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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 4, 2016

				 The SEC charged James R. Trolice and Lee P. Vaccaro with pocketing investor money they raised for companies they owned and controlled that they claimed held warrants to purchase the common stock of a technology startup company.  The SEC alleges that Trolice and Vaccaro raised approximately $6 million from more than 100 investors by creating a false sense of urgency and exclusivity around the offering and then used investor funds to pay for personal expenses such as credit card bills, college tuition, landscaping, and at Las Vegas casinos.  The SEC also alleges that neither Trolice nor Vaccaro were registered with the SEC or any state regulator.  SEC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
May 3, 2016

				 The SEC announced fraud charges against 10 individuals involved in schemes to trick investors into buying shares of ForceField Energy Inc.  The SEC alleges that investors were unaware that those soliciting them to purchase ForceField stock were being paid by ringleader Richard St. Julien, ForceField’s then-chairman of the board, to steer them to the stock.  Some of the perpetrators attempted to evade law enforcement by communicating with prepaid disposable “burner” phones and through encrypted, content-expiring text messages.  SEC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
May 2, 2016

				 Silicon Valley executive Peter D. Nunan will pay $534,303 to settle charges that he traded on inside information he received in his professional role with a subsidiary of semiconductor equipment manufacturer Screen Holdings Company.  The SEC alleged that Nunan received confidential information from a board member of FSI International that FSI was going to be acquired by a Japan-based semiconductor equipment company in FSI’s attempt to solicit a competing offer from Screen Holdings.  Nunan purchased over 100,000 shares of FSI and made over $250,000 in profits from his sale of the stock after the merger was announced.  SEC				 					 

						
Tagged in:
													  Insider Trading, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
April 29, 2016

				 Accounting firm Santos, Postal & Co. P.C. and one of its partners, Joseph Scolaro, will pay collectively about $59,000 to settle charges that they conducted deficient surprise custody examinations of SFX Financial Advisory Management Enterprises and did not adequately consider fraud risk factors.  Santos Postal was hired to conduct surprise examinations of client assets at investment advisor SFX Financial.  The SEC charged that Santos Postal performed inadequately as SFX’s president secretly stole money from accounts belonging to professional athletes.  SEC				 					 

						
Tagged in:
													  Financial Institution Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
April 19, 2016

				 Three former executives at battery manufacturer Ener1 will pay collective penalties of $180,000 to settle allegations of materially overstating revenues and assets.  The financial misstatements stemmed from management’s failure to impair investments and receivables related to an electric car manufacturer that was one of its largest customers.  In addition, the SEC found that Robert Hesselgesser, the engagement partner for PricewaterhouseCoopers’ audit of Ener1’s 2010 financial statements, violated PCAOB and professional auditing standards.  Hesselgesser agreed to be suspended from practicing before the SEC as an accountant.  SEC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
April 19, 2016

				 Technology manufacturer Logitech International will pay a $7.5 million penalty for fraudulently inflating its fiscal year 2011 financial results to meet earnings guidance and committing other accounting-related violations during a five-year period.  Logitech’s then-controller and then-director of accounting will pay collective penalties of $75,000 for violations related to Logitech’s warranty accrual accounting and failure to amortize intangibles from an earlier acquisition.  The SEC also filed a complaint in federal court against Logitech’s then-CFO and then-acting controller alleging that they deliberately minimized the write-down of millions of dollars of excess components parts for a product for which Logitech had excess inventory.  SEC				 					 

						
Tagged in:
													  Accounting Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
April 15, 2016

				 The SEC announced fraud charges against James Catipay and David Aldrich for allegedly raising $11.7 million from approximately 250 investors, many of them retirees, for their Los Angeles-based litigation marketing company, PLCMGMT LLC (a/k/a PLC or Prometheus Law).  Investors were told their money would be used to help gather plaintiffs for class-action and other lawsuits and they would earn hefty investment returns from settlement proceeds.  Instead, the SEC alleges that Catipay and Aldrich diverted millions of dollars for their personal use while failing to deliver the promised 100 to 300 percent returns to investors.  SEC				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
April 14, 2016

				 The SEC announced fraud charges and an asset freeze against Vermont-based ski resort Jay Peak, Inc. and related businesses for allegedly misusing millions of dollars raised through investments solicited under the EB-5 immigrant investor program.  The SEC alleges that Ariel Quiros of Miami, William Stenger of Newport, Vermont, and their companies, made false statements and omitted key information while raising more than $350 million from investors to construct ski resort facilities and a biomedical research facility in Vermont.  Investors were told their money would be used to finance a specific project connected to Jay Peak.  Instead, in Ponzi-like fashion, money from investors in later projects was misappropriated to fund deficits in earlier projects.  More than $200 million was allegedly used for other-than-stated purposes, including $50 million spent on Quiros’ personal expenses and in other undisclosed ways.  SEC				 					 

						
Tagged in:
													  Ponzi Schemes, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
April 14, 2016

				 The SEC announced fraud charges against the town of Ramapo, New York, the town’s local development corporation, and four town officials.  The SEC alleges that Ramapo officials resorted to fraud to hide the strain in the town’s finances caused by the approximately $60 million cost to build a baseball stadium as well as the town’s declining sales and property tax revenues.  They cooked the books of the town’s primary operating fund to falsely depict positive balances of between $1.4 million and $4.2 million during a six-year period when the town had actually accumulated balance deficits as high as nearly $14 million.  In addition, because the stadium bonds issued by the Ramapo Local Development Corp (RLDC) were guaranteed by the town, certain officials masked an operating revenue shortfall at the RLDC such that investors were unaware the town would likely need to subsidize those bond payments and further deplete the general fund.  SEC				 					 

						
Tagged in:
													  Accounting Fraud, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
April 13, 2016

				 The SEC announced insider trading charges against John Ayfriyie, a research analyst who learned about the impending acquisition of home security company The ADT Corporation by Apollo Group Management.  The SEC alleges that Ayfriyie accessed several highly confidential, deal-related documents on his firm’s computer network and purchased thousands of high-risk, out-of-the-money ADT call options in his mother’s investment account, in anticipation that ADT’s stock price would rise when the transaction was publicly announced.  In a parallel action, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Ayfriyie.  SEC				 					 

						
Tagged in:
													  Insider Trading, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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