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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 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				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Fraud in CFTC-Regulated Markets, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
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				 					 

						
Tagged in:
													  Accounting Fraud, 
													  Financial and Investment Fraud, 
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
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				 					 

						
Tagged in:
													  Accounting Fraud, 
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
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				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Financial Institution Fraud, 
													  Misrepresentations, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 9, 2022

				 The SEC has awarded two whistleblowers more than $16 million for their assistance in a successful enforcement action.  The first whistleblower, who received about $13 million, submitted information that sparked the investigation and later provided key witnesses and other critical information that helped move the investigation forward.  The second whistleblower, who received more than $3 million, later submitted new information that also aided the investigation.  SEC				 					 

						
Tagged in:
													  SEC Whistleblower Reward Program, 
													  Securities Fraud, 
													  Whistleblower Rewards, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 3, 2022

				 Surgalign Holdings, Inc.—formerly RTI Surgical Holdings, Inc.—and its former executives Brian Hutchison and Robert Jordheim will collectively pay over $2.25 million in civil penalties and disgorgement, for accelerating revenue in contravention of GAAP principles, and in violation of the ’33 Act, the ’34 Act, and SOX. Falling short of their sales targets, RTI shipped future orders ahead of schedule to “pull forward” revenue. This practice cannibalized future revenue streams, damaged important customer relationships, and kept investors in the dark as to the true financial condition of the company. RTI restated its public financial statements from 2014 through 2019 to correct errors caused by this practice. SEC, SEC				 					 

						
Tagged in:
													  Accounting Fraud, 
													  Misrepresentations, 
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 2, 2022

				 Crown Bridge Partners, Soheil Ahdoot, and Sepas Ahdoot, will pay more than $9 million for operating as unregistered securities dealers, and are required to surrender all conversion rights, unexercised warrants, and cancel any shares acquired by converting notes or exercising related warrants resulting from their fraud. Over a 5-year period, from 2016 to 2020, the defendants bought convertible notes, converted them into billions of newly issued shares of heavily-discounted stock, and sold the new shares at significant profit, all while not being registered as dealers with the SEC, skirting regulatory oversight. Defendants are subject to a 5-year penny stock bar in addition to the monetary penalties. SEC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 29, 2022

				 Aegis Capital Corp., and two of its former representatives, Alan Z. Appelbaum and Paul F. Gallivan will pay around $2.5 million total for making materially false and misleading statements and making unsuitable investment recommendations, namely, variable interest rate structured products. Appelbaum, Gallivan, and 14 Aegis brokers recommended these highly complex and risky products to customers with “moderate” risk tolerance, despite having investment timelines inconsistent with the VRSP maturity dates. The targeted customers’ financial needs were disregarded, as were their risk tolerance, investment objectives, age, investment experience, and liquidity needs. SEC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 27, 2022

				 Three registered broker-dealers have been ordered to pay civil penalties based on SEC findings that each had deficiencies in its programs to prevent customer identity theft, in violation of the SEC’s Identity Theft Red Flags Rule, or Regulation S-ID.  J.P. Morgan Securities LLC will pay $1.2 million, UBS Financial Services Inc. will pay $925,000, and TradeStation Securities, Inc. will pay $425,000.  The SEC found that the broker-dealers’ cybersecurity policies failed to detect identity theft red flags in connection with customer accounts or to incorporate those red flags into their programs, and that the firms failed to adequately train staff, failed to review and update the policies as required, did not include appropriate board oversight, and failed to oversee service provider arrangements.  SEC				 					 

						
Tagged in:
													  Cybersecurity and Data Breaches, 
													  Financial and Investment Fraud, 
													  Financial Institution Fraud, 
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			


 			


											

						

								

									
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