SEC Names Sagar S. Teotia as Deputy Chief Accountant

The Securities and Exchange Commission today announced the appointment of Sagar S. Teotia as a Deputy Chief Accountant in the agency’s Office of the Chief Accountant.

As Deputy Chief Accountant, Mr. Teotia will lead the activities of the office’s accounting group, which includes understanding investor and other perspectives on accounting matters and consulting with public companies, auditors, and divisions and offices within the SEC, on the application of accounting standards and financial disclosure requirements. Mr. Teotia will also assist the office in discharging the Commission’s oversight of standard setting bodies such as the Financial Accounting Standards Board.

Mr. Teotia previously served in the office as a professional accounting fellow from 2009 to 2011. During his time as a fellow he followed the activities of professional accounting standard-setting bodies, both within the United States and internationally.

“I am very pleased that Sagar has agreed to return to the Office of the Chief Accountant to oversee the accounting group,” said SEC Chief Accountant Wesley Bricker. “Sagar’s prior experience as an SEC accounting fellow as well as his expertise and wealth of experience in public accounting will provide critical service to investors, companies and the Commission.”

“I am honored to have this opportunity to return to work at the Commission and serve with the talented and highly dedicated team in the Office of the Chief Accountant on behalf of investors,” said Mr. Teotia.

Mr. Teotia joins the SEC with approximately 18 years of professional experience that includes expertise in regulatory matters, technical accounting, and mergers and acquisitions. He joins the SEC from Deloitte & Touche LLP’s National Office Accounting Consultation Group in Chicago, where he was a partner.

Mr. Teotia’s work has included a focus on financial instruments, business combinations, and compensation issues, including stock compensation and pension matters. He has also worked on matters regarding the application of U.S. Generally Accepted Accounting Principles and International Financial Reporting Standards.

Mr. Teotia received an accounting degree from the University of Illinois at Urbana-Champaign. He is licensed to practice as a certified public accountant in Illinois.

SEC Halts Fraud Targeting Seniors

The Securities and Exchange Commission today announced an emergency asset freeze and temporary restraining order against a Chicago-based investment adviser and his financial management company accused of scamming elderly investors out of millions of dollars. 

The SEC alleges that Daniel H. Glick and his unregistered investment advisory firm Financial Management Strategies (FMS) provided clients with false account statements to hide Glick’s use of client funds to pay personal and business expenses, purchase a Mercedes-Benz, and pay off loans and debts among other misuses.

According to the SEC’s complaint, Glick was barred by FINRA in 2014 and had his Certified Financial Planner designation and Certified Public Accountant license revoked for conduct unrelated to today’s SEC charges.

“As alleged in our complaint, Daniel Glick raised millions of dollars from elderly clients by claiming that he would pay their bills, handle their taxes, and invest on their behalf.  In reality, Daniel Glick used much of their money to do what was best for Daniel Glick,” said David Glockner, Director of the SEC’s Chicago Regional Office.

The SEC’s complaint also names Glick Accounting Services, Glick’s business partner David B. Slagter, and Glick’s business acquaintance Edward H. Forte as relief defendants for the purposes of recovering client funds that Glick transferred or paid them in the form of advances or loans.

The court issued a temporary restraining order against Glick and FMS at the SEC’s request, and issued an order freezing the assets of Glick, FMS, and Glick Accounting Services.

The SEC encourages investors to check the background of anyone offering to sell them investments.  For more information on resources for performing due diligence on your broker or adviser, please visit www.investor.gov.

The SEC’s investigation, which is continuing, is being conducted by Michelle Muñoz Durk and John Kustusch, and the case is being supervised by Jeffrey A. Shank.  The SEC’s litigation will be led by Steven C. Seeger.  The SEC’s examination that led to the investigation was conducted by Terrence Bohan, Michael Altschuler, and Christine Little, and it was supervised by Rosanne Smith.

SEC Halts Fraud Targeting Seniors

The Securities and Exchange Commission today announced an emergency asset freeze and temporary restraining order against a Chicago-based investment adviser and his financial management company accused of scamming elderly investors out of millions of dollars. 

The SEC alleges that Daniel H. Glick and his unregistered investment advisory firm Financial Management Strategies (FMS) provided clients with false account statements to hide Glick’s use of client funds to pay personal and business expenses, purchase a Mercedes-Benz, and pay off loans and debts among other misuses.

According to the SEC’s complaint, Glick was barred by FINRA in 2014 and had his Certified Financial Planner designation and Certified Public Accountant license revoked for conduct unrelated to today’s SEC charges.

“As alleged in our complaint, Daniel Glick raised millions of dollars from elderly clients by claiming that he would pay their bills, handle their taxes, and invest on their behalf.  In reality, Daniel Glick used much of their money to do what was best for Daniel Glick,” said David Glockner, Director of the SEC’s Chicago Regional Office.

The SEC’s complaint also names Glick Accounting Services, Glick’s business partner David B. Slagter, and Glick’s business acquaintance Edward H. Forte as relief defendants for the purposes of recovering client funds that Glick transferred or paid them in the form of advances or loans.

The court issued a temporary restraining order against Glick and FMS at the SEC’s request, and issued an order freezing the assets of Glick, FMS, and Glick Accounting Services.

The SEC encourages investors to check the background of anyone offering to sell them investments.  For more information on resources for performing due diligence on your broker or adviser, please visit www.investor.gov.

The SEC’s investigation, which is continuing, is being conducted by Michelle Muñoz Durk and John Kustusch, and the case is being supervised by Jeffrey A. Shank.  The SEC’s litigation will be led by Steven C. Seeger.  The SEC’s examination that led to the investigation was conducted by Terrence Bohan, Michael Altschuler, and Christine Little, and it was supervised by Rosanne Smith.

SEC Halts Boiler Room Scheme Involving State Lottery Tickets

The Securities and Exchange Commission today announced charges against a Florida-based company, its CEO, and its top sales agent accused of conducting a boiler room scheme that solicits investments in a business purportedly facilitating online and cell phone sales of lottery tickets in various states.

The SEC has obtained an emergency court order freezing the assets of LottoNet Operating Corp., David Gray, and Joseph A. Vitale. The SEC’s complaint alleges that they misrepresented to investors that their money would be used to develop and market LottoNet and that sales agents did not receive commissions. At least 35 percent of investor proceeds were allegedly paid to boiler room sales agents in the form of commissions, and LottoNet allegedly siphoned investor funds for personal spending on clothing, wedding-related expenses, and strip clubs.

According to the SEC’s complaint, which was unsealed in federal court today, among the pitches used in sales agent scripts prepared for cold calls to investors was “you’re looking at a monthly dividend payout of $8,500 every month” on a $25,000 investment if LottoNet reaches 1 percent market share. The scripts also allegedly touted the purported safety of the investment, noting a 60 percent return as a “worst case” scenario if the company was ever sold. The SEC alleges that while LottoNet has raised a total of approximately $4.8 million from investors, the company had only paid $10,525.43 in investment returns to investors through the end of February. Sales agents allegedly have been paid more than $1.1 million out of investor funds.

The SEC’s complaint further alleges that Vitale, who personally raised at least $1.4 million from investors, used the alias Donovan Kelly in an apparent attempt to hide from investors that he is permanently barred by the Financial Industry Regulatory Authority (FINRA).

“As alleged in our complaint, little did investors know they were being duped with a script based on misrepresentations while investor funds were being spent in strip clubs,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office.

The SEC’s investigation, which is continuing, has been conducted in the Miami office by Kate Zoladz, Gary Miller, and Allen J. Genaldi. The case is being supervised by Elisha L. Frank and the litigation is being led by Amie Riggle Berlin. The SEC appreciates the assistance of FINRA.

SEC Halts Boiler Room Scheme Involving State Lottery Tickets

The Securities and Exchange Commission today announced charges against a Florida-based company, its CEO, and its top sales agent accused of conducting a boiler room scheme that solicits investments in a business purportedly facilitating online and cell phone sales of lottery tickets in various states.

The SEC has obtained an emergency court order freezing the assets of LottoNet Operating Corp., David Gray, and Joseph A. Vitale. The SEC’s complaint alleges that they misrepresented to investors that their money would be used to develop and market LottoNet and that sales agents did not receive commissions. At least 35 percent of investor proceeds were allegedly paid to boiler room sales agents in the form of commissions, and LottoNet allegedly siphoned investor funds for personal spending on clothing, wedding-related expenses, and strip clubs.

According to the SEC’s complaint, which was unsealed in federal court today, among the pitches used in sales agent scripts prepared for cold calls to investors was “you’re looking at a monthly dividend payout of $8,500 every month” on a $25,000 investment if LottoNet reaches 1 percent market share. The scripts also allegedly touted the purported safety of the investment, noting a 60 percent return as a “worst case” scenario if the company was ever sold. The SEC alleges that while LottoNet has raised a total of approximately $4.8 million from investors, the company had only paid $10,525.43 in investment returns to investors through the end of February. Sales agents allegedly have been paid more than $1.1 million out of investor funds.

The SEC’s complaint further alleges that Vitale, who personally raised at least $1.4 million from investors, used the alias Donovan Kelly in an apparent attempt to hide from investors that he is permanently barred by the Financial Industry Regulatory Authority (FINRA).

“As alleged in our complaint, little did investors know they were being duped with a script based on misrepresentations while investor funds were being spent in strip clubs,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office.

The SEC’s investigation, which is continuing, has been conducted in the Miami office by Kate Zoladz, Gary Miller, and Allen J. Genaldi. The case is being supervised by Elisha L. Frank and the litigation is being led by Amie Riggle Berlin. The SEC appreciates the assistance of FINRA.

Overseas Traders Paying Back All Profits Plus Penalties in Insider Trading Case

The Securities and Exchange Commission today announced that three Peruvian traders have agreed to settle a pending case alleging that they traded on nonpublic information prior to the merger of two mining companies.

The SEC filed its complaint in September 2016, and the settlements were approved today in U.S. District Court for the Southern District of New York.

Nino Coppero del Valle, the alleged tipper who worked at one of the companies, agreed to pay full disgorgement of $53,607.70 plus interest of $5,382.44. His close friend and fellow attorney Julio Antonio Castro Roca agreed to pay full disgorgement of $59,300.02 plus $5,514.97 in interest and a $59,300.02 penalty. The other trader, Ricardo Carrion, agreed without admitting or denying the allegations to pay full disgorgement of $54,144.10 plus $5,820.29 in interest and a $54,144.10 penalty.

“The settlement of these actions for full disgorgement plus penalties on top of that reflects the strength of the evidence gathered in the SEC investigation,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office. “Overseas traders who violate U.S. insider trading laws can expect to face stiff monetary sanctions to resolve their cases.”

The final judgments also obtain permanent injunctive relief from each of the three defendants.

The SEC’s litigation was led by Jorge G. Tenreiro, Preethi Krishnamurthy, and Thomas P. Smith Jr.  The case was supervised by Sanjay Wadhwa. The SEC appreciates the assistance of the Peruvian securities regulator Superintendencia del Mercado de Valores.

Overseas Traders Paying Back All Profits Plus Penalties in Insider Trading Case

The Securities and Exchange Commission today announced that three Peruvian traders have agreed to settle a pending case alleging that they traded on nonpublic information prior to the merger of two mining companies.

The SEC filed its complaint in September 2016, and the settlements were approved today in U.S. District Court for the Southern District of New York.

Nino Coppero del Valle, the alleged tipper who worked at one of the companies, agreed to pay full disgorgement of $53,607.70 plus interest of $5,382.44. His close friend and fellow attorney Julio Antonio Castro Roca agreed to pay full disgorgement of $59,300.02 plus $5,514.97 in interest and a $59,300.02 penalty. The other trader, Ricardo Carrion, agreed without admitting or denying the allegations to pay full disgorgement of $54,144.10 plus $5,820.29 in interest and a $54,144.10 penalty.

“The settlement of these actions for full disgorgement plus penalties on top of that reflects the strength of the evidence gathered in the SEC investigation,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office. “Overseas traders who violate U.S. insider trading laws can expect to face stiff monetary sanctions to resolve their cases.”

The final judgments also obtain permanent injunctive relief from each of the three defendants.

The SEC’s litigation was led by Jorge G. Tenreiro, Preethi Krishnamurthy, and Thomas P. Smith Jr.  The case was supervised by Sanjay Wadhwa. The SEC appreciates the assistance of the Peruvian securities regulator Superintendencia del Mercado de Valores.

SEC Announces 2017 Compliance Outreach Program Seminars for Investment Companies and Investment Advisers

The Securities and Exchange Commission today announced the opening of registration for its compliance outreach program seminars for investment companies and investment advisers.  The seminars will be offered in four cities and are intended to help Chief Compliance Officers (CCOs) and other senior personnel enhance compliance programs at investment companies and investment advisory firms. 

The SEC’s Office of Compliance Inspections and Examinations (OCIE), Division of Investment Management, and the Asset Management Unit of the Division of Enforcement jointly sponsor the compliance outreach program. 

All regional seminars will include an overview of OCIE’s 2017 priorities and individual seminars will feature the following panel discussions on current topics in investment management regulation:

• Portland, Oregon – May 17 (8:30 a.m. to 12:30 p.m.): Key examination program initiatives, examination procedures and selection process, and recent trends and issues in the Enforcement Division’s Asset Management Unit.
• New York – June 7 (12:30 p.m. to 5:00 p.m.): Staff examinations and observations, and topics of interest to advisers to private funds.
• Boston – June 13 (8:30 a.m. to 1:00 p.m.): Key examination program initiatives, typical examination process, and topics of interest to advisers to private funds.
• Chicago – June 13 (8:00 a.m. to 4:30 p.m.): Key examination program initiatives, examination procedures and selection process, common examination deficiencies, data analytics, and several hot topic panels generally applicable to both small and large firms. This seminar will be webcast. 

Please register here to attend one of the compliance outreach program regional seminars.  Registration for individual events will be closed at least two weeks before the event.  Seating is limited and only the Chicago seminar will be webcast.  If registrations exceed capacity, investment company and investment adviser CCOs will be given priority on a first-come, first-registered basis.  For more information, please contact ComplianceOutreach@sec.gov.

SEC Announces 2017 Compliance Outreach Program Seminars for Investment Companies and Investment Advisers

The Securities and Exchange Commission today announced the opening of registration for its compliance outreach program seminars for investment companies and investment advisers.  The seminars will be offered in four cities and are intended to help Chief Compliance Officers (CCOs) and other senior personnel enhance compliance programs at investment companies and investment advisory firms. 

The SEC’s Office of Compliance Inspections and Examinations (OCIE), Division of Investment Management, and the Asset Management Unit of the Division of Enforcement jointly sponsor the compliance outreach program. 

All regional seminars will include an overview of OCIE’s 2017 priorities and individual seminars will feature the following panel discussions on current topics in investment management regulation:

• Portland, Oregon – May 17 (8:30 a.m. to 12:30 p.m.): Key examination program initiatives, examination procedures and selection process, and recent trends and issues in the Enforcement Division’s Asset Management Unit.
• New York – June 7 (12:30 p.m. to 5:00 p.m.): Staff examinations and observations, and topics of interest to advisers to private funds.
• Boston – June 13 (8:30 a.m. to 1:00 p.m.): Key examination program initiatives, typical examination process, and topics of interest to advisers to private funds.
• Chicago – June 13 (8:00 a.m. to 4:30 p.m.): Key examination program initiatives, examination procedures and selection process, common examination deficiencies, data analytics, and several hot topic panels generally applicable to both small and large firms. This seminar will be webcast. 

Please register here to attend one of the compliance outreach program regional seminars.  Registration for individual events will be closed at least two weeks before the event.  Seating is limited and only the Chicago seminar will be webcast.  If registrations exceed capacity, investment company and investment adviser CCOs will be given priority on a first-come, first-registered basis.  For more information, please contact ComplianceOutreach@sec.gov.

SEC Adopts T+2 Settlement Cycle for Securities Transactions

The Securities and Exchange Commission today adopted an amendment to shorten by one business day the standard settlement cycle for most broker-dealer securities transactions.  Currently, the standard settlement cycle for these transactions is three business days, known as T+3.  The amended rule shortens the settlement cycle to two business days, T+2. 

The amended rule is designed to enhance efficiency, reduce risk, and ensure a coordinated and expeditious transition by market participants to a shortened standard settlement cycle. 

“As technology improves, new products emerge, and trading volumes grow, it is increasingly obvious that the outdated T+3 settlement cycle is no longer serving the best interests of the American people,” said SEC Acting Chairman Michael Piwowar.  “The SEC remains committed to ensuring that U.S. securities regulation is reflective of modern times, and in shortening the settlement cycle by one day we aim to increase efficiency and reduce risk for market participants.”

Broker-dealers will be required to comply with the amended rule beginning on Sept. 5, 2017.

To assist broker-dealers, other securities professionals and the investing public in their preparation for the implementation of a T+2 settlement cycle, the Commission has established an e-mail address – T2settlement@sec.gov – for the submission of inquiries to SEC staff.
 

*   *   *
 

FACT SHEET

Shortening the Trade Settlement Cycle

SEC Open Meeting
March 22, 2017

The amended Rule 15c6-1(a) would prohibit a broker-dealer from effecting or entering into a contract for the purchase or sale of a security that provides for payment of funds and delivery of securities later than T+2, unless otherwise expressly agreed to by the parties at the time of the transaction.  As stated in the rule, the T+2 requirement would not apply to certain categories of securities, such as exempted securities. 

• Generally, this change would mean that when an investor buys a security, the brokerage firm must receive payment from the investor no later than two business days after the trade is executed.  When an investor sells a security, the investor must deliver to the brokerage firm the investor’s security no later than two business days after the sale.  For example, if an investor sells shares of a particular stock on Monday, the transaction would settle on Wednesday.
   
• The amended rule would apply the T+2 settlement cycle to the same securities transactions currently covered by the T+3 settlement cycle.  These include transactions for stocks, bonds, municipal securities, exchange-traded funds, certain mutual funds, and limited partnerships that trade on an exchange. 
   
• The compliance date for the amendment to Rule 15c6-1(a) is Sept. 5, 2017, which is consistent with the target implementation date set by the Industry Steering Committee.  

SEC Adopts T+2 Settlement Cycle for Securities Transactions

The Securities and Exchange Commission today adopted an amendment to shorten by one business day the standard settlement cycle for most broker-dealer securities transactions.  Currently, the standard settlement cycle for these transactions is three business days, known as T+3.  The amended rule shortens the settlement cycle to two business days, T+2. 

The amended rule is designed to enhance efficiency, reduce risk, and ensure a coordinated and expeditious transition by market participants to a shortened standard settlement cycle. 

“As technology improves, new products emerge, and trading volumes grow, it is increasingly obvious that the outdated T+3 settlement cycle is no longer serving the best interests of the American people,” said SEC Acting Chairman Michael Piwowar.  “The SEC remains committed to ensuring that U.S. securities regulation is reflective of modern times, and in shortening the settlement cycle by one day we aim to increase efficiency and reduce risk for market participants.”

Broker-dealers will be required to comply with the amended rule beginning on Sept. 5, 2017.

To assist broker-dealers, other securities professionals and the investing public in their preparation for the implementation of a T+2 settlement cycle, the Commission has established an e-mail address – T2settlement@sec.gov – for the submission of inquiries to SEC staff.
 

*   *   *
 

FACT SHEET

Shortening the Trade Settlement Cycle

SEC Open Meeting
March 22, 2017

The amended Rule 15c6-1(a) would prohibit a broker-dealer from effecting or entering into a contract for the purchase or sale of a security that provides for payment of funds and delivery of securities later than T+2, unless otherwise expressly agreed to by the parties at the time of the transaction.  As stated in the rule, the T+2 requirement would not apply to certain categories of securities, such as exempted securities. 

• Generally, this change would mean that when an investor buys a security, the brokerage firm must receive payment from the investor no later than two business days after the trade is executed.  When an investor sells a security, the investor must deliver to the brokerage firm the investor’s security no later than two business days after the sale.  For example, if an investor sells shares of a particular stock on Monday, the transaction would settle on Wednesday.
   
• The amended rule would apply the T+2 settlement cycle to the same securities transactions currently covered by the T+3 settlement cycle.  These include transactions for stocks, bonds, municipal securities, exchange-traded funds, certain mutual funds, and limited partnerships that trade on an exchange. 
   
• The compliance date for the amendment to Rule 15c6-1(a) is Sept. 5, 2017, which is consistent with the target implementation date set by the Industry Steering Committee.  

SEC, National Bank of Belgium Agree to Enhanced Cooperation and Information Sharing Regarding Euroclear

The Securities and Exchange Commission today announced that it has entered into an arrangement with the National Bank of Belgium to enhance cooperation and information sharing regarding expanded services by Euroclear Bank, which provides clearance and settlement through its operation of the Euroclear System.

Brussels-based Euroclear Bank is subject to prudential supervision and oversight by the National Bank of Belgium as a credit institution and as a clearing agency.  The SEC granted Euroclear’s predecessor an exemption from registration as a clearing agency in 1998, allowing it to provide clearing services for U.S. government securities.  On Dec. 16, 2016, the SEC approved Euroclear’s application to modify its exemption from registration, enabling it to also provide limited clearing agency services for U.S. equity securities.

On March 9, 2017, the SEC and the National Bank of Belgium added an addendum to their 2001 Understanding Regarding An Application of Euroclear Bank for an Exemption under U.S. Federal Securities Laws regarding Euroclear’s clearing activities in the U.S., enhancing their ability to exchange information about Euroclear’s new services.

“This addendum will expand the signatories’ ability to cooperate and exchange information related to Euroclear Bank and augment the SEC’s oversight of Euroclear Bank’s activities under its exemption order,” said Paul A. Leder, Director of the SEC’s Office of International Affairs.