Financial and Investment Fraud

August 16, 2019

In a consent judgment, Hani Zeini, formerly the CEO of California-based silicone breast implant company Sientra, Inc., has been ordered to pay a $160,000 civil penalty to settle charges that he concealed damaging news in advance of a $60 million stock offering by the company in 2015.  Specifically, as the offering was preparing to close, Zeini learned that the Brazilian company that was Sientra's sole source for implants had lost a regulatory approval, but concealed that information from the underwriter and the company's general counsel.  When the news became public the day after the offering closed, Sientra's stock price fell over 50%.  SEC

August 13, 2019

The SEC has charged and fined a New York broker-dealer, Canaccord Genuity LLC, of enabling over-the-counter (OTC) securities to be traded without adequate review required by the Exchange Act Rule 15c2-11.  Despite playing a critical gatekeeping role of protecting investors from fraud, Canaccord delegated the requisite review to a compliance associate who lacked necessary experience and training.  Canaccord has consented to the SEC’s cease and desist order, revised internal policies and procedures, and agreed to pay a $250,000 penalty.  SEC

July 29, 2019

Japanese manufacturer NHK Spring Co. Ltd. will plead guilty for its role in a price-fixing conspiracy and pay a $28.5 million criminal antitrust fine.  The defendant was alleged to have agreed with co-conspirators to refrain from price competition and allocate market share for suspension assemblies used in hard disk drives.  DOJ

July 25, 2019

Douglas MacKinnon of Buffalo, New York, and associated individuals and entities in the debt collection business, including Northern Resolution Group, LLC, Enhanced Acquisitions LLC, Delray Capital, LLC, and Mark Gray, will pay more than $66 million in restitution and penalties in a settlement reached with New York state and the Consumer Financial Protection Bureau.  The companies routinely engaged in unlawful and predatory debt collection practices, including: misrepresenting to consumers that they owed sums they did not owe or were not obligated to pay, or that the companies did not have a legal right to collect; falsely threatening consumers with legal action that the collectors had no intention of taking; and, impersonating law enforcement and other government officials.  The settlement permanently bans MacKinnon and Gray and their defendant companies from the debt collection industry. CFPB, NY

July 24, 2019

Facebook Inc. has agreed to pay a $100 million SEC penalty to resolve charges that its public disclosures omitted material information about a third party's misuse of Facebook user data.  Facebook's disclosures presented the risk of misuse of user data as hypothetical when Facebook knew in 2015 that, in fact, Cambridge Analytica and a researcher had collected and transferred data on approximately 30 million Americans.  Furthermore, when media investigations of Cambridge Analytical began, Facebook misleadingly stated that it had discovered no evidence of wrongdoing by Cambridge Analytica.  SEC

July 22, 2019

Credit reporting company Equifax has agreed to pay up to $700 million to resolve claims related to its 2017 data breach in a global settlement with the FTC, the CFPB, and 50 U.S. states and territories.  The settlement will be entered as a stipulated judgment in civil action pending against Equifax, alleging that Equifax failed to take adequate steps to secure its network and consumer data, despite being warned of network vulnerabilities, resulting in a hack that exposed the private information of almost 150 million people.  The settlement provides that defendant will pay between $300 million and $425 million to compensate affected consumers, in addition to a $100 million penalty to the CFPB and $175 million to the states.  Equifax also agreed to take specified steps to improve information security, subject to review by an independent third party.  FTC; CFPB; AG CA; AG NY; AG PA

July 22, 2019

Microsoft’s Hungarian subsidiary, Microsoft Magyarország Számítástechnikai Szolgáltató és Kereskedelmi Kft., has agreed to pay a $8.7 million to the DOJ and $16.6 million to the SEC to settle allegations of violating the Foreign Corrupt Practices Act.  From 2013 to 2015, executives at Microsoft Hungary falsely represented to Microsoft that steep discounts were necessary for resellers of software licenses to the Hungarian government.  However, the resellers did not pass on the discounts to the Hungarian government, and used them for instead unspecified corrupt purposes.  DOJ; USAO SDNY; SEC

July 19, 2019

Kelvin Ramirez of Houston, Texas, was ordered to pay more than $2.9 million – $2.2 million as a civil penalty, and $736,000 in restitution – in a default judgment that also permanently barred him from trading in any CFTC-regulated market or registering with the CFTC.  Ramirez solicited clients through social media platforms, offering bogus forex trading schemes.  CFTC