April 20, 2012

Does a Seller Have to Disclose Everything to The Buyer About Their Home?

Employment Law Attorney

I wish it was as simple as stating "yes" or "no". Unfortunately, there have been so many lawsuits across the country between buyers and sellers regarding the "proper" disclosure, that there is now (for the most part) no excuse for Sellers' not knowing the proper standard.

The standard is a reasonable common sense standard. If the buyer can see the defect when they are inspecting your home, then you do not need to "tell them" (disclose) about the defect since it is readily observable. This, however, is not what results in lawsuits by the buyers. It’s the defects that the buyers can’t see,and later find out 6 months after moving into the home, that starts the lawsuit

What does this mean? As the seller, you are required to tell the buyers of defects that exist within your home, but that the buyers cannot see when they walk through your home. Prime examples are leaky roof, termites, or foundational cracks. As a seller if you know you have these problems or similar problems then you are required by law to tell the buyer so the buyer can make an informed decision on whether he/she wishes to still purchase the home.

Well, I know what you are asking now. What if I didn’t know? As mentioned before, this is a common sense standard so you are not required by law to disclose defects that you didn’t know about either. I still know what you are thinking now. As seller, I can probably identify 100 small little defects, i.e, chipped plaster in a small corner of my bedroom, stains along my floors in the kitchen or maybe a kitchen cabinet doesn’t properly close all the way. Remember, this is a common sense standard so only huge defects (material) that are not readily observable need to be disclosed. If the buyers would change their mind and not buy your home over the "defect", chances are the defect is material.

What this all boils down to is that as sellers you should put every known defect in your home on your seller disclosure to avoid any future liability.

So to conclude, just remember, when in doubt disclose in writing and you will be protected.

For more information on this and other real estate matters, contact one of our West Palm Beach lawyers at LaBovick Law Group.

March 16, 2011

Lehman Probe stalls in $50 Billion real estate accounting maneuver

A legal gray area may derail an attempt by Securities and Exchange Commission officials to seek a civil or criminal suit against executives of the now defunct Lehman Brothers Holding Inc.

For months now, SEC officials have been hoping to charge former Lehman Brothers executives with duping their investors with an accounting strategy that is commonly known as Repo 105. In such a maneuver, a short term loan is classified as a sale on company balance sheets. The proceeds of this so-called sale are then used to reduce company debt in advance of publication of the company’s balance sheets. Once the sheets have been made public, the company borrows funds in order to repurchase their original assets. The strategy provides the investing public with an improved version of the company’s actual financial records, leading them to continue to invest, or remain invested, when a more realistic accounting of the company’s financial records might lead them to choose to invest elsewhere.

March 11, 2011

Former Treasurer of Mortgage Company guilty in $1.9 billion fraud scam involving Colonial Bank

Desiree E. Brown, who was once the treasurer of Taylor, Bean & Whitaker Mortgage Corp. recently pleaded guilty to a host of charges relating to fraud. The charges were leveled against Brown by the Securities and Exchange Commission, which alleges that Brown attempted to run a scam against the U.S. Treasury’s Troubled Asset Relief Program after assisting with a $1.9 billion scheme to defraud various investors.

Taylor, Bean & Whitaker was once one of the foremost mortgage lenders in the country. Beginning in 2002, the mortgage giant began to experience liquidity issues. As the economic situation in the country grew worse and the real estate market began its collapse, Taylor, Bean attempted to mitigate its losses by selling worthless mortgage assets to Colonial Bank. Taylor, Bean sold mortgages to Colonial that either did not exist, or had already been purchased by another bank. The mortgage company used the proceeds from these fraudulent sales to cover operating costs and other debts.

Continue reading "Former Treasurer of Mortgage Company guilty in $1.9 billion fraud scam involving Colonial Bank " »

March 2, 2011

J.P. Morgan Facing Up to $4.5 Billion in Fines over Botched Foreclosures

Every year, lending giant JPMorgan Chase & Co. files an annual securities report. This year's report, which was filed on February 28, included some very eye-opening information. The bank disclosed that it is currently the defendant in more than 10,000 legal proceedings around the United States. The proceedings stem from the huge array of investigations that have been taking place concerning foreclosure practices. Around the fall of 2010, glaring paperwork errors on foreclosures were brought to public attention. In many cases, those errors cost people their homes. Not surprisingly, the discovery prompted a vast range of investigations into foreclosure industry practices.

If JP Morgan ends up paying out on all of the proceedings, the New York-based bank could end up paying fines of up to $4.5 billion. The legal proceedings have been initiated by a number of different entities. The attorney generals of all fifty states have banded together to investigate botched foreclosures. The United States Department of Justice has gotten into the act, too; many bank regulators have been filing suit, as well. Considering the huge number of involved parties, it isn't especially surprising that the nation's second-largest bank is knee-deep in litigation concerning these foreclosures.

JP Morgan is not alone in its battle, though. CitiGroup, Bank of America, Wells Fargo and many other banks and lenders are facing legal proceedings, too. For homeowners who are facing foreclosure, this news highlights the importance of seeking a qualified foreclosure defense attorney. All too often, homeowners feel helpless in the face of such troubles. When a bank begins foreclosure proceedings, many people just let things proceed. The assumption tends to be that the bank knows what it is doing. As the huge number of botched foreclosures and the issue of far-reaching foreclosure fraud comes to light, it is clear that homeowners need to protect themselves.

Continue reading "J.P. Morgan Facing Up to $4.5 Billion in Fines over Botched Foreclosures" »

November 1, 2010

SEC Whistleblower Fund Totals $450 Million to combat fraud

The Securities and Exchange Commission says it has set aside about $450 million for payments to outside whistleblowers whose information results in successful cases and penalties collected from companies or individuals.

The SEC set up the program in accordance with the financial overhaul law enacted in July. It follows intense public criticism of the agency for the breakdown that allowed Bernard Madoff's multibillion-dollar fraud to go undetected for 16 years, despite numerous red flags raised by whistleblowers.

A recent report issued by the SEC shows it has put $451.9 million into a new fund to pay whistleblowers, which must have a minimum $300 million

June 7, 2010

Bank of America to pay borrowers $108 million for Countrywide misconduct

bank_of_america.jpg Bank of America will pay $108 million to settle federal charges that Countrywide Financial Corp., which it acquired nearly two years ago, collected outsized fees from borrowers facing foreclosure.

It's the latest evidence of misconduct at Countrywide, once an industry giant that has since fallen. Last year, three top executives, including former CEO Angelo Mozilo, were charged with civil fraud and insider trading by the Securities and Exchange Commission.

The settlement, which seeks to refund money to about 200,000 borrowers, was announced Monday by the Federal Trade Commission. It is the largest mortgage industry settlement for the agency, which oversees non-banking functions such as debt collection.


May 12, 2010

FINRA Permanently Bars Florida Broker for stealing more than $1.9 million from Clients

FINRA%20Logo.gifThe Financial Industry Regulatory Authority (FINRA) has permanently barred Michael J. DiMare, of Ponte Vedra Beach, Fla., from the securities industry for “misappropriating over $1.9 million in client funds.” In its news release on the settlement, FINRA stated that Dimare, formerly a registered representative, hid his financial scheme by making false statements and submitting falsified account statements to his customers.

DiMare worked for John Hancock Mutual Life Insurance Company (John Hancock) as a sales manager between 2001 and 2006, and as a registered representative/insurance agent with ING Financial Partners, Inc. (ING) from late 2006 to mid 2008. According to FINRA, DiMare persuaded his clients from at least 2001 to 2008 to invest in fictitious CDs and bonds, including what he described to be “tax free” corporate bonds.

FINRA’s investigation revealed that between 2001 and 2008, DiMare instructed some 14 of his clients to write checks payable to John Hancock – even after he no longer worked there – which he deposited directly into his bank account for eventual personal use. DiMare concealed his scheme by submitting false account statements to his clients who thought they were making legitimate financial investments.

In response to the situation, James S. Shorris, Executive Vice President and Executive Director of Enforcement for FINRA, made this statement:

"FINRA will continue to bar individuals who engage in deceit and theft with no regard for the high standards of ethical conduct that govern the industry. By deceiving customers into believing they were making legitimate investments when, in reality, he was simply enriching himself, DiMare epitomized the darkest side of the securities industry."

DiMare never admitted guilt nor denied FINRA’s charges, but the now barred schemer did consent to the entry of the agency’s findings in the settlement. John Hancock and ING reimbursed the customers defrauded by DiMare’s scheme.

Florida Broker Barred for Selling Phony Financial Products, Taking More Than $1.9 Million From Clients – FINRA’s News Release

Tips from FINRA to help Investors Avoid Financial Fraud

April 26, 2010

Charles Schwab proposes $200M settlement for investor class action suit

Despite individual investors losing a reportedly $800 million, the Charles Schwab Corp. agreed last week to pay $200 million to settle a class-action lawsuit stemming from brutal mortgage-related losses in its once-popular YieldPlus bond fund.

This case has not been as high profile in the news as the Goldman Sachs case in the news, where victims were primarily banks. The class action suit against Charles Schwab Corp., involved 250,000 individual investors.

If the judge approves this class-action settlement, Schwab would be able to move on from this legal fight. Investors are expected to receive approximately 20 to 25 cents for each dollar they lost.

Schwab has paid out $48 million in settlements and awards in other arbitration cases. However, there are approximately 180 arbitration cases still pending and a class-action suit in California state court on the horizon.

Click on the following link to read more from the LA Times on the proposed Schwab $200M settlement.

April 9, 2010

Ponzi Scheme Orchestration lands Minnesota Tycoon in Prison for 50 Years

Tom Petters U.S. District Judge Richard Kyle sentenced Minnesota businessman Tom Petters to 50 years in prison for orchestrating a Ponzi scheme estimated at $3.7 billion. Counted among the victims of his scheme were missionaries, pastors and retirees. The sentence comes after a jury found Petters guilty on 20 counts of money laundering, wire fraud, conspiracy and mail fraud in December.

The Ponzi scheme involved the fake purchase of electronics by Petters Company Inc., which would then “resell” the supposed merchandise to discount retailers for a profit. Petters and his associates used bogus bank records and fake purchase orders to swindle investors out of $3.7 billion.

Judge Kyle stated to a packed courtroom that included Petters' relatives as well as some victims, "Mr. Petters was captain of the ship." The Judge did not believe that Petters, a former owner of Polaroid and Sun Country Airlines, was unaware of the fraud at Petters Group Worldwide.

At his sentencing hearing, Petters said, “Every day, I’m filled with pain and anguish for all the lives that have been destroyed and touched by this episode.” Petters, a successful entrepreneur and former owner of Sun County Airlines and Polaroid, apologized to his family, friends and others hurt by his actions, but never admitted guilt.

At 52 years old, Petters will likely spend the remainder of his life behind bars.

50-Year Term for Minnesota Man in $3.7 Billion Ponzi Fraud – NY Times Article

Minn.'s Petters Gets 50 Years in $3.7B Fraud Case – ABC News/Money Article

March 31, 2010

Anti-Fraud Law debated before the Supreme Court

Lawyers argued before the Supreme Court on whether a key provision of the Securities and Exchange Act should protect foreign fraud victims when the alleged scammer has a U.S. subsidiary. "This case has 'Australia' written all over it," Justice Ruth Bader Ginsburg said. The law's scope is pivotal, as courts increasingly face lawsuits over transnational fraud.

Three Australians who bought stock in National Australia Bank, the country's largest bank, filed a class action when the bank was forced to write down more than $1.75 billion on HomeSide Lending, a U.S. mortgage service provider the bank bought in 1998.

The bank had to sell the Florida-based subsidiary after HomeSide miscalculated how much revenue it would receive from mortgage-backed securities in 2001. Investors said the bank, HomeSide and four officers made false and misleading statements in SEC filings. When those statements were revealed in Australia, they allegedly caused the bank's stock price to plummet.

A final ruling is expected by late spring or early summer.

Click on the following link to read more on the Justices Hear Debate on Scope of Anti-Fraud Law - Courthouse News Service

March 24, 2010

Financial Regulation Bill moves to Full Senate

Wallstreet%20flag.jpg Wall Street look out... Change is in the air...The Senate Banking Committee passed a sweeping financial regulation bill on March 22. The bill now moves to the Senate for a full vote.

President Obama and his senior advisers are now planning to focus more on issues such as financial regulation reform. The administration is “seeking to tap into the anger among many voters over Wall Street excesses” that are at the root of the current economic crisis.

The financial regulation bill ultimate goal is to increase investor protections. If signed into law, the financial reform bill that passed the Senate panel would create a bureau within the Federal Reserve that provides investors with a greater level of security. The bill would also establish a regulatory council to “survey threats to the financial system.”

According to U.S. Senator Richard Shelby (R-Ala) major points of disagreements in the bill incude the following areas: the powers of a Consumer Financial Protection Bureau that would be created within the Federal Reserve, regulation of the sprawling market in over-the-counter derivatives and provisions that would give corporate shareholders a greater say over executive pay and boards of directors.

President Obama stated:

"We are now one step closer to passing real financial reform that will bring oversight and accountability to our financial system and help ensure that the American taxpayer never again pays the price for the irresponsibility of our largest banks and financial institutions."


March 22, 2010

Provident Asset Management Expelled for Marketing Fraudulent Private Placements Offered by Affiliate in Massive Ponzi Scheme

The Financial Industry Regulatory Authority (FINRA) expelled Dallas-based broker-dealer, Management, LLC, for marketing a series of fraudulent private placements offered by its affiliate, Provident Royalties, LLC, in a massive Ponzi scheme.

The recent action is the first produced by a FINRA initiative involving active examinations and investigations of broker-dealers involved in retail sales of private placement interests, as well as broker-dealers affiliated with private placement issuers. FINRA is looking at firms' compliance with suitability, supervision and advertising rules, as well as potential instances of fraud. The initiative was undertaken in response to an increase in investor complaints involving private placements and Securities and Exchange Commission actions halting sales of certain private placement offerings.

According to FINRA, Provident Asset Management misrepresented to investors that the funds raised through the offerings would be used to purchase interests in the oil and gas business. In reality, investors' funds were used by an affiliated issuer and commingled to make dividend and principal payments to other investors. To make matters worse, the firm acted as the agent in an oil and gas private placement offering but failed to establish an escrow account for investors' funds during the contingency period of the offering.

FINRA found that Provident Asset Management marketed and sold preferred stock and limited partnership interests in a series of 23 private placements offered by Provident Royalties, LLC. from September 2006 through January 2009. Provident Asset Management's only business line was acting as the wholesaling broker-dealer for the Provident Royalties' offerings, which were sold to customers through more than 50 retail broker-dealers nationwide, raising over $480 million through approximately 7,700 individual investments made by thousands of investors.

FINRA is continuing a broader investigation into broker-dealers that sold the Provident and other troubled private placement offerings.

March 8, 2010

First Allied Securities agrees to pay nearly $2 Million to settle Securities Fraud charges of failing to supervise Broker

First Allied Securities, Inc, a San Diego-based broker-dealer, was charged with failing to reasonably supervise one of its registered representatives. The Broker engaged in unauthorized fraudulent trading in the accounts of two Florida municipalities. The Securities Exchange Commission (SEC) reports that First Allied has agreed to settle the charges for nearly $2 Million.

The SEC alleges that Harold H. Jaschke, former First Allied Broker, churned the accounts of two Florida municipalities and misrepresented his trading practices on their behalf. The two Florida Municipalities involved, were the City of Kissimmee and the Tohopekaliga Water Authority. In late 2009, Harold Jashke was charged with fraud for making over $4 million in commissions while his customers lost money due to his fraudulent behavior.

The SEC found that this fraud occurred from May 2006 and March 2008. This matter could have been avoided if First Allied identified the "red flags" and adequately supervised Jaschke, according to SEC reports.

The supervision of broker-dealers is taken seriously by the SEC. Rosalind Tyson, Director of the SEC’s Los Angeles Office stated the following:

"By failing to establish reasonable systems to prevent Jaschke’s misconduct, Fist Allied did not fulfill its obligation to reasonably supervise its registered representative.”

In addition to the settlement, First Allied agreed to censorship by the SEC. They will cease and desist from “committing or causing any future violations of certain books and records provisions,” and will hire an independent consultant to review First Allied's company’s policies and procedures.

Investor Tip: Be aware of your Broker’s method of managing your portfolio. A common fraudulent practice by brokers is the use of excessive trading to generate commissions and other revenue without regard for the customer's investment objectives, this practice is known as churning.

We encourage Investors to read monthly statements carefully. Ask questions about your Broker's investment strategy for your portfolio. If you suspect find that a Broker is engaging in unethical behavior with your investments, speak up and do so quickly. This can help save many headaches if the fraud is caught early on.


Cllick on the following link to read more on First Allied Securities, Inc being charged with failing to Supervise.

Click on the following link to learn more about Churning and Securites Fraud.

March 7, 2010

Psychic Sean David Morton charged with Securities Fraud

psychicsign.jpg The U.S. Securities and Exchange Commission charges owner of Delphi Investment Group with Securities fraud. The interesting twist is that the owner is Sean David Morton, a California based psychic. Allegedly, Morton billed himself as "America's Prophet" and scammed investors out of more than $6 million. The SEC calls Morton a con artist who "falsely touted historically predicting rises and falls in the market."

The SEC complaint provides great detail of how Delphi Investment Group masterminded their securities fraud scheme.

1) Morton used common practices such as a monthly newsletter, Delphi Associates Newsletter and a nationally syndicated radio show to attract and lure investors. In addition, he held public events to promote his psychic abilities.

2) Morton, who did not seek accreditation status from the Delphi Investment Group investors, placed investor funds in the bank accounts of the Entities, which were shell companies controlled by Morton and his wife and commingled the investors' funds among the Entities' accounts.

3) Morton promised investors that all funds would be used to trade foreign currencies, however, only invested about half of the funds with foreign currency. Unbeknownst to the investors, Morton and his wife diverted some of the investor funds, into their own nonprofit organization, PRJ.

February 23, 2010

$67 Million Fair Fund allocated to McAfee Investors for financial fraud settlement

If you are a Mcfee, Inc, investor, we have good news for you. The Securities and Exchange Commission has announced distribution of approximately $67 million to over 16,000 investors in connection with McAfee, Inc. financial fraud settlements.

The Fair Fund was created after McAfee (formerly Network Associates, Inc.), agreed to pay approximately $50 million in penalties and disgorgement to settle SEC charges in 2006 that it defrauded investors by overstating its revenues and earnings.

Investor questions regarding the distribution can be answered by calling 1-800-893-4359. Information regarding the distribution also can be obtained at McAfeeSECsettlement.com.

February 22, 2010

SEC launches Proxy Matters - a web page for Investor Investor Education

As an investor, do you fully understand the power and meaning of your proxy in corporate elections? The Securities and Exchange Commission is taking steps to educate investors on proxy voting and support greater investor participation in corporate elections.

The series of measures include amending the SEC’s e-proxy rules, issuing an Investor Alert, and creating new Internet resources that explain the proxy voting process in plain language.

The Securities Exchange Commission has created a new subsection on the SEC website Spotlight on Proxy Matters.

This new area on the SEC website provides investors educational information on such things as:
New Shareholder Voting Rules, Corporate Elections FAQ, Voting Procedures FAQ, "E-Proxy" or "Notice and Access" and Receiving Proxy Materials FAQ.

According to SEC Chairman Mary L. Schapiro:
"Investor participation in elections at companies they own is critical to effective corporate governance.”

Investors should be aware that last year, the SEC approved a change to the NYSE rule that previously allowed brokers the discretion to vote shares held in customer accounts in an uncontested election of directors without receiving voting instructions from those customers. The new SEC rule only allows brokers to vote those shares in elections at companies if they are instructed by their customers. However, the change does not apply to mutual funds or certain closed end funds.

We encourage investors to make use of the new educational site Proxy Matters and other helpful consumer information provided by the Securities Exchange Commission.


February 15, 2010

Boca Raton resident sentenced in Securities Fraud and Mortgage Fraud Scheme

Boca Raton resident, Donald Platten, was sentenced to 262 months in prison, to be followed by 3 years’ of supervised release for securities fraud, mortgage fraud, and tax fraud, according to the Justice Department and Internal Revenue Service (IRS). Restitution for the victims have not yet been determined by the Court.

Mr. Platten was convicted of conspiracy to commit securities fraud, six counts of securities fraud, conspiracy to commit wire fraud, and impeding the internal revenue laws, in 2009. He was acquitted of eight additional counts of securities fraud.

According to the indictment and evidence introduced at trial, Platten was the president of Harvard Learning Centers Inc., a Florida corporation also located in Boca Raton. Harvard Learning changed its name several times and claimed to be involved in several different business ventures.

Click on the following link to read more on Donald Platten's conviction of Securities Fraud and Mortgage Fraud

February 6, 2010

State Street Bank agrees to settle investor fraud charges for additional $300 million

The Boston-based State Street Bank and Trust Company was charged by the Securities and Exchange Commission with misleading its investors about their exposure to subprime investments while selectively disclosing more complete information to specific investors.

The State Street Bank agreed to pay over $300 million to settle the securities fraud charges. Investors that lost money during the subprime market meltdown in 2007, may be entitled to these funds. This payment is in addition to nearly $350 million that State Street previously agreed to pay to investors in State Street funds to settle private claims.

According to Robert Khuzami, Director of the SEC's Division of Enforcement,

"Investigating potential securities law violations arising out of the credit crisis remains a high priority for the SEC Enforcement Division."

State Street also was ordered to cease and desist from any further violations of certain securities laws. The SEC's enforcement action took into account the company's remediation and its cooperation, including:

* Replacement of key senior personnel and portfolio managers.
* Conducting a review of its procedures and revised its risk controls.
* Entering into private settlements with harmed investors.
* Recent agreement — pursuant to a limited privilege waiver — to provide information it was not otherwise obligated to provide to enable the SEC to assess the potential liability of individuals with respect to certain investor communications.

Click on the following lnk to read more on the State Street Investor settlement of $300 million

SEC order and settlement against State Street Bank and Trust Company

February 1, 2010

Securities Fraud complaint filed against Securities America

Last week, the Massachusetts Securities Division’s Enforcement Section filed a complaint against Securities America, Inc. (Securities America) claiming that the company omitted information and mislead investors. In the complaint, Massachusetts claims that Securities America violated a state securities act in connection with the sale of millions of dollars worth of Medical Notes to investors.

According to the state of Massachusetts, Securities America sold investors roughly $697 million worth of Medical Capital notes issued by Medical Capital Holdings, Inc. (Medical Capital). Securities America offered the notes to investors in a number of private placements, meaning the securities were considered too risky to be solicited or sold to the general public. The complaint alleges that Securities America did not properly disclose the material risks associated with the notes prior to selling them to investors.

In a statement concerning the issue, Massachusetts Secretary of the Commonwealth, William Galvin, said:

“Our investigation showed that Securities America ignored their own due diligence analysts and sold these notes to unsophisticated investors without telling them the risks involved. People invested their life savings, while this dealer hid from them the truth of what they were getting into.”

In addition to allegedly misleading investors by Securities America, since August of 2008, Medical Capital has been in permanent receivership and has defaulted on every one of its outstanding note obligations. This means that approximately $1.079 billion of notes are in default, leaving millions of investors’ dollars – including the life savings of many – frozen. The civil complaint also seeks restitution for investors whose dollars are now illiquid.

From approximately 2003 to 2009, Medical Capital issued over $1.7 billion in Medical Capital notes. Acting as a placement agent between the notes and investors, Securities America handled the sale of roughly 37 percent of the total notes issued, or $697 million.
In connection with the sale of the notes in Massachusetts alone, Securities America received nearly $30 million in compensation. This does not include the untold millions of dollars worth of compensation received from countless more allegedly mislead investors in other states.

Although Massachusetts filed this complaint on behalf of investors within its state lines, this case of financial fraud affects investors throughout the United States. If you invested in Medical Capital notes using Securities America, please contact an attorney experienced in securities fraud immediately to discuss protecting your rights under the law.

Click on the following link to read the official complaint filed by the Commonwealth of Massachusetts

Click on the following link to read the Boston Herald’s article, State seeks restitution for securities of America investors.

January 29, 2010

SEC adopts new rule set for money market funds; increases investor protection

The U.S. Securities and Exchange Commission (SEC) is taking proactive measures to increase investor protection through strengthening regulatory requirements. This rule new change is expected to significantly increase the governing structure of money market funds, thus adding substantial protection to investors. The newly adopted rules will become effective 60 days after their publication in the Federal Register.

A full-scale review of the regulatory regime of money market funds by the SEC was precipitated by large-scale factors, including the ongoing financial crisis. The SEC’s review was also triggered by the Reserve Primary Fund’s so-called “breaking the buck” weakness, which causes a money market fund’s net asset value to fall below $1.00 per share. When this happens, investors lose money.

According to the SEC, the new rules are designed to increase the resilience of money market funds to stresses (such as economic pressure), and lessen the risks of runs on the funds. The agency hopes to achieve these ends by tightening the maturity and credit standards of quality as well as implementing new requirements for liquidity.

According to SEC Chairman Mary L. Schapiro,

"These new rules will have substantial benefits for investors and are an important first step in our efforts to strengthen the money market regime. These rules will help reduce risks associated with money market funds, so that investor assets are better protected and money market funds can better withstand market crises.”

The SEC expects the new rules to decrease the risks associated with money market funds by:

• Improving liquidity
• Placing limits on lower quality securities
• Shortening maturity limits
• Using “Know Your Investor” procedures
• Performing periodic stress tests
• Using Nationally Recognized Statistical Rating Organizations (NRSROs)
• Strengthening repurchase agreements

For more information about this reform and other important investor information, visit the SEC’s Web site at: http://www.sec.gov