Blog Posts Tagged With Corporate and Other Issues

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In re Walgreens Boots Alliance, Inc., et al. (A.P. Sept. 28, 2018, Settled)

Action against Respondents, a corporation, its former CEO and Director, and its former CFO, for alleged failure to disclose an increased risk that Respondent company may not meet a financial projection.  Respondent company has agreed to pay a civil penalty of $34.5 million.  Respondents former CEO and former CFO have each agreed to pay a civil penalty of $160,000.

SEC Order 

SEC Press Release
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In re Stryker Corporation (A.P. Sept. 28, 2018, Settled)

Action against Respondent, a medical technology corporation, for alleged violations of the FCPA’s books and records and internal accounting controls provisions.  According to the SEC, Respondent was unable to detect improper transactions and potential improper payments for sales in China, India, and Kuwait due to inadequate internal accounting controls, and Respondent’s Indian subsidiary maintained incomplete and inaccurate books and records.  Respondent has agreed to pay a civil penalty of $7.8 million.

SEC Order 

SEC Press
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SEC v. Nutra Pharma Corp., et al. (E.D.N.Y. Sept. 28, 2018, Contested)

Action against Defendants, a microcap issuer, its CEO, and one of its consultants, for alleged material misstatements, sales of unregistered securities, manipulative trading, and failure to submit required filings.  According to the SEC, Defendant issuer and Defendant CEO published several press releases falsely implying that Defendant issuer was selling its product internationally and expanding and improving its facilities.  The SEC further alleges that Defendant CEO’s manipulative trading created the illusion of active trading and inflated
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In re Mota Group, Inc. and Mota “Michael” Faro (A.P. Sept. 28, 2018, Settled)

Action against Respondents, a drone company and its founder, for the alleged filing of inaccurate financial statements in connection with Respondent company’s planned IPO.  The SEC alleges that information given by Respondents to an auditing firm about a distribution agreement was inaccurate, which caused the recognition of excessive revenue.  Respondent company has agreed to withdraw and certify the withdrawal the registration statement at issue.  Respondent founder has agreed to pay a civil penalty of $10,000.
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SEC v. Salix Pharmaceutical, Ltd. (S.D.N.Y. Sept. 27, 2018, Settled); SEC v. Adam C. Derbyshire (S.D.N.Y. Sept. 27, 2018, Settled)

Actions against Defendants, a pharmaceutical company and its former CFO, for alleged material misstatements and omissions to investors and analysis.  According to the SEC, Defendants provided misleading information on inventory levels of Defendant company’s drugs and failed to disclose the effect of the excess supply on future earnings.  Defendant CFO has agreed to pay $558,534 in disgorgement and prejudgment interest and a civil penalty of $494,836.  Defendant company has agreed to be enjoined from future
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 SEC v. Elon Musk (S.D.N.Y. Sept. 27, 2018, Settled); SEC v. Tesla, Inc. (S.D.N.Y. Sept. 29, 2018, Settled)

Action against Defendants, a car company and its CEO and former Chairman, in connection with a series of allegedly false and misleading Twitter communications by Defendant CEO.  According to the SEC, Defendant CEO tweeted to followers that, subject to a shareholder vote, Defendant company had secured sufficient funding to go private at a higher price than its trading price.  The SEC alleges that Defendant CEO knew that the transaction was not definite and that he
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In re Petróleo Brasileiro S.A. – Petrobras (A.P. Sept. 27, 2018, Settled)

Action against Respondent, an oil and gas company, for misleading investors in connection with an alleged corruption scheme.  According to the SEC, some of Respondent’s former senior executives, in conjunction with Respondent’s contractors and suppliers, raised the cost of infrastructure projects in order to receive kickbacks which were then paid to foreign politicians and political parties who had helped the senior executives obtain their titles with Respondent.  The SEC further alleges that the former executives
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In re Patricio Contesse González (A.P. Sept. 25, 2018, Settled)

Action against Respondent, a former CEO, in connection with alleged FCPA violations.  According to the SEC, Respondent directed improper payments through his company to foreign politicians, political candidates, and related individuals and entities by fabricating documents such as invoices and using fake documents submitted by illegitimate vendors to support the entries.  The SEC alleges that as CEO, Respondent caused internal accounting controls violations, such as incorrect entries and filings.  Respondent has agreed to pay a
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In re Primoris Services Corporation (A.P. Sept. 21, 2018, Settled)

Action against Respondent, a construction and infrastructure company, for alleged books and records and internal accounting controls violations.  According to the SEC, Respondent’s inadequate controls caused errors in Respondent’s accounting for contingencies related to several contracts and recorded revenue associated with those contracts.  Respondent has agreed to pay a civil penalty of $200,000.

SEC Order
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In re Infrax Systems, Inc. (A.P. Sept. 21, 2018, Settled)

Action against Respondent, an electrical infrastructure company, for allegedly violating interim financial statement review requirements of Regulation S-X.  According to the SEC, Respondent filed two Forms 10-Q with the SEC that contained financial statements that were not reviewed by an independent public accounting firm.  Respondent has agreed to pay a civil penalty of $50,000.

SEC Order 

SEC Press Release
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In re Heartland Payment Systems, LLC, f/k/a Heartland Payment Systems, Inc. and Robert O. Carr (A.P. Sept. 21, 2018, Settled)

Action against Respondents, a payment processing company and its founder and CEO, for alleged overstatement of an operating metric.  The SEC alleges that Respondents provided misleading information on the metric and its meaning for future revenue in quarterly SEC filings, earnings releases, and quarterly earnings calls.  Respondent company has agreed to pay a civil penalty of $2,160,000.  Respondent CEO has agreed to pay a civil penalty of $120,000.

SEC Order
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In re First Hartford Corporation (A.P. Sept. 21, 2018, Settled)

Action against Respondent, a real estate development and management company, for allegedly violating interim financial statement review requirements of Regulation S-X.  According to the SEC, Respondent filed two Forms 10-Q with the SEC that contained financial statements that were not reviewed by an independent public accounting firm.  Respondent has agreed to pay a civil penalty of $50,000.

SEC Order 

SEC Press Release
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In re Dasan Zhone Solutions, Inc. (A.P. Sept. 21, 2018, Settled)

Action against Respondent, a telecommunications equipment company, for allegedly violating interim financial statement review requirements of Regulation S-X.  According to the SEC, Respondent filed two Forms 10-Q with the SEC that contained financial statements not reviewed by an independent public accounting firm.  Respondent has agreed to pay a civil penalty of $50,000.

SEC Order 

SEC Press Release
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In re Cool Technologies, Inc. (A.P. Sept. 21, 2018, Settled) – Action against Respondent, a thermal technology company, for allegedly violating interim financial statement review requirements of Regulation S-X. According to the SEC, Respondent filed three Forms 10-Q with the SEC that contained financial statements not reviewed by an independent public accounting firm. Respondent has agreed to pay a civil penalty of $25,000.

Action against Respondent, a thermal technology company, for allegedly violating interim financial statement review requirements of Regulation S-X.  According to the SEC, Respondent filed three Forms 10-Q with the SEC that contained financial statements not reviewed by an independent public accounting firm.  Respondent has agreed to pay a civil penalty of $25,000.

SEC Order 

SEC Press Release     
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SEC v. James Douglas Miller (W.D. Wash. Sept. 21, 2018, Contested) – Action against Defendant, a former CFO, for alleged accounting fraud to conceal rising workers’ compensation expenses. According to the SEC, Defendant manipulated accounting records to hide these expenses and failed to disclose a relevant report to independent auditors. Parallel criminal charges have been announced against him.

Action against Defendant, a former CFO, for alleged accounting fraud to conceal rising workers’ compensation expenses.  According to the SEC, Defendant manipulated accounting records to hide these expenses and failed to disclose a relevant report to independent auditors.  Parallel criminal charges have been announced against him.

SEC Litigation Release
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In re Cardiff Lexington Corporation (f/k/a Cardiff International, Inc.) (A.P. Sept. 21, 2018, Settled)

Action against Respondent, a public holding company, for allegedly violating interim financial statement review requirements of Regulation S-X.  According to the SEC, Respondent filed a Form 10-Q with the SEC that contained financial statements not reviewed by an independent public accounting firm.  Respondent has agreed to pay a civil penalty of $25,000.

SEC Order  

SEC Press Release
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In re Barrett Business Services, Inc. and Mark Cannon, CPA (A.P. Sept. 20, 2018, Settled)

Action against Respondents, a management consulting company and its Controller, for alleged anti-fraud, books and records, periodic reporting, and internal accounting controls violations.  According to the SEC, Respondent company, through its former CEO, used fraudulent accounting tactics to conceal rising workers’ compensation expenses.  The SEC also alleges that Respondent Controller approved journal entries that misstated expenses and the timing of certain taxes.  Respondent company has agreed to pay a $1.5 million civil penalty.  Respondent Controller
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SEC v. Hani Zeini (C.D. Cal. Sept. 19, 2018, Contested)

Action against Defendant, the former CEO of a breast implant company, for alleged concealment of information about the company’s only implant manufacturer ahead of a stock offering.  According to the SEC, Defendant CEO knew prior to the offering that a certification required for its manufacturer to sell products in the European Union had been suspended but failed to disclose the information to the general counsel and underwriters.  The SEC further alleges that Defendant CEO made
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In re Sientra, Inc. (A.P. Sept. 19, 2018, Settled)

Action against Respondent, a breast implant company, for the alleged concealment of information about Respondent’s only implant manufacturer ahead of a stock offering.   According to the SEC, Respondent’s former CEO knew prior to the offering that a certification required for its manufacturer to sell products in the European Union had been suspended but failed to disclose the information.  Respondent agreed to cease and desist from violations of the Securities Act of 1933 and Securities and
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SEC v. SeaWorld Entertainment, Inc. and James Atchison (S.D.N.Y. Sept. 18, 2018, Settled); SEC v. Frederick D. Jacobs (S.D.N.Y. Sept. 18, 2018, Settled)

Action against Defendants, a theme park operator, its former CEO, and former Vice President of Communications, for alleged misleading statements and omissions regarding the negative effects of a documentary film on the company.  The SEC alleges that Defendant company and CEO made false statements regarding the impact of the documentary on factors such as theme park attendance to investors, the press, and in SEC filings.  According to the SEC, share price declined when the true
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SEC v. Clovis Oncology, Inc., et al. (D. Colo. Sept. 18, 2018, Settled)

Action against Defendants, a biopharmaceutical company, its CEO, and former CFO, for allegedly misleading investors about a developmental drug for lung cancer.  The SEC alleges that Defendants misrepresented the drug’s efficacy rate to investors, which caused a decline in stock price when the actual efficacy rate was revealed.  The corporate Defendant has agreed to pay a $20 million civil penalty and Defendant CEO has agreed to pay a $250,000 civil penalty.  Defendant CFO has agreed
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In re Abtech Holdings, Inc. (A.P. Sept. 17, 2018, Settled); In re Glenn R. Rink (A.P. Sept. 17, 2018, Settled); In re Lane J. Castleton (A.P. Sept. 17, 2018, Settled)

Action against Respondents, an environmental technology company, its CEO, and its CFO, for alleged material misstatements and omissions regarding the status of a material contract. Respondent company has agreed to pay disgorgement of $29,610, prejudgment interest of $3,804.64, and a civil penalty of $100,000.  Respondent CEO has agreed to pay a civil penalty of $60,000.  Respondent CFO has agreed to pay a civil penalty of $35,000.

SEC Administrative Summary 

SEC Order Abtech 

SEC Order Rink
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In re Capital Analysts, LLC (A.P. Sept. 14, 2018, Settled)

Action against Respondent, a registered investment adviser, for alleged failure to disclose conflicts of interest arising out of a compensation arrangement with Respondent’s affiliated broker-dealer.  According to the SEC, Respondent invested some of its advisory clients in higher-fee share classes when lower-fee share classes were available.  The SEC alleges that Respondent failed to disclose to its clients that its affiliated broker-dealer received fees from investments in the higher-cost share classes.  The SEC further alleges that
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SEC v. Nevada Sports Investment Group, LP (D. Nev. Sept. 7, 2018, Settled)

Action against Defendant, a sports betting firm, for allegedly conducting an unregistered securities offering and soliciting investors.  The SEC alleges that Defendant promoted various investment opportunities on the internet and collected money from investors without registering with the SEC or performing due diligence on the investors, some of whom were not accredited.  Defendant has agreed to a permanent injunction against future violations and will send a copy of the final judgment to the involved investors.
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