SEC v. Paul Andrews Rinfret, et al. (S.D.N.Y. June 28, 2019, Contested)

Action against Defendants, an investment fund and its principal, and relief defendant, the fund’s affiliate, for alleged fraud.  According to the SEC, Defendants solicited investor funds based on false claims of returns and other misrepresentations.  The SEC further alleges that Defendant principal misappropriated investor funds and issued false account statements to conceal the scheme.  Defendant principal has been charged in a parallel criminal case.

SEC Complaint

SEC Litigation Release
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SEC v. Robert F.X. Sillerman (S.D.N.Y. June 28, 2019, Settled)

Action against Defendant, the former CEO of an online media company, for alleged offering fraud.  According to the SEC, Defendant misappropriated funds raised during his company’s public securities offering.  The SEC also alleges that Defendant misled investors by, among other things, falsely representing that two celebrities were among the investors in the company.  Defendant agreed to pay a civil penalty of $179,000 and to an officer-and-director bar.

SEC Complaint

SEC Litigation Release
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SEC v. Johnny R. Thomas, et al. (D. Nev. June 28, 2019, Contested); In re R. Gordon Jones, CPA (A.P. June 28, 2019, Settled); In re S. Jeffrey Jones, CPA (A.P. June 28, 2019, Settled)

Actions against Defendants, four former executives of an energy services company, and Respondents, two accountants, for alleged fraud and professional misconduct.  According to the SEC, Defendants misled investors by, among other misrepresentations, inflating the number of power plants that the company was building.  The SEC alleges that one Respondent accountant aided Defendants in perpetrating the fraud, and that the other Respondent accountant failed to audit the company in accordance with PCAOB standards.  Respondents have agreed
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In re Eagle Market Makers, Inc. (A.P. June 28, 2019, Settled)

Action against Respondent, a commodities trading firm, for alleged noncompetitive wash sales.  According to the CFTC, Respondent circumvented the “lockdown” period before market open, during which pre-open orders cannot be modified or cancelled.  The CFTC alleges that Respondent improperly placed additional, offsetting orders to cancel its pre-open orders, which resulted in noncompetitive wash sales upon market open.  Respondent has agreed to pay a civil penalty of $350,000.

CFTC Order

CFTC Press Release
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SEC v. Henry Sargent, et al. (D. Mass. June 27, 2019, Contested)

Action against Defendants, four attorneys and a real estate agent, for alleged microcap fraud.  According to the SEC, Defendants formed a microcap company and issued shares to friends, family, and co-workers.  The SEC alleges that Defendants then filed a Form S-1 that falsely stated that the shareholders had acquired the shares for investment purposes and that Defendants did not control the shares.  According to the SEC, Defendants subsequently sold shares of the microcap firm to
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In re State Street Bank and Trust Company (A.P. June 27, 2019, Settled)

Action against Respondent, a financial services company, for alleged overcharges to clients.  According to the SEC, Respondent’s mutual fund and other registered investment company clients agreed to reimburse certain out-of-pocket expenses that Respondent as custodian incurred on the clients’ behalf.  The SEC alleges that Respondent routinely charged clients more than its actual expenses.  Respondent has agreed to pay disgorgement of $48,473,242, prejudgment interest of $307,619, and a civil penalty of $40 million.

SEC Order

SEC
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SEC v. Comer Capital Group, LLC, and Brandon Comer (N.D. Ill. June 27, 2019, Contested); In re IFS Securities (A.P. June 27, 2019, Settled)

Actions against Defendants, a municipal advisor and its principal, and Respondent, a broker-dealer, for alleged breach of fiduciary duty and violation of Municipal Securities Rulemaking Boards rules.  According to the SEC, Respondent negligently sold bonds below market value on behalf of a public library district, and Defendant failed to properly advise the library district regarding its engagement with Respondent and the pricing of the bonds.  Respondent has agreed to pay a civil penalty of $50,000.
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SEC v. Mark Allen Plumber (N.D. Tex. June 26, 2019, Settled)

Action against Defendant, the principal of an oil company, for alleged misappropriation.  According to the SEC, Defendant solicited investor funds to be used in oil well projects and then used a portion of the funds to pay personal expenses.  Defendant has agreed to pay disgorgement of $399,011, prejudgment interest of $33,008, and a civil penalty of $75,000.

SEC Complaint

SEC Litigation Release
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SEC v. Jason Sugarman, et al. (S.D.N.Y. June 26, 2019, Contested)

Action against Defendant, a former director of a broker-dealer and investment adviser, for alleged fraud.  According to the SEC, Defendant and his associate perpetrated a complex fraudulent scheme in which they gained control of certain investment advisers, used the funds managed by the advisers to buy Native American tribal bonds, and misappropriated the proceeds of the bond sales from the tribe.  The SEC also alleges that Defendant and his associate acquired and misappropriated funds from
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Representative Waters Releases Discussion Draft for SEC Waiver Process Reform (June 26, 2019)

House Financial Services Committee Chairwoman Maxine Waters (D-CA) released a discussion draft of legislation that would amend the SEC’s approach to considering and granting waivers to automatic bad actor disqualifications.  If adopted, the “Bad Actor Disqualification Act of 2019” (the “Draft Bill”) would, among other things, introduce a 180-day temporary waiver period for an entity that demonstrates that disqualification would cause “immediate irreparable injury,” require a notice and comment period and public hearing for all
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SEC v. Worldwide Markets, Ltd., et al. (D.N.J. June 25, 2019, Contested)

Action against Defendants, a broker, its CEO, and its affiliate, for alleged offering fraud.  According to the SEC, Defendants offered foreign investors the opportunity to trade in U.S. stocks but instead provided the investors with singe-security contracts for difference, misappropriated investor funds, and failed to fulfill any withdrawal requests from customers.  The SEC also alleges that Defendants failed to transact on a registered national exchange and register as a broker.

SEC Complaint

SEC Litigation Release
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In re Merrill Lynch Commodities, Inc. (A.P. June 25, 2019, Settled)

Action against Respondent, a provisionally registered swap dealer, 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.  Respondent has agreed to pay restitution of $2,364,585, disgorgement of $11,100,000, and a civil penalty of $11,500,000.

CFTC Order

CFTC Press Release
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SEC v. Donald S. LaGuardia, Jr. (S.D.N.Y. June 24, 2019, Contested)

Action against Defendant, the principal of an investment adviser, for alleged fraud.  According to the SEC, Defendant misappropriated money from funds managed by the investment adviser  and then falsified entries in the funds’ books, statements, and other documents to conceal the misappropriation and inflate the funds’ values.

SEC Complaint

SEC Litigation Release
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The Kane Capital Investment Group, LLC, and Amrit Jaswant Singh Chahal (E.D.V.A. June 20, 2019, Settled)

Action against Defendants, a commodity pool operator and its principal, for alleged fraud.  According to the CFTC, Defendants solicited investor funds based on false claims about the pool’s trading profits and size, among other misrepresentations.  The CFTC further alleges that Defendants misappropriated investor funds and made Ponzi-like payments to earlier investors.  Defendants have agreed to pay restitution of $1,232,510.41. Defendant principal has pleaded guilty to fraud charges in a parallel criminal action and has been
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In re Walmart Inc. (A.P. June 20, 2019, Settled)

Action against Respondent, a retailer, for alleged violations of the FCPA’s books and records and internal accounting controls provisions.  According to the SEC, Respondent’s subsidiaries in Brazil, China, India, and Mexico lacked sufficient internal anticorruption controls and, as a result, employed third-party intermediaries who made improper payments to foreign government officials.  The SEC further alleges that Respondent failed to adequately investigate allegations of corruption and mitigate known risks.  Respondent has agreed to pay disgorgement of
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