Merrill Lynch Paying $10 Million Penalty for Misleading Investors in Structured Notes
The Securities and Exchange Commission today announced that Merrill Lynch has agreed to pay a $10 million penalty to settle charges that it was responsible for misleading statements in offering materials provided to retail investors for structured notes linked to a proprietary volatility index.
According to the SEC’s order instituting a settled administrative proceeding, the offering materials emphasized that the notes were subject to a 2 percent sales commission and 0.75 percent annual fee. Due to the impact of these costs over the five-year term of the notes, the volatility index would need to increase by 5.93 percent from its starting value in order for investors to earn back their original investment on the maturity date. But the offering materials failed to adequatel... Read More
Merrill Lynch to Pay $415 Million for Misusing Customer Cash and Putting Customer Securities at Risk
The Securities and Exchange Commission today announced that Merrill Lynch has agreed to pay $415 million and admit wrongdoing to settle charges that it misused customer cash to generate profits for the firm and failed to safeguard customer securities from the claims of its creditors.
An SEC investigation found that Merrill Lynch violated the SEC’s Customer Protection Rule by misusing customer cash that rightfully should have been deposited in a reserve account. Merrill Lynch engaged in complex options trades that lacked economic substance and artificially reduced the required deposit of customer cash in the reserve account. The maneuver freed up billions of dollars per week from 2009 to 2012 that Merrill Lynch used to finance its own trading activities. Had Merrill Lynch f... Read More
SEC Sues UK-Based Trader for Account Intrusion Scheme
The Securities and Exchange Commission today announced it has obtained an emergency court order to freeze the assets of a United Kingdom resident charged with intruding into the online brokerage accounts of U.S. investors to make unauthorized stock trades that allowed him to profit on trades in his own account.
In a complaint filed in U.S. District Court in the Southern District of New York, the SEC alleges that in April and May, Idris Dayo Mustapha hacked into numerous accounts of U.S. customers of broker-dealers in and outside the U.S. The complaint alleges that Mustapha placed stock trades without the customers’ knowledge and then traded in the same stocks through his own brokerage account. In one case, Mustapha allegedly hacked into a brokerage account and rapidly purch... Read More
SEC Charges Medical Device Manufacturer With FCPA Violations
The Securities and Exchange Commission today announced that Massachusetts-based medical device manufacturer Analogic Corp. and its wholly-owned Danish subsidiary have agreed to pay nearly $15 million to settle parallel civil and criminal actions involving Foreign Corrupt Practices Act (FCPA) violations.
An SEC investigation found that Analogic’s Danish subsidiary, BK Medical ApS, engaged in hundreds of sham transactions with distributors that funneled about $20 million to third parties, including individuals in Russia and apparent shell companies in Belize, the British Virgin Islands, Cyprus, and Seychelles.
Analogic agreed to pay $7.67 million in disgorgement and $3.8 million in prejudgment interest to settle the SEC’s charges that it faile...
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Former CEO of Chicago Charter School Operator Settles Muni-Bond Fraud Charges
The Securities and Exchange Commission today announced a settlement with Juan Rangel, the former President of UNO Charter School Network Inc. and former CEO of United Neighborhood Organization of Chicago, for his role in a misleading $37.5 million bond offering to build three charter schools.
Rangel agreed to pay a $10,000 penalty and be barred from participating in any future municipal bond offerings to settle the SEC’s fraud charges. The SEC
announced a settlement with UNO in 2014 for defrauding investors in the same 2011 bond offering.
The SEC’s complaint alleges that Rangel negligently approved and signed a bond offering statement that omitte...
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SEC Halts Scheme Defrauding Pro Athletes
The Securities and Exchange Commission today announced that it has obtained a court order freezing the assets of an investment advisor it has charged with secretly siphoning millions of dollars from accounts he managed for professional athletes and investing them in a struggling online sports and entertainment ticket business on whose board he served.
In a complaint filed on May 24 and unsealed today in federal court in Dallas, the SEC charged the advisor, Ash Narayan, of Newport Coast, California, along with The Ticket Reserve Inc., CEO Richard M. Harmon, and chief operating officer John A. Kaptrosky. The SEC obtained a court order on May 24 to freeze the assets of the defendants and the court appointed a receiver over The Ticket Reserve.
SEC Approves IEX Proposal to Launch National Exchange, Issues Interpretation on Automated Securities Prices
The Securities and Exchange Commission today approved Investors’ Exchange LLC’s (IEX) application to register as a national securities exchange. At the same time, the Commission issued an updated interpretation that will require trading centers to honor automated securities prices that are subject to a small delay or “speed” bump when being accessed.
“Today’s actions promote competition and innovation, which our equity markets depend on to continue to deliver robust, efficient service to both retail and institutional investors,” said SEC Chair Mary Jo White. “A critical role of the Commission’s regulatory framework is to facilitate the ability of market participants to craft appropriate market-based initiatives, consistent with our mission to protect investors, mainta...
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Software Executive and Three Friends Charged With Insider Trading
The Securities and Exchange Commission today announced insider trading charges against a former software company executive and three close friends who made more than a half-million dollars based on his illegal tip about an upcoming merger.
The SEC alleges that Christopher Salis, then a global vice president at SAP America, received thousands of dollars in kickbacks for tipping Douglas Miller in advance of SAP’s impending acquisition of Concur Technologies. Miller tipped his brother Edward Miller and mutual friend Barrett Biehl as they rushed to open online brokerage accounts and make risky, short-term trades in Concur call options so they could profit substantially when the deal was publicly announced.
SEC Proposes Rules to Modernize Property Disclosures for Mining Registrants
The Securities and Exchange Commission today announced that it has proposed rules to modernize the disclosure requirements for mining properties by aligning them with current industry and global regulatory practices and standards. The proposed revisions would update disclosure requirements for mining registrants in Item 102 of Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934 and related guidance in Industry Guide 7.
“These proposed rules would modernize the Commission’s disclosure requirements by aligning them with global standards and give investors more comprehensive information of a registrant’s mining properties that they can use to make informed investment decisions,” said SEC Chair Mary Jo White. “This proposal...
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Private Fund Administrator Charged With Gatekeeper Failures
The Securities and Exchange Commission today announced that a firm providing administrative services to private funds has agreed to pay more than $350,000 to settle charges that it failed to heed red flags and correct faulty accounting by two clients.
SEC investigations found that Apex Fund Services missed or ignored clear indications of fraud while contracted to keep records and prepare financial statements and investor account statements for funds managed by ClearPath Wealth Management and EquityStar Capital Management. Both clients have since been charged with fraud in SEC enforcement actions.
“Fund administrators are responsible for ensuring that fund records provide accurate information about the value and existence of fund ...
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Hedge Fund Managers and Former Government Official Charged in $32 Million Insider Trading Scheme
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SEC: Muni Advisors Acted Deceptively With California School Districts
The Securities and Exchange Commission today announced that two California-based municipal advisory firms and their executives have agreed to settle charges that they used deceptive practices when soliciting the business of five California school districts.
An SEC investigation found that while School Business Consulting Inc. was advising the school districts about their hiring process for financial professionals, it was simultaneously retained by Keygent LLC, which was seeking the municipal advisory business of the same school districts. Without permission, School Business Consulting shared confidential information with Keygent, including questions to be asked in Keygent’s interviews with the school districts and details of competitors’ proposals includi...
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