Government Enforcement Actions

May 20, 2014

The SEC charged James T. Adams, the former chief risk officer at Deloitte LLP, for causing violations of the auditor independence rules that ensure audit firms maintain their objectivity and impartiality with respect to their clients.  Specifically, Adams repeatedly accepted tens of thousands of dollars in casino markers while he was the advisory partner on subsidiary Deloitte & Touche’s audit of a casino gaming corporation.  Adams concealed his casino markers from Deloitte & Touche and lied to another partner when asked if he had casino markers from audit clients of the firm.  He agreed to settle the SEC’s charges by being suspended for at least two years from practicing as an accountant on behalf of any publicly traded company or other entity regulated by the SEC.  SEC

May 15, 2014

The SEC charged Behrooz Sarafraz, a California-based securities salesman for selling millions of dollars in oil-and-gas investments without being registered with the SEC as a broker-dealer or associated with a registered broker-dealer.  According to the SEC’s complaint, Sarafraz acted as the primary salesman on behalf of TVC Opus I Drilling Program and Tri-Valley Corp. which together from February 2002 to April 2010 raised more than $140M million for their oil-and-gas drilling venture.  While Sarafraz was raising money for these entities, he was not associated with any broker-dealer registered with the SEC and thus denied denied investors the protections of regulatory oversight and firm supervision.  He agreed to settle the SEC’s charges by paying disgorgement of his commissions, prejudgment interest, and a penalty for a total of more than $22M.  SEC

May 15, 2014

The SEC charged New York-based Rafferty Capital Markets with illegally facilitating trades for another firm that wasn’t registered as a broker-dealer as required under the federal securities laws.  Rafferty agreed to settle the SEC’s charges by disgorging all the profits it received in the arrangement plus interest and a penalty for a total of nearly $850,000.  SEC

May 12, 2014

The SEC filed insider trading charges against three founders of the software company, Lawson Software, for taking unfair advantage of incorrect media speculation and analyst reports about the company’s planned merger with Infor Global Solutions.  They agreed to pay nearly $5.8 million to settle the SEC’s charges.  SEC

May 7, 2014

The SEC announced fraud charges and an asset freeze against New York-based investment advisory firm Aphelion Fund Management, and two executives, for distributing falsified performance results to prospective investors in two hedge funds they managed.  SEC

May 1, 2014

The New York Stock Exchange and two affiliated exchanges along with Archipelago Securities agreed to pay a $4.5M penalty agreed to settle charges that they failed to comply with the responsibilities of self-regulatory organizations (SROs) to conduct their business operations in accordance with SEC-approved exchange rules and the federal securities laws.  SEC

April 30, 2014

The SEC announced fraud charges and an asset freeze against American Pension Services, a Utah-based retirement plan, for defrauding investors in self-directed individual retirement accounts, causing them to lose millions of dollars of savings.  SEC

April 25, 2014

The SEC charged Christopher Saridakis, former CEO of the marketing solutions division of GSI Commerce, with insider trading in advance of eBay’s acquisition of the e-commerce company by tipping off friends and relatives with confidential information about the pending deal so they could attain more than $300,000 in illegal profits.  SEC

April 17, 2014

The SEC charged Massachusetts-based TelexFree for allegedly operating a large pyramid scheme that mainly targeted Dominican and Brazilian immigrants in the US.  According to the SEC’s complaint, the defendants sold securities in the form of TelexFree “memberships” that promised annual returns of 200% or more but the company’s sales revenues of approximately $1.3M from August 2012 through March 2014 are barely one percent of the more than $1.1B needed to cover its promised payments.  SEC

April 17, 2014

The SEC charged Keith Seilhan, a former 20-year employee of BP and a senior responder during the 2010 Deepwater Horizon oil spill, with insider trading in BP securities based on confidential information about the magnitude of the disaster.  According to the SEC’s complaint, BP tasked Seilhan with coordinating BP’s oil collection and clean-up operations in the Gulf of Mexico and while in possession of material, nonpublic information, and in breach of duties owed to BP and its shareholders, he directed the sale of his family’s entire $1 million portfolio of BP securities over the course of two days in late April 2010.  SEC