Blog Posts Tagged With SEC

In re Mosaic Capital, f/k/a AOC Securities, LLC (A.P. Aug. 20, 2019, Settled)

Action against Respondent, a registered broker-dealer, for alleged failure to supervise a trader in connection with his fraudulent activity.  According to the SEC, the trader provided artificially inflated price quotes or marks for certain mortgage-backed securities to a customer in exchange for trades being sent to Respondent.  The SEC alleges that Respondent and its CEO knew of the trader’s conduct and failed to implement policies and procedures reasonably designed to prevent his violations.  Respondent has
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SEC v. Crystal World Holdings, Inc., et al. (D.D.C. Aug. 19, 2019, Contested)

Action against Defendants, an individual and his two alter ego entities, for allegedly soliciting money from investors by describing stock in the first entity as gifts offered in exchange for donations to the second entity, a nonprofit founded and controlled by Defendant individual. The SEC alleges that Defendants further misled investors and prospective investors by promising that stock in the first entity would soon be registered with the SEC without taking steps to register the
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In re BMO Capital Markets Corporation (A.P. Aug. 16, 2019, Settled)

Action against Respondent, a registered broker-dealer, for alleged failure to supervise in connection with improper practices related to the pre-release of ADRs.  The SEC alleges that Respondent failed to take reasonable steps to ensure, pursuant to operative agreements, that pre-released ADRs were supported by underlying ordinary shares.  Respondent has agreed to pay disgorgement of $2,218,363.04, prejudgment interest of $546,340,40, and a civil penalty of $1.2 million.

SEC Order

SEC Press Release
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In re Cantor Fitzgerald & Co. (A.P. Aug. 16, 2019, Settled)

Action against Respondent, a registered broker-dealer, in connection with alleged improper practices involving the pre-release of ADRs.  According to the SEC, Respondent’s securities lending desk obtained pre-released ADRs and loaned them to customers or counterparties without taking reasonable steps to determine whether Respondent or its borrowers beneficially owned the underlying ordinary shares.  The SEC further alleges that Respondent failed to establish and implement effective policies and procedures reasonably designed to ensure pre-released ADRs were appropriately
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SEC v. Scott P. Strochak (S.D. Fla. Aug. 16, 2019, Contested)

Action against Defendant, a former registered broker, for alleged misrepresentations regarding an investment fund scheme and acting as an unregistered broker.  According to the SEC, Defendant solicited investors based on false representations that the investment fund company involved was bonded and insured.  The SEC further alleges that Defendant misrepresented the company’s profitability and recklessly repeated the company’s false claims about its growth.

SEC Complaint

SEC Litigation Release
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SEC v. Alan G. Heide (S.D. Fla. Aug. 15, 2019, Contested)

Action against Defendant, the former CFO of a cash-advance company, for alleged offering fraud. According to the SEC, Defendant signed investors’ monthly account statements with knowledge that they contained misrepresentations, including overstatements of the accounts’ values and claims that the company had engaged an independent auditor.  The SEC further alleges that Defendant knew that the company’s founder had misappropriated investor funds.  Defendant has been charged in a parallel criminal proceeding.

SEC Complaint

SEC Press Release
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In re Lorenz Erne (A.P. Aug. 15, 2019, Settled)

Action against Respondent, a former executive at a pharmaceutical company, for alleged insider trading. According to the SEC, Respondent learned material nonpublic information about an upcoming merger in the course of his employment. The SEC alleges that Respondent then bought shares in the target company prior to the merger’s announcement. Respondent has agreed to pay disgorgement of $159,228 and a civil penalty of $79,614.

SEC Order

SEC Administrative Summary
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In re Canaccord Genuity LLC (A.P. Aug. 14, 2019, Settled)

Action against Respondent, a broker-dealer, for alleged Rule 15c2-11 violations.  According to the SEC, Respondent published quotes and made markets for over-the-counter securities without reviewing the accuracy of the issuers’ prospectus and offering materials as required by Rule 15c2-11.  Respondent has agreed to pay a civil penalty of $250,000.

SEC Order

SEC Press Release
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SEC v. Craig Rumbaugh, et al. (C.D. Cal. Aug. 14, 2019, Contested)

Action against Defendant, an investment advisor and his two companies, for alleged fraud and registration failures.  According to the SEC, Rumbaugh advised clients to invest in a fraudulent securities scheme, which was the subject of a separate SEC enforcement action, without disclosing that he received a commission on the investments.

SEC Complaint

SEC Litigation Release
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SEC v. Stuart Frost and Frost Management Company, LLC (C.D. Cal. Aug. 13, 2019, Contested)

Action against Defendants, an investment advisor and its principal, for alleged fraud and breach of fiduciary duty.  According to the SEC, Defendants advised clients to invest in companies that participated in Defendants’ startup-incubator program.  The SEC alleges that, contrary to Defendants’ representations, a significant portion of the fees paid by the participants was used for the incubator’s overhead and for the personal expenses of Defendant principal.

SEC Complaint

SEC Litigation Release
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In re MVP Manager LLC (A.P. Aug. 13, 2019, Settled)

Action against Respondent, an investment advisor, for alleged failure to disclose conflicts of interest.  According to the SEC, Respondent advised its clients to invest in securities without disclosing that it received commissions from the sellers.  Respondent has agreed to pay disgorgement of $150,058.88, prejudgment interest of $19,681.42, and a civil penalty of $80,000.

SEC Order

SEC Administrative Summary
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SEC v. Antonio M. Bravata (E.D. Mich. Aug. 13, 2019, Settled)

Action against Defendant for alleged offering fraud.  According to the SEC, Defendant offered securities in a company he controlled while concealing his role in the company, his criminal record, and the company’s management, among other misrepresentations.  Defendant has agreed to pay a civil penalty of $75,000 and to a trading bar.

SEC Complaint

SEC Litigation Release
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In re SimplyVital Health, Inc. (A.P. Aug. 12, 2019, Settled)

Action against Respondent, a blockchain company, for an alleged unregistered offering.  According to the SEC, Respondent conducted an initial coin offering, in which it offered cryptocurrency tokens to raise money for a healthcare-related blockchain venture, without registering with the SEC.  The SEC declined to impose a civil penalty based on Respondent’s remedial measures, including returning substantially all of the funds it had raised.

SEC Administrative Summary

SEC Order
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SEC v. Harsh Nahata and Ajay S. Bhandari (N.D. Ga. Aug. 12, 2019, Partially Settled, Partially Contested)

Action against Defendants, a former manager of a packaging company and his friend, for alleged insider trading. According to the SEC Defendant former manager learned material nonpublic information about an acquisition by his employer and tipped Defendant friend. The SEC alleges that Defendants then purchased shares in the target firm’s stock before the acquisition’s announcement and sold them thereafter. Defendant friend has agreed pay disgorgement of $22,426, prejudgment interest of $1,233, and a civil penalty
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SEC v. Reginald “Reggie” Middleton, et al. (E.D.N.Y. Aug. 12, 2019, Contested)

Action against Defendants, a finance blogger and his two companies, for alleged offering fraud. According to the SEC, Defendants offered cryptocurrency tokens based on misrepresentations regarding their prior business track record and market demand for the tokens, among other things. The SEC further alleges that Defendant blogger misappropriated investor funds and manipulated the price of the tokens through his trading on an unregistered digital-asset platform.

SEC Complaint

SEC Press Release
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SEC v. Bill Tsai (S.D.N.Y Aug. 12, 2019, Contested)

Action against Defendant, an investment banker, for alleged insider trading. According to the SEC, Defendant learned material nonpublic information about an upcoming acquisition through his employer, which was advising the acquiring firm. The SEC alleges that Defendant then bought call options on the target firm before the acquisition’s announcement and sold them thereafter.

SEC Complaint

SEC Press Release
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SEC v. Richard G. Duncan (D. Mass. Aug. 12, 2019, Contested)

Action against Defendant, an investment advisor, for alleged fraud.  According to the SEC, Defendant advised clients to transfer funds to overseas financial scammers despite warnings from two banks that the purported investment opportunity was fraudulent.  The SEC further alleges that Defendant failed to disclose these warnings to the client and made misleading statements regarding the supposed investment’s rate of return.

SEC Complaint

SEC Litigation Release
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In re Corix Bioscience, Inc. and Michael L. Ogburn (A.P. Aug. 9, 2019, Settled)

Action against Respondents, a publicly traded cannabidiol company and its former executive, for alleged misrepresentations.  According to the SEC, Respondents falsely claimed that Respondent company was able to grow hemp on Native American tribal land, had research relationships with well-known institutions, had obtained government approval to produce hemp, and had harvested hemp for sale.  Respondent former executive has agreed to pay a civil penalty of $200,000 and to officer-and-director and penny-stock bars.  Both Respondents have
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SEC v. Jerry Lee Farish and New Summit Homes, Inc. (N.D. Tex. Aug. 8, 2019, Contested)

Action against Defendants, an airline pilot and his real-estate development company, for alleged fraud. According to the SEC, Defendant induced his colleagues to invest in the construction of a luxury home, purporting to sell the same “second lien” to multiple investors, and then spent the investors’ funds on personal expenses. Defendant pilot has been charged in a parallel criminal proceeding.

SEC Complaint

SEC Litigation Release
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SEC v. Tanmaya Cabra and LaunchByte.io, LLC a/k/a The Kabra Group, LLC (D. Mass. Aug. 5, 2019, Contested)

Action against Defendants, an individual and his alleged shell company, for an alleged Ponzi scheme. According to the SEC, Defendants solicited investor funds for the purported purpose of investing in startups, and then used the funds for personal expenses and to make Ponzi-like payments to earlier investors. Defendant has been charged in a parallel criminal proceeding.

SEC Complaint

SEC Litigation Release
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Delinquent Filings (Aug. 2019)

  • In re Agritech Worldwide, Inc., et al. (A.P. Aug. 2, 2019, Contested)
  • In re Empire Energy Corporation, International, et al. (A.P. Aug. 2, 2019, Contested)
  • In re Artisanal Brands, Inc. and Daleco Resources Corporation (A.P. Aug. 5, 2019, Contested)
  • In re American Rare Earths and Materials Corp. (A.P. Aug. 5, 2019, Contested)
  • In re Dutch Gold Resources, Inc. and Paracap Corporation (A.P. Aug. 5, 2019, Contested)
  • In re Alife Corporation, et al. (A.P. Aug. 6,

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In re Sito Mobile, Ltd. (A.P. Aug. 5, 2019, Settled); SEC v. Gerard F. Hug and Kurt W. Streams (D.N.J. Aug. 2, 2019, Contested)

Action against Respondent, a mobile-data advertising company, and Defendants, two of Respondent’s former executives, for alleged financial misstatements and misappropriation, respectively.  According to the SEC, Defendants improperly used company funds to pay personal expenses.  The SEC alleges that these payments were not accurately recorded in Respondent’s books in records, causing Respondent to understate Defendants’ compensation.  The SEC has declined to impose a civil penalty on settling Respondent based on its cooperation.

SEC Order
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In re Brixmor Property Group, Inc. (A.P. Aug. 1, 2019, Settled); SEC v. Michael A. Carroll, et al. (S.D.N.Y. Aug. 1, 2019, Partially Settled and Partially Contested)

Actions against Respondent, a real estate investment trust, and Defendants, four of Respondent’s former executives, for alleged financial fraud.  According to the SEC, Respondent and Defendants manipulated a non-GAAP metric known as “same property net operating income” to give the false impression that Respondent had achieved its publicly issued growth targets.  Respondent has agreed to pay a civil penalty of $7 million, and two Defendants have agreed to the entry of partial judgments, with monetary
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