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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.

				

			

			
						
					
			

	
		
		

			

				
				
August 13, 2015

				 Brokerage firm Edward Jones and the former head of its municipal underwriting desk, Stina Wishman, agreed to settle charges that they overcharged customers in new municipal bonds sales.  This was the SEC’s first case against an underwriter for pricing-related fraud in the primary market for municipal securities.  The SEC’s investigation found that rather than offering customers municipal bonds at their “initial offering price,” Edward Jones and Wishman improperly offered the bonds at higher prices.  This resulted in customers being overcharged by at least $4.6 million.  The SEC also charged Edward Jones with failing to properly supervise dealer markups on secondary market trades that involved the firm purchasing municipal bonds from customers, placing them into its inventory, and selling them to other customers.  The SEC found that Edward Jones’ supervisory system was not designed to monitor whether the markups on these trades were reasonable.  Edward Jones will pay more than $20 million to settle the SEC’s charges, including nearly $5.2 million in disgorgement and prejudgment interest that will be distributed to customers who were overcharged.  SEC				 					 

						
Tagged in:
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 12, 2015

				 Vicente E. Garcia, a former vice president for SAP SE, agreed to pay $92,395 to settle charges by the SEC that he violated the FCPA by bribing Panamanian government officials to procure software license sales for SAP.  An SEC investigation found that Garcia orchestrated a scheme to pay $145,000 in bribes to one government official and promised to pay two others in order to obtain four contracts to sell SAP software to the Panamanian government.  Garcia arranged for SAP’s software to be sold at a steep discount to a Panamanian partner in order to create a slush fund that could be used to pay the Panamanian government officials.  Garcia also received kickbacks from the slush fund.  In a parallel action, the Department of Justice announced a criminal action against Garcia.  SEC				 					 

						
Tagged in:
													  FCPA, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 12, 2015

				 Broker Investment Technology Group, Inc. (ITG) and affiliate AlterNet Securities have admitted wrongdoing and agreed to pay $20.3 million to settle SEC charges that they operated a secret trading desk and misused the confidential trading information of dark pool subscribers.  The SEC found that despite claiming to be an “agency-only” broker whose interests wouldn’t conflict with its customers, ITG operated an undisclosed proprietary trading desk known as “Project Omega” for more than a year.  While ITG claimed to protect the confidentiality of its dark pool subscribers’ trading information, Project Omega accessed live feeds of order and execution information of its subscribers and used the information to implement high-frequency algorithmic trading strategies, including one in which it traded against subscribers in POSIT, ITG’s dark pool.  The $20.3 million payment includes an $18 million penalty – the largest to date imposed by the SEC against an alternative trading system.  SEC				 					 

						
Tagged in:
													  Dark Pools, 
													  Market Manipulation and Trading Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 11, 2015

				 The SEC announced fraud charges against 32 defendants for taking part in a scheme to hack into newswire services, steal corporate earnings announcements before they were publicly released, and trade on this information.  The SEC’s complaint alleges that defendants generated more than $100 million in illegal profits through the scheme over a five year period.  SEC				 					 

						
Tagged in:
													  Insider Trading, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 10, 2015

				 Guggenheim Partners Investment Management LLC, a subsidiary of global financial services firm Guggenheim Partners LLC, has agreed to pay a $20 million penalty to settle charges by the SEC.  The SEC’s order found that Guggenheim breached its fiduciary duties by failing to disclose a $50 million loan that one of its senior executives received from an advisory client.  Guggenheim failed to disclose the loan, or the potential conflict of interest created by the executive’s receipt of it, to other clients involved in the transactions.  In addition, the SEC’s order found that Guggenheim inadvertently categorized certain investments as managed assets, leading to a client being inappropriately charged approximately $6.5 million in asset management fees.  Despite identifying the error, Guggenheim did not return the fees for almost two years.  Finally, the SEC’s order found Guggenheim’s compliance program was not reasonably designed to prevent violations of the federal securities laws and that the company failed to enforce its code of ethics.  SEC				 					 

						
Tagged in:
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 6, 2015

				 The SEC announced charges against Knoxville-based Miller Energy Resources Inc. (Miller), Miller’s former CFO, Miller’s current COO, and the audit team leader at Miller’s former independent auditor.  The SEC alleges that defendants overstated the value of Miller oil and gas properties in Alaska by more than $400 million.  Allegedly, this inflated valuation turned the penny-stock company into one that eventually listed on the NYSE at a high of $9 per share.  SEC				 					 

						
Tagged in:
													  Accounting Fraud, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 3, 2015

				 Houston businessman, Frederick Alan Voight, settled charges by the SEC that he operated a $114 million Ponzi scheme.  The SEC’s case charged Voight with defrauding more than 300 investors in multiple offerings of promissory notes issued by two partnerships he owns.  Voight has agreed to an asset freeze and to pay civil penalties and return allegedly ill-gotten gains in an amount to be set later by the court.  SEC				 					 

						
Tagged in:
													  Misrepresentations, 
													  Ponzi Schemes, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 31, 2015

				 The SEC charged Canadian citizen, Phillip Thomas Kueber, with conducting a scheme to conceal his control and ownership of microcap company, Cynk Technology Corp., to make it appear that the company had publicly-held shares.  According to the SEC’s complaint, the SEC suspended trading in the stock before Kueber could profit on the stock’s rise from 10 cents per share to over $21 per share. SEC				 					 

						
Tagged in:
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 30, 2015

				 The SEC charged two men and eight companies with defrauding investors who purchased the companies’ securities and so-called “charitable gift annuities.”  According to the SEC’s complaint, the two men, the CEO and CFO of Defendant 54Freedom, Inc., repeatedly misled investors regarding company prospects.   The alleged scheme raised at least $8 million from 125 or more investors over seven years.  In a parallel criminal action, the U.S. Attorney’s Office of the Northern District of New York announced on July 24th that it arrested one of the men on charges of fraud and money laundering related to the “charitable gift annuities.”  SEC				 					 

						
Tagged in:
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
July 28, 2015

				 Mead Johnson Nutrition Company agreed to pay $12 million to settle the SEC’s findings that it violated the Foreign Corrupt Practices Act (“FCPA”).  An SEC investigation found that employees of Mead Johnson’s Chinese subsidiary made improper payments to healthcare professionals at government-owned hospitals to induce them to recommend Mead Johnson’s infant formula to new or expectant mothers.  SEC				 					 

						
Tagged in:
													  FCPA, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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