Blog Posts Tagged With SEC

SEC v. Jared Gabriel Forrester (S.D. Ga. Nov. 30, 2018, Settled)

Action against Defendant, the purported president and CEO of an energy company, for an alleged fraudulent offering and sale of securities in the energy company. According to the SEC, Defendant failed to disclose to investors that two individuals with previous felony convictions were actually in charge of the energy company. According to the SEC, Defendant also misrepresented that he had a substantial background in oil and gas development. The SEC further alleges that Defendant assisted
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In re Khaled Khaled (A.P. Nov. 29, 2018, Settled)

Action against Respondent, a celebrity music producer, for alleged touting violations in connection with initial coin offerings. According to the SEC, Respondent promoted three initial coin offerings on his social media accounts without disclosing that the issuers were compensating him for the publicity.  Defendant has agreed to pay disgorgement of $50,000, prejudgment interest of $2,725.72, and a civil penalty of $100,000.

SEC Order

SEC Press Release
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SEC v. Eric T. Landis and Ridgeview Capital Partners LLC (D. Mass. Nov. 29, 2018, Contested)

Action against Defendants, a self-described penny stock promoter and an entity that he controlled, for alleged manipulative trading in microcap stocks. According to the SEC, Defendant promoter falsely claimed that he would distribute promotional materials for stocks in microcap companies. The SEC alleges that Defendant promoter instead traded microcap shares himself using multiple accounts in order to appear to be generating business.

SEC Litigation Release

SEC Press Release

SEC Complaint
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In re Floyd Mayweather Jr. (A.P. Nov. 29, 2018, Settled)

Action against Respondent, a professional boxer, for alleged touting violations in connection with initial coin offerings.  According to the SEC, Respondent promoted three initial coin offerings on his social media accounts without disclosing that the issuers were compensating him for the publicity.  Respondent has agreed to pay disgorgement of $300,000, prejudgment interest of $14,775.67, and a civil penalty of $300,000.

SEC Order

SEC Press Release
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SEC v. Morrie Tobin, et al. (D. Mass. Nov. 27, 2018, Contested)

Action against Defendants, two attorneys, the head of a financial services company, and the owner of an environmental packaging company and pharmaceutical company, for their alleged role in a scheme to manipulate and illegally sell stock in the Defendant owner’s companies. According to the SEC, Defendants concealed the Defendant owner’s control of the companies and his sale of company shares. The SEC also alleges that Defendants made hidden payments to a promoter to encourage investment
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In re Retirement Capital Strategies, Inc. (A.P. Nov. 19, 2018, Settled)

Action against Respondent, a registered investment adviser, for alleged failure to apply advisory fee discounts to certain client accounts contrary to Respondent’s disclosures, representations, and advisory agreements.  According to the SEC, the improperly calculated advisory fees resulted in overcharges to certain clients. Defendant has agreed to pay a civil penalty of $50,000.

SEC Order

SEC Administrative Summary
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In re Vantage Drilling International (A.P. Nov. 19, 2018, Settled)

Action against Respondent, a drilling company, for alleged violations of the FCPA’s internal accounting control provisions by its predecessor, Vantage Drilling Company (“VDC”). The SEC alleges that VDC failed to implement an adequate system of internal controls and, as a result, made payments to a former outside director that the former director may have used to bribe foreign officials. Defendant has agreed to pay disgorgement of $5 million.

SEC Order

SEC Administrative Summary
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In re Paragon Coin, Inc. (A.P. Nov. 16, 2018, Settled)

Action against Respondent, a company established to implement blockchain technology in the cannabis industry, for an alleged unregistered offering. According to the SEC, Defendant publicly offered and sold digital tokens to raise capital without registering the offering or attempting to qualify for an exemption to the registration requirements.  Defendant has agreed to pay a civil penalty of $250,000.

SEC Press Release

SEC Order
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In re CarrierEQ, Inc., d/b/a Airfox (A.P. Nov. 16, 2018, Settled)

Action against Respondent, a mobile technology business, for an alleged unregistered offering.  According to the SEC, Defendant publicly offered and sold digital tokens to raise capital without registering the offering or attempting to qualify for an exemption to the registration requirements.  Defendant agreed to pay a civil penalty of $250,000.

SEC Press Release

SEC Order
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SEC v. Giga Entertainment Media, Inc., et al. (E.D.N.Y. Nov. 15, 2018, Partially Settled, Partially Contested)

Action against Defendants, a software development company and five of its former officers and directors, for alleged fraud against investors. According to the SEC, Defendants purchased sham downloads in order to improve the rating of their app and made false statements to investors about the reasons for the rating increase. The SEC alleges that Defendants also concealed from investors an individual Defendant’s prior mail fraud conviction. Two individual Defendants have agreed to pay penalties of
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SEC v. Mark Burnett, et al. (E.D.N.Y. Nov. 15, 2018, Contested)

Action against Defendants, an alleged boiler room and five individuals, for alleged fraudulent manipulation of stock prices. According to the SEC, the five individual Defendants engaged in manipulative and concealed trading practices and hired the Defendant corporation to solicit investors. Four of the individual Defendants have been charged in a parallel criminal action. A related action by the SEC against the Defendant corporation and 14 other defendants is pending.

SEC Litigation Release
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SEC v. Giga Entertainment Media, Inc., et al. (E.D.N.Y. Nov. 15, 2018, Partially Settled, Partially Contested)

Action against Defendants, a software development company and five of its former officers and directors, for alleged fraud against investors.  According to the SEC, Defendants purchased sham downloads in order to improve the rating of their app and made false statements to investors about the reasons for the rating increase.  The SEC alleges that Defendants also concealed from investors an individual Defendant’s prior mail fraud conviction.  Two individual Defendants have agreed to pay penalties of
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SEC v. Gaylen D. Rust and Rust Rare Coin, Inc. (D. Utah Nov. 15, 2018, Contested) and CFTC and Utah Division of Securities v. Rust Rare Coin Inc. and Gaylen Dean Rust (D. Utah Nov. 13, 2018, Contested)

Actions against Defendants, a trader and a rare coin company, for an alleged fraudulent investment scheme. According to the SEC and CFTC, Defendants misled investors by making false statements about a silver trading program. The SEC and CFTC allege that Defendants used investor funds to make Ponzi-like payments to earlier investors and to pay for Defendant trader’s personal and business expenses.

SEC Litigation Release

SEC Complaint 

CFTC Press Release 

CFTC Complaint
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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
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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
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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
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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
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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)
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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
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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
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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
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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
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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
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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
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