Custody Rule Violators Settle Charges

The Securities and Exchange Commission today announced that an investment advisory firm, two owners, and a former chief compliance officer have agreed to settle charges that the firm again violated the custody rule after being reprimanded for violations only a few years before.

Sands Brothers Asset Management LLC and co-founders Martin Sands and Steven Sands agreed to pay a $1 million penalty and will be suspended for a year from raising money from new or existing investors.  They also must have a compliance monitor for three years.  Former CCO Christopher Kelly, who also served as chief operating officer, agreed to pay a $60,000 penalty and will be suspended for one year from acting as a CCO or appearing or practicing before the SEC as an attorney.

SEC Proposes Rules to Enhance Transparency and Oversight of Alternative Trading Systems

The Securities and Exchange Commission today announced it has voted to propose rules to enhance operational transparency and regulatory oversight of alternative trading systems (ATSs) that trade stocks listed on a national securities exchange (NMS stocks), including “dark pools.” 

“Investors and other market participants need more and better information about how alternative trading systems work,” said SEC Chair Mary Jo White. “The proposed changes would represent a critical step forward in delivering greater transparency to investors and enhancing equity market structure.”

The proposal would require an NMS stock ATS to file detailed disclosures on newly proposed Form ATS-N about its operations and the activities of its broker-dealer operator and its affiliates.  ... Read More

SEC Announces Agenda and Panelists for Small Business Forum

The Securities and Exchange Commission today announced the agenda and panelists for this Thursday’s Government-Business Forum on Small Business Capital Formation.

The November 19 event will begin at 9 a.m. and include two morning panel discussions that will focus on post-JOBS Act implementation. The first panel will discuss exempt offerings focusing on the expanded and modernized options now available to small businesses considering an exempt offering.  The second panel will discuss registered offerings focusing on how the new regulatory regime affects registered offerings by smaller reporting companies and what additional reforms may further facilitate these offerings.

In the afternoon session, breakout groups will develop recommendations on a variety of iss... Read More

SEC Charges Pump-and-Dump in Marley Coffee Stock

The Securities and Exchange Commission today announced fraud charges against several alleged perpetrators behind a $78 million pump-and-dump scheme involving the stock of Jammin’ Java, a company that operates as Marley Coffee and uses trademarks of late reggae artist Bob Marley to sell coffee products.

The SEC alleges that Jammin Java’s former CEO Shane Whittle orchestrated the scheme with three others who live abroad and operate entities offshore.  Whittle utilized a reverse merger to secretly gain control of millions of Jammin Java shares, and he spread the stock to the offshore entities controlled by Wayne Weaver of the UK and Canada, Michael Sun of India, and René Berlinger of Switzerland.  The shares were later dumped on the unsuspecting public after the stoc... Read More

Mutual Fund Adviser Advertised False Performance Claims

The Securities and Exchange Commission today announced that a Hartford, Conn.-based investment management firm agreed to pay $16.5 million to settle charges that it misled mutual fund investors and others with advertisements containing false historical performance data about AlphaSector, a major exchange-traded fund (ETF) portfolio strategy.

An SEC investigation found that Virtus Investment Advisers publicized a substantially overstated performance track record as received from F-Squared, which it hired as a subadviser for mutual funds and other clients that followed F-Squared’s AlphaSector strategy.  Virtus falsely stated in client presentations, marketing materials, SEC filings, and other communications that the AlphaSector strategy had a performance history dat... Read More

Sanket Bulsara Named Deputy General Counsel for Appellate Litigation and Adjudication

The Securities and Exchange Commission today announced that it has named Sanket J. Bulsara as the Deputy General Counsel for Appellate Litigation and Adjudication.  He succeeds Michael A. Conley who has been appointed as SEC Solicitor.  Former Solicitor Jacob H. Stillman will remain as senior advisor to the Solicitor.

Mr. Stillman has 53 years of service at the SEC and has been its Solicitor for the past 17 years, leading the Office of the General Counsel’s Appellate Group in representing the Commission in litigation in the federal courts of appeals and, in conjunction with the Solicitor General, in the U.S. Supreme Court.  Before joining the SEC staff, Mr. Stillman clerked for Judge Harry E. Kalodner of the U.S. Court of Appeals for the Third Circuit and served as an offi... Read More

Marc Wyatt Named Director of the Office of Compliance Inspections and Examinations

The Securities and Exchange Commission today announced that it has named Marc Wyatt as Director of the agency’s Office of Compliance Inspections and Examinations (OCIE) and leader of its National Exam Program.  Mr. Wyatt previously was OCIE’s Deputy Director and has been the office’s Acting Director since April 2015, following the departure of former director Andrew Bowden.

Mr. Wyatt joined the SEC in December 2012 as a senior specialized examiner focused on examinations of advisers to hedge funds and private equity funds.  He was named Deputy Director in October 2014 and in that position he led OCIE’s Technology Controls Program and served as a member of the office’s Operating and Executive Committees.  He also was the national co-coordinator of OCIE’s Private Fund Specia... Read More

Olivier Girod Named SEC Deputy Director of Office of Support Operations

The Securities and Exchange Commission today announced Olivier Girod has been named Deputy Director of the Office of Support Operations (OSO). Mr. Girod will support building operations, records management, business management, security, and Freedom of Information Act services.

Mr. Girod joined the SEC in March 2014 as the Chief of the OSO’s building operations unit. Under his leadership, the SEC has pursued and implemented strategies to optimize the use of office space for its growing workforce. He has also been instrumental in managing construction and leasing projects, SEC facilities, printing, publishing, and mail operations.

“Olivier’s leadership and expertise in support operations make him uniquely qualified for the deputy director position,” OSO Director Ba... Read More

SEC Charges: False Tweets Sent Two Stocks Reeling in Market Manipulation

The Securities and Exchange Commission today filed securities fraud charges against a Scottish trader whose false tweets caused sharp drops in the stock prices of two companies and triggered a trading halt in one of them.

According to the SEC’s complaint filed in federal court in the Northern District of California, James Alan Craig of Dunragit, Scotland, tweeted multiple false statements about the two companies on Twitter accounts that he deceptively created to look like the real Twitter accounts of well-known securities research firms. 

The U.S. Attorney’s Office for the Northern District of California today filed criminal charges against Craig.

The SEC’s complaint alleges that Craig’s first false tweets caused one company’s s... Read More

Bryan Bennett Named to Head Exam Program in Los Angeles Office

The Securities and Exchange Commission today announced that it has named Bryan Bennett to lead the examination program in its Los Angeles Regional Office.  Mr. Bennett has been an assistant director in the Los Angeles examination program since January.  In his new role, he will oversee the SEC’s exam program in Southern California, Nevada, Arizona, Hawaii, and Guam with a staff of approximately 60 examiners, accountants and attorneys.

Mr. Bennett joined the SEC’s Los Angeles office in 2008 as an examiner and later was named an exam manager, leading numerous teams in the investment adviser and investment company examination program.  During his tenure, exam findings by the teams led to significant enforcement actions, including a case charging a Read More

SEC Announces Whistleblower Award of More Than $325,000

The Securities and Exchange Commission today announced a whistleblower award totaling more than $325,000 for a former investment firm employee who tipped the agency with specific information that enabled enforcement staff to open an investigation and uncover the extent of the fraudulent activity.

The whistleblower provided a detailed description of the misconduct and specifically identified individuals behind the wrongdoing to help the SEC bring a successful enforcement action.  The whistleblower waited until after leaving the firm to come forward to the SEC, however, and agency officials say the award could have been higher had this whistleblower not hesitated.

“Corporate insiders who become aware of securities law violations are encouraged to c... Read More

SEC Identifies More Alleged Corrupt Brokers in Stock Manipulation Case

The Securities and Exchange Commission today announced it has identified three additional individuals to charge in a penny stock manipulation case the agency filed last year against alleged corrupt brokers and others.

The SEC filed a request in federal court in Brooklyn to lift the stay in its civil action for the purposes of filing an amended complaint alleging that two additional brokers, Michael Morris and Ronald Heineman, facilitated the scheme through their brokerage firm while a third man, attorney Darren Ofsink, profited illegally by selling unregistered shares for which no registration exemption applied.

“Brokers serve important gatekeeping functions in o... Read More