SEC v. Natural Diamonds Investment Co., et al. (S.D. Fla. May 13, 2019, Contested)

Action against Defendants, a diamond company, an investment company, a cryptocurrency platform, and three of their owners and executives, for an alleged Ponzi scheme.  According to the SEC, Defendants offered investment opportunities in diamond sales and a diamond-backed cryptocurrency that they claimed was risk free.  The SEC alleges that Defendants instead misappropriated these funds to pay other investors and for their own personal expenses.

SEC Complaint 

SEC Litigation Release 

SEC Press Release
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SEC v. Lloyd Schuman and Dane James (W.D. Tenn. May 9, 2019, Settled)

Action against Defendants, internal auditors at a paper company and a hospitality company, for alleged insider trading.  According to the SEC, Defendant paper company auditor learned material nonpublic information about a planned acquisition by his employer, purchased shares while in possession of that information, and tipped a relative about the upcoming acquisition.  According to the SEC, this Defendant also learned material nonpublic information from the other Defendant auditor and similarly bought shares in that company
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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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CFTC v. Fabio Bretas de Freitas, et al. (S.D.N.Y. May 9, 2019, Contested)

Action against Defendants and Relief Defendants, a commodity pool operator, his companies, and related entities, for alleged fraud and misappropriation. According to the CFTC, Defendants solicited investor funds for commodity pools and futures funds based on false claims of high returns and investment capabilities. The CFTC alleges that Defendants falsified account statements, misappropriated investor funds, and made Ponzi-like payments to earlier investors. The CFTC further alleges that Defendant operator made false statements to the National
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CFTC v. David Smothermon (S.D.N.Y. May 9, 2019, Contested)

Action against Defendant, president of a commodities trading company, for alleged fraud. According to the CFTC, Defendant used a variety of methods to conceal losses from his natural gas trading, including entering false records, and directing other employees to make false records, of futures positions into the company’s recordkeeping system.

CFTC Complaint

CFTC Press Release
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SEC v. Brian Fettner, et al. (S.D. Fla. May 7, 2019, Settled)

Action against Defendant, a friend of the general counsel of a public company, and Relief Defendants, the ex-wife and former girlfriend of Defendant, for alleged insider trading.  According to the SEC, Defendant viewed material nonpublic information regarding a possible acquisition while visiting the general counsel’s home and purchased stock in the target firm through Relief Defendants’ brokerage accounts while in possession of that information.  The SEC also alleges that Defendant tipped his father and another
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In re Corinthian Capital Group, LLC, et al. (A.P. May 6, 2019, Settled)

Action against Respondents, an investment adviser, its co-founder and CEO, and its former CFO, for alleged misuse of client funds.  According to the SEC, Respondents failed to apply a fee offset owed to a private equity client, improperly paid for internal operations with the client’s funds, and caused the client to overpay organizational expenses.  The SEC further alleges that Respondents failed to timely issue audited financial statements for the client.  Respondent investment adviser, Respondent CEO,
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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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Follow-on APs, Suspensions, and Bars (May 2019)

  • In re Paul Peter Gierten (A.P. May 3, 2019, Settled)
  • In re Rocco Roveccio (A.P. May 6, 2019, Settled)
  • In re Jeffrey Francis Thompson (A.P. May 9, 2019, Settled)
  • In re Bryan B. Long, CPA (A.P. May 13, 2019, Settled)
  • In re Jonathan A. Rivera-Padilla (A.P. May 14, 2019, Settled)
  • In re Oscar Ferrer Rivera (A.P. May 14, 2019, Contested)
  • In re Robert M. Schulman, Esq. (A.P. May 16, 2019, Settled)
  • In re Paul B.

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CFTC v. William Thomas Caniff, et al. (N.D. Ill. May 3, 2019, Contested)

Action against Defendants, a binary options trading firm, its principals, and related entities, for alleged fraudulent solicitation. According to the CFTC, Defendants solicited investor funds through false statements that these funds would be used to trade binary options on the North American Derivatives Exchange (NADEX). The CFTC alleges that Defendants instead misappropriated the majority of the funds. The CFTC further alleges that Defendants filed a false statement with NADEX and issued false account statements to
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United States v. Matthew Connolly and Gavin Campbell Black (S.D.N.Y. May 2, 2019, Contested)

Judge Colleen McMahon ruled that interviews conducted during an internal investigation by a defendant’s employer and its counsel at the request of the CFTC were “fairly attributable” to the CFTC.  The court determined that, under Second Circuit precedent,[1] the CFTC’s request that the employer conduct an internal investigation and interview one of the defendants was a government directive, given the pressure that the defendant felt to cooperate.  Accordingly, the use of a criminal defendant’s
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Robare Group v. SEC (D.C. Cir. Apr. 30, 2019)

The D.C. Circuit held that while a defendant investment adviser’s failure to disclose conflicts of interests on registration applications was sufficient to support the SEC’s finding of a violation of § 206 of the Investment Advisers Act, which imposes a negligence standard, the evidence was insufficient to support the SEC’s finding of a violation of § 207 of the Act, which imposes a willfulness standard. According to the court, in order to prove willfulness, the
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SEC v. James Siniscalchi (S.D.N.Y. Apr. 29, 2019, Contested)

Action against Defendant, the chief compliance officer of a ticket resale company, for alleged misappropriation of investor funds. According to the SEC, Defendant’s company represented to investors that their funds were used to purchase Broadway musical and sporting event tickets and resell them at a profit, when Defendant and his business partners in fact used the funds for their personal benefit. The SEC alleges that Defendant also concealed the involvement of his cousin in the
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