Whitepapers Archives - Page 32 of 89

Mayor in Illinois Settles Muni Bond Fraud Charges

The Securities and Exchange Commission today announced that the mayor of Harvey, Ill., has agreed to pay $10,000 and never participate in a municipal bond offering again in order to settle fraud charges.

The SEC alleges that Eric J. Kellogg was connected to a series of fraudulent bond offerings by the city. Investors were told that their money would be used to develop and construct a Holiday Inn hotel in Harvey, but instead city officials diverted at least $1.7 million in bond proceeds to fund the city’s payroll and other operational costs unrelated to the hotel project.

According to the SEC’s complaint filed in the U.S. District Court for the Northern District... Read More

SEC Announces Insider Trading Charges in Case Involving Sports Gambler and Board Member

The Securities and Exchange Commission today announced insider trading charges against a professional sports gambler who allegedly made $40 million based on illegal stock tips from a corporate insider who owed him money.

The SEC alleges that the sports gambler, William “Billy” Walters of Las Vegas, was owed money by then-Dean Foods Company board member Thomas C. Davis. According to the SEC complaint, Davis regularly shared inside information about Dean Foods with Walters in advance of market-moving events, using prepaid cell phones and other methods in an effort to avoid detection. The SEC further alleges that while Walters made millions of dollars insider trading using the confidential information, he provided Davis with almost $1 million and other benefits to ... Read More

SEC Awards More Than $5 Million to Whistleblower

The Securities and Exchange Commission today announced that it will award between $5 million and $6 million to a former company insider whose detailed tip led the agency to uncover securities violations that would have been nearly impossible for it to detect but for the whistleblower’s information.

“Employees are often best positioned to witness wrongdoing,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement. “When they report specific and credible tips to us, we will leverage that inside knowledge to advance our enforcement of the securities laws and better protect investors and the marketplace.”

Today’s award is the SEC’s third highest to a whistleblower. In September 2014, the agency announced a Read More

Statement on Trade Reporting in the U.S. Treasury Market

The U.S. Department of the Treasury and the Securities and Exchange Commission today announced that they are working together to explore efficient and effective means of collecting U.S. Treasury cash market transaction information. As part of those efforts, the agencies are requesting that the Financial Industry Regulatory Authority (FINRA) consider a proposal to require its member brokers and dealers to report Treasury cash market transactions to a centralized repository.

Treasury’s recent request for information (RFI) on the evolution of the U.S. Treasury market structure sought views on the most effective means of obtaining more comprehensive official sector access to U.S. Treasury cash market data on a regular and ongoing basis. The responses to the RFI expressed broad ... Read More

Agencies Invite Comment on Proposed Rule to Prohibit Incentive-Based Pay that Encourages Inappropriate Risk-Taking in Financial Institutions

Six federal agencies are inviting public comment on a proposed rule to prohibit incentive-based compensation arrangements that encourage inappropriate risks at covered financial institutions. The deadline for comments on the proposed rule, which was submitted for publication in the Federal Register, is July 22, 2016.

Section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requires the agencies to jointly prescribe such regulations or guidelines. There is evidence that flawed incentive-based compensation packages in the financial industry were one of the contributing factors in the financial crisis that began in 2007.

The proposed rules would apply to covered financial institutions with total assets of $1 billion or more. The re... Read More

Whistleblower Earns $3.5 Million Award for Bolstering Ongoing Investigation

The Securities and Exchange Commission today announced a whistleblower award of more than $3.5 million to a company employee whose tip bolstered an ongoing investigation with additional evidence of wrongdoing that strengthened the SEC’s case.

The SEC noted that whistleblowers should be encouraged to come forward and report allegations of potential securities laws violations even if they think the SEC may already be looking into it.

“Whistleblowers can receive an award not only when their tip initiates an investigation, but also when they provide new information or documentation that advances an existing inquiry,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement. “This particular whistleblower’s tip substantially strengthened o... Read More

SEC Charges Two Attorneys With Defrauding Escrow Clients

The Securities and Exchange Commission today announced fraud charges against two attorneys accused of making undisclosed risky investments and in some instances outright stealing money they obtained in escrow accounts from small business owners seeking commercial loans.

The SEC alleges that Jay Mac Rust and Christopher K. Brenner collected $13.8 million acting as escrow agents between their clients and a purported loan company called Atlantic Rim Funding.

Rust and Brenner assured clients that their deposits of 10 percent of the desired loan amount would be held safe and only used to purchase liquid, government-backed securities that Atlantic would then leverage to obtain their loans.

According to the SEC’s complaint, Atlantic had no abil... Read More

SEC Charges Father, Son, Others in Tribal Bonds Scheme

The Securities and Exchange Commission today charged a father and son and five associates with defrauding investors in sham Native American tribal bonds in order to steal millions of dollars in proceeds for their own extravagant expenses and criminal defense costs.

The SEC alleges that Jason Galanis, whose checkered past dates from an accounting fraud case during his days as a major Penthouse shareholder to stock fraud charges last year, conducted the scheme in which the “primary objective is to get us a source of discretionary liquidity,” he wrote in an e-mail to other participants. Galanis and his father John Galanis convinced a... Read More

SEC Announces Agenda for May 18 Meeting of the Advisory Committee on Small and Emerging Companies

The Securities and Exchange Commission today announced that the May 18 meeting of its Advisory Committee on Small and Emerging Companies will focus on the definition of an “accredited investor” and on unregistered securities offerings under Regulation D.

Under the federal securities laws, certain securities offerings are exempt from SEC registration if the securities are sold to accredited investors. At the May 18 meeting, the committee will discuss the recent SEC staff report on the accredited investor definition, followed by a discussion of developments in unregistered securities offer... Read More

SEC: Financial Adviser Defrauded Pro Athletes and Lied to SEC Examiners

The Securities and Exchange Commission today announced fraud charges against a Pittsburgh, Pa.-based financial adviser accused of taking money without permission from the accounts of several professional athletes in order to invest in movie projects and make Ponzi-like payments.

According to the SEC’s complaint filed today in federal court in Manhattan, when SEC examiners uncovered the unauthorized withdrawals that Louis Martin Blazer III made from his clients’ accounts and asked him to explain the transactions, he lied and produced false deal documents that he created after the fact in a failed attempt to hide his misconduct.

The SEC alleges that Blazer, who founded Blazer Capital Management as a “concierge” firm targeting professional athletes ... Read More

SEC Charges Unregistered Brokers with Pocketing Investor Money

The Securities and Exchange Commission today charged two men with pocketing investor money they raised for limited liability companies they owned and controlled that purportedly held warrants to purchase the common stock of a technology startup company.

The SEC alleges that James R. Trolice and Lee P. Vaccaro raised approximately $6 million from more than 100 investors by creating a false sense of urgency and exclusivity around the offering, claiming that only a limited amount of warrants were available and that they eventually could be exercised at a very profitable price. Trolice further lured investors by showcasing his apparent wealth and hosting elaborate investor parties at his multi-million-dollar home. He also touted his purported track recor... Read More

SEC Adopts Amendments to Implement JOBS Act and FAST Act Changes for Exchange Act Registration Requirements

Washington D.C., May 3, 2016 – The Securities and Exchange Commission has approved amendments to revise the rules related to the thresholds for registration, termination of registration, and suspension of reporting under Section 12(g) of the Securities Exchange Act of 1934. These amendments implement provisions of the Jumpstart Our Business Startups Act (JOBS Act) and the Fixing America’s Surface Transportation Act (FAST Act).

“With the adoption of these amendments, the Commission has completed all of the rulemaking mandated under the JOBS Act,” said SEC Chair Mary Jo White.

To implement the JOBS Act, the Commission proposed amendments to Exchange Act Rules 12g-1 through 4 and 12h-3 to reflect the new thresholds. The Commission also proposed ... Read More