Thomas O. Gorman

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The SEC enforcement division continues its retail investor – advisor focus, with another action centered on an unscrupulous investment adviser. In its most recent case a business that began essentially as a family office and grew into a public advisory was looted by its founder and adviser. SEC v. Lyons, Civil Action No. 1L19-cv-10785 (D. Mass. Filed April 22, 2019). Defendant Eric Lyons and his firm Synchrony Capital GP LLC began as a family money…
The retail investor focus of the SEC’s Enforcement Division is translating into a concentration on microcap fraud. The actions being brought include those centered on shell creation factories that frequently create the often empty shell companies used in manipulations, the classic pump-and-dump manipulation actions and offering frauds. These fraudulent techniques have been repeated frequently in the markets over the years, deceiving investors who part with their savings for what almost always turns out to be…
The importance of firm support systems such as computer programs has repeatedly been highlighted by Commission enforcement actions. The agency has periodically initiated actions charging market participants such as brokerage firms and others with violations of the federal securities laws based on errors stemming from firm systems and computers even when those involved were unaware of the difficulty. The Commission’s most recent case of this type centers on a privately held firm that failed to…
In a week that ends with religious holidays, the Commission’s enforcement efforts focused on offering fraud cases and insider trading. One offering fraud action centered on a state registered investment adviser who solicited clients with tales about a MarketDNA trading program that offered significant returns. It was a fraud. A second offering fraud centered on what was essentially a boiler room operation used to market a Ponzi scheme. Finally, the agency brought an insider trading…
Cases involving investment advisers are rapidly becoming a key focus for SEC Enforcement. Offering fraud actions are another central focus. In both sets of cases retail investors are typically victimized, losing much of their hard earned savings and pension dollars. In the Matter of Matthew R. Rossi, Adm. Proc. File No. 3-19145 (April 17, 2019) is an action which in many respects combines the elements of each of these types of actions – a dishonest…
Last week the Commission brought an insider trading action against an in-house counsel at SeaWorld. Another insider trading action filed last week involved the Amazon – Whole Foods merger. There the husband misappropriated inside information on the pending deal from his wife who had been entrusted with inside information by a close family member. Now the agency has settled with a corporate executive who breached his obligations to his firm using the corporate information with…
Offering fraud actions have become one of the staples of the Enforcement Division. With a focus on protecting retail investors, the Division has initiated a series of these cases which often frequently target unsuspecting seniors and retirees who lose much of their life savings. The Division’s most recent case is a good example of these actions. There over 8,400 investors, many of whom were seniors, entrusted at least $1.22 billion over a five year period…
Insider trading and microcap fraud actions were the focus of SEC Enforcement this week. The Commission filed two insider trading actions. One involved a spouse who misappropriated inside information about the acquisition of Whole Foods, Inc. by Amazon, Inc. A second involved an in-house attorney who traded on favorable financial results at his employer, SeaWorld. The agency also filed four microcap fraud cases centered on a nationwide cold calling scheme implemented by unregistered brokers and…
Insider trading seems to be the theme of the day. First there was trading on the Amazon/Whole Foods deal. Then the end of a three-chain insider trading ring. Now and Associate General Counsel of SeaWorld has pleaded guilty to DOJ criminal insider trading charges and been named as a defendant by the Commission. SEC v. Powers, Civil Action No. 6:19-cv-00664 (M.D. Fla. Filed April 9, 2019). The pattern here, as in the action involving the…
Rodolfo Sablon was sentenced to serve six months in prison and pay forfeiture of $923,566 along with a $5,000 fine based on his role in an insider trading scheme. Previously, Mr. Sablon pleaded guilty to one count of conspiracy to commit securities fraud and fraud. He was charged in a 54 count criminal complaint along with Michael Siva, Roberto Rodriguez, Jhonathan Zoquier and Jeffrey Rogiers. The charges included conspiracy, wire fraud and multiple counts of…