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Page 11 of 14

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 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

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 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

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

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

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 as Operation 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

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 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

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
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