SEC Fraud Actions

SEC
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The Securities and Exchange Commission (SEC) is the United States agency with primary responsibility for enforcing federal securities laws. The SEC oversees the key participants in the securities world, including securities exchanges, securities brokers and dealers, investment advisors, and mutual funds. The SEC was created a few years after the market crash of 1929 through passage of the Securities Exchange Act of 1934. The SEC’s mission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation. The federal securities laws, and the SEC’s efforts to enforce them, focus on achieving these goals by: (1) requiring companies offering securities to the public to tell the truth about their businesses, the securities being sold, and the risks involved in investing; and (2) requiring those who sell and trade securities to treat investors fairly and honestly.

In July 2010, in response to the 2008 financial crisis, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act. One important feature of this legislation was the establishment of the SEC whistleblower program. This program encourages those with knowledge of violations of the federal securities laws to share this information with the SEC by providing both monetary rewards and protection against retaliation by employers.

Below are summaries of the most recent enforcement actions litigated by the SEC. If you believe you have information about securities fraud, please click here to contact one of our experienced whistleblower attorneys.

May 19, 2017 - 

The Securities and Exchange Commission today filed fraud charges against Robert W. Murray a Virginia-based mechanical engineer accused of scheming to manipulate the price of Fitbit stock by making a phony regulatory filing. According to the SEC’s complaint, Murray purchased Fitbit call options just minutes before a fake tender offer that he orchestrated was filed on the SEC’s EDGAR system purporting that a company named ABM Capital LTD sought to acquire Fitbit’s outstanding shares at a substantial premium.  Fitbit’s stock price temporarily spiked when the tender offer became publicly available on Nov. 10, 2016, and Murray sold all of his options for a profit of approximately $3,100. The SEC alleges that Murray created an email account under the name of someone he found on the internet, and the email account was used to gain access to the EDGAR system.  Murray then allegedly listed that person as the CFO of ABM Capital and used a business address associated with that person in the fake filing.  The SEC also alleges that Murray attempted to conceal his identity and actual location at the time of the filing after conducting research into prior SEC cases that highlighted the IP addresses the false filers used to submit forms on EDGAR.  According to the SEC’s complaint, it appeared as though the system was being accessed from a different state by using an IP address registered to a company located in Napa, California. SEC

May 15, 2017 - 

The Securities and Exchange Commission today charged James Im and Kee Chan a pair of former head traders who ran the commercial mortgage-backed securities (CMBS) desk at Nomura Securities International Inc. with deliberately lying to customers in order to inflate the profits of the CMBS desk and line their own pockets as a result. The SEC alleges that Im and Chan each misrepresented price information while acting as intermediaries on trades with Nomura’s customers who sought to buy and sell CMBS on the secondary market.  In certain instances, Im and Chan allegedly pretended they were still negotiating bond purchases with a third-party seller at higher prices when Nomura had already acquired the bonds at a lower price. The SEC alleges that in one instance, Im bragged about his purposeful deception of a customer, and Chan once altered an email to a customer to prop up his lie about the bid price for a bond.  According to the SEC’s complaints, Chan and Im fraudulently generated more than $750,000 in extra trading profits for the CMBS desk, and they received substantial bonuses based largely on the desk’s performance. SEC

May 11, 2017 - 

The Securities and Exchange Commission today charged Walter C. Little a former partner at an international law firm and his neighbor Andrew M. Berke with making more than $1 million in illicit profits by insider trading around corporate announcements. The SEC alleges that Little accessed confidential documents on his law firm’s internal computer network related to at least 11 impending announcements involving law firm clients, none of which he personally advised or billed for services.  Little then allegedly traded in advance of each announcement and often tipped Berke with material nonpublic information so he could similarly trade in company stocks before the announcements were made publicly.  According to the SEC’s complaint, the insider trading occurred from February 2015 to February 2016. “As alleged in our complaint, Little used highly-confidential information about his law firm’s clients to make more than $1 million for himself and his neighbor through illegal insider trading and tipping,” said Stephanie Avakian, Acting Director of the SEC’s Enforcement Division. In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Little and Berke. SEC

May 11, 2017 - 

Public companies must properly disclose perks, benefits, and other forms of compensation paid to CEOs and certain other highly compensated executive officers.  The Securities and Exchange Commission today announced that Miles S. Nadal the former CEO of a marketing company has agreed to pay $5.5 million to settle charges that his perks were not properly disclosed to shareholders.

According to the SEC’s order, shareholders were informed in annual filings that Nadal received an annual perquisite allowance of $500,000 in addition to other benefits as the chairman and CEO of MDC Partners.  But the SEC’s investigation found that without disclosing information to investors as required, MDC Partners paid for Nadal’s personal use of private airplanes as well as charitable donations in his name, yacht and sports car expenses, cosmetic surgery, and a wide range of other perks.  All total, Nadal improperly obtained an additional $11.285 million in perks beyond his disclosed benefits and $500,000 annual allowances.  He has since resigned and returned $11.285 million to the company. SEC

May 10, 2017 - 

The Securities and Exchange Commission today announced an enforcement action requiring Barclays Capital to refund advisory fees or mutual fund sales charges to clients who were overcharged. In a settlement of more than $97 million, Barclays agreed to settle three sets of violations that resulted in clients being overbilled by nearly $50 million.  The SEC’s order finds that two Barclays advisory programs charged fees to more than 2,000 clients for due diligence and monitoring of certain third-party investment managers and investment strategies when in fact these services weren’t being performed as represented.  Barclays also collected excess mutual fund sales charges or fees from 63 brokerage clients by recommending more expensive share classes when less expensive share classes were available.  Another 22,138 accounts paid excess fees to Barclays due to miscalculations and billing errors by the firm. SEC

May 9, 2017 - 

The Securities and Exchange Commission today charged David R. Humphrey, a former SEC employee, with securities fraud in connection with his trading of options and other securities. The SEC’s complaint alleges that David R. Humphrey, who worked at the SEC from 1998 to 2014, concealed his personal trading from the SEC’s ethics office and later misrepresented his trading activities to the SEC’s Office of Inspector General when questioned during an investigation.  “As alleged in our complaint, Humphrey never sought pre-clearance for his prohibited options trades and he filed forms that falsely represented his securities holdings,” said Gerald W. Hodgkins, Associate Director in the SEC’s Division of Enforcement.  SEC employees are subject to rigorous rules regarding securities transactions to guard against even the appearance of using public office for private gain.  The ethics rules specifically prohibit trading in options or derivatives.  The rules also require staff to disclose their securities holdings and transactions to the agency’s ethics office in annual filings. According to the SEC’s complaint, Humphrey violated the rules by engaging in transactions involving derivatives, failing to obtain pre-clearance before trading non-prohibited securities, and failing to hold securities for the required period. SEC

May 4, 2017 - 

The Securities and Exchange Commission today announced that Verto Capital Management and William Schantz III have agreed to pay more than $4 million to settle charges that they used new investor money to repay earlier investors in Ponzi-like fashion and tapped investor funds for the CEO’s personal use. According to the SEC’s complaint, Verto Capital Management and Schantz  raised approximately $12.5 million selling promissory notes to purportedly fund Verto Capital’s purchase and sale of life settlements, which are life insurance policies sold in the secondary market.  The SEC alleges that they misrepresented to investors that Verto Capital was a profitable company and investor funds would be used for general working capital purposes.  Verto Capital and other Schantz businesses had been unprofitable for several years, according to the SEC’s complaint, and Schantz resorted to taking disproportionately large distributions of investor funds for himself and using new investor money to repay earlier investors.  Verto Capital and Schantz also allegedly made misrepresentations to investors about the safety of the notes and collateral underlying them.  The SEC alleges that the promissory notes were primarily sold through a group of insurance brokers in Texas, and religious investors were targeted. “As alleged in our complaint, investors were told that the life settlement-backed notes were short-term investments with an unlikely event of default.  Schantz and Verto misled investors about the company’s past performance and the value of the collateral, and they diverted significant investor funds for Schantz’s personal use,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office. SEC

May 2, 2017 - 

The Securities and Exchange Commission today announced that a company insider has earned a whistleblower award of more than $500,000 for reporting information that prompted an SEC investigation into well-hidden misconduct that resulted in an SEC enforcement action. “This company employee saw something wrong and did the right thing by reporting what turned out to be hard-to-detect violations of the securities laws,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower.  “Company insiders are in a unique position to provide specific information that allows us to better protect investors and the marketplace.  We encourage insiders with information to bring it to our attention.” The whistleblower award is the second announced by the SEC in the past week.  Approximately $154 million has now been awarded to 44 whistleblowers who voluntarily provided the SEC with original and useful information that led to a successful enforcement action. SEC

May 1, 2017 - 

The Securities and Exchange Commission today announced that MagnaChip Semiconductor Corp. a South Korea-based semiconductor manufacturer and its former CFO Margaret Sakai have agreed to settle charges related to an accounting scheme to artificially boost revenue and manipulate the financial results reported to investors. The SEC’s order finds that MagnaChip overstated revenues for nearly two years in response to immense pressure placed on employees each quarter to meet revenue and gross margin targets that had been communicated to the public.  Then-CFO Sakai directed or approved several fraudulent accounting practices to make it falsely appear the company had met those targets.  For example, MagnaChip recognized revenue on sales of incomplete or unshipped products, and the company delayed booking obsolete or aged inventory to manipulate its reported gross margin.  MagnaChip also engaged in roundtrip transactions to manipulate accounts receivable balances, and concealed from auditors that there were side agreements with distributors to induce them to accept products early. “MagnaChip engaged in a panoply of accounting tricks to artificially meet its financial targets,” said Jina L. Choi, Director of the SEC’s San Francisco Regional Office.  “Companies that sell stock in the U.S. markets should prioritize a robust accounting culture that is entirely truthful with investors.” SEC

April 28, 2017 - 

The Securities and Exchange Commission today announced charges against David Pruitt and Mark Wentlent two former executives at a government contractor that was the subject of an SEC enforcement action earlier this year and paid a $1.6 million penalty for accounting failures. The SEC Enforcement Division alleges that Pruitt, the then-vice president of finance in the Army Sustainment Division of L3 Technologies Inc., circumvented internal accounting controls and caused L3 to improperly recognize $17.9 million in revenue from a contract with the U.S. Army by creating invoices that were not actually delivered at the same time that the revenue was recorded.  The extra revenue allegedly enabled employees in that division to barely satisfy an internal target for management incentive bonus payments. The SEC Enforcement Division further alleges that Pruitt, a CPA, took steps on several occasions to conceal from L3’s corporate office and external auditor the fact that the invoices were not delivered.  The matter against Pruitt will be scheduled for a public hearing before an administrative law judge, who will prepare an initial decision stating what, if any, remedial actions are appropriate. The SEC separately instituted an order against Wentlent, the former president of L3’s Army Sustainment Division, finding that he failed to follow up on red flags that Pruitt had caused L3 to improperly recognize revenue.  Wentlent consented to the order without admitting or denying the findings, and he agreed to pay a $25,000 penalty.  The bonus payment that Wentlent received as a result of the misconduct already has been rescinded by L3. SEC

April 25, 2017 - 

The Securities and Exchange Commission today announced an award of nearly $4 million to a whistleblower who tipped the agency with detailed and specific information about serious misconduct and provided additional assistance during the ensuing investigation, including industry-specific knowledge and expertise. “Not only did this whistleblower step forward and report suspicious conduct, but continued to help after we opened our investigation,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower.  “Whistleblowers with specialized experience or expertise can help us expend fewer resources in our investigations and bring enforcement actions more efficiently.” Approximately $153 million has now been awarded to 43 whistleblowers who became eligible for an award after voluntarily providing the SEC with original and useful information that led to successful enforcement actions. SEC enforcement actions from whistleblower tips have resulted in more than $953 million in financial remedies against wrongdoers. SEC

April 24, 2017 - 

The Securities and Exchange Commission today announced fraud charges against Kevin J. Amell, a Massachusetts-based portfolio manager accused of diverting at least $1.95 million to his personal brokerage account from a fund over which he had trading authority. The SEC’s complaint alleges that Amell carried out a fraudulent matched-trades scheme in which he prearranged the purchase or sale of call options between his own account and the brokerage accounts of the fund at prices that were disadvantageous to the fund and advantageous to him.  In one series of trades involving Amazon securities, for example, Amell allegedly generated a $23,000 profit for himself in less than 23 minutes at the fund’s expense. “As alleged in our complaint, Amell abused his trading authority at least 265 times by matching trades between the fund and his personal account at prices that he intentionally and fraudulently skewed to benefit himself,” said Joseph G. Sansone, Co-Chief of the SEC Enforcement Division’s Market Abuse Unit. In a parallel action, the U.S. Attorney’s Office for the District of Massachusetts today filed criminal charges against Amell. SEC

April 24, 2017 - 

The Securities and Exchange Commission today announced that Elek Straub and Andras Balogh two former executives at Hungarian-based telecommunications company Magyar Telekom have agreed to pay financial penalties and accept officer-and-director bars to settle a previously-filed SEC case alleging they violated the Foreign Corrupt Practices Act (FCPA). Magyar Telekom paid a $95 million penalty in December 2011 to settle parallel civil and criminal charges that the company bribed officials in Macedonia and Montenegro to win business and shut out competition in the telecommunications industry.  The SEC’s complaint also charged the company’s former CEO Straub and former chief strategy officer Balogh with orchestrating the use of sham contracts to funnel millions of dollars in corrupt payments.  The two executives were set to stand trial this month. Straub has agreed to pay a $250,000 penalty and Balogh has agreed to pay a $150,000 penalty.  Both executives agreed to a five-year bar from serving as an officer or director of any SEC-registered public company.  The settlements are subject to court approval. “The executives in this case were charged with spearheading secret agreements with a prime minister and others to block out telecom competitors,” said Stephanie Avakian, Acting Director of the SEC’s Division of Enforcement.  “We persevered in order to hold these overseas executives culpable for corrupting a company that traded in the U.S. market.” A third Magyar Telekom executive charged in the SEC’s complaint, former director of business development and acquisitions Tamas Morvai, agreed to a settlement that was approved by the court in February requiring him to pay a $60,000 penalty for falsifying the company’s books and records in connection with the bribery scheme. SEC

April 5, 2017 - 

The Securities and Exchange Commission today announced that Lawson Financial Corporation an Arizona-based brokerage firm, its CEO, Robert Lawson and its former underwriter’s counsel John T. Lynch Jr. have agreed to settle charges related to municipal bond offerings they were underwriting that turned out to be fraudulent. The SEC’s order finds that Lawson Financial Corporation failed in its role as a gatekeeper to conduct reasonable due diligence when underwriting bond offerings to purchase and renovate nursing homes and senior living facilities.  The offerings were managed by Atlanta-based businessman Christopher F. Brogdon, who was later charged by the SEC with fraud and faces a court order to repay $85 million to investors.  Lawson Financial failed to ensure Brogdon and his related borrowers were in compliance with their continuing disclosure undertakings as required by Rule 15c2-12, which generally prohibits underwriters from purchasing or selling municipal securities unless the issuer or obligated person has committed to providing continuing disclosure information, such as annual financial materials and operating data. Lawson Financial’s founder and CEO Lawson and then-underwriter’s counsel Lynch Jr. are charged with failing to conduct reasonable due diligence, and Lynch also failed to disclose that he was not actually authorized to practice law at the time as represented to investors in the bond offering documents. SEC

March 30, 2017 - 

The SEC announced fraud charges and an emergency asset freeze obtained against Michigan-based pastor Larry Holley accused of exploiting church members, retirees, and laid-off auto workers who were misled to believe they were investing in a successful real estate business.  The SEC alleges that Holley, pastor of Abundant Life Ministries in Flint, Michigan, cloaked his solicitations in faith-based rhetoric, replete with references to scripture and biblical figures.  According to the SEC’s complaint, which also charges Holley’s company Treasure Enterprise LLC and his business associate Patricia Enright Gray, approximately $6.7 million was raised from more than 80 investors who were guaranteed high returns and told they were investing in a profitable real estate company with hundreds of residential and commercial properties.  In fact, Treasure Enterprise struggled to generate enough revenue from its real estate investments to support the business and make payments to investors.  Additionally, the SEC alleges Gray advertised on a religious radio station based in Flint and singled out recently laid-off auto workers with severance packages to consult her for a “financial increase.”  Gray allegedly promised to roll over investors’ retirement funds into tax-advantaged IRAs and invest them in Treasure Enterprise.  The SEC alleges that no investor funds were deposited into IRAs. SEC

March 27, 2017 - 

The SEC announced an emergency asset freeze and temporary restraining order against Chicago-based investment advisor David H. Glick and his unregistered financial management company Financial Management Strategies (FMS) accused of scamming elderly investors out of millions of dollars.  The SEC alleges that Glick and FMS provided clients with false account statements to hide Glick’s use of client funds to pay personal and business expenses, purchase a Mercedes-Benz, and pay of loans and debts.  According to the SEC’s complaint, Glick was barred by FINRA in 2014 and had his Certified Financial Planner designation and Certified Public Accountant license revoked for conduct related to the SEC’s charges. SEC

March 27, 2017 - 

The SEC announced fraud charges and an emergency asset freeze against LottoNet Operating Corp, its CEO David Gray, and its top sales agent Joseph A. Vitale.  The SEC’s complaint alleges that the defendants misrepresented to investors that their money would be used to develop and market LottoNet and that sales agents did not receive commissions.  In fact, at least 35 percent of investor proceeds were allegedly paid to boiler room sales agents in the form of commissions, and LottoNet allegedly siphoned investor funds for personal spending on clothing, wedding-related expenses, and strip clubs.  The SEC complaint further alleges that Vitale, who personally raised at least $1.4 million from investors, used the alias Donovan Kelly in an apparent attempt to hide form investors that he is permanently barred by FINRA. SEC

March 24, 2017 - 

Three Peruvian traders – Nino Coppero del Valle, Julio Antonio Castro Roca, and Ricardo Carrion – will collectively pay over $297,000 (equal to full disgorgement of profits plus interest and penalties) to settle allegations that they traded on nonpublic information prior to the merger of two mining companies. SEC

March 14, 2017 - 

Silicon Valley-based auditor Nima Hedayati will pay more than $87,000 to settle charges that he traded on inside information about a client on the verge of a merger.  The SEC’s order found that through his work at an independent audit firm, Hedayati learned that Lam Research Corporation was making preparations to acquire KLA-Tencor Corporation, both companies involved in the manufacture of equipment used to create semiconductors.  According to the SEC’s order, Hedayati purchased out-of-the-money call options in KLA common stock in his and his fiancee’s brokerage accounts and encouraged his mother to purchase KLA common stock.  After merger plans were publicly announced, KLA’s stock price increased nearly 20 percent, and Hedayati and his mother collectively profited by more than $43,000 from the illegal trades. SEC

March 10, 2017 - 

The SEC announced fraud charges against Ukraine-based trading firm Avalon FA Ltd. for manipulating the U.S. markets hundreds of thousands of times, and against New York-based brokerage firm Lek Securities and its owner Samuel Lek for allegedly assisting in the fraud.  The SEC’s complaint alleges that Avalon touted itself to traders as a desintation to engage in layering, a scheme in which orders are placed but later canceled after tricking others into buying or selling stocks at artificial prices, resulting in illicit profits.  Avalon allegedly made more than $21 million in the layering scheme involving U.S. stocks during a five-year period.  According to the SEC’s complaint, Avalon also made more than $7 million in illicit profits through a cross-market manipulation scheme in which the firm bought and sold U.S. stocks at a loss in order to manipulate the prices of the stock and its corresponding options so that it could then profitably trade at artificial prices.  The SEC further alleges that Lek Securities and Samuel Lek made the schemes possible by providing Avalon with access to the U.S. markets, approving the cross-market trading scheme, and improving its trading technology to assist Avalon’s trading.  According to the SEC’s complaint, Lek also relaxed its layering controls after Avalon complained.  The SEC’s complaint also describes fraud charges against Avalon’s named owner Nathan Fayyer and Sergey Pustelnik who allegedly kept his controlling interest in Avalon undisclosed and embedded himself at Lek Securities as a registered representative, using his position to facilitate the scheme. SEC

March 10, 2017 - 

The SEC charged two former executives at credit card processing company iPayment with masterminding a fraudulent scheme to steal millions of dollars through phony expense reimbursements, inflated invoices, and other improper accounting tactics.  The SEC’s complaint alleges that iPayment’s then Senior Vice President of Sales and Marketing Nasir N. Shakouri and then-Executive Vice President and Chief Operating Officer Robert S. Torino routinely reimbursed themselves for payments that were never actually made to third-party vendors using their personal credit cards.  They also allegedly conspired with vendors to inflate invoices and receive kickbacks from the overpayments, and claimed improper commissions and bonuses related to other corporate funds they improperly diverted in various ways.  The SEC’s complaint also charges three other iPayment executives – Bronson L. Quon, John S. Hong, and Jonathan K. Skarie – with participating in the scheme and helping Shakouri and Torino falsify books and records to hide the theft of corporate funds.  Quoon, Hong, and Skarie were allegedly rewarded for their assistance with missapropriated iPayment funds.  According to the SEC’s complaint, the scheme caused approximately $11.6 million in damages. SEC

March 9, 2017 - 

California-based marijuana “consulting” company Medbox and its founder Vincent Mehdizadeh will pay $12 million to settle allegations of falsely touting “record” revenue numbers to investors and claiming to be a “leader” in the marijuana industry while some of the company’s earnings came from sham transactions with a secret affiliate.  According to the SEC’s complaint, Medbox claimed to sell vending machines capable of dispensing marijuana on the basis of biometric identification.  The SEC alleges that Mehdizadeh created a shell company called New-Age Investment Consulting, installed his then-fiancé, Yocelin Legaspi, as its CEO, and caused it to carry out illegal stock sales and used the proceeds from those sales to boost Medbox’s revenue.  Medbox allegedly issued press releases headlining the phony revenues as record earnings to legitimize itself as a viable commercial operation when in fact nearly 90 percent of the company’s revenue in the first quarter of 2014 stemmed from sham transactions with New-Age.  The SEC also charged Medbox’s then-CEO Bruce Bednick with being complicit in the scheme and personally profiting.  The SEC also charged New-Age and Legaspi with unlawfully selling unregistered securities.  The SEC’s litigation against Bedrick, Legaspi, and New-Age continues. SEC

March 3, 2017 - 

Mexico-based homebuilding company Desarrolladora Homex S.A.B. de C.V. has agreed to settle charges that it reported fake sales of more than 100,000 homes to boost its claimed revenues by more than 355% (about $3.3 billion) over a three year period.  The SEC used satellite imagery to help uncover the accounting scheme and illustrate its allegation that Homex had not even broker ground on many of the homes for which it reported revenue.  According to the SEC’s complaint, Homex filed for the Mexican equivalent of bankruptcy protection in April 2014 and emerged in October 2015 under new equity ownership.  The SEC separately issued a trading suspension in the securities of Homex.  As part of the settlement, Homex has agreed to be prohibited from offering securities in the U.S. markets for at least five years. SEC

February 14, 2017 - 

The SEC charged California-based penny stock company Terminus Energy, Inc. and four of its corporate officers with misleading investors about the research, development, and profitability of their purported business to manufacture power generation products such as fuel cells.  The SEC alleges that while raising approximately $7.9 million from investors, Terminus and its officers claimed to have a viable prototype capable of being sold and earning revenue.  In fact, Terminus did not have the fuel cell technology or the funding to match their claims.  Rather, the officers were allegedly converting substantial amounts of investor funds to their own use.  According to the SEC’s complaint, the company failed to disclose to investors that Terminus’ operations manager George Doumanis is a convicted felon who went to prison for securities fraud and was secretly acting as an officer of the company despite being barred from participating in penny stock offerings.  In addition, Emanuel Pantelakis served on the Terminus board of directors despite having been permanently barred by the Financial Industry Regulatory Authority.  Also charged are Terminus’ CEO Danny B. Pratte and its former president, director, and legal counsel Joseph L. Pittera.  Terminus also allegedly used unregistered brokers to sell its securities and paid them more than twice as much in commissions as was disclosed to investors in offering documents.  Joseph Alborano is charged with soliciting and selling investments for which he received more than $1 million in commissions.  SEC

February 14, 2017 - 

The SEC announced two enforcement actions involving disclosure violations that deprived investors of material information during battles for corporate control of publicly traded companies.  In one case, the SEC’s order found that Texas-based oil refinery CVR Energy made inadequate disclosures in SEC filings about “success fee” arrangements with two investment banks retained by the company to fend off a hostile takeover bid.  Shareholders were consequently unaware of potential conflicts of interest that stemmed from the fee arrangements, namely that the banks could still earn success fees even if the hostile bidder secured control of the company.  CVR will not pay a penalty due to its remedial acts and extensive cooperation with the investigation.  In the other case, the SEC’s order found that groups of investors failed to properly disclose ownership information during a series of five campaigns to influence or exert control over microcap companies.  Jeffry E. Eberwein and Charles M. Gillman collaborated with mutual fund adviser Heartland Advisors in some of these campaigns.  Others involved Lone Star Value Management, a hedge fund adviser headed by Eberwein, or Boston Avenue Capital, a private fund advised by Gillman.  In each of these campaigns, the groups collectively owned more than five percent and sometimes even more than 10 percent of the companies’ outstanding stock, yet the required ownership filings to disclose that information to the investing public were either incomplete, untimely, or altogether absent.  Eberwein, Gillman, Lone Star, and Heartland will collectively pay penalties of $420,000.  SEC