In re Vision Financial Markets LLC (A.P. Mar. 29, 2019, Settled)

Action against Respondent, a clearing broker, for alleged failure to file Suspicious Activity Reports (SARs). According to the SEC, Respondent cleared a large number of penny stock transactions that involved suspicious trading patterns without filing SARs. Respondent has agreed to pay a penalty of $625,000.

SEC Order

SEC Administrative Summary
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In re Fresenius Medical Care AG & Co. KGaA (A.P. Mar. 29, 2019, Settled)

Action against Respondent, a German medical products and services company, for alleged violations of the FCPA’s anti-bribery, books and records, and internal accounting provisions. According to the SEC, Respondent made improper payments in a number of different countries to obtain business and failed to maintain adequate accounting controls and compliance measures. Respondent has agreed to pay disgorgement of $135 million and prejudgment interest of $12 million. The SEC did not impose a penalty due to
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SEC v. Keith Borge (S.D.N.Y. Mar. 28, 2019, Contested)

Action against Defendant, a former controller of a not-for-profit college, for alleged fraud related to the state of the college’s finances. The SEC alleges that Defendant falsified financial records, failed to file certain tax submissions, and failed to determine the likelihood that pledged donations would still be received in an effort to hide the school’s worsening financial performance from municipal bond investors.

SEC Complaint

SEC Press Release
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SEC v. Richard T. Diver (S.D.N.Y. Mar. 28, 2019, Contested)

Action against Defendant, a former COO of an investment adviser, for alleged fraud on investors. According to the SEC, Defendant managed payroll and billing systems at his firm and caused the firm to overbill several hundred clients. The SEC alleges that Defendant used this additional revenue to inflate his own salary.

SEC Complaint

SEC Litigation Release 

SEC Press Release
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SEC v. Dennis Gibb and Sweetwater Investments, Inc. (A.P. Mar. 28, 2019, Settled)

Action against Respondents, an investment adviser and its founder and sole owner, for alleged misappropriation of investor funds. According to the SEC, Respondent owner used investor funds to pay for personal expenses and falsified expense statements to conceal his actions. The SEC also alleges that Respondents made false statements in SEC filings. Respondents have agreed to pay, jointly and severally, disgorgement of $1,144,000 and prejudgment interest of $20,747.40. Respondent founder also agreed to a lifetime
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Lorenzo v. SEC (U.S. Sup. Ct. Mar. 27, 2019)

The Supreme Court ruled in favor of the SEC in a 6-2 decision, holding that an investment banker had violated Rules 10b-5(a) and (c), Section 10(b) of the Exchange Act, and Section 17(a)(1) of the Securities Act by knowingly disseminating false information to prospective investors at the direction of his boss. The investment banker signed and forwarded two emails that were drafted by his boss to investors that contained false and misleading statements. The Supreme
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SEC v. James K. McKillop (D.D.C. Mar. 26, 2019, Settled); In re Tiber Creek Corp. and James M. Cassidy (A.P. Mar. 26, 2019, Settled)

Actions against Respondents, a business that assisted companies in going private and its president and sole shareholder, and Defendant, a business associate of Respondent president, for alleged failure to register as brokers and file beneficial ownership reports. According to the SEC, Respondent company created registered public shell companies through which Respondent president and Defendant performed securities transactions without registering as brokers. Respondents have agreed to pay, jointly and severally, disgorgement of $117,000, prejudgment interest of
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SEC v. Direct Lending Investments, LLC (C.D. Cal Mar. 22, 2019, Contested)

Action against Defendant, a registered investment adviser, for an alleged scheme to overcharge investors and inflate fund returns. According to the SEC, Defendant’s owner and then-CEO arranged, with a lending platform in which the funds invested, to falsify financial performance records and inflate the value of certain loans. The SEC alleges that Defendant collected excess management and performance fees because of the lending platform’s overstated valuation.

SEC Complaint

SEC Litigation Release
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In re Merrill Lynch, Pierce, Fenner & Smith Incorporated (A.P. Mar. 22, 2019, Settled)

Action against Respondent, a financial services firm, in connection with an industry-wide sweep into practices related to the pre-release of American Depositary Receipts (ADRs). According to the SEC, Respondent obtained ADRs from other brokers when Respondent should have known that the brokers did not own the requisite number of ordinary shares underlying the ADRs. The SEC further alleges that Respondent failed to implement adequate policies, procedures, and supervision related to the pre-release of ADRs. Respondent
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SEC v. Carol Ann Pedersen (C.D. Cal Mar. 20, 2019, Contested)

Action against Defendant, a former CPA and unregistered investment adviser, for an alleged Ponzi scheme. According to the SEC, Defendant falsely represented to investors that their funds would be invested in “federally guaranteed” securities and falsified account statements. The SEC alleges that Defendant misappropriated investor funds for payments to other investors and for personal use. Defendant has pleaded guilty in a parallel criminal action.

SEC Complaint

SEC Litigation Release
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SEC v. Timothy W. Crawford, et al. (S.D. Ohio Mar. 19, 2019, Contested)

Action against Defendants, an oil-and-gas penny stock company and its former CEO, for allegedly concealing in financial reports the loss of the company’s major revenue source. According to the SEC, after losing control over two oil-and-gas leases, Defendants made misrepresentations to investors in quarterly reports to conceal that development. The SEC also alleges that Defendants raised additional money from investors while improperly withholding information about the loss of revenue source, misreported the CEO’s stock ownership,
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SEC v. Kent R.E. direct, et al. (C.D. Cal Mar. 18, 2019, Contested)

Action against Defendants, two pastors, their church, and a related asset management company, for an alleged Ponzi scheme. According to the SEC, Defendants fraudulently solicited investments through radio and television advertisements, misappropriated funds, and made Ponzi-like payments to pay returns to investors.

SEC Complaint

SEC Litigation Release
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SEC v. Dale M. Walker (M.D. Ga. Mar. 15, 2019, Settled)

Action against Defendant, a former county manager, for an alleged conflict of interest in connection with a public pension fund. According to the SEC, Defendant, who was involved in the pension fund’s selection of an investment adviser, gave an unfair competitive advantage to an investment adviser due to his undisclosed relationship with a person associated with the adviser. The SEC alleges that Defendant gave confidential proposals to this adviser to review and falsely represented that
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In re Talimco, LLC (A.P. Mar. 15, 2019, Settled); In re Grant Gardner Rogers (A.P. Mar. 15, 2019, Settled)

Action against Respondents, an investment adviser and its chief operating officer, for alleged fraud in connection with the auction of real estate from one client to another. According to the SEC, Respondents allegedly rigged an auction of one client’s real estate to benefit another client who purchased the real estate and resold it at a profit. Respondent investment adviser has agreed to pay disgorgement of $74,000, prejudgment interest of $8,758.80, and a civil penalty of
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Senators Propose Doubling SEC Deadline for Recovering Investor Money from Fraudsters (Mar. 14, 2019)

Two members of the Senate Banking Committee introduced the Securities Fraud Enforcement and Investor Compensation Act in the Senate. The bill seeks to amend the Exchange Act to give the SEC ten years to seek restitution for investors from fraudulent actors while maintaining the five-year limitation on SEC disgorgement actions set forth in the Supreme Court’s 2017 decision in Kokesh v. SEC.

Law360 Coverage
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