SEC: Lawyers Offered EB-5 Investments as Unregistered Brokers

The Securities and Exchange Commission today announced a series of enforcement actions against lawyers across the country charged with offering EB-5 investments while not registered to act as brokers.

In one case, the lawyer and his firm are charged with defrauding foreign investors in the government’s EB-5 Immigrant Investor Program, through which they seek a path to U.S. residency by investing in a specific project that creates or preserves at least 10 jobs for U.S. workers.

“Individuals and entities performing certain services and receiving commissions must be registered to legally operate as securities brokers if they’re raising money for EB-5 projects,” said Andrew J. Ceresney, Director of the SEC Enforcement Division.  “The lawyers in these... Read More

SEC Announces Charges for Spoofing and Order Mismarking

The Securities and Exchange Commission today announced fraud charges against three Chicago-based traders accused of circumventing market structure rules in a pair of options trading schemes.

The SEC Enforcement Division alleges that twin brothers Behruz Afshar and Shahryar Afshar and their friend and former broker Richard Kenny mismarked option orders to obtain execution priority and lower fees, and engaged in manipulative trading known as “spoofing” to generate liquidity rebates from an options exchange.

“We allege that the Afshar brothers and Kenny fraudulently mismarked their orders to obtain benefits that they were not entitled to receive, and engaged in spoofing to collect liquidity rebates.  This alleged scheme deceived the options exchange... Read More

SEC: Grant Thornton Ignored Red Flags in Audits

The Securities and Exchange Commission today announced that national audit firm Grant Thornton LLP and two of its partners agreed to settle charges that they ignored red flags and fraud risks while conducting deficient audits of two publicly traded companies that wound up facing SEC enforcement actions for improper accounting and other violations.

Grant Thornton admitted wrongdoing and agreed to forfeit approximately $1.5 million in audit fees and interest plus pay a $3 million penalty. 

Melissa Koeppel was an engagement partner on the deficient audits of both companies, and Jeffrey Robinson was an engagement partner on one of the deficient audits, which spanned from 2009 to 2011 and involved senior housing provider Assisted Living Concepts (ALC)... Read More

SEC Charges Bitcoin Mining Companies

The Securities and Exchange Commission today charged two Bitcoin mining companies and their founder with conducting a Ponzi scheme that used the lure of quick riches from virtual currency to defraud investors.

According to the SEC’s complaint filed in federal court in Connecticut, “mining” for Bitcoin or other virtual currencies means applying computer power to try to solve complex equations that verify a group of transactions in that virtual currency.  The first computer or collection of computers to solve an equation is awarded new units of that virtual currency. 

The SEC alleges that Homero Joshua Garza perpetrated the fraud through his Connecticut-based companies GAW Miners and ZenMiner by purporting to offer shares of a digital Bitcoin mining operation.  In r... Read More

SEC, FINRA, MSRB to Hold Compliance Outreach Program for Municipal Advisors

The Securities and Exchange Commission, Financial Industry Regulatory Authority (FINRA), and the Municipal Securities Rulemaking Board (MSRB) today announced the opening of registration for the Compliance Outreach Program for Municipal Advisors that will take place in Philadelphia on Feb. 3, 2016, and be webcast live on the SEC website.

The SEC’s Office of Compliance Inspections and Examinations, in coordination with the SEC's Office of Municipal Securities, is partnering with FINRA and the MSRB to sponsor the program.  Similar to the compliance outreach programs for broker-dealers and investment advisers, the municipal advisor program will provide municipal advisor professionals a forum for discussions with regulators about recent exam findings, regulatory issues, and com... Read More

SEC Names Katherine Martin as Associate Director in the Office of International Affairs

The Securities and Exchange Commission today announced that Katherine K. Martin has been named Associate Director in its Office of International Affairs.

As Associate Director, Ms. Martin will oversee the development of the SEC’s policy on cross-border regulatory matters, including its participation in multilateral standard-setting bodies and its bilateral dialogues with foreign authorities.  Ms. Martin has served in various roles at the SEC for more than a decade, most recently as an Assistant Director in the Office of International Affairs and prior to that as a Senior Special Counsel in the Office of Clearance and Settlement in the Division of Trading and Markets.  She also has been an Assistant Chief Counsel in the Division of Economic and Risk Analysis and a Senior Co... Read More

Standard Bank to Pay $4.2 Million to Settle SEC Charges

The Securities and Exchange Commission today charged Standard Bank Plc with failing to disclose certain payments in connection with debt issued by the Government of Tanzania in 2013.  The London-based bank acted as a lead manager for the offering and failed to disclose payments made by an affiliate to a Tanzanian firm that received a portion of the proceeds of the $600 million offering but performed no substantive role in the transaction.

Standard Bank, now ICBC Standard Bank Plc, agreed to settle the SEC’s charges by paying a $4.2 million penalty and admitting the facts underlying the SEC’s charges.  As part of a coordinated global settlement, the United Kingdom’s Serious Fraud Office also announced a settlement today in an action it brought against Standard in the U.K. f... Read More

Former Goldman Employee Charged With Insider Trading Before Mergers

The Securities and Exchange Commission today announced insider trading charges against a former Goldman Sachs employee accused of stealing nonpublic information in the firm’s e-mail system so he could trade illegally in advance of client mergers and make more than $450,000 in illicit profits.  The SEC has obtained an emergency court order to freeze the assets of the trader and accounts he used to place the illicit trades. 

The SEC alleges that Yue Han, who worked as an associate in Goldman’s compliance department and also goes by the name John Han, traded on confidential information contained in e-mails sent and received by Goldman investment bankers responsible for advising clients on impending merger and acquisition transactions.  Han gained access to investment... Read More

SEC Charges Political Intelligence Firm

The Securities and Exchange Commission today announced that a political intelligence firm agreed to admit wrongdoing and pay a $375,000 penalty for compliance failures.

Marwood Group Research LLC also agreed to retain an independent compliance consultant after an SEC investigation found that the firm failed to properly inform compliance officers about instances when analysts obtained potential material nonpublic information from government employees.  Under Marwood Group’s written policies and procedures, compliance officers are central to the firm’s efforts to prevent confidential or nonpublic information from being released to clients, who in turn could use it to influence their securities trading decisions.

"Government employees routinely poss... Read More

SEC: Stockbroker Stole Investor Money for Home Renovations

The Securities and Exchange Commission today announced fraud charges against a former stockbroker accused of stealing investor money to remodel his house and pay other bills.

The SEC alleges that Bernard M. Parker raised more than $1.2 million from his longstanding brokerage customers and others who were told they were purchasing legitimate real estate tax lien certificates and would earn returns of six to nine percent annually.  However, Parker only used a small amount of investor funds to purchase tax liens and instead used their money to remodel his home in Indiana, Pa., make car payments, and pay bills for his father-in-law. 

“We allege that while Parker was using investor funds for his personal expenses, he provided investors with computer p... Read More

Atlanta Businessman Charged in Nursing Home Investment Scheme

The Securities and Exchange Commission today announced fraud charges and an emergency asset freeze obtained against an Atlanta-based businessman accused of misusing investor funds raised to purchase and renovate senior living facilities.

The SEC alleges that Christopher F. Brogdon amassed nearly $190 million through dozens of municipal bond and private placement offerings in which investors supposedly earn interest from revenues generated by the nursing home, assisted living facility, or other retirement community project supported by their investment.  But Brogdon secretly commingled investor funds instead of using the money to finance the project described to investors in the disclosure documents for each offering.  From the commingled accounts, he has diverted ... Read More

Assets Frozen in Alleged Immigration Scam

The Securities and Exchange Commission today announced it has obtained a court order freezing the assets of a South Florida woman and her company accused of purchasing a boat and luxury cars with money she raised from investors seeking U.S. residency through the EB-5 Immigrant Investor Pilot Program. 

Under the EB-5 program, foreign citizens may qualify for U.S. residency if they make a qualified investment of at least $500,000 in a specified project that creates or preserves at least 10 jobs for U.S. workers.  The SEC alleges that Lin Zhong and her company EB5 Asset Manager LLC raised at least $8.5 million for use by U.S. EB-5 Investments LLC in job-creating real estate development projects, but they diverted nearly $1 million to purchase a boat, a BMW, and a Mer... Read More