consider myself to be a morning person. I get another boost at the end of the day and stay later when needed but I typically leave on time.

We all need to understand that everyone, at least occasionally, goes thru “who cares” moments.

We’ve recently been moved into an unassigned, open work seating area. It’s been much harder to be productive, due to noise/people distractions, set-up time, and a huge loss of collaboration due to using instant messaging rather than face to face interaction with immediate team members. The consensus here is that mornings used to be the most productive for pretty much everybody. Now, it’s a challenge to stay focused and productive at all times of the day.

Since grade school, I’ve felt like the World’s typical times to work/eat/play/sleep were all scheduled 3 hours too early. Largely to accommodate my own circadian rhythms, I went into professional theatre and entertainment, but found that the people I most wanted to be with were working when I was sleeping, playing when I was working, and sleeping when I was playing. In the business world, for twenty years my toughest challenges were starting and stopping work “on time.” Being able to work Online has been my salvation. I live and work in the Eastern Time Zone for an employer based in the Pacific Time Zone. I feel like a Fiddler Crab who finally found an Ocean where the tides match my instincts.

Meeting times in morning work well; individual work time in afternoon

My productivity depends on how many meetings are scheduled and who is in the room, and who might walk past my desk that day.

My brain stops working at 1pm every Friday.

Productivity is impacted by more than just sleep. If you like what you do and if you see yourself in a “career” vs working only because you need health insurance or “just for the money”. My observations show me that when someone works only because of a paycheck or benefits, they are inclined to be absent more frequently or do the minimum to get by. Those that see themselves in a career are productive 99% of the time no matter how much sleep they get.

Unfortunately there is never enough time in the day to get more than 8 hours of sleep!

I’m an owl, always have been. Luckily, I have an employer who understands that and allows me my owlish ways.

I could be a lot more productive if there weren’t people needing things all the time. But I guess that’s part of the job in HR! 🙂

X# of hours of sleep + Coffey = Productivity!

I love being at work early, before everyone else arrives. I get so much done! But the longer the work day goes on, the less productive I am. (Don’t tell my boss)

I think it’s much more important to focus on the quality and quantity of work than whether the work started on time. Saying that, I’m terrible with being on time at 8am, but never leave one time either.

Productivity is all about staying focused on the task at hand. It is these pesky emails with tempting headlines and surveys that ruin my efficiency. 🙂

I used to be a morning person and I’m trying to be again by working out early in the morning, but I still find I need a few minutes of reading the news – and NewsDash – before I really get into my workday.

Big fan of the “Early to Bed, Early to Rise” mantra just waiting for the the “Healthy, Wealthy and Wise” part.

A good night’s sleep and morning exercise prior to work make for a productive day. I think a heavy lunch slows you down in the afternoon and a lack of sleep slows down your morning.

There are any number of studies that suggest that a nap during the course of the day really boosts productivity. And yet, pity the poor soul who, even on their lunch hour, tries to close their eyes for a bit.

 

 

NOTE: Responses reflect the opinions of individual readers and not necessarily the stance of Strategic Insight or its affiliates.

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