Financial and Investment Fraud

September 26, 2023

Registered investment advisor AssetMark Inc. has agreed to pay more than $18 million to settle charges of failing to fully disclose a conflict of interest from its affiliate’s cash sweep program.  Specifically, AssetMark failed to disclose that it helped set the fee that its affiliate received for operating the program, and the fee directly reduced the amount of interest paid to clients.  SEC

September 26, 2023

Hyzon Motors, which builds hydrogen fuel cell electric vehicles, has agreed to pay $25 million to settle SEC charges of misleading investors about its business relationships and sales numbers.  Its former CEO, Craig Knight, has agreed to pay about $250,000, and former managing director of its European subsidiary, Max C.B. Holthausen, has agreed to pay over $122,500, to settle charges against them.  Hydron, Knight, and Holthausen allegedly misrepresented that they had already sold a number of vehicles and that more sales were imminent, and made other misstatements concerning its certain customer and supplier relationships, the delivery of its first vehicle, and the reporting of its sales numbers.  SEC

September 22, 2023

American Infrastructure Funds LLC (AIM) has agreed to pay $1.6 million in civil penalties, disgorgement, and prejudgment interest to settle charges of violating the antifraud and compliance provisions of the Advisers Act while acting as an investment advisor to private funds.  According to the SEC, AIM failed to disclose multiple conflicts of interest to its clients, including instances where it failed to consider whether a fee acceleration or a loan was in its clients’ best interests.  It also violated its fiduciary duties by transferring funds from one fund nearing the end of its term to a new fund without obtaining investor consent or providing investors with an exit, even though doing so would lock up investor funds for another decade.  SEC

September 12, 2023

Canadian resident George Stubos will pay disgorgement of $5,367,926 and prejudgment interest of $806,108 for his microcap stock investment scheme. Stubos gained control of several thinly traded microcap companies and then lied to investors, brokers, and transfer agents, and convinced them his stock shares were eligible to be publicly traded. In addition to not registering his sales with the SEC and failing to disclose his control over the entities, Stubos also engaged in market manipulation to create demand for his stock. In addition to the disgorgement and interest, Stubos is subject to a penny stock bar and is prohibited from participating in the issuance, purchase, offer, or sale of any security other than for his own personal accounts. SEC

September 7, 2023

In the highest civil monetary penalty ever ordered in a CFTC case, South Africa-based Mirror Trading International Proprietary Limited (MTI) and its founder and CEO, Cornelius Johannes Steynberg, have been ordered to pay $1.7 billion for defrauding over 23,000 U.S.-based retail foreign currency (forex) investors and failing to comply with commodity pool operator regulations.  MTI and Steynberg solicited Bitcoin from U.S. as well as foreign investors, purportedly trading off-exchange retail forex through an unregistered commodity pool, when in fact they were enriching themselves through a multilevel marketing scheme.  CFTC

September 6, 2023

Ameritrust Corporation and relief defendant Beespoke Capital, Inc. will pay more than $20 million in disgorgement, civil penalties, and prejudgment interest for lying to investors primarily located in the Republic of Korea, telling them their investments would be used to purchase shares of a publicly traded company in the U.S. Ameritrust's CEO, Seong Yeol Lee, through a network of recruiters, solicited and received funds from investors, which he then deposited in his corporate and personal bank accounts, as well as bank accounts for three of his adult children. Lee in fact never applied for Ameritrust's exchange listing. In addition to paying the $20 million, Ameritrust is prohibited from violating Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act. SEC

August 28, 2023

Impact Theory, LLC will pay more than $6.1 million in disgorgement, prejudgment interest, and a civil penalty, for offering and selling crypto asset securities to the public in an unregistered offering. Impact Theory sold three tiers of non-fungible tokens (NFTs)--"Legendary," "Heroic," and "Relentless," which were ostensibly an investment into their business in which Impact was "trying to build the next Disney" which would provide "tremendous value" to investors. In addition to the $6.1 million, the order establishes a Fair Fund to return monies paid by injured investors, and Impact Theory will destroy all Founder's Keys in its possession or control and will eliminate any royalty Impact might otherwise receive from secondary market transactions. SEC

August 25, 2023

A whistleblower has been awarded more than $18 million for providing the SEC with information that launched an investigation.  According to the SEC, the whistleblower initially reported concerns internally before reporting to the agency.  Their assistance ultimately led to a successful enforcement action.  SEC

August 14, 2023

UBS AG has agreed to pay $1.4 billion to settle a DOJ investigation alleging the financial institution and its U.S.-based affiliates defrauded investors by making false and misleading statements regarding its residential mortgage-backed securities (RMBS), which it knew largely did not hold up to loan underwriting guidelines and consumer protection laws.  During the 2008 financial crisis, 40 RMBS that UBS issued in 2006 and 2007 ultimately tanked, causing substantial losses to investors.  This settlement is the last case brought by a DOJ working group focused on failed RMBS that led to the crisis.  DOJ