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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 15, 2016

				 The SEC charged hedge fund manager Sanjay Valvani with reaping unlawful profits of nearly $32 million for hedge funds he managed by investing in health care securities based on inside information he received from consultant Gordon Johnston.  Johnston, who worked at the FDA for a dozen years, remained in close contact with former friends and colleagues while working for a trade association representing generic drug manufacturers and distributors.  Johnston concealed his separate role as a hedge fund consultant and obtained confidential information about anticipated FDA approvals for companies to produce enoxaparin, a generic drug that helps prevent the formation of blood clots.  The SEC alleges Johnston funneled the details of his conversations with FDA personnel to Valvani who then traded in advance of public announcements concerning FDA approvals for such companies as Momenta Pharmaceuticals, Watson Pharmaceuticals, and Amphastar Pharmaceuticals.  The SEC further alleges that Valvani in turn tipped fellow hedge fund manager Christopher Plaford.  SEC				 					 

						
Tagged in:
													  Insider Trading, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 13, 2016

				 Two California-based municipal advisory firms, School Business Consulting (SBC) and Keygent LLC, along with several of their top executives, will collectively pay $200,000 to settle charges that they used deceptive practices when soliciting the business of five California school districts.  SBC was advising the five school districts on their hiring of financial professionals.  At the same time, SBC was retained by Keygent which was seeking the business of these five school districts.  SBC shared the confidential information of the school districts with Keygent, including questions to be asked in Keygent’s interviews with the school districts and the details of competitors’ proposals.  The school districts were unaware that Keygent had the benefit of these confidential details through the hiring process.  SEC				 					 

						
Tagged in:
													  Government Procurement Fraud, 
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 10, 2016

				 The SEC announced fraud charges and an asset freeze obtained against Thomas J. Connerton, a Connecticut man accused of misleading people into investing in his company and then taking their money for personal use.  The SEC alleges that Connerton told investors that his company, Safety Technologies LLC, was developing a material to make surgical gloves better resistant to cuts or punctures.  He claimed that several major glove manufacturers wanted the technology and his company was on the brink of imminent deals that would result in large payouts for investors in his company.  No such deals were ever close to materializing and Connerton emptied the company’s bank account by writing a series of checks to himself and using investor funds for his own expenses.  Of more than 50 investors in Safety Technologies, six were women Connerton met through online dating services, and fourteen were friends or family of those women.  SEC				 					 

						
Tagged in:
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 9, 2016

				 Guolin Ma, former consultant to two China-based private equity firms, will pay more than $756,000 to settle insider trading charges.  According to the SEC’s complaint, Ma traded on confidential information he obtained while advising two firms as they pursued a buyout of Silicon Valley-based OmniVision Technologies.  Ma attended key meetings and performed technical due diligence related to the potential acquisition and received timeline and strategy documents from the firms.  Through a series of purchases in April and May 2014, Ma stockpiled over 39,000 shares of OmniVision.  When the proposed acquisition was publicly announced in August 2014, OmniVision’s stock price rose 15% allowing Ma to generate over $367,000 in illegal profits.  SEC				 					 

						
Tagged in:
													  Insider Trading, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 9, 2016

				 The SEC announced a whistleblower award of more than $17 million to “a former company employee whose detailed tip substantially advanced the agency’s investigation and ultimate enforcement action.”  The award is the second-largest issued by the SEC since the inception of its whistleblower program.  SEC				 					 

						
Tagged in:
													  SEC Whistleblower Reward Program, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 8, 2016

				 Ethiopia’s electric utility, Ethiopian Electric Power, will pay almost $6.5 million to settle charges that it violated U.S. securities laws by failing to register bonds it offered and sold to U.S. residents of Ethiopian descent.  According to the SEC’s order, EEP conducted an unregistered bond offering to help finance construction of a hydroelectric dam on the Abay River in Ethiopia.  EEP held a series of road shows in major cities across the U.S., marketed the bonds on the website of the U.S. Embassy of Ethiopia, and through radio and television advertising aimed at Ethiopians living in the U.S.  EEP raised approximately $5.8 million from more than 3,100 U.S. residents between 2011 and 2014 without ever registering the bond offering with the SEC.  SEC				 					 

						
Tagged in:
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 8, 2016

				 Morgan Stanley Smith Barney LLC will pay a $1 million penalty to settle charges related to its failures to protect customer information, some of which was hacked and offered for sale online.  As a result of failures to adopt policies and procedures reasonably designed to protect customer data, from 2011 to 2014, a then-employee impermissibly accessed and transferred data regarding approximately 730,000 accounts to his personal server which was ultimately hacked by third parties.  SEC				 					 

						
Tagged in:
													  Cybersecurity and Data Breaches, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 8, 2016

				 New York-based electronics company IEC Electronics Corp. will pay $200,000 to settle charges that it overstated the company’s profits in financial statements by using false inventory accounting.  An SEC investigation found the false accounting to have been orchestrated by IEC’s then-executive vice president of operations Donald Doody and the controller of one of IEC’s subsidiaries, Ronald Years.  Doody and Years collectively will pay about $94,000 to settle the SEC’s charges.  In addition, Doody has been barred from serving as an officer or director of a public company for five years and Years is permanently suspended from appearing and practicing before the SEC as an accountant.  SEC				 					 

						
Tagged in:
													  Accounting Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 7, 2016

				 Rhode Island-based residential and commercial building products manufacturer Nortek, Inc. will pay more than $300,000 pursuant to a non-prosecution agreement with the SEC.  Nortek self-reported violations of the Foreign Corrupt Practices Act after finding that a foreign subsidiary had made improper payments of approximately $290,000 to Chinese officials to obtain preferential treatment for Nortek, relaxed regulatory oversight, and reduced customs duties, taxes, and fees.  SEC				 					 

						
Tagged in:
													  FCPA, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 7, 2016

				 Massachusetts-based internet services provider Akamai Technologies will pay more than $650,000 pursuant to a non-prosecution agreement with the SEC.  Akamai self-reported violations of the Foreign Corrupt Practices Act after finding that a foreign subsidiary arranged for $40,000 in payments to Chinese officials to induce government-owned entities to purchase more services than they actually needed.  SEC				 					 

						
Tagged in:
													  FCPA, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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