Misrepresentations

ITG - Securities Fraud violations (Multi-Millions)

Constantine Cannon represented a whistleblower in a submission under the SEC Whistleblower Program relating to brokerage firm ITG's alleged violations of the firm’s dark pool, POSIT.  In May 2021, the SEC awarded our client 30% of the government's recovery, the maximum amount allowed under the program.  Read more -- CC

December 23, 2020

RPM International Inc. and Edward W. Moore, its general counsel and chief compliance officer, will pay a $2 million penalty to resolve allegations that the roofing company violated generally accepted accounting principles in failing to timely disclose a material loss contingency or accrual arising from its knowledge that the government was investigating alleged overcharges by RPM on government contracts.  In August 2014, RPM restated its results in three prior quarters, although it allegedly knew about the investigation and the company’s exposure earlier.  SEC

December 16, 2020

China-based Luckin Coffee will pay a penalty of $180 million to resolve charges that the company defrauded investors by materially misstating the its revenue, expenses, and net operating loss in an effort to falsely appear to achieve rapid growth and increased profitability and to meet earnings estimates. The SEC alleged that over the course of more than a year, Luckin intentionally fabricated more than $300 million in retail sales, and $190 million in expenses, by using related parties to create false transactions and inflated expenses. Luckin overstated its revenue by 28% and 45% in two different quarters, and raised more than $864 million from debt and equity investors during the relevant time period. Luckin ADRs were traded on NASDAQ until July, 2020.  SEC

December 14, 2020

Interdealer brokers TFS-ICAP LLC and TFS-ICAP Ltd. will pay $7 million and admit that between 2014 and 2015 its employees engaged in  “flying” prices and “printing” trades on FX options by representing to clients bids and offers that had not been made, and communicating to clients trades that had not occurred. CFTC

December 9, 2020

General Electric Co. (GE) has agreed to pay $200 million to settle SEC charges of violating accounting controls, disclosure controls, antifraud, and reporting provisions of securities laws.  According to the SEC, between 2015 to 2017, GE failed to disclose to investors the full picture of some of its profits, including that some of the profits from its power business stemmed from reductions in prior cost estimates, that increases in industrial cash collections came primarily from internal receivable sales between its power and financial services businesses, and that risks had arisen in its insurance business.  When challenges to those businesses were finally disclosed to the public in 2017 and 2018, GE’s stock fell by almost 75%.  SEC

December 9, 2020

A man in Washington D.C. who ran a fraudulent diamond investment Ponzi scheme has been sentenced to 7 years in prison and ordered to pay $23 million in restitution to victims throughout the United States and Canada who were told their funds would be used to purchase rough diamonds that would be cut, polished, and resold at a profit.  To lure investors to the scheme, Jose Angel Aman and his co-conspirators promised that the investments were secured by Aman’s inventory of diamonds, allegedly valued at $25 million.  In fact, there was no $25 million inventory of diamonds, and the funds were used for interest payments to earlier investors and to pay Aman and his co-conspirators.  USAO SDFL

December 8, 2020

UK-based investment advisor BlueCrest Capital Management Limited has agreed to pay over $132 million in disgorgement and interest and over $37 million in penalties, for a total of $170 million, to settle charges of failing to make material disclosures, or making inadequate or misleading disclosures, to investors for more than four years.  The alleged securities law violations involved omissions and inadequate or misleading statements regarding the firm’s transfer of a majority of its highest-performing traders from its flagship client fund, BlueCrest Capital International (BCI), to a proprietary fund, BBSMA Limited, and replacing live traders with an underperforming algorithm while continuing to collect performance fees.  SEC

December 2, 2020

Energy company SCANA Corp. has agreed to pay a $25 million penalty to settle SEC charges of defrauding investors.  SCANA and its subsidiary, South Carolina Electric & Gas Co. (SCE&G), have also agreed to pay $112.5 million in disgorgement.  According to the SEC, SCANA, SCE&G, and top executives Kevin Marsh (former CEO) and Stephen Byrne (former executive VP) defrauded investors by making false and misleading statements concerning a nuclear power plant expansion that they said would qualify the company for more than $1 billion in tax credits.  However, defendants knew the project was far behind schedule and likely to be scrapped.  The false statements led investors to buy more than $1 billion in bonds, and caused millions of dollars in losses when the project was ultimately scrapped in mid-2017.  DOJ; SEC