Blog Posts Tagged With Enforcement Action

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In re Benjamin Cox (A.P. July 31, 2019, Settled)

Action against Respondent, a commodities trader, for alleged spoofing.  According to the CFTC, Respondent placed orders for futures contracts with the intent to cancel them before execution in order to manipulate prices.  Respondent has agreed to pay a civil penalty of $150,000 and a three-month trading suspension.

CFTC Order

CFTC Press Release
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In re James W. Holden (A.P. July 31, 2019, Settled)

Action against Respondent, the friend of an energy company’s director, for alleged insider trading.  According to the SEC, Respondent’s friend shared material nonpublic information about the energy company’s plans for a joint venture.  The SEC alleges that Respondent then bought shares in the company prior to the announcement of the joint venture and sold them thereafter.  Respondent has agreed to pay  disgorgement of $18,527.18, prejudgment interest of $1,348.32, and a civil penalty of $18,527.18.

SEC
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In re Curtis Dalton d/b/a Binary International (A.P. July 29, 2019, Settled)

Action against Respondent, the principal of a binary-options issuer, for alleged registration failures.  According to the CFTC, Respondent solicited and accepted orders for foreign-currency binary options on an unregistered trading platform.  The CFTC has reserved decision on monetary sanctions pending Respondents’ fulfillment of their cooperation agreements with the CFTC.  Respondent has agreed to pay a civil penalty of $200,000 and to trading and solicitation bars.

CFTC Order

CFTC Press Release
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SEC v. Bettor Investments, LLC and Matthew C. Stuart (D. Nev. July 29, 2019, Contested)

Action against Defendants, a sports-betting company and its principal, for an alleged unregistered offering and alleged offering fraud.  According to the SEC, Defendants publicly sold interests in a sports-betting venture without SEC registration.  The SEC further alleges that Defendants misled investors about the venture’s finances and other matters in connection with the conversion of certain investor interests into promissory notes.

SEC Litigation Release
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SEC v. Chua Seong Seng, a/k/a Robbie Chua (A.P. July 26, 2019, Settled)

Action against Respondent, a former executive of an alleged shell company, for alleged fraud.  According to the SEC, Respondent signed an SEC disclosure stating that his company had received $1,000,000 in a private-placement sale of its stock, when it had not.  Respondent has agreed to pay a civil penalty of $15,000 and to an officer-and-director bar.

SEC Order
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In re Timothy M. Rooney, Sr. (A.P. July 26, Settled)

Action against Respondent, a former employee of a brokerage firm, for alleged insider trading.  According to the SEC, Respondent learned material nonpublic information about a luggage company’s earnings from his friend and customer.  The SEC alleges that Respondent then bought shares in the company ahead of its earnings announcement and sold them thereafter.  Respondent has agreed to pay disgorgement of $139,673, a prejudgment interest of $21,407, and a civil penalty of $715,417, and to various
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In re Corey D. Flaum (A.P. July 25, 2019, Settled); In re John Edmonds (A.P. July 25, 2019, Settled)

Action against Respondents, former precious-metals traders, for alleged spoofing.  According to the CFTC, Respondents placed orders for futures contracts with the intent to cancel them before execution in order to manipulate prices.  The CFTC has reserved decision on monetary sanctions pending Respondents’ fulfillment of their cooperation agreements with the CFTC.  Respondents have pleaded guilty in parallel criminal proceedings.

CFTC Order (Flaum)

CFTC Order (Edmonds)

CFTC Press Release
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In re Foundations Asset Management, LLC, et al. (A.P. July 24, 2019, Settled)

Action against Respondents, an investment advisor and two of its principals, for alleged conflicts of interest and registration violations.  According to the SEC, Respondents recommended that their clients invest in a real-estate fund and failed to disclose their compensation from the same fund.  The SEC further alleges that Respondent investment adviser acted as an unregistered broker in connection with the transactions and made false statements in its SEC filings about the compensation it received from
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In re N. Gary Price (A.P. July 24, 2019, Settled)

Action against Respondent, the principal of a registered investment advisor, for alleged failure to disclose conflicts of interest.  According to the SEC, Respondent advised clients to invest in promissory notes issued by a family of companies in which he had financial interests.  Respondent has agreed to pay disgorgement of $57,945, prejudgment interest of $9,088, and a civil penalty of $75,000, and to various professional bars. SEC Order SEC Administrative Summary
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In re Balaji Sunarraj and David O’Brien (A.P. July 23, 2019)

Action against Respondents, two Texas residents, for alleged insider trading.  According to the SEC, one Respondent learned material nonpublic information about an upcoming acquisition when he overheard his brother, an attorney, discussing the acquisition on the telephone.  The SEC alleges that he then tipped the other Respondent, and that both Respondents bought stock in the target firm ahead of the acquisition’s announcement and sold it thereafter.  Respondent tipper has agreed to pay disgorgement of $12,050,
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Delinquent Filings (July 2019)

  • In re Africa Growth Corporation and Gold Dynamics Corp. (A.P. July 23, 2019, Contested)
  • In re Gold Lakes Corp. and Novagen Ingenium Inc. (A.P. July 23, 2019, Contested)
  • In re Quantumsphere, Inc. and Shenzhen Yidian Double Way of Innovation Culture Media Corp. (A.P. July 23, 2019, Contested)
  • In re American Smooth Wave Ventures, Inc. (A.P. July 23, 2019, Contested)
  • In re Equality Investments, Inc., et al. (A.P. July 24, 2019, Contested)
  • In re NECO Energy

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In re Microsoft Corporation (A.P. July 22, 2019, Settled)

Action against Respondent, a technology company, for alleged violations of the books and records and internal controls provisions of the FCPA.  According to the SEC, Respondent’s subsidiary in Hungary provided resellers and other third parties with discounts that were used to fund improper payments to government officials.  The SEC further alleges that Respondent’s subsidiaries in Saudi Arabia and Thailand used resellers and other third parties to provide improper travel and gifts to government officials.  Finally,
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SEC v. Gary Winemaster et al. (N.D. Ill. July 19, 2019, Contested)

Action against Defendants, the former CEO of an engine-manufacturing company and two former sales executives, for alleged accounting fraud.  According to the SEC, Defendants caused their employer to falsely record revenue from sales that were incomplete or that for other reasons should not have been recorded.  The SEC further alleges that Defendants misled the company’s accountants and external auditor.  Two Defendants have been charged in a parallel criminal proceeding.

SEC Complaint

SEC Litigation Release

SEC
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In re Account Management LLC, et al. (July 19, 2019, Settled)

Action against an investment advisor, its principal, and its founder, for alleged breach of fiduciary duty.  According to the SEC, Respondents induced their client to amend her will, increasing her bequest to a charity that was also a client of Respondents and providing that Respondents would manage most of the donated assets.  Respondent investment advisor, Respondent principal, and Respondent founder have agreed to pay civil penalties of $100,000, $50,000, and $25,000, respectively.

SEC Order
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SEC v. Mark Loman (C.D. Cal. July 18, 2019, Contested)

Action against Defendant, the former controller and vice president of a security, electronics, and healthcare company, for alleged insider trading.  According to the SEC, Defendant learned that the company would not meet its financial expectations and then made a series of options trades betting that the company’s share price would fall.

SEC Complaint

SEC Litigation Release
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In re Swapnil Rege (A.P. July 18, 2019, Settled)

Parallel enforcement actions against Respondent, a former employee of an investment advisor, for alleged fraud.  According to the SEC and CFTC, Defendant mispriced interest-rate swaps and swap options to inflate the returns of funds that the advisor managed, which in turn inflated the advisor’s fees.  Respondent has agreed to pay disgorgement of $600,000, prejudgment interest of $49,170.84; and a civil penalty of $100,000 to resolve the SEC action; to pay a $100,000 civil penalty to
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Follow-on APs, Suspensions, and Bars (July 2019)

  • In re Henry J. Wieniewitz, III (A.P. July 18, 2019, Settled)
  • In re Laverne C. Moter (A.P. July 1, 2019, Settled)
  • In re James B. Catledge (A.P. July 2, 2019, Settled)
  • In re Pedro L. Gonzalez-Seijo (A.P. July 5, 2019, Settled)
  • In re Paul Douglas Vandivier (A.P. July 9, 2019, Settled)
  • In re Thomas H. Laws, CPA (A.P. July 10, 2019, Settled)
  • In re Kimm C. Hannan (A.P. July 11, 2019, Contested)
  • In re Jehu

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SEC v. AR Capital, LLC, et al. (S.D.N.Y. July 17, Settled)

Action against Defendants, an asset manager, its founder, and its former CFO, for alleged fraud.  According to the SEC, Defendants arranged for mergers among three real-estate investment trusts (“REITs”).  The SEC alleges that Defendants inflated their incentive fees and fraudulently charged the REITs duplicative, inflated, or fabricated expenses.  Defendants have agreed to jointly and severally pay disgorgement in the amount of $39 million.  Defendant asset manager, founder, and former CFO have agreed to pay civil
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SEC v. William J. Milles, Jr. and Donald J. Lutzko (W.D. Text. July 17, 2019, Contested)

Action against Defendants, founders of an oil and gas company, for an alleged Ponzi scheme.  According to the SEC, Defendants fraudulently solicited investments in their company by overstating its projects’ oil and gas production.  The SEC also alleges that Defendants made Ponzi-like payments to earlier investors and misappropriated investor funds to pay personal expenses.

SEC Complaint

SEC Litigation Release
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SEC v. Garrett M. O’Rourke and Michael J. Black (E.D.N.Y. July 17, 2019, Contested)

Action against Defendants, two microcap investors, for an alleged pump-and-dump scheme.  According to the SEC, Defendants cold-called retail investors to tout several microcap stocks that they held and, after the resulting price increase, sold their holdings.  The SEC also alleges that Defendants made misrepresentations in touting the stocks and attempted to hide their control of one of the microcap companies.  One Defendant has been charged in a parallel criminal proceeding.

SEC Complaint

SEC Litigation Release
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In re Salus, LP, et al. (A.P. July 17, 2019, Settled)

Action against Respondents, two investment advisors and their founders, for alleged fraud.  According to the SEC, Respondents made various misstatements in Form ADV filings, including claiming that they had assets under management when they had none and were ineligible to register as investment advisors.  The SEC also alleges that Respondents misled prospective clients about the composition and qualifications of their investment-advisory team.  Two Respondent founders have agreed to pay civil penalties of $25,000 each and
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