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SEC Enforcement Actions

The Securities and Exchange Commission (SEC) is the United States agency with primary responsibility for enforcing federal securities laws. Whistleblowers with knowledge of violations of the federal securities laws can submit a claim to the SEC under the SEC Whistleblower Reward Program, and may be eligible to receive  monetary rewards and protection against retaliation by employers.

Below are summaries of recent SEC settlements or successful prosecutions. If you believe you have information about fraud which could give  rise to an SEC enforcement action and claim under the SEC Whistleblower Reward Program, please contact us to speak with one of our experienced whistleblower attorneys.

September 27, 2022

Oracle Corporation has been ordered to pay more than $23 million to resolve charges that its subsidiaries in Turkey, the UAE, and India violated the Foreign Corrupt Practices Act.  According to the SEC, between 2016 and 2019, the subsidiaries used slush funds to pay foreign officials and their families to attend international technology conferences in exchange for business.  Oracle India was previously sanctioned for similar charges in 2012.  SEC

September 27, 2022

Fifteen broker-dealers and one affiliated investment advisor has been ordered to pay combined penalties of more than $1.1 billion following SEC charges of violating the recordkeeping provision of securities laws.  Barclays, Bank of America (including Merrill Lynch, Pierce, Fenner & Smith), Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, Morgan Stanley, and UBS each paid $125 million, while Jefferies and Nomura each paid $50 million and Cantor Fitzgerald paid $10 million, to settle charges of failing to prevent or preserve communications their employees made via messaging apps on their personal devices.  SEC

September 22, 2022

The Boeing Company and its former CEO, Dennis A. Muilenburg, have agreed to pay $200 million and $1 million respectively, in order to resolve SEC charges of making materially misleading statements to investors following crashes of two 737 MAX planes in 2018 and 2019.  Despite knowing the MCAS system at fault would be an ongoing safety issue, Boeing and Muilenburg repeatedly assured investors and the public otherwise.  SEC

September 20, 2022

Morgan Stanley Smith Barney LLC (MSSB) has agreed to pay $35 million to the SEC to settle charges of failing to protect the personal identifying information (PII) of some 15 million customers.  Between 2015 to 2020, MSSB failed to properly encrypt PII or properly dispose of devices and servers containing PII.  As a result, decommissioned devices containing unencrypted PII were resold by a third party via an internet auction site, and 42 decommissioned servers containing unencrypted PII went missing entirely.  SEC

September 19, 2022

Sparkster Ltd. and its CEO, Sajjad Daya, have agreed to pay $30 million to settle charges of offering and selling crypto asset securities called SPRK tokens that were not registered with the SEC and were not eligible for a registration exemption.  A crypto influencer, Ian Balina, was separately charged in federal court for promoting SPRK tokens on social media without disclosing that he received a 30% bonus on tokens he purchased in exchange for his posts, and for selling the tokens to an investing pool of around 50 individuals.  SEC

September 15, 2022

Brazil’s second largest airline, GOL Linhas Aéreas Inteligentes S.A. (GOL), has agreed to pay $70 million to the SEC and $41 million to civil and criminal authorities in the U.S. and Brazil to resolve charges of violating the Foreign Corrupt Practices Act.  The airline allegedly offered and paid $3.8 million in bribes to various officials in Brazil to help usher in legislation involving certain payroll taxes and fuel tax reductions that were favorable to the airline.  DOJ; SEC

September 2, 2022

Swapnil Rege, SwapStar Capital LLC, and Reema Rege have been ordered to pay $5 million in disgorgement and pre-judgment interest for engaging in fraudulent solicitation and misappropriation, including on Swapnil’s part, engaging in trading despite an existing bar for prior violations, and on Reema’s part, receiving illegally-obtained profits she was not entitled to.  The orders resulted from parallel but separate enforcement actions by the CFTC and SEC, and included a permanent trading and registration ban against Swapnil.  CFTC; SEC

August 24, 2022

Taronis Technologies, Inc. and related entities have agreed to pay a total of $5.1 million in disgorgement and interest to resolve allegations that the companies issued false and misleading statements claiming to have agreements and relationships with customers that did not exist or were exaggerated.  Taronis executives created fake and backdated orders, resulting in improper revenue recognition.  Based on these misstated financials, defendants raised approximately $30 million from investors in private placements.  SEC

August 16, 2022

Eagle Bancorp, Inc. has agreed to pay $13.35 million in penalties, disgorgement, and interest to resolve charges that it violated SEC regulations and GAAP in failing to disclose as related party transactions nearly $90 million in loans extended to trusts associated with its former CEO and chairman of the board, Ronald D. Paul, as well as tens of millions of dollars of loans to other Eagle directors and their family members.  The SEC further found that when questions about the reporting were raised publicly, the bank knowingly made false and misleading statements that the loans were not related party loans.  Paul agreed to settle related charges for a total of $431,000.  SEC

August 10, 2022

Angel Oak Capital Advisors and its portfolio manager Ashish Neghandi will pay $1.75 million and $75,000 respectively to settle charges of misleading investors via their $90 million securitization of home renovation loans. When delinquency rates on their “fix-and-flip” loans increased unexpectedly, rather than accelerating return payments to certain investors, as contractually required, defendants artificially reduced delinquency rates by diverting borrowers’ funds to pay down outstanding loan balances. SEC
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