FINRA Fines Investment Services $5 Million for Violations
The US Financial Industry Regulatory Authority (FINRA) of Canada has announced that it has fined SunTrust Robinson Humphrey, Inc. (SunTrust RH) and SunTrust Investment Services, Inc. (SunTrust IS) for violations related to the sale of auction rate securities (ARS). FINRA executive vice president Brad Bennett said that SunTrust RH and SunTrust IS “withheld information about the ARS market” and that this “prevented their sales representatives from making proper recommendations and their customers from making informed decisions about ARS. Because of that, the customers were left holding illiquid securities when the auctions failed”. FINRA will also administer an arbitration program to compensate investors.
FINRA’s media release (26 July 2011)
SFO Orders Macmillan to Return Proceeds of “Corrupt Relationships”
Europe, Middle East and Africa
The UK Serious Fraud Office (SFO) has announced that the UK High Court has ordered Macmillan Publishers Limited (MPL) to pay more than £11 million of its proceeds of alleged unlawful conduct in awarding supply contracts for educational materials in East and West Africa to companies that MPL may have had “corrupt relationship[s]” with.
SFO’s media release (22 July 2011)
Comcast and Al Sharpton’s Integrity Questioned in Potential Conflicts of Interest
About a year after Comcast used Rev. Al Sharpton to lobby in support of its successful takeover of NBCUniversal, MSNBC, a channel owned by NBCUniversal, is reportedly set to hire the activist as host of a daily television program. Through separate statements released by both MSNBC and Comcast, the network and its parent company claim Comcast has no influence over the editorial decisions made by the news channel. Sharpton also denied any connection between his work as an advocate on behalf of Comcast and his potential work as host on MSNBC.
New York Times: Sharpton’s Push for Comcast Raises Issues About Possible MSNBC Job (27 July 2011)
(Source: New York Times)
GOA Urges Better Conflicts Advice from SEC
Reuters reports that a recent Government Accountability Office (GOA) report recommends that the Securities and Exchange Commission (SEC) should implement more stringent ethics advice to prevent issues arising when former government officials enter the private sector. The GOA reportedly criticised the SEC’s lack of consistency in the advice it provides to its staff on post-employment and conflict of interest issues, with particular concern arising because 37% of SEC employees are categorised in the accounting, economics, legal and other professions highly regulated by the SEC.
Reuters: SEC urged to adopt more revolving door safeguards (12 July 2011)
Conflict of Interest Claims Challenge Spinal Study
In an article published this week in The Spine Journal, a group of spine specialists calls into question research done by fellow experts that supports the widespread use of Medtronic’s Infuse, a bone growth product. The article claims that the experts’ research, funded by Medtronic, overstates the product’s benefits while understating its risks. Previous studies had indicated potential side effects from the use of Infuse, so much so that the U.S. Food and Drug Administration required Medtronic to list them on the product’s label. However, the recent studies, funded by Medtronic, claim that the use of Infuse does not come with any complications. In response to the article, Medtronic has stated that it will retain independent experts to review the issues raised in The Spine Journal article.
Spine Experts Repudiate Medtronic Studies (28 June 2011)
(Source: New York Times)