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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.

				

			

			
						
					
			

	
		
		

			

				
				
June 2, 2014

				 The SEC charged a charter school operator in Chicago with defrauding investors in a $37.5M bond offering for school construction by making materially misleading statements about transactions that presented a conflict of interest.  The SEC alleges that UNO Charter School Network Inc. and United Neighborhood Organization of Chicago not only failed to disclose a multi-million-dollar contract with a windows company owned by the brother of one of its senior officers, but investors also weren’t informed about the potential financial impact the conflicted transaction had on its ability to repay the bonds.  SEC				 					 

						
Tagged in:
													  Misrepresentations, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
May 29, 2014

				 The SEC charged Chicago-based investment fund manager Neal V. Goyal and two investment advisers he owned and controlled – Blue Horizon Asset Management and Caldera Advisors – with violating the antifraud provisions of the various securities laws.  According to the SEC’s complaint, Goyal raised more than $11.4M in the last several years for investments in four private funds that he managed and controlled.  Goyal’s investment strategy lost money from the outset, but he hid those losses from investors through the Ponzi payments and phony account statements.  Meanwhile, Goyal misused investor funds to make down-payments and pay the mortgages on two homes he purchased.  He also siphoned away investor money to invest in a Chicago tavern, fund two children’s clothing boutiques that his wife operates in Chicago, and purchase artwork and lavish furniture.  SEC				 					 

						
Tagged in:
													  Ponzi Schemes, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
May 28, 2014

				 The SEC announced fraud charges and an emergency asset freeze against IST Shareholder Services and Robert G. Pearson for misusing money belonging to their corporate clients and the clients’ shareholders in order to fund their own payroll and business obligations.  According to the SEC’s complaint, Pearson misappropriated more than $1.3M during the past two years from an IST bank account holding the funds of clients who use IST as a paying agent to make cash disbursements to shareholders.  Pearson admitted to the scheme during questioning by SEC examiners.  SEC				 					 

						
Tagged in:
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
May 22, 2014

				 The SEC charged a former director of the Long Island-based vitamin company, NBTY Inc., and others in his family circle with insider trading ahead of the company’s sale to private equity firm The Carlyle Group.  The SEC alleges that board member Glenn Cohen learned that NBTY was negotiating a sale to The Carlyle Group and tipped his three brothers and a brother’s girlfriend with the confidential information.  Craig Cohen, Marc Cohen, Steven Cohen, and Laurie Topal all traded on the inside information that Glenn Cohen provided and reaped illicit profits totaling $175,000.  The four Cohens and Topal agreed to settle the SEC’s charges by paying a total of more than $500,000.  SEC				 					 

						
Tagged in:
													  Insider Trading, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
May 21, 2014

				 The SEC charged Gaeton “Guy” S. Della Penna, a Sarasota, Florida-based private fund manager, with defrauding investors in a Ponzi scheme that ensued after he squandered their money on bad investments and personal expenses.  The SEC alleges that Della Penna raised $3.8M from investors in three private investment funds that he operated but then lost nearly all of their money by making unsuccessful investments and diverting more than a million dollars to himself and his girlfriend.  In an effort to cover up his fraud as it unraveled, Della Penna began operating a Ponzi scheme by using money from newer investors to pay fake returns to prior investors. SEC				 					 

						
Tagged in:
													  Ponzi Schemes, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
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				 					 

						
Tagged in:
													  Accounting Fraud, 
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
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				 					 

						
Tagged in:
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
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				 					 

						
Tagged in:
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
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				 					 

						
Tagged in:
													  Insider Trading, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
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				 					 

						
Tagged in:
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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