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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.

				

			

			
						
					
			

	
		
		

			

				
				
July 18, 2022

				 Equitable Financial Life Insurance Company has agreed to pay $50 million to settle charges of providing statements to 1.4 million variable annuity investors, which included public school teachers and staff, that failed to list all fees paid during the period.  In addition to the monetary settlement, Equitable has agreed to cease and desist from future violations and revise how it presents fee information.  SEC				 					 

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

					
	
							
	
		
		
	


 			


 			




	
		
		

			

				
				
July 15, 2022

				 An anonymous whistleblower was awarded $3 million based on SEC findings that the individual, who was solicited to invest in a product, expeditiously contacted the SEC to report misrepresentations regarding the product.  That report prompted the Commission to open an investigation, during which the individual provided additional assistance.  SEC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  SEC Whistleblower Reward Program, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 11, 2022

				 Attorney Shimon Rosenfeld was ordered to pay over $7 million in disgorgement and prejudgment interest and will spend 6 months in prison for defrauding real estate investors. For a period of nearly four years, from May 2014 to March 2018, Rosenfeld solicited investors for a pooled real estate investment fund whose profits would be split with the investors. Instead, Rosenfeld misappropriated the funds to trade securities in his personal brokerage account, resulting in a $6 million loss of investor funds. SEC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Ponzi Schemes, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 29, 2022

				 UBS Financial Services Inc. has agreed to pay $25 million in connection with a complex investment strategy that it ran from 2016 to 2017.  Though it marketed and sold YES, or Yield Enhancement Strategy, to some 600 investors, UBS did not adequately inform those investors about possible risks, nor provide its financial advisors with enough training and oversight to counteract those risks.  SEC				 					 

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

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 28, 2022

				 In response to SEC charges, audit firm Ernst & Young LLP admitted that its employees cheated on CPA exams and in continuing professional education courses, and that the firm withheld evidence of this misconduct during the SEC’s investigation.  EY agreed to pay a $100 million penalty and undertake extensive remedial measures.  The cheating took place on the ethics component of CPA exams and in courses required to maintain CPA licenses, including ones designed to ensure that accountants can properly evaluate whether clients’ financial statements comply with Generally Accepted Accounting Principles.  SEC				 					 

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

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 14, 2022

				 Energy Capital Partners Management LP will pay a $1 million penalty and has paid back more than $3.3 million to a private equity fund it advises, for allocating a disproportionate share of expenses to the fund, a violation of Sections 206(2) and 206(4) of the Investment Advisers Act of 1940, and Rule 206(4)-7 and 206(4)-8. ECPM should have either disclosed the disproportionate allocation or not have allocated them in this manner. SEC				 					 

						
Tagged in:
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 14, 2022

				 Weiss Asset Management LP will pay $6.9 million for its Rule 105 violation, i.e., short selling stocks and then purchasing the same stocks in public offerings. Weiss sold short the stocks, despite the stocks being under a 5-day restricted period. Weiss regularly miscalculated the applicable restricted period and dismissed internal red flags alerting them to the potential noncompliance. SEC				 					 

						
Tagged in:
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 13, 2022

				 Charles Schwab & Co., Inc., Charles Schwab Investment Advisory, Inc., and Schwab Wealth Investment Advisory, Inc. will pay $187 million for violating the antifraud provisions of the Investment Advisers Act of 1940. Mandated disclosures for Schwab Intelligent Portfolios—Schwab’s robo-adviser product—stated that the amount of cash in the robo-adviser portfolios utilized a “disciplined portfolio construction methodology,” and would seek “optimal return[s].” Instead, Schwab swept cash from the robo-adviser portfolios to its affiliate bank, loaned it out, and kept the difference between the interest it earned on the loans and the interest it paid to the robo-adviser clients. This resulted in customers making less money while taking on the same amount of risk. SEC				 					 

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

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 8, 2022

				 CohnReznick LLP and its partners Stephen M. Wyss, Stephen H. Jackson, and Robert G. Hilbert were charged with improper professional conduct in their engagement with clients Sequential Brands Group, Inc. and Longfin Corp, violations of Rule 102(e) of the SEC’s Rules of Practice, Rule 2-02(b)(1) of Regulation S-X, and violations of Section 13(a) of the SEC Act of 1934. CohnReznick failed to obtain sufficient evidence to support Sequential’s conclusion that its goodwill was not impaired or reduced in value, despite the firm’s own valuation specialists expressing concern. In its Longfin audit, CohnReznick failed to address known issues involving related party transactions used to fraudulently inflate Longfin’s revenues. CohnReznick’s $1.9 million penalty will be returned to investors. SEC				 					 

						
Tagged in:
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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