Government Enforcement Actions

September 26, 2023

Registered investment advisor AssetMark Inc. has agreed to pay more than $18 million to settle charges of failing to fully disclose a conflict of interest from its affiliate’s cash sweep program.  Specifically, AssetMark failed to disclose that it helped set the fee that its affiliate received for operating the program, and the fee directly reduced the amount of interest paid to clients.  SEC

September 26, 2023

Hyzon Motors, which builds hydrogen fuel cell electric vehicles, has agreed to pay $25 million to settle SEC charges of misleading investors about its business relationships and sales numbers.  Its former CEO, Craig Knight, has agreed to pay about $250,000, and former managing director of its European subsidiary, Max C.B. Holthausen, has agreed to pay over $122,500, to settle charges against them.  Hydron, Knight, and Holthausen allegedly misrepresented that they had already sold a number of vehicles and that more sales were imminent, and made other misstatements concerning its certain customer and supplier relationships, the delivery of its first vehicle, and the reporting of its sales numbers.  SEC

September 25, 2023

Investment adviser DWS Investment Management Americas Inc. (DIMA), a subsidiary of Deutsche Bank AG, has agreed to pay $25 million to settle two separate enforcement actions.  In the first action, DIMA was found to have failed to develop and implement an anti-money laundering (AML) program to comply with the Bank Secrecy Act and Financial Crimes Enforcement Network regulations.  In the second action, DIMA was found to have made materially misleading statements about how it managed its Environmental, Social, and Governance (ESG) products while marketing itself as a leader in the field.  SEC

September 22, 2023

Goldman Sachs & Co. LLC has agreed to pay $6 million to resolve charges of failing to provide accurate securities trading information to the SEC.  The firm admitted to making 26 of 43 total types of errors, through 22,000 deficient blue sheet submissions, ultimately causing inaccurate or missing trade data for at least 163 million transactions.  SEC

September 22, 2023

American Infrastructure Funds LLC (AIM) has agreed to pay $1.6 million in civil penalties, disgorgement, and prejudgment interest to settle charges of violating the antifraud and compliance provisions of the Advisers Act while acting as an investment advisor to private funds.  According to the SEC, AIM failed to disclose multiple conflicts of interest to its clients, including instances where it failed to consider whether a fee acceleration or a loan was in its clients’ best interests.  It also violated its fiduciary duties by transferring funds from one fund nearing the end of its term to a new fund without obtaining investor consent or providing investors with an exit, even though doing so would lock up investor funds for another decade.  SEC

September 21, 2023

The former CFO of a Russian natural gas company has been sentenced to 7 years in prison and ordered to pay $4 million in restitution and a $350,000 fine for failing to file a Report of Foreign Bank and Financial Accounts (FBAR), making a false statement to the IRS, and failing to pay taxes on millions of dollars of income over a 10 year period.  As the CFO of Novatek, Mark Anthony Gyetvay opened two different bank accounts in Switzerland, which he put under the name of his then-wife, and in which he stored at one point up to $93 million.  Despite knowing better as a CPA and despite receiving recommendations to do so from his accountant, Gyetvay then failed to file FBARs or personal tax returns.  DOJ

September 21, 2023

Yale University and Dr. John Krystal—who was employed at Yale in multiple roles, including as a psychiatry professor and chair with the School of Medicine, and as a clinical psychiatrist with research responsibilities at the VA Medical Center—has agreed to pay $1.5 million to resolve their liability under the False Claims Act.  According to the government, Dr. Krystal and four co-inventors failed to share royalties with the VA for several patents they obtained for discovering that depression and suicidal ideation could be treated with intranasal ketamine.  Yale and Dr. Krystal began receiving the royalties in 2015, and the royalties now total more than $3 million.  DOJ

September 19, 2023

Two whistleblowers who provided significant information and assistance to the CFTC has been awarded over $15 million for aiding in successful enforcement actions.  According to the agency, one whistleblower interpreted key evidence and helped identify new lines of inquiry, while the second whistleblower provided information that launched the investigation, provided a corroborating witness, and provided a declaration in support.  CFTC

September 19, 2023

Commercial real estate firm CBRE, Inc., a subsidiary of CBRE Group, Inc., has agreed to pay $375,000 to settle charges of violating the SEC’s whistleblower protection rule between 2011 and 2022.  In order to receive separation pay, CBRE allegedly required over 800 of its departing employees to sign releases stating they had not filed complaints with any federal agency.  As part of its settlement with the SEC, CBRE has informed former employees who signed the release of their right to communicate with the government, as well as taken revised all of its releases to be in compliance with the whistleblower protection rule.  SEC

September 18, 2023

Lyft Inc. will pay a $10 million civil penalty for its failure to disclose a board director's role in the sale of $424 million worth of private shares prior to Lyft's initial public offering. The director arranged for a shareholder to sell their shares to a special purpose vehicle, and then arranged for another investor to purchase the shares through the SPV. Lyft failed to disclose this information in its 2019 Form 10-K, depriving investors of critical information. SEC