Joseph Borg (regulator)
Encyclopedia
Joseph P. Borg is an American financial regulator who has served as the Securities Commissioner of Alabama since 1994. In this position, he is responsible for prosecuting financial crimes
which affect Alabama residents. He has also served as the president of the North American Securities Administrators Association
for two terms. Due to his successful record of prosecuting financial crimes, he has been described in Forbes
as "Wall Street's Worst Nightmare".. Smart Money magazine listed Borg in its listing of "The Power 30- The Top Financial Players" citing his 98% conviction rate and calling him "one of the toughest 'stock cops' in America" [Smart Money November, 2011]
to Maltese immigrants
Philip J. Borg and Dorothy Borg (née
Chircop). He attended Hofstra University School of Law
and then worked as a personal injury lawyer
. He moved from Queens
to Montgomery, Alabama
to work as a defense lawyer in in product–liability cases. Borg soon made partner
in a Montgomery law firm and later worked as a corporate lawyer for First Alabama Bank.
case. In 1994 Borg was named the Securities Commissioner of Alabama. He currently oversees approximately fifty employees. In 2010 his department forced the repayment of $1 million to fraud victims and generated $10 million in state revenue through fines and licensing fees. From 1998 to 2002 he averaged twenty eight criminal convictions a year. In Alabama, the office of Securities Commissioner is a non–partisan post, and consequently Borg has served under five Governors of Alabama. Under Borg's administration, the Alabama Securities Commission has a successful conviction rate of ninety five percent. He primarily prosecutes ponzi scheme
s, unregistered brokers, and penny stock dealers, prosecuting any cases in which Alabama residents are directly affected, regardless of where the offending company is located. During his tenure, he has received a number of death threats. These threats have led to the installation of armed guards outside his office.
Borg attempts to impose long sentences on white–collar criminals
and has argued that they should be treated no differently than perpetrators of violent crime. The Wall Street Journal
has described his approach as "lock–'em–up–and–throw–away–the–key". Borg claims that Allen Stanford
avoided selling his fraudulent certificates of deposit
in Alabama for fear of being caught.
Borg was first elected as the president of the North American Securities Administrators Association for the 2001–02 term. The NASAA is a nonprofit organization which represents regulators from across North America. He also served in this role for the 2006–07 term and now serves on their board of directors
.
. Stratton Oakmont was perpetrating a "pump and dump
" scheme, in which they bought shares in a small company and sold their shares after convincing a number of people to invest in the company. Borg pushed for the formation of a multistate task force, which following an investigation succeeded in shutting down the brokerage. This event later inspired the 2000 film Boiler Room
.
In 1999 Borg prosecuted a Christian organization from Tampa, Florida
which had raised funds at churches in Alabama using itinerant speakers. The organization, known as Greater Ministries International
, promised its followers that if they donated money it would later be repaid to them with a profit. The organization operated as a ponzi scheme, paying established donors dividends which were taken from the funds supplied by newer donors. The fraud eventually took in over $500 million. After the U.S. Securities and Exchange Commission declined to involve themselves in the case, Borg sought to prosecute the group himself. He traveled to Florida where a Federal judge authorized the Alabama Securities Commission to seize the church's assets. Accompanied by U.S. Marshals
in an armored vehicle
, Borg successfully took over the Greater Ministries' headquarters. According to Birmingham trial lawyer John Haley, the armored vehicle was used due to safety concerns following the recent raids on the Branch Davidian compound
in Waco, Texas
. Leaders of Greater Ministries were eventually given lengthy prison sentences.
In 2002 Borg led a coalition of law enforcement members from multiple U.S. states in a coördinated investigation of Wall Street
businesses. Modeled after litigation against the tobacco industry, this move was described in Forbes as "regulation by lawsuit". The investigation prompted Morgan Stanley
head Philip J. Purcell
to unsuccessfully lobby for new laws which would prevent such suits. The investigation later led to ten Wall Street firms paying a settlement of $1.4 billion. Firms that contributed to the settlement included Morgan Stanley, Goldman Sachs
, Bear Stearns
, and Lehman Brothers
. The state of Alabama received $5 million of the settlement.
In 2009, Borg organized a group of regulators from Alabama, Mississippi, Tennessee, South Carolina and Kentucky against Morgan Keegan, a Tennessee based Broker and Morgan Asset Management in Birmingham, Alabama and together with the U.S. SEC in June, 2011 created a $200 million fund for 39,000 + investors who lost money in a sub-prime bond fund claiming the funds were sold as 'safe' investments. As part of the settlement an additional $10 million was set aside for the States where investors were harmed. http://www.asc.alabama.gov/News/2011%20News/6-22-11%20M%20Keegan%20press%20rel%20-%20FNL.pdf
for not imposing tougher sanctions on financial criminals. He has also argued that financial regulatory power in the U.S. should not be concentrated in one agency. Rather, he proposes that regulatory agencies across the country should attempt to work together more effectively.
He was also critical of George W. Bush's plan to partially privatize Social Security. Borg agreed that reform was necessary, but called for what he described as a "middle way" between the current system and the President's plan.
Financial crimes
Financial crimes are crime against property, involving the unlawful conversion of the ownership of property to one's own personal use and benefit...
which affect Alabama residents. He has also served as the president of the North American Securities Administrators Association
North American Securities Administrators Association
The North American Securities Administrators Association , founded in Kansas in 1919, is the oldest international investor protection organization. NASAA is an association of state securities administrators who are charged with the responsibility to protect consumers who purchase securities or...
for two terms. Due to his successful record of prosecuting financial crimes, he has been described in Forbes
Forbes
Forbes is an American publishing and media company. Its flagship publication, the Forbes magazine, is published biweekly. Its primary competitors in the national business magazine category are Fortune, which is also published biweekly, and Business Week...
as "Wall Street's Worst Nightmare".. Smart Money magazine listed Borg in its listing of "The Power 30- The Top Financial Players" citing his 98% conviction rate and calling him "one of the toughest 'stock cops' in America" [Smart Money November, 2011]
Early life
Borg was born in New York CityNew York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
to Maltese immigrants
Maltese American
Maltese American is a citizen or resident of the United States with ethnic origins in the southern European nation of Malta.-History:The first immigrants from Malta in the United States arrived in New Orleans, Louisiana. Many Americans assumed Malta was part of Italy. In some cases "Born Malta,...
Philip J. Borg and Dorothy Borg (née
NEE
NEE is a political protest group whose goal was to provide an alternative for voters who are unhappy with all political parties at hand in Belgium, where voting is compulsory.The NEE party was founded in 2005 in Antwerp...
Chircop). He attended Hofstra University School of Law
Hofstra University School of Law
The Maurice A. Deane School of Law at Hofstra University is located in Hempstead, New York. Founded in 1970 and accredited by the ABA in 1971, the school offers a JD, a joint JD/MBA degree, and LL.M degrees in American Law and Family law...
and then worked as a personal injury lawyer
Personal injury lawyer
A personal injury lawyer is a lawyer who provides legal representation to those who claim to have been injured, physically or psychologically, as a result of the negligence or wrongdoing of another person, company, government agency, or other entity....
. He moved from Queens
Queens
Queens is the easternmost of the five boroughs of New York City. The largest borough in area and the second-largest in population, it is coextensive with Queens County, an administrative division of New York state, in the United States....
to Montgomery, Alabama
Montgomery, Alabama
Montgomery is the capital of the U.S. state of Alabama, and is the county seat of Montgomery County. It is located on the Alabama River southeast of the center of the state, in the Gulf Coastal Plain. As of the 2010 census, Montgomery had a population of 205,764 making it the second-largest city...
to work as a defense lawyer in in product–liability cases. Borg soon made partner
Partner (business rank)
A partner in a law firm, accounting firm, consulting firm, or financial firm is a highly ranked position. Originally, these businesses were set up as legal partnerships in which the partners were entitled to a share of the profits of the enterprise. The name has remained even though many of these...
in a Montgomery law firm and later worked as a corporate lawyer for First Alabama Bank.
Securities regulation
Borg first began prosecuting financial fraud in 1993 when he represented the victim of a microcap fraudMicrocap stock fraud
Microcap stock fraud is a form of securities fraud involving stocks of "microcap" companies, generally defined in the United States as those with a market capitalization of under $250 million. Its prevalence has been estimated to run into the billions of dollars a year...
case. In 1994 Borg was named the Securities Commissioner of Alabama. He currently oversees approximately fifty employees. In 2010 his department forced the repayment of $1 million to fraud victims and generated $10 million in state revenue through fines and licensing fees. From 1998 to 2002 he averaged twenty eight criminal convictions a year. In Alabama, the office of Securities Commissioner is a non–partisan post, and consequently Borg has served under five Governors of Alabama. Under Borg's administration, the Alabama Securities Commission has a successful conviction rate of ninety five percent. He primarily prosecutes ponzi scheme
Ponzi scheme
A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation...
s, unregistered brokers, and penny stock dealers, prosecuting any cases in which Alabama residents are directly affected, regardless of where the offending company is located. During his tenure, he has received a number of death threats. These threats have led to the installation of armed guards outside his office.
Borg attempts to impose long sentences on white–collar criminals
White-collar crime
Within the field of criminology, white-collar crime has been defined by Edwin Sutherland as "a crime committed by a person of respectability and high social status in the course of his occupation" . Sutherland was a proponent of Symbolic Interactionism, and believed that criminal behavior was...
and has argued that they should be treated no differently than perpetrators of violent crime. The Wall Street Journal
The Wall Street Journal
The Wall Street Journal is an American English-language international daily newspaper. It is published in New York City by Dow Jones & Company, a division of News Corporation, along with the Asian and European editions of the Journal....
has described his approach as "lock–'em–up–and–throw–away–the–key". Borg claims that Allen Stanford
Allen Stanford
Robert Allen Stanford is a former prominent financier and sponsor of professional sports who is in prison awaiting trial on charges his investment company was a massive Ponzi scheme and fraud. Stanford was the chairman of the now defunct Stanford Financial Group of Companies. A fifth-generation...
avoided selling his fraudulent certificates of deposit
Certificate of deposit
A certificate of Deposit is a time deposit, a financial product commonly offered to consumers in the United States by banks, thrift institutions, and credit unions....
in Alabama for fear of being caught.
Borg was first elected as the president of the North American Securities Administrators Association for the 2001–02 term. The NASAA is a nonprofit organization which represents regulators from across North America. He also served in this role for the 2006–07 term and now serves on their board of directors
Board of directors
A board of directors is a body of elected or appointed members who jointly oversee the activities of a company or organization. Other names include board of governors, board of managers, board of regents, board of trustees, and board of visitors...
.
Notable cases
In his first year as commissioner, his office was inundated with complaints regarding New York penny stock brokerage Stratton OakmontStratton Oakmont
Stratton Oakmont was a Long Island, New York, "pump and dump" boiler room brokerage house founded by Jordan Belfort, Danny Porush, COO Steven Carter and CFO Kenny Greene that was shut down in the late 1990s. Jordan Belfort wrote a book about it entitled The Wolf of Wall Street...
. Stratton Oakmont was perpetrating a "pump and dump
Pump and dump
"Pump and dump" is a form of microcap stock fraud that involves artificially inflating the price of an owned stock through false and misleading positive statements, in order to sell the cheaply purchased stock at a higher price....
" scheme, in which they bought shares in a small company and sold their shares after convincing a number of people to invest in the company. Borg pushed for the formation of a multistate task force, which following an investigation succeeded in shutting down the brokerage. This event later inspired the 2000 film Boiler Room
Boiler Room (film)
Boiler Room is a 2000 American drama film written and directed by Ben Younger, and starring Giovanni Ribisi, Vin Diesel, Nia Long, Ben Affleck, Nicky Katt, Scott Caan, Tom Everett Scott, Ron Rifkin and Jamie Kennedy....
.
In 1999 Borg prosecuted a Christian organization from Tampa, Florida
Tampa, Florida
Tampa is a city in the U.S. state of Florida. It serves as the county seat for Hillsborough County. Tampa is located on the west coast of Florida. The population of Tampa in 2010 was 335,709....
which had raised funds at churches in Alabama using itinerant speakers. The organization, known as Greater Ministries International
Greater Ministries International
Greater Ministries International was a church ministry that ran a Ponzi scheme taking nearly 500 million dollars from 18,000 people. Headed by Gerald Payne in Tampa, Florida, the ministry bribed church leaders around the United States to keep "donations" coming in. Payne and other church elders...
, promised its followers that if they donated money it would later be repaid to them with a profit. The organization operated as a ponzi scheme, paying established donors dividends which were taken from the funds supplied by newer donors. The fraud eventually took in over $500 million. After the U.S. Securities and Exchange Commission declined to involve themselves in the case, Borg sought to prosecute the group himself. He traveled to Florida where a Federal judge authorized the Alabama Securities Commission to seize the church's assets. Accompanied by U.S. Marshals
United States Marshals Service
The United States Marshals Service is a United States federal law enforcement agency within the United States Department of Justice . The office of U.S. Marshal is the oldest federal law enforcement office in the United States; it was created by the Judiciary Act of 1789...
in an armored vehicle
Armoured fighting vehicle
An armoured fighting vehicle is a combat vehicle, protected by strong armour and armed with weapons. AFVs can be wheeled or tracked....
, Borg successfully took over the Greater Ministries' headquarters. According to Birmingham trial lawyer John Haley, the armored vehicle was used due to safety concerns following the recent raids on the Branch Davidian compound
Waco Siege
The Waco siege began on February 28, 1993, and ended violently 50 days later on April 19. The siege began when the United States Bureau of Alcohol, Tobacco and Firearms attempted to execute a search warrant at the Branch Davidian ranch at Mount Carmel, a property located east-northeast of Waco,...
in Waco, Texas
Waco, Texas
Waco is a city in and the county seat of McLennan County, Texas. Situated along the Brazos River and on the I-35 corridor, halfway between Dallas and Austin, it is the economic, cultural, and academic center of the 'Heart of Texas' region....
. Leaders of Greater Ministries were eventually given lengthy prison sentences.
In 2002 Borg led a coalition of law enforcement members from multiple U.S. states in a coördinated investigation of Wall Street
Wall Street
Wall Street refers to the financial district of New York City, named after and centered on the eight-block-long street running from Broadway to South Street on the East River in Lower Manhattan. Over time, the term has become a metonym for the financial markets of the United States as a whole, or...
businesses. Modeled after litigation against the tobacco industry, this move was described in Forbes as "regulation by lawsuit". The investigation prompted Morgan Stanley
Morgan Stanley
Morgan Stanley is a global financial services firm headquartered in New York City serving a diversified group of corporations, governments, financial institutions, and individuals. Morgan Stanley also operates in 36 countries around the world, with over 600 offices and a workforce of over 60,000....
head Philip J. Purcell
Philip J. Purcell
Philip J. Purcell was the former Chairman and CEO of Morgan Stanley in the late 1990s and 2000s. He previously served as Chairman and CEO of Dean Witter and managed the firm under its ownership by Sears, Roebuck & Co....
to unsuccessfully lobby for new laws which would prevent such suits. The investigation later led to ten Wall Street firms paying a settlement of $1.4 billion. Firms that contributed to the settlement included Morgan Stanley, Goldman Sachs
Goldman Sachs
The Goldman Sachs Group, Inc. is an American multinational bulge bracket investment banking and securities firm that engages in global investment banking, securities, investment management, and other financial services primarily with institutional clients...
, Bear Stearns
Bear Stearns
The Bear Stearns Companies, Inc. based in New York City, was a global investment bank and securities trading and brokerage, until its sale to JPMorgan Chase in 2008 during the global financial crisis and recession...
, and Lehman Brothers
Lehman Brothers
Lehman Brothers Holdings Inc. was a global financial services firm. Before declaring bankruptcy in 2008, Lehman was the fourth largest investment bank in the USA , doing business in investment banking, equity and fixed-income sales and trading Lehman Brothers Holdings Inc. (former NYSE ticker...
. The state of Alabama received $5 million of the settlement.
In 2009, Borg organized a group of regulators from Alabama, Mississippi, Tennessee, South Carolina and Kentucky against Morgan Keegan, a Tennessee based Broker and Morgan Asset Management in Birmingham, Alabama and together with the U.S. SEC in June, 2011 created a $200 million fund for 39,000 + investors who lost money in a sub-prime bond fund claiming the funds were sold as 'safe' investments. As part of the settlement an additional $10 million was set aside for the States where investors were harmed. http://www.asc.alabama.gov/News/2011%20News/6-22-11%20M%20Keegan%20press%20rel%20-%20FNL.pdf
Political views
Borg has been critical of the U.S. Securities and Exchange Commission and the Financial Industry Regulatory AuthorityFinancial Industry Regulatory Authority
In the United States, the Financial Industry Regulatory Authority, Inc., or FINRA, is a private corporation that acts as a self-regulatory organization . FINRA is the successor to the National Association of Securities Dealers, Inc. ...
for not imposing tougher sanctions on financial criminals. He has also argued that financial regulatory power in the U.S. should not be concentrated in one agency. Rather, he proposes that regulatory agencies across the country should attempt to work together more effectively.
He was also critical of George W. Bush's plan to partially privatize Social Security. Borg agreed that reform was necessary, but called for what he described as a "middle way" between the current system and the President's plan.