Commission Statement on T+2 Implementation

Last week, on September 5, 2017, the securities industry successfully implemented a shortened settlement cycle for most securities transactions, pursuant to amendments to Rule 15c6-1 that the Commission adopted earlier this year.  The move to a two business day standard settlement cycle – or T+2 – was the product of extensive preparation and coordination among regulators and industry.  This change represents a significant milestone for the securities markets – the standard settlement cycle was last shortened in 1995 when it moved from five business days to three business days.  The first transactions covered by the amended rule settled on September 7, 2017. 

The benefits of a shortened settlement cycle extend throughout the financial sector.  The shortened settlement cycle, which was largely enabled by advances in technology, should reduce certain risks in the clearance and settlement process, including credit, market, and liquidity risks for central counterparties, their members, and other market participants.  It also should enhance efficiency by promoting innovation and changes in market infrastructures and operations. 

“Last week’s transition to a T+2 standard settlement cycle represents a significant accomplishment,” said SEC Chairman Jay Clayton.  “Going forward, investors and other market participants will be able to receive the proceeds of their securities transactions one day sooner, thereby enhancing the overall efficiency of the U.S. securities markets.  I would like to thank my colleagues, including Commissioners Piwowar and Stein and the staff of the Commission, for their leadership in achieving this important result.”

“Last week, the U.S. securities markets terminated the outdated T+3 settlement cycle and successfully implemented T+2,” said Commissioner Michael Piwowar.  “I applaud the Commission staff and market participants for achieving a smooth transition to a new environment that provides greater efficiency and less risk to the American people.”

“The shortened settlement cycle benefits investors and contributes to the resiliency of our securities markets,” said Commissioner Kara Stein.  “I look forward to future collaborative efforts as we work together to further enhance our market structure.”

If you have additional questions about this transition to the T+2 standard settlement cycle, the Commission will continue to maintain the previously-established e-mail address – T2settlement@sec.gov – for the submission of inquiries to SEC staff. 

Commission Statement on T+2 Implementation

Last week, on September 5, 2017, the securities industry successfully implemented a shortened settlement cycle for most securities transactions, pursuant to amendments to Rule 15c6-1 that the Commission adopted earlier this year.  The move to a two business day standard settlement cycle – or T+2 – was the product of extensive preparation and coordination among regulators and industry.  This change represents a significant milestone for the securities markets – the standard settlement cycle was last shortened in 1995 when it moved from five business days to three business days.  The first transactions covered by the amended rule settled on September 7, 2017. 

The benefits of a shortened settlement cycle extend throughout the financial sector.  The shortened settlement cycle, which was largely enabled by advances in technology, should reduce certain risks in the clearance and settlement process, including credit, market, and liquidity risks for central counterparties, their members, and other market participants.  It also should enhance efficiency by promoting innovation and changes in market infrastructures and operations. 

“Last week’s transition to a T+2 standard settlement cycle represents a significant accomplishment,” said SEC Chairman Jay Clayton.  “Going forward, investors and other market participants will be able to receive the proceeds of their securities transactions one day sooner, thereby enhancing the overall efficiency of the U.S. securities markets.  I would like to thank my colleagues, including Commissioners Piwowar and Stein and the staff of the Commission, for their leadership in achieving this important result.”

“Last week, the U.S. securities markets terminated the outdated T+3 settlement cycle and successfully implemented T+2,” said Commissioner Michael Piwowar.  “I applaud the Commission staff and market participants for achieving a smooth transition to a new environment that provides greater efficiency and less risk to the American people.”

“The shortened settlement cycle benefits investors and contributes to the resiliency of our securities markets,” said Commissioner Kara Stein.  “I look forward to future collaborative efforts as we work together to further enhance our market structure.”

If you have additional questions about this transition to the T+2 standard settlement cycle, the Commission will continue to maintain the previously-established e-mail address – T2settlement@sec.gov – for the submission of inquiries to SEC staff. 

SEC, MSRB, FINRA to Hold Compliance Outreach Program for Municipal Advisors

The Securities and Exchange Commission, Municipal Securities Rulemaking Board (MSRB), and Financial Industry Regulatory Authority (FINRA) today announced the opening of registration for the Compliance Outreach Program for Municipal Advisors. 

There is no cost to attend the program, which provides an open forum for municipal advisory industry professionals to discuss compliance practices with regulators and promote a more effective compliance structure for regulatory obligations of municipal advisors.  The event will be held at the SEC’s Atlanta Regional Office on November 8, from 9:00 a.m. to 4:00 p.m. ET, and webcast live on the SEC’s website. Additional information, including the agenda, is available on the SEC, MSRB, and FINRA websites.

The SEC’s Office of Compliance Inspections and Examinations (OCIE) and Office of Municipal Securities are partnering with the MSRB and FINRA to sponsor the program.  Topics of discussion include the duties and standards of conduct for non-solicitor municipal advisors under MSRB Rule G-42 and the Securities and Exchange Act of 1934, and municipal advisor compliance with supervision, registration, and books and records rules. The program also will include a roundtable discussion among the regulators and a question and answer session with participants.

“This program is designed to promote compliance with municipal advisor regulations and affords the industry the opportunity to hear from all three regulators on the regulatory obligations of municipal advisors,” said Rebecca Olsen, Deputy Director of the SEC’s Office of Municipal Securities.  Suzanne McGovern, Assistant Director of the SEC’s broker-dealer and municipal advisor examination programs, added, “This municipal advisor outreach will take a deeper dive into regulatory requirements and their practical implementation, helping municipal advisor professionals ensure proper regulatory compliance.”

MSRB Executive Director Lynnette Kelly said, “This program is consistent with the MSRB’s goal of assisting municipal advisors in understanding and complying with their regulatory obligations, and municipal advisors will benefit from getting first-hand feedback from our staff.”

Mike Rufino, FINRA’s Head of Member Regulation-Sales Practice, said, “Any firm that wants to enhance its understanding of the regulatory expectations in the important areas of fiduciary duty and supervision will benefit from participating in the outreach program.”

Registration is being administered by the MSRB and is open to all municipal advisor industry professionals, with a maximum of two in-person attendees per firm. In-person attendance is limited to a first-come, first-served basis.  For those who cannot attend in person, the program will be webcast live on the SEC’s website. 

Register to attend the program here.  Information on accessing the webcast and the links to program materials will be posted on the SEC, MSRB, and the FINRA websites on the day of the program.

SEC, MSRB, FINRA to Hold Compliance Outreach Program for Municipal Advisors

The Securities and Exchange Commission, Municipal Securities Rulemaking Board (MSRB), and Financial Industry Regulatory Authority (FINRA) today announced the opening of registration for the Compliance Outreach Program for Municipal Advisors. 

There is no cost to attend the program, which provides an open forum for municipal advisory industry professionals to discuss compliance practices with regulators and promote a more effective compliance structure for regulatory obligations of municipal advisors.  The event will be held at the SEC’s Atlanta Regional Office on November 8, from 9:00 a.m. to 4:00 p.m. ET, and webcast live on the SEC’s website. Additional information, including the agenda, is available on the SEC, MSRB, and FINRA websites.

The SEC’s Office of Compliance Inspections and Examinations (OCIE) and Office of Municipal Securities are partnering with the MSRB and FINRA to sponsor the program.  Topics of discussion include the duties and standards of conduct for non-solicitor municipal advisors under MSRB Rule G-42 and the Securities and Exchange Act of 1934, and municipal advisor compliance with supervision, registration, and books and records rules. The program also will include a roundtable discussion among the regulators and a question and answer session with participants.

“This program is designed to promote compliance with municipal advisor regulations and affords the industry the opportunity to hear from all three regulators on the regulatory obligations of municipal advisors,” said Rebecca Olsen, Deputy Director of the SEC’s Office of Municipal Securities.  Suzanne McGovern, Assistant Director of the SEC’s broker-dealer and municipal advisor examination programs, added, “This municipal advisor outreach will take a deeper dive into regulatory requirements and their practical implementation, helping municipal advisor professionals ensure proper regulatory compliance.”

MSRB Executive Director Lynnette Kelly said, “This program is consistent with the MSRB’s goal of assisting municipal advisors in understanding and complying with their regulatory obligations, and municipal advisors will benefit from getting first-hand feedback from our staff.”

Mike Rufino, FINRA’s Head of Member Regulation-Sales Practice, said, “Any firm that wants to enhance its understanding of the regulatory expectations in the important areas of fiduciary duty and supervision will benefit from participating in the outreach program.”

Registration is being administered by the MSRB and is open to all municipal advisor industry professionals, with a maximum of two in-person attendees per firm. In-person attendance is limited to a first-come, first-served basis.  For those who cannot attend in person, the program will be webcast live on the SEC’s website. 

Register to attend the program here.  Information on accessing the webcast and the links to program materials will be posted on the SEC, MSRB, and the FINRA websites on the day of the program.

Bridget Fitzpatrick Named Chief Litigation Counsel

The Securities and Exchange Commission today announced the leadership of the agency’s trial unit.  Bridget Fitzpatrick has been named Chief Litigation Counsel of the SEC and David Gottesman will continue to serve as the agency’s Deputy Chief Litigation Counsel.

Since December 2016, Ms. Fitzpatrick and Mr. Gottesman have served as Co-Acting Chief Litigation Counsel.  In that role, they were jointly responsible for supervising the trial unit at the agency’s Washington D.C. headquarters as well as coordinating with litigators in the SEC’s 11 regional offices around the country.  In her new role, Ms. Fitzpatrick will oversee the agency’s national litigation program and, as Deputy, Mr. Gottesman’s responsibilities will include oversight of all trial lawyers in the SEC’s Washington, D.C., headquarters.

Ms. Fitzpatrick previously served as a supervisor and a trial lawyer in the SEC’s Enforcement Division, where she supervised the litigation of several successful cases and tried highly complex matters such as the Commission’s charges against the Chairman and Vice Chairman of the Board of Directors of Michaels Stores, Samuel and Charles Wyly, and former Goldman Sachs banker Fabrice Tourre.  In recognition of her contributions to the SEC’s litigation program, she has twice received the Chairman’s Award for Excellence, and also received the Arthur F. Flemming Award for excellence in public service for her role as lead trial counsel in the Commission’s action against the Wyly brothers. 

As Deputy Chief Litigation Counsel, Mr. Gottesman has managed and advised the agency’s nationwide trial unit on litigation strategies and trial preparation.  He previously served as a supervisor and a trial lawyer in the SEC’s Enforcement Division, where he litigated cases involving accounting and disclosure fraud, market manipulation, offering frauds, and insider trading.

“The combination of Bridget’s impressive track record and strong judgment on litigation and trial strategy will serve the Division’s national litigation program well,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division.  “And I am pleased that David is going to substantially broaden his role by overseeing more than 40 trial lawyers and continuing to bring his significant securities expertise and judgment to our litigation program.”

Steven Peikin, Co-Director of the SEC’s Enforcement Division, added, “Bridget is well respected within both the Division and the agency, and her leadership of the program will be well complemented by David’s expertise and strong management experience.”

Ms. Fitzpatrick said, “I am honored to have been chosen to lead the SEC’s trial program and look forward to working with David and the SEC’s talented trial lawyers nationwide to continue our fight to protect investors from wrongdoers.”

Mr. Gottesman said, “I look forward to working with Bridget to continue to build upon the successes of our strong litigation program, and look forward to leading the agency’s Washington, D.C.-based trial lawyers to success in the agency’s litigation against wrongdoers.”

Before joining the SEC staff, Ms. Fitzpatrick served as a federal prosecutor for more than five years.  She served as an Assistant U.S. Attorney in the U.S. Attorney’s Office for the District of Columbia, where she tried 30 cases to verdict, including 15 jury trials, and obtained felony convictions against a sitting City Council member in Washington, D.C., for the embezzlement of more than $350,000 in public funds earmarked for youth and against an accounting manager who stole money from a woman’s shelter and an international charity.  Prior to her work in the U.S. Attorney’s Office, Ms. Fitzpatrick worked in private practice.  Ms. Fitzpatrick received her bachelor’s degree with distinction in all subjects from Cornell University and her law degree with honors from Georgetown University, where she was a member of the American Criminal Law Review.

Before joining the SEC staff, Mr. Gottesman was a trial attorney in the Commercial Litigation Branch of the Civil Division of the U.S. Department of Justice.  Prior to his work at the Department of Justice, he worked in private practice.  Mr. Gottesman received his bachelor’s and law degrees from the University of Minnesota.

Former Amazon Employee and College Friend Charged With Insider Trading

The Securities and Exchange Commission today announced insider trading charges against a former Amazon financial analyst who allegedly leaked confidential information to his former fraternity brother in advance of a company earnings announcement so they could turn an illegal profit.  The college friend and his trading partner also are charged in the SEC’s complaint.

The SEC alleges that Brett Kennedy accessed nonpublic 2015 first quarter earnings information without authorization while working at Amazon and shared it with Maziar Rezakhani, who illegally traded on the financial results before their public release to make more than $116,000 in illicit profits.  According to the SEC’s complaint, Rezakhani paid Kennedy $10,000 in cash for the tip and also shared the trading profits with Sam Sadeghi, who was advising him on his brokerage account trades and joined Rezakhani at a meeting with Kennedy to discuss the nonpublic information.  The SEC’s complaint alleges that Rezakhani and Sadeghi aimed to establish a successful track record with the trading in Rezakhani’s brokerage account and together open a hedge fund in New York that would accept investments from others.

According to the SEC’s complaint, Rezakhani boasted on at least two trading-related internet communication platforms in the days leading up to Amazon’s earnings announcement that he was predicting first quarter revenue of $22.7 billion and earnings per share of -$0.12, writing that the “numbers are so obvious” that a “5 year old can guess what they will do.”

Jina L. Choi, Director of the SEC’s San Francisco Regional Office, said, “As alleged in our complaint, Rezakhani boasted on social media that he could accurately predict Amazon’s financial performance.  But he failed to predict that we would catch him and his accomplices in their illegal scheme.”

Sadeghi and Kennedy agreed to settlements that are subject to court approval.  Without admitting or denying the allegations, Sadeghi agreed to pay disgorgement of $11,599.74 plus $1,035.39 in interest and an $11,599.74 penalty for a total of $24,214.87.  Kennedy agreed to pay disgorgement of $10,000 plus interest of $875.36.  In a parallel action, the U.S. Attorney’s Office for the Western District of Washington today announced criminal charges against Kennedy.

The SEC’s investigation was conducted by Sallie Kim and supervised by Steven Buchholz of the San Francisco office.  The litigation against Rezakhani will be led by Ms. Kim and Mr. Buchholz.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Western District of Washington and the Federal Bureau of Investigation.

Former Amazon Employee and College Friend Charged With Insider Trading

The Securities and Exchange Commission today announced insider trading charges against a former Amazon financial analyst who allegedly leaked confidential information to his former fraternity brother in advance of a company earnings announcement so they could turn an illegal profit.  The college friend and his trading partner also are charged in the SEC’s complaint.

The SEC alleges that Brett Kennedy accessed nonpublic 2015 first quarter earnings information without authorization while working at Amazon and shared it with Maziar Rezakhani, who illegally traded on the financial results before their public release to make more than $116,000 in illicit profits.  According to the SEC’s complaint, Rezakhani paid Kennedy $10,000 in cash for the tip and also shared the trading profits with Sam Sadeghi, who was advising him on his brokerage account trades and joined Rezakhani at a meeting with Kennedy to discuss the nonpublic information.  The SEC’s complaint alleges that Rezakhani and Sadeghi aimed to establish a successful track record with the trading in Rezakhani’s brokerage account and together open a hedge fund in New York that would accept investments from others.

According to the SEC’s complaint, Rezakhani boasted on at least two trading-related internet communication platforms in the days leading up to Amazon’s earnings announcement that he was predicting first quarter revenue of $22.7 billion and earnings per share of -$0.12, writing that the “numbers are so obvious” that a “5 year old can guess what they will do.”

Jina L. Choi, Director of the SEC’s San Francisco Regional Office, said, “As alleged in our complaint, Rezakhani boasted on social media that he could accurately predict Amazon’s financial performance.  But he failed to predict that we would catch him and his accomplices in their illegal scheme.”

Sadeghi and Kennedy agreed to settlements that are subject to court approval.  Without admitting or denying the allegations, Sadeghi agreed to pay disgorgement of $11,599.74 plus $1,035.39 in interest and an $11,599.74 penalty for a total of $24,214.87.  Kennedy agreed to pay disgorgement of $10,000 plus interest of $875.36.  In a parallel action, the U.S. Attorney’s Office for the Western District of Washington today announced criminal charges against Kennedy.

The SEC’s investigation was conducted by Sallie Kim and supervised by Steven Buchholz of the San Francisco office.  The litigation against Rezakhani will be led by Ms. Kim and Mr. Buchholz.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Western District of Washington and the Federal Bureau of Investigation.

State Street Paying Penalties to Settle Fraud Charges and Disclosure Failures

The Securities and Exchange Commission today announced that State Street has agreed to pay more than $35 million to settle charges that it fraudulently charged secret markups for transition management services and separately omitted material information about the operation of its platform for trading U.S. Treasury securities.

An SEC order finds that State Street’s scheme to overcharge transition management customers generated approximately $20 million in improper revenue for the firm.  State Street used false trading statements, pre-trade estimates, and post-trade reports to misrepresent its compensation on various transactions, especially purchases and sales of bonds and other securities that trade outside large transparent markets.  When one customer detected some hidden markups and confronted State Street employees, they falsely called it a “fat finger error” and “inadvertent commissions” in order to conceal the scheme.   

“Agreeing to a fee arrangement and then secretly tucking in hidden, unauthorized markups is fraudulent mistreatment of customers,” said Paul G. Levenson, Director of the SEC’s Boston Regional Office that investigated the overcharges.

In a separate SEC order, the agency finds that State Street failed to inform subscribers to its government securities trading platform called GovEx that despite marketing the system as “fair and transparent” it provided one subscriber with a “Last Look” trading functionality that allowed a short period of time for the subscriber to reject a match to a submitted quote.  The subscriber used Last Look to reject 57 matches that each had a $1 million face value.  State Street did not inform the counterparties that their orders had been rejected with Last Look.  While developing Last Look, State Street even told one subscriber that the platform did not have Last Look functionality at all.

“Firms that run trading platforms cannot mislead subscribers about their order handling operations,” said Kathryn A. Pyszka, Associate Director of the SEC’s Chicago Regional Office that investigated the GovEx-related disclosure failures. 

State Street Bank and Trust Company agreed to pay a $3 million penalty without admitting or denying the findings that its GovEx-related disclosure failures violated Section 17(a)(2) of the Securities Act of 1933.  The SEC’s investigation was conducted by Jonathan I. Katz of the Chicago office and Marcus D. Fruchter of the Market Abuse Unit, and the case was supervised by Ms. Pyszka, Joseph G. Sansone, and Robert A. Cohen.

State Street Global Markets LLC, State Street Global Advisors Funds Distributors LLC, and State Street Bank and Trust Company agreed to pay a $32.3 million penalty to settle the fraud charges for the hidden transition services markups, which violated Sections 17(a)(1) and (3) of the Securities Act of 1933 as well as Section 15(c)(1) and Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c).  State Street Corporation and certain foreign subsidiaries previously agreed to pay separate penalties to U.S. criminal authorities and the United Kingdom’s Financial Conduct Authority.  The SEC’s investigation was conducted by Eric Heining, Rory Alex, Rua Kelly, and Paul Block of the Boston office with assistance from examiner Mark Gera.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of Massachusetts, Fraud Section of the U.S. Department of Justice, Federal Bureau of Investigation, United Kingdom’s Financial Conduct Authority, and City of London Police.

State Street Paying Penalties to Settle Fraud Charges and Disclosure Failures

The Securities and Exchange Commission today announced that State Street has agreed to pay more than $35 million to settle charges that it fraudulently charged secret markups for transition management services and separately omitted material information about the operation of its platform for trading U.S. Treasury securities.

An SEC order finds that State Street’s scheme to overcharge transition management customers generated approximately $20 million in improper revenue for the firm.  State Street used false trading statements, pre-trade estimates, and post-trade reports to misrepresent its compensation on various transactions, especially purchases and sales of bonds and other securities that trade outside large transparent markets.  When one customer detected some hidden markups and confronted State Street employees, they falsely called it a “fat finger error” and “inadvertent commissions” in order to conceal the scheme.   

“Agreeing to a fee arrangement and then secretly tucking in hidden, unauthorized markups is fraudulent mistreatment of customers,” said Paul G. Levenson, Director of the SEC’s Boston Regional Office that investigated the overcharges.

In a separate SEC order, the agency finds that State Street failed to inform subscribers to its government securities trading platform called GovEx that despite marketing the system as “fair and transparent” it provided one subscriber with a “Last Look” trading functionality that allowed a short period of time for the subscriber to reject a match to a submitted quote.  The subscriber used Last Look to reject 57 matches that each had a $1 million face value.  State Street did not inform the counterparties that their orders had been rejected with Last Look.  While developing Last Look, State Street even told one subscriber that the platform did not have Last Look functionality at all.

“Firms that run trading platforms cannot mislead subscribers about their order handling operations,” said Kathryn A. Pyszka, Associate Director of the SEC’s Chicago Regional Office that investigated the GovEx-related disclosure failures. 

State Street Bank and Trust Company agreed to pay a $3 million penalty without admitting or denying the findings that its GovEx-related disclosure failures violated Section 17(a)(2) of the Securities Act of 1933.  The SEC’s investigation was conducted by Jonathan I. Katz of the Chicago office and Marcus D. Fruchter of the Market Abuse Unit, and the case was supervised by Ms. Pyszka, Joseph G. Sansone, and Robert A. Cohen.

State Street Global Markets LLC, State Street Global Advisors Funds Distributors LLC, and State Street Bank and Trust Company agreed to pay a $32.3 million penalty to settle the fraud charges for the hidden transition services markups, which violated Sections 17(a)(1) and (3) of the Securities Act of 1933 as well as Section 15(c)(1) and Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c).  State Street Corporation and certain foreign subsidiaries previously agreed to pay separate penalties to U.S. criminal authorities and the United Kingdom’s Financial Conduct Authority.  The SEC’s investigation was conducted by Eric Heining, Rory Alex, Rua Kelly, and Paul Block of the Boston office with assistance from examiner Mark Gera.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of Massachusetts, Fraud Section of the U.S. Department of Justice, Federal Bureau of Investigation, United Kingdom’s Financial Conduct Authority, and City of London Police.

SEC Announces Agenda for September 13 Meeting of the Advisory Committee on Small and Emerging Companies

The Securities and Exchange Commission today announced the agenda for the next meeting of its Advisory Committee on Small and Emerging Companies.  The committee will discuss the Sarbanes-Oxley Act auditor attestation requirement and explore whether updates are needed to Securities Act Rule 701, which many companies use to provide stock and option awards.  The committee also will vote on a final report that would be issued before the committee’s charter expires on September 24.

The September 13 meeting will begin at 9:30 a.m. in the multipurpose room at the SEC’s headquarters at 100 F Street, N.E., Washington, D.C., and is open to the public.  It will be webcast live on the SEC’s website and archived on the website for later viewing. 

The committee provides a formal mechanism for the SEC to receive advice and recommendations on privately held small businesses and publicly traded companies with a market capitalization less than $250 million.

Members of the public who wish to provide their views on the matters to be considered by the committee may submit comments electronically or on paper.  Please submit comments using one method only.  Information that is submitted will become part of the public record of the meeting.

Electronic submissions:

Use the SEC’s Internet submission form or send an e-mail to rule-comments@sec.gov.

Paper submissions:

Send paper submissions to Brent Fields, Secretary, Securities and Exchange Commission, 100 F Street, N.E., Washington, D.C. 20549-1090.

All submissions should refer to File Number 265-27, and the file number should be included on the subject line if e-mail is used.

Agenda

SEC Announces Agenda for September 13 Meeting of the Advisory Committee on Small and Emerging Companies

The Securities and Exchange Commission today announced the agenda for the next meeting of its Advisory Committee on Small and Emerging Companies.  The committee will discuss the Sarbanes-Oxley Act auditor attestation requirement and explore whether updates are needed to Securities Act Rule 701, which many companies use to provide stock and option awards.  The committee also will vote on a final report that would be issued before the committee’s charter expires on September 24.

The September 13 meeting will begin at 9:30 a.m. in the multipurpose room at the SEC’s headquarters at 100 F Street, N.E., Washington, D.C., and is open to the public.  It will be webcast live on the SEC’s website and archived on the website for later viewing. 

The committee provides a formal mechanism for the SEC to receive advice and recommendations on privately held small businesses and publicly traded companies with a market capitalization less than $250 million.

Members of the public who wish to provide their views on the matters to be considered by the committee may submit comments electronically or on paper.  Please submit comments using one method only.  Information that is submitted will become part of the public record of the meeting.

Electronic submissions:

Use the SEC’s Internet submission form or send an e-mail to rule-comments@sec.gov.

Paper submissions:

Send paper submissions to Brent Fields, Secretary, Securities and Exchange Commission, 100 F Street, N.E., Washington, D.C. 20549-1090.

All submissions should refer to File Number 265-27, and the file number should be included on the subject line if e-mail is used.

Agenda

Radio Host Charged With Concert Ticket Investment Scam

The Securities and Exchange Commission today charged a sports radio personality and another New York City man with stealing millions of dollars from investors who were allegedly promised their funds would be used for the purchase and resale of concert tickets.

In a complaint filed in federal district court in Manhattan, the SEC alleges that Craig Carton and Joseph Meli falsely claimed they had access to large blocks of face value tickets to popular concert performances.  According to the SEC’s complaint, investors were falsely promised high returns from the price markups in ticket resales.  But instead of purchasing tickets for resale, Carton and Meli allegedly misappropriated at least $3.6 million to repay earlier investors and cover such other expenses as Carton’s gambling debts.  Carton allegedly stole an additional $2 million by tricking a concert venue into forwarding an investor’s money into a bank account belonging to one of Carton’s companies. 

According to the SEC’s complaint, one investor was provided documents falsely representing that large blocks of Adele tickets were being purchased at face value directly from Adele’s management company when in fact no such agreement was in place.  Meli was separately charged earlier this year with operating a Ponzi scheme involving purported resales of tickets to the Broadway musical Hamilton and other events.

“As alleged in our complaint, investors were lured with promises of big profits from resales of A-list concert tickets, but little did they know their money was being used to cover Carton’s gambling debts among other things,” said Paul Levenson, Director of the SEC’s Boston Regional Office.

The SEC’s complaint seeks disgorgement of ill-gotten gains plus interest and penalties against Carton and Meli along with six businesses they control: Advance Entertainment LLC, AdvanceM Ltd., Misoluki Inc., Misoluki LLC, Ticket Jones LLC, and Tier One Tickets LLC.

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

The SEC’s case is being handled by Dahlia Rin, John McCann, Martin Healey, and Celia Moore of the Boston office.  The SEC appreciates the assistance of the FBI and the U.S. Attorney’s Office for the Southern District of New York.