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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Congressman Proposes Requiring Public Companies to Disclose Board Members’ Cybersecurity Expertise (Mar. 13, 2019)

A member of the House Intelligence Committee has reintroduced the Cybersecurity Disclosure Act of 2019 that would require the SEC to issue a set of rules making publicly traded companies disclose whether any of their board members have cybersecurity expertise, and if not, to justify the skills gap. A companion bill is pending in the Senate.
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SEC v. Diane D. Dalmy (D. Colo. Mar. 13, 2019, Contested)

Action against Defendant, an attorney, for alleged fraud related to the preparation of opinion letters regarding microcap securities. According to the SEC, Defendant continued to draft letters after a major microcap quotation and trading system banned Defendant from providing legal opinion letters. The SEC alleges that Defendant hired another attorney to sign the letters without performing additional due diligence.

SEC Complaint 

SEC Litigation Release
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In re Kiarash (Kia) Jam (A.P. Mar. 12, 2019, Settled)

Action against Respondent, a film producer, for alleged offering frauds. According to the SEC, Respondent falsely informed investors that he was raising money to take an auction site private and to spin off a separate business unit from that site. The SEC alleges that Respondent misappropriated investor funds and misrepresented information, including the amount of money raised, the number of shares for sale, and the purported involvement of a broker-dealer. Respondent has agreed to pay
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In re Lumber Liquidators Holdings, LLC (A.P. Mar. 12, 2019, Settled)

Action against Respondent, a flooring retailer, for alleged fraud on investors. According to the SEC, Respondent falsely informed investors that its products complied with environmental regulations. Respondent has agreed to pay disgorgement of $6,037,838 and prejudgment interest of $59,660. The SEC did not impose a civil penalty due to Respondent’s agreement to pay $33 million in criminal fines and forfeiture, less disgorgement paid to the SEC, in a parallel criminal action.

SEC Order

SEC Press
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SEC v. River North Equity LLC, et al. (N.D. Ill. Mar. 11, 2019, Contested)

Action against Defendants, a securities trading company, two microcap entertainment companies, and six individuals, for alleged market manipulation and unlawful stock offerings. According to the SEC, Defendants operated a scheme involving falsified financial statements and fraudulent statements on social media to sell the microcap companies’ unregistered stock to the public.

SEC Complaint

SEC Litigation Release
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SEC Announces Settled Charges with 79 Investment Advisers in Share Class Selection Disclosure Initiative (Mar. 11, 2019)

Actions against Respondents, 79 investment advisers, for alleged violations of the antifraud and compliance provisions of the Advisers Act. According to the SEC, Respondents invested client funds in mutual fund share classes that charged 12b-1 fees directly or indirectly received by Respondents when less expensive share classes were available and failed to properly disclose this conflict of interest to their clients. The settlements stem from the SEC’s Share Class Selection Disclosure Initiative, which generally offered
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In re Ascension Asset Management, LLC and Grenville M. Gooder, Jr. (A.P. Mar. 7, 2019, Contested)

Action against Respondents, an investment adviser and its principal, for alleged violations of the Advisers Act compliance, custody, and books and records rules. According to the SEC, Respondents made material misstatements on their annual Forms ADV, including that Respondent adviser did not have custody of client assets and had chief compliance officers in place. The SEC further alleges that Respondent violated the Advisers Act custody rule by failing to retain an independent CPA and failing
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SEC v. William Neil “Doc” Gallagher, et al. (N.D. Tex. Mar. 7, 2019, Contested)

Action against Defendants, a radio host and his two companies, for an alleged Ponzi scheme. According to the SEC, Defendant host used his radio shows to solicit investors in his fund, falsely stating that he was a licensed investment adviser and falsely claiming that his fund offered certain guaranteed returns. The SEC alleges that Defendants misappropriated investor funds for personal expenses and to pay other investors and that Defendant host sent investors falsified statements.

SEC
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In re Mobile TeleSystems PJSC (A.P. Mar. 6, 2019, Settled)

Action against Respondent, a Russian telecom company, for alleged violations of the FCPA’s anti-bribery, books and records, and internal accounting control provisions.  According to the SEC, Respondent made improper payments to Uzbek government officials to gain market access and improperly recorded the payments in its books and records.  Respondent has agreed to pay a civil penalty of $100 million.  In parallel criminal proceedings, Respondent has entered into a deferred prosecution agreement with the Department of
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In re BB&T Securities, LLC (A.P. Mar. 5, 2019, Settled)

Action against Respondent, a dually registered broker-dealer and investment adviser, for alleged misrepresentations to clients. According to the SEC, Respondent’s predecessor in interest made misstatements in Form ADV filings and client contracts about services and prices offered by its in-house broker. The SEC alleges that Respondent’s predecessor in interest failed to disclose to clients that it benefitted financially when clients selected this broker. Respondent has agreed to pay disgorgement of $4,712,366, prejudgment interest of $497,387,
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Delinquent Filings

In re Cardinal Energy Group, Inc. (A.P. Mar. 18, 2019, Contested)

In re First Liberty Power Corp., et al. (A.P. Mar. 21, 2019, Settled)

In re Golden Global Corp. and Power Efficiency Corporation (A.P. Mar. 27, 2019, Settled)

In re Coupon Express, Inc., et al. (A.P. Mar. 28, 2019, Settled)

In re Hua Yang Investment Group, et al. (A.P. Mar. 28, 2019, Settled)

In re Grey Fox Holdings Corp. (f/k/a Gray Fox Petroleum Corp.), Green
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SEC. v. Mark E. Kuchenrither (A.P. Mar. 1, 2019, Settled)

Action against Respondent, a former CFO, for alleged failure to comply with the applicable standard of care in making financial projections.  The SEC alleges that, to obtain a fairness opinion, Respondent revised his company’s projections based on inadequately vetted assumptions about potential acquisitions.  Respondent has agreed to pay a civil penalty of $50,000.

SEC Order
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In re DLL CPAs, LLC and Debra Lee Lindaman (A.P. Mar. 1, 2019, Settled); In re Arthur Viola (A.P. Mar. 1, 2019, Settled)

Actions against Respondents, an accounting firm, an accountant, and an audit engagement quality reviewer, for allegedly conducting deficient audits in violation of PCAOB standards and Regulation S-X. According to the SEC, in the course of auditing five public companies, Respondent accountant and her firm failed to collect sufficient evidence, adequately review financial information, and properly document the audits, among other deficiencies. The SEC further alleges that Respondent reviewer’s engagement quality reviews failed to comply with
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Follow-on APs, Suspensions, and Bars

In re Raymond K. Montoya (A.P. Mar. 5, 2019, Settled)

In re Lewis Dean McBride (A.P. Mar. 7, 2019, Settled)

In re Jared Jeffrey Davis (A.P. Mar. 15, 2019, Settled)

In re Craig Arsenault (A.P. Mar. 15, 2019, Settled)

In re Robert P. DePalo (A.P. Mar. 18, 2019, Settled)

In re Joshua B. Gladtke (A.P. Mar. 18, 2019, Settled)

In re Gregg A. Lerman (A.P. Mar. 18, 2019, Settled)

In re Richard G. Cody (A.P.
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