Archive

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