SEC and CFTC Update

A month-by-month recap of the U.S. Securities and Exchange Commission, and Commodity Futures Trading Commission enforcement activities and developments

Latest from SEC and CFTC Update

Action against Defendants, a beverage company and its CEO and president, for an alleged fraudulent offering of Defendant company’s shares. According to the SEC, Defendants sold restricted shares derived from a fictitious convertible note, inflated the number of outstanding shares to avoid certain limitations, and issued press releases falsely claiming that the company was buying back shares in order to inflate the share price. Defendant CEO has agreed to pay $208,000 in disgorgement, $23,436 in…
Action against Defendants, a stockbroker and his associated entities, for alleged investment fraud. According to the SEC, Defendant stockbroker solicited investments from consumers, including many elderly individuals, stating that the money would be invested in various products. The SEC alleges that Defendant stockbroker instead used the funds for personal expenses. Parallel criminal charges have been announced against Defendant stockholder. SEC Litigation Release
Action against Defendants, an attorney and a businessman, for their alleged participation in a “pump and dump” scheme. The SEC alleges that Defendants acquired penny stock shares, launched a marketing campaign to boost the stock’s liquidity and price, and then sold the shares.  Defendants have agreed to lifetime bars from participating in penny stock offerings and will pay disgorgement, interest, and civil penalties in amounts to be determined by the court. Parallel criminal charges have…
Action against Defendants, an immigration attorney, her husband, her law firm, a family friend, a family employee, and two of the couple’s owned entities, for alleged facilitation of an EB-5 visa offering fraud.  According to the SEC, Defendants received over $10 million in undisclosed commissions from sales of securities to Defendant attorney’s clients. The SEC also alleges that Defendant attorney and Defendant husband advised clients to invest in an EB-5 immigrant investor regional center that…
Action against Defendants, owners of a defunct private equity fund, for alleged schemes to defraud advisory clients and misappropriation of client assets. According to the SEC, Defendants acquired five insurance companies and seven reinsurance trusts and caused the companies and trusts to enter into investment management agreements with registered investment advisers owned by Defendants. The SEC alleges that Defendants then caused the companies and trusts to transfer money in exchange for securities that Defendants knew…
Action against Defendants, an investment adviser, his investment fund, and the fund’s unregistered investment adviser, for alleged fraud on investors. According to the SEC, Defendant investment adviser solicited funds from friends with the understanding that he would use the money to day trade. The SEC alleges that Defendant investment adviser instead misappropriated the funds for personal use. SEC Litigation Release SEC Press Release
The SEC released an investigative report addressing cyber threats that companies should consider when implementing internal accounting controls.  The report stems from SEC investigations into alleged cyber fraud perpetrated against nine public companies.  According to the SEC, personnel from these companies received emails from perpetrators posing as company executives or vendors asking that large sums of money be sent to bank accounts belonging to the perpetrators.  The SEC is not pursuing enforcement actions against the…
Action against Respondent, a former trader, for alleged spoofing. According to the CFTC, Respondent placed futures orders with the intent to cancel the orders before execution in order to manipulate prices. The CFTC has reserved decision on monetary sanctions pending Respondent’s fulfillment of a cooperation agreement with the CFTC. CFTC Press Release CFTC Order
Action against Defendant, outside counsel to a medical device company, for allegedly engaging in a series of frauds designed to inflate the company’s stock price for his benefit.  The SEC alleges that Defendant falsified purchase orders with fictitious companies in order to increase sale numbers in SEC filings and press releases.  The Ninth Circuit affirmed the district court’s grant of summary judgment in favor of the SEC, finding that Defendant’s conviction in a parallel criminal…
Action against Defendants, a real estate developer and his asset management firms, for alleged fraud on investors. According to the SEC, Defendants misrepresented that investor money would be used for real estate projects. The SEC alleges that Defendants instead misappropriated and commingled the funds by spending the money on Ponzi-like payments to earlier investors and personal expenses. Defendants have agreed to pay civil penalties and disgorgement to be determined by the court. Parallel criminal charges…