Blog Posts Tagged With Corporate and Other Issues

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In re Omega Protein Corporation (A.P. Aug. 29, 2019, Settled)

Action against Respondent, a manufacturer of fish oil and fish meal products, for allegedly misrepresenting in its annual and quarterly reports that it was in compliance with all the covenants related to loan agreements with the federal government.  According to the SEC, Respondent had violated its covenants, a default that required payment of accelerated interest under its outstanding loan agreements.  Respondent has agreed to pay a civil penalty of $400,000.

SEC Order
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In re Juniper Networks, Inc. (A.P. Aug. 29, 2019, Settled)

Action against Respondent, a networking equipment product and service company, for alleged violations of the books and records and internal controls provisions of the FCPA.  According to the SEC, sales employees of Respondent’s foreign subsidiaries agreed with third-party channel partners to increase the incremental discount provided to customers through those partners without passing the discounts on to customers.  The SEC alleges that the channel partners diverted the discounts for personal and marketing expenses, including trips
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In re Deutsche Bank AG (A.P. Aug. 22, 2019, Settled)

Action against Respondent, a financial services corporation, for alleged violations of the books and records and internal accounting controls provisions of the FCPA.  According to the SEC, Respondent provided employment to the relatives of foreign government officials to influence them to assist the bank in obtaining or retaining business or other benefits.  The SEC further alleges that Respondent did not enforce a hiring policy enacted to prevent such conduct, that its books and records did
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In re TherapeuticsMD, Inc. (A.P. Aug. 20, 2019, Settled)

Action against Respondent, a pharmaceutical company, in connection with alleged selective disclosures of material nonpublic information regarding a potential FDA drug approval to sell-side research analysts who covered Respondent.  According to the SEC, Respondent sent private messages to analysts describing an FDA meeting as “very positive and productive.”  Respondent has agreed to pay a civil penalty of $200,000.

SEC Order

SEC Press Release
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In re SimplyVital Health, Inc. (A.P. Aug. 12, 2019, Settled)

Action against Respondent, a blockchain company, for an alleged unregistered offering.  According to the SEC, Respondent conducted an initial coin offering, in which it offered cryptocurrency tokens to raise money for a healthcare-related blockchain venture, without registering with the SEC.  The SEC declined to impose a civil penalty based on Respondent’s remedial measures, including returning substantially all of the funds it had raised.

SEC Administrative Summary

SEC Order
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In re Corix Bioscience, Inc. and Michael L. Ogburn (A.P. Aug. 9, 2019, Settled)

Action against Respondents, a publicly traded cannabidiol company and its former executive, for alleged misrepresentations.  According to the SEC, Respondents falsely claimed that Respondent company was able to grow hemp on Native American tribal land, had research relationships with well-known institutions, had obtained government approval to produce hemp, and had harvested hemp for sale.  Respondent former executive has agreed to pay a civil penalty of $200,000 and to officer-and-director and penny-stock bars.  Both Respondents have
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In re Sito Mobile, Ltd. (A.P. Aug. 5, 2019, Settled); SEC v. Gerard F. Hug and Kurt W. Streams (D.N.J. Aug. 2, 2019, Contested)

Action against Respondent, a mobile-data advertising company, and Defendants, two of Respondent’s former executives, for alleged financial misstatements and misappropriation, respectively.  According to the SEC, Defendants improperly used company funds to pay personal expenses.  The SEC alleges that these payments were not accurately recorded in Respondent’s books in records, causing Respondent to understate Defendants’ compensation.  The SEC has declined to impose a civil penalty on settling Respondent based on its cooperation.

SEC Order
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In re Brixmor Property Group, Inc. (A.P. Aug. 1, 2019, Settled); SEC v. Michael A. Carroll, et al. (S.D.N.Y. Aug. 1, 2019, Partially Settled and Partially Contested)

Actions against Respondent, a real estate investment trust, and Defendants, four of Respondent’s former executives, for alleged financial fraud.  According to the SEC, Respondent and Defendants manipulated a non-GAAP metric known as “same property net operating income” to give the false impression that Respondent had achieved its publicly issued growth targets.  Respondent has agreed to pay a civil penalty of $7 million, and two Defendants have agreed to the entry of partial judgments, with monetary
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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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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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SEC v. Longfin Corp. and Venkata S. Meenavalli (S.D.N.Y. June 5, 2019, Contested)

Action against Defendants, a finance and technology company and its CEO, for an alleged fraudulent public offering.  According to the SEC, Defendants qualified for a public offering by making false representations to the SEC, distributed shares to meet qualification criteria without collecting payment, and committed accounting fraud by recording sham revenue.  A parallel criminal case is proceeding against Defendant CEO, and the SEC has previously charged both Defendants and other individuals with alleged unregistered trading.
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SEC v. Kik Interactive Inc. (S.D.N.Y. June 4, 2019, Contested)

Action against Defendant, a technology company that offers an instant messaging application, for an alleged illegal offering of digital tokens.  According to the SEC, Defendant financed a new line of business by offering digital tokens to the public.  The SEC claims that Defendant marketed these tokens as an investment opportunity and assured investors that they would become more valuable as demand for the tokens rose.  The SEC alleges that at the time of the offering
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SEC v. Danny R. Williams (S.D. Ind. May 9, 2019, Contested)

Action against Defendant, president of a trucking company, for alleged accounting fraud.  According to the SEC, Defendant agreed to purchase trucks from third parties at inflated prices, and the third parties agreed in exchange to purchase Defendant’s used trucks at similarly inflated prices. The SEC alleges that Defendant therefore concealed losses on the sales of the used trucks, resulting in falsified financial statements.  Defendant has pleaded guilty in a parallel criminal proceeding in the Southern
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In re GT Advanced Technologies, Inc. (A.P. May 3, 2019, Settled); In re Thomas Gutierrez (May 3, 2019, Settled)

Actions against Respondents, a high-tech glass company and its former CEO, for alleged fraud.  According to the SEC, Respondent company owed hundreds of millions of dollars to a customer for failing to meet product specifications.  The SEC alleges that Respondents misled investors about this debt and failed to report it as current, soon thereafter filing for bankruptcy.  Respondents have agreed to cease-and-desist orders, and Respondent CEO has agreed to pay disgorgement of $15,510, prejudgment interest
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SEC v. Celadon Group, Inc. (S.D. Ind. Apr. 25, 2019, Settled)

Action against Defendant, a truckload freight company, for alleged accounting fraud.  According to the SEC, Defendant purchased and sold used trucks at inflated prices to avoid recognizing certain charges and losses.  The SEC alleges that as a result, Defendant overstated its financials in its annual report.  Defendant has agreed to pay disgorgement of $7 million, which the SEC will deem satisfied by Defendant’s payment of restitution in a parallel criminal case.

SEC Complaint

SEC Litigation
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SEC v. Jeffrey C. Mack and Lawrence C. Blaney (D. Minn. Apr. 3, 2019, Contested)

Action against Defendants, two former officers of a fintech company, for alleged accounting fraud.  According to the SEC, Defendants falsely recorded revenue from certain contracts subject to secret side letters that gave customers an unconditional right to cancel without an obligation to make any payments.  The SEC alleges that the cancellation right precluded recognition of the revenue under GAAP.

SEC Complaint

SEC Litigation Release
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SEC v. Peter Armbruster, et al. (E.D. Wis. Apr. 3, 2019, Contested)

Action against Defendants, the former CFO and two former employees of a transportation company, for alleged accounting fraud.  According to the SEC, Defendants fraudulently deferred expenses to be spread over multiple quarters, failed to write off overvalued assets, and overstated receivables to meet earnings targets and projections.  Defendants have been charged in a parallel criminal case.

SEC Complaint

SEC Press Release
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SEC v. Daniel Mattes (N.D. Cal. Apr. 2, 2019, Settled); In re Chad Starkey (A.P. Apr. 2, 2019, Settled)

Actions against Defendant, the founder and former CEO of a fintech company, and Respondent, the company’s former CFO, for alleged fraud and negligence.  According to the SEC, Defendant overstated the company’s revenue and subsequently sold his company shares to secondary market investors, concealing his gains from the company’s board.  The SEC alleges that Respondent knew or should have known of Defendant’s alleged fraud and failed to exercise reasonable care with respect to company financial statements. 
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In re Mutual Coin Fund LLC and Usman Majeed (A.P. Apr. 1, 2019, Settled)

Action against Respondents, a cryptocurrency company and its principal, for an alleged unregistered public offering.  According to the SEC, Respondents submitted a Form D Notice of Exempt Offering but improperly solicited investments from the general public.  The SEC further alleges that in soliciting investments, Respondents misrepresented the amount of money raised and the sizes of other investors’ commitments.  Respondents have agreed to pay, jointly and severally, disgorgement of $10,000.

SEC Order
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SEC v. Timothy W. Crawford, et al. (S.D. Ohio Mar. 19, 2019, Contested)

Action against Defendants, an oil-and-gas penny stock company and its former CEO, for allegedly concealing in financial reports the loss of the company’s major revenue source. According to the SEC, after losing control over two oil-and-gas leases, Defendants made misrepresentations to investors in quarterly reports to conceal that development. The SEC also alleges that Defendants raised additional money from investors while improperly withholding information about the loss of revenue source, misreported the CEO’s stock ownership,
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SEC v. Volkswagen Aktiengesellschaft, et al. (N.D. Cal. Mar. 14, 2019, Contested)

Action against Defendants, an auto manufacturer, two of its subsidiaries, and its former CEO, for alleged fraud in connection with misstatements made about vehicle emissions. According to the SEC, Defendants knew that some of their vehicles exceeded legal emissions limits and passed emissions tests due only to a device installed on the cars. The SEC alleges that Defendants made false and misleading statements to investors and underwriters to conceal this information while issuing over $13
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