Insider Traders Returning Illegal Profits and Kickbacks

The Securities and Exchange Commission today announced that a Florida man trading on inside information ahead of a pharmaceutical company merger and a friend who tipped him have agreed to settle enforcement actions against them.

Jay Y. Fung has agreed to pay back more than $700,000 in illegal profits plus more than $60,000 in interest earned after allegedly purchasing stock and call options in Pharmasset Inc. based on his friend’s tip that it was about to be acquired.  The SEC alleges that Fung cashed in when Pharmasset’s stock rose 84 percent after its acquisition by Gilead Sciences was publicly announced, and he paid kickbacks to his friend who provided the nonpublic information. 

The SEC filed a complaint against Fung today in federal district... Read More

California Water District to Pay Penalty for Misleading Investors

The Securities and Exchange Commission today charged California’s largest agricultural water district with misleading investors about its financial condition as it issued a $77 million bond offering.  

In addition to charging Westlands Water District, the SEC charged its general manager Thomas Birmingham and former assistant general manager Louie David Ciapponi.

According to the SEC’s order instituting a settled administrative proceeding:

• Westlands agreed in prior bond offerings to maintain a 1.25 debt service coverage ratio, which is a measure of an issuer’s ability to make future bond payments.
• Westlands learned in 2010 that drought conditions and reduced water supply would prevent the water district from generating e... Read More

Money Returning to Investors Harmed by Unregistered Broker

The Securities and Exchange Commission today announced that a Cyprus-based company has agreed to pay $11 million to settle charges that it illegally sold binary options to U.S. investors.  A judge signed a court order late yesterday authorizing the distribution of this money to harmed investors through a Fair Fund.

The SEC filed a complaint in 2013 against Banc de Binary Ltd., its founder Oren Shabat Laurent, and three affiliates alleging that they failed to register the offering before soliciting U.S. customers through YouTube videos, spam e-mails, and other Internet advertising.  They failed to register as a broker-dealer before communicating directly with U.S. clients by phone... Read More

SEC Awarding Nearly $2 Million to Three Whistleblowers

The Securities and Exchange Commission today announced the payment of almost $2 million to three whistleblowers. 

The largest of the three awards will go to a whistleblower who voluntarily provided original information that prompted the SEC to open its investigation.  That whistleblower, who will receive about $1.8 million, continued to provide valuable information throughout the investigation.  The other two whistleblowers will receive approximately $65,000 each for providing information after the investigation started.

By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower’s identity.

The SEC’s whistleblower progra... Read More

SEC Announces Charges Against Unregistered Fund Manager Accused of Hiding Criminal Past

The Securities and Exchange Commission today announced fraud charges against an unregistered fund manager accused of hiding his checkered past while providing false and misleading data to investors and an independent research firm.

“We allege that Steven Zoernack deceived investors by spreading false and misleading fund information while doing everything possible to bury his criminal history and troubling financial record,” said Antonia Chion, Associate Director of the SEC’s Enforcement Division.

The SEC’s Enforcement Division alleges in an administrative proceeding against Zoernack and his firm EquityStar Capital Management:

• They fraudulently offered and sold at least $5.6 million of interests in a pair of private investment fun... Read More

Robert M. Fisher Named Managing Executive of the Office of Compliance Inspections and Examinations

The Securities and Exchange Commission today announced that Robert M. Fisher has been named Managing Executive of the Office of Compliance Inspections and Examinations (OCIE).  In this role, Dr. Fisher will oversee OCIE’s business operations, technology services, examiner training, and Tips, Complaints and Referrals programs.  He succeeds Peter B. Driscoll who has been named Chief Risk and Strategy Officer of OCIE’s new Office of Risk and Strategy.

“Rob has terrific experience and brings proven skill sets to the position of Managing Executive,” said OCIE Director Marc Wyatt. “I look forward to working with him to further advance the effectiveness of our National Exam Program.”

“I am extremely proud to be working with such a great and dedicated team in OCIE to supp... Read More

SEC Announces Creation of Office of Risk and Strategy for its National Exam Program

The Securities and Exchange Commission today announced the creation of the Office of Risk and Strategy within its Office of Compliance Inspections and Examinations (OCIE).  The new office will consolidate and streamline OCIE’s risk assessment, market surveillance, and quantitative analysis teams and provide operational risk management and organizational strategy for OCIE.

Peter B. Driscoll will lead the office and has been named as its first Chief Risk and Strategy Officer.  In this role, Mr. Driscoll will manage the new office and the Investment Adviser/Investment Company examination staff based in Washington, D.C. 

“The Office of Risk and Strategy will lead our exam program’s risk-based, data-driven, and transparent approach to protecting investors,” said OCIE D... Read More

SEC Charges Rhode Island Agency and Wells Fargo With Fraud in 38 Studios Bond Offering

The Securities and Exchange Commission today charged a Rhode Island agency and its bond underwriter Wells Fargo Securities with defrauding investors in a municipal bond offering to finance startup video game company 38 Studios. 

The Rhode Island Economic Development Corporation (RIEDC, now called the Rhode Island Commerce Corporation) issued $75 million in bonds for the 38 Studios project as part of a state government program intended to spur economic development and increase employment opportunities by loaning bond proceeds to private companies.

According to the SEC’s complaint filed in federal district court in Providence:

• The RIEDC loaned $50 million in bond proceeds to 38 Studios.  Remaining proceeds were used to pay related ... Read More

SEC: Qualcomm Hired Relatives of Chinese Officials to Obtain Business

The Securities and Exchange Commission today announced that Qualcomm Incorporated has agreed to pay $7.5 million to settle charges that it violated the Foreign Corrupt Practices Act (FCPA) by hiring relatives of Chinese government officials deciding whether to select the company’s mobile technology products amid increasing competition in the international telecommunications market.

An SEC investigation found that Qualcomm also provided gifts, travel, and entertainment to try to influence officials at government-owned telecom companies in China.  With insufficient internal controls to detect improper payments, Qualcomm misrepresented in its books and records that the things of value provided to foreign officials were legitimate business expenses.

... Read More

Fee Rate Advisory #4 for Fiscal Year 2016

Pursuant to Section 31(j)(2) of the Securities Exchange Act of 1934, the Commission has determined that a mid-year adjustment to the Section 31 fee rate for fiscal year 2016 is not required.  These adjustments do not directly affect the amount of funding available to the SEC.

The Section 31 fee rate for fiscal 2016 will remain at the current rate of $21.80 per million, as previously announced on Jan. 7, 2016.  This rate will remain in place until Sept. 30, 2016, or 60 days after the enactment of a regular FY 2017 appropriation, whichever is later.  The Section 31 assessment on round turn transactions in security futures will remain at $0.0042 per transaction.

The Office of Interpretation and Guidance i... Read More

VimpelCom to Pay $795 Million in Global Settlement for FCPA Violations

The Securities and Exchange Commission today announced a global settlement along with the U.S. Department of Justice and Dutch regulators that requires telecommunications provider VimpelCom Ltd. to pay more than $795 million to resolve its violations of the Foreign Corrupt Practices Act (FCPA) to win business in Uzbekistan.

The SEC alleges that VimpelCom offered and paid bribes to an Uzbek government official related to the President of Uzbekistan as the company entered the Uzbek telecommunications market and sought government-issued licenses, frequencies, channels, and number blocks.  At least $114 million in bribe payments were funneled through an entity affiliated with the Uzbek official, and approximately a half-million dollars in bribes were disguised as char... Read More

Daniel Kahl Named as Chief Counsel of National Exam Program

The Securities and Exchange Commission today announced that Daniel S. Kahl has been named Chief Counsel of its Office of Compliance Inspections and Examinations (OCIE).  In this role Mr. Kahl will oversee a staff of 15 lawyers and advise OCIE’s leadership on legal, technical, and policy matters regarding the agency’s National Exam Program.

“Dan’s expertise in policy and regulatory issues makes him an excellent addition to OCIE’s leadership team.  In his prior roles at the SEC he has been a strong partner for our National Exam Program and as OCIE’s Chief Counsel he will be instrumental in helping us advance our mission,” said OCIE Director Marc Wyatt.

Mr. Kahl said, “I look forward to working with Marc, the OCIE leadership team, and the talented staff of the Chief ... Read More