Securities Fraud

September 24, 2020

BMW AG and two of its U.S. subsidiaries will pay $18 million to resolve charges that its public reporting inflated retail sales in the U.S. between 2015 and 2017, allowing it to meet sales targets.  This information, which BMW allegedly knew to be inaccurate, was then provided to investors in bond offerings by BMW’s U.S. subsidiary.  SEC

September 24, 2020

Following a guilty plea, Jason Galanis was sentenced to nearly 16 years in prison for his role in multi-million dollar securities frauds.  In the one scheme, Galanis acquired, but did not disclose, control of the Gerova Financial Group, Ltd. and caused the company to enter into transactions designed for his benefit, including issuance of Gerova stock for his benefit, which he subsequently sold while fraudulently maintaining the price of the stock through coordinated trades.  In a second scheme, Galanis misappropriated the proceeds of bonds issued by Native American tribal entity the Wakpamni Lake Community Corporation.  USAO SDNY

August 28, 2020

Herbalife Nutrition Ltd. will pay over $123 million to resolve claims that the US-based company violated the Foreign Corrupt Practices Act by paying bribes to Chinese officials and other state-owned entities in order to secure required direct selling licenses, improperly influence Chinese investigations into Herbalife's business, and improperly influence Chinese state-owned and state-controlled media for the purpose of removing negative media reports about Herbalife. Herbalife admitted that over the course of ten years it falsified its books and records in order to provide corrupt payments and benefits to Chinese government officials.  To resolve criminal charges, Herbalife will enter into a deferred prosecution agreement and pay a $55 million criminal penalty; to resolve civil charges by the SEC, Herbalife will pay disgorgement and interest totaling approximately $67 million.  DOJ; USAO SDNY; SEC

August 25, 2020

Computer manufacturer Super Micro Computer, Inc. has agreed to pay a penalty of $17.5 million to resolve allegations that the company prematurely recognized revenue and understated expenses.  The SEC alleged that the company, including its former CFO, Howard Hideshima, pushed employees to maximize end-of-quarter revenue.  Hideshima agreed to pay disgorgement and penalties totaling $350,000.  SEC

July 31, 2020

Canadian company Bausch Health, formerly known as Valeant Pharmaceuticals, will pay a $45 million penalty to resolve charges that its executives engaged in improper revenue recognition and misleading disclosures in SEC filings and earnings presentations between 2014 and 2015.  The company was alleged to have recorded false sales of products to specialty pharmacy Philidor Rx Services and its affiliates, which were controlled by Valeant.  In addition, Valeant allegedly misrepresented the source and materiality of revenue it received following a 500% increase in the price of its diabetes drug Glumetza.  Former CEO J. Michael Pearson will pay a civil penalty of $250,000; former CFO Howard B. Schiller will pay a civil penalty of $100,000; former controller Tanya Carro will pay a civil penalty of $75,000.  The individuals also agreed to return specified portions of their incentive compensation to the company.  SEC

July 20, 2020

UBS Financial Services Inc. and two of its registered representatives will pay $10 million in penalties, disgorgement, and interest to resolve claims that UBS improperly redirected municipal bond offerings away from retail customers and to “flippers,” who re-sold the bonds to other broker-dealers, including UBS.  This practice allowed UBS to circumvent the priority retail order periods set by bond issuers and improperly obtain a greater allocation of bonds for its own inventory.  SEC