ITG Paying $24 Million for Improper Handling of ADRs

The Securities and Exchange Commission today announced that broker ITG agreed to pay more than $24.4 million to settle charges that it violated federal securities laws when it prompted the issuance of American Depository Receipts (ADRs) without possessing the underlying foreign shares.

ADRs are U.S. securities that represent shares of a foreign company, and for all issued ADRs there must be a corresponding number of foreign shares in custody.  On behalf of counterparties, ITG obtained ADRs from depositary banks that administer ADR programs.

The SEC’s order finds that ITG facilitated transactions known as “pre-releases” of ADRs to its counterparties without owning the foreign shares or taking the necessary steps to ensure they were custodied by the counterparty on whose behalf they were being obtained.  Many of the ADRs obtained by ITG through pre-release transactions were ultimately used to engage in short selling and dividend arbitrage even though they may not have been backed by foreign shares.  ITG’s improper handling of ADRs lasted from 2011 to 2014.

“ITG’s failure to properly supervise its securities lending desk caused ADRs to be issued that were not backed by actual shares, leaving them ripe for potential market abuse,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office. 

The SEC’s order finds that ITG violated Section 17(a)(3) of the Securities Act of 1933 and failed reasonably to supervise its employees on its securities lending desk.  Without admitting or denying the findings, ITG agreed to be censured and pay more than $15 million in disgorgement plus more than $1.8 million in interest and a penalty of more than $7.5 million.  The SEC’s order acknowledges ITG’s cooperation in the investigation and its remedial acts.             

The SEC’s continuing investigation is being conducted by Andrew Dean, William Martin, Elzbieta Wraga, and Adam Grace of the New York office, and the case is being supervised by Sanjay Wadhwa.  

SEC Charges Government Contractor With Inadequate Controls and Books and Records Violations

The Securities and Exchange Commission today announced that L3 Technologies Inc. (formerly known as L-3 Communications Holdings Inc.), a contractor for U.S. and various foreign government agencies, has agreed to pay a $1.6 million penalty to settle charges that it failed to maintain accurate books and records and had inadequate internal accounting controls. 

An SEC investigation found that in December 2013, L3’s Army Sustainment Division (ASD) – part of L3’s Aerospace Systems segment – improperly recorded $17.9 million in revenue from a contract with the U.S. Army by creating invoices associated with unresolved claims against the U.S. Army that were not delivered when the revenue was recorded.  While certain employees immediately reported their concerns to L3’s ethics department, the subsequent ethics review failed to uncover the misconduct due, in part, to a failure by internal investigators to adequately understand the billing process.  In October 2014, following a subsequent investigation conducted by outside advisors, L3 concluded it had material weaknesses in its internal controls over financial reporting for the fiscal year ended Dec. 31, 2013 and for the first quarter of 2014.  L3 revised its financial statements from 2011 to 2014.

“Adequate internal accounting controls function as a critical safeguard against the type of improper revenue recognition that occurred at L3,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.  “L3 failed to have such controls in place, which rendered inaccurate its books and records.”

According to the SEC’s order, in or around August 2013, ASD executives developed a “Revenue Recovery Initiative” that identified approximately $50 million in work performed under a contract with the U.S. Army that had not been billed.  Because L3 and the U.S. Army had not reached any agreement on payment for the work performed, any revenue recognition for that work would have been improper under relevant accounting rules.  Nonetheless, in December 2013, a senior finance official at ASD requested that 69 invoices be generated – but not delivered – to the U.S. Army, which caused ASD to recognize almost $18 million in revenue.  Because of that revenue, ASD employees barely satisfied an internal target for management incentive bonuses.

The SEC’s order finds that immediately after the 69 invoices were generated, ASD employees internally reported to L3’s ethics department, but a subsequent internal investigation concluded that there was no improper revenue recognition and the issue was not promptly raised to the L3’s Audit Committee.  In June 2014, L3 retained outside advisors to conduct an internal investigation, which concluded that the revenue recognized on the undelivered invoices was improper.  This investigation uncovered additional accounting errors in L3’s Aerospace Systems segment from 2011 to 2014, which combined with the improper accounting associated with the 69 undelivered invoices had the effect of overstating the company’s pre-tax income by $169 million.

Without admitting or denying the findings, L3 agreed to pay the $1.6 million penalty and consented to the entry of the SEC’s cease-and-desist order finding that it violated the books and records and internal controls provisions of the federal securities laws.  

The SEC’s continuing investigation is being conducted by H. Gregory Baker, David Oliwenstein, Christopher Mele, and Steven G. Rawlings of the New York Office, and the case is being supervised by Sanjay Wadhwa.

SEC: Port Authority Omitted Risks to Investors in Roadway Projects

The Securities and Exchange Commission today announced that the Port Authority of New York and New Jersey has agreed to admit wrongdoing and pay a $400,000 penalty to settle charges that it was aware of risks to a series of New Jersey roadway projects but failed to inform investors purchasing the bonds that would fund them.

The SEC’s order finds that the Port Authority offered and sold $2.3 billion worth of bonds to investors despite internal discussions about whether certain projects outlined in offering documents, including the Pulaski Skyway, ventured outside its mandate and potentially weren’t legal to pursue.  One internal memo noted, “There is no clear path to legislative authority to undertake such projects.” Another memo explicitly identified “the risk of a successful challenge by the bondholders and investors” in connection with the funding of the roadway projects.  But the Port Authority omitted any mention in its offering documents about these risks surrounding its ability to fund the projects.  Its offering documents stated that it issued bonds “only for purposes for which the Port Authority is authorized by law to issue bonds.”

“The Port Authority represented to investors that it was authorized to issue bonds while not disclosing significant known risks that its actions were not legally permitted,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.  “Municipal bond issuers must ensure that their disclosures are complete and accurate so that investors can make fully informed decisions about whether to invest.”

The Port Authority is the first municipal issuer to admit wrongdoing in an SEC enforcement action.

The SEC’s order finds that the Port Authority violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933.  The SEC’s order acknowledges the Port Authority’s cooperation and prompt remedial acts.  The projects at issue have proceeded as planned.

The SEC’s continuing investigation is being conducted by Osman Nawaz and Celeste Chase of the New York office.  The case is being supervised by Sanjay Wadhwa.     

Investment Adviser, Lawyer Settle Charges in Secret Referral Fee Scheme

The Securities and Exchange Commission today announced that a Connecticut-based investment adviser has agreed to admit wrongdoing and pay more than $575,000 to settle charges that he defrauded a client and then compounded his scheme by attempting to mislead SEC investigators while lying to other clients about the status of the SEC’s investigation.

According to the SEC’s order against John W. Rafal, he secretly paid a lawyer for referring a legal client’s large account to Essex Financial Services, an investment advisory firm Rafal founded.  Instead of disclosing the referral fee arrangement to the elderly widow who owned the account, as required by law, Rafal and the lawyer agreed to disguise the payments as legal services purportedly provided by the lawyer’s firm.  After other Essex officers discovered and stopped Rafal’s payment arrangement, Rafal continued to secretly pay the lawyer using other accounts he controlled. 

The SEC’s order further finds that while the SEC’s investigation was ongoing, Rafal reacted to escalating rumors that he had committed a securities law violation by sending numerous emails to Essex clients falsely stating that the SEC had “fully investigated all matters” and “issued a ‘no action’ letter completely exonerating” him and the firm.

According to the SEC’s order, Rafal also tried in vain to throw SEC enforcement investigators off the track.  During testimony while responding to direct questions about the referral fees, Rafal concealed the additional payments he made after Essex halted the arrangement and falsely indicated that the lawyer had returned all the money he was previously paid. 

Enforcement investigators referred the suspected obstruction to the SEC’s Office of Inspector General, whose agents conducted a parallel investigation along with the U.S. Attorney’s Office for the District of Massachusetts, which today announced a criminal case against Rafal for obstructing the proceedings of a federal agency.

“Rafal misled one client by hiding referral fees, misled other clients by falsely stating the SEC’s investigation was over, and then attempted to mislead those investigating him.  He will now be paying the price for his deceit,” said Stephanie Avakian, Acting Director of the SEC’s Enforcement Division.  “We will not tolerate attempts to mislead and we will continue to refer possible obstruction cases to the SEC’s Office of Inspector General.”

SEC Inspector General Carl Hoecker said, “The charges announced by the U.S. Attorney’s Office reflect the Office of Inspector General’s commitment to investigate individuals who obstruct SEC enforcement activities.”

The lawyer involved in the payment scheme, Peter D. Hershman, agreed to pay more than $90,000 to settle SEC charges against him for aiding and abetting Rafal’s securities law violations.  Both Rafal and Hershman also agreed to be barred from the securities industry and from serving as an officer or director of a publicly-traded company, and they agreed to be permanently suspended from appearing and practicing before the SEC as attorneys.  The SEC’s orders prohibit them from representing clients in SEC matters, including investigations, litigation, or examinations, and from advising clients about SEC filing obligations or content. 

Rafal is no longer affiliated with Essex Financial Services, which agreed to pay more than $180,000 in disgorgement and interest to settle charges related to Rafal’s misconduct.  Hershman and Essex neither admitted nor denied the findings against them in the SEC’s orders.

The SEC’s investigation was conducted by Dawn Edick, Marc Jones, and Amy Gwiazda of the Boston office, and the examination that led to the investigation was conducted by Kenneth Leung, Joshua Grinspoon, Jacob Stewart, Daniel Wong, and Philmore Beazer.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the District of Massachusetts and the Securities and Business Investments Division of the Connecticut Department of Banking.

SEC Charges Two Brokers With Defrauding Customers

The Securities and Exchange Commission today charged two New York-based brokers with fraudulently using an in-and-out trading strategy that was unsuitable for customers in order to generate hefty commissions for themselves.

The SEC’s complaint alleges that Gregory T. Dean and Donald J. Fowler did no reasonable diligence to determine whether their investment strategy involving frequent buying and selling of securities could deliver even a minimal profit for their customers.  Their strategy, which generally involved selling the securities within a week or two of purchase and charging customers a commission for each transaction, allegedly resulted in substantial losses for 27 customers.

“This case marks another chapter in the SEC’s pursuit of brokers who deploy excessive trading as a strategy in customer accounts to enrich themselves at customers’ expense,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office and Co-Chair of the Enforcement Division’s Broker Dealer Task Force.  “The allegations in our complaint are based on our examination of trading patterns across more than two dozen customer accounts, and this trading data shows that only the brokers stood to profit from this cost-laden in-and-out strategy.”

The SEC today issued an Investor Alert warning about excessive trading and churning that can occur in brokerage accounts. 

“Investors should be wary of unauthorized trading, frequent sales and purchases, or excessive fees in their brokerage accounts,” said Lori J. Schock, Director of the SEC’s Office of Investor Education and Advocacy.  “If you do not know why a trade was made or why a fee was charged, ask your broker to explain it to you.”

The SEC’s complaint, filed in federal court in Manhattan, charges Dean and Fowler with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.

The SEC’s investigation was conducted by Kristin M. Pauley, David Stoelting, Barry O’Connell, Nathaniel I. Kolodny, Michael P. Fioribello, Leslie Kazon, and Thomas P. Smith Jr. in the New York office.  The litigation will be led by Mr. Stoelting and Ms. Pauley.  The case is being supervised by Sanjay Wadhwa.  The examination that led to the investigation was conducted by Jennifer A. Grumbrecht, Jeffrey Berfond, Glen Riddle, and Margaret Lett.

SEC Awards $5.5 Million to Whistleblower

The Securities and Exchange Commission today announced an award of more than $5.5 million to a whistleblower who provided critical information that helped the SEC uncover an ongoing scheme.

According to the SEC’s order, the whistleblower was employed at the company involved in the wrongdoing and reported the information directly to the SEC, which brought a successful enforcement action to end the scheme.

“Whistleblowers play a key role in bringing wrongdoing to the SEC’s attention, and this whistleblower helped prevent further harm to a vulnerable investor community by boldly stepping forward while still employed at the company,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower.

SEC enforcement actions from whistleblower tips have resulted in more than $904 million in financial remedies.

The SEC’s whistleblower program has now awarded approximately $142 million to 38 whistleblowers since issuing its first award in 2012. 

By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.  Whistleblowers may be eligible for an award when they voluntarily provide the SEC with unique and useful information that leads to a successful enforcement action. 

Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.  All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators.  No money has been taken or withheld from harmed investors to pay whistleblower awards.

For more information about the whistleblower program and how to report a tip, visit www.sec.gov/whistleblower.

Wire and Cable Manufacturer Settles FCPA and Accounting Charges

The Securities and Exchange Commission today announced that Kentucky-based General Cable Corporation agreed to pay more than $75 million to resolve parallel SEC and U.S. Department of Justice investigations related to its violations of the Foreign Corrupt Practices Act (FCPA). The company agreed to pay an additional $6.5 million penalty to the SEC to settle separate accounting-related violations.

According to the SEC’s orders instituting settled administrative proceedings, General Cable’s overseas subsidiaries made improper payments to foreign government officials for a dozen years to obtain or retain business in Angola, Bangladesh, China, Egypt, Indonesia, and Thailand. General Cable’s weak internal controls also failed to detect improper inventory accounting at its Brazilian subsidiary, causing the company to materially misstate its financial statements from 2008 to the second quarter of 2012.

“General Cable operated globally without the effective compliance programs and internal controls necessary to proactively address corruption risks and accounting errors,” said Stephanie Avakian, Acting Director of the SEC Enforcement Division.

In the FCPA case, General Cable agreed to pay more than $55 million in disgorgement and interest to the SEC as well as a penalty of nearly $20.5 million in a non-prosecution agreement announced today by the Justice Department. General Cable must self-report its FCPA compliance efforts for the next three years. General Cable neither admitted nor denied the SEC’s findings while agreeing to pay the $6.5 million penalty to settle the accounting violations. The SEC considered General Cable’s self-reporting, cooperation, and remedial acts when determining the settlements.

The SEC also charged Karl J. Zimmer, General Cable’s then-senior vice president responsible for sales in Angola. Zimmer agreed to pay a $20,000 penalty without admitting or denying the SEC’s findings that he knowingly circumvented internal accounting controls and caused FCPA violations when he approved certain improper payments.

The SEC’s investigation found no personal misconduct by General Cable’s former CEO Gregory B. Kenny and former CFO Brian J. Robinson, who returned $3.7 million and $2.1 million in compensation received from the company during the period when the accounting violations occurred. Therefore, it wasn’t necessary for the SEC to pursue a clawback action under Section 304(a) of the Sarbanes-Oxley Act.

The SEC’s investigation, which is continuing, is being conducted by Rachel Nonaka, Mark Oh, Colin Rand, Eric Hubbs, David Johnson, and Olivia Choe. The case is being supervised by Anita Bandy, Kristen Dieter, and Bridget Fitzpatrick. The SEC appreciates the assistance of the U.S. Department of Justice, Federal Bureau of Investigation, and Portuguese Securities Market Commission.

Businessman Settles Charges of Fraudulent EB-5 Offering

The Securities and Exchange Commission today announced that a Florida-based businessman has agreed to settle charges that he misused investor funds intended to create U.S. jobs through the EB-5 Immigrant Investor Program.

The SEC alleges that Jason Adam Ogden, the CEO of a pair of smoothie and frozen yogurt franchises called Juiceblendz and Yoblendz, formed AJN Investments LLC to conduct an investment offering in conjunction with the EB-5 program, which provides foreign investors a path to permanent residency when their investments create at least 10 jobs for American workers.  Investors were allegedly told that their money would help build and operate Juiceblendz and Yoblendz stores in strip malls and create a sufficient amount of jobs for them to qualify for an EB-5 visa and ultimately a green card. 

But according to the SEC’s complaint, Ogden changed his business model midstream without updating the offering materials, focusing on developing kiosks in sports arenas and university campuses rather than following through with the construction of full-size stores.  Not only did this result in smaller-than-promised returns for investors, but also jeopardized their EB-5 program status because kiosks don’t stimulate the same job creation as full-size stores and construction projects.

The SEC further alleges that Ogden improperly siphoned more than $1 million in investor funds for his personal use, making undisclosed cash transfers to his bank account.  Ogden allegedly used investor funds to repay a personal loan and pay for meals and entertainment.

“As alleged in our complaint, jobs and green cards fell by the wayside as Ogden abruptly changed his business plan and diverted funds for his own benefit,” said Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office.

The SEC’s complaint, filed in U.S. District Court of the Southern District of Florida, charges Ogden and AJN Investments with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) the Securities Exchange Act of 1934 and Rule 10b-5.  They agreed to settle the SEC’s charges without admitting or denying the allegations.  Ogden agreed to pay back the amount of investor funds he misused for his own personal benefit totaling $1,008,681, plus interest of $41,024 and a penalty of $160,000.  The settlement is subject to court approval. 

The SEC’s investigation was conducted by Kimberly A. Cain, Jennifer R. Turner, Timothy L. Evans, and Ty S. Martinez and supervised by Jonathan P. Scott and David L. Peavler of the Fort Worth Regional Office.  The SEC appreciates the assistance of U.S. Citizenship and Immigration Services.

SEC Charges Lawyer With Stealing Investor Money in EB-5 Offerings

The Securities and Exchange Commission today charged a California-based attorney with defrauding investors seeking to participate in the EB-5 immigrant investor program, stealing their money to buy a yacht and prop up his other businesses.

The SEC alleges that Emilio Francisco raised $72 million from investors in China solicited through his marketing firm PDC Capital to invest in EB-5 projects that included opening Caffe Primo restaurants, developing assisted living facilities, and renovating a production facility for environmentally friendly agriculture and cleaning products.  Under the EB-5 program, foreign investors can apply to permanently live and work in the U.S. by investing money in certain projects that bring about American jobs.

According to the SEC’s complaint, Francisco and PDC Capital diverted investor funds from one project to another and outright stole at least $9.6 million that was used to finance Francisco’s own businesses and luxury lifestyle.  Francisco was allegedly aware that doing so would violate federal regulations and jeopardize any visas for the foreign investors.

“As alleged in our complaint, Emilio Francisco illegally enriched himself with investor money intended for specific EB-5 projects that create jobs for U.S. workers,” said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office.

The SEC’s complaint charges Francisco, PDC Capital, and 20 other Francisco-controlled businesses with violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.  The SEC is seeking an emergency asset freeze and a court-appointed receiver over Francisco’s businesses involved in the schemes.  

The SEC’s investigation has been conducted in the Los Angeles office by Adrienne D. Gurley, Jasmine Starr, and Christopher M. Conte, and the case has been supervised by Spencer Bendell, Alka N. Patel, and John W. Berry.  The SEC’s litigation is being led by John B. Bulgozdy.  The SEC appreciates the assistance of U.S. Citizenship and Immigration Services.

Chinese Traders Charged With Trading on Hacked Nonpublic Information Stolen From Two Law Firms

The Securities and Exchange Commission today charged three Chinese traders with fraudulently trading on hacked nonpublic market-moving information stolen from two prominent New York-based law firms, racking up almost $3 million in illegal profits.  The SEC also is seeking an asset freeze that prevents the traders from cashing in on their illicit gains.  The enforcement action marks the first time the SEC has charged hacking into a law firm’s computer network.

The SEC’s complaint alleges that Iat Hong, Bo Zheng, and Hung Chin executed a deceptive scheme to hack into the networks of two law firms and steal confidential information pertaining to firm clients that were considering mergers or acquisitions. 

According to the SEC’s complaint, the alleged hacking incidents involved installing malware on the law firms’ networks, compromising accounts that enabled access to all email accounts at the firms, and copying and transmitting dozens of gigabytes of emails to remote internet locations.  Hong and Zheng in particular coveted the emails of attorneys involved in mergers and acquisitions as they exchanged a list of partners who performed the work at one of the law firms prior to the hack at that firm.

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

“We used enhanced trading surveillance and analysis capabilities that we developed over the last few years to identify the broad scope of the defendants’ alleged scheme, including the use of both U.S. and offshore accounts to carry it out,” said Stephanie Avakian, Acting Director of the SEC’s Enforcement Division.  “This action demonstrates our commitment and effectiveness in rooting out cyber-driven schemes no matter how sophisticated.”

“As we allege, the defendants’ ‘hacking to trade’ scheme involved numerous levels of deception as they gained broad access to the nonpublic networks of two law firms, stole confidential information and then used it for substantial personal gain,” said Antonia Chion, Associate Director of the SEC’s Division of Enforcement.  “This action marks the end of their alleged deception and serves as a stark reminder to companies and firms that your networks can be vulnerable targets.”

According to the SEC’s complaint, Hong, Zheng, and Chin used the stolen confidential information contained in emails to purchase shares in at least three public companies ahead of public announcements about entering into merger agreements.  The SEC alleges that they spent approximately $7.5 million in a one-month period buying shares in semiconductor company Altera Inc. in advance of a 2015 report that it was in talks to be acquired by Intel Corporation.  Within 12 hours of emails being extracted from one of the firms, Hong and Chin allegedly began purchasing shares of e-commerce company Borderfree so aggressively that they accounted for at least 25 percent of the company’s trading volume on certain days in advance of the announcement of a 2015 deal.  Hong and Zheng also allegedly traded in advance of a 2014 merger announcement involving InterMune, a pharmaceutical company.

The SEC’s complaint charges Hong, Zheng, and Chin with violating the antifraud provisions of the federal securities laws and related rules.  The SEC seeks a final judgment ordering them to pay penalties and disgorge ill-gotten gains plus interest and permanently enjoining them from violating the federal securities laws.  Hong’s mother is named as a relief defendant in the SEC’s complaint for the purpose of recovering ill-gotten gains in her accounts resulting from her son’s alleged illicit trading.

The SEC’s investigation is continuing, and is being conducted by Jennie B. Krasner, Devon Leppink Staren, and staff in the SEC’s Information Technology Forensics Group with assistance from Wendy Kong.  The case is being supervised by Ricky Sachar and Antonia Chion and the litigation is being led by Britt Biles.  The SEC appreciates the assistance of the U.S. Attorney’s Office for Southern District of New York, Federal Bureau of Investigation, Hong Kong Securities and Futures Commission, and Financial Industry Regulatory Authority.  

SEC Names Timothy Husson Associate Director in the Division of Investment Management’s Risk and Examinations Office

The Securities and Exchange Commission today named Timothy Husson Associate Director in the Division of Investment Management’s Risk and Examinations Office.

As Associate Director, Dr. Husson will oversee the management and operations of key data analysis and examination projects and initiatives related to the asset management industry and provide guidance on complex financial and quantitative issues as he leads the Division of Investment Management’s asset management monitoring program.

“Tim is an accomplished quantitative analyst and an insightful colleague who is focused on enhancing the use of data-driven analysis in policymaking and asset management industry oversight,” said David W. Grim, Director of the Division of Investment Management. “As a quantitative specialist, Tim will be a key and complimentary member of the senior management team in the Division of Investment Management.”

Dr. Husson said, “I look forward to continuing to work with the exceptional staff of the Risk and Examinations Office to implement enhanced data analysis and review and inform policy recommendations that promote a fair, efficient, and effective regulatory regime for investment funds and investment advisers.”

Dr. Husson has been a member of the SEC and Division of Investment Management since 2014, serving as Branch Chief, Quantitative Research Analyst (Financial Engineer) and Financial Analyst Fellow in the Division of Investment Management’s Risk and Examinations Office. Prior to his SEC service, Dr. Husson was a Senior Financial Economist at Securities Litigation & Consulting Group, where he provided quantitative analysis and drafted expert reports for arbitrations, state and federal court hearings, and regulatory proceedings.

Dr. Husson is a certified Financial Risk Manager (FRM) and holds a B.A. (with Honors) and Ph.D. in Computational Neuroscience from the University of Chicago, where his work focused on the development and applications of a novel neural imaging system.

SEC Names Sara P. Crovitz Deputy Chief Counsel in the Division of Investment Management’s Chief Counsel’s Office

The Securities and Exchange Commission today named  Sara P. Crovitz Deputy Chief Counsel and Associate Director in the Division of Investment Management’s Chief Counsel’s Office.

As Deputy Chief Counsel, Ms. Crovitz will assist the Chief Counsel in overseeing legal guidance under the Investment Company and Investment Advisers Acts of 1940. Ms. Crovitz also will focus on strategic collaboration between the Chief Counsel’s Office and other offices within the Division of Investment Management and in the Commission and plans to implement leadership initiatives that promote professional development among the staff.

“Sara has a proven track record of expertly handling complex legal matters and providing high quality guidance in an evolving market,” said David W. Grim, Director of the Division of Investment Management. “She also is committed to inspiring collaborative and people-oriented leadership. I know she will be a key voice on our senior team.”

“Sara is a resource throughout the Commission for regulatory knowledge and for promoting inclusive leadership,” said Doug Scheidt, Chief Counsel of the Division of Investment Management. “We all look forward to continuing to benefit from Sara’s counsel as she steps into this new role.”

Ms. Crovitz said, “I am honored to have this opportunity. Having served in the Commission for many years, I have seen the incredible talent and relentless dedication of the Division staff. I welcome the opportunity to work with the Division’s entire staff as we move forward together, dedicated to providing an appropriate regulatory environment in an ever-evolving market environment.”

Ms. Crovitz joined the Commission in 1996 as an attorney in the Office of General Counsel. In 1999, Ms. Crovitz joined the Division of Investment Management as a Senior Counsel in the Office of Investment Company Regulation; and later became a Senior Counsel, a Branch Chief, and an Assistant Chief Counsel in the Chief Counsel’s Office. Prior to her SEC service, Ms. Crovitz was an Associate with Steptoe & Johnson from 1994-1996. Ms. Crovitz received her law degree and bachelor’s degree from the University of Chicago.  Among other honors, Ms. Crovitz received the Chair’s International Award in 2014, the Chair’s Excellence in Leadership Award in 2011, and the Martha Platt Award in 2010.