SEC Fraud Actions

SEC
Photo Credit: sec.gov
August 30, 2016 - 

The SEC announced an award of more than $22 million to a whistleblower whose detailed tip and extensive assistance helped the agency halt a well-hidden fraud where the whistleblower worked.  SEC


August 26, 2016 - 

The SEC charged the California-based company Enviro Board Corporation and its two co-chairmen/CEOs Glenn Camp and William Peiffer with using baseless financial projections and other misleading statements to defraud investors in their venture to manufacture environmentally-friendly building materials.  The SEC alleges that the defendants raised approximately $6 million over a four-year period by using documents predicting company earnings of $18 million to $95 million per year.  The SEC alleges that they lacked any reasonable basis for these estimates.  The defendants made additional misstatements and omissions to fraudulently induce investment.  Meanwhile, according to the SEC’s complaint, Camp and Peiffer and their primary salesman, Joshua Mosshart, paid themselves approximately $2.6 million in compensation. Mosshart is charged with selling unregistered securities and acting as an unregistered broker.  SEC


August 25, 2016 - 

The SEC announced penalties against 13 investment advisory firms found to have spread false claims made by investment management firm F-Squared Investments about its flagship product Alphasector.  An SEC sweep found that the 13 firms accepted and negligently relied upon claims by F-Squared that its Alphasector strategy for investing in exchange-traded funds had outperformed the S&P index for several years.  The firms repeated many of F-Squared claims while recommending the investment to their own clients without obtaining sufficient documentation to substantiate the information being advertised.  The penalties assessed against the firms range from $100,000 to a half million based upon the fees earned by each firm related to Alphasector.  SEC


August 24, 2016 - 

The SEC announced enforcement actions against 71 municipal issuers and other obligated parties for violations related to their municipal bond offerings.  The actions were brought under the Municipal Continuing Disclosure Cooperation Initiative which offers favorable settlement terms to municipal bond underwriters, issuers, and obligated persons that self-report certain violations of federal securities laws.  The SEC found that from 2011 through 2014, the 71 issuers and obligated persons sold municipal bonds using offering documents that contained materially false statements or omissions about their compliance with continuing disclosure obligations.  The parties settled the actions and agreed to cease and desist from future violations and to undertake to establish appropriate policies, procedures, and training regarding continuing disclosure obligations.  SEC


August 23, 2016 - 

Four private equity fund advisers affiliated with Apollo Global Management will pay $52.7 million to settle charges related to misleading fund investors about fees and a loan agreement and failing to supervise a senior partner who repeatedly charged personal expenses to the funds.  An SEC investigation found that the Apollo advisers failed to adequately disclose the benefits they received (to the detriment of fund investors) by accelerating payment of future monitoring fees owed by the funds’ portfolio companies upon their IPO or sale.  The lump sum payments received by the Apollo advisers essentially reduced the portfolio companies’ value prior to their sale or IPO.  The SEC also found that one of the advsiers failed to disclose certain information about interest payments made on a loan between the adviser’s affiliated general partner and five funds.  The purpose of the loan was to defer taxes on the general partner’s carried interest.  The loan agreement obligated the general partner to pay interest to the funds during the course of the loan and the funds’ financial statements disclosed the accruing interest as an asset of the funds.  But the interest was instead ultimately allocated solely to the general partner, making the financial statements misleading.  Finally, according to the SEC’s order, Apollo’s supervisory failures pertain to a then-senior partner at the firm who was twice caught improperly charging personal items to Apollo-advised funds.  SEC


August 16, 2016 - 

The former head trader in residential mortgage-backed securities (RMBS) at Goldman Sachs, Edwin Chin, has agreed to be barred from the securities industry and pay $400,000 to settle charges that he repeatedly misled customers and caused them to pay higher prices.  An SEC investigation found that Chin generated extra revenue for Goldman by concealing the prices at which the firm had bought various RMBS and then re-selling them at higher prices to the buying customers with Goldman keeping the difference.  On other occasions, Chin misled purchasers by suggesting he was actively negotiating a transaction between customers when he was merely selling RMBS out of Goldman’s inventory.  SEC


August 16, 2016 - 

California-based health insurance provider Health Net Inc. will pay a $340,000 penalty for illegally using severance agreements which required outgoing employees to waive their ability to obtain monetary awards from the SEC’s whistleblower program.  According to the SEC’s order, Health Net violated federal securities laws by requiring departing employees to waive their right to file applications for SEC whistleblower awards in exchange for severance payments and other post-employment benefits.  SEC


August 15, 2016 - 

The SEC announced fraud charges against New York-based Donald Lathen and his investment advisory firm Eden Arc Capital Management.  The SEC alleges that Lathen used contacts at nursing homes and hospices to identify patients with less than six months to live.  He then recruited at least 60 of them, by paying $10,000 apiece, to use their names on purportedly joint brokerage accounts he could use to purchase investments on behalf of his hedge fund.  When a patient died, Lathen redeemed the investments in the accounts by falsely representing to the issuers that he and the terminally ill individuals were the joint owners of the account and invoking a survivor’s option.  In fact, Lathen’s hedge fund was the true owner of the survivor’s option investments.  Issuers paid out more than $100 million in early redemptions as a result of the alleged misrepresentations and omissions.  The SEC further alleges that this conduct violated the custody rule by failing to properly place the hedge fund’s cash and securities in an account under the fund’s name or in an account containing only clients’ funds and securities under the investment adviser’s name as agent for the client.  SEC


August 11, 2016 - 

The SEC charged stockbroker Paul T. Rampoldi and his friend William Scott Blythe III with insider trading.  Allegedly, an IT executive at pharmaceutical company Ardea Biosciences tipped one of the brokers at Rampoldi’s firm about a cancer drug licensing agreement and an acquisition by AstraZeneca before the company made public announcement of the deals.  The broker in turn tipped two other brokers at his firm, including Rampoldi, who told his friend Blythe.  To evade detection by the compliance department where Rampoldi worked, Blythe agreed to fund the purchase of Ardea call option contracts in a brokerage account he held at a different brokerage firm and divide the profits among the group.  The two other brokers and Ardea employee were charged previously.  SEC


August 11, 2016 - 

The SEC announced fraud charges against San Francisco-based Nicolas M. Mitsakos and his investment advisory firm Matrix Capital Markets.  The SEC alleges that Mitsakos and Matrix solicited investors in a purported hedge fund while falsely marketing themselves as experienced money managers with a highly successful track record.  They claims assets under management in the millions when in fact they did not manage any client assets at all.  When they were given $2 million in client assets to manage in September 2015, they proceeded to steal approximately $800,000 from the client and used most of it to pay for unauthorized personal and business expenses.  SEC


August 10, 2016 - 

Atlanta-based building products distributor BlueLinx Holdings Inc. will pay a $265,000 penalty to settle charges that it violated securities laws by requiring outgoing employees to sign severance agreements that waived their rights to monetary recovery should they file a charge or complaint with the SEC or other federal agencies.  According to the SEC’s order, BlueLinx added the monetary recovery prohibition to all of its severance agreements in mid-2013, nearly two years after the SEC’s adoption of Rule 21F-17, which prohibits any action to impede someone from communicating with the SEC about possible securities law violations.  SEC


August 10, 2016 - 

August 10, 2016 – The SEC charged former Philadelphia Eagle Merrill Robertson, Jr., his partner Sherman C. Vaughn Jr., and their company Cavalier Union Investments LLC, with defrauding investors by misleading them about their experience and the security of their investments and by diverting investor funds to personal use.  According to the SEC’s complaint, the defendants promised to invest in diversified holdings but instead diverted nearly $6 million of the $10 million raised to pay for personal expenses and repay earlier investors.  Allegedly the scheme targeted seniors and coaches, donors, alumni, and employees of schools where Robertson had attended and played football.  SEC


August 4, 2016 - 

The SEC charged Connecticut cardiologist Dr. Edward Kosinski with insider trading.  Dr. Kosinski was the principal investigator in a drug trial being pursued by Regado Biosciences for a potential new clotting agent designed to be used in patients undergoing coronary angioplasty.  Dr. Kosinski received advance notice that patient enrollment in the trial was being suspended because patients had experienced severe allergic reactions.  In response, he allegedly sold all 40,000 shares of his Regado stock to avoid $160,000 in losses he would have suffered when the news became public and the stock dropped.  A month later, he received advance notice that enrollment would be halted because a patient had died, and he again profited by betting the stock price would drop and purchasing option trades.  SEC


July 28, 2016 - 

The SEC filed an emergency action in federal court and obtained an asset freeze against Matthew E. White, Rodney A. Zehner, and Daniel J. Merandi who allegedly fraudulently issued $1 billion in unsecured corporate bonds out of a shell company they own and claimed invested money would be used to fund a resort project.  In fact, they never came close to raising the funds necessary to start the project.  In the meantime, they pocketed the $5.6 million in investor funds they had raised and used it for personal purchases at Saks Fifth Avenue, Gucci, Louis Vuitton, Prada, and Versace.  SEC


July 26, 2016 - 

State Street Bank and Trust Company will pay $382.4 million in a global settlement for misleading mutual funds and other custody clients by applying hidden markups to foreign currency exchange trades.  As part of its custody bank line of business, State Street safeguards clients’ financial assets and offers such services as indirect foreign currency exchange trading (Indirect FX) for clients to buy and sell foreign currencies as needed to settle their transactions involving foreign securities.  An SEC investigation found that State Street realized substantial revenues by misleading custody clients about Indirect FX, telling some clients that it guaranteed the most competitive rates available on their foreign currency trades, provided “best execution,” or charged “market rates” on the transactions.  Instead, State Street set prices largely driven by predetermined, uniform markups and made no effort to obtain the best possible prices for these clients.  State Street will pay $167.4 million in disgorgement and penalties to the SEC, a $155 million penalty to the Department of Justice, and at least $60 million to ERISA plan clients in an agreement with the Department of Labor.  SEC


July 25, 2016 - 

South American-based LAN Airlines will pay more than $22 million to settle parallel civil and criminal cases related to improper payments it authorized during a dispute between the airline and its union employees in Argentina.  An SEC investigation found that when LAN encountered problems negotiating labor agreements with the unions, it was contacted by a consultant from Argentina, then a Cabinet Advisor with the Department of Transportation, who offered to negotiating on the company’s behalf.  The consultant made clear that he would expect compensation and that payments would be made to third parties who had influence over the unions.  LAN’s CEO approved $1.15 million in payments to the consultant through a sham contract for a purported study of existing air routes in Argentina.  The CEO knew that no actual study would be performed and that it was possible the consultant would pass some portion of the money to union officials in Argentina to settle the wage disputes.  SEC


July 22, 2016 - 

The SEC obtained an asset freeze against James Hugh Brennan III and Douglas Albert Dyer, two former brokers with disciplinary histories who allegedly raised more than $5 million from investors without using the money as promised.  In an emergency action field in federal court, the SEC alleged that Brennan and Dyer sold purported shares in eight similarly named companies to more than 240 investors since 2008 without ever registering the stock as promised.  Instead, according to the SEC’s complaint, Brennan and Dyer transferred investor funds into their personal accounts or those belonging to their wives.  The SEC further alleged that Brennan and Dyer continue to solicit investors while touting their securities industry experience and failing to disclose that Brennan was banned from the brokerage industry and Dyer suspended and fined for executing unauthorized transactions in customers’ accounts.  SEC


July 22, 2016 - 

Accountant Nicholas Bottini will pay a $25,000 penalty and has been permanently suspended from appearing and practicing before the SEC, after conducting a faulty audit of the financial statements of ContinuityX Solutions, Inc., a publicly-traded company that claimed to sell internet services to businesses and whose executives have since been charged by the SEC for allegedly engineering a scheme to grossly overstate the company’s revenue through fraudulent sales.  New York-based accounting firm EFP Rotenberg LLP, where Bottini was a partner at the time, will also pay a $100,000 penalty to settle the SEC’s charges and is prohibited from accepting new public company clients for one year.  SEC


July 14, 2016 - 

Investment advisory firm RiverFront Investment Group will pay $300,000 to settle charges that it failed to properly prepare clients for additional transaction costs beyond the “wrap fees” they expected to pay to cover the costs of bundled services.  In wrap fee programs, subadvisers typically use a sponsoring brokerage firm to execute their trades on behalf of clients and the costs of those trades are included in the annual wrap fee that each client pays.  An SEC investigation found that RiverFront disclosed to investors in ADV forms that client trades were typically executed through the sponsoring broker so the wrap fee would cover the transaction costs.  But RiverFront actually used brokers besides the wrap program sponsor to execute the majority of its wrap program trading, resulting in additional costs to clients for those transactions.  While RiverFront did disclose that some “trading away” from the sponsoring broker could occur, the firm inaccurately described the frequency, rendering its disclosures materially misleading.  SEC


July 12, 2016 - 

Citigroup Global Markets will pay a $7 million penalty and admit wrongdoing to settle charges that a computer coding error caused the firm to provide the agency with incomplete “blue sheet” information about trades it executed.  According to the SEC’s order, the coding error occurred in the software that Citigroup used from May 1999 to April 2014 to process SEC requests for blue sheet data, including the time of trades, types of trades, volume traded, prices, and other customer identifying information.  Consequently, during that period, Citigroup omitted 26,810 securities transactions from its responses to more than 2,300 blue sheet requests.  After discovering the coding error, Citigroup failed to report the incident to the SEC or take any steps to produce the omitted data until nine months later.  SEC


June 24, 2016 - 

The SEC charged four companies and eight individuals in connection with an $80 million oil and gas fraud orchestrated by Chris Faulkner, a Dallas man who calls himself the “Frack Master” for his purported expertise in hydraulic fracturing.  The SEC charged Faulkner, CEO of Breitling Energy Corporation (BECC), with disseminating false and misleading offering materials, misappropriating millions of dollars of investor funds, and attempting to manipulate BECC’s stock.  According to the SEC’s complaint, Faulkner started the scheme through privately-held Breitling Oil and Gas Corporation (BOG), which offered and sold turnkey oil and gas working interests.  Faulker ran most of BOG’s operations while co-owners Parker Hallam and Michael Miller oversaw the sales process.  The SEC alleges that BOG’s offering materials contained false statements and omissions about Faulkner’s experience, estimates for drilling costs, how investor funds would be used, and baseless production projections prepared by a geologist whose affiliation with BOG was undisclosed.  The scheme evolved to include BOG’s successor, BECG, a reporting company with shares traded on OTC Link, and two affiliated companies Crude Energy LLC and later Patriot Energy Inc.  Faulkner allegedly established Crude and Patriot to deceive investors through offerings similar to those conducted by BOG.  The SEC alleges that BOG, Crude, and Patriot raised more than $80 million from investors as part of these deceptive offerings.  The SEC further alleges that Faulkner misappropriated at least $30 million of investor funds for personal expenses including lavish meals and entertainment, international travel, cars, jewelry, gentlemen’s clubs, and personal escorts.  In the midst of this fraud, Faulkner engaged in a scheme to manipulate the price of BECC’s stock by placing trades at the end of the day to “mark the close” of the stock.  SEC


June 23, 2016 - 

Merrill Lynch will pay $10 million to settle charges that it was responsible for misleading statements in offering materials provided to retail investors for structured notes linked to a proprietary volatility index.  According to the SEC’s order, the offering materials emphasized that the notes were subject to a 2% sales commission and .75% annual fee.  Due to the impact of these costs over the five-year term of the notes, the volatility index would need to increase by 5.93% from its starting value in order for investors to earn back their original investment on the maturity date.  But the offering materials failed to adequately disclose a third cost included in the index known as the “execution factor” that imposed a cost of 1.5% of the index value each quarter.  The notes were issued by Merrill Lynch’s parent company Bank of America Corporation and Merrill Lynch had principal responsibility for drafting and reviewing the retail pricing supplements.  The SEC’s order finds that Merrill Lynch did not have in place effective policies or procedures to ensure its personnel drafted and approved disclosures that adequately disclosed the impact of the execution factor.  SEC


June 23, 2016 - 

Merrill Lynch will pay $415 million and admit wrongdoing to settle charges that it misused customer cash to generate profits for the firm and failed to safeguard customer securities from the claims of its creditors.  An SEC investigation found that Merrill Lynch violated the SEC’s Customer Protection Rule by misusing customer cash that rightfully should have been deposited in a reserve account.  Merrill Lynch engaged in complex options trades that lacked economic substance and artificially reduced the required deposit of customer cash in the reserve account.  The maneuver freed up billions of dollars per week from 2009 to 2012 that Merrill Lynch used to finance its own trading activities.  Had Merrill Lynch failed in the midst of these trades, the firms’ customers would have been exposed to a massive shortfall in the reserve account.  In addition, according to the SEC’s order, Merrill Lynch further violated the Customer Protection Rule by failing to adhere to requirements that fully-paid-for customer securities be held in lien-free accounts and shielded from claims by third parties should the firm collapse.  In addition to the Customer Protection Rule violations, Merrill Lynch violated Exchange Act 21F-17 by using language in severance agreements that operated to impede employees from voluntarily providing information to the SEC.  SEC


June 22, 2016 - 

The SEC obtained an emergency court order to freeze the assets of Idris Dayo Mustapha, a UK resident charged with intruding into the online brokerage accounts of U.S. investors to make unauthorized stock trades that allowed him to profit on trades in his own account.  The SEC’s complaint alleges that in April and May of 2016, Mustapha hacked into numerous accounts of U.S. customers of broker-dealers in and outside the U.S, placed stock trades without the customers’ knowledge, and then traded in the same stocks through his brokerage account.  SEC


June 21, 2016 - 

Massachusetts-based medical device manufacturer Analogic Corp. and its wholly-owned Danish subsidiary, BK Medical ApS, will pay nearly $15 million to settle parallel civil and criminal actions involving Foreign Corrupt Practices Act violations.  An SEC investigation found that BK Medical engaged in hundreds of sham transactions with distributors that funneled about $20 million to third parties, including individuals in Russia and apparent shell companies in Belize, the British Virgin Islands, Cyprus, and Seychelles.  According to the SEC’s order, from at least 2001 through 2011, at the direction of its distributors, BK Medical participated in hundreds of highly suspicious transactions that posed a significant risk of bribery or other improper conduct, such as embezzlement or tax evasion.  SEC


June 21, 2016 - 

Former President of UNO Charter School Network Inc. and CEO of United Neighborhood Organization of Chicago, Juan Rangel, will pay $10,000 to settle charges related to his role in a misleading $37.5 million bond offering to build three charter schools.  The SEC alleged that Rangel negligently approved and signed a bond offering statement that omitted the charter schools’ multi-million-dollar contracts with two brothers of UNO’s COO – conflicted transactions that could have threatened UNO’s ability to repay bond investors.  According to the SEC’s complaint, in 2010 and 2011, UNO entered into grant agreement with the Illinois Department of Commerce and Economic Opportunity (IDCEO) to build three charter schools.  Rangel signed the agreements, which required UNO to certify that no conflict of interest existed and to immediately notify IDCEO in writing if any conflicts subsequently arose.  The complaint alleges that UNO breached the agreement when, at Rangel’s direction, it contracted with its COO’s brothers, agreeing to pay $11 million to one brother’s window company and $1.9 million to another brother for construction services.  UNO did not notify IDCEO in writing about either transaction and its offering statement disclosed only the smaller contract.  The offering statement also did not disclose that by breaching its agreement with IDCEO, the agency could seek to recover the grants, requiring UNO to liquidate its charter schools to repay them, losing the assets it depended on to repay bond investors.  SEC


June 21, 2016 - 

The SEC has filed charges and obtained an asset freeze against investment adviser Ash Narayan for allegedly siphoning millions of dollars from accounts he managed for professional athletes and investing them in The Ticket Reserve, a struggling online sports and entertainment ticket business on whose board he served.  The SEC’s complaint alleges that Narayan transferred $33 million from clients’ accounts to The Ticket Reserve, typically without their knowledge or consent and often using forged or unauthorized signatures.  Narayan received nearly $2 million in hidden compensation from the company, most of it directly traceable to funds stolen from his clients.  According to the SEC’s complaint, The Ticket Reserve also made Ponzi-like payments to existing investors using money from the new investors.  The SEC also charged The Ticket Reserve CEO Richard Harmon and COO John Kaptrosky with participating in the scheme by making undisclosed finder’s fee to payments to Narayan out of his clients’ funds and approving and executing Ponzi-like payments.  SEC


June 16, 2016 - 

The SEC announced charges against Christopher Salis, former global vice president at SAP America, for receiving thousands of dollars in kickbacks for tipping Douglas Miller in advance of SAP’s impending acquisition of Concur Technologies.  Miller then tipped his brother, Edward Miller, and mutual friend, Barrett Biehl, as they rushed to open online brokerage accounts and make risky, short-term trades in Concur call options so they could profit substantially when the deal was publicly announced.  The SEC has also linked Salis and Douglas Miller to suspicious trades in 2007 that were made in advance of a tender for a company called Business Objects where Salis worked at the time.  SEC


June 16, 2016 - 

Private fund administrator Apex Fund Services (US) Inc. will pay more than $350,000 to settle charges it failed to heed red flags and correct faulty accounting by two clients. SEC investigations found that Apex missed or ignored clear indications of fraud while contracted to keep records and prepare financial statements and investor account statements for funds managed by ClearPath Wealth Management and EquityStar Capital Management, both of which have since been charged with fraud by the SEC.  SEC


June 15, 2016 - 

The SEC charged hedge fund manager Christopher Plaford with trading on inside information received from Sanjay Valvani regarding anticipated drug approvals and from a former CMS official about impending cuts to Medicare reimbursement for certain home health services.  Plaford allegedly made $300,000 by trading based on insider information in hedge funds he managed.  Separately, the SEC charged Stefan Lumiere and Plaford with falsely inflating the value of securities held by a hedge fund managed by their firm.  Over an 18-month period, Lumiere used sham broker quotes to mismark as many as 28 securities per month, surreptitiously passing along his desired prices to brokers via his personal cell phone or a flash drive delivered by courier.  The fund consequently reported artificially inflated returns and monthly net asset values and paid out more than $5.9 million in inflated management and performance fees to its investment adviser.  SEC


June 15, 2016 - 

The SEC charged hedge fund manager Sanjay Valvani with reaping unlawful profits of nearly $32 million for hedge funds he managed by investing in health care securities based on inside information he received from consultant Gordon Johnston.  Johnston, who worked at the FDA for a dozen years, remained in close contact with former friends and colleagues while working for a trade association representing generic drug manufacturers and distributors.  Johnston concealed his separate role as a hedge fund consultant and obtained confidential information about anticipated FDA approvals for companies to produce enoxaparin, a generic drug that helps prevent the formation of blood clots.  The SEC alleges Johnston funneled the details of his conversations with FDA personnel to Valvani who then traded in advance of public announcements concerning FDA approvals for such companies as Momenta Pharmaceuticals, Watson Pharmaceuticals, and Amphastar Pharmaceuticals.  The SEC further alleges that Valvani in turn tipped fellow hedge fund manager Christopher PlafordSEC


June 13, 2016 - 

Two California-based municipal advisory firms, School Business Consulting (SBC) and Keygent LLC, along with several of their top executives, will collectively pay $200,000 to settle charges that they used deceptive practices when soliciting the business of five California school districts.  SBC was advising the five school districts on their hiring of financial professionals.  At the same time, SBC was retained by Keygent which was seeking the business of these five school districts.  SBC shared the confidential information of the school districts with Keygent, including questions to be asked in Keygent’s interviews with the school districts and the details of competitors’ proposals.  The school districts were unaware that Keygent had the benefit of these confidential details through the hiring process.  SEC


June 10, 2016 - 

The SEC announced fraud charges and an asset freeze obtained against Thomas J. Connerton, a Connecticut man accused of misleading people into investing in his company and then taking their money for personal use.  The SEC alleges that Connerton told investors that his company, Safety Technologies LLC, was developing a material to make surgical gloves better resistant to cuts or punctures.  He claimed that several major glove manufacturers wanted the technology and his company was on the brink of imminent deals that would result in large payouts for investors in his company.  No such deals were ever close to materializing and Connerton emptied the company’s bank account by writing a series of checks to himself and using investor funds for his own expenses.  Of more than 50 investors in Safety Technologies, six were women Connerton met through online dating services, and fourteen were friends or family of those women.  SEC


June 9, 2016 - 

Guolin Ma, former consultant to two China-based private equity firms, will pay more than $756,000 to settle insider trading charges.  According to the SEC’s complaint, Ma traded on confidential information he obtained while advising two firms as they pursued a buyout of Silicon Valley-based OmniVision Technologies.  Ma attended key meetings and performed technical due diligence related to the potential acquisition and received timeline and strategy documents from the firms.  Through a series of purchases in April and May 2014, Ma stockpiled over 39,000 shares of OmniVision.  When the proposed acquisition was publicly announced in August 2014, OmniVision’s stock price rose 15% allowing Ma to generate over $367,000 in illegal profits.  SEC


June 9, 2016 - 

The SEC announced a whistleblower award of more than $17 million to “a former company employee whose detailed tip substantially advanced the agency’s investigation and ultimate enforcement action.”  The award is the second-largest issued by the SEC since the inception of its whistleblower program.  SEC


June 8, 2016 - 

Ethiopia’s electric utility, Ethiopian Electric Power, will pay almost $6.5 million to settle charges that it violated U.S. securities laws by failing to register bonds it offered and sold to U.S. residents of Ethiopian descent.  According to the SEC’s order, EEP conducted an unregistered bond offering to help finance construction of a hydroelectric dam on the Abay River in Ethiopia.  EEP held a series of road shows in major cities across the U.S., marketed the bonds on the website of the U.S. Embassy of Ethiopia, and through radio and television advertising aimed at Ethiopians living in the U.S.  EEP raised approximately $5.8 million from more than 3,100 U.S. residents between 2011 and 2014 without ever registering the bond offering with the SEC.  SEC


June 8, 2016 - 

Morgan Stanley Smith Barney LLC will pay a $1 million penalty to settle charges related to its failures to protect customer information, some of which was hacked and offered for sale online.  As a result of failures to adopt policies and procedures reasonably designed to protect customer data, from 2011 to 2014, a then-employee impermissibly accessed and transferred data regarding approximately 730,000 accounts to his personal server which was ultimately hacked by third parties.  SEC


June 8, 2016 - 

New York-based electronics company IEC Electronics Corp. will pay $200,000 to settle charges that it overstated the company’s profits in financial statements by using false inventory accounting.  An SEC investigation found the false accounting to have been orchestrated by IEC’s then-executive vice president of operations Donald Doody and the controller of one of IEC’s subsidiaries, Ronald Years.  Doody and Years collectively will pay about $94,000 to settle the SEC’s charges.  In addition, Doody has been barred from serving as an officer or director of a public company for five years and Years is permanently suspended from appearing and practicing before the SEC as an accountant.  SEC


June 7, 2016 - 

Rhode Island-based residential and commercial building products manufacturer Nortek, Inc. will pay more than $300,000 pursuant to a non-prosecution agreement with the SEC.  Nortek self-reported violations of the Foreign Corrupt Practices Act after finding that a foreign subsidiary had made improper payments of approximately $290,000 to Chinese officials to obtain preferential treatment for Nortek, relaxed regulatory oversight, and reduced customs duties, taxes, and fees.  SEC


June 7, 2016 - 

Massachusetts-based internet services provider Akamai Technologies will pay more than $650,000 pursuant to a non-prosecution agreement with the SEC.  Akamai self-reported violations of the Foreign Corrupt Practices Act after finding that a foreign subsidiary arranged for $40,000 in payments to Chinese officials to induce government-owned entities to purchase more services than they actually needed.  SEC


June 3, 2016 - 

The SEC charged Rhode Islanders Michael J. Maciocio and David P. Hobson with insider trading in the securities of deal targets being pursued by the pharmaceutical company where Maciocio worked.  The SEC alleges that Maciocio obtained confidential clinical and business data about pharmaceutical firms being considered by his company for potential acquisitions and business relationships, and that he used this nonpublic information to trade in their stocks.  Maciocio made approximately $116,000 in illegal profits based on this trading activity.  The SEC also alleges that Maciocio illegally tipped his childhood friend, Hobson, a stockbroker who utilized the nonpublic information to realize at least $187,000 in illicit trading profits for himself and $145,000 for his customers.  SEC


June 2, 2016 - 

The SEC charged New York City-based trader Haena Park with defrauding investors out of millions of dollars by misrepresenting her investment track record, the profitability of her investments, and her use of investor funds.  The SEC alleges that Park touted her supposedly profitable futures and foreign exchange trading strategy when soliciting friends, family, former Harvard classmates, and individuals with connections to them.  She pooled investor finds and incurred heavy trading losses month after month in the futures and forex markets, yet repeatedly told investors that their investments were profitable and sent them monthly account statements showing fictitious profits.  She raised at least $14 million from more than 30 investors since 2012, and has suffered more than $16 million in trading losses during that time.  SEC


June 2, 2016 - 

The SEC announced fraud charges and an asset freeze against Charles C. Liu, his wife Xin “Lisa” Wang, and their companies Pacific Proton Therapy Regional Center, Pacific Proton EB-5 Fund, and Beverly Proton Center LLC.  The SEC’s complaint alleges that Liu and Wang raised $27 million for a proton therapy cancer treatment center in Southern California from 50 investors in China through the EB-5 immigrant investor program.  They touted in promotional materials that the project would create more than 4,500 new jobs and have a substantial impact on the local economy while giving foreign investors an opportunity for future U.S. residency.  But presently there is no construction at the proposed site after more than 18 months of collecting investments.  Meanwhile, Liu has transferred $11 million in investor funds to three firms in China and diverted another $7 million to his and his wife’s personal accounts.  SEC


June 2, 2016 - 

North Carolina-based investment adviser Richard W. Davis, Jr. has agreed to settle charges of defrauding investors by secretly steering portions of real estate-related investments into deals with companies he owned or operated.  The SEC further alleges that Davis made false and misleading statements to investors before and after they made their investments, failed to inform investors of their losses as his companies failed to pay the loans, and improperly received at least $1.5 million from bank accounts which commingled investor funds when he was only entitled to less than $150,000 in management fees.  Davis has agreed to a settlement subject to court approval with disgorgement plus interest and penalties to be determined by the court at a later date.  SEC


June 1, 2016 - 

Wall Street-based brokerage firm Albert Friend & Company (AF&Co) will pay $300,000 to settle charges it failed to sufficiently evaluate or monitor customers’ trading for suspicious activity.  Specifically, an SEC investigation found that AF&CO failed to file Suspicious Activity Reports with bank regulators for more than five years despite red flags tied to its customers high-volume liquidations of low-priced securities.  SEC


June 1, 2016 - 

Maryland-based private equity firm Blackstreet Capital Management and its owner, Marry N. Gunty, will pay $3.1 million to settle charges that they engaged in brokerage activity and charged fees without registering as a broker-dealer and committed other securities law violations.  Blackstreet and Gunty performed in-house brokerage services rather than using investment banks or broker-dealers to handle the acquisition and disposition of portfolio companies for a pair of private equity funds they advise.  Blackstreet fully disclosed that it would provide brokerage services in exchange for a few, but failed to comply with the registration requirements to operate as a broker-dealer.  An SEC investigation further found that Blackstreet and Gunty engaged in conflicted transactions and inadequately disclosed fees and expenses.  SEC


May 31, 2016 - 

The SEC charged two California men, Jaswant “Jason” Gill and Javier Rios, along with their investment firm, JSG Capital Investments, with operating a Ponzi scheme as they purported to specialize in serving middle-class investors and securing exorbitant returns by investing in hot pre-IPO stocks.  The SEC alleges that instead of using the firm’s purported proprietary trading models and investing in pre-IPO shares of well-known tech companies, as promised to investors, Gill and Rios personally pocketed at least $2.8 million in investor funds.  They never actually invested in any pre-IPO shares and used money from new investors to pay supposed returns to earlier investors.  They raised approximately $10 million by catering to average retail investors and promising them exclusive investment opportunities “previously only available to the one-percenters.”  The SEC also obtained a court ordered asset-freeze against the defendants.  SEC


May 31, 2016 - 

The SEC charged Nashville-based investment advisory firm Hope Advisers, Inc. and its owner, Karen Bruton, with scheming to collect extra fees from a pair of hedge funds they managed.  The SEC alleges that Hope Advisers and Bruton orchestrated certain trades to cause the funds to realize large gains near the end of the month, while basically guaranteeing a large loss to be realized the following month, in order to circumvent the funds’ fee structure under which Hope Advisers was entitled to fees only if the funds’ profits in the month exceeded past losses.  Without the fraudulent trades, Hope Advisers would have received almost no incentive fees since October 2014.  Hope Advisers and Bruton have consented to an interim order that restricts them from accessing $7 million of their own investments in the funds.  SEC


May 31, 2016 - 

California-based mortgage company First Mortgage Corporation (FMC), along with six senior executives, will pay $12.7 million to settle charges that they orchestrated a scheme to defraud investors in the sale of residential mortgage-backed securities guaranteed by the Government National Mortgage Association (Ginnie Mae).  FMC is a mortgage lender that issued Ginnie Mae RMBS backed by loans it originated.  The SEC alleges that from March 2011 to March 2015, FMC and its senior-most executives pulled current, performing loans out of Ginne Mae RMBS by falsely claiming they were delinquent in order to sell them at a profit into newly-issued RMBS.  According to the SEC’s complaint, FMC purposely delayed depositing checks from borrowers who had been behind on their loans, falsely claiming to both investors and Ginnie Mae that such loans remained delinquent when in reality they were current.  After repurchasing at prices applicable to delinquent loans, FMC was able to resell the loans into new Ginnie Mae RMBS pools at higher prices applicable to current loans for an immediate, nearly risk-free profit.  FMC’s Chairman and CEO Clement Ziroli Sr., President Clement Ziroli Jr., CFO Pac Wong, Senior VP Ronald Vargas, Senior VP Scott Lehrer, and Servicing Department Managing Director Edward Joseph Sanders will pay collectively over $1 million to settle the SEC’s charges.  SEC


May 31, 2016 - 

The SEC announced insider trading charges against investment banker Steven McClatchey and his friend and plumber Gary Pusey.  The SEC alleges that McClatchey had regular access to highly confidential nonpublic information about impending transactions being pursued for investment bank clients.  McClatchey allegedly tipped Pusey on 10 different occasions ahead of public merger announcements.  Pusey allegedly used the misappropriated nonpublic information to generate $76,000 in illicit trading profits.  In return for the tips, Pusey provided McClatchy with free services during his bathroom remodel and paid him thousands of dollars in cash that he typically placed in McClatchey’s gym bag while at the marina where they kept their boats or which he handed to him directly in his garage.  SEC


May 24, 2016 - 

The SEC obtained a court order to freeze the profits of Nauman A. Aly, a trader in Pakistan, who allegedly made more than $425,000 in profits by manipulating a technology stock through false company filings.  The SEC alleges that Aly filed a form 13D on the SEC’s Edgar system falsely stating that his group of investors had purchased a 5.1% beneficial ownership of Silicon Valley-based Integrated Device Technology (IDT) and had offered to acquire all of the company’s shares for a price that represented a 65 percent premium.  The market reacted quickly to the filing and IDT’s stock price increased by more than 25% in less than 10 minutes.  Aly then sold all of his IDT call options for an illicit profit of more than $425,000.  The asset freeze ensures that Aly cannot withdraw the $425,000 from his U.S.-based account.  SEC


May 20, 2016 - 

The SEC announced a whistleblower award of more than $450,000 to be split between two individuals for a tip that led the agency to open a corporate accounting investigation and for their assistance once the investigation was underway.  SEC


May 19, 2016 - 

Eric J. Kellogg, mayor of Harvey, Illinois, will pay $10,000 and has agreed to never participate in a municipal bond offering again, in order to settle SEC fraud charges.  The SEC alleged that Kellogg was connected to a series of fraudulent bond offerings by the city.  Investors were told that their money would be used to develop and construct a Holiday Inn hotel in Harvey, but instead city officials diverted at least $1.7 million in bond proceeds to fund the city’s payroll and other operational costs.  SEC


May 19, 2016 - 

The SEC announced insider trading charges against professional sports gambler William “Billy” Walters.  The SEC alleges that Walters was owed money by Thomas C. Davis, former board member of Dean Foods.  According to the SEC’s complaint, Davis regularly shared insider information about Dean Foods with Walters in advance of market-moving events.  The two communicated using prepaid cell phones and through other methods in an effort to avoid detection.  Around 2013, when Davis was lacking market-moving information about Dean Foods to share with Walters, he began sharing non-public information about strategic plans for Darden Restaurant group which Davis had subject to a non-disclosure agreement.  Walters allegedly made $40 million based on the illegal stock tips from Davis.  The SEC also included professional golfer Phil Michelson as a relief defendant.  The SEC alleges that Mickelson owed Walters money and Walters urged him to trade in Dean Food securities based on Davis’ information.  Michelson reaped more than $931,000 in profits based on his trading of Dean Foods securities and used part of the money to pay his trading debts to Walters.  Michelson has agreed to full disgorgement of his trading profits plus interest.  SEC


May 17, 2016 - 

The SEC announced a whistleblower award of more than $5 million to a former company insider whose detailed tip led the agency to uncover securities violations that would have been nearly impossible for it to detect but for the whistleblower’s information.  SEC


May 13, 2016 - 

The SEC announced a whistleblower award of more than $3.5 million to a company employee whose tip bolstered an ongoing investigation of wrongdoing that strengthened the SEC’s case.  SEC


May 13, 2016 - 

The SEC announced fraud charges against attorneys Jay Mac Rust and Christopher K. Brenner for making undisclosed risky investments and stealing money from escrow accounts of small business owners seeking commercial loans.  The SEC alleges Rust and Brenner collected $13.8 million acting as escrow agents between their clients and a purported loan company called Atlantic Rim Funding.  Rust and Brenner assured clients that their deposits of 10 percent of the desired loan amount would be held safe and only used to purchase liquid, government-backed securities.  According to the SEC’s complaint, Atlantic had no ability or intention to obtain these loans.  Yet Rust and Brenner continued to make misrepresentations to clients and collect more money from clients anyway.  Rust and Brenner took over $1 million in client funds to pay themselves and others and gambled on risky securities derivatives with the remainder of the money.  SEC


May 12, 2016 - 

The SEC announced fraud charges against California stock promoter Imran Husain and New Jersey lawyer Gregg Evan Jaclin for creating sham companies and selling them until the SEC issued stop orders and suspended the registration statements of the last two companies they created.  The SEC alleges that Husain and Jaclin created nine shell companies and sold seven by creating a sham business plan for each company, installing puppet CEOs, preparing bogus legal documents purporting to sell each company’s shares to straw shareholders who were actually given cash to pay for the stock they purchased plus a commission, and then filing misleading quarterly and annual reports once the companies were registered.  Husain obtained about $2.25 million in total proceeds when the empty shell companies were sold.  Jaclin and his firm received nearly $225,000 for their legal services.  SEC


May 11, 2016 - 

The SEC charged Jason Galanis, his father John Galanis, and five associates with defrauding investors in sham Native American tribal bonds in order to steal millions of dollars in proceeds to fund their own extravagant expenses and criminal defense costs.  The SEC alleges that Jason and John convinced a Native American tribal corporation to issue limited recourse bonds they had previously structured, acquired two investment advisory firms, and installed officers to arrange the purchase of $43 million in bonds using clients’ funds.  The SEC alleges that instead of investing bond proceeds as promised in annuities to benefit the tribal corporation and generate sufficient income to repay bondholders, the money wound up in a bank account in Florida belonging to a company controlled by the defendants.  The misappropriated funds were used for the purchase of luxury goods and to pay attorneys representing Jason and John in a criminal case brought parallel to fraud charges brought by the SEC last year.  SEC


May 6, 2016 - 

Pittsburgh, Pa.-based financial adviser Martin Blazer III, founder of Blazer Capital Management, agreed to settle fraud charges brought by the SEC.  The SEC’s complaint, filed in federal court in Manhattan, alleges that Blazer targeted professional athletes and other high-net worth individuals as clients, took approximately $2.35 million from five clients without their authorization to invest in two movie projects in which he had a personal financial interest, and then took money from one client’s account when another found out about the unauthorized investment and threatened to sue if the money was not returned.  When SEC examiners uncovered the unauthorized withdrawals, Blazer lied and produced false deal documents he created in an attempt to hide his misconduct.  A determination of disgorgement and financial penalties will be determined by the court at a later date.  SEC


May 4, 2016 - 

The SEC charged James R. Trolice and Lee P. Vaccaro with pocketing investor money they raised for companies they owned and controlled that they claimed held warrants to purchase the common stock of a technology startup company.  The SEC alleges that Trolice and Vaccaro raised approximately $6 million from more than 100 investors by creating a false sense of urgency and exclusivity around the offering and then used investor funds to pay for personal expenses such as credit card bills, college tuition, landscaping, and at Las Vegas casinos.  The SEC also alleges that neither Trolice nor Vaccaro were registered with the SEC or any state regulator.  SEC


May 3, 2016 - 

The SEC announced fraud charges against 10 individuals involved in schemes to trick investors into buying shares of ForceField Energy Inc.  The SEC alleges that investors were unaware that those soliciting them to purchase ForceField stock were being paid by ringleader Richard St. Julien, ForceField’s then-chairman of the board, to steer them to the stock.  Some of the perpetrators attempted to evade law enforcement by communicating with prepaid disposable “burner” phones and through encrypted, content-expiring text messages.  SEC


May 2, 2016 - 

Silicon Valley executive Peter D. Nunan will pay $534,303 to settle charges that he traded on inside information he received in his professional role with a subsidiary of semiconductor equipment manufacturer Screen Holdings Company.  The SEC alleged that Nunan received confidential information from a board member of FSI International that FSI was going to be acquired by a Japan-based semiconductor equipment company in FSI’s attempt to solicit a competing offer from Screen Holdings.  Nunan purchased over 100,000 shares of FSI and made over $250,000 in profits from his sale of the stock after the merger was announced.  SEC


April 29, 2016 - 

Accounting firm Santos, Postal & Co. P.C. and one of its partners, Joseph Scolaro, will pay collectively about $59,000 to settle charges that they conducted deficient surprise custody examinations of SFX Financial Advisory Management Enterprises and did not adequately consider fraud risk factors.  Santos Postal was hired to conduct surprise examinations of client assets at investment advisor SFX Financial.  The SEC charged that Santos Postal performed inadequately as SFX’s president secretly stole money from accounts belonging to professional athletes.  SEC


April 19, 2016 - 

Three former executives at battery manufacturer Ener1 will pay collective penalties of $180,000 to settle allegations of materially overstating revenues and assets.  The financial misstatements stemmed from management’s failure to impair investments and receivables related to an electric car manufacturer that was one of its largest customers.  In addition, the SEC found that Robert Hesselgesser, the engagement partner for PricewaterhouseCoopers’ audit of Ener1’s 2010 financial statements, violated PCAOB and professional auditing standards.  Hesselgesser agreed to be suspended from practicing before the SEC as an accountant.  SEC


April 19, 2016 - 

Technology manufacturer Logitech International will pay a $7.5 million penalty for fraudulently inflating its fiscal year 2011 financial results to meet earnings guidance and committing other accounting-related violations during a five-year period.  Logitech’s then-controller and then-director of accounting will pay collective penalties of $75,000 for violations related to Logitech’s warranty accrual accounting and failure to amortize intangibles from an earlier acquisition.  The SEC also filed a complaint in federal court against Logitech’s then-CFO and then-acting controller alleging that they deliberately minimized the write-down of millions of dollars of excess components parts for a product for which Logitech had excess inventory.  SEC


April 15, 2016 - 

The SEC announced fraud charges against James Catipay and David Aldrich for allegedly raising $11.7 million from approximately 250 investors, many of them retirees, for their Los Angeles-based litigation marketing company, PLCMGMT LLC (a/k/a PLC or Prometheus Law).  Investors were told their money would be used to help gather plaintiffs for class-action and other lawsuits and they would earn hefty investment returns from settlement proceeds.  Instead, the SEC alleges that Catipay and Aldrich diverted millions of dollars for their personal use while failing to deliver the promised 100 to 300 percent returns to investors.  SEC


April 14, 2016 - 

The SEC announced fraud charges and an asset freeze against Vermont-based ski resort Jay Peak, Inc. and related businesses for allegedly misusing millions of dollars raised through investments solicited under the EB-5 immigrant investor program.  The SEC alleges that Ariel Quiros of Miami, William Stenger of Newport, Vermont, and their companies, made false statements and omitted key information while raising more than $350 million from investors to construct ski resort facilities and a biomedical research facility in Vermont.  Investors were told their money would be used to finance a specific project connected to Jay Peak.  Instead, in Ponzi-like fashion, money from investors in later projects was misappropriated to fund deficits in earlier projects.  More than $200 million was allegedly used for other-than-stated purposes, including $50 million spent on Quiros’ personal expenses and in other undisclosed ways.  SEC


April 14, 2016 - 

The SEC announced fraud charges against the town of Ramapo, New York, the town’s local development corporation, and four town officials.  The SEC alleges that Ramapo officials resorted to fraud to hide the strain in the town’s finances caused by the approximately $60 million cost to build a baseball stadium as well as the town’s declining sales and property tax revenues.  They cooked the books of the town’s primary operating fund to falsely depict positive balances of between $1.4 million and $4.2 million during a six-year period when the town had actually accumulated balance deficits as high as nearly $14 million.  In addition, because the stadium bonds issued by the Ramapo Local Development Corp (RLDC) were guaranteed by the town, certain officials masked an operating revenue shortfall at the RLDC such that investors were unaware the town would likely need to subsidize those bond payments and further deplete the general fund.  SEC


April 13, 2016 - 

The SEC announced insider trading charges against John Ayfriyie, a research analyst who learned about the impending acquisition of home security company The ADT Corporation by Apollo Group Management.  The SEC alleges that Ayfriyie accessed several highly confidential, deal-related documents on his firm’s computer network and purchased thousands of high-risk, out-of-the-money ADT call options in his mother’s investment account, in anticipation that ADT’s stock price would rise when the transaction was publicly announced.  In a parallel action, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Ayfriyie.  SEC


April 11, 2016 - 

The SEC announced fraud charges against Texas-based technology company Servergy Inc. and its founder and former CEO William Mapp III for boosting company stock sales with false claims about a supposedly revolutionary computer server and purported purchases by big-name companies.  The SEC alleges that Servergy and Mapp sold $26 million worth of stock in private offerings while misleading investors to believe that the “Cleantech CTS-1000” server (the company’s sole product) was especially energy efficient and would compete directly with top server makers like IBM, Dell, and Hewlett Packard.  In fact, 32-bit processors like the CTS-1000 were being phased out of the industry and could not compete with the high-performance 64-bit processors being produced by competitors.  In addition, the SEC alleges that when Servergy was low on operating funds, Mapp enticed prospective investors to purchase by falsely claiming well-known companies, such as Amazon, had placed orders for the servers.  In fact, an Amazon employee had merely contacted Servergy about testing the product for his personal use.  Servergy will pay $200,000 to settle the SEC’s charges.  The litigation against Mapp continues in the Eastern District of Texas.  Also charged in the SEC’s complaint is Texas Attorney General Ken Paxton and a former member of Servergy’s board of director, Caleb White.  The SEC alleges that Paxton and White recruited investors for Servergy while hiding that they were being compensated to promote the company’s stock.  White will pay $66,000 to settle the charges.  SEC


April 7, 2016 - 

Resort company Las Vegas Sands Corp. (LVS) will pay $9 million to settle charges of violating the Foreign Corrupt Practices Act (FCPA).  An SEC investigation found that LVS kept inaccurate books and records and frequently lacked supporting documentation or proper approvals for more than $62 million in payments to a consultant in Asia.  The consultant acted as an intermediary to obscure the company’s role in certain business transactions, such as the purchase of a basketball team to play in the Chinese Basketball Association (which does not permit gaming companies to own team) or the purchase of a building in Beijing from a state-owned company (where casino gambling is not permitted).  SEC


April 4, 2016 - 

The SEC announced charges against four individuals for fraud against victims including seniors solicited through free dinners at a Tampa, Florida restaurant.  The SEC alleges that Philadelphia residents Joseph Andrew Paul and John D. Ellis, Jr. lied about the track record of their advisory firm, including by creating fraudulent marketing materials with performance numbers cut-and-pasted from another firm’s website.  Paul and Ellis recruited Donald Ellison and James Quay to use these materials and solicit potential victims with promises of lofty returns.  The SEC alleges that much of the money was never invested, but rather split between the four men.  SEC


March 31, 2016 - 

Commercial vehicle manufacturer Navistar International Corp. will pay $7.5 million to settle charges that it misled investors about its development of an advanced technology truck engine that could be certified to meet U.S. standards.  Separately, the SEC has filed charges in federal court in the Northern District of Illinois against Navistar’s former CEO Daniel Ustian.  The SEC alleges that Navistar and Ustian failed to fully disclose the difficulties Navistar was having gaining EPA certification that its truck engine, designed using “exhaust-gas-recirculation” technology, met stricter Clean Air Act standards which took effect in 2010.  SEC


March 30, 2016 - 

Biotech venture capitalist G. Steven Burrill and his firm, Burrill Capital Management, will pay $5.785 million to settle charges that Burrill siphoned money from the Burrill Life Sciences Capital Fund III under the guise of “advanced” management fees to fund his lavish lifestyle.  The SEC’s order also found Burrill Capital Management’s Chief Legal Officer and Controller to have played integral roles in Burrill’s scheme.  They will pay $275,000 combined to settle the SEC’s charges.  SEC


March 29, 2016 - 

AVEO Pharmaceuticals Inc. will pay $4 million to settle charges that it mislead investors about its efforts to obtain FDA approval for Tivozanib, its flagship developmental drug to treat kidney cancer.  The SEC alleges that AVEO concealed the FDA’s level of concern about Tivozanib in public statements to investors by omitting the critical fact that FDA staff had recommended a second clinical trial to address concerns about patient death rates during the first clinical trial.  When the FDA made public months later that it had recommended an additional clinical trial, the company’s stock price declined 31 percent.  AVEO never conducted an additional trial and the FDA later refused to approve Tivozanib.  The SEC also filed charges against AVEO’s former CEO, CFO, and CMO.  These charges remain outstanding.  SEC


March 29, 2016 - 

Former market analyst and TV news commentator Tobin Smith and his company NBT Group Inc. will pay over $250,000 to settle charges that they fraudulently promoted a penny stock to investors.  The SEC alleged that Smith and NBT were paid to prepare and disseminate communications touting the stock of IceWEB Inc., a data storage company.  Smith and NBT did not fully disclose their compensation to investors.  In addition, the promotional material contained false and misleading statements intended to artificially increase the trading volume and share price of IceWEB’s stock.  SEC


March 28, 2016 - 

The SEC charged New York-based securities professional Andrew W.W. Caspersen with soliciting approximately $95 million from two institutional investors by offering promissory notes issued by Irving Place III SPV LLC.  The SEC alleges that Irving Place III SPV LLC is a shell entity formed and controlled by Caspersen with no legitimate business operations, unlike the similarly named Irving Place Capital Partners III SPV which is not associated with Caspersen in any way.  Caspersen obtained a $25 million investment in November 2015 from an institutional investor by falsely representing that the investment would be secured by approximately $900 million of assets of Irving Place Capital Partners III SPV.  SEC


March 25, 2016 - 

The SEC brought fraud charges and obtained asset freezes against New Jersey fund manager John Bivona and his firms Saddle River Advisors and SRA Management Associates for marketing shares in promising pre-IPO tech companies in the Bay Area while stealing $5.7 million and diverting millions more to other improper and undisclosed uses.  The SEC alleges that Bivona used money raised through his firms to pay off earlier investors, prop up other funds, and pay family-related expenses.  He secretly steered the lion’s share of misappropriated funds to his nephew Frank Mazzola who was barred from the securities industry in a prior SEC enforcement action.  The SEC alleges that while Bivona raised more than $53 million from investors, the money he siphoned away for undisclosed uses left his firms continuously short of the cash needed to buy the shares promised to investors.  SEC


March 15, 2016 - 

The SEC charged former Boston resident Mark A. Jones with operating a $10 million Ponzi scheme that claimed to generate profits from “bridge loans” to businesses in Jamaica.  Jones was arrested by the FBI and the U.S. Attorney for the District of Massachusetts has filed related criminal charges against him.  SEC


March 15, 2016 - 

Kansas-based municipal advisor Central States Capital Markets, its CEO, and two employees will pay about $437,327 collectively to settle charges that they breached their fiduciary duties by failing to disclose a conflict of interest to a municipal client.  According to the SEC’s order, while Central States served as a municipal advisor to a client on municipal bond offerings in 2011, two of its employees, in consultation with the CEO, arranged for the offerings to be underwritten by a broker-dealer where all three worked as registered representatives.  Central States did not inform the client of its relationship to the underwriter or the financial benefit it obtained from serving in dual roles.  In three offerings, Central States received 90 percent of the underwriting fees the client city paid to the broker-dealer.  The case is the SEC’s first to enforce the fiduciary duty for municipal advisors created by the 2010 Dodd-Frank Act which required these advisors to put their municipal clients’ interests ahead of their own.  SEC


March 14, 2016 - 

The SEC charged microcap company RVPlus Inc. and its CEO, Lee Peterson, with making bogus claims in the company’s public filings and in statements to private investors and with unlawfully distributing RVPlus’ stock.  The SEC alleges that starting in 2012, Peterson filed periodic reports with the SEC claiming that RVPlus had a lucrative relationship with the United Nations and clean energy agreements with governmental bodies in Nigeria, Haiti, and Liberia worth $2.8 billion.  RVPlus had no relationship with the U.N. and the contracts were fictitious.  In addition, the SEC alleges that RVPlus and Peterson gained control of more than 90 percent of RVPlus’ free trading shares and gave them individuals who unlawfully sold them into the market.  SEC


March 14, 2016 - 

Three AIG affiliates, Royal Alliance Associates, SagePoint Financial, and FSC Securities Corporation, will pay $9.5 million to settle SEC charges of steering mutual fund clients toward more expensive share classes so the firms could collect more fees.  An SEC investigation found that the firms placed clients in share classes that charged fees for marketing and distribution despite the clients being eligible to buy shares in fund classes without those additional charges.  As a result, the firms collected approximately $2 million in extra fees.  The firms failed to disclose this conflict of interest.  The SEC’s order also alleged that the firms failed to monitor advisory accounts on a quarterly basis to prevent reverse churning.  The firms had compliance policies and procedures to ensure that fee-based advisory accounts that charged an inclusive fee for both advisory services and trading costs remained in the best interest of clients that traded infrequently, but failed to implement those policies and procedures.  SEC


March 11, 2016 - 

The SEC charged California businessman Daniel Nase with raising money from investors through unregistered offerings of common stock in his Bakersfield, California-based company, BIC Real Estate Development Corp., and using the funds for personal expenses.  Nase tried to cover up the theft after learning of the SEC’s investigation by investing stolen assets back into the company to make it appear he was increasing his equity stake in it.  SEC


March 10, 2016 - 

The SEC charged Oregon-based investment group Aequitas Management LLC and four affiliates, along with three top executives, with raising more than $350 million from investors while hiding the group’s rapidly deteriorating financial condition.  Aequitas allegedly defrauded more than 1,500 investors nationwide into believing they were making health care, education, and transportation-related investments when their money was really being used in a last-ditch effort to save the firm, including using some new money to pay earlier investors.  SEC


March 10, 2016 - 

Texas-based oil company Magnum Hunter Resources Corporation as well as two former senior officers and two consultants will pay $290,000 collectively to settle charges of deficient evaluation of, and failure to maintain control over, Magnum Hunter’s internal controls over financial reporting (ICFR) between December 2011 and September 2013.  ICFR refers to a company’s process for providing reasonable assurance to the public regarding the reliability of its financial reporting.  SEC rules require company management to evaluate and annually report on the effectiveness of ICFR, including disclosing any identified material weaknesses that create a reasonable possibility that the company will not timely prevent or detect a material misstatement of its financial statements.  According to the SEC’s orders, Magnum Hunter enjoyed rapid growth in 2010 and significant acquisitions in 2010 and 2011 which strained its accounting resources.  Despite assessments that there was inadequate control over the financial reporting process, a material weakness was not reported.  SEC


March 9, 2016 - 

Uni-Pixel Inc., a developer of technologies for touchscreen devices, has agreed to pay $750,000 to settle charges it misled investors about the production status and sales agreements for a key product.  The SEC alleged that Uni-Pixel began publicly touting sales of a touchscreen sensor product  supposedly in speedy high-volume commercial production when in fact only a few samples had been manually completed.  The misrepresentations caused Uni-Pixel’s stock price to more than double, enabling then-CEO Reed Killion and then-CFO Jeffrey Tomz to make more than $2 million in personal profits from selling their own shares of company stock.  Uni-Pixel also announced multi-million dollar sales agreements in 2012 and 2013 that highlighted potential revenues but omitted material conditions the company had to meet to actually receive those revenues.  The SEC also filed charges against Killion and Tomz and entered into a deferred prosecution agreement with Uni-Pixel’s former chairman of the board.  SEC


March 9, 2016 - 

Florida man Jay Y. Fung has agreed to pay $760,000 to settle charges by the SEC that he traded on inside information by purchasing stock and call options in Pharmasset Inc. based on a friend’s tip that it was about to be acquired.  The SEC previously charged Fung’s friend and tipper, Kevin Dowd, who has agreed to pay back the cash kickbacks he received from Fung and has pled guilty in a parallel criminal case.  SEC


March 9, 2016 - 

The SEC charged California’s largest agricultural water district, the Westlands Water District, as well as its general manager and former assistant general manager, with misleading investors about Westlands’ financial condition in connection with a $77 million bond offering.  The SEC’s order instituting settled administrative proceedings alleged that Westlands had agreed to maintain a 1.25 debt service coverage ratio.  But when drought conditions reduced the water supply, preventing it from generating enough revenue to maintain the ratio, Westlands used extraordinary accounting transactions to reclassify funds from reserve accounts to record additional revenue.  When the Westlands issued the $77 million bond offering in 2012 it represented to investors that it met or exceeded the 1.25 ratio for each of the prior five years.  Absent the reclassifications and adjustments, Westlands’ ratio for 2010 would have been .11.  Westlands and the charged managers agreed to pay $195,000 collectively to settle the SEC’s charges.  SEC


March 9, 2016 - 

Cyprus-based company Banc de Binary Ltd., its founder Oren Shabat Laurent, and three affiliates, will pay $11 million to settle charges of illegally selling binary options to U.S. investors.  The SEC’s 2013 complaint alleged that the defendants failed to register the offering before soliciting U.S. customers and failed to register as a broker-dealer before communicating directly with U.S. clients.  Binary options differ from more conventional options contracts because the payout typically depends entirely on whether the price of a particular asset underlying the option will rise above or fall below a specified amount.  The defendants will pay about $9 million to the SEC and $2 million to the CFTC which filed a parallel action.  A fair fund has been established to distribute money to the harmed investors.  SEC

 


March 8, 2016 - 

The SEC charged fund manager Steven Zoernack and his firm EquityStar Capital Management with operating without registration, providing false and misleading data to investors, and actively hiding Zoernack’s checkered past, including two felony fraud convictions and a bankruptcy filing.  SEC


March 7, 2016 - 

The SEC charged the Rhode Island state agency now known as the Rhode Island Commerce Corporation and its bond underwriter Wells Fargo Securities with defrauding investors in connection with a municipal bond offering to finance a start-up video game company called 38 Studios.  The Rhode Island agency loaned $50 million in bond proceeds to 38 Studios.  However, the bond offering documents produced by the agency and Wells Fargo failed to disclose that 38 Studios had conveyed it needed at least $75 million in funding to produce a particular video game.  Therefore, investors were not fully informed that 38 Studios faced a funding shortfall even with the loan proceeds.  When 38 Studios was unable to obtain additional financing, the company defaulted on the loan.  The SEC also charged Wells Fargo’s lead banker on the deal and two Rhode Island agency executives with aiding and abetting the fraud.  The SEC’s complaint further alleges that Wells Fargo and the lead banker on the 38 Studios deal failed to disclose that Wells Fargo had a side deal with 38 Studios which enabled it to receive nearly double the amount of compensation disclosed in offering documents.  SEC


March 8, 2016 - 

The SEC announced an award of approximately $2 million to three whistleblowers.  The largest portion of the award, $1.8 million, will go to the whistleblower whose original information prompted the SEC to open its investigation.  The other two whistleblowers will receive approximately $65,000 each.  SEC


March 1, 2016 - 

March 1, 2016 – Telecommunications company Qualcomm Inc. will pay $7.5 million to settle charges that it violated the Foreign Corrupt Practices Act (FCPA) by hiring relatives of Chinese government officials involved with the decision of whether to purchase Qualcomm’s mobile technology products.  An SEC investigation also found Qualcomm provided gifts, travel, and entertainment to officials at government-owned telecom companies in China in an attempt to influence their purchasing decisions.  SEC


February 18, 2016 - 

February 18, 2016 – Telecommunications provider VimpelCom Ltd. will pay $795 million in a global settlement with the SEC, DOJ, and Dutch regulators to resolve allegations that it violated the Foreign Corrupt Practices Act (FCPA) in connection with its business in Uzbekistan.  The SEC alleges that Vimpelcom offered and paid bribes to an Uzbek government official related to the President of Uzbekistan, as the company entered the Uzbek market and sought government-issued licenses, frequencies, channels, and number blocks.  At least $114 million in bribe payments were funneled through an entity affiliated with the Uzbek official.  The SEC’s press release announcing the settlement described VimpelCom’s revenues in Uzbekistan as a result of the improper payments as “massive.”  VimpelCom will pay $167.5 million to the SEC, $230.1 million to the DOJ, and $397.5 million to Dutch regulators.  SEC


February 17, 2016 - 

February 17, 2016 – Former Deutsche Bank research analyst Charles Grom will pay $100,000 and be suspended from the security industry for one year, to settle SEC charges that he certified the rating on a stock that was inconsistent with his personal view.  An SEC investigation found that Grom certified that his March 29, 2012 report about discount retailer Big Lots accurately reflected his own beliefs about the company and its securities.  But in private communications with Deutsche Bank research and sales personnel, Grom indicated that he did not downgrade Big Lots from a “buy” recommendation because he wanted to maintain his relationship with Big Lots management.  SEC


February 16, 2016 - 

February 16, 2016 – Massachusetts-based technology company PTC Inc. and its Chinese subsidiaries will pay more than $28 million to settle civil and criminal actions involving violations of the Foreign Corrupt Practices Act (FCPA).  An SEC investigation found that two Chinese subsidiaries of PTC provided non-business related travel and other improper payments to various Chinese government officials in an effort to win business.  Specifically, the SEC’s order found that from 2006 to 2011, PTC’s subsidiaries provided improper travel, gifts, and entertainment totaling nearly $1.5 million to Chinese government officials.  PTC gained nearly $11.8 million in profits from contracts with state-owned entities whose officials received the improper payments.  PTC will pay about $13.6 million to settle the SEC’s charges and its Chinese subsidiaries will pay $14.54 million in a non-prosecution agreement with the DOJ.  The SEC also announced its first deferred prosecution agreement with an individual in an FCPA case.  The SEC agreed to defer for three years, FCPA charges against Yu Kai Yuan, a former employee of one of PTC’s Chinese subsidiaries, based on his significant cooperation with the SEC’s investigation.  SEC


February 11, 2016 - 

February 11, 2016 – The SEC charged unregistered broker Gregory Ruehle with fraudulently selling purported stock in medical device company ICB International while pocketing investors’ money and using it to pay gambling debts.  The SEC alleges that Ruehle raised approximately $1.9 million from over 100 investors by claiming that he would sell them his personally-owned securities in ICB International.  However, Ruehle sold far more shares than he in fact owned, owned shares that were non-transferable, and fabricated documents purportedly transferring the shares.  In a parallel action, the U.S. Attorney’s Office for the Southern District of California announced criminal charges against Ruehle.  SEC


February 9, 2015 - 

St. Louis-based agribusiness Monsanto Company will pay an $80 million penalty to settle charges that it violated accounting rules and misstated company earnings with respect to its flagship product Roundup.  In addition, three accounting and sales executives will pay $135,000 collectively to settle charges against them.  An SEC investigation found that Monsanto had insufficient internal controls to properly account for millions of dollars in rebates offered to retailers and distributors of Roundup after generic competition had undercut Monsanto’s prices and resulted in a significant loss of market share for the company.  Monsanto booked substantial revenue resulting from sales incentivized by the rebate programs but failed to recognize all of the related program costs at the same time.  Therefore, Monsanto materially misstated its consolidated earnings in corporate filings during a three-year period.   Monsanto’s CEO and former CFO reimbursed the company $3,165,852 and $728,843 respectively, for cash bonuses and certain stock awards received during the period when the company committed the accounting violations.  SEC


February 5, 2016 - 

The SEC filed charges against Dennis Wayne Hamilton, an executive at Connecticut-based electronics company Harman International Industries, alleging that he made more than $130,000 in illegal profits by trading on nonpublic information he learned on the job in advance of Harman’s release of its fiscal year 2014 first quarter earnings.  In a parallel action, the U.S. Attorney’s Office for the District of Connecticut filed criminal charges against Hamilton.  SEC


February 4, 2016 - 

Miami-based brokerage firm E.S. Financial Services, now known as Brickell Global Markets, will pay a $1 million penalty to settle charges that it violated anti-money laundering rules by allowing foreign entities to buy and sell securities without verifying the identities of non-U.S. citizens who beneficially owned them.  Federal law requires all financial institutions to maintain an adequate customer identification program to ensure they know their customers and do not become a conduit for money laundering or terrorist financing.  But during SEC examinations, the firm twice failed to provide required books and records identifying certain foreign customers whom they were soliciting directly and to whom they were providing investment advice.  An ensuing investigation found that the firm’s customer identification program failed to obtain and maintain documentation to verify the identities of 23 non-U.S. citizens, the beneficial owners of 13 non-U.S. corporate entities, who executed more than $23 million in securities transactions through a brokerage account opened by a Central American bank affiliated with the firm.  SEC


February 3, 2016 - 

Manhattan-based lending company, American Growth Funding II LLC (AGF), and its owner, Ralph Johnson, have been charged with fraud for repeatedly lying to investors purchasing high-yield securities.  The SEC alleges that the defendants promised investors 12-percent annual returns, falsely claimed its financial statements were being audited each year, and concealed details about the deteriorating value of assets that could imperil full payment of returns to investors.  The SEC also charged Portfolio Advisors Alliance, the brokerage firm that acted as AGF’s placement agent, and two of its executives, for allegedly continuing to use AGF’s offering documents to solicit sales of its securities when they knew that the documents were inaccurate.  SEC


February 2, 2016 - 

Fourteen municipal underwriting firms will pay civil penalties to settle charges under the SEC’s Municipalities Continuing Disclosure Cooperation (MCDC) initiative.  In all, 72 underwriters (comprising 96% of the municipal underwriting market) have been charged under the voluntary self-reporting program which targets material misstatements and omissions in municipal bond offering documents.  The settling firms and civil penalties paid by the settling firms are as follows: Barclays Capital Inc. ($500,000), Boenning & Scattergood Inc. ($250,000), D.A. Davidson & Co. ($500,000), First Midstate Inc. ($100,000), Hilltop Securities Inc. ($360,000), Janney Montgomery Scott LLC ($500,000), Jefferies LLC ($500,000), KeyBanc Capital Markets Inc. ($440,000), Mitsubishi UFJ Securities  (USA) Inc. ($20,000), Municipal Capital Markets Group Inc. ($60,000), Roosevelt & Cross Inc. ($250,0000), TD Securities (USA) LLC ($500,000), United Bankers’ Bank ($160,000), and Wells Fargo Bank N.A. Municipal Products Group ($440,000).  SEC


February 1, 2016 - 

Software manufacturer SAP SE will disgorge $3.7 million from profits on its sales of software to the Panamanian Government to settle charges that it violated the Foreign Corrupt Practices Act when procuring business in Panama.  An SEC investigation found that SAP’s deficient internal controls allowed a former SAP executive, Vincente Garcia, to pay $145,000 in bribes to a senior Panamanian government official and offer bribes to two others in exchange for lucrative software contracts.  The bribery scheme involved providing large discounts of up to 82% to SAP’s Panamanian business partner, who used the excessive discounts to create a slush fund out of which it could pay bribes on Garcia’s behalf.  SEC


January 31, 2016 - 

Barclays Capital Inc. and Credit Suisse Securities (USA) LLC will collectively pay $154.3 million to the SEC and New York Attorney General to settle separate cases finding that they violated federal securities laws while operating alternative trading systems known as dark pools and Credit Suisse’s Light Pool.  Barclays will pay $35 million in penalties to the SEC and $35 million in penalties to the New York Attorney General.  Credit Suisse will pay $30 million in penalties and $24.3 million in disgorgement and prejudgment interest to the SEC and $30 million in penalties to the New York Attorney General.  The settlements address misstatements by Barclays and Credit Suisse to subscribers about the material operations of their alternative trading systems.  SEC


January 28, 2016 - 

Manhattan-based advisory firm, QED Benchmark Management LLC, and its Toronto-based founder/manager, Peter Kuperman, will reimburse investors $2.877 million in losses to settle charges that they misled investors about a fund’s investment strategy and historical performance.  According to the SEC’s order, QED and Kuperman avoided disclosing heavy trading losses to investors by using a misleading mixture of actual and hypothetical returns when describing the fund’s performance history.  After obtaining millions of dollars from investors based on these misrepresentations, QED and Kuperman then deviated from their stated investment strategy and poured most of the fund’s assets into a single penny stock.  SEC


January 20, 2016 - 

Ocwen Financial Corp. will pay $2 million to settle charges that it misstated financial results by using a flawed, undisclosed methodology to value complex mortgage assets.  Ocwen inaccurately disclosed to investors that it independently valued these assets at fair market value according to U.S. Generally Accepted Accounting Principles. In fact, Ocwen merely used, and failed to review, the valuation performed by a related party to which it sold the rights to service certain mortgages.  In addition, the SEC found that Ocwen’s internal controls failed to prevent conflicts of interest involving Ocwen’s executive chairman who played a dual role in many related party transactions.  As a result, Ocwen’s executive chairman was able to approve transactions from both sides, including a $75 million bridge loan to Ocwen from a company where he also served as chairman of the board.  SEC


January 19, 2016 - 

Equinox Fund Management LLC, a Denver-based alternative fund manager, will pay over $6 million to settle charges that the firm overcharged management fees and misled investors about how it valued certain assets.  Equinox will refund investors approximately $5.4 million in excessive management fees collected during a seven-year period.  SEC


January 15, 2016 - 

The SEC awards more than $700,000 to a whistleblower described as a “company outsider.”  The SEC says that the whistleblower provided a “detailed analysis” of the wrongdoing that lead to a successful SEC enforcement action.  SEC


January 14, 2016 - 

Goldman, Sachs & Co. will pay $15 million to settle charges that its securities lending practices violating federal regulations.  The SEC’s order found that Goldman violated Regulation SHO by improperly providing “locates” — representations that the firm believes it can obtain a security necessary to settle a short sale — when it had failed to perform an adequate review of the securities to be located.  Specifically, Goldman employees routinely processed customer locate requests by relying on a function of Goldman’s order management system which allowed orders to be placed based on the start-of-day inventory reported to Goldman by large financial institutions.  However, this function allowed locates to be provided even when the automated system had already deemed the inventory depleted based on locate requests placed earlier in the day.  Additionally, when questioned about the firm’s lending practices by SEC examiners, Goldman Sachs provided incomplete responses that adversely affected and unnecessarily prolonged the SEC’s examination.  SEC


January 14, 2016 - 

State Street Bank and Trust Company will pay $12 million to settle charges that it conducted a pay-to-play scheme to win contracts to service Ohio pension funds.  An SEC investigation found that Vincent DeBaggis, head of State Street’s public funds group, made a deal with Ohio’s then-deputy treasurer under which DeBaggis would make illicit cash payments and political campaign contributions in exchange for three lucrative contracts to safeguard certain funds’ investment assets and effect the settlement of their securities transactions.  DeBaggis will pay almost $275,000 to settle the SEC’s charges.  In related proceedings, attorney Robert Crowe, who worked as a lobbyist and fundraiser for State Street, was charged in federal court for his role in the scheme.  SEC


January 13, 2016 - 

Nine of eleven high-ranking executives and board members of Superior Bank and its holding company have settled charged by the SEC based on their alleged involvement in various schemes designed to conceal the extent of loan losses experienced as the bank was faltering in the wake of the financial crisis.  The defendants propped up Superior’s financial condition through straw borrowers, bogus appraisals, and insider deals, allowing the bank to avoid impairment and the reporting of ever-increasing allowances for loan and lease losses.  As a result, Superior overstated its net income in public filings by 99 percent for 2009 and 50 percent for 2010.  The settling defendants will pay at least $2.8 million collectively and are all permanently barred from serving as officers or directors of a public company.  SEC


January 8, 2016 - 

Steven Cohen, founder and manager of hedge fund S.A.C. Capital Advisors LLC, will be prohibited from supervising funds that manage outside money until 2018.  The SEC found that Cohen ignored red flags of insider trading and failed to supervise a former portfolio manager, Mathew Martoma, who engaged in insider trading in 2008 while employed at C.R. Intrinsic Investors, an investment advisory firm that was a wholly-owned subsidiary of S.A.C. Capital Advisors.  C.R. Intrinsic previously paid more than $600 million to settle SEC charges of insider trading.  Several of Cohen’s entities, including C.R. Intrinsic and S.A.C. Capital Advisors, previously paid $1.2 billion to resolve related criminal charges brought by the U.S. Attorney’s Office for the S.D.N.Y.  SEC


January 6, 2016 - 

J.P. Morgan’s brokerage business will pay $4 million to settle charges that it falsely claimed that its advisors were compensated “based on our clients’ performance.”  An SEC investigation found that J.P. Morgan Securities LLCdid not pay representatives based on client performance.  Rather, advisors were paid a salary and a discretionary bonus based on a number of factors, none of which were tied to portfolio performance.  SEC


December 28, 2015 - 

Two traders in China and Hong Kong, Zhichen Zhou and Yannan Liu, will pay more than $920,000 to settle charges of insider trading.  The traders’ assets were frozen last month when the SEC’s complaint was filed against them.  They will disgorge the entirety of their ill-gotten profits and pay additional penalties.  The SEC’s complaint alleged that Zhou and Liu traded in two healthcare company stocks, MedAssets Inc. and Chindex International, based on nonpublic information about their impending acquisitions by private equity firms.  Liu was an associate at TPG Capital which had ties to both of the deals.  SEC


December 22, 2015 - 

Morgan Stanley Investment Management will pay $8.8 million to settle charges that one of its portfolio managers, Sheila Huang, unlawfully conducted prearranged trading known as “parking” that favored certain advisory client accounts over others.  An SEC investigation found that Huang arranged sales of mortgage-backed securities to brokerage firm SG Americas at predetermined prices that would enable her to buy back the positions at a small markup into other accounts advised by Morgan Stanley.  Huang also sold additional bonds at above-market prices to avoid incurring losses in certain accounts, but repurchased them at unfavorable prices in a fund that she managed without disclosing it to the disadvantaged fund client.  SG Americas also agreed to pay more than $1 million to settle SEC charges related to its role in these transactions.  SEC


December 21, 2015 - 

The SEC charged Donald Toomer, a Las Vegas-based financial advisor, in connection with previously filed fraud charges against Samuel DelPresto.  The SEC alleges that Toomer, to assist DelPresto in demonstrating liquidity and market demand for his microcap stocks, agreed to buy shares of three microcap stocks in client accounts in exchange for hundreds of thousands of dollars in kickbacks.  In a parallel action, the U.S. Attorney’s Office for the District of New Jersey announced criminal charges against Toomer.  SEC


December 18, 2015 - 

The SEC charged known securities fraudster, Edward Durante, with defrauding investors by selling shares of a shell company he secretly controlled and falsely telling them stock sale proceeds would be used to fund the company’s operations when they were actually tapped for other purposes including Durante’s personal use.  Durante served a 10-year prison term following a previous securities fraud conviction in 2001.  An SEC investigation revealed that he has again been soliciting investors under aliases and between 2012 and 2014 defrauded at least 50 relatively inexperienced investors through at least $11 million in sales of stock in his shell company VGTel.  SEC


December 18, 2015 - 

J.P. Morgan wealth management subsidiaries, J.P. MorganSecurities LLC and JPMorgan Chase Bank N.A., will pay $267 million to settle charges that they failed to disclose conflicts of interest to clients.  An SEC investigation found that the businesses preferred to invest clients in the firm’s own proprietary investment products without properly disclosing this preference.  This preference impacted fundamental aspects of money management — asset allocation and selection of fund managers.  In a parallel action, JP Morgan Chase Bank will pay an additional $40 million penalty to the Commodity Futures Trading Commission.  SEC


December 17, 2015 - 

The SEC charged Martin Shkreli, former CEO of pharmaceutical company Retrophin, with committing fraud during a five-year period when he was also working as a hedge fund manager.  The SEC alleges that Shkreli misappropriated money from two hedge funds he founded and made material misrepresentations to investors among other widespread misconduct, including fraudulently inducing Retrophin to issue stock and make cash payments to certain disgruntled investors in Shkreli’s hedge funds who were threatening legal action.  The SEC also charged Retrophin’s former outside counsel and corporate secretary Evan Greebel with aiding and abetting certain aspects of Shkreli’s alleged fraud.  In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York announced criminal charges against Shkreli and Greebel.  SEC


December 16, 2015 - 

The SEC barred hedge fund adviser Owen Li from the securities industry and censured his associated firm Canarsie Capital LLC after Li made a series of false statements to investors and ultimately caused a fund’s collapse.  In a parallel action, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Li.  Monetary sanctions are expected to be ordered in this parallel criminal proceeding.  SEC


December 15, 2015 - 

The SEC announced fraud charges against Connecticut-based investment advisory firm Atlantic Asset Management LLC for investing clients in certain bonds with a hidden financial benefit to the broker-dealer connected to the firm.  The SEC alleges that Atlantic invested more than $43 million of client funds in illiquid bonds issued by a native American tribal corporation without disclosing the conflict of interest that the bond sales generated a private placement fee for the broker-dealer, whose parent company partially owns Atlantic.  SEC


December 15, 2015 - 

The SEC charged New Jersey resident Samuel DelPresto and his company MLF Group, Inc. with illicitly pocketing $13 million from an elaborate pump-and-dump scheme.  The SEC alleges that DelPresto teamed with others to secretly obtain control of substantially all available stock in four microcap companies,BioNeutral Group, NXT Nutritionals Holdings, Mesa Energy Holdings, and Clear-Lite Holdings, and facilitate coordinated trading that created the appearance of liquidity and market demand for the stocks.  After unwitting investors were enticed through promotional campaigns to buy the stock at inflated prices, DelPresto dumped his shares on the market.  In a parallel action, the U.S. Attorney’s Office for the District of new Jersey announced criminal charges against DelPresto.  SEC


December 11, 2015 - 

The SEC announced fraud charges and a court-ordered asset freeze against penny stock company Oxford City Football Club, Inc.  The SEC alleges that Oxford City’s CEO, Thomas Anthony Guerriero, used pressure tactics and a boiler room of salespeople to raise more than $6.5 million from primarily inexperienced investors who were misled to believe that the company was a thriving conglomerate of sports teams, academic institutions, and real estate holdings.  The company even falsely touted itself as “the largest publicly traded diversified portfolio of professional sports teams in the world.”  In reality, the company was losing millions of dollars each year and turning zero profit from its two lower-division soccer teams in the U.K.  SEC


December 10, 2015 - 

Through orders instituting settled administrative proceedings, the SEC suspended five accountants and two associated auditing firms from practicing or appearing before the SEC.  The SEC’s orders found that the accountants and firms at various times performed deficient audits of public companies, jeopardized the independence of other audits, falsified and backdated audit documents, and violated other key rules designed to preserve the integrity of the financial reporting system. SEC


December 7, 2015 - 

The SEC announced a series of enforcement actions against lawyers across the country charged with offering EB-5 investments while not registered to act as brokers.  The SEC settled administrative proceedings against at least seven immigration law firms and/or attorneys, who agreed to cease and desist from acting as unregistered brokers, and collectively will pay over $700,000 in disgorgement, penalties, and prejudgment interest.  The SEC also filed a complaint in federal district court in Los Angeles alleging that immigration attorney Hui Feng and the Law Office of Feng & Associates not only acted as unregistered brokers by selling EB-5 investments to more than 100 investors, but also defrauded their clients by failing to disclose their receipt of commissions on the investments in breach of their fiduciary and legal duties. SEC


December 3, 2015 - 

The SEC announced fraud charges against three Chicago-based traders, twin brothers Behruz and Shahryar Afshar and their friend and former broker Richard Kenny, for circumventing market structure rules through a pair of options trading schemes.  Options exchange rules provide that a non-broker-dealer that places more than 390 orders in options per day (on average) during any month will be designated as a “professional” for the next quarter.  This designation applies to all accounts beneficially owned by a trader.  The SEC alleges that despite far exceeding this threshold in every quarter between October 2010 and December 2012, the Afshar brothers were able to trade as non-professionals, thus obtaining execution priority and lower fees, by alternating their trading between accounts and falsely representing the ownership of their accounts.  The SEC also alleges that the defendants engaged in a “spoofing” scheme in which they placed non-bona fide orders to take advantage of a “maker-taker” program offered by an options exchange to encourage liquidity.  SEC


December 2, 2015 - 

National audit firm Grant Thorton will pay $4.5 million to settle charges it ignored red flags and fraud risks while conducting deficient audits for publicly-traded Assisted Living Concepts (a senior housing provider) and Broadwind Energy (an alternative energy company) — both of which themselves faced SEC enforcement actions for improper accounting and other violations.  Grant Thorton’s deficient audits spanned from 2009 to 2011.  The SEC’s investigation found that Grant Thorton repeatedly violated professional standards and their inaction allowed the companies to make numerous false and misleading public filings.  SEC


December 1, 2015 - 

The SEC charged “Bitcoin mining” companies GAW Miners andZenMiner, and their founder, Homero Joshua Garza, with conducting a Ponzi scheme to defraud investors.  Bitcoin “mining” means to apply computer power to complex equations that verify a group of transactions in a virtual currency.  The first computer to solve an equation is awarded new units of the virtual currency.  The SEC’s complaint alleges that Garza, through GAW Miners and Zen Miners, purported to offer shares of a digital Bitcoin mining operation.  In reality, the companies did not own enough computer power for the mining it promised to conduct.  Therefore, most investors paid for a share of computing power that never existed.  Returns paid to some investors came from proceeds generated from sales to other investors.  SEC


November 30, 2015 - 

Standard Bank will pay $4.2 million to settle SEC charges that it failed to disclose certain payments made in connection with debt issued by the Government of Tanzania in 2013.  The bank acted as a lead manager for the offering but failed to disclose that its affiliate, Stanbic Bank Tanzania Limited, would pay $6 million of the proceeds of the $600 million offering to a private Tanzanian firm that performed no substantive role in the transaction.  A representative of the Government of Tanzania was a director of the private firm and the offering was not finalized until Standard and Stanbic agreed to pay the firm a percentage of the proceeds of the offering.  The payment is part of a global coordinated settlement with the United Kingdom’s Serious Fraud Office under which Standard Bank will pay a total of $36.9 million.  SEC


November 24, 2015 - 

Political intelligence firm, Marwood Group Research LLC, will pay a $375,000 penalty for failing to properly inform compliance officers about instances in which analysts obtained potential material nonpublic information from government employees.  According to the SEC’s order, in 2010, Marwood analysts sought and received information about policy issues or pending regulatory approvals before the Centers for Medicare and Medicaid Services (CMS) and the Food and Drug Administration (FDA).  Without bringing this information to the compliance department to be vetted for any material nonpublic information, Marwood drafted research notes based in part on this information and distributed them directly to clients who could have used any material nonpublic information contained therein to inform securities trading decisions.  SEC


November 20, 2015 - 

The SEC announced fraud charges and an asset freeze obtained against Atlanta-based business man Christopher Brogdon, accused of misusing investor funds to purchase and renovate senior living facilities.  The SEC alleges that Brogdon amassed nearly $190 million through dozens of municipal bond offerings and private placement offerings in which investors supposedly earned interest from revenues generated by the nursing home, assisted living facilities, or retirement community project supported by their investment.  But Brogdon commingled the accounts instead of using the funds to finance the project described in the disclosure documents for each offering.  From the commingled accounts, he diverted investor money to other business ventures and personal expenses.  SEC


November 19, 2015 - 

The SEC obtained a court order freezing the assets of Lin Zhong and her company EB5 Asset Manager LLC.  The SEC alleges that Zhong and EB5 raised at least $8.5 million for use in job-creating real estate development projects, but they diverted nearly $1 million to purchase a boat, a BMW, and a Mercedes among other improper personal uses of investor funds.  SEC


November 19, 2015 - 

Investment firm Sands Brothers Asset Management LLC and its founders and former chief compliance officer will pay over $1 million to settle charges of violating the custody rule which requires firms to obtain independent verification of assets when they can access or control client money or securities.  Sands Brothers was in trouble twice before with the SEC — in 2010 for violating the custody rule and in 2014 for belatedly providing investors audited financial statements of its private funds.  SEC


November 17, 2015 - 

The SEC announced fraud charges against several alleged perpetrators behind a $78 million pump-and-dump scheme involving the stock of Jammin’ Java, a company that operates as Marley Coffee and uses trademarks of late reggae artist Bob Marley to sell coffee products.  The SEC alleges that Jammin Java’s former CEO Shane Whittle orchestrated the scheme with three others who live abroad and operate entities offshore.  Whittle utilized a reverse merger to secretly gain control of millions of Jammin Java shares, and he spread the stock to the offshore entities controlled by Wayne Weaver of the UK and Canada, Michael Sun of India, and René Berlinger of Switzerland.  The shares were later dumped on the unsuspecting public after the stock price soared following fraudulent promotional campaigns.  SEC


November 16, 2015 - 

Investment management firm Virtus Investment Advisers agreed to pay $16.5 million to settle charges that it misled mutual fund investors through advertisements containing false historical performance data aboutAlphaSector, a major exchange-traded fund (ETF) portfolio strategy.  Virtus publicized a substantially overstated performance track record received from F-Squared, a sub-adviser it had hired for mutual funds and other clients following the AlphaSector strategy.  Virtus accepted F-Squared’s historical performance misrepresentations at face value and ignored red flags that called these claims into question.  During the period in which Virtus used the false and misleading advertisements, its AlphaSector funds’ assets under management grew from $191 million at the end of 2009 to $11.5 billion by 2013.  SEC


November 5, 2015 - 

The SEC filed securities fraud charges against Scottish trader James Alan Craig based on false “tweets” authored by Craig which caused sharp drops in the stock prices of two companies.  Craig created fake twitter accounts designed to look like the twitter accounts of well-known securities research firms.  His false tweets, claiming that the target companies were under investigation, caused the share price of Audience, Inc. to fall 28% and the share price of Sarepta Therapeutics, Inc. to fall 16%.  Craig bought and sold shares of the two companies in a largely unsuccessful attempt to profit from the sharp price swings.  SEC


November 4, 2015 - 

The SEC announced a whistleblower award totaling more than $325,000 for a former investment firm employee who tipped the agency with specific information that enabled enforcement staff to open an investigation and uncover the extent of the fraudulent activity.  The whistleblower waited until after leaving the firm to come forward to the SEC, however, and agency officials say the award could have been higher had this whistleblower not hesitated.  SEC


November 3, 2015 - 

Private equity firm Fenway Partners and four executives will pay over $10 million to settle SEC charges of failure to disclose conflicts of interest.  An SEC investigation found that Fenway and the charged executives did not fully disclose to a client fund and investors the details of several transactions involving more than $20 million in payments by the client fund or affiliated portfolio companies.  In short, investors were not told that portfolio company fees were rerouted to a Fenway affiliate, allowing Fenway to avoid providing the benefits of those fees to the client in the form of management fee offsets.  SEC


October 28, 2015 - 

The SEC barred two brokers from now-defunct Connecticut brokerage Rochdale Securities.  According to the SEC’s allegations, the two brokers defrauded customers by using their order information to advise two longtime customers to trade ahead of these orders.  As a result, the favored customers profited from the trades, the defrauded customers generally received worse prices than if their orders had been routed directly to the market, and the brokers received double trading commissions.  SEC


October 27, 2015 - 

The St. Joe Company, a Florida-based real estate developer and landowner, its former top executives, and two former accounting department directors, agreed to pay, collectively, $3.725 million in penalties and disgorgement to settle SEC claims of improperly accounting for the declining value of residential real estate developments during the financial crisis.  According to the SEC’s order instituting settled administrative proceedings, the respondents repeatedly failed to properly apply generally accepted accounting practices in testing St. Joe’s real estate developments for impairment, resulting in the failure to take required write-downs on properties hit hard by the financial crisis.  SEC


October 26, 2015 - 

Credit rating agency DRBS Inc. agreed to pay almost $6 million to settle SEC charges of misrepresenting its surveillance methodology for ratings of certain complex financial instruments during a three-year period.  An SEC investigation found that the firm misrepresented that it would monitor on a monthly basis each of its outstanding ratings of U.S. residential mortgage-backed securities (RMBS) and re-securitized real estate mortgage investment conduits (Re-REMICs) by conducting a three-step quantitative analysis and subjecting each rating to review by a surveillance committee.  In fact, the review was not conducted on a monthly basis and when the committee convened it reviewed only a limited subset of ratings.  DRBS did not have adequate staffing and technological resources to conduct the surveillance promised by its surveillance methodology.  SEC


October 19, 2015 - 

UBS advisory firms, UBS Willow Management LLC and UBS Fund Advisor LLC, agreed to pay $17.5 million to settle SEC charges arising from a failure to disclose a change in investment strategy used by UBS Willow Fund, a closed-end fund they advised.  UBS Willow Fund was marketed as one that primarily invested in distressed debt, a strategy predicated on the debt increasing in value.  In 2008, instead of focusing on investments in debt, UBS Willow Management had the fund purchase large quantities of credit default swaps, a strategy predicated on the debt decreasing in value.  Due to this change in strategy, the fund started incurring large losses and was liquidated in 2012.  UBS Willow Management did not provide adequate disclosure of the change in investment strategy to the fund’s investors or board of directors.  UBS Fund Advisor, which retained ultimate control over the fund, was aware of the change in investment strategy and failed to provide appropriate supervision by allowing the change without adequate disclosure.  SEC


October 14, 2015 - 

As part of its enforcement initiative focused on violations of Rule 105 of Regulation M, the SEC settled enforcement actions against six firms: Auriga Global Investors, Sociedad de Valores, S.A., Harvest Capital Strategies LLC, J.P. Morgan Investment Management Inc., Omega Advisors, Inc., Sabby Management LLC, and War Chest Capital Partners LLC.  Rule 105 is intended to preserve the independent pricing mechanisms of the securities markets and prevent stock price manipulation by prohibiting firms from participating in public stock offerings after selling short those same stocks.  Through its Rule 105 Initiative, first announced in 2013, the SEC has taken action on every Rule 105 violation over a de minimis amount that has come to its attention – promoting a message of zero tolerance for these offenses.  As a result of this Initiative, the SEC has seen a dramatic decrease in Rule 105 violations.  The firms identified in this round of enforcement have agreed to pay over $2.5 million to settle the SEC’s charges.  SEC


October 13, 2015 - 

UBS AG will pay $19.5 million to settle charges that it made false or misleading statements and omissions in offering materials provided to U.S. investors in structured notes linked to a proprietary exchange trading strategy.  This is the first case by the SEC involving misstatements and omissions by an issuer of structured notes, a complex financial product that typically consists of a debt security with a derivative tied to the performance of other securities, commodities, currencies, or proprietary indices.  The return on the structured note is linked to the performance of the derivative over the life of the note.  UBS, one of the largest issuers of structured notes in the world, settled the SEC’s charges that it misled U.S. investors in structured notes tied to the V10 Currency Index with Volatility Cap by falsely stating that the investment relied on a “transparent” and “systematic” currency trading strategy using “market prices” to calculate financial instruments underlying the index, when, in fact, undisclosed hedging trades by UBS reduced the index price by about 5%.  SEC


October 8, 2015 - 

New York-based proprietary trading firm, Briargate Trading LLP, and its co-founder, Eric Oscher, will pay more than $1 million to settle charges by the SEC of “spoofing.”  An SEC investigation found that Briargate and Oscher orchestrated a scheme in which they placed sham orders (“spoofs”), to create the appearance of interest in stocks and manipulate their prices, and then placed bona fide orders on the opposite side of the market to take advantage of the artificially inflated or depressed prices.  Immediately after the bona fide orders were executed, the spoof orders were cancelled.  Through this conduct, perpetrated between October 2011 and September 2012, Oscher and Briargate reaped approximately $525,000 in profits.  SEC


October 7, 2015 - 

Three private equity fund advisers within The Blackstone Group will pay nearly $39 million to settle charges they failed to fully inform investors about benefits that the advisers obtained from accelerated monitoring fees and discounts on legal fees.  An SEC investigation found  that advisers Blackstone Management Partners, Blackstone Management Partners III, and Blackstone Management Partners IV, failed to adequately disclose the acceleration of monitoring fees paid by fund-owned portfolio companies prior to the companies’ sale or initial public offering.  These payments essentially reduced the value of the portfolio companies prior to the sale, to the detriment of the funds and their investors.  Additionally, the fund investors were not informed about a separate fee arrangement that provided Blackstone with a much greater discount on services by an outside law firm than the discount the law firm provided to the funds.  SEC


October 6, 2015 - 

The SEC charged two former top executives at OCZ Technology Group Inc., a now-bankrupt seller of computer memory storage and power supply devices, with accounting failures.  The SEC’s complaint alleges that OCZ’s former CEO engaged in a scheme to materially inflate OCZ’s revenues and gross margins from 2010 to 2012, by, for instance, mischaracterizing sales discounts as marketing expenses, channel-stuffing OCZ’s largest customer, and concealing large product returns.  OCZ’s former CFO agreed to pay $130,000 in disgorgement and to be barred from acting as an officer or director of a public company  to settle the SEC’s charges against him of accounting, disclosure, and internal accounting control failures.  SEC


October 5, 2015 - 

Cayman Islands-based Home Loan Services Solutions Ltd.(HLSS) will pay a $1.5 million penalty to settle SEC charges of making material misstatements about its handling of related party transactions and the value of its primary asset.  According to the SEC’s order instituting a settled administrative proceeding, HLSS misstated its handling of transactions with related parties.  For example, from 2012 to 2014, HLSS stated that to avoid potential conflicts of interest, it required its Chairman (also the Chairman of Ocwen Financial Corp.) to recuse himself from transactions with Ocwen.  However, HLSS had no written policies on recusals for related-party transactions and, in fact, HLSS’ Chairman approved many transactions with Ocwen.  In addition, according to the SEC’s order, HLSS misstated its net income in 2012, 2013, and the first quarter of 2014, because the methodology used to value its primary asset – billions of dollars of mortgage servicing rights purchased from Ocwen – did not conform to generally accepted accounting principles.  SEC


October 5, 2015 - 

New York-based pharmaceutical company Bristol-Myers Squibb will pay $14 million to settle SEC charges that its joint venture in China made cash payments and provided other benefits to health care providers at state-owned and state-controlled hospitals in China in exchange for prescription sales.  According to the SEC’s order instituting settled administrative proceedings, between 2009 and 2014, BMS China sales representatives sought to secure and increase business by providing health care providers in China with cash, jewelry, meals, travel, entertainment, and sponsorships for conferences and meetings.  SEC


October 1, 2015 - 

The SEC announced fraud charges and an asset freeze against the operator of a worldwide pyramid scheme.  California resident Steve Chen and 13 California-based entities, including USFIA Inc. are at the center of the alleged scheme.  According to the SEC’s complaint, USFIA and Chen’s other entities have raised more than $32 million from investors in and outside the U.S. since at least April 2013.  The SEC alleges that Chen and his companies misled investors about a lucrative public offering for USFIA that never happened and about ownership of amber deposits worth billions of dollars.  In addition, the SEC alleges that investors were told their holdings had been converted into “Gemcoins,” a virtual currency supposedly backed by the company’s amber holdings, but which were actually worthless.  SEC


October 1, 2015 - 

Grant Thornton India LLP and Grant Thornton Audit Pty Ltd will pay $365,085 to settle charges of violating auditor independence rules.  According to the SEC’s order, two Grant Thornton Mauritius partners served on the boards of subsidiaries of Grant Thornton audit clients and performed non-audit services prohibited under the SEC’s auditor independence rules.  SEC


September 30, 2015 - 

Focus Media Holding Limited and its CEO Jason Jiang will pay $55.6 million to settle charges of inaccurate disclosures about the company’s partial sale of subsidiary Allyes Online Media Holdings Ltd. to insiders, including Jiang.  In March 2010, Focus Media sold a 38 percent stake in Allyes to company insiders such as Jiang.  The sales price to these insiders represented an implied value of $35 million for the entire subsidiary and was claimed to be based on an independent third-party valuation.  However, unknown to shareholders, before the sale was finalized, a private equity firm had begun discussions with Allyes about acquiring the company for $150 million to $200 million.  The SEC alleges that Allyes asked the potential acquirer to “hold off the deal” until the insiders’ purchase was finalized.  Three months after the insider sale, Focus Media announced that Allyes had been sold to the private equity firm for an amount that valued it at $200 million.  SEC


September 30, 2015 - 

Latour Trading LLC, a high-frequency proprietary trading firm, will pay more than $8 million to settle charges that Latour violated the SEC’s Market Access Rule and Regulation National Market System over a four-year period in which Latour sent millions of non-compliant orders to U.S. exchanges.  SEC


September 30, 2015 - 

In the SEC’s second round of filings against underwriters under its Municipalities Continuing Disclosure Cooperation (MCDC) Initiative, a voluntary self-reporting program targeting material misstatements and omissions in municipal bond offering documents, the SEC announced enforcement actions against 22 municipal underwriting firms.  The underwriters and the agreed penalty amounts to be paid are as follows: Ameritas Investment Corp. ($200,000), BB&T Securities, LLC ($200,000),Comerica Securities, Inc. ($60,000), Commerce Bank Capital Markets Group($40,000), Country Club Bank ($140,000), Crews & Associates, Inc. ($250,000),Duncan-Williams, Inc. ($250,000), Edward D. Jones & Co., L.P. ($100,000), Estrada Hinojosa & Company, Inc. ($40,000), Fifth Third Securities, Inc. ($20,000), The Frazer Lanier Company, Inc. ($100,000), J.J.B. Hilliard, W.L. Lyson, LLC($420,000), Joe Jolly & Co., Inc. ($100,000), Mesirow Financial, Inc. ($100,000),Northland Securities, Inc. ($220,000), NW Capital Markets Inc. ($100,000), PNC Capital Markets LLC ($500,000), Prager & Co., LLC ($100,000), Ross, Sinclaire & Associates, LLC ($220,000), UBS Financial Services, Inc. ($480,000), UMB Bank, N.A. Investment Banking Division ($420,000), and U.S. Bank Municipal Securities Group, a Division of U.S. Bank National Association ($60,000).  SEC


September 30, 2015 - 

The SEC charged David Godwin and Anthony Roth, former executives of ContinuityX, a now bankrupt company that claimed to sell internet services to businesses, with financial fraud.  The SEC alleges that Godwin and Roth engineered a scheme to inflate ContinuityX’s revenues.  ContinuityX reported revenues of $27.2 million from April 2011 to September 2012, but the SEC alleges that 99 percent came from fraudulent and fictitious sales.  Godwin and Roth used the allegedly fraudulent SEC filings to raise millions of dollars from investors in a private offering of ContinuityX securities.  SEC


September 29, 2015 - 

UBS Financial Services Inc. of Puerto Rico (UBSPR) will pay $15 million to settle charges of failing to supervise a former broker who had customers invest in UBSPR affiliated mutual finds using money borrowed from a UBSPR affiliated bank.  The SEC alleged that UBSPR and the bank prohibited using such loans to purchase securities and the practice exposed investors to losses while producing profits for the former UBSPR broker.  SEC


September 28, 2015 - 

Trinity Capital Corporation and its wholly-owned subsidiaryLos Alamos National Bank will pay $1.5 million to settle accounting fraud charges.  An SEC investigation found that Trinity materially misstated its provision for loan losses and its allowance for loan and lease losses in its SEC filings between 2010 and 2012.  In 2011, Trinity understated its net loss available to common shareholders by $30.5 million, reporting income of $4.9 million instead of a $25.6 million loss.  SEC


September 28, 2015 - 

Credit Suisse Securities (USA) LLC will pay a $4.25 million penalty to settle charges by the SEC that over a two-year period, it made at least 593 deficient “blue sheet” submissions to the SEC, omitting more than 553,400 reportable trades representing 1.3 billion shares.  Broker-dealers like Credit Suisse are required to provide the SEC with information about trades by its customers, commonly referred to as “blue sheet data,” which the agency can use to identify and analyze trades in the course of investigations and other work.  As part of the settlement, Credit Suisse also has admitted it violated the recordkeeping and reporting provisions of the federal securities laws.  SEC


September 28, 2015 - 

Tokyo-based conglomerate Hitachi, Ltd. will pay a $19 million penalty to settle SEC charges that it inaccurately recorded improper payments to South Africa’s ruling political party in connection with contracts to build two multi-billion dollar power plants in violation of the Foreign Corrupt Practice Act.  SEC


September 25, 2015 - 

The SEC charged four former SMF Energy Corp. officers with financial fraud by vastly inflating SMF Energy’s revenues through a fraudulent billing scheme.  The SEC alleges that SMF Energy overbilled certain mobile fueling customers, including the U.S. Postal Service, by charging for fuel that was not delivered and adding surcharges that the customers’ contracts did not permit.  As a result, the SEC alleges that SMF Energy materially overstated its revenues, profit margins, shareholders’ equity and net income.  According to the SEC’s complaint, the overbilling began in 2004 as a minor contributor to SMF Energy’s financial performance but later made the difference between the company being profitable and posting net losses. SEC


September 24, 2015 - 

Michael A. Glickstein and his new York-based investment advisory firm, G Asset Management LLC, will collectively pay $275,000 to settle fraud charges by the SEC.  The SEC alleged that Glickstein and G Asset issued a misleading press release announcing their offer to purchase a majority stake in retail bookseller Barnes & Noble which caused Barnes & Noble’s stock price to rise $1.94 per share.  The SEC’s order instituting a settled administrative proceeding found the press release to be misleading because it did not disclose that: (1) G Asset had no ability to finance its purported offer to purchase Barnes & Noble; and (2) that G Asset had recently purchased thousands of Barnes & Noble shares and short-term call options, intending to profit by selling the shares and options after issuing the press release.  SEC


September 23, 2015 - 

The SEC announced and settled charges against two Philadelphia-area men, William Fretz and John Freeman, and their investment advisory firm, Covenant Capital Management Partners, L.P., for defrauding their friends and family in connection with their private equity fund, Covenant Partners, L.P.  The men sold partnership interests in the fund to family and friends but rather than investing the money as promised, they used it to benefit themselves and a failing business, Keystone Equities Group L.P.  Under the settlement, the respondents will owe approximately $6.8 million to the SEC which will distribute collected money to harmed investors.  SEC


September 22, 2015 - 

R.T. Jones Capital Equities Management, a St. Louis-based investment adviser, will pay a $75,000 penalty to settle charges that it failed to establish required cybersecurity policies and procedures reasonably designed to protect customer records and information, in advance of a breach that compromised the personally identifiable information of approximately 100,000 individuals, including thousands of the firm’s clients.  SEC


September 22, 2015 - 

Retailer Stein Mart Inc. will pay an $800,000 penalty to settle charges of materially misstating its pre-tax income due to improper valuation of inventory subject to price discounts.  An SEC investigation found that when Stein Mart offered its merchandise to customers at reduced prices, the value of the inventory subject to the markdowns was reduced at the time the item was sold rather than immediately at the time the markdown was applied.  As a result, Stein Mart materially misstated its pre-tax income in certain quarterly filings with the SEC, including an overstatement of almost 30 percent in the first quarter of 2012.  SEC


September 21, 2015 - 

Investment advisor Eagle Investment Management and its affiliated distributor FEF Distributors will pay $40 million to settle SEC charges of improperly using mutual fund assets to pay for the marketing and distribution of fund shares.  This settles the first case brought by the SEC under its “Distribution-in-Guise” Initiative which protects mutual fund shareholders.  The money will be returned to the accounts of affected shareholders.  SEC


September 18, 2015 - 

An attorney, two audit firms, and seven audit professionals have agreed to settle SEC charges filed in January alleging that they engaged in a microcap scheme that the agency stopped in its tracks when it suspended the registration statements used for sham offerings in 20 purported mining companies.  SEC


September 17, 2015 - 

The SEC settled charges brought against four former officials of clearing firm Penson Financial Services.  The SEC investigation found that Penson’s publicly-traded holding company, Penson Worldwide, provided customers nearly $100 million in margin loans secured by risky, unrated municipal bonds which became impaired during the financial crisis.  Instead of liquidating the collateral, accounting for its losses, and disclosing the situation to investors, Penson extended more loans to these customers in violation of federal margin regulations.  The eventual accounting and disclosure of the resulting $60 million in loan losses contributed to Penson’s bankruptcy in 2013.  The four Penson officials collectively agreed to pay $175,000 in penalties.  SEC


September 14, 2015 - 

The SEC charged three men with attempting a pump-and-dump scheme that was thwarted by the SEC’s preemptive action to suspend trading in the company’s securities before secretly-controlled shares could be dumped on unsuspecting investors.  The SEC’s complaint alleges that the three men schemed to conceal their control over 40 million shares of Endeavor Power Corp. and artificially inflate Endeavor’s share price through manipulative trading and a campaign of misinformation.  The scheme was thwarted when the SEC suspended trading in Endeavor’s securities on March 8, 2013.  SEC


September 14, 2015 - 

Ukranian-based Jaspen Partners Limited and its CEO Andriy Suprnonok agreed to pay $30 million to settle SEC allegations that they profited from trading on non-public corporate information hacked from newswire services.  Jaspen and Supranonok were two of the traders alleged to have received stolen data hacked from newswire services and transmitted to a web of international traders.  According to the SEC’s complaint, Jaspen and Supranonok made approximately $25 million buying and selling contracts-for-difference (CFDs) on the basis of hacked press releases.  The SEC’s litigation continues against the remaining 32 defendants charged in the case. SEC


September 10, 2015 - 

The SEC charged New York Global Group (NYGG) and its CEO, Benjamin Wey, with secretly obtaining control and manipulating the stock of Chinese companies they were purportedly guiding through the process of raising capital and becoming publicly-traded in the United States.  The SEC alleges that Wey and NYGG structured reverse mergers between clients and publicly-traded shell companies to secretly obtain ownership interests in the newly listed companies, which they concealed through a vast network of foreign accounts.  The SEC alleges they generated tens of millions of dollars in illegal profits as they sold the securities into artificially inflated markets.  In addition to Wey and NYGG, Wey’s wife and sister, their Switzerland-based broker, and two attorneys have been charged as well.  SEC


September 9, 2015 - 

The SEC charged national audit firm BDO USA and five of its partners with dismissing red flags and issuing false and misleading unqualified audit opinions about the financial statements of staffing services company General Employment Enterprises, after failing to obtain reasonable and coherent explanations about why $2.3 million (approximately half of the company’s assets) had gone missing.  In a related action, the SEC filed fraud charges against Stephen Pence, then General Employment Enterprises’ chairman of the board and majority shareholder, and a former U.S. Attorney and lieutenant government of Kentucky.  BDO agreed to admit wrongdoing and pay disgorgement and penalties of $2.1 million.  BDO’s five partners also settled the charges brought against them and agreed to pay $75,000 in penalties collectively.  The SEC’s litigation with Stephen Pence continues.  SEC


September 8, 2015 - 

The SEC charged former CEO and CFO of now-bankrupt video management company KIT Digital with falsifying financial statements to make the company appear more profitable than it was.  The defendants’ variety of schemes, as alleged by the SEC, included an off-the-books slush fund used to generate payments back to KIT to create the false appearance that the company was being paid for its products.  The U.S. Attorney’s Office for the Southern District of New York brought parallel criminal charges against both men.  SEC


September 8, 2015 - 

Financial publishing company Bankrate Inc. agreed to pay a $15 million penalty to settle accounting fraud charges.  The SEC alleged that Bankrate’s then-CFO, Director of Accounting, and Vice President of Finance, engaged in a scheme to fabricate revenues and avoid booking certain expenses to meet analyst expectations for its adjusted earnings before interest, taxes, depreciation, and amortization, a key financial metric known as “EBITDA.”  The SEC charged the three former executives as well.  SEC


September 8, 2015 - 

Sports supplement and nutrition company MusclePharm agreed to pay a $700,000 penalty for committing a series of accounting and disclosure violations, including the omission or understatement of nearly $500,000 worth of perks bestowed upon company executives.  Three current or former executives and the company’s former audit committee chair also agreed to pay penalties of $210,000 collectively to settle related charges brought against them.  SEC


September 2, 2015 - 

Investment advisory firm Taberna Capital Management will pay $21 million to settle charges that it fraudulently retained fees belonging to collateralized debt obligation (CDO) clients.  An SEC investigation found that Taberna did not inform CDO clients that it was retaining payments known as “exchange fees” obtained in connection with restructuring transactions.  Retention of the exchange fees was not permitted by the CDO’s governing documents or disclosed to investors in the CDOs. SEC


August 25, 2015 - 

The SEC obtained court authorization to freeze the assets of Mr. Lobsang Fargey, a Bellevue, Washington man accused of defrauding Chinese investors seeking U.S. residency through the EB-5 program.  The SEC alleged that Dargey and his “Path America” companies raised at least $125 million for two Washington-based real estate projects, but Dargey diverted $14 million for unrelated real estate projects and $3 million for personal use.  The court’s order also restrains Dargey from soliciting additional investors and requires him to repatriate funds transferred to overseas bank accounts.  SEC


August 19, 2015 - 

Citigroup Global Markets will pay a $15 million penalty to settle SEC charges that it failed to enforce policies to prevent transactions that involved misuse of material, nonpublic information.  Broker-dealer employees routinely have access to material nonpublic information.  Therefore, federal securities laws require firms to take reasonable steps to prevent misuse of such information.  An SEC investigation found that between 2002 and 2012, Citigroup’s monitoring for such abuse was inadequate because it failed to review thousands of trades executed by its trading desks.  Additionally, the SEC found that Citigroup inadvertently routed more than 467,000 transactions on behalf of advisory clients to an affiliated market maker which executed the transactions as principal at or near prevailing market prices.  SEC


August 18, 2015 - 

BNY Mellon will pay $14.8 million to settle charges that it violated the Foreign Corrupt Practices Act (FCPA) by providing valuable student internships to family members of foreign government officials affiliated with a Middle Eastern sovereign wealth fund.  An SEC investigation found that students related to foreign officials were given preferential treatment in that they were not required to meet the normally rigorous criteria of BNY Mellon’s highly competitive internship programs.  This was done to win or retain contracts to manage and service the assets of the sovereign wealth fund the foreign officials were affiliated with.  BNY’s $14.8 million payment includes $8.3 million in disgorgement and a $5 million penalty.  SEC


August 17, 2015 - 

Citigroup affiliates, Citigroup Global Markets, Inc. (CGMI) and Citigroup Alternative Investments LLC (CAI), will pay $180 million to settle charges that they defrauded investors in two hedge funds by claiming that the funds were safe, low-risk, and suitable for traditional bond investors.  An SEC investigation found that even as the funds began to collapse, CGMI and CAI failed to disclose the dire condition of the funds.  Many of the misleading representations were at odds with disclosures in written materials provided to investors.  The funds raised nearly $3 billion from approximately 4,000 investors before collapsing.  CGMI and CAI will bear all costs of distributing the $180 million in settlement funds to harmed investors.  SEC


August 13, 2015 - 

Brokerage firm Edward Jones and the former head of its municipal underwriting desk, Stina Wishman, agreed to settle charges that they overcharged customers in new municipal bonds sales.  This was the SEC’s first case against an underwriter for pricing-related fraud in the primary market for municipal securities.  The SEC’s investigation found that rather than offering customers municipal bonds at their “initial offering price,” Edward Jones and Wishman improperly offered the bonds at higher prices.  This resulted in customers being overcharged by at least $4.6 million.  The SEC also charged Edward Jones with failing to properly supervise dealer markups on secondary market trades that involved the firm purchasing municipal bonds from customers, placing them into its inventory, and selling them to other customers.  The SEC found that Edward Jones’ supervisory system was not designed to monitor whether the markups on these trades were reasonable.  Edward Jones will pay more than $20 million to settle the SEC’s charges, including nearly $5.2 million in disgorgement and prejudgment interest that will be distributed to customers who were overcharged.  SEC


August 12, 2015 - 

Vicente E. Garcia, a former vice president for SAP SE, agreed to pay $92,395 to settle charges by the SEC that he violated the FCPA by bribing Panamanian government officials to procure software license sales for SAP.  An SEC investigation found that Garcia orchestrated a scheme to pay $145,000 in bribes to one government official and promised to pay two others in order to obtain four contracts to sell SAP software to the Panamanian government.  Garcia arranged for SAP’s software to be sold at a steep discount to a Panamanian partner in order to create a slush fund that could be used to pay the Panamanian government officials.  Garcia also received kickbacks from the slush fund.  In a parallel action, the Department of Justice announced a criminal action against Garcia.  SEC


August 12, 2015 - 

Broker Investment Technology Group, Inc. (ITG) and affiliate AlterNet Securities have admitted wrongdoing and agreed to pay $20.3 million to settle SEC charges that they operated a secret trading desk and misused the confidential trading information of dark pool subscribers.  The SEC found that despite claiming to be an “agency-only” broker whose interests wouldn’t conflict with its customers, ITG operated an undisclosed proprietary trading desk known as “Project Omega” for more than a year.  While ITG claimed to protect the confidentiality of its dark pool subscribers’ trading information, Project Omega accessed live feeds of order and execution information of its subscribers and used the information to implement high-frequency algorithmic trading strategies, including one in which it traded against subscribers in POSIT, ITG’s dark pool.  The $20.3 million payment includes an $18 million penalty – the largest to date imposed by the SEC against an alternative trading system.  SEC


August 11, 2015 - 

The SEC announced fraud charges against 32 defendants for taking part in a scheme to hack into newswire services, steal corporate earnings announcements before they were publicly released, and trade on this information.  The SEC’s complaint alleges that defendants generated more than $100 million in illegal profits through the scheme over a five year period.  SEC


August 10, 2015 - 

Guggenheim Partners Investment Management LLC, a subsidiary of global financial services firm Guggenheim Partners LLC, has agreed to pay a $20 million penalty to settle charges by the SEC.  The SEC’s order found that Guggenheim breached its fiduciary duties by failing to disclose a $50 million loan that one of its senior executives received from an advisory client.  Guggenheim failed to disclose the loan, or the potential conflict of interest created by the executive’s receipt of it, to other clients involved in the transactions.  In addition, the SEC’s order found that Guggenheim inadvertently categorized certain investments as managed assets, leading to a client being inappropriately charged approximately $6.5 million in asset management fees.  Despite identifying the error, Guggenheim did not return the fees for almost two years.  Finally, the SEC’s order found Guggenheim’s compliance program was not reasonably designed to prevent violations of the federal securities laws and that the company failed to enforce its code of ethics.  SEC


August 6, 2015 - 

The SEC announced charges against Knoxville-based Miller Energy Resources Inc. (Miller), Miller’s former CFO, Miller’s current COO, and the audit team leader at Miller’s former independent auditor.  The SEC alleges that defendants overstated the value of Miller oil and gas properties in Alaska by more than $400 million.  Allegedly, this inflated valuation turned the penny-stock company into one that eventually listed on the NYSE at a high of $9 per share.  SEC


August 3, 2015 - 

Houston businessman, Frederick Alan Voight, settled charges by the SEC that he operated a $114 million Ponzi scheme.  The SEC’s case charged Voight with defrauding more than 300 investors in multiple offerings of promissory notes issued by two partnerships he owns.  Voight has agreed to an asset freeze and to pay civil penalties and return allegedly ill-gotten gains in an amount to be set later by the court.  SEC


July 31, 2015 - 

The SEC charged Canadian citizen, Phillip Thomas Kueber, with conducting a scheme to conceal his control and ownership of microcap company, Cynk Technology Corp., to make it appear that the company had publicly-held shares.  According to the SEC’s complaint, the SEC suspended trading in the stock before Kueber could profit on the stock’s rise from 10 cents per share to over $21 per share. SEC


July 30, 2015 - 

The SEC charged two men and eight companies with defrauding investors who purchased the companies’ securities and so-called “charitable gift annuities.”  According to the SEC’s complaint, the two men, the CEO and CFO of Defendant 54Freedom, Inc., repeatedly misled investors regarding company prospects.   The alleged scheme raised at least $8 million from 125 or more investors over seven years.  In a parallel criminal action, the U.S. Attorney’s Office of the Northern District of New York announced on July 24th that it arrested one of the men on charges of fraud and money laundering related to the “charitable gift annuities.”  SEC


July 28, 2015 - 

Mead Johnson Nutrition Company agreed to pay $12 million to settle the SEC’s findings that it violated the Foreign Corrupt Practices Act (“FCPA”).  An SEC investigation found that employees of Mead Johnson’s Chinese subsidiary made improper payments to healthcare professionals at government-owned hospitals to induce them to recommend Mead Johnson’s infant formula to new or expectant mothers.  SEC


July 23, 2015 - 

Three former employees of broker-dealer Oppenheimer settled charges stemming from the unregistered sales of billions of shares of penny stocks on behalf of a customer.  This action relates to a previously settled enforcement action against Oppenheimer in which the broker-dealer admitted wrong-doing and paid $20 million to the SEC and the Treasury Department’s Financial Crimes Enforcement Network.  According to the SEC’s order, the former employees failed to make reasonable inquiries or provide appropriate oversight in the face of red flags indicating that their customer’s stock sales were not exempt from registration.  SEC


July 21, 2015 - 

The SEC charged three men, currently living in Israel, with defrauding investors by disseminating promotional e-mails exhorting readers to immediately buy purportedly hot stocks so they could secretly sell their own holdings at a substantial profit, a classic “pump and dump” scheme.  According to the allegations in the complaint, the men pumped the price of penny stocks by as much as 1,800 percent, permitting them to take over $2.8 million in trading profits.  In a parallel action, the Southern District of New York’s U.S. Attorney’s office has brought criminal charges against the three men.  SEC


July 17, 2015 - 

The SEC paid more than $3 million to a whistleblower whose “specific and detailed information comprehensively laid out the fraudulent scheme which otherwise would have been very difficult for investigators to detect.”  SEC


July 16, 2015 - 

The SEC charged Pennsylvania real estate attorney, Herbert Sudfeld, with insider trading in the stock of Harleysville Group, Inc. in advance of the 2011 announcement of a $760 million merger of Harleysville and Nationwide Mutual Insurance Company.  According to the complaint, Sudfeld illegally traded on the news that sent Harleysville’s stock price up 87%.  SEC


July 14, 2015 - 

The SEC charged 15 individuals and 19 entities for their roles in alleged schemes to manipulate the trading of microcap stocks.  The defendants include two microcap issuers (Warrier Girl Corp. and Nature’s Peak, formerly Everock, Inc.), six firms alleged to have acted as unregistered broker-dealers for customers wishing to conceal their stock ownership and manipulate the microcap market, owners and employees at these six firms, customers, and stock promoters.  Defendant Moneyline Brokers is alleged to have unlawfully operated as a broker-dealer for U.S.-based customers who engaged in “pump and dump” schemes.  SEC


July 14, 2015 - 

OZ Management LP admitted wrongdoing and agreed to pay a $4.25 million penalty to settle charges that it provided inaccurate trade data to four prime brokers, causing inaccuracies in the brokers’ books and records and in data provided to the SEC in investigations.  SEC


July 13, 2015 - 

The SEC announced a settlement with Frank Tamayo, a Brooklyn man who cooperated with the SEC’s investigation of an insider trading scheme.  Tamayo served as the intermediary between a law firm clerk and stockbroker.  The clerk would give Tamayo non-public information about the pending corporate transactions of his law firm’s clients and Tamayo would pass this on post-its or napkins to the stockbroker who would trade on this information for Tamayo, himself, and others.  The SEC previously brought charges against the clerk and the broker.  Under the terms of Tamayo’s settlement, he agreed to disgorge $1 million in ill-gotten gains, but this is deemed satisfied by orders of forfeiture or restitution from a parallel criminal case in which he pled guilty.  SEC


July 6, 2015 - 

The SEC charged Bay Area oil and gas company, Luca International Group, and its CEO, Bingqing Yang, with running a $68 million Ponzi-like scheme and affinity fraud that targeted the Chinese-American community in California and investors in Asia, including some solicited as part of the EB-5 Immigrant Investor Program.  SEC


June 23, 2015 - 

The SEC charged Gregg R. Mulholland, a microcap promoter, with illegally selling more than 83 million penny stock shares that he secretly obtained through at least 10 different offshore front companies.  Mulholland was previously charged by the SEC in 2011 for the fraudulent pump-and-dump manipulation of a sports drink company founded by Daniel “Rudy” Ruettiger, known for having inspired the motion picture “Rudy.”  In 2013, the SEC obtained a monetary judgment against Mulholland for more than $5.3 million. SEC


June 23, 2015 - 

The SEC charged Ireeco LLC and Ireeco Limited with illegally brokering more than $79 million of investments by foreigners seeking U.S. residency through the EB-5 Immigrant Investor Program.  The companies are charged with acting as unregistered brokers for more than 150 EB-5 investors.  SEC


June 18, 2015 - 

The SEC charged Norstra Energy, a Texas-based oil company, and its CEO, Glen Landry, with defrauding investors by making false and misleading claims about reserve estimates and drilling campaigns.  The SEC also charged Eric Dany, the author of a stock-picking newsletter, for his role in a fraudulent promotional campaign encouraging readers to buy Norstra’s penny stock shares.  SEC


June 18, 2015 - 

The SEC announced enforcement actions against 36 municipal underwriting firms for violations in municipal bond offerings.  The cases are the first brought against underwriters under the Municipalities Continuing Disclosure Cooperation (MCDC) initiative, a voluntary self-reporting program targeting material misstatements and omissions in municipal bond offering documents.  The SEC’s actions allege that between 2010 and 2014, the 36 firms violated federal securities laws by selling municipal bonds using offering documents that contained materially false statements or omissions about the bond issuers’ compliance with continuing disclosure obligations.  Under the terms of the MCDC initiative, each firm will pay civil penalties based on the number and size of fraudulent offerings identified, up to $500,000.  The firms and penalty amounts are as follows: The Baker Group, LP ($250,000), B.C. Ziegler and Company ($250,000), Benchmark Securities, LLC ($100,000), Bernardi Securities, Inc. ($100,000), BMO Capital Markets GKST Inc. ($250,000), BNY Mellon Capital Markets, LLC ($120,000), BOSC, Inc. ($250,000), Central States Capital Markets, LLC ($60,000), Citigroup Global Markets Inc. ($500,000), City Securities Corporation ($250,000), Davenport & Company LLC ($80,000),Dougherty & Co. LLC ($250,000), First National Capital Markets, Inc. ($100,000),George K. Baum & Company ($250,000), Goldman, Sachs & Co. ($500,000),Hutchinson, Shockey, Erley & Co. ($220,000), J.P. Morgan Securities LLC ($500,000), L.J. Hart and Company ($100,000), Loop Capital Markets, LLC ($60,000), Martin Nelson & Co., Inc. ($100,000), Merchant Capital, L.L.C. ($100,000), Merrill Lynch, Pierce, Fenner & Smith Incorporated ($500,000),Morgan Stanley & Co. LLC ($500,000), The Northern Trust Company ($60,000),Oppenheimer & Co. Inc. ($400,000), Piper Jaffray & Co. ($500,000), Raymond James & Associates, Inc. ($500,000), RBC Capital Markets, LLC ($500,000),Robert W. Baird & Co. Incorporated ($500,000), Siebert Brandford Shank & Co., LLC ($240,000), Smith Hayes Financial Services Corporation ($40,000), Stephens Inc. ($400,000), Sterne, Agee & Leach, Inc. ($80,000), Stifel, Nicolaus & Company, Inc. ($500,000), Wells Nelson & Associates, LLC ($100,000), William Blair & Co., L.L.C. ($80,000).  SEC


June 17, 2015 - 

The SEC announced an enforcement action against Silicon Valley-based Sand Hill Exchange for illegally offering complex derivatives products to retail investors.  The violations were detected shortly after the offering process began, and with cooperation from the company the platform was shut down before any investor harm occurred.  Sand Hill and two associated individuals agreed to pay a $20,000 penalty to settle the SEC’s charges.  SEC


June 15, 2015 - 

Swiss trader, Helmut Anscheringer, agreed to pay the SEC more than $2.8 million to settle charges that he purchased stock and call options in AuthenTec, Inc. upon learning from a longtime friend related to an AuthenTec executive that Apple proposed to buy the company.  Through his unlawful trading, Anschreinger garnered more than $1.8 million in illicit profits.  SEC


June 10, 2015 - 

The SEC brought fraud charges against Nicholas Lattanzio claiming he posed as a hedge fund manager and defrauded small companies out of more than $4 million.  According to the SEC, Lattanzio falsely promised small businesses he would arrange project financing for them and generate substantial returns on money they invested in his Black Diamond Capital Appreciation Fund when instead he simply took investor money and spent it on himself and his family.  SEC


June 9, 2015 - 

The SEC charged three men living in California with insider trading in the stock and options of a biotechnology company where one of them worked.  Specifically, the SEC alleges Michael J. Fefferman learned material nonpublic information as senior director of information technology at Ardea Biosciences Inc. and tipped off his brother-in-law in advance of major public announcements related to two pharmaceutical trials, a licensing agreement for a cancer drug, and eventually the acquisition of the company by AstraZeneca PLC.  SEC


June 9, 2015 - 

Andrew L. Evans, a trader residing in Canada, agreed to pay more than $1 million to settle charges that through his firm Maritime Asset Management he shorted US stocks in companies planning follow-on offerings and then illegally bought shares in the follow-on offerings to lock in significant profits with little to no market risk. SEC


June 5, 2015 - 

Computer Sciences Corporation agreed to pay $190 million to settle SEC charges of manipulating financial results and concealing significant problems about the company’s contract with the UK’s National Health Service, the company’s largest and most high-profile contract.  Former CEO Michael Laphen agreed to return to CSC more than $3.7 million in compensation under the clawback provision of the Sarbanes-Oxley Act and pay a $750,000 penalty.  Former CFO Michael Mancuso agreed to return $369,100 in compensation and pay a $175,000 penalty.  SEC


June 3, 2015 - 

The SEC announced insider trading charges against four individuals stealing confidential information from investment banks and their public company clients in order to trade in advance of secondary stock offerings.  SEC


June 1, 2015 - 

The SEC charged Miami investment adviser Phil Donnahue Williamson with running a Ponzi scheme under which he siphoned money from his Sterling Investment Fund and defrauded investors, including several local teachers and law enforcement officers.  SEC


June 1, 2015 - 

Merrill Lynch agreed to admit wrongdoing and pay nearly $11 million to settle charges that two of its entities used inaccurate data in the course of executing short sale orders.  SEC


May 28, 2015 - 

The SEC announced fraud charges against William Quigley for allegedly fleecing investors and stealing money from Trident Partners Ltd., the brokerage firm where he worked as the director of compliance.  According to the SEC, Quigley was involved in a scheme to solicit investors to buy stock in well-known companies or supposed start-ups on the verge of going public, but the securities were never actually purchased for them.  Instead, after investors wired their funds to bank and brokerage accounts that Quigley set up and controlled, the money was quickly wired to a bank account in the Philippines or withdrawn in small increments from ATM machines in the vicinity of Quigley’s home and office.  SEC


May 26, 2015 - 

The SEC announced fraud charges against Adam S. Gottbetter, a securities lawyer who used his New York law office as the headquarters for planning and implementing market manipulation schemes.  According to the SEC, Gottbetter orchestrated promotional campaigns that touted the prospects of microcap companies and enticed investors to buy their stock at inflated prices so he and his cohorts could sell shares they controlled and reap massive profits.  Gottbetter agreed to pay $4.6 million to settle the SEC’s charges.  SEC


May 26, 2015 - 

Deutsche Bank agreed to pay a $55 million penalty to settle SEC charges of filing misstated financial reports during the height of the financial crisis that failed to take into account a material risk for potential losses estimated to be in the billions of dollars.  SEC


May 21, 2015 - 

The SEC announced fraud charges against Atlanta-based investment advisory firm Gray Financial Group, its founder and president Laurence O. Gray, and its co-CEO Robert C. Hubbard IV, for allegedly selling unsuitable investments to pension funds for the city’s police and firefighters, transit workers, and other employees.  SEC


May 20, 2015 - 

The SEC announced fraud charges against the co-owners of a Manhattan-based brokerage firm.  The SEC alleges that as Arjent LLC and its UK-based affiliate Arjent Limited were approaching insolvency, chairman and CEO Robert P. DePalo attempted to keep the firms afloat and maintain his extravagant lifestyle by selling shares in a holding company called Pangaea Trading Partners.  DePalo along with managing director and co-owner Joshua B. Gladtke allegedly misrepresented to investors the value of Pangaea’s assets and how their money would be used – transferring the first $2.3 million raised in the offering directly to his own bank accounts and using it for his personal benefit.  SEC


May 20, 2015 - 

Global resources company BHP Billiton agreed to pay a $25 million penalty to settle charges it violated the Foreign Corrupt Practices Act when it sponsored the attendance of foreign government officials at the 2008 Summer Olympic Games in Beijing.  Specifically, BHP Billiton invited 176 government officials and employees of state-owned enterprises to attend the Games at the company’s expense, and ultimately paid for 60 such guests as well as some spouses and others who attended along with them.  Sponsored guests enjoyed three- and four-day hospitality packages that included event tickets, luxury hotel accommodations, and sightseeing excursions valued at $12,000 to $16,000 per package.  SEC


May 14, 2015 - 

The SEC charged Sean R. Stewart, a managing director at a prominent investment bank, with routinely tipping off his father Robert K. Stewart with confidential information about future mergers and acquisitions involving clients of two investment banks where he has worked during the past few years. The elder Stewart, a certified public accountant and CFO of a technology company, cashed in on the tips by placing and directing highly profitable securities trades ahead of at least a half-dozen merger and acquisition announcements. The scheme generated approximately $1.1 million in illicit proceeds in a four-year period. SEC


May 14, 2014 - 

Nationwide Life Insurance Company agreed to pay an $8 million penalty to settle SEC charges it routinely violated pricing rules in its daily processing of purchase and redemption orders for variable insurance contracts and underlying mutual funds. SEC


May 11, 2015 - 

The SEC charged a self-described retirement planning firm, Novers Financial and its principals Christopher A. Novinger and Brady J. Speers with falsely telling customers that interests in life settlements they offered and sold were “guaranteed,” “safe as CDs,” and “federally insured.” In addition to the charges against Novers Financial and the two principals, the SEC charged ICAN Investment Group LLC and Speers Financial Group LLC for acting as unregistered broker-dealers. SEC


May 6, 2015 - 

The SEC filed fraud charges against four former officers of Wilmington Trust for intentionally understating past due bank loans during the financial crisis. According to the SEC, the former officials improperly excluded hundreds of millions of dollars of past due real estate loans from financial reports filed by Wilmington Trust in 2009 and 2010, violating a requirement to fully disclose the amount of loans 90 or more days past due. The former Delaware-based bank holding company was acquired by M&T Bank in May 2011 and paid $18.5 million in September 2014 to settle related SEC charges of improper accounting and disclosure fraud. SEC


 April 29, 2015 - 

The SEC charged the hedge fund advisory firm Alpha Titans LLC along with its principal Timothy P. McCormack and general counsel Kelly D. Kaeser with improper allocations of fund assets to pay undisclosed operating expenses.  To settle the SEC’s charges, Alpha Titans and McCormack agreed to pay disgorgement of $469,522, prejudgment interest of $28,928, and a penalty of $200,000.  Lesser agreed to pay a penalty of $75,000.  SEC


April 28, 2015 - 

The SEC awarded $600,000 to a whistleblower who suffered “unique hardships, including retaliation” as a result of blowing the whistle on misconduct at hedge fund advisory firm Paradigm Capital Management.  It is the first time the SEC has made an award to a whistleblower in a retaliation case.  Whistleblower Insider


April 22, 2015 - 

Real estate investment firm W2007 Grace Acquisition I Inc., which is indirectly owned by one or more private equity funds affiliated with The Goldman Sachs Group Inc., agreed to pay $640,000 to settle SEC charges relating to its failure to make eight required SEC filings.  SEC


April 22, 2015 - 

The SEC announced a whistleblower award of roughly $1.5 million to a compliance officer who had a reasonable basis to believe that disclosure to the SEC was necessary to prevent imminent misconduct from causing substantial financial harm to the company or investors.  This is the second award the SEC has made to an employee with internal audit or compliance responsibilities.  Whistleblower Insider


April 20, 2015 - 

BlackRock Advisors LLC agreed to pay a $12 million penalty to settle SEC charges it breached its fiduciary duty by failing to disclose a conflict of interest created by the outside business activity of a top-performing portfolio manager.  According to the SEC, Daniel J. Rice III was managing energy-focused funds at BlackRock when he founded Rice Energy, which later formed a joint venture with a publicly-traded coal company that eventually became the largest holding in the $1.7 billion BlackRock Energy & Resources Portfolio, the largest Rice-managed fund. Whistleblower Insider


April 16, 2015 - 

The SEC charged New York City-based financial advisor Michael J. Oppenheim with stealing at least $20 million from customers to fund his own brokerage accounts and then squandering the bulk of the money in highly unprofitable options trading.  SEC


April 14, 2015 - 

The SEC announced fraud charges and an asset freeze against central Texas-based Leroy Brown Jr. accused of telling false tales about his stockbroking experience to lure current and former US military personnel into investing with him.  According to the government, Brown through his firm LB Stocks and Trades Advice LLC falsely assured investors, including some stationed at nearby Fort Hood, that he had many years of experience in the securities markets when in fact he is not a licensed securities professional and his firm is not registered with the SEC, Financial Industry Regulatory Authority, or any state regulator, and they have no evident experience with investments.  SEC


April 9, 2015 - 

Katsuichi Fusamae, a senior accounting officer at Molex Japan Co. Ltd., agreed to settle SEC charges he cost his company millions of dollars in trading losses and manipulated accounting records to avoid detection.  Specifically, the SEC alleged Fusamae engaged in unauthorized equity trading in the company’s brokerage accounts that resulted in losses of more than $110 million and then concealed the losses by taking out unauthorized and undisclosed company loans with Japanese banks and brokerage firms to replenish account balances.  Fusamae admitted wrongdoing and accepted a permanent bar from serving as an officer or director of a publicly traded company with possible monetary sanctions to come.  SEC


April 9, 2015 - 

The SEC announced fraud charges and an asset freeze against the operators of a South Florida-based microcap scheme spearheaded by Dean A. Esposito, Joseph DeVito, and Frederick Birks, all hired by the CEO of eCareer Holdings, Inc. Joseph J. Azzata.  According to the SEC, more than $11 million were raised from more than 400 investors by telling them their money would be used as working capital to develop eCareer’s online job staffing business when in reality much of it was diverted to pay exorbitant fees to the brokers and sales agents.  SEC


April 8, 2015 - 

Oregon-based defense contractor FLIR Systems Inc. agreed to pay more than $9.5 million to settle charges it violated the Foreign Corrupt Practices Act (FCPA) by financing a “world tour” of personal travel and gifts for Middle East government officials.  FLIR, which develops infrared technology for use in binoculars and other sensing products, allegedly earned more than $7 million in profits from sales influenced by the improper travel and gifts.  Whistleblower Insider


April 7, 2015 - 

The SEC charged Los Angeles-based Pacific West Capital Group Inc. and its owner Andrew B. Calhoun IV with fraud in the sale of “life settlement” investments.  The SEC’s complaint alleges since at least 2012, Pacific West and Calhoun defrauded investors by using proceeds from the sale of new life settlements to continue funding life settlement investments sold years earlier to make life settlement investments appear successful.  SEC

 


April 7, 2015 - 

The SEC announced fraud charges against former professional football player William D. Allen and his business partner Susan C. Daub and others, alleging they operated a Ponzi scheme that raised more than $31 million from investors who were promised profits from loans to professional athletes.  SEC


April 6, 2015 - 

The SEC charged 12 companies and six individuals with defrauding investors in a scheme involving applications to the Federal Communications Commission (FCC) for cellular spectrum licenses.  According to the SEC’s complaint, David Alcorn and Kent Maerki orchestrated the offering fraud through their Arizona-based company Janus Spectrum LLC. and raised more than $12.4 million, much of which they and their co-conspirators kept for personal use.  Those alleged to be involved in the scheme include Daryl G. Bank and his companies Dominion Private Client Group LLC, Janus Spectrum Group LLC, Spectrum Management LLC, Spectrum 100 LLC, Spectrum 100 Management LLC, Prime Spectrum LLC and Prime Spectrum Management LLC; Bobby D. Jones and his company Premier Spectrum Group PMA; Terry W. Johnson and Raymon G. Chadwick Jr. and their companies Innovative Group PMA, Premier Group PMA and Prosperity Group PMASECv


April 2, 2015 - 

The SEC charged two longtime friends, Amit Kanodia and Iftikar Ahmed, with insider trading on news of a proposed acquisition of Cooper Tire and Rubber Company by Apollo Tyres Ltd.  The SEC also named Rakitfi Holdings LLC, a company owned by Ahmed, and Lincoln Charitable Foundation, a supposed charity operated by Kanodia, as relief defendants.  SEC


April 1, 2015 - 

Timothy Scronce agreed to settle charges of defrauding Illinois-based telecommunications company PCTEL Inc. and its shareholders during and after its acquisition of his business TelWorx Communications LLC and his three related telecommunications companies.  According to the SEC, Scronce used false accounting entries to inflate TelWorx’s quarterly revenues and earnings in the months leading up to the purchase to inflate the price PCTEL paid for the companies.  He also allegedly falsified PCTEL’s books and records and circumvented the company’s internal controls by recording bogus transactions.  Scronce consented to the SEC’s order requiring him to return his allegedly ill-gotten gains with interest, pay a civil penalty, and be barred for 10 years from serving as a public company officer or director.  SEC


April 1, 2015 - 

Houston-based global technology and engineering firm KBR Inc.agreed to pay a $130,000 penalty to settle SEC charges of violating whistleblower protection Rule 21F-17 under the Dodd-Frank Act which prohibits confidentiality agreements that discourage protected whistleblowing activity.  It is the SEC’s first enforcement action against a company for using improperly restrictive language in confidentiality agreements with the potential to stifle the whistleblowing process.  At issue was KBR’s requirement that witnesses in certain internal investigations sign confidentiality statements with language warning that they could face discipline and even be fired if they discussed the matters with outside parties without the prior approval of KBR’s legal department.  As part of the settlement, KBR amended its confidentiality statement by adding language making clear that employees are free to report possible violations to the SEC and other federal agencies without KBR approval or fear of retaliation.  Whistleblower Insider


March 31, 2015 - 

The SEC charged Andrew Miller, the former CEO of Silicon Valley-based technology firm Polycom Inc., with using nearly $200,000 in corporate funds for personal perks that were not disclosed to investors.  The SEC separately charged Polycom in an administrative order finding the company had inadequate internal controls and failed to report Miller’s perks to investors.  Polycom agreed to pay $750,000 to settle the SEC’s charges.  SEC


March 30, 2015 - 

The SEC announced fraud charges against investment adviser Lynn Tilton and her New York-based Patriarch Partners firms accusing them of hiding the poor performance of loan assets in three collateralized loan obligation (CLO) funds they manage collectively referred to as the Zohar funds.  SEC


March 27, 2015 - 

New York-based brokerage firm Macquarie Capital (USA) Inc., a wholly owned subsidiary of global financial services firm Macquarie Group Limited, agreed to pay $15 million to settle SEC charges for underwriting a public offering ofPuda Coal despite obtaining a due diligence report indicating that the China-based company’s offering materials contained false information.  Former Macquarie Capital managing director Aaron Black and former investment banker William Fang also agreed to pay $212,711 and $35,000, respectively, to settle charges they failed to exercise appropriate care in their due diligence review.  SEC


March 26, 2015 - 

Chicago-based trading firm Global Fixed Income LLC, its owner Charles Perlitz Kempf and nearly two dozen companies and individuals who regularly bought and sold securities on behalf of Global agreed to pay nearly $5 million in disgorgement of profits and $1 million in penalties to settle SEC charges of failing to properly register with the SEC.  The settling companies included: Florida-based AGS Capital Group, Tennessee-based Banes Capital Management, Florida-based Big Star Capital, California-based Esso Ventures, New Jersey-based Etek Investment Management, New Jersey-based Finmark Resources, Kentucky-based Parker Paschal & Company, Florida-based PMK Capital Management, and Maryland-basedRLJ Fixed IncomeSEC


March 13, 2015 - 

The SEC charged eight officers, directors, or major shareholders for failing to update their stock ownership disclosures to reflect material changes, including steps to take the companies private.  Each of the respondents, which included Berjaya Lottery Management (H.K.) Ltd., The Ciabattoni Living Trust; SMP Investments I, LLC and Shuipan Lin, the Chairman and CEO of China-based Exceed Company LtdSEC


March 4, 2015 - 

The SEC charged Texas-based brokerage firm H.D. Vest Investment Securities with violating key customer protection rules after failing to adequately supervise registered representatives who misappropriated customer funds.  The company agreed to settle the charges by paying a financial penalty and retaining an independent compliance consultant to improve its supervisory controls.  SEC


March 2, 2015 - 

The SEC announced it has suspended trading in 128 inactive penny stock companies to ensure they don’t become a source for pump-and-dump schemes.  The trading suspensions are the latest in a microcap fraud-fighting initiative known asOperation Shell-Expel in which the SEC Enforcement Division’s Office of Market Intelligence utilizes technology to scour the over-the-counter (OTC) marketplace and identify dormant companies ripe for abuse.  SEC


February 27, 2015 - 

The SEC charged purported venture capital fund manager Gregory W. Gray Jr. and his firms Archipel Capital LLC and BIM Management LPwith fraudulently using money from three investment funds to pay fictitious returns to investors in a different fund.  SEC


February 24, 2015 - 

Goodyear Tire & Rubber Company agreed to pay more than $16M to settle charges it violated the Foreign Corrupt Practices Act (FCPA) when its subsidiaries paid bribes to land tire sales in Kenya and Angola.  SEC


February 19, 2015 - 

The SEC announced insider trading charges against Scott Zeringue, alleging that while serving as vice president of construction operations at Baton Rouge-based The Shaw Group he traded company securities based on confidential information he learned on the job about an impending acquisition by Chicago Bridge & Iron Company.  SEC


February 19, 2015 - 

New York City-based brokerage firm VCAP Securities and its CEO Brett Thomas Graham agreed to pay nearly $1.5M to settle charges they fraudulently deceived other market participants while conducting auctions to liquidate collateralized debt obligations.  SEC


February 18, 2015 - 

The SEC announced fraud charges and an emergency asset freeze against two operators of a Colorado-based pyramid and Ponzi scheme that promises investors extraordinary returns of 700 percent through a purported “triple algorithm” and “3-D matrix.”  According to the government, Kristine L. Johnson and Troy A. Barnes raised more than $3.8M since April 2014 from investors they enticed into buying positions in their company Work With Troy Barnes Inc. (d/b/a “The Achieve Community”) when their company had no legitimate business operations and they were merely paying purported investment returns to earlier investors.  SEC


February 13, 2015 - 

The SEC charged purported hedge fund manager Moazzam “Mark” Malik with stealing money from his investors.  Specifically, the SEC alleges Malik raised $840,774 from investors but never made real investments and withdrew the cash and spent it as his own.  His fund, which has changed its name several times, has been called Wall Street Creative Partners, then Seven Sages Capital LP, and then American Bridge Investment Group LLC, and most recently Wolf Hedge LLCSEC


February 11, 2015 - 

The SEC charged Charles L. Hill Jr. with insider trading.  Specifically, the government alleges Hill made approximately $740,000 in illicit profits by trading in Radiant Systems stock on the basis of confidential inside information he received from a friend about an impending tender offer by NCR Corporation to buy the company.  SEC


February 10, 2015 - 

The SEC announced William Slater and Peter E. Williams III, former CFOs of Silicon Valley software company Saba Software, agreed to return nearly a half-million dollars in bonuses and stock sale profits they received while Saba was committing accounting fraud.  While not personally charged with the company’s misconduct, Slater and Williams are still required under the Sarbanes-Oxley Act to reimburse the company for bonuses and stock sale profits received while the fraud occurred.  Last year, the SEC charged Saba Software and two former executives responsible for the accounting fraud in which timesheets were falsified to hit quarterly financial targets.  SEC

February


February 10, 2015 - 

Craig S. Lax, former CEO of a ConvergEx, agreed to pay more than $783,000 and admit wrongdoing to settle charges he participated in a scheme that caused his company’s customers to pay substantially higher amounts than the disclosed commissions for buying and selling securities.  The company previously paid $107M and admitted wrongdoing to settle related charges.  In settling the SEC’s charges, Lax also agreed to be barred from the securities industry for at least five years.  SEC


February 6, 2015 - 

The SEC imposed sanctions against four China-based accounting firms that had refused to turn over documents related to investigations of potential fraud.  The China-based firms are members of large international networks associated with the “Big Four” accounting firms and include Deloitte Touche Tohmatsu Certified Public Accountants Limited, Ernst & Young Hua Ming LLP, KPMG Huazhen, andPricewaterhouseCoopers Zhong Tian CPAs Limited Company.  Under the settlement, the firms each agreed to pay $500,000 and admit they did not produce documents before the proceedings were instituted against them in 2012.  SEC


February 5, 2015 - 

The SEC charged Chicago-area alternative energy company Broadwind Energy, along with its former CEO J. Cameron Drecoll and CFO Stephanie K. Kushner, for accounting and disclosure violations that prevented investors from knowing that reduced business from two significant customers had caused substantial declines in the company’s long-term financial prospects.  Broadwind Energy agreed to pay a $1 million penalty, and Drecoll and Kushner agreed to pay nearly $700,000 in combined disgorgement and penalties.  SEC


February 5, 2015 - 

The SEC charged a stock research analyst, a corporate insider, and two others involved in a California-based insider trading ring that generated nearly $750,000 in illegal profits by trading in advance of four corporate news announcements.  According to the government, John Gray, then an analyst at Barclays Capital, and his friend Christian Keller traded on confidential merger information that Keller learned while working in finance at two Silicon Valley-based public companies Applied Materials Inc. and Rovi Corporation.  Gray, Keller and their accomplices agreed to settle the SEC’s charges by paying more than $1.6M combined.  SEC


January 29, 2015 - 

Chicago-based International Capital Group, along with its two co-founders and former chief operating officer, agreed to pay more than $4.3M to settle charges they sold more than nine billion shares of penny stocks through purported stock-based loans, block trades, and other transactions without registering with the SEC as a broker-dealer as required under the federal securities laws.  SEC


January 27, 2015 - 

Oppenheimer & Co. agreed to pay $20M to settle charges of violating federal securities laws by improperly selling penny stocks in unregistered offerings on behalf of customers.  SEC


January 22, 2015 - 

Florida-based engineering and construction firm The PBSJ Corporation (now known as The Atkins North America Holdings Corporation) agreed to pay $3.4M to settle charges of violating the Foreign Corrupt Practices Act (FCPA) by offering and authorizing bribes and employment to foreign officials to secure Qatari government contracts.  SEC


January 21, 2015 - 

The SEC announced fraud charged and an asset freeze against Fort Lauderdale, Florida-based investment advisory firm Elm Tree Investment Advisors LLC, and its founder and manager Frederic Elm, in a scheme that raised more than $17M since November 2013.  According to the SEC, Elm and his company misled investors and used most of the money raised to make Ponzi-like payments to the investors while treating the funds as a “personal piggy bank,” to purchase a $1.75M home, luxury automobiles, and jewelry, and to cover daily living expenses.  SEC


January 21, 2015 - 

Standard & Poor’s Ratings Services agreed to pay $77M to settle fraud charges relating to its ratings of certain commercial mortgage-backed securities.  According to the Director of the SEC Enforcement Division Andrew J. Ceresney, “Standard & Poor’s elevated its own financial interests above investors by loosening its rating criteria to obtain business and then obscuring these changes from investors.  These enforcement actions, our first-ever against a major ratings firm, reflect our commitment to aggressively policing the integrity and transparency of the credit ratings process.”  SEC


January 15, 2015 - 

The SEC announced charges against attorneys, auditors, and others allegedly involved in a microcap scheme under which fake mining companies were used for sham offerings of stock to investors.  According to the SEC, Canada-based attorney and stock promoter John Briner orchestrated the scheme with the assistance of Colorado-based attorney Diane Dalmy, Nevada-based audit firm De Joya Griffith LLC and Texas-based audit firm M&K CPAS PLLC.  SEC


January 15, 2015 - 

UBS subsidiary UBS Securities LLC agreed to pay more than $14.4M, including a $12M penalty that is the SEC’s largest against an alternative trading system (ATS), to settle charges of disclosure failures and other securities law violations related to the operation and marketing of its dark pool.  SEC


January 12, 2015 - 

Two exchanges formerly owned by Direct Edge Holdings and since acquired by BATS Global Markets (the EDGA Exchange and EDGX Exchange) have agreed to pay a $14M penalty to settle charges that their rules failed to accurately describe the order types being used on the exchanges.  The penalty is the SEC’s largest against a national securities exchange, and the case is the SEC’s first principally focusing on stock exchange order types.  SEC


December 29, 2014 - 

The SEC charged New York-based VERO Capital Management and its president Robert Geiger, general counsel George Barbaresi, and chief financial officer Steven Downey with secretly diverting investor money for their own benefit to prop up a fledgling side business. SEC


December 23, 2014 - 

The SEC charged stock promoter Efstratios “Elias” Argyropoulos with fraudulently raising nearly $3.5 million from investors purportedly to purchase Facebook and Twitter shares prior to their initial public offerings.  According to the SEC, instead of purchasing the shares in the secondary market as promised, Argyropoulos and his firm Prima Capital Group misappropriated investor funds and used them primarily for day trading of stocks and options as well as to pay off certain investors who complained when they didn’t receive the promised Facebook or Twitter shares.  SEC


December 22, 2014 - 

The SEC charged California-based attorney Shivbir Grewal and his wife Preetinder with insider trading on confidential information obtained from a corporate client.  According to the SEC, while serving as outside counsel to Spectrum Pharmaceuticals, Grewal learned that the company was on the brink of announcing a significant decline in expected revenue due to an unanticipated drop in orders for its top-selling drug.  Grewal sold his entire investment in Spectrum stock within 48 hours of getting the nonpublic information from company officials who sought the disclosure advice of his law firm.  The Grewals agreed to pay $90,000 to settle the SEC’s charges.  SEC


December 22, 2014 - 

Investment management firm F-Squared Investments agreed to pay $35M and admit wrongdoing to settle charges it defrauded investors through false performance advertising about its flagship index product AlphaSector, .  The SEC separately charged the firm’s co-founder and former CEO Howard Present with making false and misleading statements to investors as the public face of F-Squared.  SEC


December 18, 2014 - 

The SEC charged Staten Island, N.Y.-based firm Premier Links, Inc., along with its former president and two sales representatives, with participating in a fraudulent boiler room scheme targeting seniors to invest in speculative start-up companies.  According to the SEC, the company along with Dwayne Malloy, Chris Damon, and Theirry Ruffin “treated vulnerable older investors as their personal ATM machines” by using high-pressure sales tactics to convince them to invest in companies purportedly on the brink of conducting initial public offerings.  But they did not disclose that only a small fraction of the money would be transmitted to the promoted companies and that Premier Links diverted the funds to other entities controlled by the sales representatives or other associates.  SEC


December 17, 2014 - 

Global beauty products company Avon Products Inc. agreed to pay $135M to settle charges it violated the Foreign Corrupt Practices Act (FCPA) by failing to put controls in place to detect and prevent payments and gifts to Chinese government officials from employees and consultants at a subsidiary.  According to the government, Avon’s subsidiary in China made $8M worth of illicit payments to Chinese officials to secure business there.  SEC


December 16, 2014 - 

The SEC charged Michael Crow and Alexandre Clug and their company Aurum Mining LLC with a gold mining investment scheme under which they promised investors a stake in so-called “quick-to-production” gold mines that Aurum Mining purported to own and operate in Brazil and Peru.  According to the SEC, despite highly optimistic statements that the gold mines would yield millions of dollars, the investors never received any money back from their investments, while Crow and Clug used a substantial amount of investor funds to cover their monthly salaries, rental of upscale apartments in Lima, and other living or travel expenses.  SEC


December 15, 2014 - 

The SEC charged New Orleans-based oil-and-gas company Treaty Energy Corporation and five executives with running a stock trading scheme in which they claimed to have struck oil in Belize in order to manipulate the price of the company’s stock as they illegally sold restricted shares to the public.  According to the SEC, Treaty Energy issued deceptive press releases touting drilling successes in Belize and Texas to induce investor demand for its unregistered stock, which was then illegally distributed to the public.  The SEC alleges that Treaty Energy’s founder Ronald Blackburn and four company officers – Andrew V. Reid, Bruce A. Gwyn, Lee C. Schlesinger, and Michael A. Mulshine – obtained at least $3.5 million in illicit profits from the scheme.  SEC


December 15, 2014 - 

Massachusetts-based manufacturer of scientific instruments Bruker Corporation agreed to pay $2.4M to settle charges of violating the Foreign Corrupt Practices Act (FCPA) by providing non-business related travel and improper payments to various Chinese government officials in an effort to win business.  SEC


December 10, 2014 - 

Morgan Stanley agreed to pay $4M to settle charges it violated the market access rule when it failed to uphold credit limits for a customer firm with a rogue trader who engaged in fraudulent trading of Apple stock.  An SEC investigation found that Morgan Stanley, which offers institutional customers direct market access through an electronic trading desk, did not have the risk management controls necessary to prevent the rogue trader from entering orders that exceeded pre-set trading thresholds.  The trader exploited the market access and, without Morgan Stanley’s knowledge, committed a fraud that eventually shuttered the firm where he worked.  SEC


November 25, 2014 - 

The SEC charged HSBC’s Swiss-based private banking arm HSBC Private Bank (Suisse) with violating federal securities laws by failing to register with the SEC before providing cross-border brokerage and investment advisory services to U.S. clients.  The bank admitted wrongdoing and agreed to pay $12.5M to settle the SEC’s charges.  SEC


November 21, 2014 - 

The SEC charged father-and-son executives Robert and Marc Benou at New Jersey-based penny stock company Conolog Corporation for issuing false and misleading press releases while secretly selling thousands of their own stock shares into the market.  They agreed to pay nearly $325,000 and accept officer-and-director bars to settle the SEC’s charges.  SEC


November 21, 2104 - 

The SEC announced charged William E. Redmond Jr., former CEO and board member of engineering and chemical company GenTek Inc., with passing on insider trading to his close friend Stefano Signorastri.  GenTek’s nonpublic negotiations to find suitors for a company sale were among the topics that Redmond shared with Signorastri.  Redmond and Signorastri agreed to pay more than $324,000 to settle the SEC’s charges.  SEC


November 20, 2014 - 

The SEC announced that Los Angeles-based broker-dealer Wedbush Securities agreed to settle a pending SEC case for market access violations by admitting wrongdoing, paying a $2.44M penalty.  The SEC’s order finds that Wedbush violated the market access rule by failing to have adequate risk controls in place before providing customers with access to the market, including some customer firms with thousands of essentially anonymous overseas traders.  SEC


November 20, 2014 - 

The SEC suspended trading in four companies that claim to be developing products or services in response to the Ebola outbreak, citing a lack of publicly available information about the companies’ operations.  The SEC simultaneously issued an investor alert warning about the potential for fraud in microcap companies purportedly involved in Ebola prevention, testing, or treatment, noting that scam artists often exploit the latest crisis in the news cycle to lure investors into supposedly promising investment opportunities.  The companies whose trading was suspended were Bravo Enterprises Ltd., Immunotech Laboratories Inc.,Myriad Interactive Media Inc. and Wholehealth Products Inc.  SEC


November 17, 2014 - 

The SEC sanctioned Stephen Timms and Yasser Ramahi, two former employees in the Dubai office of US-based defense contractor FLIR Systems Inc., for violating the Foreign Corrupt Practices Act (FCPA) by taking government officials in Saudi Arabia on a “world tour” to help secure business for the company.  The two employees later falsified records in an attempt to hide their misconduct.  FLIR is headquartered in Oregon and produces thermal imaging, night vision, and infrared cameras and sensor systems.  SEC


November 17, 2014 - 

The SEC charged three penny stock promoters Anthony Thompson, Jay Fung, and Eric Van Nguyen with conducting pump-and-dump schemes involving stocks they were touting in their supposedly independent newsletters for Blast Applications Inc., Smart Holdings Inc., Blue Gem Enterprise Inc., Lyric Jeans Inc.and Mass Hysteria Entertainment Company Inc.  According to the SEC, the defendants worked in coordinated fashion to gain control of a large portion of shares in the stock of these microcap companies and then hyped those stocks in newsletters they distributed to prospective investors.  After creating demand for the stock and increasing the value, they sold their holdings at the higher prices and earned significant profits.  Once they stopped their promotional efforts, the demand for the stocks subsided and the prices dropped, leaving investors who had purchased the promoters’ shares with significant losses.  The defendants allegedly conducted five separate schemes that resulted in more than $10M in ill-gotten gains.  SEC


November 17, 2014 - 

The SEC charged Joseph A. Noel, CEO of San Francisco-based penny stock company YesDTC Holdings, with defrauding investors by issuing false and misleading press releases portraying his purported marketing and infomercial company as a successful venture in order to drive the stock price up while he covertly sold millions of shares into the public market for more than $300,000 in illicit profits. SEC


November 14, 2014 - 

The SEC charged Wilfred T. Azar III, the owner of a Maryland-based real estate company Empire Corporation, with conducting an offering fraud and spending investor money on such personal expenses as his mortgage, country club dues, and season tickets to the Baltimore Ravens.  SEC


November 12, 2014 - 

The SEC charged Pankaj Srivastava and Nataraj Kavuri, two India-based operators of an alleged high-yield investment scheme, with seeking to exploit investors through pervasive social media pitches on Facebook, YouTube, and Twitter.  According to the SEC, the two individuals offered “guaranteed” daily profits as they anonymously solicited investments for their purported investment management company called Profits Paradise, but the guaranteed returns were allegedly false and the investments being offered bore the hallmark of a fraudulent high-yield investment program.  SEC


November 6, 2014 - 

The SEC charged California attorney Richard Weed behind a pump-and-dump scheme that defrauded investors in the Boston-based ticket brokering business CitySide Tickets, Inc.  According to the SEC, Weed created backdated promissory notes and authored false legal opinion letters that enabled Thomas Brazil and Coleman Flaherty to obtain millions of purportedly unrestricted shares of stock in the company.  Investors were then blitzed with a false and misleading promotional campaign touting CitySide Tickets as a budding national leader on the verge of acquiring smaller ticket firms across the country and positioning itself as an attractive takeover target for Ticketmaster.  As the company’s stock price increased on the false hype, Brazil and Flaherty sold their shares to unsuspecting investors for illicit proceeds of approximately $3M.  Shortly thereafter, the market for CitySide Tickets stock collapsed and the company eventually went out of business.  SEC

November


November 6, 2014 - 

The SEC charged the City of Allen Park, Michigan and two former city leaders, former mayor Gary Burtka and former city administrator Eric Waidelich, in connection with a municipal bond offering to support a movie studio project within the city.  An SEC investigation found that offering documents provided to investors during the Detroit suburb’s sale of $31 million in general obligation bonds contained false and misleading statements about the scope and viability of the movie studio project as well as Allen Park’s overall financial condition and its ability to service the bond debt.  SEC


November 5, 2014 - 

The SEC announced enforcement actions against 10 companies for failing to make the required disclosures about financing deals and other unregistered sales that diluted their stock.  The relevant companies and the penalties they will pay are as follows: APT MotoVox Group Inc., formerly known as Frozen Food Gift Group Inc. ($25,000); CoroWare Inc. ($50,000); ERF Wireless Inc.($50,00); Green Automotive Company ($50,000); MineralRite Corporation($25,000); Mondial Ventures Inc. ($50,000); Monster Arts Inc. ($25,000); Red Giant Entertainment Inc. ($25,000); Seaniemac International Ltd. ($50,000); Worthington Energy Inc. ($25,000).  SEC


November 3, 2014 - 

The SEC charged Canadian citizens Bruce D. Strebinger and Brent Howard Chapman with conducting an international microcap fraud scheme by stockpiling shares in the coal mining company Americas Energy Company and funding a multi-million dollar promotional campaign to hype the stock while simultaneously dumping their shares and routing the proceeds through offshore accounts.  According to the SEC, as the scheme was attracting new investors and Americas Energy’s share price was significantly increasing, Strebinger and Chapman were secretly selling their shares through an intricate web of offshore corporations, foreign accounts, and financial institutions located in Canada, Nevis, Panama, Switzerland, and the Turks and Caicos Islands.  Strebinger and Chapman generated proceeds of more than $17M through their elaborate scheme.  SEC


November 3, 2014 - 

The SEC sanctioned 13 firms for violating a rule primarily designed to protect retail investors in the municipal securities market.  It related to improper sales in a $3.5B offering of junk bonds by the Commonwealth of Puerto Rico earlier this year.  The sanctioned firms include: Charles Schwab & Co., Hapoalim Securities USA, Interactive Brokers LLC, Investment Professionals Inc., J.P. Morgan Securities, Lebenthal & Co., National Securities Corporation,Oppenheimer & Co., Riedl First Securities Co. of Kansas, Stifel Nicolaus & Co.,TD Ameritrade, UBS Financial Services, and Wedbush SecuritiesSEC


November 3, 2014 - 

Clinical diagnostic and life science research company Bio-Rad Laboratories agreed to pay $55M to settle charges it violated the Foreign Corrupt Practices Act (FCPA) when its subsidiaries made improper payments to foreign officials in Russia, Vietnam, and Thailand in order to win business.  An SEC investigation found Bio-Rad lacked sufficient internal controls to prevent or detect approximately $7.5M in bribes that were paid during a five-year period and improperly recorded in books and records as legitimate expenses like commissions, advertising, and training fees.  The improper payments enabled Bio-Rad to earn $35M in illicit profits.  Whistleblower Insider


October 31, 2014 - 

The SEC announced securities fraud charges against New York businessman Gregory Rorke and his software company Navagate Inc. for making false statements to investors while raising more than $3M to fund operations.  According to the government, Rorke falsely told investors that he possessed millions of dollars in liquid assets to personally guarantee their purchase of promissory notes issued by Navagate Inc.  However, virtually all of the liquid assets and real estate he claimed as his own actually belonged solely to his wife who did not pledge any of her assets in connection with the securities offering and had no obligation to make good on Rorke’s personal guarantee.  Ultimately, Navagate defaulted on the notes and Rorke did not adhere to his promise to pay investors under his personal guarantee.  SEC


October 29, 2014 - 

The SEC announced charges against investment advisory firmSands Brothers Asset Management LLC and three top officials for violating the “custody rule” that requires firms to follow certain procedures when they control or have access to client money or securities.  Specifically, the government alleges Sands Brothers has been repeatedly late in providing investors with audited financial statements of its private funds, and the firm’s co-founders Steven Sands and Martin Sands along with chief compliance officer and chief operating officer Christopher Kelly were responsible for the firm’s failures to comply with the custody rule.  SEC


October 27, 2014 - 

Texas-based global water management, construction, and drilling company Layne Christensen Company agreed to pay more than $5M to settle charges it violated the Foreign Corrupt Practices Act (FCPA) by making improper payments to foreign officials in several African countries in order to obtain beneficial treatment and reduce its tax liability.  SEC


October 16, 2014 - 

New York City-based high frequency trading firm Athena Capital Research agreed to pay $1M to settle charges it placed a large number of aggressive, rapid-fire trades in the final two seconds of almost every trading day during a six-month period to manipulate the closing prices of thousands of NASDAQ-listed stocks.  This marks the first high frequency trading manipulation case.  According to the government, Athena Capital used an algorithm that was code-named Gravy to engage in a practice known as “marking the close” in which stocks are bought or sold near the close of trading to affect the closing price.  The massive volumes of Athena’s last-second trades allowed Athena to overwhelm the market’s available liquidity and artificially push the closing market price in Athena’s favor.  Athena was well aware of the price impact of its algorithmic trading, calling it “owning the game” in internal e-mails.  SEC


October 15, 2014 - 

The SEC announced an enforcement action against former Wells Fargo Advisors compliance officer Judy K. Wolf for allegedly altering a document before it was provided to the SEC during an investigation and then lying about it.  The SEC previously charged Wells Fargo in the case, and the firm agreed to pay $5M settle the charges.  Prior to the enforcement action, Wells Fargo placed Wolf on administrative leave and ultimately terminated her employment.  SEC


October 9, 2014 - 

The SEC brought an enforcement action against current and former brokerage subsidiaries of E*TRADE Financial Corporation that failed in their gatekeeper roles and improperly engaged in unregistered sales of microcap stocks on behalf of their customers.  Specifically, the SEC found that E*TRADE Securities and E*TRADE Capital Markets sold billions of penny stock shares for customers during a four-year period while ignoring red flags the offerings were being conducted without an applicable exemption from the registration provisions of the federal securities laws.  E*TRADE Securities and E*TRADE Capital Markets (now G1 Execution Services) agreed to settle the SEC’s charges by paying back more than $1.5 million in disgorgement and prejudgment interest from commissions they earned on the improper sales.  They also must pay a combined penalty of $1 million.  SEC


September 30, 2014 - 

The SEC charged two individuals for insider trading on a prominent hedge fund manager’s announcement that his hedge fund had formed a negative view of Herbalife Ltd. and taken a $1 billion short position in its securities.  Specifically, the SEC’s orders find that Filip Szymik of New York City and Jordan Peixoto of Toronto engaged in insider trading in Herbalife securities in advance of hedge fund manager William Ackman’s December 20, 2012 announcement of the views of his hedge fund, Pershing Square Management, L.P.  SEC


September 29, 2014 - 

Bank of America Corporation agreed to pay a $7.65 million penalty for violating internal controls and recordkeeping provisions of the federal securities laws after it assumed a large portfolio of structured notes and other financial instruments as part of its acquisition of Merrill Lynch.  SEC


September 29, 2014 - 

The SEC charged former Vision Broadcast Network CEO Erick Laszlo Mathe and consultant Ashif Jiwa with defrauding investors in a purported startup television network and production company by providing false information about its revenues and future prospects, including that former basketball star Michael Jordan planned to invest in the company.  Specifically, the SEC alleges the two raised at least $5.7 million in startup capital from approximately 100 investors by  misrepresenting that Vision Broadcast owned low-power television stations as well as 70 broadcast licenses to operate additional low power television stations estimated to be worth $400 million once the television stations became operational.  Vision Broadcast meanwhile funneled hundreds of thousands of dollars in investor funds to companies controlled by Mathe or Jiwa in the form of purported professional and consulting services that were never provided.  SEC


September 26, 2014 - 

The SEC charged Charles S. Wang, Qian Cathy Zhang and Francis Y. Yuen, operators of Hong Kong-based eAdGear Holdings Limited and California-based eAdGear, Inc., with running an international pyramid scheme that raised more than $129 million from investors worldwide, primarily in the U.S., China, and Taiwan.   According to the SEC, even though eAdGear claimed to be a successful Internet marketing company, nearly all of its revenue was generated by investors, not its products or services and eAdGear’s operators used money from new investors to pay earlier investors as well as to repay a personal loan and purchase million-dollar homes for themselves. SEC


September 25, 2014 - 

Scottsdale, Arizona-based software company JDA Software Group Inc. agreed to pay a $750,000 penalty for having inadequate internal accounting controls over its financial reporting, which resulted in misstated revenues in public filings.  Specifically, the SEC found the company failed to properly recognize and report revenue from certain software license agreements it sold to customers because its internal accounting controls failed to consider information needed for determining a critical component of revenue recognition for software companies.  SEC


September 25, 2014 - 

The SEC suspended trading for the following nine penny stocks as part of an ongoing enforcement initiative to combat microcap fraud: All Grade Mining Inc. (HYII); Bluforest Inc. (BLUF); DHS Holding Co. (DHSM); Essential Innovations Technology Corp. (ESIV); Global Green Inc. (GOGC); Inova Technology Inc. (INVA); mLight Tech Inc. (MLGT); Solar Thin Films Inc. (SLTZ); and Xumanii International Holdings Corp. (XUII).  SEC


September 24, 2014 - 

The SEC charged Silicon Valley-based software companySaba Software, and two former Saba executives Patrick Farrell and Sajeev Menon, with accounting fraud involving falsified timesheets to hit quarterly financial targets.  An SEC investigation found that Farrell and Menon were atop a scheme at Saba in which managers based in the US directed consultants in India to either falsely record time they had not yet worked, or purposely fail to record hours worked during certain pay periods to conceal budget overruns from management and finance divisions.  This enabled Saba to achieve its quarterly revenue and margin targets by improperly accelerating and misstating virtually all its professional services revenue.  Saba agreed to pay $1.75 million to settle the SEC’s charges.  SEC


September 23, 2014 - 

The SEC charged a Florida-based penny stock companyHeathrow Natural Food & Beverage Inc. and its CEO Michael S. Pagnano with defrauding investors by issuing false and misleading press releases proclaiming large sales and fantastic revenue projections while the purported health food company actually was a failing enterprise.  According to the SEC, Heathrow touted sales of natural health food products that the company had not even manufactured as well as non-existent distribution agreements with major retail chains.  Meanwhile, Pagnano was prompting the illegal, unregistered distribution of billions of shares of company stock to several people or entities, including himself.  SEC


September 23, 2014 - 

Barclays Capital Inc. agreed to pay $15 million for allegedly failing to maintain an adequate internal compliance system to ensure the firm did not run afoul of any federal securities laws after its wealth management business in the U.S. acquired the advisory business of Lehman Brothers in September 2008.  SEC


September 22, 2014 - 

Wells Fargo Advisors LLC agreed to pay $5 million to settle charges it failed to maintain adequate controls to prevent one of its employees from insider trading based on a customer’s nonpublic information.  The SEC also charged Wells Fargo for unreasonably delaying its production of documents during the SEC’s investigation and providing an altered internal document related to a compliance review of the broker’s trading.  This was the first time the SEC brought charges against a broker-dealer for failing to protect a customer’s material nonpublic information.  SEC


September 22, 2014 - 

The SEC announced an expected whistleblower award of more than $30 million.  It will be the largest award to date under the SEC whistleblower program established in 2012 under the Dodd-Frank Act.  It surpasses the $14 million award the SEC made roughly a year ago.  The new award will also be the fourth award to a whistleblower living in a foreign country.  Whistleblower Insider


September 22, 2014 - 

New York-based investment advisory firm Lincolnshire Management agreed to pay more than $2.3 million to settle charges of breaching its fiduciary duty to a pair of private equity funds by sharing expenses between a company in one’s portfolio and a company in the other’s portfolio in a manner that improperly benefited one fund over the other.  SEC


September 19, 2014 - 

The SEC charged Brooklyn resident Frank Tamayo with facilitating a $5.6 million insider trading scheme that typically involved the passing of illegal tips via napkins or post-it notes at Grand Central Terminal.  The SEC alleges that Tamayo received material nonpublic information from Steven Metro about 13 impending corporate deals involving clients of the law firm where Metro worked.  Tamayo then tipped his stockbroker Vladimir Eydelman, who used the confidential information to illegally trade for himself and for Tamayo and other customers.  SEC


September 18, 2014 - 

Investment advisory firm Strategic Capital Group LLC agreed to pay nearly $600,000 to settle SEC charges it engaged in hundreds of principal transactions through its affiliated broker-dealer without informing clients or obtaining their consent.  The SEC also charged the company with distributing false and misleading advertisements to investors.  SEC


September 17, 2014 - 

The SEC charged Sean C. Cooper, former hedge fund manager at San Francisco-based investment advisory firm WestEnd Capital Management LLC , with fraudulently taking excess management fees from the accounts of fund clients and using their money to remodel his multi-million dollar home and buy a Porsche.  WestEnd, which expelled Cooper and reimbursed the hedge fund once it became aware of his scheme, is being charged separately by the SEC for failing to effectively supervise him.  The firm agreed to pay a $150,000 penalty to settle the SEC’s charges.  SEC


September 17, 2014 - 

New York-based high frequency trading firm Latour Trading LLC agreed to pay a $16 million penalty to settle charges it violated the net capital rule that requires all broker-dealers to maintain minimum levels of net liquid assets or net capital.  It is the largest penalty ever for violations of the net capital rule.  SEC


September 16, 2014 - 

The SEC secured an emergency asset freeze againstAbatement Corp. Holding Company Limited, located in Turks and Caicos Islands, in connection with its operation of a South Florida-based Ponzi scheme.  The SEC’s complaint alleged that Abatement Corp. and its now-deceased principal Joseph Laurer falsely promised investors safe, guaranteed returns while instead engaging in a Ponzi scheme.  According to the SEC, Laurer, who was a member of the City of Homestead’s General Employee Pension Board and president of the South Dade chapter of AARP, raised more than $4.6 million from approximately 50 investors residing primarily in South Florida.  SEC


September 16, 2014 - 

The SEC charged Dimitry Braverman, a senior information technology professional at the international law firm Wilson Sonsini Goodrich & Rosati, with insider trading ahead of several mergers and acquisitions involving firm clients being advised on the deals.  The SEC alleged Braverman used his access to nonpublic information in the firm’s client-related databases and garnered more than $300,000 in illicit profits by trading in advance of merger announcements.  Braverman began by insider trading in accounts in his own name, but shifted course when a lawyer at his firm was charged by the SEC and criminal authorities in an entirely separate insider trading scheme.  After immediately liquidating the remaining securities that he had purchased on the basis of nonpublic information, Braverman waited about 18 months and then continued his insider trading in a brokerage account held in the name of a relative living in Russia.  His concealment efforts failed, however, when SEC investigators were able to dissect a suspicious pattern of trades and trace them back to Braverman.  SEC


September 16, 2014 - 

The SEC announced d the latest sanctions in a continuing enforcement initiative uncovering certain hedge fund advisers and private equity firms that have illegally participated in an offering of a stock after short selling it during a restricted period.  The following firms and individual trader have agreed to settle the SEC’s charges and pay a combined total of more than $9 million in disgorgement, interest, and penalties: Advent Capital Management; Antipodean Advisors; BlackRock Institutional Trust Company; East Side Holdings II; Explorador Capital Management; Formula Growth; Great Point Partners; Indaba Capital Management; Ironman Capital Management; James C. Parsons; Midwood Capital Management; Nob Hill Capital Management; RA Capital Management; Rockwood Investment Management (also known as Rockwood Partners LP); Seawolf Capital; Solus Alternative Asset Management; SuttonBrook Capital Management; Troubh Partners; Vinci Partners Investimentos; Whitebox Advisors.  SEC


September 15, 2014 - 

Tennessee-based animal feed company AgFeed Industries, currently in Chapter 11 bankruptcy, agreed to pay back $18 million in illicit profits from an accounting fraud that resulted in an SEC enforcement action earlier this year.  In March, the SEC charged AgFeed charged along with top company executives for repeatedly reporting fake revenues from the company’s China operations in order to meet financial targets and prop up AgFeed’s stock price.  The company obtained illicit gains in stock offerings to investors at the inflated prices resulting from the accounting scheme.  The $18 million to be paid by AgFeed will be distributed to victims of the company’s fraud.  SEC


September 11, 2014 - 

Delaware-based bank holding company Wilmington Trust Company (which M&T Bank acquired in May 2011) agreed to pay $18.5 million to settle charges of accounting and disclosure fraud.  According to the government, as the real estate market declined in 2009 and 2010 and its construction loans began to mature without repayment or completion of the underlying project, Wilmington Trust did not renew, extend, or take other appropriate action on a material amount of its matured loans.  Instead of fully and accurately disclosing the amount of these accruing loans as required by accounting guidance, Wilmington Trust improperly excluded the matured loans from its public financial reporting.  SEC


September 10, 2014 - 

The SEC charged Massachusetts-based biotech companyAdvanced Cell Technology and its former CEO Gary H. Rabin with defrauding investors by failing to report his sales of company stock as federal securities laws require to give investors the opportunity to evaluate whether the purchases and sales by an insider could be indicative of the prospects of the company.  Rabin, who left the company earlier this year, agreed to settle the SEC’s charges by paying a $175,000 penalty.  ACT agreed to pay a $375,000 penalty.  SEC


September 10, 2014 - 

The SEC announced charges against 28 officers, directors, or major shareholders for violating federal securities laws requiring them to promptly report information about their holdings and transactions in company stock.  Six publicly-traded companies were charged for contributing to filing failures by insiders or failing to report their insiders’ filing delinquencies.  A total of 33 of the 34 individuals and companies named in the SEC’s orders agreed to settle the charges and pay financial penalties totaling $2.6 million as follows:  Paul D. Arling, CEO and chairman of the board of directors of Universal Electronics Inc. (agreed to pay a $60,375 penalty); Paul C. Cronson, a director of eMagin Corporation (agreed to pay a $47,250 penalty); Bradley S. Forsyth, CFO and chief accounting officer of Willis Lease Finance Corporation (agreed to pay a $25,000 penalty); Stephen Gans, a director and beneficial owner of Digital Ally Inc. (agreed to pay a $100,000 penalty); Sidney C. Hooper, CFO and principal accounting officer of Sutron Corporation (agreed to pay a $34,125 penalty); Edgar W. Levin, a director of Dorman Products Inc. (agreed to pay a $46,300 penalty); Raul S. McQuivey, CEO, chairman of the board of directors, and a beneficial owner of Sutron Corporation (agreed to pay a $60,000 penalty); Donald A. Nunemaker, president of Willis Lease Finance Corporation (agreed to pay a $25,000 penalty); Thomas C. Nord, general counsel and senior vice president of Willis Lease Finance Corporation (agreed to pay a $78,500 penalty); Alan M. Schnaid, principal accounting officer and corporate controller of Starwood Hotels & Resorts Worldwide(agreed to pay a $25,000 penalty); Justin Tang, a director of ChinaCast Education Corporation (agreed to pay a $100,000 penalty); Charles F. Willis IV, CEO, chairman of the board of directors, and a beneficial owner of Willis Lease Finance Corporation(agreed to pay a $75,000 penalty); Stephen Adams, a beneficial owner of Solar Senior Capital Ltd. shares (agreed to pay a $100,000 penalty); Thomas J. Edelman, a beneficial owner of BioFuel Energy Corporation shares (agreed to pay a $64,125 penalty); Neil Gagnon, a beneficial owner of General Finance Corporation and NTS Inc. shares (agreed to pay a $75,000 penalty); Peter R. Kellogg, a beneficial owner ofMercer International Inc., TRC Companies Inc., Evans & Sutherland Computer Corp., and MFC Industrial Ltd. shares (agreed to pay a $100,000 penalty); Gregory M. Shepard, a beneficial owner of Donegal Group Inc.’s Class A common stock (agreed to pay an $80,000 penalty); Brown Brothers Harriman & Co. (agreed to pay a $120,000 penalty); Del Mar Asset Management LP (agreed to pay a $66,000 penalty);Lazarus Management Company LLC (agreed to pay a $60,000 penalty); P.A.W. Capital Partners LP (agreed to pay a $68,000 penalty); Ridgeback Capital Management LP (agreed to pay a $104,500 penalty); RIMA Senvest Management LLC (agreed to pay a $64,000 penalty); The Royal Bank of Scotland Group plc(agreed to pay a $120,000 penalty); Sankaty Advisors LLC (agreed to pay a $68,000 penalty); Security Capital Research & Management (agreed to pay an $88,000 penalty); Trinad Management LLC (agreed to pay a $95,000 penalty); Jones Lang LaSalle Incorporated (agreed to pay a $150,000 penalty); KMG Chemicals Inc.(agreed to pay a $150,000 penalty); Starwood Hotel & Resorts Worldwide Inc.(agreed to pay a $75,000 penalty); Tel-Instrument Electronics Corp. (agreed to pay a $75,000 penalty); Universal Electronics Inc. (agreed to pay a $75,000 penalty); and Willis Lease Finance Corporation (agreed to pay a $150,000 penalty).  SEC


September 9, 2014 - 

The SEC charged Belize residents Robert Bandfield and Andrew Godfrey, who manage IPC Corporate Services, with helping clients evade U.S. securities laws by concealing their ownership of certain microcap stocks.  SEC


September 8, 2014 - 

The SEC charged Minneapolis-based hedge fund manager Steven R. Markusen and his investment advisory firm Archer Advisors LLC with bilking investors in two hedge funds out of more than $1 million under the guise of research expenses and fees.  According to the SEC, Markusen routinely caused the funds to reimburse Archer for fake research expenses, and he eventually routed much of that money to his personal checking account and spent it on country club dues, boarding school tuition, and a Lexus among other luxury items.  SEC


September 3, 2014 - 

The SEC charged Los Angeles-based immigration attorney Justin Moongyu Lee along with his wife Rebecca Taewon Lee and law firm partner Thomas Edward Kent with conducting an investment scheme to defraud foreign investors trying to come to the U.S. through the EB-5 Immigrant Investor Program.  According to the SEC, they raised nearly $11.5 million from two dozen investors seeking to participate in the EB-5 program, which provides immigrants an opportunity to apply for U.S. residency by investing in a domestic project to create jobs for U.S. workers.  The Lees and Kent informed investors that they would be EB-5 eligible if they invested in an ethanol production plant they would build and operate in Ulysses, Kansas.  However, investors’ money was misappropriated for other uses and the plant was never built and the promised jobs never created.  SEC


September 2, 2014 - 

The SEC charged Houston-based investment advisory firm Robare Group Ltd. with recommending that clients invest in particular mutual funds without disclosing a key conflict of interest:  the firm was in turn receiving compensation from the broker offering the funds.  Therefore, unbeknownst to investors, Robare Group and its co-owners Mark L. Robare and Jack L. Jones Jr. had an incentive to recommend these funds to clients over other investment opportunities and generate additional revenue for the firm.  SEC


August 29, 2014 - 

The SEC announced a whistleblower award of more than $300,000 to a company employee who performed audit and compliance functions and reported wrongdoing to the SEC after the company failed to take action when the employee reported it internally.  It is the first award for a whistleblower with an audit or compliance function at a company.  This particular whistleblower award recipient reported concerns of wrongdoing to appropriate personnel within the company, including a supervisor.  But when the company took no action on the information within 120 days, the whistleblower reported the same information to the SEC.  SEC


August 28, 2014 - 

Lynn R. Blodgett and Kevin R. Kyser, the former CEO and CFO of Dallas-based information technology company, Affiliated Computer Services (now owned by Xerox Corporation), agreed to pay roughly $675,000 to settle charges that they mischaracterized resale transactions to inflate the company’s reported revenue. SEC


August 26, 2014 - 

The SEC charged Michael Anthony Dupre Lucarelli, a director of market intelligence at a Manhattan-based investor relations firm, with insider trading ahead of impending news announcements by more than a dozen clients.  According to the government, Lucarelli repeatedly accessed clients’ draft press releases stored on his firm’s computer network prior to public announcements and then routinely purchased stock or call options in advance of favorable news and sold short or bought put options ahead of unfavorable news, garnering nearly $1 million in illicit profits.  SEC


August 22, 2014 - 

The SEC charged California-based telecommunications equipment company AirTouch Communications and its former CEO and CFO with orchestrating a fraudulent revenue recognition scheme under which they improperly recognized as revenue more than a million dollars’ worth of inventory that was shipped to a Florida warehouse but not actually sold.  They’re also accused of defrauding an investor from whom they secured a $2 million loan for the company based on misstatements and omissions associated with the inventory shipments.  SEC


August 21, 2014 - 

Bank of America agreed as part of its record-breaking $16.65 billion mortgage fraud settlement to pay $245 million for failing to inform investors during the financial crisis about known uncertainties to future income from its exposure to repurchase claims on mortgage loans.  SEC


August 18, 2014 - 

The SEC charged Patrick O’Neill, former senior vice president atEastern Bank in Massachusetts, with insider trading in advance of the bank’s acquisition of Wainwright Bank & Trust Company.  SEC


August 15, 2014 - 

The SEC charged Andrew I. Farmer and his Houston-based penny stock company Chimera Energy for a pump-and-dump scheme that misled investors to believe the company was on the brink of developing revolutionary technology to enable environmentally friendly oil-and-gas production.  According to the SEC, Chimera issued around three dozen press releases in a two-month period about its supposed licensing and development of technology to extract shale oil without the perceived environmental impact of hydraulic fracturing known as fracking.  However, Chimera Energy did not actually license or even possess the technology it touted and had not achieved the claimed results in commercially developing it.  While the stock was being pumped by the false claims, entities controlled by Farmer dumped more than 6 million shares on the public markets for illicit proceeds of more than $4.5M.  SEC


August 14, 2014 - 

The SEC charged New York-based brokerage firm Linkbrokers Derivatives LLC with unlawfully taking secret profits of more than $18M from customers by adding hidden markups and markdowns to their trades.  According to the SEC, Linkbrokers defrauded customers by purporting to charge them very low commission fees, but in reality extracting fees that in some cases were more than 1,000 percent greater than represented.  The scheme was difficult for customers to detect because the brokers charged the markups and markdowns during times of market volatility in order to conceal the false prices they were reporting to customers.  Linkbrokers agreed to pay $14M to settle the SEC’s charges.  SEC


August 11, 2014 - 

As part of its nationwide review of municipal bond offerings, the SEC charged the state of Kansas with failing to properly disclose material pension liabilities and other risks to investors.  According to the SEC’s cease-and-desist order, the state’s offering documents failed to disclose the state’s pension system was significantly underfunded and created a repayment risk for investors in those bonds.  The SEC previously sanctioned New Jersey for failing to disclose to investors that it was underfunding the state’s two largest pension plans.  It also charged Illinois last year for its misleading pension disclosures.  SEC


August 8, 2014 - 

The SEC charged Bahamas-based brokerage firm Alliance Investment Management Limited (AIM) and its president Julian R. Brown with misrepresenting themselves as the “custodian” for assets under the management of hedge fund manager Nikolai Battoo when they did not have such custody.  They also allowed Battoo to create false account statements on AIM letterhead that vastly overstated the value of investors’ assets by more than $150 million.  Brown and AIM then routinely provided the false account statements to auditors and others acting on behalf of Battoo’s investors.  SEC


August 8, 2014 - 

The SEC charged New York-based brokerage firm Crucible Capital Group and its founder Charles “Chuck” Moore for allegedly violating net capital requirements and falsifying books and records to conceal the capital deficiencies.  According to the SEC, they attempted to disguise the firm’s extensive net capital insufficiencies by improperly off-loading its liabilities onto the books of an affiliated firm and improperly treating non-marketable stock as an allowable asset.  Moore went so far as to try to hide Crucible’s true financial condition from SEC examiners by providing them doctored invoices that sought to mask the extent of those liabilities.  SEC


August 7, 2014 - 

The SEC charged Anthony G. Blumberg, the former CEO of a broker-dealer subsidiary of ConvergEx Group LLC, with deceiving brokerage customers with hidden fees to buy and sell securities.  According to the SEC, the scheme entailed concealing the practice of routing orders to an offshore affiliate in Bermuda to add mark-ups or mark-downs.  The hidden fees known as “trading profits” were in addition to and often much higher than the commissions paid by customers to have their orders executed.  The charges against Blumberg follow those announced in December by the SEC against three ConvergEx subsidiaries that agreed to pay more than $107 million and admit wrongdoing to settle the matter.  SEC


August 5, 2014 - 

The SEC charged four promoters with ties to the Pacific Northwest with manipulating the securities of several microcap companies, including two marijuana-related companies GrowLife Inc. and Hemp Inc.  SEC


August 4, 2014 - 

The SEC charged Houston-based oil-and-gas exploration and production company Houston American Energy Corp. and its CEO John F. Terwilliger with making fraudulent claims about the company’s oil reserves.  According to the SEC, Terwilliger and his company fraudulently claimed that a Colombian exploration concession in which Houston American only owned a fractional interest held between 1 billion and 4 billion barrels of oil reserves, and that the reserves were worth more than $100 per share to Houston American’s investors.  SEC


August 1, 2014 - 

The SEC obtained a final judgment requiring Richmond, Va.-based financial services holding company AIC Inc., its subsidiary brokerage firm Community Bankers Securities LLC, and their CEO Nicholas D. Skaltsounis to pay nearly $70 million for conducting an offering fraud while selling AIC promissory notes and stock to numerous investors across multiple states, many of whom were elderly or unsophisticated brokerage customers.  SEC


July 31, 2014 - 

Virginia-based broker Donna Jessee Tucker agreed to disgorge $730,000 in ill-gotten gains to settle charges of defrauding elderly customers, including some who are legally blind, by stealing their funds for her personal use and falsifying their account statements to cover up her fraud.  SEC


July 31, 2014 - 

The SEC announced an award, under the whistleblower provisions of the Dodd-Frank Act, of more than $400,000 for a whistleblower who reported a fraud to the SEC after the company failed to address the issue internally.  SEC


July 31, 2014 - 

LA-based broker Michael A. Horowitz agreed to pay more than $850,000 to settle charges he participated in a variable annuities scheme designed to profit from the imminent deaths of the terminally ill.  As part of his scheme, he deceived his own brokerage firm to obtain the approvals he needed to sell the annuities and generate hefty sales commissions.  He also falsified various broker-dealer forms used by firms to conduct investment suitability reviews, causing some insurance companies to unwittingly issue variable annuities they may not have sold otherwise.  SEC


July 30, 2014 - 

The SEC charged CEO Marc Sherman and former CFO Edward L. Cummings of Florida-based computer equipment company QSGI Inc. with violating the Sarbanes-Oxley Act by misrepresenting to external auditors and the investing public the state of the company’s internal controls over financial reporting.  SEC


July 29, 2014 - 

The SEC charged penny stock company MSGI Technology Solutions and its CEO J. Jeremy Barbera with defrauding investors by touting a joint venture to develop and manage solar energy farms across the country on land purportedly owned by an electricity provider operated by Christopher Plummer.  Barbera and Plummer co-authored press releases falsely portraying MSGI as a successful renewable energy company on the brink of profitable solar energy projects.  However, MSGI had no operations, customers, or revenue at the time, and Plummer’s company did not actually possess any of the assets or financing needed to develop the purported solar energy farms.  SEC


July 28, 2014 - 

Peter A. Jensen, former chief operating officer at Harbinger Capital Partners, agreed to pay $200,000 to settle charges he assisted a scheme by the firm and its owner Philip A. Falcone to misappropriate millions of dollars from a hedge fund they managed to pay Falcone’s personal taxes.  Falcone and Harbinger consented to a settlement last year in which they agreed to pay more than $18M and admit wrongdoing.  SEC


July 28, 2014 - 

Massachusetts-based firearm manufacturer Smith & Wesson agreed to pay $2M to settle charges it violated the Foreign Corrupt Practices Act (FCPA) by providing guns and cash to Pakistani police officials in order to win a contract with the Pakistani police department.  SEC


July 25, 2014 - 

Citigroup business unit LavaFlow, Inc., which operates an alternative trading system (ATS), agreed to pay $5M to settle charges of failing to protect the confidential trading data of its subscribers.  The payment includes a $2.85M penalty which is the SEC’s largest to date against an ATS.  SEC


July 24, 2014 - 

Morgan Stanley agreed to pay $275M to settle charges of misleading investors in a pair of residential mortgage-backed securities (RMBS) securitizations it underwrote, sponsored, and issued.  In an asset-backed securities offering, federal regulations under the securities laws require the disclosure of delinquency information for the mortgage loans serving as collateral.  Morgan Stanley allegedly misrepresented the current or historical delinquency status of mortgage loans underlying two subprime RMBS securitizations that came against a backdrop of rising borrower delinquencies and unprecedented distress in the subprime market.  SEC


July 18, 2014 - 

The SEC charged Christopher Plummer, a serial con artist and Lex M. Cowsert, the CEO of penny stock company CytoGenix, with misleading investors in a supposed vaccine development company by issuing false press releases portraying it as a successful venture when it was in fact a failing enterprise.  Specifically, the government alleged that Plummer and Cowsert teamed up to defraud investors with extravagant claims about the company’s revenues flowing from a “shared revenue agreement” with Franklin Power & Light, an electricity provider supposedly operated by Plummer.  However, Plummer’s entity was a complete sham and CytoGenix had actually lost all its vaccine patents and other intellectual property in a lawsuit.  SEC


July 17, 2014 - 

The SEC charged the CEO and president of asupposed merchant banking firm,Abraxas “A.J.” Discala and Marc E. Wexler, with teaming up with brokers and the CEO of the medical education company CodeSmart, Ira Shapiro, to inflate the price of the company’s stock and profit at the expense of the brokers’ customers.  According to the SEC, they acquired 3 million restricted shares of CodeSmart stock following its reverse merger into a public shell company in May 2013, and improperly flooded the market with the shares as though they were unrestricted.  CodeSmart’s stock price crashed from a peak of nearly $7 per share to where it is currently trading at below 10 cents.  SEC


July 17, 2014 - 

The SEC charged Dennis H. Daugs Jr., owner of Seattle-based investment advisory firm Lakeside Capital Management, with fraudulently misusing millions of dollars in client assets to make loans to himself to buy a luxury vacation home and refinance a rare vintage automobile.  SEC


July 16, 2014 - 

The SEC charged Natural Blue Resources Inc. with concealing from investors that two lawbreakers actually ran the company.  According to the SEC, the company was to create, acquire, or otherwise invest in environmentally-friendly companies.  What investors didn’t know was that two individuals with prior fraud violations — James E. Cohen and Joseph Corazzi — secretly controlled the operational and management decisions of Natural Blue while calling themselves outside “consultants.”  SEC


July 14, 2014 - 

Ernst & Young agreed to pay more than $4M to settle charges of violatingauditor independence rules that require firms to maintain their objectivity and impartiality with clients.  The SEC found that an Ernst & Young subsidiary lobbied congressional staff on behalf of two audit clients.  Such lobbying activities were impermissible under the SEC’s auditor independence rules because they put the firm in the position of being an advocate for those audit clients.  Despite providing the prohibited legislative advisory services on behalf of the clients, Ernst & Young repeatedly represented that it was “independent” in audit reports issued on the clients’ financial statements.  SEC


July 2, 2014 - 

The SEC charged five traders for committing short selling violations while trading for themselves and Worldwide Capital Inc.  This is the Long Island, N.Y.-based proprietary firm that in March paid $7.2M, the largest-ever monetary sanction, for Rule 105 violations.  Rule 105 prohibits the short sale of an equity security during a restricted period – generally five business days before a public offering – and the subsequent purchase of that same security through the offering.  SEC


June 25, 2014 - 

The SEC announced fraud charges against three former senior managers of Regions Bank for intentionally misclassifying loans that should have been recorded as impaired for accounting purposes.  As a result, the bank’s publicly-traded holding company overstated its income and earnings per share in its financial reporting.  Regions will pay a total of $51M to resolve parallel actions by the SEC, Federal Reserve Board, and Alabama Department of Banking.  SEC


June 25, 2014 - 

The SEC announced it has charged two additional brokers with trading on inside information ahead of the $1.2B acquisition of SPSS Inc. in 2009 by IBM Corporation.  The SEC alleged that former brokers Benjamin Durant III and Daryl M. Payton illegally traded on a tip about the acquisition from Thomas C. Conradt, a friend and fellow broker in the New York office of a Connecticut-based broker-dealer.  SEC


June 23, 2014 - 

The SEC charged hedge fund advisory firm Weston Capital Asset Management LLC and its founder and president Albert Hallac with illegally draining more than $17M from a hedge fund they managed and transferred the money to a consulting and investment firm known as Swartz IP Services Group Inc.  The transaction went against the hedge fund’s stated investment strategy and wasn’t disclosed to investors, who received account statements falsely portraying that their investment was performing as well or even better than before.  Weston Capital and Hallac agreed to settle the SEC’s charges with monetary sanctions to be determined at a later date.  SEC


June 16, 2014 - 

Albany, N.Y.-based hedge fund advisory firm Paradigm Capital Management and owner Candace King Weir agreed to pay $2.2M to settle charges of engaging in prohibited principal transactions and then retaliating against the employee who reported the trading activity to the SEC.  This is the first time the SEC has filed a whistleblower retaliation case under its new authority to bring such enforcement actions under the Dodd-Frank Act.  SEC


June 13, 2014 - 

The SEC charged four Northern California residents with insider trading in Ross Stores stock options based on nonpublic information about monthly sales results leaked by one of the retailer’s employees.  The agency alleged that Saleem Khan was routinely tipped by his friend Roshanlal Chaganlal, who was a director in the Ross Stores finance department and used confidential information to illegally trade on more than 40 occasions ahead of the company’s public release of financial results.  Khan also tipped his work colleagues Ranjan Mendonsa and Ammar Akbari so they too could trade in Ross stock options based on the nonpublic information.  The insider trading resulted in collective profits of more than $12M.  SEC


June 6, 2014 - 

The SEC announced charges against LA-based market access provider Wedbush Securities and two officials accused of violating the agency’s market access rule that requires firms to have adequate risk controls in place before providing customers with access to the market.  The SEC’s Enforcement Division alleges the company, which has consistently ranked as one of the five largest firms by trading volume on NASDAQ, failed to maintain direct and exclusive control over settings in trading platforms used by its customers to send orders to the markets.  SEC


June 3, 2014 - 

The SEC filed an emergency enforcement action to halt an ongoing fraud by Scott Valente and his Albany-based firm, the ELIV Group.  The SEC alleges that Valente and his company have fraudulently raised more than $8.8M from approximately 80 clients by falsely claiming they achieve outsized positive returns when in fact ELIV Group has earned no positive results at all, instead sustaining consistent investment losses for the past three years.  Meanwhile, Valente has been making substantial cash withdrawals of client funds and spending their money on his home improvements and mortgage payments as well as jewelry and a vacation condominium.  SEC


June 2, 2014 - 

The SEC charged a charter school operator in Chicago with defrauding investors in a $37.5M bond offering for school construction by making materially misleading statements about transactions that presented a conflict of interest.  The SEC alleges that UNO Charter School Network Inc. and United Neighborhood Organization of Chicago not only failed to disclose a multi-million-dollar contract with a windows company owned by the brother of one of its senior officers, but investors also weren’t informed about the potential financial impact the conflicted transaction had on its ability to repay the bonds.  SEC


May 29, 2014 - 

The SEC charged Chicago-based investment fund manager Neal V. Goyal and two investment advisers he owned and controlled – Blue Horizon Asset Management and Caldera Advisors – with violating the antifraud provisions of the various securities laws.  According to the SEC’s complaint, Goyal raised more than $11.4M in the last several years for investments in four private funds that he managed and controlled.  Goyal’s investment strategy lost money from the outset, but he hid those losses from investors through the Ponzi payments and phony account statements.  Meanwhile, Goyal misused investor funds to make down-payments and pay the mortgages on two homes he purchased.  He also siphoned away investor money to invest in a Chicago tavern, fund two children’s clothing boutiques that his wife operates in Chicago, and purchase artwork and lavish furniture.  SEC


May 28, 2014 - 

The SEC announced fraud charges and an emergency asset freeze against IST Shareholder Services and Robert G. Pearson for misusing money belonging to their corporate clients and the clients’ shareholders in order to fund their own payroll and business obligations.  According to the SEC’s complaint, Pearson misappropriated more than $1.3M during the past two years from an IST bank account holding the funds of clients who use IST as a paying agent to make cash disbursements to shareholders.  Pearson admitted to the scheme during questioning by SEC examiners.  SEC


May 22, 2014 - 

The SEC charged a former director of the Long Island-based vitamin company, NBTY Inc., and others in his family circle with insider trading ahead of the company’s sale to private equity firm The Carlyle Group.  The SEC alleges that board member Glenn Cohen learned that NBTY was negotiating a sale to The Carlyle Group and tipped his three brothers and a brother’s girlfriend with the confidential information.  Craig Cohen, Marc Cohen, Steven Cohen, and Laurie Topal all traded on the inside information that Glenn Cohen provided and reaped illicit profits totaling $175,000.  The four Cohens and Topal agreed to settle the SEC’s charges by paying a total of more than $500,000.  SEC


May 21, 2014 - 

The SEC charged Gaeton “Guy” S. Della Penna, a Sarasota, Florida-based private fund manager, with defrauding investors in a Ponzi scheme that ensued after he squandered their money on bad investments and personal expenses.  The SEC alleges that Della Penna raised $3.8M from investors in three private investment funds that he operated but then lost nearly all of their money by making unsuccessful investments and diverting more than a million dollars to himself and his girlfriend.  In an effort to cover up his fraud as it unraveled, Della Penna began operating a Ponzi scheme by using money from newer investors to pay fake returns to prior investors. SEC


May 20, 2014 - 

The SEC charged James T. Adams, the former chief risk officer at Deloitte LLP, for causing violations of the auditor independence rules that ensure audit firms maintain their objectivity and impartiality with respect to their clients.  Specifically, Adams repeatedly accepted tens of thousands of dollars in casino markers while he was the advisory partner on subsidiary Deloitte & Touche’s audit of a casino gaming corporation.  Adams concealed his casino markers from Deloitte & Touche and lied to another partner when asked if he had casino markers from audit clients of the firm.  He agreed to settle the SEC’s charges by being suspended for at least two years from practicing as an accountant on behalf of any publicly traded company or other entity regulated by the SEC.  SEC


May 15, 2014 - 

The SEC charged Behrooz Sarafraz, a California-based securities salesman for selling millions of dollars in oil-and-gas investments without being registered with the SEC as a broker-dealer or associated with a registered broker-dealer.  According to the SEC’s complaint, Sarafraz acted as the primary salesman on behalf of TVC Opus I Drilling Program and Tri-Valley Corp. which together from February 2002 to April 2010 raised more than $140M million for their oil-and-gas drilling venture.  While Sarafraz was raising money for these entities, he was not associated with any broker-dealer registered with the SEC and thus denied denied investors the protections of regulatory oversight and firm supervision.  He agreed to settle the SEC’s charges by paying disgorgement of his commissions, prejudgment interest, and a penalty for a total of more than $22M.  SEC


May 15, 2014 - 

The SEC charged New York-based Rafferty Capital Markets with illegally facilitating trades for another firm that wasn’t registered as a broker-dealer as required under the federal securities laws.  Rafferty agreed to settle the SEC’s charges by disgorging all the profits it received in the arrangement plus interest and a penalty for a total of nearly $850,000.  SEC


May 12, 2014 - 

The SEC filed insider trading charges against three founders of the software company, Lawson Software, for taking unfair advantage of incorrect media speculation and analyst reports about the company’s planned merger with Infor Global Solutions.  They agreed to pay nearly $5.8 million to settle the SEC’s charges.  SEC


May 7, 2014 - 

The SEC announced fraud charges and an asset freeze against New York-based investment advisory firm Aphelion Fund Management, and two executives, for distributing falsified performance results to prospective investors in two hedge funds they managed.  SEC


May 1, 2014 - 

The New York Stock Exchange and two affiliated exchanges along with Archipelago Securities agreed to pay a $4.5M penalty agreed to settle charges that they failed to comply with the responsibilities of self-regulatory organizations (SROs) to conduct their business operations in accordance with SEC-approved exchange rules and the federal securities laws.  SEC


April 30, 2014 - 

The SEC announced fraud charges and an asset freeze against American Pension Services, a Utah-based retirement plan, for defrauding investors in self-directed individual retirement accounts, causing them to lose millions of dollars of savings.  SEC


April 25, 2014 - 

The SEC charged Christopher Saridakis, former CEO of the marketing solutions division of GSI Commerce, with insider trading in advance of eBay’s acquisition of the e-commerce company by tipping off friends and relatives with confidential information about the pending deal so they could attain more than $300,000 in illegal profits.  SEC


April 17, 2014 - 

The SEC charged Massachusetts-based TelexFree for allegedly operating a large pyramid scheme that mainly targeted Dominican and Brazilian immigrants in the US.  According to the SEC’s complaint, the defendants sold securities in the form of TelexFree “memberships” that promised annual returns of 200% or more but the company’s sales revenues of approximately $1.3M from August 2012 through March 2014 are barely one percent of the more than $1.1B needed to cover its promised payments.  SEC


April 17, 2014 - 

The SEC charged Keith Seilhan, a former 20-year employee of BP and a senior responder during the 2010 Deepwater Horizon oil spill, with insider trading in BP securities based on confidential information about the magnitude of the disaster.  According to the SEC’s complaint, BP tasked Seilhan with coordinating BP’s oil collection and clean-up operations in the Gulf of Mexico and while in possession of material, nonpublic information, and in breach of duties owed to BP and its shareholders, he directed the sale of his family’s entire $1 million portfolio of BP securities over the course of two days in late April 2010.  SEC


April 15, 2014 - 

The SEC charged San Diego-based investment advisory firm Total Wealth Management and its owner and CEO Jacob Cooper with misleading investors and breaching their fiduciary duties to clients by entering into undisclosed revenue sharing agreements through which they paid themselves kickbacks or so-called “revenue sharing fees.”  They failed to disclose to clients the conflicts of interest created by these agreements as they recommended the underlying investments to clients and investors in the Altus family of funds.  SEC


April 9, 2014 - 

The SEC charged Hewlett-Packard with violating the Foreign Corrupt Practices Act (FCPA) when its subsidiaries in Russia, Poland and Mexico made improper payments to government officials to obtain or retain lucrative public contracts.  Hewlett-Packard agreed to pay more than $108M to settle the SEC’s charges and a parallel criminal case by the DOJ.  SEC


April 8, 2014 - 

The SEC announced fraud charges and an asset freeze against the operators of JCS Enterprises Inc. and T.B.T.I. Inc., a South Florida-based Ponzi scheme which targeted investors through YouTube videos and sold them investments in a product called virtual concierge machines (VCMs) that would purportedly generate guaranteed returns of 300 to 500 percent in four years.  SEC


April 8, 2014 - 

The SEC charged CVS Caremark Corp. with misleading investors about significant financial setbacks and using improper accounting that artificially boosted its financial performance.  CVS  agreed to pay $20M to settle the charges.  SEC


April 3, 2014 - 

The SEC charged the St. Petersburg, Florida-based financial services firm, Transamerica Financial Advisors, with improperly calculating advisory fees and overcharging clients. SEC


March 28, 2014 - 

The SEC announced charges and asset freezes against three entities operating under the business names WCM and WCM777 for allegedly running a worldwide pyramid scheme targeting Asian and Latino communities in the U.S. and abroad.  According to the SEC’s complaint, WCM and WCM777 have raised more than $65M since March 2013 by, among other things, falsely promising tens of thousands of investors a return on investment of 100 percent or more in 100 days. SEC


March 19, 2014 - 

The SEC charged Vladimir Eydelman, a stock broker, and Steven Metro, a managing clerk at the New York law firm Simpson Thacher & Bartlett, with insider trading around more than a dozen mergers or other corporate transactions for illicit profits of $5.6M during a four-year period.  Metro allegedly obtained inside information from the firm’s corporate clients involved in pending deals by accessing confidential documents in the law firm’s computer system.  SEC


March 13, 2014 - 

The SEC charged Ronald Dennis, a former analyst at an affiliate of hedge fund advisory firm S.A.C. Capital Advisors, with insider trading.  Dennis allegedly received from two fellow hedge fund analysts confidential details about impending announcements at Dell Inc. and Foundry Networks which he used to make illegal trades in Dell and Foundry stock, enabling hedge funds managed by S.A.C. Capital and affiliate CR Intrinsic Investors generate illegal profits and avoid significant losses.  SEC 


March 12, 2014 - 

The SEC charged global investment bank and brokerage firm Jefferies LLC with failing to supervise employees on its mortgage-backed securities desk who were lying to customers about pricing during the financial crisis.  Jefferies agreed to pay $25M to settle the SEC’s charges as well as a parallel action by the US Attorney’s Office for the District of Connecticut.  SEC


March 5, 2014 - 

Long Island-based proprietary trading firm, Worldwide Capital, and its owner Jeffrey Lynn, agreed to pay $7.2M to settle charges they violated Rule 105 short-selling restrictions, the largest-ever monetary sanction for Rule 105 short selling violations.  SEC


February 21, 2014 - 

The SEC charged Zurich-based Credit Suisse Group AG for violating the federal securities laws by providing cross-border brokerage and investment advisory services to U.S. clients without first registering with the SEC.  Credit Suisse agreed to pay $196M and admit wrongdoing to settle the SEC’s charges.  SEC


January 29, 2014 - 

The SEC charged St. Louis-based Scottrade with failing to provide the agency with complete and accurate information about trades done by the firm and its customers, which is commonly called “blue sheet” data.  The company agreed to settle the charges by paying a $2.5M penalty and admitting it violated the recordkeeping provisions of the federal securities laws.  SEC


January 27, 2014 - 

The SEC sanctioned California-based investment adviser Western Asset Management Company, a subsidiary of Legg Mason,  for concealing investor losses that resulted from a coding error and engaging in cross trading that favored some clients over others.  The company agreed to pay more than $21M to settle the SEC’s charges as well as a related matter by the DOJ. SEC


January 24, 2014 - 

The SEC charged public accounting firm KPMG with violating rules that require auditors to remain independent from the public companies they’re auditing to ensure they maintain their objectivity and impartiality.   An SEC investigation found that KPMG broke auditor independence rules by providing prohibited non-audit services such as bookkeeping and expert services to affiliates of companies whose books they were auditing.  Some KPMG personnel also owned stock in companies or affiliates of companies that were KPMG audit clients.  KPMG agreed to pay $8.2M to settle the SEC’s charges.  SEC


January 9, 2014 - 

The SEC charged San Francisco-based snack foods company Diamond Foods and its former CFO in an accounting scheme to falsify walnut costs in order to boost earnings and meet estimates by stock analysts.  Diamond Foods agreed to pay $5M to settle the SEC’s charges.  SEC


January 9, 2014 - 

The SEC charged global aluminum producer Alcoa Inc. with violating the Foreign Corrupt Practices Act (FCPA) when its subsidiaries repeatedly paid bribes, collectively valued at more than $110M,  to government officials in Bahrain to maintain a key source of business.  Alcoa agreed to settle the SEC’s charges and a parallel criminal case by the DOJ for $384M.  SEC