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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.

				

			

			
						
					
			

	
		
		

			

				
				
January 9, 2017

				 The SEC brought fraud charges against Gregory T. Dean and Donald J. Fowler, two New York-based brokers, for using an “in-and-out” trading strategy to generate hefty commissions for themselves despite the fact that the strategy was unsuitable for their customers. The SEC’s complaint alleges that Dean and Fowler did not conduct reasonable diligence to determine whether their investment strategy, which involved frequent buying and selling of securities, could deliver even a minimal profit to their customers. Their strategy, which generally involved selling securities within a week or two of purchase, and charging customers a fee for each transaction, allegedly resulted in substantial losses for at least 27 customers. The SEC also issued an Investor Alert warning about excessive trading and “churning” that can occur in brokerage accounts. SEC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Market Manipulation and Trading Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
January 6, 2017

				 The SEC announced an award of more than $5.5 million to a whistleblower who “provided critical information that helped the SEC uncover an ongoing scheme.”  Jane Norberg, Chief of the SEC’s Office of the Whistleblower, lauded the whistleblower for “boldly stepping forward while still employed at the company.”  SEC				 					 

						
Tagged in:
													  SEC Whistleblower Reward Program, 
													  Whistleblower Rewards, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 29, 2016

				 Kentucky-based wire and cable manufacturer General Cable Corporation will pay more than $75 million to resolve parallel SEC and DOJ investigations related to its violations of the Foreign Corrupt Practices Act.  General Cable will also pay an additional $6.5 million penalty to the SEC to settle separate accounting-related violations.  According to the SEC’s order, General Cable’s overseas subsidiaries made improper payments to foreign government officials for a dozen years to obtain or retain business in Angola, Bangladesh, China, Egypt, Indonesia, and Thailand.  The company’s weak internal controls also failed to detect improper inventory accounting at its Brazilian subsidiary, causing the company to materially misstate its financial statements from 2008 to the second quarter of 2012.  Karl Zimmer, General Cable’s then-senior vice president responsible for sales in Angola will also pay a $20,000 penalty to settle charges of knowingly circumventing internal accounting controls and causing FCPA violations when he approved certain improper payments.  SEC				 					 

						
Tagged in:
													  Accounting Fraud, 
													  FCPA, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 28, 2016

				 Florida-based businessman Jason Adam Ogden has agreed to pay more than $1.2 million to settle charges that he misused investor funds intended to create U.S. jobs through the EB-5 Immigrant Investor Program.  The SEC alleged that Ogden, the CEO of a pair of smoothie and frozen yogurt franchises called Juiceblendz and Yoblendz, formed AJN Investments LLC to conduct an investment offering in conjunction with the EB-5 program which provides foreign investors a path to permanent residency when their investments create at least 10 jobs for American workers.  Investors were allegedly told that their money would help build and operate Juiceblendz and Yoblendz stores in strip malls and create a sufficient amount of jobs for them to qualify for an EB-5 visa and ultimately a green card.  But, according to the SEC’s complaint, Ogden changed his business model midstream without updating the offering materials, and focused on developing kiosks in sports arenas and university campuses rather than following through the construction of full-size stores.  Not only did this result in smaller-than-promised returns for investors, it also jeopardized their EB-5 program status because kiosks don’t stimulate the same job creation as full-size stores and construction projects.  The SEC further alleged that Ogden improperly siphoned off more than $1 million in investor funds for his personal use, making undisclosed cash transfers to his bank account.  SEC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Visa Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 27, 2016

				 The SEC charged California-based attorney Emilio Francisco with defrauding investors seeking to participate in the EB-5 immigrant investor program.  The SEC alleges that Francisco raised $72 million from investors in China, solicited through his marketing firm PDC Capital, to invest in EB-5 projects that included opening Caffe Primo restaurants, developing assisted living facilities, and renovating a production facility for environmentally friendly agriculture and cleaning products.  According to the SEC’s complaint, Francisco and PDC Capital diverted investor funds from one project to another and outright stole at least $9.6 million that was used to finance Francisco’s own business and luxury lifestyle.  SEC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Visa Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 27, 2016

				 The SEC charged three Chinese traders, Iat Hong, Bo Zheng, and Hung Chin, with hacking into the networks of two law firms, stealing confidential information pertaining to firm clients considering mergers or acquisitions, and trading on the nonpublic market-moving information to their benefit.  The SEC alleges that the defendants obtained almost $3 million in illegal profits from their scheme.  According to the SEC’s complaint, the alleged hacking incidents involved installing malware on the law firms’ networks, compromising accounts that enabled access to all email accounts at the firms, and copying and transmitting dozens of gigabytes of emails to remote internet locations.  SEC				 					 

						
Tagged in:
													  Market Manipulation and Trading Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 22, 2016

				 Teva Pharmaceutical Industries Limited will pay more than $519 million to settle civil and criminal charges that it violated the Foreign Corrupt Practices Act by paying bribes to foreign government officials in Russia, Ukraine, and Mexico.  The SEC’s complaint alleges that Teva made more than $214 million in illicit profits by making the influential payments to increase its market share and obtain regulatory and formulary approvals as well as favorable drug purchase and prescription decisions.  SEC				 					 

						
Tagged in:
													  FCPA, 
													  Pharma Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 21, 2016

				 The SEC brought charges against Noris Chamroonrat of Bangkok, Thailand and Adam L. Plumer of Las Vegas for running a phony day-trading firm and pocketing more than $1.4 million in deposits from hundreds of investors in over 30 countries.  The SEC alleges that Chamroonrat recruited Plumer to help him lure investors to day-trade through an unregistered brokerage firm called Nonko Trading with promises of generous leverage, low trading commissions, and low minimum deposit requirements.  According to the SEC’s complaint, rather than using a live securities trading platform, Nonko Trading provided certain investors with training accounts that merely simulated the placement and execution of trade orders.  When these investors sent funds to Nonko Trading and proceeded to place trade orders, the orders were never actually routed to the markets.  The SEC alleges that investor money was instead used to fund Chamroonrat’s personal expenses, pay Plumer and other associates, and make Ponzi-like payments to investors who asked to close out their accounts.  The SEC alleges that the scheme deliberately targeted investors who were inexperienced and more likely to place unprofitable trades, making them less likely to ask to withdraw funds from their accounts.  SEC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Ponzi Schemes, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 21, 2016

				 The SEC announced fraud charges against Navnoor Kang, the former Director of Fixed Income for the New York State Common Retirement Fund, and Greg Schonhorn and Deborah Kelly, registered representatives of two different broker-dealers.  According to the SEC’s complaint, Schonhorn and Kelly orchestrated a pay-to-play scheme in which Kang steered billions of dollars in pension business to certain firms in exchange for luxury gifts, lavish vacations, and tens of thousands of dollars spent on hotel rooms, restaurants, cocaine, and prostitutes.  SEC				 					 

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

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 21, 2016

				 Brazilian-based petrochemical manufacturer Braskem S.A. will pay $957 million in a global settlement with the SEC, DOJ, and authorities in Brazil and Switzerland to settle charges that it paid bribes to Brazilian government officials to win or retain business.  Braskem’s stock trades in the U.S.  The SEC’s complaint alleges that Braskem made approximately $325 million in profits through bribes paid through intermediaries and off-book accounts managed by a private company that was Braskem’s largest shareholder.  Bribes were paid to a government official at Brazil’s state-controlled petroleum company as well as Brazilian legislators and political party officials.  Braskem will pay $325 million in disgorgement, including $65 million to the SEC and $260 million to Brazilian authorities.  Braskem also agreed to pay more than $632 million in criminal fines and penalties.  SEC				 					 

						
Tagged in:
													  FCPA, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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