Securities Fraud

January 6, 2022

The SEC has awarded over $13 million to an individual who promptly alerted agency staff to an ongoing fraud.  The resulting investigation and subsequent assistance helped minimize investor losses and led to a successful enforcement action.  SEC

December 21, 2021

Nikola Corporation will pay $125 million to resolve charges that the transportation systems provider, which designs and manufactures electric trucks and hydrogen fuel systems, misrepresented or omitted material facts about its products, technical advancements, and commercial prospects.  Many of these statements were made by Nikola’s founder and former CEO, Trevor Milton, on social media and otherwise, both before and after Nikola went public through a merger with a special purpose acquisition company (SPAC).  An SEC action against Milton is continuing.   SEC

December 17, 2021

J.P. Morgan Chase entities, including broker-dealer J.P. Morgan Securities LLC, will pay a total of $200 million -- $125 million as an SEC penalty and $75 million as a CFTC penalty -- to resolve claims that firm employees communicated both internally and externally on unapproved channels, failed to preserve written communications, and failed to supervise.  Defendants admitted that employees, including senior and supervisory employees, regularly and openly communicated about business using personal devices, text messages, WhatsApp, and other private messaging, none of which were preserved by the firm, in violation of recordkeeping requirements.  As a result, J.P. Morgan entities were unable to provide information in response to subpoenas and information requests from regulators.  SEC; CFTC

December 7, 2021

The SEC has issued a whistleblower reward of $5 million to an individual who voluntarily provided original information to the Commission regarding the misuse of proceeds from a securities offering.  The SEC found that the whistleblower promptly reported the misconduct, enabling the Commission to quickly bring a successful enforcement action and return millions to harmed investors.  SEC

November 24, 2021

Guy Scott Griffithe, who controlled an entity called Renewable Technologies Solutions, Inc., and Robert William Russell, who owned an entity called SMRB, LLC, have been ordered to pay more than $6 million to resolve charges that they mislead investors by falsely stating that investments in Renewable would be used to operate SMRB, which held a license to grow marijuana under Washington’s recreational cannabis laws.  To create the illusion that the marijuana business was profitable and paying dividends as promised, Griffithe allegedly paid out purported profit distributions to some investors, which were partially funded in a Ponzi-like fashion using funds from other investors.  Griffithe was found liable for more than $5.3 million in disgorgement, prejudgment interest, and civil penalties; Russell was found liable for more than $698,000 in disgorgement, prejudgment interest, and civil penalties.  SEC

November 10, 2021

The SEC has announced awards totaling more than $15 million to two whistleblowers.  Information provided by the first whistleblower, who received $12.5 million, prompted an investigation to open, while information from the second whistleblower, who received $2.5 million, was more limited but helped lead to a successful enforcement action.  SEC