Follow-on APs, Suspensions, and Bars (December 2017)

  • In re Gregory Davis, CPA (A.P. Dec. 5, 2017, Settled)
  • In re Next Galaxy Corp., et al. (A.P. Dec. 5, 2017, Settled)
  • In re Robert W. Davis, CPA (A.P. Dec. 5, 2017, Settled)
  • In re William P. Carlson, Jr. (A.P. Dec. 5, 2017, Settled)
  • In re Robin Glen Charlet (A.P. Dec. 8, 2017, Settled)
  • In re Steven William Sparks (A.P. Dec. 8, 2017, Settled)
  • In re William J. Peiffer, Esq. (A.P. Dec. 12, 2017, Settled)
... Continue Reading

SEC v. Gaughran, et al. (S.D.N.Y. Dec. 26, 2017, Partially Settled and Partially Contested)

Action against an investment adviser firm in connection with an alleged fraudulent scheme in which the Defendant investment adviser’s principal misappropriated more than $9 million from a client’s charitable foundation.  Defendant investment adviser allegedly failed to maintain policies and procedures to detect these misappropriations.  The SEC has also brought charges against the foundation’s accountant and a trustee for aiding and abetting the fraud by failing to act upon several red flags.    Defendant investment adviser has ... Continue Reading

In re Train, Babcock Advisors, LLC (A.P. Dec. 22, 2017, Settled)

Action against an investment adviser firm for failure to prevent two former principals from misappropriating more than $10 million from two client accounts.  The SEC also alleges that Respondent failed to implement adequate supervisory procedures during the relevant time period.  Respondent has agreed to pay disgorgement of $331,957, pre-judgment interest of $33,768.23, and a civil penalty of $1.3 million.

SEC Order ... Continue Reading

In re Southwind Associates of NJ Inc., et al. (A.P. Dec. 22, 2017, Settled)

Action against an investment adviser, its former president and sole owner, and its former CCO, for alleged failure to conduct surprise inspections of client funds, failure to adopt and implement policies and procedures designed to prevent violations of the Advisers Act and safeguard client records, including failure to adopt and implement procedures to ensure that fund clients distributed financial statements in a timely manner and failure to conduct annual reviews of its policies and procedures.  ... Continue Reading

In re Team Financial Asset Management, LLC, et al. (A.P. Dec. 22, 2017, Settled)

Action against Respondents, two investment advisers and their portfolio manager and owner, for alleged material misrepresentations regarding changes to their investment strategy.  The SEC alleges that Respondents shifted to an aggressive investment strategy in certain funds while failing to make appropriate disclosures to investors and kept the fund operating long after it was clear that it could not recover, exacerbating its losses.  The individual Respondent agreed to pay disgorgement of $65,062, interest of $6,277, and ... Continue Reading

In re Alan Shortall (A.P. Dec. 22, 2017, Settled)

Action against the former CEO of a medical device company for allegedly misrepresenting the degree of independence of the corporation’s Board of Directors in public filings.  Respondent allegedly arranged for the company to transfer funds to a director to pay for personal expenses without the knowledge of its Board of Directors, creating a conflict of interest that was not disclosed in the company’s public filings.  Respondent has agreed to pay a penalty of $15,000.

SEC ... Continue Reading

In re TPG Capital Advisers, LLC (Dec. 21, 2017, Settled)

Action against a private equity fund for alleged inadequate disclosures regarding portfolio companies.  Respondent allegedly failed to disclose that it could accelerate future monitoring fees upon termination of its monitoring agreements, resulting in an undisclosed conflict of interest.  Respondent has agreed to pay $9,487,620.80 in disgorgement, $361,507.99 in prejudgment interest, and a civil penalty of $3,000,000.

SEC Order ... Continue Reading

In re Packerland Brokerage Services, Inc., et al. (Dec. 21, 2017, Settled)

Action against Respondents, investment advisers, for alleged disclosure and best execution failures.  The SEC alleges that Respondents recommended and managed mutual fund strategies involving a certain class of mutual fund shares that imposed a 1% annual service fee and failed to disclose that a lower-cost, but otherwise identical, fund share class was available.  The SEC also alleges that Respondents failed to implement policies and procedures governing the selection of mutual funds.  Respondents have collectively agreed ... Continue Reading

In re Merrill Lynch, Pierce, Fenner & Smith Inc. (A.P. Dec. 21, 2017, Settled)

Action against Respondent, a registered broker-dealer and investment adviser, for alleged failure to adopt and implement anti-money laundering (“AML”) procedures reasonably designed to account for AML risks associated with certain services offered to its brokerage accounts, including ATM cash deposits and money wiring.  The SEC alleges that, as a result, Respondent failed to report certain suspicious activity in its customer accounts to regulators.  Respondent has agreed to pay a $13 million civil money penalty.

SEC ... Continue Reading

CFTC v. Mintco LLC, et al. (S.D.N.Y. Dec. 20, 2017, Settled)

Action against Defendants, a company and its owners, for alleged fraudulent off-exchange precious metals transactions. According to the CFTC, Defendant’s precious metal sales to retail customers were illegal off-exchange transactions because their customers did not qualify as Eligible Contract Participants and Defendant company did not itself acquire and store financed metal of behalf of its customers or deliver precious metals to any customers as required.  In addition, the CFTC alleges that Defendant owners misrepresented or ... Continue Reading

SEC v. Robert H. Shapiro, et al. (S.D. Fla. Dec. 20, 2017, Contested)

Action against Defendants, an individual and companies he controlled, for allegedly running a Ponzi scheme.  The SEC alleges that Defendant and his companies defrauded approximately 8,400 individuals, advertising that their primary business involved making high-interest, short-term loans to commercial property owners. The majority of the borrowers, however, were other companies that Defendant Shapiro owned and that never repaid the loans.  Defendant allegedly used investors’ money to pay other investors and commissions to sales agents, and ... Continue Reading

SEC v. Stephen C. Peters, et al. (E.D.N.C. Dec. 20, 2017, Settled)

Action against Defendants, an investment adviser and his firm for allegedly running a Ponzi scheme.  The SEC alleges that Defendant misrepresented the risks associated with promissory notes sold to his clients and further misrepresented that he would not receive compensation.  Defendant allegedly used approximately $4.4 million to fund personal expenses and another $4.9 million to make Ponzi-style payments to early investors.  Parallel criminal charges have been filed.

SEC Litigation Release ... Continue Reading

SEC v. Brian Hirsch and Joseph Spera (D.N.J. Dec. 19, 2017, Contested)

Action against Defendants, a former registered representative and a former day trader, in connection with an alleged agreement to exchange cash for preferential access to initial public offerings (“IPOs”). According to the SEC, Defendant representative arranged to give customers, including Defendant day trader, larger allocations of IPOs being marketed by Defendant representative’s brokerage firm employers in exchange for undisclosed kickbacks.  Parallel criminal charges have been filed against Defendant representative.

SEC Press Release ... Continue Reading

SEC v. Ronald A. Fossum, Jr. and Alonzo R. Cahoon (W.D. Wash. Dec. 19, 2017, Contested)

Action against Defendants, two investment advisers, for alleged fraud relating to the misappropriation of investor funds and misrepresentations regarding Defendants’ compensation.  The SEC alleges that retail investor funds were used to pay for Defendants’ personal expenses and that Defendants misrepresented the financial condition of their portfolio and the fees received on each investment unit.

SEC Litigation Release ... Continue Reading

SEC v. Ray C. Davis, et al. (S.D. Tex. Dec. 14, 2017, Contested)

Action against a technology company and its former CEO for alleged fraud in connection with raising approximately $28 million from investors.  The SEC alleges Defendants issued offering documents indicating that investor funds would be used for business expansion, but much of the capital raised was misappropriated.  Defendants allegedly sought to conceal their fraud through a network of shell companies and false invoices.  Parallel criminal charges have been filed.

SEC Litigation Release ... Continue Reading

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