SEC Uncovers Cherry-Picking Scheme, Charges Investment Adviser Behind It
The Securities and Exchange Commission today announced that a Massachusetts-based investment adviser agreed to be banned from the securities industry after the agency uncovered an illegal cherry-picking scheme through its data analysis used to detect suspicious trading patterns. The SEC filed fraud charges in federal district court against Michael J. Breton and his firm Strategic Capital Management, alleging they defrauded clients out of approximately $1.3 million. Breton allegedly placed trades through a master brokerage account and then allocated profitable trades to himself while placing unprofitable trades into the client accounts. Breton and his firm agreed to a partial settlement subject…
Read MoreTimothy L. Warren, Associate Director of Enforcement in Chicago Office, to Retire After 30 Years of Service
The Securities and Exchange Commission today announced that Timothy L. Warren, Associate Director of Enforcement in the Chicago Regional Office, is retiring at the end of this month after more than 30 years of service. Since his appointment to Associate Director, Mr. Warren has supervised a staff of more than 40 attorneys and other professionals responsible for investigating potential violations of the federal securities laws by a wide range of market participants. Mr. Warren also has been significantly involved in international enforcement training with the Office of International Affairs to build capacity and strengthen partnerships with the SEC’s international counterparts,…
Read MoreMorgan Stanley, Citigroup Charged With Misleading Investors About Forex Trading Program
The Securities and Exchange Commission today announced that Morgan Stanley Smith Barney and Citigroup Global Markets have agreed to pay more than $2.96 million apiece to settle charges that they made false and misleading statements about a foreign exchange trading program they sold to investors. According to the SEC’s orders, Citigroup held a 49 percent ownership interest in Morgan Stanley Smith Barney at the time, and registered representatives at both firms were pitching a foreign exchange trading program known as “CitiFX Alpha” to Morgan Stanley customers from August 2010 to July 2011. The SEC’s orders find that their written and…
Read MoreShipping Conglomerate and Former CFO Charged With Failure to Recognize Hundreds of Millions in Tax Liabilities
The Securities and Exchange Commission today charged shipping conglomerate Overseas Shipholding Group (OSG) and its former chief financial officer Myles R. Itkin with failing to recognize hundreds of millions in tax liabilities in its financial statements that had accumulated over nearly 12 years resulting from its controlled foreign subsidiary guaranteeing OSG’s debt that had been borrowed under various credit financing agreements. As a result of the misconduct, OSG materially understated its income tax liabilities by approximately $512 million (17 percent) of its total liabilities. In November 2012, following the discovery of the tax liabilities, OSG filed for bankruptcy protection. “Where…
Read MoreSEC Announces Fraud Charges, Asset Freeze in Alleged Nursing Home Investment Scheme
The Securities and Exchange Commission today announced fraud charges and an emergency asset freeze obtained against a businessman in South Carolina accused of siphoning funds he raised from investors for the purpose of purchasing or renovating senior housing facilities. The SEC alleges that Dwayne Edwards improperly commingled money from several different municipal bond offerings and the revenues of the facilities underlying the offerings. The offerings were each supposed to finance a particular assisted living or memory care facility in Georgia or Alabama. From the commingled funds, Edwards allegedly diverted investor money for personal use as well as to finance other…
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