In re Melanie Ryan (A.P. July 20, 2018, Settled)

Action against Respondent, the Chief Compliance Officer of a broker-dealer, in connection with Respondent’s contribution to the broker-dealer’s violation of Section 17(a)(3) in connection with its practices related to pre-release of American Depository Receipts (ADRs).  The SEC alleges that Respondent failed to ensure that the broker-dealer took adequate steps to satisfy its obligations in connection with pre-release of ADRs by failing to verify that ordinary shares backed the pre-released ADRs.  Respondent has agreed to pay ... Continue Reading

SEC v. Charles Schwab & Co., Inc (N.D. Cal. July 2, 2018, Settled)

Action against Defendant, a registered broker-dealer, for alleged failure to file Suspicious Activity Reports (SARs), as required by the Bank Secrecy Act, in connection with transactions executed by independent investment advisers after Defendant terminated its custodian relationship.  The SEC alleges that Defendant terminated its relationship with the investment advisers after it found their activity was in violation of Defendant’s policies and posed a risk.  The SEC further alleges, however, that the Defendant failed to file ... Continue Reading

In re Deutsche Bank Trust Company Americas (A.P. July 20, 2018, Settled)

Action against Respondent, a financial services firm, in connection with its practices related to the pre-release of American Depository Receipts (ADRs).  The SEC alleges that Respondent provided pre-released ADRs to brokers that did not hold the supporting ordinary shares as required by the agreements entered into between Respondent and the brokers and that it should have known, based on the characteristics of the pre-release transactions, that the brokers were not complying with the requirements of ... Continue Reading

SEC v. Kimberly Pine Kitts (D. Mass. July 19, 2018, Contested)

Action against Defendant, a registered investment adviser representative, in connection with an alleged scheme to misappropriate client funds.  The SEC alleges that Defendant misappropriated funds by making unauthorized withdrawals, forging client signatures on withdrawals, and making material representations to clients to gain consent to make withdrawals.  The SEC further alleges that Defendant used these funds for personal expenses and attempted to conceal this conduct by altering client statements.

SEC Complaint

SEC Litigation Release ... Continue Reading

SEC v. Bhushan Dandawate (N.D. Ill. July 19, 2018, Settled)

Action against Defendant, owner of two consulting and IT solutions companies utilized by Quadrant 4 System Corporation (“QFOR”), in connection with an alleged scheme to aid two QFOR executives’ material misrepresentations regarding the company’s performance and to conceal misappropriation of company funds.  The SEC alleges the Defendant used bank accounts and business enterprises under his control to obscure the executives’ misappropriation of funds and to create the appearance of an increase of the company’s business.   ... Continue Reading

SEC v. Steven J. Barber and Larry Lee Arrowood (M.D. Fla. July 18, 2018, Settled in part and Contested in part)

Action against Defendants, president and CEO of a battery manufacturer, in connection with alleged misrepresentations regarding the company’s performance.  The SEC alleges that Defendants distributed misleading press releases regarding the amount of customer orders received by the company and its production capabilities. Defendant Arrowood has agreed to pay a civil penalty of $50,000 and to an officer and director bar, while the SEC’s litigation continues against Barber.

SEC Complaint

SEC Litigation Release ... Continue Reading

SEC v. Temnos Advisory, Inc., and George L. Taylor (D. Conn. July 18, 2018, Contested)

Action against Defendants, an investment advisory firm and its founder, majority owner, and CEO, in connection with failure to disclose conflicts of interest that resulted in risky investment advice.  The SEC alleges that the Defendants recommended investments in privately offered securities without conducting proper due diligence and suitability analyses and without disclosing the extra fees and commissions they received as a result of the recommended investments.  The SEC further alleges that Defendants made material misrepresentations ... Continue Reading

In re Jay C. Lake (A.P. July 17, 2018, Settled)

Action against Respondent, a certified public accountant, in connection with alleged failure to conduct adequate audits.  The SEC alleges that Respondent failed to properly audit companies, allowing a fraudulent scheme involving shell blank check companies to continue.  Respondent has agreed to pay $10,500 in disgorgement, $1,620.71 in prejudgment interest, and a $25,000 civil penalty.

SEC Order ... Continue Reading

In re Michael Devlin (A.P. July 17, 2018, Settled)

Action against Respondent, managing partner and Chief Compliance Officer of a private equity adviser, in connection with failure to disclose a conflict of interest.  The SEC alleges the Respondent invested in a venture on the condition that the venture would buy a product that Respondent created and failed to disclose this conflict to the adviser firm.  Respondent has agreed to a bar and to pay an $80,000 civil money penalty.

SEC Order ... Continue Reading

SEC v. John Geraci (S.D.N.Y. July 17, 2018, Contested)

Action against Defendant, an investment fund director, in connection with an alleged scheme to solicit investment funds.  The SEC alleges the Defendant made material misrepresentations and omissions regarding the Defendant’s experience, the fund’s performance, and the use of client’s investment money.  The SEC further alleges that the Defendant used client’s money for personal expenses.  A parallel criminal action has been announced.

SEC Complaint

SEC Litigation Release ... Continue Reading

SEC v. Daniel Rudden, et al. (D. Colo. July 17, 2018, Contested)

Action against Defendants, an owner and operator of investment funds and the operator’s associated funds, in connection with an alleged Ponzi scheme.  The SEC alleges that Defendant funds engaged in “life insurance assignments” and when the fund Defendants could not meet its promised rate of return, the individual Defendant used investment money from newer investors to pay the promised returns.  The SEC further alleges the individual Defendant made material misrepresentations to the fund Defendant’s performance ... Continue Reading

SEC v. Centor Energy Inc., and Frederick DaSilva (S.D.N.Y. July 17, 2018, Settled)

Action against Defendants, an oil exploration company and its CEO, in connection with alleged misrepresentations regarding the company’s business position.  The SEC alleges that Defendants made misrepresentations regarding oil reserves on company-leased land, its ability to acquire additional land, and the affiliation of geologists who produced oil reserve projections in press releases, company literature, and SEC filings.  The SEC further alleges that Defendant CEO materially misstated stock-purchase options he held.  Defendant CEO has agreed to ... Continue Reading

In re New Silk Route Advisors, L.P. (A.P. July 17, 2018, Settled)

Action against Respondent, a registered investment adviser firm, in connection with alleged failure to timely distribute  annual financial statements to investors.  The SEC alleges that Respondent repeatedly failed to timely distribute audited financial statements to investors.  Respondent has agreed to pay a $75,000 penalty.

SEC Order

SEC Press Release ... Continue Reading

In re Normal M.K. Louie and Mount Kellett Capital Management LP (A.P. July 16, 2018, Settled)

Action against Respondents, an investment advisory firm and its managing director, in connection with alleged failure to disclose the provision of personal loans to a client and the associated conflict of interest.  The SEC alleges that Respondents provided undisclosed personal loans to a client in exchange for a seat on the client’s board of directors.  Respondent Louie agreed to pay a $100,000 civil penalty and Respondent Mount Kellett agreed to pay a $160,000 civil penalty. ... Continue Reading

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