In re THL Managers V, et al. (A.P. June 29, 2018, Settled)

Action against Respondent, a registered private equity fund investment adviser, in connection with failure to adequately disclose receipt of lump-sum fee payments from a client fund, resulting in failure to disclose potential conflicts of interest.  Respondent has agreed to pay disgorgement of $4,806,016, prejudgment interest of $200,000, and a civil penalty of $1,500,000.

SEC Order ... Continue Reading

SEC v. Adam Mattessich and Joseph Ludovico (S.D.N.Y. June 29, 2018, Contested)

Action against Defendants, a former supervisor and a former trader, in connection with an alleged commission-splitting scheme in which Defendant supervisor received off-book payments from traders he managed in an effort to bypass compensation-related procedures designed to comply with various tax and regulatory requirements.  According to the SEC, Defendant trader and a colleague used personal checks to pay a portion of their commissions to Respondent supervisor.

SEC Litigation Release

SEC Complaint ... Continue Reading

In re Morgan Stanley Smith Barney, LLC (A.P. June 29, 2018, Settled)

Action against Respondent, a registered broker-dealer and investment advisor, in connection with an alleged failure to supervise.  The SEC alleges that one of Respondent’s financial advisors misappropriated client funds by engaging in unauthorized wire transfers.  The SEC further alleges that Respondent failed to detect the unauthorized money movements and the fraudulently created order forms that were necessary to facilitate these unauthorized wire transfers.  Respondent has agreed to pay a civil penalty of $3,600,000.

SEC Order ... Continue Reading

In re Cantor Fitzgerald & Co. (A.P. June 29, 2018, Settled)

Action against Respondent, a registered broker-dealer, in connection with an alleged commission-sharing scheme entered into by two employees.  The SEC alleges that Respondent’s employees engaged in an unauthorized commission-sharing scheme and that, as a result, Respondent failed to maintain accurate records of the sales attributable to, and compensation received by, a registered representative.  Respondent has agreed to pay a civil penalty of $1,250,000.

SEC Order ... Continue Reading

In re Philip A. Noto II (A.P. June 29, 2018, Settled)

Action against Respondent, a registered representative for Alexander Capital, L.P. with supervisory responsibility, in connection with failure to supervise two registered representatives.  The SEC alleges that the Respondent failed to supervise registered representatives by ignoring red flags relating to a pattern of representatives providing unsuitable investment advice, conducting unsuitable trades for retail clients, and churning in customer accounts. Respondent has agreed to pay a civil penalty of $20,000.

Related to In re Alexander Capital, L.P. ... Continue Reading

In re Alexander Capital, L.P. (A.P. June 29, 2018, Settled)

Action against Respondent, a registered broker-dealer, in connection with alleged failure to supervise its registered representatives, who engaged in a pattern of providing unsuitable investment advice and conducting unsuitable trades for retail clients.  The SEC alleges that Respondent failed to maintain adequate written policies and failed to supervise its registered representatives.   Respondent has agreed to pay disgorgement of $193,774.86, prejudgment interest of $23,436.78, and a civil penalty of $193,774.86.

Related to In reBarry T. ... Continue Reading

In re Barry T. Eisenberg (A.P. June 29, 2018, Settled)

Action against Respondent, a registered representative and supervisor at Alexander Capital, L.P., in connection with his failure to supervise other registered representatives.  The SEC alleges that the Respondent ignored red flags relating to a pattern of representatives providing unsuitable investment advice, conducting unsuitable trades for retail clients, and churning in a customer account.  Respondent has agreed to pay a civil penalty of $15,000.

Related to In re Alexander Capital, L.P. 

SEC Order 

SEC Press Release ... Continue Reading

In re Aisling Capital LLC (A.P. June 29, 2018, Settled)

Action against Respondent, an investment advisor that provides consulting services to investment funds, in connection with alleged failure to offset consulting fees.  The SEC alleges that Respondent failed to offset the required percentage of management fees paid to Respondent by clients.  After having voluntarily reimbursed $860,515 to affected clients, Respondent agreed to pay a civil penalty of $200,000.

SEC Order 

SEC Press Release ... Continue Reading

SEC v. Curative Biosciences, Inc., et al. (C.D. Cal. June 29, 2018, Contested)

Action against Defendants, a company, its former chairman, his wife, and a media advertising consultant, for alleged fraudulent misrepresentations.  According to the SEC, Defendants represented that company had issued shares to third parties in compensation for services and in discharge of company debt but instead issued the shares for capital-raising purposes in violation of the offering registration requirements.  Defendant consultant has agreed to a penny stock ban and to pay disgorgement of $32,203.95 and prejudgment ... Continue Reading

SEC v. Donato J. Dandreo III (D. Mass. June 29, 2018, Settled)

Action against Defendant, a real-estate developer, for allegedly making false statements in connection with raising funds from potential investors.  According to the SEC, Defendant allegedly made misrepresentations in order to finance the construction of residential homes through his real-estate development company.  In addition, the SEC alleges that Defendant claimed to have raised approximately $1.5 million from investors, despite raising no funds.  Respondent has agreed to pay a civil penalty of $9,239.

SEC Litigation Release  

SEC ... Continue Reading

In re Bruce A. Hauptman, et al. (A.P. June 29, 2018, Settled)

Action against Respondent, an investment advisor and sole owner of an investment fund, in connection with alleged misappropriation of investor funds.  The SEC alleges that Respondent made material misrepresentations regarding fund performance and management fees to investors and in his disclosures, and used investment funds for personal expenses.  Respondent has agreed to pay disgorgement of $121,026.49, prejudgment interest of $20,417.35, and a civil penalty of $160,000.

SEC Order

SEC Press Release ... Continue Reading

In re Bayes Capital, LLC (A.P. June 28, 2018, Settled)

Action against Respondent, a registered broker-dealer, in connection with the execution of short-sale trades.  The SEC alleges that Respondent failed to follow order marking, locate, and circuit breaker requirements in connection with its execution of short sales for its customers.  Respondent has agreed to pay a $300,000 civil penalty.

SEC Order ... Continue Reading

SEC Proposes Whistleblower Rule Amendments (June 28, 2018)

The SEC voted to propose amendments to the rules governing its whistleblower program.  These amendments address, in part, the Supreme Court’s decision in Digital Realty Trust, Inc. v. Somers, which held that the Dodd-Frank Act’s whistleblower anti-retaliation provisions only apply where a securities violation is reported to the SEC itself.  With respect to whistleblower retaliation protection, the proposed rules would require an individual to report information about possible securities laws violations to the Commission ... Continue Reading

SEC v. Sudhakar Reddy Bonthu (N.D. Ga. June 28, 2018, Contested)

Action against Defendant, a former employee of a consumer credit reporting agency, for alleged insider trading.  According to the SEC, Defendant obtained material nonpublic information from his employer regarding a data breach purportedly affecting a client and deduced that the agency itself was the victim of the breach.  The SEC alleges that Defendant then traded against the agency by purchasing option put contracts in the agency’s common stock and selling them after the breach was ... Continue Reading

SEC v. Pinto-Thomaz, et al. (S.D.N.Y. June 26, 2018, Contested)

Action against Defendants, a credit ratings agency employee and two of his friends, in connection with Defendant employee’s alleged tip of material nonpublic information to his friends regarding a company’s confidential acquisition plans, which Defendant learned about through his work at the ratings agency.  According to the SEC, Defendant friends bought securities before the merger was announced and sold their holdings after the announcement.

SEC Litigation Release  

SEC Complaint ... Continue Reading

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