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September 19, 2014

The SEC charged Brooklyn resident Frank Tamayo with facilitating a $5.6 million insider trading scheme that typically involved the passing of illegal tips via napkins or post-it notes at Grand Central Terminal.  The SEC alleges that Tamayo received material nonpublic information from Steven Metro about 13 impending corporate deals involving clients of the law firm where Metro worked.  Tamayo then tipped his stockbroker Vladimir Eydelman, who used the confidential information to illegally trade for himself and for Tamayo and other customers.  SEC

September 18, 2014

Investment advisory firm Strategic Capital Group LLC agreed to pay nearly $600,000 to settle SEC charges it engaged in hundreds of principal transactions through its affiliated broker-dealer without informing clients or obtaining their consent.  The SEC also charged the company with distributing false and misleading advertisements to investors.  SEC

September 17, 2014

The SEC charged Sean C. Cooper, former hedge fund manager at San Francisco-based investment advisory firm WestEnd Capital Management LLC , with fraudulently taking excess management fees from the accounts of fund clients and using their money to remodel his multi-million dollar home and buy a Porsche.  WestEnd, which expelled Cooper and reimbursed the hedge fund once it became aware of his scheme, is being charged separately by the SEC for failing to effectively supervise him.  The firm agreed to pay a $150,000 penalty to settle the SEC’s charges.  SEC

September 17, 2014

New York-based high frequency trading firm Latour Trading LLC agreed to pay a $16 million penalty to settle charges it violated the net capital rule that requires all broker-dealers to maintain minimum levels of net liquid assets or net capital.  It is the largest penalty ever for violations of the net capital rule.  SEC

September 16, 2014

The SEC secured an emergency asset freeze againstAbatement Corp. Holding Company Limited, located in Turks and Caicos Islands, in connection with its operation of a South Florida-based Ponzi scheme.  The SEC’s complaint alleged that Abatement Corp. and its now-deceased principal Joseph Laurer falsely promised investors safe, guaranteed returns while instead engaging in a Ponzi scheme.  According to the SEC, Laurer, who was a member of the City of Homestead’s General Employee Pension Board and president of the South Dade chapter of AARP, raised more than $4.6 million from approximately 50 investors residing primarily in South Florida.  SEC

September 16, 2014

The SEC charged Dimitry Braverman, a senior information technology professional at the international law firm Wilson Sonsini Goodrich & Rosati, with insider trading ahead of several mergers and acquisitions involving firm clients being advised on the deals.  The SEC alleged Braverman used his access to nonpublic information in the firm’s client-related databases and garnered more than $300,000 in illicit profits by trading in advance of merger announcements.  Braverman began by insider trading in accounts in his own name, but shifted course when a lawyer at his firm was charged by the SEC and criminal authorities in an entirely separate insider trading scheme.  After immediately liquidating the remaining securities that he had purchased on the basis of nonpublic information, Braverman waited about 18 months and then continued his insider trading in a brokerage account held in the name of a relative living in Russia.  His concealment efforts failed, however, when SEC investigators were able to dissect a suspicious pattern of trades and trace them back to Braverman.  SEC

September 16, 2014

The SEC announced d the latest sanctions in a continuing enforcement initiative uncovering certain hedge fund advisers and private equity firms that have illegally participated in an offering of a stock after short selling it during a restricted period.  The following firms and individual trader have agreed to settle the SEC’s charges and pay a combined total of more than $9 million in disgorgement, interest, and penalties: Advent Capital Management; Antipodean Advisors; BlackRock Institutional Trust Company; East Side Holdings II; Explorador Capital Management; Formula Growth; Great Point Partners; Indaba Capital Management; Ironman Capital Management; James C. Parsons; Midwood Capital Management; Nob Hill Capital Management; RA Capital Management; Rockwood Investment Management (also known as Rockwood Partners LP); Seawolf Capital; Solus Alternative Asset Management; SuttonBrook Capital Management; Troubh Partners; Vinci Partners Investimentos; Whitebox Advisors.  SEC

September 15, 2014

Tennessee-based animal feed company AgFeed Industries, currently in Chapter 11 bankruptcy, agreed to pay back $18 million in illicit profits from an accounting fraud that resulted in an SEC enforcement action earlier this year.  In March, the SEC charged AgFeed charged along with top company executives for repeatedly reporting fake revenues from the company’s China operations in order to meet financial targets and prop up AgFeed’s stock price.  The company obtained illicit gains in stock offerings to investors at the inflated prices resulting from the accounting scheme.  The $18 million to be paid by AgFeed will be distributed to victims of the company’s fraud.  SEC

September 11, 2014

Delaware-based bank holding company Wilmington Trust Company (which M&T Bank acquired in May 2011) agreed to pay $18.5 million to settle charges of accounting and disclosure fraud.  According to the government, as the real estate market declined in 2009 and 2010 and its construction loans began to mature without repayment or completion of the underlying project, Wilmington Trust did not renew, extend, or take other appropriate action on a material amount of its matured loans.  Instead of fully and accurately disclosing the amount of these accruing loans as required by accounting guidance, Wilmington Trust improperly excluded the matured loans from its public financial reporting.  SEC

September 10, 2014

The SEC charged Massachusetts-based biotech company Advanced Cell Technology and its former CEO Gary H. Rabin with defrauding investors by failing to report his sales of company stock as federal securities laws require to give investors the opportunity to evaluate whether the purchases and sales by an insider could be indicative of the prospects of the company.  Rabin, who left the company earlier this year, agreed to settle the SEC’s charges by paying a $175,000 penalty.  ACT agreed to pay a $375,000 penalty.  SEC
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