In re Pyxus International, Inc. (formerly known as “Alliance One International, Inc.”) (A.P. Nov. 9, 2018, Settled)

Action against Respondent, a tobacco company, for alleged financial misstatements. According to the SEC, Respondent’s subsidiary, Alliance One Tobacco (Kenya) Ltd., maintained inadequate accounting controls that resulted in overstatements of inventory, accounts receivable, and retained earnings.  Respondent agreed to cease and desist from violations of the Securities and Exchange Act of 1934.  The SEC noted Respondent’s prompt remedial actions and cooperation in its order.

SEC Order

SEC Administrative Summary
Continue Reading

In re Commerzbank AG (A.P. Nov. 8, 2018, Settled)

Action against Respondent, a banking and financial services company, for alleged violations of the Commodity Exchange Act and CFTC regulations. According to the CFTC, Respondent failed to supervise the activities of its swap dealers and made material misstatements and omissions to the CFTC about operations and regulatory compliance for these dealers. Respondent has agreed to pay a $12 million civil penalty and has also agreed to remediation and monitoring measures.

CFTC Press Release

CFTC Order
Continue Reading

SEC v. SeeThruEquity, LLC, et al. (S.D.N.Y. Nov. 8, 2018, Contested)

Action against Defendants, a stock research firm and its co-founders, for alleged fraud against investors. According to the SEC, Defendants published reports on issuers while falsely claiming that they had not been compensated by the issuers and did not trade in the issuers’ stocks. The SEC alleges that Defendants did in fact trade in the issuers’ stocks and had been paid by the issuers to publish the reports.

SEC Litigation Release 

SEC Complaint
Continue Reading

SEC v. James E. Hengen (D. Minn. Nov. 8, 2018, Settled)

Action against Defendant, the spouse of a human resources executive, for alleged insider trading.  According to the SEC, Defendant learned material nonpublic information about two pending acquisitions from his wife.  The SEC alleges that Defendant bought stock in each of the target firms while in possession of this information and sold the stock after the acquisition was announced.  The SEC also alleges that Defendant tipped four other individuals, who also traded while in possession of
Continue Reading

In re Zachary Coburn (A.P. Nov. 8, 2018, Settled)

Action against Respondent, an entrepreneur and former registered representative, for alleged operation of an unregistered online cryptocurrency exchange.  According to the SEC, Respondent founded and later sold an exchange that allowed the purchase and sale of digital assets known as Ether and ERC20 tokens without registering the exchange or qualifying for an exemption from registration.  Respondent has agreed to pay disgorgement of $300,000, prejudgment interest of $13,000, and a civil penalty of $75,000.

SEC Order
Continue Reading

Delinquent Filings (November 2018)

  • In re Avant Diagnostics, Inc., et al. (A.P. Nov. 7 & 26, 2018, Settled)
  • In re Mullan Agritech, Inc., et al. (A.P. Nov. 13, 2018, Partially Settled, Partially Contested)
  • In re America Greener Technologies, Inc., et al. (A.P. Nov. 14, 2018, Settled)
  • In re Nutrastar International, Inc. (A.P. Nov. 14, 2018, Settled)
  • In re Solaris Power Cells, Inc., et al. (A.P. Nov. 14, 2018, Settled)
  • In re AMI James Brands, Inc., et al. (A.P. Nov.

Continue Reading

In re Citibank, N.A. (A.P. Nov. 7, 2018, Settled)

Action against Respondent, a financial services firm, in connection with an industry-wide sweep into practices related to the pre-release of American Depository Receipts (ADRs).  In connection with the settlement, Citibank neither admitted nor denied the SEC’s findings.  According to the SEC, Citibank  pre-released ADRs to pre-release brokers pursuant to an agreement which required the broker receiving the pre-released ADRs to represent, among other things, that it beneficially owned the ordinary shares (or an equivalent security)
Continue Reading

SEC v. Ricardo H. Goldman (S.D. Fla. Nov. 7, 2018, Settled)

Action against Defendant, a trader, for alleged operation of a fraudulent, unregistered brokerage. According to the SEC, Defendant informed investors that he would use their funds to open individual day trading accounts but instead commingled the funds in a single concealed account. The SEC also alleges that Defendant charged investors trading commissions and misrepresented his background and disciplinary history. Defendant has agreed to pay disgorgement of $470,000, prejudgment interest of $53,497, and a civil penalty
Continue Reading

SEC v. Slobodan Dragojlovic (C.D. Cal. Nov. 7, 2018, Settled)

Action against Defendant, a software consultant, for alleged insider trading.  According to the SEC, Defendant learned information about a pending acquisition from his brother, an executive at the target firm.  According to the SEC, Defendant bought stock in the target firm while in possession of the material nonpublic information and sold the stock after the announcement of the acquisition.  Defendant has agreed to pay disgorgement of $20,101, prejudgment interest of $1,038, and a civil penalty
Continue Reading

In re ITG Inc. and Alternet Securities, Inc. (A.P. Nov. 7, 2018, Settled)

Action against Respondents, a registered broker-dealer and its affiliate, for alleged misrepresentations and failure to protect customers’ confidential trading information.  According to the SEC, Respondents misrepresented or failed to disclose features of a dark pool that Respondents operated, including the existence of two separate liquidity pools within the alternative trading system. The SEC further alleges that Respondents improperly disclosed information about customers’ trades, such as order size.  Respondents have agreed to pay a civil penalty
Continue Reading

In re Pennant Management, Inc. (A.P. Nov. 6, 2018, Settled)

Action against Respondent, a formerly registered investment adviser, for alleged misrepresentations to investors. According to the SEC, Respondent overstated its due diligence program with respect to certain investments and failed to disclose that it was investigating an alleged fraud connected with one of these investments.  The SEC further alleges that Respondent underfunded its compliance program and failed to implement certain due diligence and monitoring policies and procedures, which resulted in compliance failures.  Respondent has agreed
Continue Reading

In re Mark A. Elste (A.P. Nov. 6, 2018, Settled)

Action against Respondent, the founder, CEO, and CIO of an investment advisory company, for alleged failure to maintain adequate controls.  According to the SEC, Respondent knew that his company’s compliance program was underfunded but failed to address the deficiency, which resulted in compliance failures.  The SEC further alleges that Respondent failed to put in place adequate due diligence and monitoring policies. Respondent has agreed to pay a civil penalty of $45,000.  In a related proceeding
Continue Reading

United States v. Sean Stewart (2d Cir. Nov. 5, 2018, Contested)

The Second Circuit reversed the insider trading conviction of Defendant, a former investment banking analyst, on evidentiary grounds.  The government alleged that Defendant, his father, and his father’s friend traded while in possession of material, nonpublic information.  At trial, the United States introduced an incriminating prior statement by Defendant’s father and codefendant.  The court refused to admit an allegedly inconsistent statement made to the FBI for impeachment purposes at trial. The Second Circuit vacated Defendant’s
Continue Reading

SEC Enforcement Division Issues Report on Priorities and Fiscal Year 2018 Results (Nov. 2, 2018)

The SEC Enforcement Division issued its annual report outlining its priorities for the coming year and reviewing enforcement actions from the 2018 fiscal year. The Commission brought a total of 821 enforcement actions, including 490 stand-alone actions, and imposed disgorgement and penalties totaling more than $3.945 billion.  Cases concerning investment advisory issues, securities offerings, and issuer reporting / accounting and auditing collectively comprised 63 percent of the Commission’s 490 stand-alone cases.  Additionally, actions initiated by
Continue Reading

SEC v. Douglas P. Simanski (W.D. Pa. Nov. 2, 2018, Settled)

Action against Defendant, a former investment adviser, for alleged offering fraud. According to the SEC, Defendant operated a Ponzi scheme, raising over $3.9 million from his customers. Instead of investing the funds, Defendant used the money to reimburse other investors and for personal use. Defendant has agreed to pay disgorgement and interest and to a lifetime securities industry bar. Defendant has pleaded guilty in a parallel criminal action.

SEC Litigation Release

SEC Press Release
Continue Reading

LexBlog