Blog Posts Tagged With Enforcement Action

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SEC v. David A. Harbour (D. Ariz. July 31, 2018, Settled)

Action against Defendant, an individual, in connection with an alleged scheme to misappropriate investor funds.  The SEC alleges that the Defendant made material misrepresentations about the use of investor money as the Defendant allegedly told investors he would put the funds towards payday loan enterprises.  However, the SEC alleges the Defendant used investor funds for personal expenses instead.  Defendant has agreed to pay $1,535,000 in disgorgement, $97,072 in prejudgment interest, and a $1,535,000 civil penalty. ... Continue Reading

In re Brandon T. Neff (A.P. July 31, 2018, Settled)

Action against Respondent, an individual, in connection with an alleged scheme to use an unregistered broker-dealer to collect commissions from investors related to sales of an investment vehicle controlled by Respondent and associated persons.  The SEC further alleges that Respondent made misrepresentations to investors regarding his experience, the status of the broker-dealer, the underlying investment, and use of investor funds.  Respondent has agreed to pay a $5,000 civil penalty.

SEC Order ... Continue Reading

In re R.J. O’Brien & Associates, LLC (July 30, 2018, Settled)

Action against Respondent, a registered Futures Commission Merchant, in connection with alleged failure to supervise a client’s alleged misallocation of executed bunched orders.  The CFTC alleges that, despite various red flags, Respondent failed to monitor its client’s use of Respondent’s trading platform to execute bunched orders and improperly allocated the bunched orders post-execution.  Respondent has agreed to pay a civil penalty in the amount of $600,000.

CFTC Order

CFTC Press Release ... Continue Reading

SEC v. Axesstel, Inc., et al. (S.D. Cal. June 28, 2018, Settled)

Action against Defendants, a telecommunications equipment company, its CEO, its CFO, and its director of sales, for allegedly misstating revenue in the Company’s financials.  The SEC alleges that Defendants recognized revenue on non-existent purchases and purchases that were not finalized, and also inflated the unit prices associated with sales.  The SEC further alleges that Defendant executives made material misrepresentations to the company’s auditors.   Defendant CFO has agreed to pay a penalty of $40,000 and to ... Continue Reading

SEC v. Howard M. Appel (E.D. Pa. July 27, 2018, Settled)

Action against Defendant, an individual, in connection with an alleged market manipulation scheme of certain microcap stocks.  The SEC alleges that Defendant orchestrated coordinated and matched stock trades to give the appearance of increased liquidity.  The SEC further alleges that Defendant engaged in a “pump-and-dump” scheme to increase the price of the stock and then sell it at a profit.  Defendant has agreed to a bar as an officer of a public company and to ... Continue Reading

CFTC v. JAFX, Ltd. (July 27, 2018, Contested)

Action against Defendant, an unregistered retail foreign exchange dealer, in connection with alleged failure to register as a forex dealer.  The CFTC alleges that Defendant failed to register as a retail forex dealer as required and did not provide U.S. customers with Risk Disclosure Statements as required.

CFTC Complaint

CFTC Press Release ... Continue Reading

SEC v. John A. Paulsen (S.D.N.Y. July 26, 2018, Contested)

Action against Defendant, managing director of a registered broker-dealer, in connection with an alleged “pay-to-play” scheme involving a senior employee of the New York State Common Retirement Fund.  The SEC alleges that Defendant provided gifts and entertainment in exchange for the Fund’s bond trading business.  The SEC further alleges the Defendant and related parties made material misrepresentations to internal investigators regarding expenses and the relationship.  Parallel criminal actions have been announced against related parties.

SEC ... Continue Reading

SEC v. Richard T. Cunniffe (S.D.N.Y. July 25, 2018, Settled)

Action against Defendant, managing director of a registered broker-dealer, in connection with an alleged insider trading scheme.  The SEC alleges the Defendant placed trades on behalf of an investment banker and the investment banker’s father in Defendant’s personal brokerage accounts while in possession of material nonpublic information provided by the investment banker.  The SEC further alleges that the three individuals shared the profits from these trades.  Defendant has agreed to pay disgorgement and prejudgment interest.  ... Continue Reading

SEC v. Matthew Brunstrum and Susan Brunstrum (N.D. Ill. July 24, 2018, Settled)

Action against Defendants, a financial analyst and his mother, in connection with alleged insider trading.  The SEC alleges Defendant learned of his employer company’s earnings report before they were announced, traded the company’s stock options while in possession of this information, and encouraged his mother to trade in the stock as well.  Defendants have agreed to pay disgorgement, prejudgment interest, and a civil penalty.

SEC Complaint

SEC Litigation Release ... Continue Reading

SEC v. William Z. (“Billy”) McFarland, et al. (S.D.N.Y. July 24, 2018, Settled)

Action against Defendants, the owner and CEO of various purported entertainment businesses, two companies he founded, a former senior executive, and a former contractor, in connection with an alleged scheme to solicit investment in the companies based on material misrepresentations regarding the companies’ performance.  The SEC alleges that the individual Defendants made statements misrepresenting the companies’ performance and falsified supporting documents.  The SEC further alleges that Defendants falsified acquisition offers for the various companies. The ... Continue Reading

In re Fred Tinker (A.P. July 24, 2018, Settled)

Action against Respondent, the Vice President of Finance of a technology company, in connection with alleged insider trading.  The SEC alleges that Respondent traded while in possession of material, non-public information regarding a proposed buyout of his employer company. Respondent has agreed to pay disgorgement of $89,171.88, prejudgment interest of $8,506.64, and a civil penalty of $89,171.88.

SEC Order

SEC Press Release ... Continue Reading

In re Yao Li (A.P. July 24, 2018, Settled)

Action against Respondent, the Vice President of Technology at a fiber optics company, in connection with alleged insider trading.  The SEC alleges that Respondent traded while in possession of material, non-public information regarding the financial performance of the company prior to its announcement of quarterly earnings.  Respondent has agreed to a five-year public officer bar and to pay disgorgement of $196,203, prejudgment interest of $23,062, and a civil penalty of $196,203.

SEC Order ... Continue Reading

In re Sycamore Lane Partners LLC (A.P. July 23, 2018, Settled)

Action against Respondent, an investment manager, in connection with allegedly mismarking of transactions.  The SEC alleges that Respondent mismarked “short” positions as “long” positions when conducting trades.  Respondent has agreed to pay $100,429 in disgorgement, $8,613 in prejudgment interest, and a $25,000 civil penalty.

SEC Order ... Continue Reading

In re Mizuho Securities USA LLC (A.P. July 23, 2018, Settled)

Action against Respondent, a registered broker-dealer, in connection with alleged failures to adequately safeguard material, non-public information.  The SEC alleges that Respondent shared material, non-public information regarding issuer share buyback trades with its customers.  Respondent has agreed to pay a civil penalty of $1,250,000.

SEC Order ... Continue Reading

In re Beverly Hills Wealth Management LLC and Margaret Mulligan Black (A.P. July 20, 2018, Settled)

Action against Respondents, a registered investment adviser and its CEO, in connection with alleged failure to reimburse departed clients for unearned advisory fees.  The SEC alleges the Respondents refused to recognize termination requests that were made in accordance with the terms set forth in the firm Respondent’s Form ADV, Part 2A.  Respondent investment adviser has agreed to pay a civil penalty of $100,000.

SEC Order ... Continue Reading

In re Melanie Ryan (A.P. July 20, 2018, Settled)

Action against Respondent, the Chief Compliance Officer of a broker-dealer, in connection with Respondent’s contribution to the broker-dealer’s violation of Section 17(a)(3) in connection with its practices related to pre-release of American Depository Receipts (ADRs).  The SEC alleges that Respondent failed to ensure that the broker-dealer took adequate steps to satisfy its obligations in connection with pre-release of ADRs by failing to verify that ordinary shares backed the pre-released ADRs.  Respondent has agreed to pay ... Continue Reading

SEC v. Charles Schwab & Co., Inc (N.D. Cal. July 2, 2018, Settled)

Action against Defendant, a registered broker-dealer, for alleged failure to file Suspicious Activity Reports (SARs), as required by the Bank Secrecy Act, in connection with transactions executed by independent investment advisers after Defendant terminated its custodian relationship.  The SEC alleges that Defendant terminated its relationship with the investment advisers after it found their activity was in violation of Defendant’s policies and posed a risk.  The SEC further alleges, however, that the Defendant failed to file ... Continue Reading

In re Deutsche Bank Trust Company Americas (A.P. July 20, 2018, Settled)

Action against Respondent, a financial services firm, in connection with its practices related to the pre-release of American Depository Receipts (ADRs).  The SEC alleges that Respondent provided pre-released ADRs to brokers that did not hold the supporting ordinary shares as required by the agreements entered into between Respondent and the brokers and that it should have known, based on the characteristics of the pre-release transactions, that the brokers were not complying with the requirements of ... Continue Reading

SEC v. Kimberly Pine Kitts (D. Mass. July 19, 2018, Contested)

Action against Defendant, a registered investment adviser representative, in connection with an alleged scheme to misappropriate client funds.  The SEC alleges that Defendant misappropriated funds by making unauthorized withdrawals, forging client signatures on withdrawals, and making material representations to clients to gain consent to make withdrawals.  The SEC further alleges that Defendant used these funds for personal expenses and attempted to conceal this conduct by altering client statements.

SEC Complaint

SEC Litigation Release ... Continue Reading

SEC v. Bhushan Dandawate (N.D. Ill. July 19, 2018, Settled)

Action against Defendant, owner of two consulting and IT solutions companies utilized by Quadrant 4 System Corporation (“QFOR”), in connection with an alleged scheme to aid two QFOR executives’ material misrepresentations regarding the company’s performance and to conceal misappropriation of company funds.  The SEC alleges the Defendant used bank accounts and business enterprises under his control to obscure the executives’ misappropriation of funds and to create the appearance of an increase of the company’s business.   ... Continue Reading

SEC v. Steven J. Barber and Larry Lee Arrowood (M.D. Fla. July 18, 2018, Settled in part and Contested in part)

Action against Defendants, president and CEO of a battery manufacturer, in connection with alleged misrepresentations regarding the company’s performance.  The SEC alleges that Defendants distributed misleading press releases regarding the amount of customer orders received by the company and its production capabilities. Defendant Arrowood has agreed to pay a civil penalty of $50,000 and to an officer and director bar, while the SEC’s litigation continues against Barber.

SEC Complaint

SEC Litigation Release ... Continue Reading

SEC v. Temnos Advisory, Inc., and George L. Taylor (D. Conn. July 18, 2018, Contested)

Action against Defendants, an investment advisory firm and its founder, majority owner, and CEO, in connection with failure to disclose conflicts of interest that resulted in risky investment advice.  The SEC alleges that the Defendants recommended investments in privately offered securities without conducting proper due diligence and suitability analyses and without disclosing the extra fees and commissions they received as a result of the recommended investments.  The SEC further alleges that Defendants made material misrepresentations ... Continue Reading

In re Jay C. Lake (A.P. July 17, 2018, Settled)

Action against Respondent, a certified public accountant, in connection with alleged failure to conduct adequate audits.  The SEC alleges that Respondent failed to properly audit companies, allowing a fraudulent scheme involving shell blank check companies to continue.  Respondent has agreed to pay $10,500 in disgorgement, $1,620.71 in prejudgment interest, and a $25,000 civil penalty.

SEC Order ... Continue Reading

In re Michael Devlin (A.P. July 17, 2018, Settled)

Action against Respondent, managing partner and Chief Compliance Officer of a private equity adviser, in connection with failure to disclose a conflict of interest.  The SEC alleges the Respondent invested in a venture on the condition that the venture would buy a product that Respondent created and failed to disclose this conflict to the adviser firm.  Respondent has agreed to a bar and to pay an $80,000 civil money penalty.

SEC Order ... Continue Reading

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