Archive

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 subsidiary Los 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