Archive

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 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 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