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Misrepresentations

This archive displays posts tagged as relevant to fraudulent misrepresentations in financial transactions and financial markets. You may also be interested in the following pages:

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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

Catch of the Week — Yukom Communications and Others Face CFTC Claims of Binary Options Fraud

Posted  08/16/19
computerized trading
The Commodity Futures Trading Commission filed suit against five entities and four individuals on August 12, 2019, in the Northern District of Illinois for running a $103 million fraudulent binary options scheme. The defendants, led by Israeli company Yukom Communications Ltd.,which marketed binary options using two websites known as BinaryBook and BigOption. In recent years, the CFTC has targeted fraudulent binary...

August 9, 2019

In a default judgment, Kevin Andre Perry and Lucrative Pips Corporation of Atlanta, Georgia were ordered to pay a civil penalty of $2 million and restitution of almost $700,000 with respect to their fraudulent marketing of a foreign exchange pool.  Defendants told prospective pool participants that their funds were “guaranteed” against trading losses and that their accounts would grow in value by 200% to 350% in less than 60 days.  Defendants then failed to return funds when customers tried to later withdraw them.  CFTC

August 8, 2019

Lee Elbaz was found guilty of orchestrating a scheme to defraud U.S. investors, wrongfully obtaining $145 million in investor funds.   Yukom Communications, Ltd., with Elbaz as the CEO, used the websites BinaryBook and BigOption to market "binary options" to investors.  Elbaz and Yukom falsely claimed to represent the interests of investors when, in fact, they profited when investors lost money, and made false statements about binary option suitability and expected returns, their identity and qualifications, and the ability of investors to withdraw funds.  Elbaz will be sentenced in December, 2019.  DOJ

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

July 18, 2019

Swapnil Rege, who worked as a portfolio manager for a hedge fund that operated as a commodity pool operator, was been ordered by the CFTC  and SEC to pay a $100,000 civil penalty and disgorge a $600,000 performance bonus he received as a result of his fraudulent mismarking the valuations of interest rate swaps.  The mismarking, accomplished through various means, artifically inflated the profitability of his trades, earning him a larger performance bonus.  SEC, CFTC

July 16, 2019

AR Capital LLC, together with its founder Nicholas Schorsch and its former CFO Brian Block, have agreed to pay $39 million in disgorgement and interest, as well as penalties totaling $21.75 million, to resolve allegations that they wrongfully inflated incentive fees and took unsupported charges in two separate mergers involving the publicly-traded REIT American Realty Capital Properties, Inc. that AR Capital sponsored and managed.  Defendants allegedly failed to properly disclose their compensation to shareholders.  SEC

July 15, 2019

Nomura Securities, Inc. agreed to provide $25 million to reimburse customers that purchased mortgage-backed securities from Nomura.  The SEC orders find that Nomura traders made false and misleading statements to customers, including about the price at which Nomura bought securities, the amount of profit Nomura would receive on the potential trade, and the current owner of the security.  The SEC furhter alleged that Nomura failed to reasonably supervise its traders.  Nomura, which cooperated in the investigation, will also pay $1.5 million in penalties.  Two individual traders were previously charged by the SEC.  SEC

July 3, 2019

A Florida man convicted in February of causing the collapse of one of the largest banks in Puerto Rico has been sentenced to 30 years in prison and ordered to pay $103 million in restitution to the FDIC.  Jack Kachkar had fraudulently secured $142 million in loans from Westernbank of Puerto Rico by presenting fake invoices from his company, Inyx Inc.  When he failed to repay the loans, the bank suffered a catastrophic loss that forced it to close.  DOJ; USAO SDFL

June 25, 2019

Merrill Lynch Commodities, Inc. (MLCI) has agreed to pay $25 million for spoofing and manipulating the precious metals market on the Commodity Exchange from 2008 to 2014.  In the non-prosecution agreement signed with DOJ, MLCI admitted that its employees had placed thousands of fraudulent orders to create a false sense of demand and induce other market participants to make purchases or sales.  CFTC, DOJ
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