A federal judge scolded the top U.S. securities regulator, issuing an opinion that said blunders by the Securities and Exchange Commission triggered the collapse of a Cayman Islands bank and other "collateral damage" in a case involving an alleged penny stock scheme, Reuters reported yesterday. District Court Judge William H. Pauley III said that the SEC was mistaken when it requested a February order to freeze more than $88 million in assets belonging to two financial institutions suspected of securities fraud. One of the institutions, Verdmont Capital SA, a Panama-based brokerage, tried to dismiss the case. The judge denied that request, but he did criticize the SEC.
