Value Line, Execs Paying $45M To Settle With SEC
Value Line arranged for unaffiliated brokers to execute the trades at a discounted commission rate of a penny or two per share. But rather than passing the discount on to the mutual funds, the SEC said, Value Line had the outside brokers bill the funds 0.048 cents per share and then "rebate" 0.028 cents to 0.038 cents a share to Value Line Securities.
Altogether, Value Line Securities received more than $24 million in phony brokerage commissions in this scheme while not performing any real brokerage services for the funds on those trades, according to the SEC. Value Line falsely advised the funds' independent directors and shareholders that Value Line Securities provided genuine brokerage services for the commissions it received, the agency said.
"Value Line misappropriated millions of dollars from the mutual funds they managed by artificially allocating fund trades and then charging the funds for phantom brokerage services," SEC Enforcement Director Robert Khuzami said. "Such blatant wrongdoing will not be tolerated."
Value Line said in a statement that the brokerage fees in question comprised less than 1.5 percent of its total revenue during the period. Management ended Value Line's associated brokerage practice in 2004, the statement said.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV