Press Releases, Author at Vigilant LLC

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.

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.

Chairman Clayton Names Executive Staff

The Securities and Exchange Commission today announced that John Cook, Jeffrey Dinwoodie, Raquel Fox, Kristina Littman, Alan Cohen, Christopher Carofine, and Shelby Begany Telle have been named to the executive staff of Chairman Jay Clayton.

These executive staff members will advise Chairman Clayton alongside Chief of Staff Lucas Moskowitz, Deputy Chief of Staff Sean Memon, Chief Counsel Jaime Klima, Managing Executive Peter Uhlmann, and Senior Advisor to the Chair for Cybersecurity Policy Christopher Hetner. Chairman Clayton’s executive staff is responsible for advising the Chairman on all matters before the Commission, working closely with agency staff, and helping the Chairman perform all day-to-day operations needed to fulfill the SEC’s mission.

“I am pleased that we have assembled a dedicated, talented, and diverse group with such a wide range of experiences in the public and private sectors,” said Chairman Jay Clayton. “With their help, and the work of the dedicated staff of the Commission, I look forward to continuing the SEC’s strong tradition of interacting with all constituencies we serve effectively and efficiently as we strive to fulfill the SEC’s mission.”

John Cook
Senior Advisor to the Chairman

John Cook is the lead advisor to the Chairman on matters involving the Division of Investment Management, Division of Economic and Risk Analysis (DERA), and Office of the Chief Accountant (OCA), and assists on enforcement matters. Mr. Cook joined the SEC in 2010, previously serving as a Senior Special Counsel in DERA and in OCA, and as a counsel to Commissioner Daniel M. Gallagher. Before joining the SEC, Mr. Cook practiced law at Gibson, Dunn & Crutcher LLP, representing clients in regulatory matters. Mr. Cook earned his J.D., cum laude, from Harvard Law School and an undergraduate degree, magna cum laude, from the Georgetown University School of Foreign Service.

Jeffrey Dinwoodie
Senior Advisor to the Chairman

Jeffrey T. Dinwoodie is the lead advisor to the Chairman on matters involving the Division of Trading and Markets, Office of Compliance Inspections and Examinations, Office of Municipal Securities, and Office of Credit Ratings, and assists on enforcement matters. Mr. Dinwoodie previously practiced law at Davis Polk & Wardwell LLP, where he advised banks, broker-dealers, clearinghouses, markets, rating agencies, and other financial institutions on a wide range of regulatory, enforcement, and transactional matters. He has been a frequent writer and speaker on securities and derivatives law topics. Prior to joining Davis Polk, Mr. Dinwoodie served as an SEC attorney from 2008 to 2011 in the Division of Trading and Markets. Mr. Dinwoodie earned his J.D., magna cum laude, from American University and an undergraduate degree from George Mason University.

Raquel Fox
Senior Advisor to the Chairman

Raquel Fox is the lead advisor to the Chairman on matters involving the Division of Corporation Finance and Office of International Affairs, and assists on enforcement matters. Ms. Fox joined the SEC in 2011, previously serving as a Senior Special Counsel to the Director of the Division of Corporation Finance and an attorney fellow in the offices of Capital Markets Trends and Rulemaking. Before joining the SEC, Ms. Fox practiced law at Wilmer Cutler Pickering Hale and Dorr LLP, specializing in capital markets transactions, corporate governance, and disclosure. She began her career as a certified public accountant, specializing in taxation. Ms. Fox earned her J.D. from Harvard Law School and a master’s degree in Taxation and an undergraduate degree, summa cum laude, from Baylor University.

Kristina Littman
Senior Advisor to the Chairman

Kristina Littman is the lead advisor to the Chairman on matters involving the Division of Enforcement, and assists on other regulatory and policy matters. Ms. Littman joined the SEC in 2010, previously serving as a trial attorney and investigative attorney in the Division of Enforcement and as Counsel to the Director of Enforcement. Prior to joining the SEC, Ms. Littman practiced law at Drinker Biddle & Reath LLP, specializing in white collar and securities litigation. Ms. Littman earned her J.D. and M.B.A. from Rutgers University School of Law – Camden and an undergraduate degree from Florida State University.

Alan Cohen
Senior Policy Advisor to the Chairman

Alan Cohen will serve as advisor to the Chairman on emerging risks and regulatory developments, including the impact of Brexit, new European Union regulations (e.g. MiFID II), and issues related to domestic and international clearing and settlement of securities and derivatives transactions. Most recently, Mr. Cohen was an advisor to the executive office at Goldman Sachs after joining the firm in 2004 as the Global Head of Compliance and a member of the management committee, where he supervised a global team that was responsible for compliance across all business and financial products, and in every major international market. Additionally, he was the court-appointed receiver of an SEC- and CFTC-regulated firm that engaged in a global securities and commodities fraud scheme and served on FINRA’s Compliance Advisory Committee and International Advisory Working Group. From 1991 to 2003, Mr. Cohen created and co-headed the white collar and regulatory defense practice at O’Melveny & Myers LLP. Mr. Cohen earned his J.D. from Rutgers School of Law – Newark, a Ph.D. in Political Science from Rutgers University, and an undergraduate degree from Temple University.

Christopher Carofine
Director of Communications

Christopher Carofine serves as Director of Communications to Chairman Clayton, advising on all matters related to communications and media relations. Prior to joining the SEC, Mr. Carofine served as the Communications Director for Rep. Scott Garrett, former Chairman of the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises. He was previously a Senior Account Executive at a business communications and public relations firm in New York. Mr. Carofine earned his undergraduate degree from Rutgers University.

Shelby Begany Telle
Confidential Assistant

Shelby Begany Telle serves as Confidential Assistant to Chairman Clayton. Prior to joining the SEC staff, Ms. Telle spent four years working on Capitol Hill—most recently for the Senate Rules Committee and previously for the Senate Committee on Banking, Housing and Urban Affairs and the Senate Appropriations Committee—all for U.S. Senator Richard Shelby. Ms. Telle earned her undergraduate degree from Vanderbilt University, where she was a Chancellor’s Scholar, and is an evening student at Catholic University’s Columbus School of Law.

Other Members of the Executive Staff

Lucas Moskowitz
Chief of Staff
Bio

Sean Memon
Deputy Chief of Staff
Bio

Jaime Klima
Chief Counsel
Bio

Peter Uhlmann
Managing Executive
Bio

Christopher Hetner
Senior Advisor to the Chair for Cybersecurity Policy
Bio

SEC Names Jeffrey Harris as Director of the Division of Economic and Risk Analysis

The Securities and Exchange Commission today announced that Dr. Jeffrey H. Harris has been named Director of the agency’s Division of Economic and Risk Analysis (DERA). He replaces former director Mark Flannery who left the agency to return to teaching.

DERA was created in September 2009 to integrate financial economics and rigorous data analytics into the core mission and operations of the SEC. As Director, Dr. Harris will lead DERA’s team of experienced economists as they are involved across the entire range of SEC activities, including policy, rulemaking, enforcement, and examination.

“Dr. Harris’s extensive research on securities and commodities issues and experience in government, academia, and the private sector make him a great fit to lead DERA’s team of dedicated economists,” said Chairman Jay Clayton. “I am confident that DERA will continue to provide the SEC’s staff and the Commission with the valuable economic analysis, research, and support they need.”

Dr. Harris added, “The team at DERA is one of the most well-respected and talented groups of economists in public service and it is an honor to join their ranks. I look forward to working with my new team, agency staff, and the Commissioners as we work to fulfill the SEC’s mission.”

Chairman Clayton also thanked Acting Director Scott Bauguess. “Scott has been a terrific leader of DERA since the departure of Professor Flannery and I look forward to continuing to work with him on various important projects.”

Dr. Harris is currently a professor and the Gary D. Cohn Goldman Sachs Chair in Finance at Kogod School of Business at American University in Washington, D.C. Dr. Harris has an extensive background in market microstructure and regulatory issues. He recently served as Chief Economist at the Commodity Futures Trading Commission, with prior experience as Visiting Academic at the Nasdaq Stock Market and at the SEC. He has previously held faculty appointments as the Dean’s Chair in Finance at the Whitman School of Management at Syracuse University, as the Collins Chair of Finance in the Cox School of Business at Southern Methodist University (visiting), and at the University of Delaware, the University of Notre Dame, and The Ohio State University.

DERA relies on a variety of academic disciplines, quantitative and non-quantitative approaches, and knowledge of market institutions and practices to help the Commission approach complex matters and conduct economic analysis in a fresh light. DERA also assists in the Commission’s efforts to identify, analyze, and respond to risks and trends, including those associated with new financial products and strategies. Through the range and nature of its activities, DERA serves the critical function of promoting collaborative efforts throughout the agency and breaking through silos that might otherwise limit the impact of the agency’s institutional expertise.

Dr. Harris’s research has appeared in the Energy Journal, European Financial Management, Financial Management, The Financial Review, the Journal of Finance, the Journal of Investment Management, the Journal of Financial and Quantitative Analysis, the Journal of Financial Economics, the Journal of Futures Markets, the Review of Futures Markets and the Review of Financial Studies.

Dr. Harris holds an undergraduate degree and M.B.A. from the University of Iowa and a Ph.D. in Finance from The Ohio State University.

SEC Names Dalia Blass as Director of the Division of Investment Management

The Securities and Exchange Commission today announced that Dalia Blass has been named Director of the agency’s Division of Investment Management.

The SEC’s Division of Investment Management works to protect investors and to promote capital formation and innovation in investment products and services through oversight and regulation of the nation’s multi-trillion dollar investment management industry. The Division is responsible for the Commission’s regulation of investment companies, variable insurance products, and federally registered investment advisers.

“Dalia’s years of service here at the SEC and extensive experience in the private sector will make her a valuable asset to the agency and the Division of Investment Management,” said Chairman Jay Clayton. “The investment management industry is constantly evolving, yet its integrity is vital to our markets and Main Street investors. I know Dalia and the dedicated team in the Investment Management Division recognize this and will continue to work every day to fulfill the SEC’s mission.”

Ms. Blass returns to the SEC after previously serving in a number of leadership roles in the Division of Investment Management, most recently as Assistant Chief Counsel. During her SEC tenure of more than a decade, Ms. Blass received the SEC’s Manuel F. Cohen Award, which recognizes outstanding legal ability and performance.

“It is an enormous honor to return to the SEC to work with Chairman Clayton, Commissioners Stein and Piwowar, and the talented and hard-working staff in the Division of Investment Management and across the agency,” said Ms. Blass. “The asset management industry is more important than ever to American investors and to our capital markets. I am humbled by the opportunity to lead the Division and to promote opportunities for capital formation and innovation that benefits investors.”

Ms. Blass joins the agency from Ropes & Gray LLP, where she advised on a broad range of investment fund, private equity, and regulatory matters. She previously practiced law at O’Melveny & Myers LLP, and began her career in the London office of Shearman & Sterling LLP.

Ms. Blass earned a J.D. from Columbia University School of Law, where she was Harlan Fiske Stone Scholar and Executive Editor of the Journal of Transnational Law. She received her B.A in international studies from the American University and studied political science at the American University in Cairo.

SEC and NYU to Host Forum on Exchange-Traded Products

The Securities and Exchange Commission and New York University will host a forum in September to examine the fast growing market for exchange-traded products and its implications for investors.

The event, hosted by SEC’s Division of Economic and Risk Analysis and NYU’s Salomon Center for the Study of Financial Institutions, will bring together regulators, industry members, and academics for a half-day dialogue on September 8. It will kick off with welcoming remarks by Commissioner Michael Piwowar at 9:15 a.m. and conclude following remarks by Commissioner Kara Stein at 1:00 p.m.

Since the first exchange-traded product (ETP) was introduced in 1993, the ETP market has expanded to nearly 2,000 different securities holding more than $2.7 trillion of assets. While the first ETPs tracked stock-market indices, the market now includes ETPs that track other market indices as well as actively managed ETPs that invest in stocks, bonds, commodities, currencies, futures, options, and other derivative products.

“Exchange-traded products, once novel instruments, now account for nearly one-third of trading volume on U.S. exchanges. It is important that we examine the impact of these products on our markets and Main Street investors,” said SEC Chairman Jay Clayton. “We are pleased to collaborate with NYU on this event and I thank my fellow Commissioners for their participation.”

The event will be held at SEC headquarters at 100 F Street NE, Washington, D.C., and webcast at DERA Events. The event is free and open to the public who are asked to register in advance.

Former Pharma Company Accountant, Three Others Charged With Insider Trading

The Securities and Exchange Commission today charged an accountant and three others with insider trading on market-moving news about the New Jersey-based pharmaceutical company where the accountant formerly worked.

The SEC’s complaint, filed in federal court in New Jersey, alleges that Evan R. Kita, a CPA and former accountant at Celator Pharmaceuticals Inc., tipped two of his friends with confidential information about the clinical trial results for Celator’s cancer drug and its acquisition by Dublin-based Jazz Pharmaceuticals Plc almost three months later. Celator’s stock rose more than 400 percent in March 2016 when it announced positive results for its drug to treat leukemia, and Jazz Pharmaceuticals offered to pay a hefty premium in May 2016 to acquire Celator.

According to the SEC’s complaint, Daniel Perez and Richard Yu purchased Celator stock based on Kita’s tips before the two announcements and agreed to share their trading profits with him. The SEC alleges that Richard Yu passed Kita’s tips to his father, Chiang Yu, who also traded in advance of both announcements. To avoid detection, Kita allegedly communicated with Perez and Richard Yu through an encrypted smartphone application.

”The investing public relies on accountants and other gatekeepers to safeguard confidential information, not use it for personal profit,” said Kelly L. Gibson, Associate Director of the SEC’s Philadelphia Regional Office. ”When gatekeepers violate that public trust as Kita allegedly did, the SEC is committed to holding them accountable.”

In a parallel action, the U.S. Attorney’s Office for the District of New Jersey today filed criminal charges against Kita, Perez, Richard Yu, and Chiang Yu.

The SEC’s complaint charges Kita, Perez, Richard Yu, and Chiang Yu with violating antifraud provisions of the federal securities laws and related SEC antifraud rules.

The SEC’s continuing investigation is being conducted by David W. Snyder and John S. Rymas and supervised by Ms. Gibson and Joseph G. Sansone, Co-Chief of the Market Abuse Unit. The litigation will be led by Jennifer Chun Barry. 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.

SEC Monitoring Market Impact of Hurricane Harvey

The Securities and Exchange Commission is closely monitoring the impact of Hurricane Harvey on investors and capital markets. Chairman Jay Clayton has mobilized agency resources to assist affected investors and market participants.

“Our thoughts and prayers are with the millions of people in Texas and Louisiana affected by Hurricane Harvey,” said Chairman Clayton. “Agency officials have been and will remain in close communication with market participants and key market infrastructure providers, as well as the Financial Industry Regulatory Authority and other regulators concerning the storm and its aftermath. We are also actively working with firms in affected areas to ensure that investors continue to have access to their securities accounts.”

The SEC Divisions and Offices that oversee companies, accountants, investment advisers, mutual funds, brokerage firms, transfer agents, and other regulated entities and investment professionals will continue to closely track developments. They will evaluate the possibility of granting relief from filing deadlines and other regulatory requirements for those affected by the storm. Entities and investment professionals affected by Hurricane Harvey are encouraged to contact Commission staff with questions and concerns:

Office of Compliance Inspections and Examinations staff in the Commission’s Fort Worth Regional Office can be reached by phone at 817-978-3821 or email at dfw@sec.gov,
Division of Corporation Finance staff can be reached by phone at 202-551-3500 or via online submission at www.sec.gov/forms/corp_fin_interpretive,
Division of Investment Management staff can be reached by phone at 202-551-6825 or email at imocc@sec.gov,
Division of Trading and Markets staff can be reached by phone at 202-551-5777 or email at tradingandmarkets@sec.gov, and
Office of Municipal Securities staff can be reached by phone at 202-551-5680 or email at munis@sec.gov.

Individuals experiencing problems accessing their securities accounts or with similar questions or concerns relating to the hurricane are encouraged to contact the Commission’s Office of Investor Education and Advocacy by phone at 1-800-SEC-0330 or email at help@sec.gov.

The Division of Enforcement will be vigilant for Hurricane Harvey-related securities scams and will vigorously prosecute those who attempt to take advantage of this tragedy by defrauding victims of the storm. The SEC is asking investors to report any suspicious solicitations at www.sec.gov/complaint/tipscomplaint.shtml.

Fee Rate Advisory #1 for Fiscal Year 2018

The Securities and Exchange Commission today announced that in fiscal year 2018 the fees that public companies and other issuers pay to register their securities with the Commission will be set at $124.50 per million dollars.

The securities laws require the Commission to make annual adjustments to the rates for fees paid under Section 6(b) of the Securities Act of 1933 and Sections 13(e) and 14(g) of the Securities Exchange Act of 1934. The Commission must set rates for the fees paid under Section 6(b) to levels that the Commission projects will generate collections equal to annual statutory target amounts. The Commission’s projections are calculated using a methodology developed in consultation with the Congressional Budget Office and the Office of Management and Budget. The statutory target amount for fiscal year 2018 is $620 million. The annual adjustment to the fee rate under Section 6(b) also sets the annual adjustment to the fee rates under Sections 13(e) and 14(g).

By law, the annual rate changes for fees paid under Section 6(b) of the Securities Act of 1933 and Sections 13(e) and 14(g) of the Securities Exchange Act of 1934 must take effect on the first day of each fiscal year. Therefore, effective Oct. 1, 2017, the Section 6(b) fee rate applicable to the registration of securities, the Section 13(e) fee rate applicable to the repurchase of securities, and the Section 14(g) fee rates applicable to proxy solicitations and statements in corporate control transactions will increase from $115.90 per million dollars to $124.50 per million dollars. The Section 6(b) rate is also the rate used to calculate the fees payable with the Annual Notice of Securities Sold Pursuant to Rule 24f-2 under the Investment Company Act of 1940.

The Commission will issue further notices as appropriate to keep the public informed of developments relating to fees under Section 6(b), Section 13(e) and Section 14(g). These notices will be posted on the Commission’s Internet Web site at www.sec.gov.

Fee Rate Advisory #1 for Fiscal Year 2018

The Securities and Exchange Commission today announced that in fiscal year 2018 the fees that public companies and other issuers pay to register their securities with the Commission will be set at $124.50 per million dollars.

The securities laws require the Commission to make annual adjustments to the rates for fees paid under Section 6(b) of the Securities Act of 1933 and Sections 13(e) and 14(g) of the Securities Exchange Act of 1934. The Commission must set rates for the fees paid under Section 6(b) to levels that the Commission projects will generate collections equal to annual statutory target amounts. The Commission’s projections are calculated using a methodology developed in consultation with the Congressional Budget Office and the Office of Management and Budget. The statutory target amount for fiscal year 2018 is $620 million. The annual adjustment to the fee rate under Section 6(b) also sets the annual adjustment to the fee rates under Sections 13(e) and 14(g).

By law, the annual rate changes for fees paid under Section 6(b) of the Securities Act of 1933 and Sections 13(e) and 14(g) of the Securities Exchange Act of 1934 must take effect on the first day of each fiscal year. Therefore, effective Oct. 1, 2017, the Section 6(b) fee rate applicable to the registration of securities, the Section 13(e) fee rate applicable to the repurchase of securities, and the Section 14(g) fee rates applicable to proxy solicitations and statements in corporate control transactions will increase from $115.90 per million dollars to $124.50 per million dollars. The Section 6(b) rate is also the rate used to calculate the fees payable with the Annual Notice of Securities Sold Pursuant to Rule 24f-2 under the Investment Company Act of 1940.

The Commission will issue further notices as appropriate to keep the public informed of developments relating to fees under Section 6(b), Section 13(e) and Section 14(g). These notices will be posted on the Commission’s Internet Web site at www.sec.gov.

Muni Bond Issuer and Underwriter Charged With Disclosure Failures

The Securities and Exchange Commission today announced that a municipal financing authority in Beaumont, California, and its then-executive director have agreed to settle charges that they made false statements about prior compliance with continuing disclosure obligations in five bond offerings.

Also settling charges are the underwriting firm behind those offerings and its co-founder for failing to conduct reasonable due diligence on the continuing disclosure representations.

The SEC’s Enforcement Division uncovered the violations as part of a review of municipal issuers and underwriters that did not voluntarily self-report under the agency’s Municipalities Continuing Disclosure Cooperation (MCDC) Initiative. The Beaumont Financing Authority and the underwriter, O’Connor & Company Securities Inc., would have been eligible for more lenient remedies had they self-reported during the MCDC Initiative.

According to the SEC’s order, the Beaumont Financing Authority had issued approximately $260 million in municipal bonds in 24 separate offerings from 2003 to 2013 for the development of public infrastructure. For each of those offerings, a community facilities district established by Beaumont agreed to provide investors with annual continuing disclosures, including important financial information and operating data. From at least 2004 to April 2013, the district regularly failed to provide investors with the promised information. The Beaumont Financing Authority failed to disclose this poor record of compliance when it conducted the 2012 and 2013 offerings totaling more than $32 million. As a result, the bonds appeared more attractive and investors were misled about the likelihood that the district would comply with its continuing disclosure obligations in the future.

“Investors in municipal bonds depend on timely and complete continuing disclosure from municipal issuers,” said LeeAnn Ghazil Gaunt, Chief of the SEC Enforcement Division’s Public Finance Abuse Unit. “Issuers and underwriters will continue to be held accountable when they fail to provide investors with an accurate picture of past compliance with continuing disclosure obligations.”

In a complaint filed in the Eastern Division of the U.S. District Court for the Central District of California, the SEC charged Beaumont’s then-city manager Alan Kapanicas, who also served as the Beaumont Financing Authority’s executive director. According to the complaint, he approved and signed the misleading offering documents. Kapanicas agreed to settle the charges without admitting or denying the allegations, and pay a $37,500 penalty. He also agreed to be barred from participating in any future municipal bond offerings.

In consenting to an SEC order without admitting or denying the findings, the Beaumont Financing Authority agreed to retain an independent consultant to review its policies and procedures. It also is required to establish appropriate and comprehensive policies, procedures, and training for employees as well as designate a compliance officer in order to ensure compliance with continuing disclosure agreements.

O’Connor & Company Securities Inc. and its co-founder and former primary investment banker Anthony Wetherbee agreed to settle the charges against them without admitting or denying the SEC’s findings. O’Connor & Company Securities Inc. will pay a $150,000 penalty and retain an independent compliance consultant to review its policies and procedures. Wetherbee will pay a $15,000 penalty and serve a suspension from the securities industry for six months.

The SEC’s investigation was conducted by Steven Varholik and Jason H. Lee of the Public Finance Abuse Unit with assistance from Deputy Chief Mark R. Zehner, Jonathan Wilcox, and Creighton L. Papier. The investigation was supervised by Monique C. Winkler.