SEC Charges Financial Advisor in Market Manipulation Case

The Securities and Exchange Commission today announced additional fraud charges in a market manipulation case the agency filed last week.

The SEC amended its complaint to additionally name Donald Toomer Jr., a Las Vegas-based financial advisor who allegedly agreed to buy shares of three microcap stocks in client accounts in exchange for hundreds of thousands of dollars in cash kickbacks.   

In a parallel action, the U.S. Attorney’s Office for the District of New Jersey announced criminal charges against Toomer.

“We allege that Toomer abused his role as a financial advisor to help create the false appearance of market demand in these stocks and facilitate the pump-a... Read More

Convicted Fraudster Using Aliases Charged Again for Defrauding Investors

The Securities and Exchange Commission today charged a known securities fraudster with conducting a new scheme since his release from prison by using fake names to solicit investors while hiding his criminal past.

An SEC examination revealed that Edward Durante, who served a 10-year prison term following his securities fraud conviction in 2001, has again been soliciting investors under such aliases as Ted Wise, Efran Eisenberg, and Anthony Walsh.  The SEC alleges that Durante defrauded investors by selling shares of a shell company he secretly controlled and falsely telling them stock sale proceeds would be used to fund the company’s operations when they were actually tapped for other purposes including Durante’s personal use.

In a parallel actio... Read More

SEC Issues Staff Report on Accredited Investor Definition

The Securities and Exchange Commission today issued a staff report on the accredited investor definition.  The Dodd-Frank Wall Street Reform and Consumer Protection Act directs the Commission to review the accredited investor definition as it relates to natural persons every four years to determine whether the definition should be modified or adjusted.  Staff from the Divisions of Corporation Finance and Economic and Risk Analysis prepared the report in connection with the first review of the definition.

“This report analyzes various approaches for modifying the definition of an accredited investor,” said SEC Chair Mary Jo White.  “I encourage investors, companies and other market participants to provide comments as public input will be very valuable as the Commission cons... Read More

J.P. Morgan to Pay $267 Million for Disclosure Failures

The Securities and Exchange Commission today announced that two J.P. Morgan wealth management subsidiaries have agreed to pay $267 million and admit wrongdoing to settle charges that they failed to disclose conflicts of interest to clients.

An SEC investigation found that the firm’s investment advisory business J.P. Morgan Securities LLC (JPMS) and nationally chartered bank JPMorgan Chase Bank N.A. (JPMCB) preferred to invest clients in the firm’s own proprietary investment products without properly disclosing this preference.  This preference impacted two fundamental aspects of money management – asset allocation and the selection of fund managers – and deprived JPMorgan’s clients of information they needed to make fully informed investment decisions.

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SEC Charges Martin Shkreli With Fraud

The Securities and Exchange Commission today charged Martin Shkreli, former CEO of pharmaceutical company Retrophin, with committing fraud during a five-year period when he also was working as a hedge fund manager.

The SEC alleges that Martin Shkreli misappropriated money from two hedge funds he founded and made material misrepresentations to investors among other widespread misconduct.  The SEC also charged Retrophin’s former outside counsel and corporate secretary Evan Greebel with aiding and abetting certain aspects of Shkreli’s alleged fraud.

In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York today announced criminal charges against Shkreli and Greebel.

“Over a five-year period, Shkreli is ... Read More

SEC: Hedge Fund Adviser Lied to Investors

The Securities and Exchange Commission today barred a hedge fund adviser from the securities industry for making a series of false statements to investors and ultimately causing a fund’s collapse.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Owen Li, whose firm is Canarsie Capital LLC.

“When investment advisers agree to manage client assets, they assume the duty of utmost good faith,” said Julie M. Riewe, Co-Chief of the SEC Enforcement Division’s Asset Management Unit.  “Li disregarded his fiduciary duty and secretly subjected investors and the fund to massive risk and an eventual collapse.” 

According to the SEC’s order instituting a settled administrative proceeding agai... Read More

SEC Announces Fraud Charges Against Investment Adviser

The Securities and Exchange Commission today announced fraud charges against a Stamford, Conn.-based investment advisory firm accused of investing clients in certain bonds with a hidden financial benefit to a broker-dealer connected to the firm.

The SEC alleges that Atlantic Asset Management LLC (AAM) invested more than $43 million of client funds in illiquid bonds issued by a Native American tribal corporation without disclosing the conflict of interest that the bond sales generated a private placement fee for the broker-dealer, whose parent company partially owns AAM.

“As alleged, Atlantic violated a fundamental duty to its clients by placing its own financial interests ahead of client interests,” said Andrew M. Calamari, Director of the SEC’s ... Read More

SEC Files Charges in Multi-Million Dollar Market Manipulation

The Securities and Exchange Commission today charged a New Jersey man and his company with illicitly pocketing $13 million from an elaborate pump-and-dump scheme.

The SEC alleges that Samuel DelPresto teamed up with others to secretly obtain control of substantially all available stock in four microcap companies and to facilitate coordinated trading that created the appearance of liquidity and market demand for the stocks.  After unwitting investors were enticed through promotional campaigns to buy the stock at inflated prices, DelPresto dumped his shares on the market.

“The series of fraudulent schemes alleged in our complaint enticed unwitting investors to pay inflated prices for four companies secretly controlled by DelPresto and others and th... Read More

SEC: Sports Team Offering Is A Penny Stock Fraud

The Securities and Exchange Commission today announced fraud charges and a court-ordered asset freeze obtained against a Florida-based penny stock company falsely touting itself as “the largest publicly traded diversified portfolio of professional sports teams in the world.”

The SEC alleges that Thomas Anthony Guerriero as CEO of Oxford City Football Club Inc. used pressure tactics and a boiler room of salespeople to raise more than $6.5 million from primarily inexperienced investors who were misled to believe that the company was a thriving conglomerate of sports teams, academic institutions, and real estate holdings.  But in reality the company was losing millions of dollars each year and turning zero profit from its two lower-division soccer teams in the U.K.Read More

SEC Proposes Rules for Resource Extraction Issuers Under Dodd-Frank Act

The Securities and Exchange Commission today voted to propose rules that would require resource extraction issuers to disclose payments made to the U.S. federal government or foreign governments for the commercial development of oil, natural gas or minerals.  The proposed rules, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, are intended to further the statutory objective to advance U.S. policy interests by promoting greater transparency about payments related to resource extraction.

Under the proposed rules, an issuer would be required to disclose payments made to the U.S. federal government or a foreign government if the issuer is required to file annual reports with the Commission under the Securities Exchange Act.  The issuer would ... Read More

SEC Proposes New Derivatives Rules for Registered Funds and Business Development Companies

The Securities and Exchange Commission today voted to propose a new rule designed to enhance the regulation of the use of derivatives by registered investment companies, including mutual funds, exchange-traded funds (ETFs) and closed-end funds, as well as business development companies.  The proposed rule would limit funds’ use of derivatives and require them to put risk management measures in place which would result in better investor protections.

“Today’s proposal is designed to modernize the regulation of funds’ use of derivatives and safeguard both investors and our financial system,” said SEC Chair Mary Jo White.  “Derivatives can raise risks for a fund, including risks related to leverage, so it is important to require funds to monitor and manage derivative... Read More

SEC Suspends Public Accountants for Bad Auditing

The Securities and Exchange Commission today suspended five accountants and two audit firms from practicing or appearing before the SEC after they violated key rules that are designed to preserve the integrity of the financial reporting system.

According to the SEC’s orders instituting settled administrative proceedings, the accountants and firms at various times performed deficient audits of public companies, jeopardized the independence of other audits, and falsified and backdated audit documents among other misconduct.

“Auditors must follow the professional standards and avoid conflicts of interest when they opine on the financial information reported by public companies,” said Paul G. Levenson, Director of the SEC’s Boston Regional Office. “These accountants a... Read More