Blog Posts Tagged With Financial Institutions and Regulated Entities

Subscribe to Financial Institutions and Regulated Entities RSS Feed

SEC v. Steven Pagartanis (E.D.N.Y. May 30, 2018, Contested)

Action against Defendant, a registered broker-dealer, for alleged retail fraud.  The SEC alleges that Defendant offered a nonexistent secure investment vehicle with guaranteed monthly interest.  The SEC further alleges that Defendant used the funds for personal expenses and created fictitious account statements.

SEC Litigation Release

SEC Press Release ... Continue Reading

CFTC v. X-Change Financial Access LLC (C.D. Cal. May 29, 2018, Settled)

Action against Defendant, a commodity pool operator, for alleged failure to supervise its employees’ handling of customer accounts and failure to preserve complete records.  According to the CFTC, Defendant failed to maintain written policies or procedures concerning the post-execution allocation of bunched orders and did not train its staff regarding their obligations related to the handling of bunched orders.  The CFTC further alleges that Defendant’s policies and procedures regarding compliance with regulatory actions were insufficient ... Continue Reading

In re Aberon Capital Management, LLC and Joseph Kirgsfeld (A.P. May 24, 2018, Settled)

Action against Respondents, an investment adviser and its managing member, for alleged misrepresentations regarding the assets and performance of a hedge fund.  The SEC alleges that Respondent manager inflated performance metrics in order to increase performance fee payouts.  Respondent manager has agreed to a bar with the right to reapply, and Respondent investment adviser has agreed to pay a $160,000 civil penalty.

SEC Order ... Continue Reading

In re Manhattan Transfer Registrar Co., and John Ahearn (A.P. May 17, 2018, Settled)

Action against Respondents, a registered transfer agent and its former principal, for their alleged role in enabling public trading of shares of undisclosed “blank check” companies.  According to the SEC, undisclosed control persons, who manufactured undisclosed blank check companies, hired Respondents to facilitate the sale of purportedly unrestricted shares of the blank check companies by reverse merger.  The SEC alleges that despite red flags that the shares were illegal distributions, Respondents removed restrictive legends and ... Continue Reading

In re Chardan Capital Markets, LLC (A.P. May 16, 2018, Settled); In re Jarard Basmagy (A.P. May 16, 2018); In re Industrial and Commercial Bank of China Financial Services, LLC (“ICBC”) (A.P. May 16, 2018, Settled)

Actions against Respondents, a registered broker-dealer, its AML Officer, and a registered broker-dealer specializing in business clearing equity securities, for alleged reporting violations.  The SEC alleges that Respondents Chardan and Basmagy neglected to file Suspicious Activity Reports (“SARs”) despite having reason to suspect that certain penny stock transactions that they executed were associated with fraudulent activity.  The SEC alleges that Respondent ICBC cleared some of these suspicious trades and contacted Chardan regarding the suspicious activity, ... Continue Reading

SEC v. William Jordan (C.D. Cal. May 15, 2018, Settled)

Action against Defendant, an investment adviser, in connection with an alleged scheme to misappropriate investor funds.  According to the SEC, Defendant used the money in various private funds as one pool of money, regularly moving money between funds to meet cash flow needs.  The SEC further alleges that Defendant made misrepresentations to clients regarding fund performance, management fee arrangements, and use of investor funds and overpaid himself in violation of investor agreements.  The court will ... Continue Reading

In re Mark A. Karow and Legend Securities, Inc. (A.P. May 15, 2018, Settled)

Action against Respondents, a registered broker-dealer and a former registered representatives, for allegedly engaging in distribution of unregistered securities.  The SEC alleges that Respondent representative offered and sold approximately 6 million unregistered securities and that Respondent broker-dealer failed to reasonably supervise its registered representative and maintain business records.  Respondent representative has agreed to a bar and to pay disgorgement of $67,089.03, prejudgment interest of $7,313.01, and a civil penalty of $20,000.

SEC Order

Related to ... Continue Reading

In re Timothy C. Scarpino (A.P. May 15, 2018, Settled)

Action against Respondent, a former registered representative at a broker-dealer, for allegedly engaging in distribution of unregistered securities.  According to the SEC, Respondent offered and sold approximately 8.2 million unregistered securities and ignored red flags indicating an unregistered distribution of securities.  Respondent has agreed to a five year bar with a right to reapply.  SEC Order

Related to Karow

Related to Villena ... Continue Reading

SEC v. Premium Point Investments, LP, et al. (S.D.N.Y. May 9, 2018, Contested)

Action against Defendants, an investment adviser, its CEO, a former partner, and a former trader for allegedly inflating the value of private funds the firm advised by secretly sending trades to a broker-dealer in return for inflated quotes on mortgage-backed securities.  The SEC also alleges that Defendant used “imputed” mid-point valuations in a manner that inflated the value of securities and further exaggerated returns.

SEC Litigation Release ... Continue Reading

In re Barcelona Strategies, LLC and Mario Hinojoso (A.P. May 9, 2018, Settled)

Action against Respondents, a municipal advisor and its principal, for allegedly misrepresenting Respondent principal’s experience and qualifications and failing to disclose conflicts of interest.  The SEC alleges that Respondents failed to disclose that Respondent principal had no advisory experience and that he had recently been employed by the advisory client’s bond counsel.  Respondents have agreed to pay, jointly and severally, disgorgement of $362,606.91 and prejudgment interest of $19,514.37.  The corporate Respondent has agreed to pay ... Continue Reading

Visium Asset Management, LP (A.P. May 8, 2018, Settled)

Action against Respondent, an investment adviser, in connection with an alleged mismarking scheme involving two of its portfolio managers.  According to the SEC, the managers used sham broker quotes to inflate the value of securities held by a credit fund advised by Respondent, causing the credit fund to falsely report inflated returns, overstate its net asset value, misclassify certain distressed assets, and overpay performance and management fees.  The SEC further alleges that Respondent issued statements ... Continue Reading

In re Steven Ku (A.P. May 8, 2018, Settled)

Action against Respondent, the Chief Financial Officer of a registered investment adviser, for alleged failure to reasonably supervise portfolio managers with respect to valuation of securities owned by a credit fund.  The SEC alleges that Respondent failed to respond appropriately to red flags in the course of monitoring two employees who engaged in a mismarking scheme to inflate securities valuations, including with respect to the employees’ frequent use of price overrides.  Respondent has agreed to ... Continue Reading

In re Winter, Kloman, Moter & Repp, S.C., et al. (A.P. May 4, 2018, Settled)

Action against Respondents, a certified public accounting firm, the manager of its financial group, and one of its employees, in connection with alleged misconduct in completing audits for a fund client affiliated with an investment adviser.  The SEC alleges that Respondents prepared the financial statements that they then audited and had a direct relationship with the investment adviser affiliate, and that Respondent firm was not subject to regular inspection by the PCAOB at the time ... Continue Reading

SEI Investments Global Funds Services (A.P. Apr. 26, 2018, Settled)

Action against Respondent, a statutory trust, in connection with alleged violations of the Investment Company Act relating to the pricing and administration of an affiliated unregistered money market fund.  According to the SEC, Respondent used a flawed methodology to determine the net asset value (“NAV”) of its shares, and used a stable NAV for some funds while using a floating NAV for others.  The SEC alleges that Respondent’s conduct was inconsistent with Rule 2a-7, disqualifying ... Continue Reading

WCAS Management Corporation (A.P. Apr. 24, 2018, Settled)

Action against Respondent, a registered investment adviser, for alleged failure to disclose conflicts of interest between Respondent and its private equity fund clients and fund investors in connection with an agreement between the adviser and a group purchasing organization (“GPO”).  According to the SEC, Respondent advised private equity funds which owned portfolio companies that used the GPO, and the GPO paid Respondent compensation based on a share of the fees the GPO received from vendors ... Continue Reading

In re Arlington Capital Management, Inc. & Joseph F. LoPresti (A.P. Apr. 16, 2018, Settled)

Action against Respondents, a registered investment adviser and its president, for allegedly making misleading statements regarding a proprietary trading model.  According to the SEC, Respondents used a set of algorithms to make trading decisions, which were periodically adjusted  in response to changing market conditions; however, they marketed their model with reference to the historical returns that would have been generated if those adjustments had always been in place, rather than according to the model’s actual ... Continue Reading

In re Li and Company PC, et al. (A.P. Apr. 12, 2018, Settled)

Action against Respondents, a public accounting firm and its principal, for alleged misconduct in connection with the audit of a vitamin and nutritional supplement company.  According to the SEC, Respondents failed  to comply with industry auditing standards in reviewing allegedly improper payments made by the company to its CEO.  Respondents have each agreed to individually pay disgorgement of $22,500 and prejudgment interest of $2,643.  They have agreed to pay, jointly and severally, a civil penalty ... Continue Reading

SEC v. Amrit J. S. Chahal (E.D. Va. Apr. 12, 2018, Contested)

Action against Defendant, an investment adviser, for alleged fraudulent solicitation of investor funds.  According to the SEC, Defendant falsely claimed to investors that he was an experienced and successful trader who could generate above-market returns through a low-risk trading strategy.  The SEC further alleges that Defendant suffered trading losses, made false statements to investors regarding their investment returns, and used investor money for personal expenses and to make Ponzi-like payments to earlier investors.

SEC Litigation ... Continue Reading

In re Securities America Advisors, Inc. (A.P. Apr. 6, 2018, Settled)

Action against Respondent, a registered investment adviser and broker-dealer, for alleged irregularities in its mutual fund share class selections practices.  According to the SEC, Respondent invested clients in mutual fund share classes with fees when lower fee alternatives were available. The SEC further alleges that Respondent failed to maintain adequate policies and procedures to prevent such violations.  Respondent has agreed to pay disgorgement of $4,473,025.50, prejudgment interest of $580,423.14, and a civil penalty of $775,000. ... Continue Reading

In re PNC Investments, LLC (A.P. Apr. 6, 2018, Settled)

Action against Respondent, a registered investment adviser and broker-dealer, for alleged irregularities in its mutual fund share class selections practices.  According to the SEC, Respondent invested clients in mutual fund share classes with fees when no fee alternatives were available.  The SEC further alleges that Respondent failed to disclose marketing support payments from three mutual fund companies.  Respondent has agreed to pay disgorgement and prejudgment interest in the amount of $6,407,770 and a civil penalty ... Continue Reading

In re Geneos Wealth Management, Inc. (A.P. Apr. 6, 2018, Settled)

Action against Respondent, a registered investment adviser and broker-dealer, for alleged irregularities in its mutual fund share class selections practices and receipt of revenue sharing payments.  According to the SEC, Respondent benefitted from investing advisory clients in mutual fund share classes with higher fees, which created an undisclosed conflict of interest.  Respondent has agreed to pay disgorgement of 1,433,803.27, prejudgment interest of $124,318.86, and a civil penalty in the amount of $250,000; $1,047,617.50 of the ... Continue Reading

In re Clayborne Group, LLC, et al. (A.P. Apr. 5, 2018, Settled)

Action against Respondents, a registered investment adviser and its principal, for alleged misrepresentations in registration documents.  According to the SEC, Respondent’s Form ADV filings overstated its assets under management, which if correctly reported would have prevented Respondent from successful registration.  The SEC also alleges that Respondent failed to make and keep various records required under the Advisers Act.  Respondent has agreed to pay a civil penalty in the amount of $20,000.

SEC Order ... Continue Reading

SEC v. Gregory M. Bercowy (M.D. Fla. Apr. 3, 2018, Contested)

Action against Defendant, an individual associated with a registered investment adviser, for alleged market manipulation.  The SEC alleges that Defendant accumulated penny stock shares valued at $2.8 million and subsequently placed and cancelled a large number of orders to buy the shares at higher prices in an effort to artificially inflate the price of the stock.

SEC Litigation Release ... Continue Reading

In re Aegis Capital Corporation (A.P. Mar. 28, 2018, Settled); In re Kevin McKenna, et al. (A.P. Mar. 28, 2018, Settled); In re Eugene Terracciano (A.P. Mar. 28, 2018, Contested)

Actions against Respondents, a registered broker-dealer, its CEO, and two former AML compliance officers, for alleged failure to file required Suspicious Activity Reports (“SARs”).  According to the SEC, Respondents failed to submit SARs related to potential market manipulation despite numerous red flags indicating potential money laundering activity that were brought directly to the attention of Respondents compliance officers and CEO.  Respondent broker-dealer has agreed to pay a civil penalty of $750,000 and retain a compliance ... Continue Reading

LexBlog