Securities Fraud

March 24, 2020

Two whistleblowers have received awards totaling over $570,000 for their roles in recent enforcement actions by the SEC.  According to the press release, the first whistleblower received approximately $478,000 and the second whistleblower received approximately $94,000.  In keeping with agency practices, the whistleblowers’ identities have not been revealed.  SEC

March 23, 2020

The SEC has announced that it has awarded a whistleblower over $1.6 million for informing the agency of a possible securities violation and providing critical assistance during the investigation.  Because of the whistleblower’s actions, the SEC was able to successfully enforce securities laws while preserving time and resources.  SEC

February 27, 2020

Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network will pay a $35 million penalty to resolve charges that certain of Wells Fargo's investment advisors and registered representatives made unsuitable recommendations to retail clients regarding single-inverse ETF products.  The SEC charged that Wells Fargo lacked policies and procedures that would have detected such unsuitable recommendations, and failed to adequately supervise and train its financial professionals, who did not fully understand the products they were recommending.  Wells Fargo did not admit or deny the SEC's findings; the penalty will be distributed to harmed individuals.  SEC

February 21, 2020

Wells Fargo & Co. will pay a total of $3 billion in a federal settlement resolving criminal, civil, and administrative liability with respect to its “cross-selling” sales practices between 2002 and 2016 that led to the opening of millions of checking, savings, credit card, and other accounts on behalf of individual customers under false pretenses or without the customers’ consent.  As part of the settlement, Wells Fargo admitted that it collected millions of dollars in fees and interest to which the Company was not entitled, harmed customer credit ratings, and unlawfully misused customers’ personal information.  Wells Fargo entered into a three-year deferred prosecution agreement requiring the bank to take certain compliance steps and cooperate with ongoing investigations.  Of the $3 billion settlement, $500 million resolves SEC claims that the bank, knowing about the underlying violations, mislead investors about the success of its business; the SEC settlement will be distributed to harmed investors.  The federal settlement is in addition to a $575 million 2018 settlement Wells Fargo entered into with 50 states and the District of Columbia and a $100 million 2016 fine from the CFPB arising from the same conduct.  DOJ; SEC; WD NC; CD Cal

February 19, 2020

Diageo plc will pay $5 million to resolve SEC charges that the alcohol producer's North American subsidiary, Diageo North America, engaged in channel-stuffing by pressuring distributors to buy products in excess of demand in order to meet internal sales targets in the face of declining market conditions. Diageo failed to disclose the trends that resulted from shipping products in excess of demand, the positive impact the overshipping had on sales and profits, and the negative impact that the unnecessary increase in inventory would have on future growth. SEC

Confidential - Securities Fraud Violation (Multi-Millions)

Constantine Cannon represented a whistleblower in making a submission under the SEC Whistleblower Program, which led to a successful government enforcement action and in a whistleblower award for our client of $1.7 million made in October 2020.  Read more --  CC.

January 27, 2020

Catalyst Capital Advisors LLC and its CEO Jerry Szilagyi will pay more than $10 million -- $8.9 million in disgorgement and 1.6 million in civil monetary penalties -- to resolve claims that they failed to adequately supervise employees including the portfolio manager of Catalyst's Hedged Futures Strategy Fund, Edward Walczak, who was separately charged.   Catalyst and Walczak made materially misleading statements about the risk management strategies employed by the fund, including false statements that stop-loss measures and risk monitoring were in place.  The misrepresentations led investors and investment advisors to believe that the fund was a safer investment than it actually was. CFTC, SEC

January 22, 2020

The SEC announced a reward of $45,000 to a harmed investor-turned-whistleblower who provided significant information that helped the SEC shut down a fraudulent scheme targeting retail investors, and enabled the SEC to recover assets to return to victims.  SEC