SEC: Research Analyst Is Insider Trading in Mother’s Brokerage Account

The Securities and Exchange Commission today announced insider trading charges against a research analyst who allegedly reaped more than $1.5 million in February through trades he made in his mother’s brokerage account based on nonpublic information he learned at work.

The SEC alleges that John Afriyie found out about an impending acquisition of home security company The ADT Corporation when prospective acquirer Apollo Global Management approached the Manhattan-based investment firm where he was employed and discussed potential debt financing for a public-to-private deal.  Afriyie subsequently accessed several highly confidential, deal-related documents on the firm’s computer network and purchased thousands of high-risk, out-of-the-money ADT call options in his mother’s account in anticipation that ADT’s stock price would rise when the transaction was publicly announced.  The ADT deal was announced on February 16, and afterwards Afriyie sold all of the ADT options in his mother’s account to obtain his illicit profits.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Afriyie. 

“Insider traders should have learned by now that trying to hide their illegal activity in a relative’s account ultimately won’t work,” said Jina L. Choi, Director of the SEC’s San Francisco Regional Office.  “On behalf of the millions of traders in our markets who play by the rules, we will continue to detect and expose those who don’t.”

Today’s charges are the latest example of SEC staff thwarting the efforts of insider traders to avoid detection by trading in a relative's brokerage account.  Other cases include:

·         A group of Northern California men allegedly conducted an insider trading scheme in which the primary trader used his brother-in-law’s account to trade on nonpublic tips about Ross Stores leaked by his friend who worked there.

·         A then-employee at Goldman Sachs was charged with insider trading after SEC enforcement staff utilized data analysis tools to detect his unusual trading activity in two different accounts, including one belonging to his father.

·         A New York City investment banker was charged with insider trading in his father’s account as well as an account belonging to the mother of his young child to generate illegal proceeds in lieu of formal child support payments.

·         A Chicago-based accountant was charged with secretly using his wife’s account to illegally trade in advance of financial reporting announcements by the company where he worked.

·         A systems administrator at Green Mountain Coffee allegedly used his mother’s account for insider trading based on confidential data he obtained shortly before the company made its quarterly earnings announcement.

The SEC’s complaint against Afriyie, which was filed in U.S. District Court for the Southern District of New York, charges him with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.  The complaint also names his mother as a relief defendant for purposes of recovering ill-gotten gains that Afriyie generated by trading in his mother’s name.

The SEC’s continuing investigation is being conducted by Walker Newell and supervised by Jennifer J. Lee of the San Francisco office with assistance from John Rymas of the Market Abuse Unit.  The SEC’s litigation will be led by Mr. Newell and Marc Katz.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York, the Federal Bureau of Investigation, the Financial Industry Regulatory Authority, and the Options Regulatory Surveillance Authority.

SEC Press Release

SEC: Company Misled Investors About Energy-Efficient Technology

The Securities and Exchange Commission today announced fraud charges against a Texas-based technology company and its founder accused of boosting stock sales with false claims about a supposedly revolutionary computer server and big-name customers purportedly placing orders to buy it.

Also charged in the SEC’s complaint is Texas Attorney General Ken Paxton and a former member of the company’s board of directors for allegedly recruiting investors while hiding they were being compensated to promote the company’s stock.

The SEC alleges that Servergy Inc. and William E. Mapp III sold $26 million worth of company stock in private offerings while misleading investors to believe that the Cleantech CTS-1000 server (the company’s sole product) was especially energy-efficient.  They said it could replace “power-hungry” servers found in top data centers and compete directly with top server makers like IBM, Dell, and Hewlett Packard.  However, neither Mapp nor Servergy informed investors that those companies were manufacturing high-performance servers with 64-bit processors while the CTS-1000 had a less powerful 32-bit processor that was being phased out of the industry and could not in reality compete against those companies.

The SEC further alleges that when Servergy was low on operating funds, Mapp enticed prospective investors by falsely claiming well-known companies were ordering the CTS-1000, and he specifically mentioned an order purportedly received from Amazon.  In reality, an Amazon employee had merely contacted Servergy because he wanted to test the product in his free time for personal use.

Servergy has since cut ties with Mapp, who served as CEO.  The company agreed to pay a $200,000 penalty to settle the SEC’s charges.  The litigation continues against Mapp in U.S. District Court for the Eastern District of Texas. 

“We allege that Mapp deceived investors into believing that Servergy’s groundbreaking technology was generating lucrative sales to major customers when it was technologically behind its competitors and made no actual sales,” said Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office. 

While serving in the Texas House of Representatives, Paxton allegedly reached an agreement with Mapp to promote Servergy to prospective investors in return for shares of Servergy stock.  According to the SEC’s complaint, Paxton raised $840,000 in investor funds for Servergy and received 100,000 shares of stock in return, but never disclosed his commissions to prospective investors while recruiting them.  Similarly, former Servergy director Caleb White allegedly raised more than $1.4 million for Servergy and received $66,000 and 20,000 shares of Servergy stock while never disclosing these commissions to investors.  White has agreed to settle the SEC’s charges by paying $66,000 in disgorgement and returning his shares of Servergy stock to the company.  The SEC’s litigation continues against Paxton.

“People recruiting investors have a legal obligation to disclose any compensation they are receiving to promote a stock, and we allege that Paxton and White concealed the compensation they were receiving for touting Servergy’s product,” Mr. Shipchandler said.

The SEC’s complaint charges Servergy, Mapp, Paxton, and White with violating Sections 17(a) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934.  Servergy, Mapp, and White also allegedly violated Sections 5(a) and (c) of the Securities Act, and Paxton and White allegedly violated Section 17(b) of the Securities Act and Section 15(a) of the Exchange Act. 

Servergy and White neither admitted nor denied the SEC’s charges in their settlements.

The SEC’s investigation was conducted by Samantha S. Martin and Carol J. Hahn and supervised by Jessica B. Magee and David L. Peavler in the Fort Worth office.  The SEC’s litigation will be led by Matthew J. Gulde and Ms. Magee.

SEC Press Release

SEC Charges Four in Fraudulent “Free Dinner” Scheme

The Securities and Exchange Commission today announced that it has charged four individuals in a fraud whose victims included seniors who were solicited at “free dinner” investment seminars in Florida.

The SEC alleges that Philadelphia residents Joseph Andrew Paul and John D. Ellis, Jr. lied about the track record of their investment advisory firm and recruited James S. Quay of Atlanta and Donald H. Ellison of Palm Bay, Florida, to lure potential victims with promises of lofty returns.

According to the SEC’s complaint, Paul and Ellis created fraudulent marketing materials including some with performance numbers that were “cut and pasted” from another firm’s website.  The complaint further alleges that Quay and Ellison used these materials to mislead seniors who responded to their mass-mailing offer of a free dinner at a Tampa restaurant.

“As we allege in our complaint, a large portion of the money was never invested but instead was split among these self-described investment experts whose only real expertise was stealing other people’s money,” said Sharon Binger, Director of the SEC’s Philadelphia Regional Office.

According to the SEC’s complaint filed in the U.S District Court for the Eastern District of Pennsylvania, Quay used an alias, “Stephen Jameson,” to conceal his true identity from potential victims.  Quay was previously convicted of tax fraud in 2005 and found liable for securities fraud in a 2012 SEC enforcement action.   

“Jameson” was not registered as an investment professional during the relevant period of fraudulent conduct, and Ellison also was not registered for the majority of that period.  Investors can easily and quickly check the registration status and disciplinary history of investment professionals by using the searchable database on the SEC’s Investor.gov website. 

The SEC’s investigation was conducted by Lisa M. Candera and Brendan P. McGlynn and supervised by G. Jeffrey Boujoukos.   David L. Axelrod and Mark R. Sylvester will lead the SEC’s litigation.  The examination that led to the investigation was conducted by Michael K. Nally, William M. Lavin, and John Cajulis, under the supervision of Steven R. Dittert.  

SEC Press Release

SEC: Navistar International and Former CEO Misled Investors About Advanced Technology Engine

The Securities and Exchange Commission today charged Navistar International Corp. with misleading investors about its development of an advanced technology truck engine that could be certified to meet U.S. emission standards.

Navistar, without admitting or denying the charges, has reached a settlement with the SEC and agreed to pay a $7.5 million penalty.  Separately, in a complaint filed in federal court in the Northern District of Illinois, the SEC charged former Navistar CEO Daniel C. Ustian with misleading investors and with aiding and abetting violations by Lisle, Illinois-based Navistar.

The SEC alleges that Navistar and Ustian failed to fully disclose the company’s difficulties obtaining Environmental Protection Agency (EPA) certification of a truck engine able to meet stricter EPA Clean Air Act standards that took effect in 2010.  Navistar and Ustian also are alleged to have repeatedly misled investors about Navistar’s development of the engine, which used exhaust-gas-recirculation (EGR) technology.  Navistar later abandoned the effort and adopted the selective catalytic reduction (SCR) technology used by its competitors.

“When public companies and top executives discuss important regulatory developments with investors, they must tell the whole truth,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement. “Here, we allege that Navistar and its former CEO misled investors about their dealings with the EPA and the likely approval of its new emissions technology."

David Glockner, Director of the SEC’s Chicago Regional Office added, “We allege that in 2011 and 2012, the EPA repeatedly raised serious concerns with Navistar about its applications to certify an engine using EGR technology and that top Navistar officials knew the company had not succeeded in developing a commercially viable engine that would meet EPA standards.  Navistar and its then-CEO misled investors about these difficulties in numerous SEC filings, press releases, and public conference calls, and today we seek to hold them accountable for that misconduct.”

According to the SEC’s order instituting a settled administrative proceeding against Navistar:

• In early 2011, in an effort to reassure investors about its emissions control strategy, Navistar applied for certification of an engine it knew was not ready for production and sale even if the EPA certified it.  The EPA did not approve the application and by summer 2011, Navistar decided not to pursue it any longer.
• In late 2011, Navistar began preparing another application for EPA certification.  Four days after a meeting in which the EPA staff told Navistar that the proposed engine did not appear to meet the certification requirements, Navistar filed its 2011 annual report on Form 10-K, which stated that it planned to apply to have the EPA certify the engine and that it believed the engine met EPA’s certification requirements.
• After Navistar submitted a new application in early 2012, EPA staff raised  “several serious concerns” that it said would need to be resolved before it could approve the application.  Nevertheless, in a press release and filings in March 2012, Navistar characterized the application as a “milestone,” and in a conference call with analysts and investors, Ustian indicated that certification was proceeding in a typical timeframe and that Navistar could begin production on the engine in June 2012.
• In May 2012, Navistar withdrew its January 2012 application and submitted a third one incorporating changes to lower emissions at the expense of fuel economy and other engine performance features.  In a June 4, 2012 meeting, EPA staff told Navistar that it had serious concerns about this application as well and the next day informed Navistar in writing that the engine as currently designed was “unlikely” to be certified.  Despite this, Navistar’s June 2012 quarterly filing and conference call suggested that Navistar was unaware of any concerns by the EPA regarding the May 2012 application – one of several misstatements in the filing and call regarding the application.
• In July 2012, Navistar announced that it was withdrawing its application and would begin work on an engine using SCR technology.

The SEC’s investigation was conducted by Anne Graber Blazek, Amy Flaherty Hartman, Tim Stockwell, Will Saylor and Ann Tushaus, and was supervised by Robert J. Burson.  Eric Phillips and Jonathan Polish will lead the SEC’s litigation against Ustian.

SEC Press Release

Former TV Commentator Settles Penny Stock Fraud Charges

The Securities and Exchange Commission today announced that a former market analyst and TV news commentator has agreed to settle charges that he and his company fraudulently promoted a penny stock to investors.

The SEC alleges that Tobin Smith and NBT Group Inc. were paid to prepare and disseminate e-mails, online blogs, articles, and other communications touting the stock of IceWEB Inc., a data storage company.  Smith and NBT did not fully disclose their compensation to investors, who did not have the benefit of knowing that part of their pay was tied to a sustained increase in IceWEB’s share price.  The promotional material also contained false and misleading statements intended to artificially increase the trading volume and share price of IceWEB’s stock. 

Smith and NBT agreed to be barred from involvement in any future penny stock offerings and must pay disgorgement of $165,900 plus $16,893 in interest.  Smith also must pay a $75,000 penalty. 

“Smith and NBT claimed IceWEB was a ‘perfect tech stock’ in order to manipulate the market and enrich themselves with illicit stock promoter fees,” said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office.  

According to the SEC’s complaint filed in U.S. District Court for the District of Columbia:

• Smith entered into two separate agreements on NBT’s behalf to promote IceWEB and its stock in exchange for $330,000 in cash and IceWEB stock. 
• NBT could earn incentive fees of more than $250,000 if the marketing campaigns succeeded in increasing share price.
• Smith and NBT only disclosed some of their compensation and never informed investors that they would earn incentive fees if the stock price increased above a certain amount.
• Smith and NBT falsely stated in communications to subscribers that Smith discovered IceWEB when he was “searching for a solution” to his own company’s “rapidly growing cloud data storage problem.” 
• In fact, Smith only “found” IceWEB after he was retained to promote the company.  He did not actually use IceWEB for NBT data storage.
• Smith and NBT also falsely touted that IceWEB “provides the cheapest storage box and more important the lowest cost/highest performance solution to”  public and private data storage centers including “Amazon cloud drive, Dropbox, Evernote, iCloud, Microsoft SkyDrive, Google Drive,  SugarSync” and Facebook.
• Smith did not know whether any of these companies were actually IceWEB customers.
• Smith touted he could “easily make the case” for “10X Return -- $200 million valuation” on IceWEB given “what has been already paid for its competitors.” 
• But Smith made these projections despite being well aware of IceWEB’s poor financial condition and knowing that no company was contemplating a purchase of IceWEB.  

The SEC’s complaint charges Smith and NBT with violating the anti-touting and anti-fraud provisions of Section 17(b) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.  Smith and NBT neither admitted nor denied the allegations in the settlement, which is subject to court approval. 

    

The SEC’s investigation was conducted by Yolanda Ochoa and Finola H. Manvelian and trial counsel are John Berry and Karen Matteson in the Los Angeles office. 

*   *   *

SEC Investor Alert: Fraudulent Stock Promotions

SEC Press Release

SEC: Biotech Company Misled Investors About New Drug's Status With FDA

The Securities and Exchange Commission today announced fraud charges against a Massachusetts-based biotech company and three former executives for misleading investors about the company’s efforts to obtain Food and Drug Administration (FDA) approval for its flagship developmental drug to treat kidney cancer.

The SEC alleges that AVEO Pharmaceuticals Inc. concealed the FDA’s level of concern about Tivozanib in public statements to investors by omitting the critical fact that FDA staff had recommended a second clinical trial to address their concerns about patient death rates during the first clinical trial.  When the FDA made public months later that it had recommended an additional clinical trial, the company’s stock price declined 31 percent.  AVEO never conducted an additional trial, and the FDA later refused to approve Tivozanib.

AVEO agreed to pay a $4 million penalty to settle the SEC’s charges without admitting or denying the allegations in the complaint filed today in federal court in Boston.  The SEC’s case continues against three of the company’s former officers: CEO Tuan Ha-Ngoc, chief financial officer David Johnston, and chief medical officer William Slichenmyer.

“We allege that AVEO and its executives hid from investors the reality of their communications with the FDA on Tivozanib while suggesting they had identified a simpler route to FDA approval,” said Paul G. Levenson, Director of the SEC’s Boston Regional Office. “Companies must be forthcoming about their communications with regulators so investors can make informed investment decisions while knowing what challenges may lay ahead.”

According to the SEC’s complaint:

• AVEO raised $53 million in a public offering of its stock in January 2013 while failing to disclose that the FDA staff had explicitly recommended during a May 2012 meeting that AVEO conduct an additional clinical trial for Tivozanib. 
• AVEO and its officers understood that the FDA’s concerns were serious and an additional clinical trial is an expensive and time-consuming proposition.  While AVEO went so far as to design a second trial and present trial designs to the FDA, it was never conducted. 
• In corporate communications, AVEO and its officers suggested that they intended to satisfy the FDA by presenting new analyses of the data that had been gathered in the previous clinical trial.  In doing so, AVEO concealed the FDA staff’s level of concern about Tivozanib’s impact on patient survival and the recommendation that AVEO conduct a second clinical trial.
• Ha-Ngoc and Johnston knowingly approved and certified a press release and public filings that failed to disclose the FDA staff’s recommendation for an additional clinical trial. 
• Johnston also made public statements during investor conferences suggesting the FDA staff had asked only for an explanation of the survival results.  In reality, the FDA staff had recommended a second trial. 
• Slichenmyer misled investors in an investor conference call when he falsely stated he could not “speculate” on what the FDA “might be thinking” and “might want [AVEO] to do in the future.”  He actually knew that the FDA staff had recommended an additional trial.

The SEC’s complaint charges AVEO, Ha-Ngoc, Johnston, and Slichenmyer with violations of the antifraud provisions of the federal securities laws and various other violations.  The settlement with AVEO is subject to court approval.  The SEC is seeking disgorgement plus interest and penalties, permanent injunctions, and officer-and-director bars against Ha-Ngoc, Johnston, and Slichenmyer.

The SEC’s investigation was conducted by Susan Cooke Anderson and Michele T. Perillo of the Enforcement Division’s Market Abuse Unit in the Boston Regional Office.  The SEC’s litigation will be led by Rachel E. Hershfang and Ms. Anderson.

SEC Press Release

SEC Halts Fraud by Manager of Investments in Pre-IPO Companies

The Securities and Exchange Commission today announced fraud charges and asset freezes obtained in a case filed against a New Jersey-based fund manager and two firms he controls that marketed shares in promising pre-IPO tech companies in the Bay Area. The SEC alleges they stole $5.7 million from investors and diverted millions more to other improper and undisclosed uses.

Specifically, the SEC alleges that John Bivona used money raised through Saddle River Advisors and SRA Management Associates to pay off earlier investors, prop up other funds, and pay family-related expenses.  He secretly steered the lion’s share of misappropriated funds to his nephew Frank Mazzola, who was barred from the securities industry in a prior SEC enforcement action and is charged along with Bivona and his firms in the complaint filed Monday in federal district court in California.

“We allege that Bivona preyed on investors seeking to invest in popular pre-IPO technology companies and hid the scheme by avoiding outside reviews of the funds and depriving investors of financial statements despite promises to do so,” said Jina L. Choi, Director of the SEC’s San Francisco Regional Office.

According to the SEC’s complaint:

• Bivona raised more than $53 million from investors, and the money he was siphoning away for undisclosed uses left his firms continuously short of the cash needed to buy the shares promised to investors.
• Bivona kept the scheme going by indiscriminately transferring money among more than a dozen bank accounts associated with an array of different entities. 
• Bivona used investor money to pay Mazzola’s credit card bills, income taxes, a car loan, attorney fees, and the mortgage on a Jersey Shore vacation home.
• Investors were told they would receive financial statements for the funds on an annual basis.  But no financial statements were ever prepared.
• Bivona and Mazzola failed to register the offering with the SEC and thereby violated the bad actor rules of the federal securities laws, which prohibit companies from relying on registration exemptions under Rule 506 of Regulation D if a promoter or investment manager like Mazzola has a disqualifying event like his fraud-based injunction.

Investors can learn more about the risks involved with investing in unregistered offerings by reading such SEC investor bulletins as 10 Red Flags That An Unregistered Offering May Be A Scam and Private Placements Under Regulation D.

The SEC’s complaint seeks permanent injunctions plus disgorgement with prejudgment interest and monetary penalties from Bivona and the firms as well as Mazzola. The SEC obtained a court order to freeze the assets of Frank Mazzola and his wife, a relief defendant, and ordering the appointment of an independent monitor over Saddle River Advisors, SRA Management, the SRA Funds, and other affiliated entities. The order also preliminarily enjoins Bivona, Saddle River Advisors, and SRA Management from violating the antifraud provisions of the federal securities laws and raising money from investors.

The SEC’s investigation was conducted by Jessica W. Chan and Ellen Chen of the San Francisco office, and the case was supervised by Jeremy E. Pendrey.  The SEC’s litigation will be led by John Yun, Marc Katz, and Ms. Chan.

SEC Press Release

SEC Charges Microcap Company CEO for Touting Bogus “Clean Energy” Contracts With Foreign Governments

The Securities and Exchange Commission today charged a microcap company CEO for falsely claiming to have a lucrative relationship with the United Nations and billions of dollars in clean energy contracts with foreign governments.  

The SEC alleges that RVPlus Inc. CEO Cary Lee Peterson made bogus claims in the company’s public filings and in statements to private investors, and that he and RVPlus participated in an unlawful distribution of RVPlus’s stock.  The SEC temporarily suspended trading in RVPlus securities in July 2013, citing “material deficiencies” in the company’s financial statements.  

“We allege that Peterson inflated RVPlus’s finances and expected profitability,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.  “We also allege that using a pseudonym, he posted hundreds of messages to an online investors’ forum calling RVPlus stock ‘undervalued,” and urging investors to ‘buy up as much as possible.’”

In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against Peterson. 

According to the SEC’s complaint filed in U.S. District Court for the District of New Jersey:

• Starting in May 2012, Peterson filed periodic reports with the SEC claiming that RVPlus had a lucrative relationship with the United Nations and clean energy agreements with governmental bodies in Nigeria, Haiti, and Liberia worth $2.8 billion.  RVPlus had no relationship with the U.N. and the contracts were fictitious.
• Peterson repeatedly claimed in RVPlus’s SEC filings that RVPlus had issued invoices and was owed millions of dollars in accounts receivable on the bogus contracts.
• RVPlus and Peterson gained control of more than 90 percent of RVPlus’s free trading shares and gave them to individuals who unlawfully sold them into the market.

The SEC’s complaint charges RVPlus and Peterson with violating the antifraud provisions of the securities laws and an SEC antifraud rule.  It also charges RVPlus and Peterson with violating the registration provisions of the securities laws and Peterson with aiding and abetting RVPlus’s violations of the antifraud provisions.  The SEC is seeking a permanent injunction, return of allegedly ill-gotten gains with interest, and penalties.  In addition, it is seeking to bar Peterson from serving as a corporate officer or director and from participating in the penny-stock business.

The SEC’s investigation was conducted by Megan R. Genet, Bennett Ellenbogen, Jordan Baker, and Adam Grace of the New York office.  The SEC’s litigation will be led by Preethi Krishnamurthy and supervised by Lara Shalov Mehraban.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of New Jersey, the Federal Bureau of Investigation, the Financial Industry Regulatory Authority, and the British Columbia Securities Commission.

SEC Press Release

SEC: California Businessman Attempted Cover Up of Stolen Investor Funds

The Securities and Exchange Commission today announced fraud charges against a California businessman accused of stealing investor assets and then trying to cover it up once the SEC caught onto his scheme.

The SEC alleges that Daniel R. Nase raised money from investors through an unregistered offering of common stock in his Bakersfield, California-based company, BIC Real Estate Development Corp., and used the funds for personal expenses.  According to the SEC’s complaint filed in U.S. District Court for the Eastern District of California:

• Nase told investors that BIC would invest in real estate and promissory notes.  With money he used to purchase real estate and notes, Nase improperly titled most of the properties in his name or his wife’s name or their family trust, not BIC.
• Nase used some investor funds to pay for clothing, vacations, student loans, and other personal expenses.
• Nase tried to cover up his theft after learning of the SEC’s investigation by investing stolen assets back into the company to make it appear he was increasing his equity stake in it.

Nase was not registered with the SEC or any state regulator to sell investments.  Investors can quickly and easily check whether people selling investments are registered by using the SEC’s investor.gov website.  

“Those raising money for a business venture must use it as promised and not to simply enrich themselves,” said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office.  “As alleged in our complaint, time and again Nase used investor funds for an illicit personal benefit.”

The SEC’s complaint charges Nase and BIC with violating federal antifraud laws and rules and securities registration provisions.  The complaint seeks emergency relief in the form of a temporary restraining order, asset freeze, and a preliminary injunction.  It also seeks return of allegedly ill-gotten gains along with interest, penalties, and permanent injunctions and other relief against Nase and BIC.

The SEC’s investigation was conducted by Manuel Vazquez, Matthew Montgomery, Roger Boudreau, and Robert Conrrad, and the litigation will be led by John Berry, John Bulgozdy, Mr. Vazquez, and Mr. Montgomery.  

SEC Press Release

SEC Charges Company and Executives for Faulty Evaluations of Internal Controls

The Securities and Exchange Commission has settled charges against Texas-based oil company Magnum Hunter Resources Corporation and several individuals, including a company consultant, for deficient evaluation of the company’s internal controls over financial reporting, and failures to maintain internal control over financial reporting between Dec. 31, 2011 and Sept. 30, 2013. 

Internal control over financial reporting (ICFR) refers to a company’s process for providing reasonable assurance to the public regarding the reliability of its financial reporting.  SEC rules require company management to evaluate and annually report on the effectiveness of ICFR, including disclosing any identified material weaknesses that creates a reasonable possibility that the company will not timely prevent or detect a material misstatement of its financial statements.  Management may not conclude ICFR is effective if a material weakness exists.

The SEC alleges that MHR and two senior officers – former CFO Ronald Ormand and former chief accounting officer David Krueger – failed to properly evaluate and apply applicable ICFR standards and improperly concluded that MHR had no material weaknesses.  The SEC also charged former MHR consultant Joseph Allred, and former MHR audit engagement partner Wayne Gray, with improperly evaluating the severity of MHR’s internal control deficiencies and misapplying relevant standards for assessing deficiencies and material weaknesses.  Accordingly, the public was not told that MHR had a material weakness in its ICFR.

According to the SEC’s orders:

• MHR’s rapid growth, which included multiples of revenue growth in 2010 and significant acquisitions in 2010 and 2011, strained its accounting resources.  The acquisition and revenue growth caused Magnum Hunter to be unable to complete its standard monthly close process on time.
• Ronald Ormand and David Krueger knew of the stresses placed on Magnum Hunter’s accounting department as a result of its rapid growth.  Nonetheless, they failed to apply appropriate standards when determining the severity of MHR’s internal control deficiency.
• Joseph Allred, a partner at a PCAOB-registered public accounting firm that provided consulting and internal auditing services to Magnum Hunter, led consulting engagements to document and test Magnum Hunter’s controls and identified problems in the company’s accounting department that exhibited “inadequate and inappropriately aligned staffing.”  These problems caused delays in Allred’s testing. 
• Despite identified problems, and his belief that “[t]he potential for error in such a compressed work environment presents substantial risk,” Allred concluded that the staffing deficiency in the company’s accounting department did not rise to the level of a material weakness.
• Wayne Gray, an engagement partner at a PCAOB-registered public accounting firm that served as Magnum Hunter’s independent auditor, recognized during his audit that MHR lacked “adequate internal control over financial reporting due to inadequate and inappropriately aligned staffing” which “increases the possibility of a material error occurring and being undetected.”  Despite this assessment, Gray concluded that the weakness did not rise to the level of material weakness and failed to adequately document the basis for his conclusion.

“Effective internal controls are a critical safeguard against false and inaccurate information that may harm shareholders,” said Shamoil T. Shipchandler, Director for the SEC’s Fort Worth Regional Office.  “This action emphasizes that all those involved in ICFR assessments – companies, management, external auditors and consultants – must take their responsibilities seriously and rigorously assess controls, including those over financial reporting.”

Without admitting or denying the findings in the cease-and-desist orders covering various reporting and internal control provisions of the federal securities laws, MHR agreed to pay a penalty of $250,000 subject to bankruptcy court approval, Ormand and Allred agreed to pay penalties of $25,000 and $15,000 respectively, and Krueger and Gray agreed to be suspended from appearing and practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies.  The SEC’s order permits them to apply for reinstatement after one year.

The SEC’s investigation was conducted by David Whipple, David King, and Chris Davis and supervised by Jessica Magee and David Peavler of the Fort Worth office.

SEC Press Release

SEC: Tech Company Misled Investors About Key Product

The Securities and Exchange Commission today announced that a developer of technologies for touchscreen devices has agreed to pay $750,000 to settle charges that it misled investors about the production status and sales agreements for a key product.

Two former company executives face related charges in an SEC complaint filed today in U.S. District Court for the Southern District of Texas.  The SEC entered into a deferred prosecution agreement with the company’s former chairman of the board, who has agreed to cooperate and be barred from serving as an officer and director for five years.

The SEC alleges that Uni-Pixel Inc. began publicly touting sales of a touchscreen sensor product supposedly in speedy high-volume commercial production when in fact only a few samples had been manually completed.  The misrepresentations caused Uni-Pixel’s stock price to more than double, enabling then-CEO Reed Killion and then-CFO Jeffrey Tomz to make more than $2 million in personal profits from selling their own shares of company stock.  Killion and Tomz allegedly knew the company’s statements were untrue and Uni-Pixel’s manufacturing process was still incapable of mass producing commercial quantities of sensors.

“We allege that Uni-Pixel and top executives portrayed a company whose technology had arrived when in truth it was still in the developmental stage,” said Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office.  “Tech companies and their officers must be honest with investors about the state of their products and cannot portray them as something they are not.”

According to the SEC’s complaint:

• Uni-Pixel announced “multi-million dollar” sales agreements in 2012 and 2013 that highlighted potential revenues but omitted material conditions the company had to meet to actually receive those revenues.
• Uni-Pixel announced in April 2013 that its high-volume production line was “qualified and production ready” and its capacity “started at fifty moving to hundreds and then thousands over the next several months.”  At the time, Uni-Pixel had yet to produce any functional sensors through its high-speed process.
• Uni-Pixel issued a press release in November 2013 touting a “purchase order” for its sensors that expected to ship an initial “commercial run” of sensors by year-end.  The company concealed that the order was for a mere $10 worth of sensors for the customer to review as samples.

Without admitting or denying the SEC’s charges, Uni-Pixel consented to entry of a final judgment permanently enjoining it from violating Section 17(a) of the Securities Act of 1933 and Sections 10(b), 13(a), and 13(b) of the Securities and Exchange Act of 1934 as well as Rules 10b-5, 12b-20, 13a-1, 13a-11, and 13a-13.  The settlement is subject to court approval.  The SEC’s litigation continues against Killion and Tomz.

The deferred prosecution agreement with former board chairman Bernard T. Marren alleges that he became aware that information in Uni-Pixel’s press releases was inaccurate but failed to ensure that the company corrected the releases.  The agreement requires him to cooperate with the SEC’s continuing case while complying with certain undertakings in order to avoid civil charges against him. 

The SEC’s investigation was conducted by David Whipple, Carol Hahn, and David King, and the case was supervised by Jessica Magee in the SEC’s Fort Worth Regional Office.  The SEC’s litigation will be led by Matt Gulde.

SEC Press Release

Insider Traders Returning Illegal Profits and Kickbacks

The Securities and Exchange Commission today announced that a Florida man trading on inside information ahead of a pharmaceutical company merger and a friend who tipped him have agreed to settle enforcement actions against them.

Jay Y. Fung has agreed to pay back more than $700,000 in illegal profits plus more than $60,000 in interest earned after allegedly purchasing stock and call options in Pharmasset Inc. based on his friend’s tip that it was about to be acquired.  The SEC alleges that Fung cashed in when Pharmasset’s stock rose 84 percent after its acquisition by Gilead Sciences was publicly announced, and he paid kickbacks to his friend who provided the nonpublic information. 

The SEC filed a complaint against Fung today in federal district court in Newark, N.J., and the U.S. Attorney’s Office for the District of New Jersey today announced parallel criminal charges.

The SEC previously charged Fung’s friend and tipper Kevin Dowd, who learned the nonpublic information during his employment at an investment advisory firm where a Pharmasset board member maintained an account and confidentially sought financial advice in advance of the acquisition.  Dowd has since cooperated with the SEC’s investigation and agreed to pay back the cash kickbacks he received from Fung and be barred from the securities industry and penny stock offerings.  Dowd also pleaded guilty in a parallel criminal case.

“SEC enforcement staff continue to develop and refine analytical tools to uncover illicit trading activity and hold accountable those abusing the markets for their own financial gain,” said Joseph G. Sansone, Co-Chief of the SEC’s Market Abuse Unit, which has an Analysis and Detection Center dedicated to crunching trading data to identify suspicious trading patterns.   

The SEC’s settlements with Fung and Dowd are subject to court approval. 

The SEC’s investigation was conducted by Paul T. Chryssikos and Scott A. Thompson of the Market Abuse Unit and the Philadelphia Regional Office with assistance from John Rymas in the Analysis and Detection Center and Christopher R. Kelly of the Philadelphia office.  The investigation was supervised by Mr. Sansone.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of New Jersey and the Federal Bureau of Investigation.  

SEC Press Release

VimpelCom to Pay $795 Million in Global Settlement for FCPA Violations

The Securities and Exchange Commission today announced a global settlement along with the U.S. Department of Justice and Dutch regulators that requires telecommunications provider VimpelCom Ltd. to pay more than $795 million to resolve its violations of the Foreign Corrupt Practices Act (FCPA) to win business in Uzbekistan.

The SEC alleges that VimpelCom offered and paid bribes to an Uzbek government official related to the President of Uzbekistan as the company entered the Uzbek telecommunications market and sought government-issued licenses, frequencies, channels, and number blocks.  At least $114 million in bribe payments were funneled through an entity affiliated with the Uzbek official, and approximately a half-million dollars in bribes were disguised as charitable donations made to charities directly affiliated with the Uzbek official.

“VimpelCom made massive revenues in Uzbekistan by paying over $100 million to an official with significant influence over top leaders of the Uzbek government,” said Andrew J. Ceresney, Director of the SEC Enforcement Division.  “These old-fashioned bribes, hidden through sham contracts and charitable contributions, left the company’s books and records riddled with inaccuracies.”

The settlement requires VimpelCom to pay $167.5 million to the SEC, $230.1 million to the U.S. Department of Justice, and $397.5 million to Dutch regulators.  The company must retain an independent corporate monitor for at least three years. 

“International cooperation among regulators is critical to holding companies responsible for all facets of a bribery scheme.  This closely coordinated settlement is a product of the extraordinary efforts of the SEC, Department of Justice, and law enforcement partners around the globe to jointly pursue those who break the law to win business,” said Kara N. Brockmeyer, Chief of the SEC Enforcement Division’s FCPA Unit.

The SEC’s complaint was filed in U.S. District Court for the Southern District of New York.  VimpelCom consented to the entry of a court order ordering the company to pay disgorgement and retain an independent monitor, and permanently enjoining the company from future violations of Sections 30A, 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934. 

The SEC’s continuing investigation is being conducted by the FCPA Unit under the supervision of Charles Cain.  The SEC appreciates the significant assistance of the Department of Justice’s Criminal Division, Fraud and Asset Forfeiture Money Laundering Sections as well as the following agencies: Internal Revenue Service, Department of Homeland Security, Public Prosecution Service of the Netherlands (Openbaar Ministrie), National Authority for Investigation and Prosecution of Economic and Environmental Crime in Norway (ØKOKRIM), Swedish Prosecution Authority, Office of the Attorney General in Switzerland, and Corruption Prevention and Combating Bureau in Latvia.  Other valuable assistance was provided by the British Virgin Islands Financial Services Commission, Caymans Islands Monetary Authority, Bermuda Monetary Authority, and Central Bank of Ireland, Estonia Financial Supervisory Authority (Finantsinspektioon), Comisión Nacional del Mercado de Valores (Spain), Latvian Financial and Capital Market Commission, UAE Securities and Commodities Authority, Banking Commission of the Marshall Islands, and Gibraltar Financial Services Commission. 

SEC Press Release

SEC Charges Biopesticide Company and Former Executive With Accounting Fraud

The Securities and Exchange Commission today charged biopesticide company Marrone Bio Innovations and a former executive with inflating financial results to meet projections it would double revenues in its first year as a public company.  Marrone Bio agreed to pay a $1.75 million penalty to settle the SEC’s charges.

The SEC alleges that former chief operating officer Hector M. Absi Jr. concealed from Marrone Bio’s finance personnel and independent auditor various sales concessions offered to customers, leading the Davis, Calif.-based company to improperly recognize revenue on sales.  Absi allegedly profited from the fraud.  He resigned in August 2014 shortly before the alleged fraud came to light and the company’s stock price plunged more than 44 percent. 

In a parallel action, the U.S Attorney’s Office for the Eastern District of California today announced criminal charges against Absi.

“We allege that Marrone Bio misled investors to make itself look like a fast-growing new public company,” said Jina L. Choi, Director of the SEC’s San Francisco Regional Office.  “Public companies and their officers should know better that taking shortcuts to recognize revenue in the near term is harmful to investors and can be damaging to a company’s long-term success.” 

According to the SEC’s complaint filed in U.S District Court for the Eastern District of California:

• In November 2015, Marrone Bio restated its results for fiscal 2013 and the first half of fiscal 2014, reversing approximately $2 million of previously reported revenue.
• Absi previously inflated Marrone Bio’s revenues by offering distributors “inventory protection,” a concession that allowed distributors to return unsold product.
• Absi also inflated Marrone Bio’s revenue by directing his subordinates to obtain false sales and shipping documents and intentionally ship the wrong product to book sales.
• Absi abused Marrone Bio’s expense reporting system to pay for personal items, including vacations, home furnishings, and professionally installed Christmas lights for his home.  Absi falsified his bank and credit card statements to make it appear as though he had incurred the expenses for legitimate business purposes. 
• Absi personally profited from his scheme, receiving more than $350,000 in bonuses, stock sale proceeds, and illegitimate expense reimbursements.

The SEC also instituted a settled administrative proceeding against Marrone Bio’s former customer relations manager Julieta Favela Barcenas for violations of the books and records provisions of the federal securities laws.  Favela entered into a cooperation agreement to assist in the SEC’s investigation and ongoing litigation against Absi. 

As required by Section 304(a) of the Sarbanes-Oxley Act, Marrone Bio CEO Pamela G. Marrone has reimbursed the company $15,234 and former CFO Donald J. Glidewell will reimburse the company $11,789 for incentive-based compensation they received following the filing of Marrone Bio’s misstated financial statements.  They weren’t charged with any misconduct.

The SEC’s investigation was conducted by Joseph P. Ceglio and John A. Roscigno and supervised by Tracy L. Davis, and the litigation is being led by Robert L. Tashjian and Jason M. Habermeyer of the San Francisco office.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of California and the Federal Bureau of Investigation.

SEC Press Release

SEC: California Man Sold Investors Phony Stock to Pay Gambling Debts

The Securities and Exchange Commission today charged an unregistered broker in Oceanside, Calif., with fraudulently selling purported stock in a medical device company and pocketing investors’ money.

The SEC alleges that Gregory Ruehle raised approximately $1.9 million from more than 100 investors but never delivered or transferred the securities as promised while using the money to pay gambling debts among other personal expenditures.

In a parallel action, the U.S. Attorney’s Office for the Southern District of California today announced criminal charges against Ruehle. 

“We allege that Ruehle lied to investors, sent them phony documents to further his deception, and spent their money on living expenses and gambling,” said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office. 

According to the SEC’s complaint filed in U.S. District Court for the Southern District of California:

• Ruehle began his scheme as early as 2012, misrepresenting to investors in California and Minnesota that he would sell them his personally-owned securities in a La Jolla, Calif.-based medical device company called ICB International, Inc.  He was a former consultant for the company.
• Ruehle, however, sold investors far more securities than he actually owned, and those he did own were not transferable.  Ruehle never disclosed these facts to investors.
• Ruehle compounded his fraud by creating fabricated documents that he told investors were from the company.
• He disseminated fake company stock certificates purportedly informing the investor of the number of shares they owned in ICB. 
• He transmitted the fake stock certificates with a letter falsely stating that the certificates had been transferred from Ruehle to the investor. 
• Ruehle also fabricated and sent investors an additional document that served as a phony confirmation that his shares had been transferred to the investor.  The document falsely appeared to be on ICB letterhead and signed by the company’s CEO.  

The SEC’s complaint seeks a permanent injunction as well as disgorgement plus prejudgment interest and penalties against Ruehle, who is charged with violating the antifraud provisions of the federal securities laws and acting as unregistered broker-dealer.  Investors can quickly check whether people selling investments are registered by using the SEC’s investor.gov website. 

The SEC’s continuing investigation is being conducted by Matthew Montgomery and Robert Conrrad, and the litigation will be led by Gary Leung.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of California and the Federal Bureau of Investigation.

SEC Press Release

SEC: Miami Firm Broke Anti-Money Laundering Protocols

SEC: Miami Firm Broke Anti-Money Laundering Protocols

02/04/2016 02:15 PM EST

The Securities and Exchange Commission today announced that a Miami-based brokerage firm agreed to pay a $1 million penalty to settle charges that it violated anti-money laundering rules by allowing foreign entities to buy and sell securities without verifying the identities of the non-U.S. citizens who beneficially owned them.
During SEC examinations of E.S. Financial Services, which is now named Brickell Global Markets, the firm twice failed to provide required books and records identifying certain foreign customers whom they were soliciting directly and providing investment advice.  Federal law requires all financial institutions to maintain an adequate customer identification program (CIP) to ensure financial institutions know their customers and do not become a conduit for money laundering or terrorist financing.  An ensuing SEC investigation found that E.S. Financial's CIP failed to obtain and maintain documentation to verify the identities of certain non-U.S. customers who traded through a brokerage account opened by a Central American bank affiliated with the firm.
As part of the settlement, E.S. Financial agreed to retain an independent monitor to directly review its anti-money laundering/CIP policies, procedures, and practices for the next two years.
"While no fraud occurred in this instance, our investigation found there were significant holes in the framework of E.S. Financial's CIP that left the firm susceptible to illegal activity by customers who were not fully known," said Eric Bustillo, Director of the SEC's Miami Regional Office.  "Firms must stick to the CIP rules that require a broker-dealer to establish, document, and maintain procedures for identifying all customers and verifying their identities."
According to the SEC's order instituting a settled administrative proceeding:

• During approximately a decade, E.S. Financial maintained a brokerage account for a Central American bank that was purportedly trading for its sole benefit.
• E.S. Financial allowed 13 non-U.S. corporate entities and, in turn, 23 non-U.S. citizens who were their beneficial owners, to execute more than $23 million in securities transactions through the Central American bank's brokerage account.
• E.S. Financial worked directly with these non-U.S. citizens as if they were E.S. Financial customers, but did not collect, verify, or document any information regarding their identities as required under anti-money laundering/CIP regulations. 

The SEC's order finds that E.S. Financial willfully violated Section 17(a) of the Securities Exchange Act of 1934 and Rule 17a-8, which require a broker-dealer to comply with the reporting, recordkeeping, and record retention requirements in regulations implemented under the Bank Secrecy Act, including the requirements in the CIP rule applicable to broker-dealers. The order also finds that E.S. Financial willfully violated Exchange Act Rules 17a-3 and 17a-4 which require broker-dealers to create and maintain customer account records and furnish them to SEC representatives upon request. Without admitting or denying the findings, E.S. Financial consented to the order and agreed to cease and desist from committing or causing any future violations.
The SEC's continuing investigation has been conducted by Scott A. Lowry, under the supervision of Thierry Olivier Desmet.  The examination that led to the investigation was conducted by Ileana Rodriguez and Debra Williamson, and supervised by Nicholas A. Monaco and John C. Mattimore of the Miami Regional Office.  The SEC appreciates the assistance of the Financial Industry Regulatory Authority.

SEC Charges 11 Bank Officers and Directors With Fraud

The Securities and Exchange Commission today announced fraud charges against 11 former executives and board members at Superior Bank and its holding company involved in various schemes to conceal the extent of loan losses as the bank was faltering in the wake of the financial crisis.

The SEC alleges the high-ranking officers and directors schemed to mislead investors and bank regulators by propping up Superior Bank’s financial condition through straw borrowers, bogus appraisals, and insider deals.  Specifically they improperly extended, renewed, and rolled over bad loans to avoid impairment and the need to report ever-increasing allowances for loan and lease losses (ALLL) in its financial accounting.  As a result, Superior Bank overstated its net income in public filings by approximately 99 percent for 2009 and 50 percent for 2010.  The Birmingham, Ala.-based bank failed in 2011. 

Nine of the 11 bank officers and directors have agreed to settle the SEC’s charges.  Contesting the SEC’s complaint filed in federal district court in Tallahassee are Kenneth D. Pomeroy, who was president of Superior Bank’s central Florida region, and William C. McKinnon, who was a senior vice president and commercial loan officer.

“Accurate and fair reporting of loan impairment is of paramount importance for financial institutions during periods of severe financial stress,” said Andrew J. Ceresney, Director of the SEC’s Enforcement Division. “Superior’s senior-most officers and certain directors allegedly engaged in a widespread and egregious accounting fraud by concealing significant losses from loan impairments.”

Walter E. Jospin, Director of the SEC’s Atlanta Regional Office, added, “We allege that pervasive fraudulent behavior rippled through the executive offices at Superior Bank in a calculated effort to mislead investors on the amount of loan losses and disguise the bank’s flailing financial condition.”

Under the settlements in which they neither admit nor deny the SEC’s charges and are each permanently barred from serving as officers or directors of a public company:

• Charles S. Bailey, former CEO and chairman of the bank’s holding company Superior Bancorp, must pay a $250,000 penalty.
• James A. White, former CFO of Superior Bancorp, must pay a $200,000 penalty
• Dewayne S. Maddox, former market executive at Superior Bank, must pay a $200,000 penalty
• William H. Caughran, former general counsel of Superior Bank and Superior Bancorp, must pay a $150,000 penalty.
• Charles W. Roberts III and Robert R. Parrish Jr., who served as outside directors at Superior Bancorp, must each pay $100,000 penalties.
• Superior Bank’s former president and CEO Charles M. Scott Jr., former chief credit officer John E. Figlewski, and former president George J. Hall have each agreed to bifurcated settlements in which the court will determine financial penalties at a later date.

According to the SEC’s complaint:

• The fraud involved many of the largest loans in Superior Bank’s portfolio. 
• Among the lending schemes they used to materially understate the bank’s ALLL in public filings and conceal the loan problems:
  • They engaged in non-recourse loans in which they replaced the borrowers of record for a severely delinquent loan with alternative borrowers who typically were in default on multiple other loans from Superior Bank.  They agreed to the additional loan relationship as an explicit accommodation to avoid foreclosure or collection efforts on prior loans and understood they were not obligated to repay Superior Bank under the new loans.
  • They frequently utilized appraisals that were several years out-of-date with no justification supporting the continued use of the stale appraisals, which routinely overstated the value of the loan properties and identified wholly inaccurate or unviable projected future uses of the properties.  Other times they used conflicted appraisers beholden to Superior Bank or the borrower.
  • They approved renewals or modifications of severely delinquent loans either by rolling forward relevant payment dates or funding new loans to the borrower and using those proceeds to pay down the prior loan.  This technique made the loan appear current on paper and within Superior Bank’s internal systems.
  • They proposed, structured, and documented non-recourse joint venture agreements with defaulted borrowers and a now-deceased outside director of Superior Bancorp in which Superior Bank benefited from the appearance that the loan was current despite its near-certainty of falling back into delinquency and default.
• Bailey, Hall, Scott, and White orchestrated a separate accounting fraud by failing to appropriately impair more than $250 million in substandard loans being actively marketed for sale to third parties at less than 50 cents on the dollar. 
• Bailey, Scott, and White knowingly failed to write-down to zero a deferred tax asset that Superior Bancorp was using to offset future income they knew would never materialize as a result of the fraudulent lending schemes and operating losses.

The SEC’s continuing investigation is being supervised by Aaron W. Lipson and William P. Hicks, and the litigation will be led by Robert K. Gordon and Robert F. Schroeder of the Atlanta office.  The SEC appreciates the assistance of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), Office of the Comptroller of the Currency, Federal Bureau of Investigation, U.S. Attorney’s Office for the Northern District of Alabama, Federal Deposit Insurance Corporation, and Federal Housing Finance Agency Office of Inspector General.

SEC Press Release

Qualcomm, CIVIQ and Google Replacing NYC PayPhones with WiFi and Tablets

New York City will begin this month replacing thousands of pay phones with free Wi-Fi hot spots. The city expects to have 500 hot spots installed by July, and eventually about 7,500 units will be replaced.

"The hot spots will sit atop a 9.5-foot tall box with electronic screens on each side to display advertising. Sandwiched between the sidewalk ads will be an Android tablet that can be used to place free phone calls and surf the Web."

The advertising-supported project, called LinkNYC, is being run by CityBridge, a joint venture between three tech companies: smartphone chip maker Qualcomm Inc. QCOM, -1.30%  , networking company CIVIQ Smartscapes and Intersection, which has backing from Google parent company Alphabet Inc. GOOG, +0.10% GOOGL, -1.58%  . CityBridge says it is investing more than $200 million in the project."

New York City to swap out payphones for free high-speed Wi-Fi hot spots - MarketWatch:

Investor Alert: Securities-Backed Lines of Credit

An increasing number of securities firms are marketing and offering securities-backed lines of credit, or SBLOCs, to investors. SBLOCs can be a key revenue source for securities firms, especially in times of solid market returns and growing investment portfolios, when investors may feel more comfortable leveraging their assets. Firms market SBLOCs as a type of financing and liquidity strategy that can unlock the value of your investment portfolio. Between 2012 and 2014, one large brokerage firm that offers these programs reported a 70 percent increase in its securities-based lending business, while another firm reported an over 50 percent increase.

The Financial Industry Regulatory Authority (FINRA) and the SEC’s Office of Investor Education and Advocacy (OIEA) are issuing this investor alert to provide information about the basics of SBLOCs, how they may be marketed to you, and what risks you should consider before posting your investment portfolio as collateral. SBLOCs may seem like an attractive way to access extra capital when markets are producing positive returns, but market volatility can magnify your potential losses, placing your financial future at greater risk.

What Are SBLOCs?

SBLOCs are loans that are often marketed to investors as an easy and inexpensive way to access extra cash by borrowing against the assets in your investment portfolio without having to liquidate these securities. They do, however, carry a number of risks, among them potential unintended tax consequences and the possibility that you may, in fact, have to sell your holdings, which could have a significant impact on your long-term investment goals.

Set up as a revolving line of credit, an SBLOC allows you to borrow money using securities held in your investment accounts as collateral. You can continue to trade and buy and sell securities in your pledged accounts. An SBLOC requires you to make monthly interest-only payments, and the loan remains outstanding until you repay it. You can repay some (or all) of the outstanding principal at any time, then borrow again later. Some investors like the flexibility of an SBLOC as compared to a term loan, which has a stated maturity date and a fixed repayment schedule. In some ways, SBLOCs are reminiscent of home equity lines of credit, except of course that, among other things, they involve the use of your securities rather than your home as collateral.

How Do SBLOCs Work?

Many firms might offer you the opportunity to pursue an SBLOC, including your brokerage or advisory firm, a clearing firm (a firm that maintains custody of your securities and other assets, such as cash in your account), or a third-party lender like a bank. To set one up, you and the lender execute an SBLOC contract. The contract specifies the maximum amount you may borrow, and you agree to use your investment account assets as collateral. If the value of your securities declines to an amount where it is no longer sufficient to support your line of credit, you will receive a “maintenance call” notifying you that you must post additional collateral or repay the loan within a specified period (typically two or three days). If you are unable to add additional collateral to your account or repay the loan with readily available cash, the firm can liquidate your securities and keep the cash to satisfy the maintenance call.

SBLOCs are non-purpose loans, which means you may not use the proceeds to purchase or trade securities. However, an SBLOC still provides a fair amount of flexibility when you consider the restrictions on other types of loans, such as a mortgage or auto loan, or borrowing on margin. Those types of loans all require that loan proceeds be used for a specific purpose. Money from an SBLOC can be used to finance virtually anything you might want, from home renovations and real estate purchases, to personal travel or a new business venture. They also can be used, for example, to fund education expenses or to pay an unexpected tax bill.

But remember: The fact that you might be eligible for an SBLOC doesn’t mean the loan is necessarily a good idea.  And be aware that SBLOCs are just one type of securities-based lending offered to investors. Other types include margin and stock-based loan programs.

What About Credit Limits?

A typical SBLOC agreement permits you to borrow from 50 to 95 percent of the value of the assets in your investment account, depending on the value of your overall holdings and the types of assets in the account. To qualify for an SBLOC, firms often require that both the market value of your portfolio assets and your initial withdrawal on an SBLOC meet certain minimum requirements. It’s not uncommon for a firm to require that your assets have a market value of $100,000 or more to qualify for an SBLOC.

In general, securities that are eligible to serve as collateral for an SBLOC include stocks, bonds and mutual funds held in fully paid-for, cash accounts. The maximum credit limit for an SBLOC typically is based on the quantity and type of underlying collateral in your account, and is determined by assigning an advance rate to your eligible securities. Advance rates vary by institution, depending on the firm’s underwriting criteria. Typical advance rates range from 50-65 percent for equities, 65-80 percent for corporate bonds and 95 percent for U.S. Treasuries. For example, if your account contains a mix of equity securities and mutual fund shares with a total market value of $500,000, you could be eligible to borrow from $250,000 to $325,000 for an SBLOC.

SBLOCs generally allow you to borrow as little as $100,000 and up to $5 million, depending on the value of your investments. Once approved, you can access your SBLOC funds using checks provided by the firm, a federal funds wire, electronic funds transfer, or ACH payments. SBLOC funds may be available to you within a week from the date you sign your SBLOC contract.

Interest Rates and Repayment

The interest rates for SBLOCs often are lower than those you would be able to qualify for with a personal loan or line of credit from your bank or by using a credit card to fund purchases. In fact, some SBLOC lenders might not run a credit check or conduct an analysis of your liabilities before setting and extending the credit line, and may determine your maximum limit solely based on the value of your portfolio. SBLOC interest rates typically follow broker-call, prime or LIBOR rates plus some stated percentage or “spread”—and you will be responsible for interest payments on an on-going basis. Although interest is calculated daily, and the interest rate on your loan can change every day, it is usually charged monthly and will appear on your monthly account statement. Some firms offer the option of a fixed rate SBLOC.

Weigh Potential Advantages and Risks

An SBLOC may allow you to avoid potential capital gains taxes because you don’t have to liquidate securities for access to funds. You might also be able to continue to receive the benefits of your holdings, like dividends, interest and appreciation. Marketing materials for SBLOCs also promote the flexibility of spending that comes with an SBLOC as a key feature. And, some firms market SBLOCs as part of a retirement income strategy to fund short-term expenses.

However, as with virtually every financial product, SBLOCs have risks and downsides. Be aware that marketing materials touting the advantages of SBLOCs may suggest benefits that you may not achieve given the risks. For instance, if the value of the securities you pledge as collateral decreases, you may need to come up with extra money fast, or your positions could be liquidated. So even if an SBLOC may be an appropriate solution for you, it always pays to ask questions.

10 Questions to Ask Before Taking Out an SBLOC

Before you use your assets as collateral for an SBLOC, take time to understand the risks, and get answers to important questions about how this type of lending arrangement could impact your long-term investment goals.

(1)   When I take out an SBLOC, what am I agreeing to?  Make sure you fully understand the details of any SBLOC offered to you, including the terms of your agreement with the lender and how the lending arrangement will impact your holdings, including potential tax consequences, maintenance call requirements, and other costs. You need to know what aspects of the arrangement are out of your control. For example, the interest that you pay on your loan may change every day. In addition, your firm may decide that a security that was previously eligible as collateral for an SBLOC is no longer eligible. If this happens, your credit limit will be adjusted to reflect the change, leaving you with less money to borrow than you planned for. You also may be required to post additional assets to shore up the account if the remaining eligible securities cannot cover the balance. In addition, some SBLOC agreements permit the lender to increase the percentage of equity you must keep in your pledged accounts, which would require you to deposit additional securities or cash into the account, or pay down the loan.

(2)   Who is the lender?  Before you sign up for an SBLOC, understand who you are doing business with (your brokerage or advisory firm, one of its affiliates, a clearing firm or a third-party lending institution). Many brokerage firms offering SBLOCs do so through a bank affiliate, so your broker may not be the point of contact for your loan and may not know much about how the program works. Make sure you know who to contact with questions about the SBLOC and ongoing account services. If your securities firm is offering the SBLOC for a third-party lending institution, ask your firm how they will continue monitoring your account and how, and when, you will be notified if a collateral shortfall or other issue may impact your assets.

(3)   Should I use my investments as collateral?  While SBLOCs’ low rates and quick access to cash may be appealing, remember that your investment portfolio may not be the best option for loan collateral. The prices of securities in your portfolio are constantly shifting, which means that the collateral backing your line of credit may be volatile. If the market is up and the value of your assets increases, then great. But nothing guarantees that the market, or the value of your assets, won’t go down.
(4)   What if the value of my portfolio decreases?  The firm might sell your securities if you receive a maintenance call and are unable to meet it. SBLOCs seem like a great option for extra capital when markets are producing positive returns and interest rates are low, but a market downswing or change in interest rates could make it much less enticing, and this can happen at any time. The value of your holdings is always changing, so you can’t assume that the price today will be the price tomorrow. And keep in mind that SBLOCs are classified as demand loans, which means lenders may call the loan at any time. If you are unable to repay some, or all, of the loan on demand, the firm can liquidate securities and reduce your credit limit.

(5)   Does my investment mix matter?  Consider the extent to which your portfolio is diversified. If your portfolio is concentrated in a particular stock or sector, a single market event could cause your portfolio value to drop precipitously and trigger a maintenance call. Then you might be forced to liquidate your assets at the bottom of the market. Other assets may be more appropriate to serve as collateral for a loan, and without terms that allow the lender to liquidate your investments at a moment’s notice. With that in mind, if you do decide to pursue an SBLOC, consider taking out less than the maximum amount of credit offered to you.

(6)   What if my securities are liquidated to meet collateral requirements?  There might be tax consequences. For example, if your lending firm notifies you that securities will be liquidated to maintain collateral at a sufficient level to support your SBLOC, you could be faced with paying capital gains taxes on the proceeds from these sales, depending on your cost basis in the stock and other factors affecting your tax status. Lenders often are permitted to make these decisions without giving you any notice. One way to protect yourself and your assets is to limit the amount you borrow. If you are offered an SBLOC based on a high percentage of the value of your assets, consider taking a lesser amount than what you are offered, so that you are not putting such a substantial portion of your portfolio on the line.

(7)   What impact will an SBLOC have on my pledged investments?  If you pledge securities that typically receive dividend payments, you should determine whether those payments will be credited to your loan balance and what, if any, circumstances will cause ownership of your holdings to change. In addition, certain account features may change with securities pledged for an SBLOC, such as check-writing privileges and recurring distributions. Some firms cancel check-writing privileges for your account when you take out an SBLOC because you will be issued a new set of checks directly tied to the SBLOC.

(8)   What about interest rates?  If interest rates rise, it could cause a spike in the broker-call, prime or LIBOR rates that apply to your SBLOC. If this happens, the cost of your SBLOC may increase significantly. Also, for accounts that have money market funds or bank sweeps, depending on your firm’s SBLOC policy, the debit in your account from the interest charge may be paid from redemptions, effectively reducing your cash or money fund balances. Interest payments may be rolled into the balance, which, over time, can erode the value of your account (particularly if the SBLOC is sizeable), or increase your indebtedness. In addition, depending on the interest rate environment, if you have a money market fund or cash in your account, you may be paying more in interest for your SBLOC than you are earning.

(9)   How is my broker compensated with SBLOCs?  Your broker or adviser may receive additional compensation or a portion of the fees generated by SBLOCs sold to customers. Some firms pay salespersons on a quarterly basis depending on how much money you have borrowed on the line of credit. Your broker or adviser also will benefit from your SBLOC because you don’t have to liquidate assets in your account to pay for things with cash, which would diminish the assets held in the account and the potential fees and commissions that could be earned by your broker or adviser from holding or engaging in future transactions with those assets. For example, with a fee-based account, by encouraging investors to take out an SBLOC to fund some purchase or financial need rather than liquidate securities, the firm continues to earn fees on the full account value, and may also earn revenue from the new loans.

(10) Can I move to a new firm if I have an SBLOC?  It is not as easy to pick up and move your assets to a new firm if they are pledged as collateral for an SBLOC. This makes an SBLOC a “sticky” product because it makes it more difficult to leave your current brokerage or advisory firm. To move, you will likely have to pay off the loan.

Today, financing opportunities come in all shapes and sizes. Remember to exercise caution and consider the risks before pledging your securities as collateral. You worked hard to build your investment portfolio.

Convicted Fraudster Using Aliases Charged Again for Defrauding Investors

The Securities and Exchange Commission today charged a known securities fraudster with conducting a new scheme since his release from prison by using fake names to solicit investors while hiding his criminal past.

An SEC examination revealed that Edward Durante, who served a 10-year prison term following his securities fraud conviction in 2001, has again been soliciting investors under such aliases as Ted Wise, Efran Eisenberg, and Anthony Walsh.  The SEC alleges that Durante defrauded investors by selling shares of a shell company he secretly controlled and falsely telling them stock sale proceeds would be used to fund the company’s operations when they were actually tapped for other purposes including Durante’s personal use.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Durante.

“As alleged in our complaint, Durante shamelessly peddled worthless stock under phony names to steal millions of dollars from unsuspecting investors,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.

According to the SEC’s complaint filed in federal district court in Manhattan:

• Durante began laying the groundwork for his next stock fraud while still in prison, using the name Anthony Walsh to negotiate his acquisition of the shell company VGTel Inc.
• From 2012 to 2014, Durante defrauded at least 50 relatively inexperienced investors through at least $11 million in sales of VGTel stock.
• Durante held sales meetings with investors under his Ted Wise alias in such locations as San Diego and Tewksbury, Mass.
• Durante separately bribed investment advisers to steer clients toward VGTel stock purchases without disclosing they had received money from Durante to do so.
• Durante also engaged in matched trading of VGTel stock with a stockbroker to artificially control the stock’s market price.

The SEC's complaint charges Durante with violating Section 17(a) of the Securities Act of 1933 and Sections 9(a)(1) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.  



http://1.usa.gov/1IZgHoQ

SEC Charges Martin Shkreli With Fraud

The Securities and Exchange Commission today charged Martin Shkreli, former CEO of pharmaceutical company Retrophin, with committing fraud during a five-year period when he also was working as a hedge fund manager.

The SEC alleges that Martin Shkreli misappropriated money from two hedge funds he founded and made material misrepresentations to investors among other widespread misconduct.  The SEC also charged Retrophin’s former outside counsel and corporate secret

ary Evan Greebel with aiding and abetting certain aspects of Shkreli’s alleged fraud.

In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York today announced criminal charges against Shkreli and Greebel.

“Over a five-year period, Shkreli is alleged to have perpetrated a series of frauds on investors in his hedge funds and Retrophin’s shareholders in order to cover up his poor trading decisions,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement.
Andrew M. Calamari, Director of the SEC’s New York Regional Office, added, “Greebel’s alleged role in facilitating Shkreli’s fraud on Retrophin’s shareholders not only crossed legal boundaries but also grossly violated both his professional and ethical obligations.”

According to the SEC’s complaint filed in federal district court in Brooklyn:

• Shkreli was portfolio manager for the hedge fund MSMB Capital Management LP from October 2009 to March 2014, and also served as portfolio manager of another hedge fund he founded and controlled named MSMB Healthcare LP.
• Shkreli misappropriated about $120,000 from MSMB Capital Management from October 2009 to July 2011 to unlawfully pay for food, clothing, medical expenses, clothing, office rent, and cash withdrawals.
• Shkreli misled investors and prospective investors in MSMB Capital Management about the fund’s size and performance, claiming for example in July 2010 to have “returned +35.77% since inception on 11/1/2009.”  In fact, the fund generated losses of about 18 percent.
• In another example, Shkreli falsely stated in December 2010 that the fund had $35 million in assets under management.  In fact, the fund had less than $1,000 in assets in its bank and brokerage accounts.
• Shkreli lied to one of MSMB Capital Management’s executing brokers in February 2011 about the fund’s ability to settle a sizeable short sale in a pharmaceutical stock in MSMB Capital Management’s account.  This transaction resulted in losses of more than $7 million to the executing broker who had to cover the short position in the open market.
• Shkreli misappropriated $900,000 from MSMB Healthcare in 2013 to settle claims asserted by MSMB Capital Management’s executing broker arising out of the losses suffered in the short selling transaction.
• From September 2013 to March 2014, Shkreli, with assistance from Greebel, fraudulently induced Retrophin to issue stock and make cash payments to certain disgruntled investors in Shkreli’s hedge funds who were threatening legal action.  Shkreli and Greebel had investors enter into agreements with Retrophin misleadingly stating the payments were for consulting services when in fact the purpose was the release of potential claims against Shkreli.

The SEC’s complaint charges Shkreli with violating Sections 17(a)(1) and 17(a)(2) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rules 10b-5 and 10b-2.  He also is charged with violating Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8.  Greebel is charged with aiding and abetting Shkreli’s violations of Exchange Act Section 10(b) and Rule 10b-5.  Two Shkreli-owned entities that served as investment advisers to the hedge funds, MSMB Capital Management LLC and MSMB Healthcare Management LLC, are charged with violations of the antifraud provisions of the Investment Advisers Act, and Shkreli is charged with aiding and abetting those violations.


http://1.usa.gov/1NVo6pn

SEC Files Charges in Multi-Million Dollar Market Manipulation

SEC Files Charges in Multi-Million Dollar Market Manipulation

The SEC alleges that Samuel DelPresto teamed up with others to secretly obtain control of substantially all available stock in four microcap companies and to facilitate coordinated trading that created the appearance of liquidity and market demand for the stocks.  After unwitting investors were enticed through promotional campaigns to buy the stock at inflated prices, DelPresto dumped his shares on the market.

"The series of fraudulent schemes alleged in our complaint enticed unwitting investors to pay inflated prices for four companies secretly controlled by DelPresto and others and then left the investors holding the bag when the manipulative activity ceased and the stock price dropped," said Andrew M. Calamari, Regional Director of the SEC's New York office.

In a parallel action, the U.S. Attorney's Office for the District of New Jersey today announced criminal charges against DelPresto.

According to the SEC's complaint, the microcap companies manipulated by DelPresto were: BioNeutral Group (BONU), NXT Nutritionals Holdings (NXTH), Mesa Energy Holdings (MSEH), and Clear-Lite Holdings (CLRH).

The SEC's complaint charges DelPresto with violations of the antifraud provisions of the federal securities laws.  The complaint seeks a permanent injunction, disgorgement of ill-gotten gains along with prejudgment interest, financial penalties, and a penny stock bar.

SEC Announces Fraud Charges Against Investment Adviser

SEC Announces Fraud Charges Against Investment Adviser

The Securities and Exchange Commission today announced fraud charges against a Stamford, Conn.-based investment advisory firm accused of investing clients in certain bonds with a hidden financial benefit to a broker-dealer connected to the firm.

The SEC alleges that Atlantic Asset Management LLC (AAM) invested more than $43 million of client funds in illiquid bonds issued by a Native American tribal corporation without disclosing the conflict of interest that the bond sales generated a private placement fee for the broker-dealer, whose parent company partially owns AAM.

"As alleged, Atlantic violated a fundamental duty to its clients by placing its own financial interests ahead of client interests," said Andrew M. Calamari, Director of the SEC's New York Regional Office.  "AAM's clients should have been informed that the investments in illiquid bonds would financially benefit people with ownership control over AAM."

According to the SEC's complaint filed in federal court in Manhattan:

• AAM is partially owned by an entity called BFG Socially Responsible Investing Ltd., although BFG's ownership is not disclosed in AAM's public SEC filings.
• At the suggestion of a BFG representative, AAM purchased the dubious, illiquid bonds on behalf of clients while aware that the sales would generate a private placement fee for a broker-dealer affiliated with BFG.  AAM also was aware that proceeds from the bond sales were to be used to purchase an annuity provided by BFG's parent company. 
• An AAM officer evaluating whether or not to make the investments discussed balancing the "fiduciary duty" owed to the placement agent with the duty owed to AAM's clients.
• AAM ultimately decided to put its owner's financial interests first, approving the bond purchases without telling clients about the conflict of interest. 
• Upon learning about the investments in the bonds, several AAM clients expressed concern over the bonds' valuation and suitability.  They demanded, unsuccessfully, that the investments be unwound.

The SEC complaint charges AAM with violations of the antifraud provisions of the Investment Advisers Act of 1940 and related rules as well as violations of Section 207 of the Advisers Act by failing to disclose BFG's ownership interest in the Form ADV filed with the SEC.

SEC Announces Fraud Charges Against Investment Adviser

The Securities and Exchange Commission today announced fraud charges against a Stamford, Conn.-based investment advisory firm accused of investing clients in certain bonds with a hidden financial benefit to a broker-dealer connected to the firm.

The SEC alleges that Atlantic Asset Management LLC (AAM) invested more than $43 million of client funds in illiquid bonds issued by a Native American tribal corporation without disclosing the conflict of interest that the bond sales generated a private placement fee for the broker-dealer, whose parent company partially owns AAM.

“As alleged, Atlantic violated a fundamental duty to its clients by placing its own financial interests ahead of client interests,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.  “AAM’s clients should have been informed that the investments in illiquid bonds would financially benefit people with ownership control over AAM.”

According to the SEC’s complaint filed in federal court in Manhattan:

• AAM is partially owned by an entity called BFG Socially Responsible Investing Ltd., although BFG’s ownership is not disclosed in AAM’s public SEC filings.
• At the suggestion of a BFG representative, AAM purchased the dubious, illiquid bonds on behalf of clients while aware that the sales would generate a private placement fee for a broker-dealer affiliated with BFG.  AAM also was aware that proceeds from the bond sales were to be used to purchase an annuity provided by BFG’s parent company. 
• An AAM officer evaluating whether or not to make the investments discussed balancing the “fiduciary duty” owed to the placement agent with the duty owed to AAM’s clients.
• AAM ultimately decided to put its owner’s financial interests first, approving the bond purchases without telling clients about the conflict of interest. 
• Upon learning about the investments in the bonds, several AAM clients expressed concern over the bonds’ valuation and suitability.  They demanded, unsuccessfully, that the investments be unwound.

The SEC complaint charges AAM with violations of the antifraud provisions of the Investment Advisers Act of 1940 and related rules as well as violations of Section 207 of the Advisers Act by failing to disclose BFG’s ownership interest in the Form ADV filed with the SEC.

The SEC’s continuing investigation is being conducted by Tejal D. Shah, Christopher Ferrante, and Adam Grace.  The litigation will be handled by Ms. Shah and Nancy A. Brown.  The case is being supervised by Sanjay Wadhwa.

http://1.usa.gov/1UvNkMf

SEC Files Charges in Multi-Million Dollar Market Manipulation

The Securities and Exchange Commission today charged a New Jersey man and his company with illicitly pocketing $13 million from an elaborate pump-and-dump scheme.

The SEC alleges that Samuel DelPresto teamed up with others to secretly obtain control of substantially all available stock in four microcap companies and to facilitate coordinated trading that created the appearance of liquidity and market demand for the stocks.  After unwitting investors were enticed through promotional campaigns to buy the stock at inflated prices, DelPresto dumped his shares on the market.

“The series of fraudulent schemes alleged in our complaint enticed unwitting investors to pay inflated prices for four companies secretly controlled by DelPresto and others and then left the investors holding the bag when the manipulative activity ceased and the stock price dropped,” said Andrew M. Calamari, Regional Director of the SEC’s New York office.

In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today announced criminal charges against DelPresto.

According to the SEC’s complaint, the microcap companies manipulated by DelPresto were: BioNeutral Group (BONU), NXT Nutritionals Holdings (NXTH), Mesa Energy Holdings (MSEH), and Clear-Lite Holdings (CLRH). 

The SEC’s complaint charges DelPresto with violations of the antifraud provisions of the federal securities laws.  The complaint seeks a permanent injunction, disgorgement of ill-gotten gains along with prejudgment interest, financial penalties, and a penny stock bar.

The SEC’s continuing investigation is being conducted by Rhonda L. Jung, Teresa A. Rodriguez, Melissa Coppola, Nancy A. Brown, Adam S. Grace, and Wendy B. Tepperman of the New York office.  The SEC’s litigation will be led by Ms. Brown and the case is being supervised by Lara Shalov Mehraban.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of New Jersey, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.

http://1.usa.gov/1O3x1kj