Wenchi Hu, Associate Director in the Division of Trading and Markets, to Leave SEC

The Securities and Exchange Commission today announced that Wenchi Hu, an Associate Director in the Division of Trading and Markets, will leave the agency in early February.

Ms. Hu has headed the division's Office of Clearance and Settlement Supervision since August 2015, after serving three months as its Acting Associate Director. The office oversees registered clearing agencies including those that are designated systemically important in the equity, options, government and mortgage-backed securities, and security-based swaps markets. It routinely coordinates with the Federal Reserve Board, the Commodity Futures Trading Commission, and regulators outside the U.S. to enhance supervision of clearing agencies.

"Wenchi has been a tremendous source of expertise on cleara... Read More

OCIE Director Marc Wyatt to Leave SEC

The Securities and Exchange Commission today announced that Marc Wyatt, Director of the Office of Compliance Inspections and Examinations, will leave the agency next month to return to the private sector.

Mr. Wyatt joined the SEC in December 2012 as a senior specialized examiner and co-founded the Private Fund Unit within OCIE. He was named Deputy Director in October 2014 and served as Acting Director in April 2015 before being named Director in November 2015. 

“OCIE has benefited greatly from Marc’s leadership and vision,” said SEC Acting Chairman Michael Piwowar. “His efforts on enhancing our risk based exam program and the organizational changes he has put in place will leave a lasting mark on the Commission.”

“It has been an honor to serve alongside the ou... Read More

SEC Announces Charges in Hamilton Ticket Resale Ponzi Scheme

The Securities and Exchange Commission today announced fraud charges against two New York City men accused of running a Ponzi scheme with money raised from investors to fund businesses purportedly created to purchase and resell tickets to such high-demand shows as Adele concerts and the Broadway musical Hamilton.

The SEC alleges that Joseph Meli and Matthew Harriton misrepresented to investors that all of their money would be pooled to buy large blocks of tickets that would be resold at a profit to produce high returns for investors.  The bulk of investor funds were allegedly used for other undisclosed purposes, namely making Ponzi payments to prior investors using money from new investors.  Meli and Harriton allegedly diverted almost $2 million for such personal expenses as ... Read More

Chief Operating Officer Jeffery Heslop to Leave SEC

The Securities and Exchange Commission today announced SEC Chief Operating Officer Jeffery Heslop will leave the agency in February.

Mr. Heslop joined the SEC in 2010 when he was named the SEC’s first-ever COO. In the nearly seven years since joining the SEC, Mr. Heslop has led significant innovation in the agency’s approach to human capital management, business process, internal controls, and technology infrastructure.  Through his efforts, the agency has realized substantial operational cost reductions, increased efficiencies in staffing and operations, and strengthened the cooperation between various SEC offices and divisions.

In his role as COO, Mr. Heslop oversees the operations of the SEC’s Office of Human Resources; Office of Acquisitions; Office of Information... Read More

Citigroup Paying $18 Million for Overbilling Clients

The Securities and Exchange Commission today announced that Citigroup Global Markets has agreed to pay $18.3 million to settle charges that it overbilled investment advisory clients and misplaced client contracts.

The SEC’s order finds that at least 60,000 advisory clients were overcharged approximately $18 million in unauthorized fees because Citigroup failed to confirm the accuracy of billing rates entered into its computer systems in comparison to fee rates outlined in client contracts, billing histories, and other documents.  Citigroup also improperly collected fees during time periods when clients suspended their accounts.  The billing errors occurred during a 15-year period, and the affected clients have since been reimbursed.

“Advisory clients have every expect... Read More

SEC Charges Two Former Och-Ziff Executives With FCPA Violations

The Securities and Exchange Commission today charged two former executives at Och-Ziff Capital Management Group with being the driving forces behind a far-reaching bribery scheme that violated the Foreign Corrupt Practices Act (FCPA).

Och-Ziff and two other executives previously settled charges against them in the case.

The SEC’s complaint filed today alleges that Michael L. Cohen, who headed Och-Ziff’s European office, and an investment executive on Africa-related deals, Vanja Baros, caused tens of millions of dollars in bribes to be paid to high-level government officials in Africa.  Their alleged misconduct induced the Libyan Investment Authority sovereign wealth fund to invest in Och-Ziff managed fu... Read More

Brokerage Firm Charged With Gatekeeper Failures Related to Pump-and-Dump Scheme

The Securities and Exchange Commission today announced administrative proceedings against New York-based brokerage firm Windsor Street Capital and its former anti-money laundering officer John D. Telfer.  The SEC’s Enforcement Division alleges that the firm, formerly named Meyers Associates L.P., failed to file Suspicious Activity Reports (SARs) for $24.8 million in suspicious transactions, including those occurring in accounts controlled by microcap stock financiers Raymond H. Barton and William G. Goode who are separately charged today by the SEC with conducting a pump-and-dump scheme. 

The SEC’s Enforcement Division alleges that Meyers Associates and Telfer should have known about the suspicious circumstances behind many transactions occurring in customer accounts.  Custom... Read More

SEC Uncovers Cherry-Picking Scheme, Charges Investment Adviser Behind It

The Securities and Exchange Commission today announced that a Massachusetts-based investment adviser agreed to be banned from the securities industry after the agency uncovered an illegal cherry-picking scheme through its data analysis used to detect suspicious trading patterns.

The SEC filed fraud charges in federal district court against Michael J. Breton and his firm Strategic Capital Management, alleging they defrauded clients out of approximately $1.3 million.  Breton allegedly placed trades through a master brokerage account and then allocated profitable trades to himself while placing unprofitable trades into the client accounts. 

Breton and his firm agreed to a partial settlement subject to court approval.  Monetary sanctions would be determined at a later dat... Read More

Timothy L. Warren, Associate Director of Enforcement in Chicago Office, to Retire After 30 Years of Service

The Securities and Exchange Commission today announced that Timothy L. Warren, Associate Director of Enforcement in the Chicago Regional Office, is retiring at the end of this month after more than 30 years of service.

Since his appointment to Associate Director, Mr. Warren has supervised a staff of more than 40 attorneys and other professionals responsible for investigating potential violations of the federal securities laws by a wide range of market participants.  Mr. Warren also has been significantly involved in international enforcement training with the Office of International Affairs to build capacity and strengthen partnerships with the SEC’s international counterparts, including conducting programs in held in India, Malaysia, Vietnam, South Korea, Kenya, Swaziland, R... Read More

Morgan Stanley, Citigroup Charged With Misleading Investors About Forex Trading Program

The Securities and Exchange Commission today announced that Morgan Stanley Smith Barney and Citigroup Global Markets have agreed to pay more than $2.96 million apiece to settle charges that they made false and misleading statements about a foreign exchange trading program they sold to investors.

According to the SEC’s orders, Citigroup held a 49 percent ownership interest in Morgan Stanley Smith Barney at the time, and registered representatives at both firms were pitching a foreign exchange trading program known as “CitiFX Alpha” to Morgan Stanley customers from August 2010 to July 2011.  The SEC’s orders find that their written and verbal presentations were based on the program’s past performance and risk metrics, and they failed to adequately disclose that investors could ... Read More

Shipping Conglomerate and Former CFO Charged With Failure to Recognize Hundreds of Millions in Tax Liabilities

The Securities and Exchange Commission today charged shipping conglomerate Overseas Shipholding Group (OSG) and its former chief financial officer Myles R. Itkin with failing to recognize hundreds of millions in tax liabilities in its financial statements that had accumulated over nearly 12 years resulting from its controlled foreign subsidiary guaranteeing OSG’s debt that had been borrowed under various credit financing agreements.  As a result of the misconduct, OSG materially understated its income tax liabilities by approximately $512 million (17 percent) of its total liabilities.  In November 2012, following the discovery of the tax liabilities, OSG filed for bankruptcy protection.

“Where public companies derive economic benefits from their offshore earnings, it is criti... Read More

SEC Announces Fraud Charges, Asset Freeze in Alleged Nursing Home Investment Scheme

The Securities and Exchange Commission today announced fraud charges and an emergency asset freeze obtained against a businessman in South Carolina accused of siphoning funds he raised from investors for the purpose of purchasing or renovating senior housing facilities.

The SEC alleges that Dwayne Edwards improperly commingled money from several different municipal bond offerings and the revenues of the facilities underlying the offerings.   The offerings were each supposed to finance a particular assisted living or memory care facility in Georgia or Alabama.  From the commingled funds, Edwards allegedly diverted investor money for personal use as well as to finance other unrelated bond offerings.

“As alleged in our complaint, investors thought they were investing in ... Read More