Blog Posts Tagged With Corporate and Other Issues

Subscribe to Corporate and Other Issues RSS Feed

In re Maxwell Technologies, Inc., et al. (A.P. Mar. 27, 2018, Settled)

Action against Respondents, an energy storage and power delivery products company, its former Senior Vice President of Sales & Marketing, its former CEO, and its former Corporate Controller, in connection with an alleged accounting fraud scheme that improperly recognized revenue from future quarters in violation of GAAP. According to the SEC, Respondent company issued false and misleading statements regarding its revenue, growth, and gross margins, and inflated its reported financial results.  The SEC further alleges ... Continue Reading

In re Kinross Gold Corporation (A.P. Mar. 26, 2018, Settled)

Action against Respondent, a gold mining company, for alleged violations of the books and records and internal controls provisions of the FCPA.  According to the SEC, Respondent paid vendors and consultants without reasonable assurance that the transactions were consistent with their stated purpose and were not improper payments to government officials.  In addition, Respondent allegedly used petty cash to make certain of these payments, which it failed to accurately describe in its books and records.  ... Continue Reading

SEC v. Akorn, Inc., et al. (N.D. Ill. Mar. 26, 2018, Settled)

Action against Defendants, a pharmaceutical company, its former CEO, and its former Controller, in connection with alleged financial reporting, books and records, and internal accounting controls violations by Defendant company.  According to the SEC, Defendant company failed to maintain internal controls over financial reporting related to controls on the company’s gross-to-net reserve accounts and estimates and overstated net revenue and income from continuing operations before income taxes, both issues disclosed in Defendant company’s restatement of ... Continue Reading

SEC v. Elizabeth Holmes and Theranos, Inc. (N.D. Cal. Mar. 14, 2018, Settled); SEC v. Ramesh “Sunny” Balwani (N.D. Cal. Mar. 14, 2018, Contested)

Action against Defendants, a medical device manufacturer, its founder and CEO, and its former President, for allegedly raising more than $700 million from investors on the basis of false or misleading claims.  The SEC alleges that Defendants misrepresented the effectiveness of their key product, a portable blood analyzer, and made misrepresentations to potential investors regarding a contract with the Department of Defense.  Defendant Holmes has agreed to pay a $500,000 penalty, to be barred from ... Continue Reading

In re Elbit Imaging, Ltd. (A.P. Mar. 9, 2018, Settled)

Action against Respondent, an Israeli holding company, for allegedly tolerating violations of the books and records and internal accounting controls provisions of the FCPA.  The SEC alleges that Respondent made payments to third-party consultants and sales agents for purported services related to a Romanian real estate development project and the sale of U.S. real estate assets without evidence that the consultants and sales agents provided the contracted-for services. The SEC further alleges that Respondent failed ... 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 Provectus Biopharmaceuticals (A.P. Dec. 12, 2017, Settled); In re Peter R. Culpepper, CPA (A.P. Dec. 12, 2017, Settled)

Actions against Respondents, a pharmaceutical company and its former CFO, in connection with alleged payment of millions of dollars of unearned perquisites and reimbursements.    Respondent CFO also allegedly received reimbursements for non-existent travel and entertainment expenses and failed to implement sufficient internal accounting controls for such expenses.  Respondent Provectus allegedly failed to implement sufficient internal accounting control and materially misstated the compensation of Respondent CEO and former CFO.  Respondents CFO and Provectus have each agreed ... Continue Reading

SEC v. H. Craig Dees (E.D. Tenn. Dec. 11, 2017, Contested)

Action against Defendant, a former CEO, in connection with alleged payment of millions of dollars in unearned perquisites and reimbursements.  Defendant allegedly obtained approximately $3.2 million in cash advances and reimbursements in connection with business travel expenses that were never taken and used the money to pay for personal expenses instead.  The CEO is contesting the allegations.

SEC Litigation Release

Related Cases, In re Provectus Biopharmaceuticals (A.P. Dec. 12, 2017, Settled); In re Peter R. ... Continue Reading

In re Munchee Inc. (Dec. 11, 2017, Settled)

Action against Respondent, an app developer, in connection with an alleged unregistered offering.  The SEC alleges that Respondent sought to raise capital to improve its restaurant review app, and relatedly offered and sold digital tokens to be issued on a distributed ledger, also known as an initial coin offering (“ICO”).  Respondent allegedly described to investors how its tokens would increase in value and stated that they would take steps to create a secondary market, but ... Continue Reading

In re William J. Pulte (A.P. Dec. 7, 2017, Settled)

Action against former CEO and Chairman of a home construction company for alleged failure to timely disclose planned changes to the company’s management and Board of Directors, as well as the nature of Respondent’s involvement in these changes.  Respondent allegedly failed to disclose actions taken to remove the then-CEO of the company, instead characterizing his removal as voluntary in public filings.  Respondent has agreed to pay a civil penalty of $33,000.

SEC Order ... Continue Reading

In re Michael C. Sabatino, CPA (A.P. Nov. 17, 2017, Settled)

Action against former Senior Vice President and Chief Accounting Officer of a publicly traded marketing company for allegedly contributing to the improper receipt of undisclosed compensation by the company’s Chairman and CEO. According to the SEC, Respondent approved reimbursement for various personal expenses of the CEO, not all of which were disclosed in the issuer’s proxy statements. Respondent has agreed to pay a civil penalty of $70,000.

SEC Litigation Release ... Continue Reading

SEC v. Osiris Therapeutics Inc., et al. (D. Mary. Nov. 2, 2017, Settled and Contested)

Action against a biotech company and four former executives for allegedly falsifying accounting data and issuing fraudulent financial statements. According to the SEC, Defendants overstated the issuer’s financial performance, including through improper revenue recognition and backdating. Defendant has agreed to pay a $1.5 million penalty, and the SEC’s action against the four Defendant executives continues.

SEC Litigation Release ... Continue Reading

In re Artemus Mayor (A.P. Oct. 26, 2017, Settled); In re Henry Lin-Han Jan (A.P. Oct. 26, 2017, Settled)

Related actions against president and controlling investor of SK3 Group, Inc. (“SK3”), for an alleged $2.3 million pump-and-dump scheme. According to the SEC, Respondents issued misleading press releases, periodic reports, and financial statements touting positive business developments for SK3. The SEC alleges that Respondents unlawfully caused SK3 to issue common stock to nominees, for which no exemption from registration was available. The nominees then allegedly sold the common stock into the market and transferred almost ... Continue Reading

In re YourPeople, Inc. (A.P. Oct. 26, 2017, Settled)

Action against software company and its founder and former CEO for alleged misstatements and omissions related to the company’s compliance with state insurance and licensing regulations. According to the SEC, the company raised more than $565 million from investors in connection with these misstatements and omissions in two private placements. The company has agreed to pay a civil penalty of $450,000, and the former CEO has agreed to pay $350,000 in disgorgement, $23,692.39 in prejudgment ... Continue Reading

SEC v. Rio Tinto PLC, et al. (S.D.N.Y. Oct. 17, 2017, Contested)

Action against a mining company and its former CEO and CFO for alleged fraud and reported internal control failures. Coal assets were allegedly acquired for $3.7 billion and sold a few years later for $50 million. According to the SEC, Defendants released misleading financial statements in an effort to conceal this decline in value prior to a series of U.S. debt offerings. The SEC further alleges that one Defendant then repeated and reinforced the false ... Continue Reading

In re Mergenet Medical, Inc., et al. (A.P. Oct. 16, 2017, Settled)

Action against Respondents, a developer of medical devices and several key officers and employees, for alleged material misstatements or omissions in connection with the marketing of securities. According to the SEC, these misstatements and omissions concerned the status of applications to the Food and Drug Administration for a medical device, and projected sales of the medical device and related medical supplies. Respondents Bruce Sher and Shara Hernandez each agreed to pay a civil penalty of ... Continue Reading

SEC v. Gerardo de Nicolás et al. (S.D. Cal. Oct. 11, 2017, Contested)

Action against CEO of Mexico-based homebuilding company Desarrolladora Homex S.A.B. de C.V., and other executive officers with an alleged $3.3 billion accounting fraud based on reporting revenues for homes that had not been built. The SEC used satellite imagery to help uncover the accounting scheme and illustrate its allegation that Homex had not even broken ground on many of the homes for which it reported revenues. The SEC’s complaint also alleges that Defendants caused Homex ... Continue Reading

SEC v. Jason McDiarmid, et al. (C.D. Cal. Sept. 29, 2017, Contested)

Action against Defendants Jason McDiarmid, Kenneth Telford, and Stop Sleep Go, Inc. (formerly Interactive Multi-Media Auction Corp. (“IMMA”)) for their alleged involvement in a pump and dump scheme involving IMMA stock. The SEC alleges that Defendants McDiarmid and Telford incorporated IMMA and took it public while misrepresenting in the IMMA’s Form S-1 and amendments that its CEO ran the company, when it was instead being run by Defendants. The SEC further alleges that IMMA’s Form ... Continue Reading

In re Alere Inc. (A.P. Sept. 28, 2017, Settled)

Action against Respondent, a public company that manufactures and sells diagnostic tests for infectious disease, cardiometabolic disease, and toxicology, for allegedly engaging in improper premature recognition of revenue in its financial statements. The SEC further alleges that Respondent’s subsidiary in Colombia improperly characterized payments made to a Colombian government official and Respondent’s subsidiary in India failed to properly record certain payments made by a distributor. The SEC also alleges that Respondent failed to devise or ... Continue Reading

SEC v. Eric Pulier (C.D. Cal. Sept. 27, 2017, Contested)

Action against Defendant, a former IT executive at Computer Sciences Corporation (“CSC”) and co-founder of ServiceMesh, Inc. (“SMI”), a cloud-computing company, for allegedly masterminding a scheme to defraud CSC of $98 million in connection with the company’s 2013 acquisition of SMI. The SEC alleges that Defendant bribed the former Executive Vice President of Information Technology at the Commonwealth Bank of Australia (“CBA”) and another CBA executive to persuade CBA to enter into contracts with CSC ... Continue Reading

SEC v. Aegerion Pharmaceuticals, Inc. (D. Mass. Sept. 22, 2017, Settled)

Action against Defendant, a biopharmaceutical company, alleging that Defendant misrepresented to investors how many new patients filled prescriptions for a drug, Juxtapid, that was its sole source of revenue. Defendant allegedly told investors that the “vast majority” of patients receiving prescriptions purchased the drug, while its records showed that only slightly more than 50% of patients did so. Defendant agreed to pay a $4.1 million civil penalty.

SEC Litigation Release

SEC Press Release ... Continue Reading

In re Beaumont Financing Authority (Aug. 23, 2017, Settled)

Action against the Beaumont Financing Authority (“BFA”) for allegedly making false statements regarding its compliance with disclosure requirements in municipal bond offering documents. According to the SEC, for several years, the BFA failed to comply with continuing disclosure agreements (“CDAs”) requiring it to publish annual reports with financial information and operating data. Nonetheless, the BFA stated in its offering documents that in all but one instance it had complied with CDAs. The BFA has agreed ... Continue Reading

SEC v. Brian Pappas, et al. (M.D. Fla. Aug. 21, 2017, Partially Settled)

Action against franchisor of children’s educational programs, its CEO Brian Pappas, and two other officers and directors for allegedly making numerous false and misleading statements and omissions regarding the business’s finances and activities. The SEC alleges that Defendants made false statements regarding Pappas’s business experience, signed SEC disclosures falsely stating that Pappas had evaluated the effectiveness of internal and disclosure controls, failed to disclose fees and commissions made to Pappas’s relatives, arranged for improper loans ... Continue Reading

SEC v. Hidalgo Mining Corp., et al. (S.D. Fla. Aug. 4, 2017, Settled)

Action against Defendants, a Florida-based mining company and its owners John Boyer and Joshua McAlees, for allegedly defrauding investors in an unregistered securities offering involving a silver mine located near Mexico City, Mexico. The SEC alleges that, from at least 2009 to 2013, Defendant Hidalgo Mining Corp. (“Hidalgo”), and its principals, raised $10.35 million nationwide to fund mining operations for a silver mine. The SEC further alleges that investors were promised that they would have ... Continue Reading

LexBlog