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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.

May 6, 2022

The SEC awarded $3.5 million to 4 whistleblowers in a single covered action. Three joint whistleblowers provided staff with information that caused a new investigation to be opened, and a fourth whistleblower provided analytical insights of publicly available information that focused the staff’s attention on new allegations that advanced the investigation. SEC

April 28, 2022

Publicly-traded asset manager Medley Management and its former CEOs, Brook and Seth Taube, have agreed to pay $10 million in civil penalties to resolve SEC charges of making material misrepresentations to investors and clients.  Through multiple public filings dating back to at least 2016, Medley and the Taubes allegedly overstated assets under management, failed to disclose certain risks, and made unfounded projections of Medley’s likely future growth to sway investors toward voting for a merger between Medley and two of its clients.  SEC

April 25, 2022

The SEC has awarded five whistleblowers a total of $6 million for their assistance in a single successful enforcement action.  According to the agency, one group of the whistleblowers provided key documents that prompted the agency to request additional documents from the respondent, while the second group provided firsthand accounts of the misconduct.  SEC

April 21, 2022

Bernard L. Compton, former accountant at Domino’s Pizza, will pay nearly $2 million for insider trading. Compton illicitly leveraged his insider role at Domino’s to trade ahead of 12 of the company’s earnings announcements between 2015 and 2020. Compton attempted to hide his crime by spreading the trades across several different brokerage accounts held by himself and his family members. Compton is permanently enjoined from practicing before the SEC. SEC

April 20, 2022

Waste management company Stericycle Inc. agreed to pay a total of $84 million and enter into a deferred prosecution agreement admitting to the payment of millions of dollars in bribes to government officials in Brazil, Mexico, and Argentina in order to obtain and retain business and to secure improper advantages in violation of the Foreign Corrupt Practices Act.  The company’s foreign subsidiaries maintained false records to conceal the bribes, which were typically paid in cash and recorded on spreadsheets using code words and euphemisms, including describing the payments made in Argentina as “alfajores.”  Stericycle’s total payment consists of a $28 million payment to resolve an investigation by the SEC, a $52.5 million criminal penalty, and $9.3 million to resolve investigations by the Controladoria-Geral da União (CGU) and the Advocacia-Geral de União (Attorney General’s Office) in Brazil, part of which will be credited to reduce the criminal penalty.  DOJ; SEC

April 15, 2022

Damon Elliott, and his entity Piptastic Limited will pay almost $6.5 million in disgorgement and interest, and a civil penalty of nearly $100,000 for his promotion of a Ponzi scheme in violation of the antifraud provisions of the Securities Act and the Securities Exchange Act. Elliott, through Piptastic, misused investor assets, lied about the status of their investments, provided fabricated account statements, and lied about investors’ funds being safely held in trading accounts. In addition to the disgorgement and interest levied against Elliott, Piptastic is enjoined from further violations of the Securities Act and the Securities Exchange Act.  SEC

April 14, 2022

Andrew J. Chapin, former CEO of Benja Inc. will pay $2.8 million to settle  charges that he violated the antifraud provisions of the Securities Act and the Securities Exchange Act. Chapin touted Benja’s online advertising platform as successful, claiming it generated millions in revenue from popular consumer brands. He enlisted the help of associates who impersonated actual Benja representatives, as well as a person who posed as the “founder” of a venture capital fund who had invested heavily in Benja. Chapin is enjoined from further SEC violations and is barred from serving as an officer or director of a public company. SEC

March 24, 2022

Michael Gastauer of Germany has been ordered to pay $17 million in disgorgement, prejudgment interest, and civil penalty after he and his six U.S.-based entities were found to have aided and abetted a $165 million microcap fraud scheme.  Gastauer and his entities had allegedly disbursed of illegal stock sales orchestrated by Roger Knox of the U.K. via a Swiss entity called Wintercap SA.  Knox is awaiting sentencing in a parallel criminal action brought by the U.S. Attorney for the District of Massachusetts.  SEC

March 18, 2022

The SEC has made three awards totaling approximately $3 million to three whistleblowers whose actions helped lead to three enforcement actions.  All three whistleblowers were said to have provided information that prompted the agency to open investigations into potential securities law violations.  Two of the whistleblowers were company insiders who reported concerns internally before coming forward.  SEC

March 15, 2022

Fund manager Eric Malley, his company MG Capital Management LP, and related entities MG Capital Realty Management LLC and MG GP III LP, have agreed to pay $12 million to resolve charges of defrauding investors.  In order to market two real estate funds managed by MG Capital, Malley allegedly made a number of material misrepresentations, including that he’d previously managed two highly successful funds and that investor funds were protected against loss.  In fact, Malley was a real estate broker with no experience managing investments, the prior funds did not exist, and he was misappropriating millions from the new funds.  SEC
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