SEC and Law Enforcement Partners Crack Stock Promotion and Kickback Schemes

The Securities and Exchange Commission today announced fraud charges against 10 individuals involved in schemes to trick investors into buying shares of a particular company stock.  

The schemes were allegedly fraught with cash bribes and other kickbacks to registered representatives and unregistered brokers who solicited investors to buy stock in ForceField Energy Inc.  The SEC alleges that investors were unaware those soliciting them were being paid by a ringleader – ForceField’s then-chairman of the board Richard St. Julien – to steer them to the stock, and that some of the perpetrators attempted to evade law enforcement by going so far as to communicate with prepaid disposable “burner” phones and encrypted, content-expiring text messages.    

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Silicon Valley Executive Settles Insider Trading Charges

The Securities and Exchange Commission today announced that a Silicon Valley executive has agreed to pay more than a half-million dollars to settle charges that he traded on inside information received from a board member at a Minnesota-based company that was trying to solicit a competing bid in advance of a merger.

The SEC alleges that Peter D. Nunan was contacted by the board member at FSI International and confidentially informed that a Japan-based semiconductor equipment company called Tokyo Electron Ltd. was negotiating to acquire FSI.  The board member knew that Nunan, a senior engineering executive at a subsidiary of a semiconductor equipment manufacturer named Screen Holdings Company, knew the executive responsible for evaluating potential corporate acquis... Read More

SEC: Accounting Firm, Partner Conducted Deficient Surprise Exams

The Securities and Exchange Commission today announced that an accounting firm and one of its partners who conducted surprise examinations of client assets at an investment adviser have agreed to settle charges that they performed inadequately as the adviser’s president secretly stole money from accounts belonging to professional athletes.

The SEC’s order finds that Santos, Postal & Co. P.C. and Joseph A. Scolaro conducted deficient surprise custody examinations of SFX Financial Advisory Management Enterprises and did not adequately consider fraud risk factors.  They twice filed paperwork with the SEC that contained untrue statements.  In one instance they stated that they complied with certain procedures to verify client assets when in fact they never did.  I... Read More

SEC Seeks Public Comment on Plan to Create A Consolidated Audit Trail

The Securities and Exchange Commission today voted to publish for public comment a proposed national market system (NMS) plan to create a single, comprehensive database that would enable regulators to efficiently track all trading activity in the U.S. equity and options market. The plan for the database, known as the consolidated audit trail (CAT), was submitted jointly by the self-regulatory organizations (SROs) as required by Rule 613 of Regulation NMS.

“The Commission’s action to approve the proposed CAT plan for public comment is a major market structure milestone.  CAT will enable regulators to harness today’s technology to enhance the regulation and oversight of today’s trading markets,” said SEC Chair Mary Jo White.  “It will significantly increase the abil... Read More

SEC Announces Agenda for April 26 Meeting of the Equity Market Structure Advisory Committee

The Securities and Exchange Commission today announced the agenda for its Equity Market Structure Advisory Committee meeting on April 26.  The Commission established the advisory committee to provide a formal mechanism through which the Commission can receive advice and recommendations on equity market structure issues.  

The meeting will focus on recommendations related to a potential access fee pilot and trading venues regulation, as well as updates from the subcommittees.  These documents are available on the SEC’s website.      

The meeting will be held at the SEC’s headquarters at 100 F Street, N.E., Washington, D.C., and is open to the public.  It also will be webcast... Read More

SEC Issues Order Modifying and Extending the Pilot Period for the National Market System Plan to Address Extraordinary Market Volatility

The Securities and Exchange Commission today issued an order to extend for one year the pilot period of the National Market System Plan to Address Extraordinary Market Volatility, commonly known as the limit up-limit down (LULD) plan.  

The Commission also approved a modification to the manner in which the LULD plan establishes the reference price in cases where a security does not trade in the opening auction on the primary listing exchange.  In these circumstances, a security’s reference price will now be the previous trading day’s closing price or, if no closing price exists, the last reported sale on the primary listing exchange.  The Commission believes that this modification is appropriate to potentially prevent unnecessary trading pauses that are unrelated to extrao... Read More

SEC Announces Financial Fraud Cases

The Securities and Exchange Commission today announced a pair of financial fraud cases against companies and then-executives accused of various accounting failures that left investors without accurate depictions of company finances.

In one case, technology manufacturer Logitech International agreed to pay a $7.5 million penalty for fraudulently inflating its fiscal year 2011 financial results to meet earnings guidance and committing other accounting-related violations during a five-year period.  Logitech’s then-controller Michael Doktorczyk and then-director of accounting Sherralyn Bolles agreed to pay penalties of $50,000 and $25,000, respectively, for violations related to Logitech’s warranty accrual accounting and failure to amortize intangibles from an earlier... Read More

SEC Offers Online Tool to Help Companies Estimate Registration Fees

The Securities and Exchange Commission today announced the release of an online tool to help companies calculate registration fees for certain form submissions to EDGAR, the SEC’s electronic database of financial reports and other filings.  The new tool is intended to improve the accuracy of fee calculations and minimize the need for corrections.

The Registration Fee Estimator, created by the Filing Fees Branch in the SEC’s Office of Financial Management, is available here.

The new online tool covers the most common filings companies use to register initial public offerings, debt offerings, asset-backed securities, closed-end mutual funds, limited partnerships, and small business investment comp... Read More

SEC Charges Litigation Marketing Company With Bilking Retirees

The Securities and Exchange Commission today charged a Los Angeles-based litigation marketing company and its co-founders with defrauding retirees and other investors who were told their money would be used to help gather plaintiffs for class-action and other lawsuits and they would earn hefty investment returns from settlement proceeds.

The SEC alleges that James Catipay and David Aldrich raised $11.7 million from approximately 250 investors during the past three years for their company PLCMGMT LLC, also referred to as PLC or Prometheus Law.  But only $4.3 million was actually used to locate prospective plaintiffs for lawsuits, and the company has generated scant revenue from any settlements.  Catipay and Aldrich have instead diverted millions of dollars for thei... Read More

SEC Adopts Business Conduct Standards for Security-Based Swap Dealers and Major Security-Based Swap Participants

The Securities and Exchange Commission voted on April 13 to adopt final rules implementing a comprehensive set of business conduct standards and chief compliance officer requirements for security-based swap dealers and major security-based swap participants (security-based swap entities).

The final rules are adopted under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which authorizes the Commission to implement a framework for regulating the over-the-counter security-based swap markets.

“For years, the over-the-counter derivatives market operated without basic customer protections,” said SEC Chair Mary Jo White.  “These rules better protect investors by providing fundamental reforms to the conduct of security-based swap activity that ... Read More

SEC Solicits Public Comment on Business and Financial Disclosure Requirements in Regulation S-K

The Securities and Exchange Commission voted on April 13 to publish a concept release discussing and seeking public comment on modernizing certain business and financial disclosure requirements in Regulation S-K.  The Commission is interested in receiving input on whether the disclosure requirements continue to elicit the information that investors need for investment and voting decisions and how registrants can most effectively present the information.  The Commission is also seeking comment on the costs and benefits of the disclosure requirements for companies and investors. 

The request for comment is part of the Disclosure Effectiveness Initiative, which is a broad-based staff review of ... Read More

SEC Case Freezes Assets of Ski Resort Steeped in Fraudulent EB-5 Offerings

The Securities and Exchange Commission today announced fraud charges and an asset freeze against a Vermont-based ski resort and related businesses allegedly misusing millions of dollars raised through investments solicited under the EB-5 Immigrant Investor Program.  The SEC’s case was unsealed today in federal court in Miami, and the court has appointed a receiver over the companies to prevent any further spending of investor assets.

The SEC alleges that Ariel Quiros of Miami, William Stenger of Newport, Vt., and their companies made false statements and omitted key information while raising more than $350 million from investors to construct ski resort facilities and a biomedical research facility in Vermont.  Investors were told they were investing in one of seve... Read More