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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.

August 16, 2019

Brokers Cantor Fitzgerald & Co. and BMO Capital Markets Corporation will pay, respectively, $647,000 and $3.9 million to resolve allegations that they marketed pre-released American Depositary Receipts (ADRs) when they should have known that the transactions were not backed by foreign shares.  SEC

August 16, 2019

In a consent judgment, Hani Zeini, formerly the CEO of California-based silicone breast implant company Sientra, Inc., has been ordered to pay a $160,000 civil penalty to settle charges that he concealed damaging news in advance of a $60 million stock offering by the company in 2015.  Specifically, as the offering was preparing to close, Zeini learned that the Brazilian company that was Sientra's sole source for implants had lost a regulatory approval, but concealed that information from the underwriter and the company's general counsel.  When the news became public the day after the offering closed, Sientra's stock price fell over 50%.  SEC

August 13, 2019

The SEC has charged and fined a New York broker-dealer, Canaccord Genuity LLC, of enabling over-the-counter (OTC) securities to be traded without adequate review required by the Exchange Act Rule 15c2-11.  Despite playing a critical gatekeeping role of protecting investors from fraud, Canaccord delegated the requisite review to a compliance associate who lacked necessary experience and training.  Canaccord has consented to the SEC’s cease and desist order, revised internal policies and procedures, and agreed to pay a $250,000 penalty.  SEC

July 23, 2019

An international whistleblower has been awarded half a million dollars for helping the SEC with a successful enforcement action.  Pursuant to the Dodd-Frank Act, the whistleblower’s identity was not revealed.  SEC

July 22, 2019

Microsoft’s Hungarian subsidiary, Microsoft Magyarország Számítástechnikai Szolgáltató és Kereskedelmi Kft., has agreed to pay a $8.7 million to the DOJ and $16.6 million to the SEC to settle allegations of violating the Foreign Corrupt Practices Act.  From 2013 to 2015, executives at Microsoft Hungary falsely represented to Microsoft that steep discounts were necessary for resellers of software licenses to the Hungarian government.  However, the resellers did not pass on the discounts to the Hungarian government, and used them for instead unspecified corrupt purposes.  DOJ; USAO SDNY; SEC

July 18, 2019

Swapnil Rege, who worked as a portfolio manager for a hedge fund that operated as a commodity pool operator, was been ordered by the CFTC  and SEC to pay a $100,000 civil penalty and disgorge a $600,000 performance bonus he received as a result of his fraudulent mismarking the valuations of interest rate swaps.  The mismarking, accomplished through various means, artifically inflated the profitability of his trades, earning him a larger performance bonus.  SEC, CFTC

July 18, 2018

After being charged in March 2018, former Equifax executive Jun Ying has agreed to pay disgorgement and prejudgment interest totaling $125,636 to resolve charges that he engaged in insider trading ahead of exposure of Equifax's data breach. Ying's payment obligation will be offset by the $117,117 forfeiture that he has already paid in the parallel criminal case.  SEC

July 16, 2019

AR Capital LLC, together with its founder Nicholas Schorsch and its former CFO Brian Block, have agreed to pay $39 million in disgorgement and interest, as well as penalties totaling $21.75 million, to resolve allegations that they wrongfully inflated incentive fees and took unsupported charges in two separate mergers involving the publicly-traded REIT American Realty Capital Properties, Inc. that AR Capital sponsored and managed.  Defendants allegedly failed to properly disclose their compensation to shareholders.  SEC

July 15, 2019

Nomura Securities, Inc. agreed to provide $25 million to reimburse customers that purchased mortgage-backed securities from Nomura.  The SEC orders find that Nomura traders made false and misleading statements to customers, including about the price at which Nomura bought securities, the amount of profit Nomura would receive on the potential trade, and the current owner of the security.  The SEC furhter alleged that Nomura failed to reasonably supervise its traders.  Nomura, which cooperated in the investigation, will also pay $1.5 million in penalties.  Two individual traders were previously charged by the SEC.  SEC

June 20, 2019

To settle charges of violating the Foreign Corrupt Practices Act (FCPA), Walmart Inc. and its Brazilian subsidiary, WMT Brasilia S.a.r.l., have agreed to pay $138 million to the DOJ and $144 million to the SEC, for a combined penalty of $282 million.  According to the DOJ and SEC, Walmart’s alleged failure to implement and maintain adequate internal anti-corruption controls from 2000 to 2011 resulted in bribes to government officials in Brazil, China, India, and Mexico that allowed Walmart’s foreign subsidiaries to open more stores faster.  For cooperating with all investigations and self-disclosing some of the alleged misconduct, Walmart received a reduction of 20-25% off the amount originally owed to the DOJ.  In addition to the monetary penalty, Walmart has agreed to retain an outside compliance monitor for two years.  DOJ, SEC, USAO EDVA
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