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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.

December 16, 2014

The SEC charged Michael Crow and Alexandre Clug and their company Aurum Mining LLC with a gold mining investment scheme under which they promised investors a stake in so-called “quick-to-production” gold mines that Aurum Mining purported to own and operate in Brazil and Peru.  According to the SEC, despite highly optimistic statements that the gold mines would yield millions of dollars, the investors never received any money back from their investments, while Crow and Clug used a substantial amount of investor funds to cover their monthly salaries, rental of upscale apartments in Lima, and other living or travel expenses.  SEC

December 15, 2014

The SEC charged New Orleans-based oil-and-gas company Treaty Energy Corporation and five executives with running a stock trading scheme in which they claimed to have struck oil in Belize in order to manipulate the price of the company’s stock as they illegally sold restricted shares to the public.  According to the SEC, Treaty Energy issued deceptive press releases touting drilling successes in Belize and Texas to induce investor demand for its unregistered stock, which was then illegally distributed to the public.  The SEC alleges that Treaty Energy’s founder Ronald Blackburn and four company officers – Andrew V. Reid, Bruce A. Gwyn, Lee C. Schlesinger, and Michael A. Mulshine – obtained at least $3.5 million in illicit profits from the scheme.  SEC

December 15, 2014

Massachusetts-based manufacturer of scientific instruments Bruker Corporation agreed to pay $2.4M to settle charges of violating the Foreign Corrupt Practices Act (FCPA) by providing non-business related travel and improper payments to various Chinese government officials in an effort to win business.  SEC

December 10, 2014

Morgan Stanley agreed to pay $4M to settle charges it violated the market access rule when it failed to uphold credit limits for a customer firm with a rogue trader who engaged in fraudulent trading of Apple stock.  An SEC investigation found that Morgan Stanley, which offers institutional customers direct market access through an electronic trading desk, did not have the risk management controls necessary to prevent the rogue trader from entering orders that exceeded pre-set trading thresholds.  The trader exploited the market access and, without Morgan Stanley’s knowledge, committed a fraud that eventually shuttered the firm where he worked.  SEC

November 25, 2014

The SEC charged HSBC’s Swiss-based private banking arm HSBC Private Bank (Suisse) with violating federal securities laws by failing to register with the SEC before providing cross-border brokerage and investment advisory services to U.S. clients.  The bank admitted wrongdoing and agreed to pay $12.5M to settle the SEC’s charges.  SEC

November 21, 2014

The SEC charged father-and-son executives Robert and Marc Benou at New Jersey-based penny stock company Conolog Corporation for issuing false and misleading press releases while secretly selling thousands of their own stock shares into the market.  They agreed to pay nearly $325,000 and accept officer-and-director bars to settle the SEC’s charges.  SEC

November 21, 2104

The SEC announced charged William E. Redmond Jr., former CEO and board member of engineering and chemical company GenTek Inc., with passing on insider trading to his close friend Stefano Signorastri.  GenTek’s nonpublic negotiations to find suitors for a company sale were among the topics that Redmond shared with Signorastri.  Redmond and Signorastri agreed to pay more than $324,000 to settle the SEC’s charges.  SEC

November 20, 2014

The SEC announced that Los Angeles-based broker-dealer Wedbush Securities agreed to settle a pending SEC case for market access violations by admitting wrongdoing, paying a $2.44M penalty.  The SEC’s order finds that Wedbush violated the market access rule by failing to have adequate risk controls in place before providing customers with access to the market, including some customer firms with thousands of essentially anonymous overseas traders.  SEC

November 20, 2014

The SEC suspended trading in four companies that claim to be developing products or services in response to the Ebola outbreak, citing a lack of publicly available information about the companies’ operations.  The SEC simultaneously issued an investor alert warning about the potential for fraud in microcap companies purportedly involved in Ebola prevention, testing, or treatment, noting that scam artists often exploit the latest crisis in the news cycle to lure investors into supposedly promising investment opportunities.  The companies whose trading was suspended were Bravo Enterprises Ltd., Immunotech Laboratories Inc.,Myriad Interactive Media Inc. and Wholehealth Products Inc.  SEC

November 17, 2014

The SEC sanctioned Stephen Timms and Yasser Ramahi, two former employees in the Dubai office of US-based defense contractor FLIR Systems Inc., for violating the Foreign Corrupt Practices Act (FCPA) by taking government officials in Saudi Arabia on a “world tour” to help secure business for the company.  The two employees later falsified records in an attempt to hide their misconduct.  FLIR is headquartered in Oregon and produces thermal imaging, night vision, and infrared cameras and sensor systems.  SEC
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