SEC Files Motion for Order to Show Cause in Case Against Elon Musk (S.D.N.Y. Feb. 27, 2019)

The SEC sought an order to show cause why Elon Musk, the CEO of Tesla, should not be held in contempt for a violation of an October 2018 final judgment by the District Court for the Southern District of New York.  The judgment required Musk to obtain pre-approval of any written communications that “contained, or reasonably could contain, information material to Tesla or its shareholders.”  The SEC filed this motion after Musk tweeted about the
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SEC v. Daniel Adams, et al. (C.D. Cal. Feb. 26, 2019, Contested)

Action against Defendants, two individuals and two movie companies under their control, for allegedly defrauding two investors in a forthcoming film.  According to the SEC, Defendants made multiple misrepresentations to the investors, falsified relevant documents that were sent to the investors, and misappropriated investor funds.

SEC Complaint

SEC Litigation Release
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In re Krishna Mohan (A.P. Feb. 25, 2019, Settled)

Action against Respondent, a former trader, for alleged spoofing.  According to the CFTC, Respondent placed orders for futures contracts with the intent to cancel the orders before execution in order to manipulate prices.  The CFTC has reserved decision on monetary sanctions pending Respondent’s fulfillment of a cooperation agreement with the CFTC.

CFTC Order

CFTC Press Release
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SEC v. Jack D. Massimino and Robert C. Owen (C.D. Cal. Feb. 25, 2019, Settled)

Action against Defendants, two former executives of a now defunct public company that operated for-profit schools, for their roles in the company’s alleged failure to disclose material regulatory risks in public filings.  According to the SEC, the company improperly inflated its long-term debt in financial submissions to the Department of Education.  The SEC alleges that Defendants failed disclose in public filings that the inflation could affect the company’s access to education funds.  Defendants have agreed
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CFTC and UK Authorities Issue Joint Statement on Continuity of Derivatives Trading and Clearing Post-Brexit (Feb. 25, 2019)

The CFTC and the Bank of England, including the Prudential Regulation Authority and the Financial Conduct Authority, issued a joint statement assuring the market that derivative trading and clearing activities will continue between the U.K. and U.S. after the U.K.’s withdrawal from the EU. The statement sets out a list of measures to ensure regulatory and financial stability, including continued supervisory cooperation, extension of existing CFTC relief and comparability for the U.K., and U.K. equivalence
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CFTC v. The Tulving Company, Inc. and Hannes Tulving, Jr. (W.D.N.C. Nov. 29, 2018, Consent Order)

The U.S. District Court for the Western District of North Carolina entered a supplemental consent order against Defendants, an individual and his precious metals company, for alleged fraudulent solicitation of customers for precious metals transactions, misappropriation of customer funds, and false statements about purported transactions.  The Court’s supplemental order requires Defendants to pay, jointly and severally, a civil penalty of $15,761,432.  The supplemental consent order followed the Court’s consent order of permanent injunction and its
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SEC v. Joseph Frank Vacante (S.D.N.Y. Feb. 21, 2019, Settled)

Action against Defendant, a former employee of a biotechnology company, for alleged insider trading.  According to the SEC, Respondent traded while in possession of material nonpublic information regarding the FDA’s recommendation that the company withdraw some of its products from FDA consideration.  Defendant has agreed to pay disgorgement of $70,827, prejudgment interest of $6,247, and a civil penalty of $70,827.

SEC Complaint

SEC Litigation Release
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SEC v. Spartan Securities Group, Ltd., et al. (M.D. Fla. Feb. 20, 2019, Contested)

Action against Defendants, a transfer agent, a broker-dealer, and its principals, for alleged creation and sale of sham companies.  According to the SEC, Defendants broker-dealer and transfer agents manufactured numerous fake public companies which they then sold.  The SEC further alleges that two Defendant principals signed and submitted FINRA and DTC applications that contained false information, and the third Defendant principal failed to acquire sufficient knowledge about the companies and investigate areas of concern raised
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In re Gladius Network LLC (A.P. Feb. 20, 2019, Settled)

Action against Respondent, a cybersecurity company, for alleged unregistered initial coin offering.  According to the SEC, Respondent conducted an initial coin offering without registering or qualifying for an exemption.  Respondent agreed to return funds to participating investors.  The SEC did not impose a penalty due to Respondent’s self-reporting and cooperation.

SEC Complaint

SEC Press Release
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SEC v. Castleberry Financial Services Group, LLC, et al. (S.D. Fla. Feb. 19, 2019, Contested)

Action against Defendants, an investment fund and its principals, for allegedly defrauding investors.  According to the SEC, Defendants made misrepresentations about their investment portfolio and amount of capital.  The SEC further alleges that Defendant principals misappropriated investor funds.

SEC Complaint

SEC Litigation Release

SEC Press Release
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SEC v. Joshua Sason, et al. (S.D.N.Y. Feb. 15, 2019, Contested)

Action against Defendants, four individuals and their four companies, for alleged microcap fraud and unregistered offerings.  According to the SEC, Defendants used fake promissory notes to obtain unregistered shares of microcap issuers and sold the shares to the public.  The SEC further alleges that one Defendant company bought a fake promissory note from another Defendant company and, in a fraudulent settlement agreement approved by a state court, agreed to retire the debt in exchange for
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SEC v. Gordon J. Coburn and Steven E. Schwartz (D.N.J. Feb. 15, 2019, Contested); In re Cognizant Technology Solutions Corporation (A.P. Feb. 15, 2019, Settled)

Actions against Respondent, a technology company, and Defendants, two of Respondent’s former executives, for alleged violations of the FCPA’s anti-bribery, books and records, and internal accounting controls provisions.  According to the SEC, Respondent and Defendants paid bribes through a contractor to Indian officials to obtain operating licenses and construction permits.  The SEC alleges that Respondent and Defendants falsified documents in order to conceal the payments.  Respondent has agreed to pay disgorgement of $16,394,351, prejudgment interest
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In re Deloitte Touche Tohmatsu, et al. (A.P. Feb. 13, 2019, Settled)

Action against Respondents, an audit firm, its CEO, and its Reputation and Risk Leader, for alleged violations of auditor independence requirements.  According to the SEC, Respondents audited a firm with a banking subsidiary at which the individual Respondents and other audit partners and team members maintained account balances that exceeded amounts insured by the Deposit Insurance Corporation of Japan, which was in violation of Regulation S-X.  Respondent firm has agreed to pay disgorgement of $971,722,
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SEC v. Gene Daniel Levoff (D.N.J. Feb. 13, 2019, Contested)

Action against Defendant, a former senior in-house attorney, for alleged insider trading.  According to the SEC, Defendant, who was responsible for securities laws compliance at his then-employer, traded while in possession of material nonpublic information about his then-employer’s quarterly earnings announcements.  Defendant has been charged in a parallel criminal action in the District of New Jersey.

SEC Complaint

SEC Litigation Release

SEC Press Release
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SEC v. Kevin R. Kuhnash and Jason P. Jimerson (S.D. Ind. Feb. 12, 2019, Contested)

Action against Defendants, former executives of a plastics manufacturer, for alleged fraud in connection with the company’s sale to a public company.  According to the SEC, the company routinely made material misrepresentations about product specifications and test data.  The SEC alleges that Defendants concealed these practices while negotiating the company’s acquisition.  Defendants have been charged in a parallel criminal action in the Southern District of Indiana.

SEC Complaint

SEC Litigation Release
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