UBS to Pay $19.5 Million Settlement Involving Notes Linked to Currency Index

The Securities and Exchange Commission today announced that UBS AG has agreed to pay $19.5 million to settle charges that it made false or misleading statements and omissions in offering materials provided to U.S. investors in structured notes linked to a proprietary foreign exchange trading strategy.

The case is the agency’s first involving misstatements and omissions by an issuer of structured notes, a complex financial product that typically consists of a debt security with a derivative tied to the performance of other securities, commodities, currencies, or proprietary indices.  The return on the structured note is linked to the performance of the derivative over the life of the note.   Between $40 billion to $50 billion of structure notes are registered with the SEC p... Read More

Wolverine Affiliates Charged With Failing to Maintain Policies to Prevent Misuse of Material Nonpublic Information

The Securities and Exchange Commission today charged Wolverine Trading LLC and Wolverine Asset Management LLC with failing to maintain and enforce policies and procedures to prevent the misuse of material nonpublic information. 

The Chicago-based affiliates will pay more than $1 million to settle the SEC’s charges.  Each agreed to pay penalties of $375,000, and Wolverine Asset Management will pay disgorgement of $364,145.80, plus prejudgment interest of $39,158.47.

According to the SEC’s order instituting administrative proceedings:

• From February to March 2012, Wolverine Trading, a broker-dealer, and Wolverine Asset Management, an investment adviser, repeatedly shared information in violation of their firms’ policies and procedures. 
• ... Read More

SEC Charges Firm and Owner With Manipulative Trading

The Securities and Exchange Commission today charged a New York-based proprietary trading firm and one of its co-founders with engaging in a manipulative trading strategy known as “spoofing.” 

An SEC investigation found that Briargate Trading LLP and co-founder Eric Oscher orchestrated a scheme in which they placed sham orders — spoofs — to create the false appearance of interest in stocks and manipulate their prices.  After entering spoof orders, Oscher placed bona fide orders on the opposite side of the market for the same stocks and took advantage of the artificially inflated or depressed prices.  Immediately after the bona fide orders were executed, Oscher canceled the spoof orders.

Briargate and Oscher agreed to pay more than $1 million to settle the SEC’s ch... Read More

Blackstone Charged With Disclosure Failures

The Securities and Exchange Commission today announced that three private equity fund advisers within The Blackstone Group have agreed to pay nearly $39 million to settle charges that they failed to fully inform investors about benefits that the advisers obtained from accelerated monitoring fees and discounts on legal fees.  Nearly $29 million of the settlement will be distributed to affected fund investors.

An SEC investigation found that Blackstone Management Partners, Blackstone Management Partners III, and Blackstone Management Partners IV failed to adequately disclose the acceleration of monitoring fees paid by fund-owned portfolio companies prior to the companies’ sale or initial public offering.  The payments to Blackstone essentially reduced the value of the portfo... Read More

SEC Charges Former Executives With Accounting Fraud and Other Accounting Failures

The Securities and Exchange Commission today charged two former top executives at OCZ Technology Group Inc. for accounting failures at the now-bankrupt seller of computer memory storage and power supply devices. 

In a complaint filed in the Northern District of California, the SEC alleges that OCZ’s former CEO Ryan Petersen engaged in a scheme to materially inflate OCZ’s revenues and gross margins from 2010 to 2012.  It separately charged OCZ’s former chief financial officer Arthur Knapp for certain accounting, disclosure, and internal accounting controls failures at OCZ.  Knapp agreed to settle the SEC’s charges without admitting or denying the allegations against him.  The SEC’s litigation continues against Petersen.

“CEOs and CFOs are responsible for reporting ... Read More

Michael Liftik Named SEC Deputy Chief of Staff

The Securities and Exchange Commission today announced that Michael Liftik will become a deputy chief of staff of the agency.

Mr. Liftik became Senior Advisor to Chair Mary Jo White in April 2013, serving as the Chair’s legal advisor on enforcement policy matters and cases.  He also serves as the Chair’s representative on the Deputies Committee of the Financial Stability Oversight Council. 

In his legal advisor role, Mr. Liftik has worked with SEC staff and with senior officials from the Department of Treasury, Federal Reserve Board, and other financial regulators on identifying and addressing developments in the financial sector involving the asset management industry, cybersecurity, and macroeconomic trends.

“I have relied on Michael’s securities law ex... Read More

SEC Deputy Chief of Staff Erica Williams to Leave Agency

The Securities and Exchange Commission today announced that Erica Williams will be leaving the SEC after serving as deputy chief of staff to three Chairs, Mary Jo White, Elisse B. Walter, and Mary L. Schapiro.

As Chair White’s deputy chief of staff, Ms. Williams served as a senior legal advisor to the Chair on all aspects of the SEC’s operations, including enforcement, regulatory policy, compliance exams, strategy, and management of the agency. She also served as the Chair’s representative to the Financial Stability Oversight Board, which oversees the operation of the troubled asset relief program (TARP).

Ms. Williams joined the Chair’s staff in February 2011as enforcement counsel and became deputy chief of staff in May 2012. 

She began her career at the ... Read More

SEC Charges Florida Investment Adviser and His Company With Defrauding Investors

The Securities and Exchange Commission today announced fraud charges against Florida-based investment adviser Arthur F. Jacob and his company, Innovative Business Solutions LLC, for allegedly deceiving clients over a period of at least five years.

In an order instituting administrative proceedings the SEC Enforcement Division alleges that from at least mid-2009 through July 2014:

• Jacob and IBS misrepresented the risks and profitability of investments he purchased for investment advisory clients.  Jacob was informed of investment risks of certain exchange traded funds but failed to disclose these risks to clients and told them that the investment strategy he used was safe, carried low or no risk, and would produce predictable profits.
• Jacob con... Read More

SEC Charges Home Loan Servicing Solutions for Misstatements and Inadequate Internal Controls

The Securities and Exchange Commission today charged Home Loan Servicing Solutions Ltd. (HLSS) for making material misstatements about its handling of related party transactions and the value of its primary asset and for having inadequate internal accounting controls.

Cayman Islands-based HLSS agreed to pay a $1.5 million penalty to settle the SEC’s charges and agreed to cease and desist from disclosure and books and recordkeeping violations.

According to the SEC’s order instituting a settled administrative proceeding, HLSS misstated its handling of transactions with related parties, including Ocwen Financial Corp., whose Chairman also served as HLSS’s Chairman.  From 2012 to 2014, HLSS disclosed that to avoid potential conflicts of interest, it required its Chair... Read More

SEC Charges Bristol-Myers Squibb With FCPA Violations

The Securities and Exchange Commission today announced that New York-based pharmaceutical company Bristol-Myers Squibb has agreed to settle charges that its joint venture in China made cash payments and provided other benefits to health care providers at state-owned and state-controlled hospitals in exchange for prescription sales. 

Bristol-Myers Squibb will pay more than $14 million to settle the SEC’s finding that it violated the Foreign Corrupt Practices Act (FCPA) and reaped more than $11 million in profits from its misconduct. 

According to the SEC’s order instituting settled administrative proceedings, Bristol-Myers Squibb lacked effective internal controls over interactions with health care providers at BMS China, its majority-owned joint venture.  Between ... Read More

Chyhe Becker Named as Associate Director in the Division of Economic and Risk Analysis

The Securities and Exchange Commission today announced that Chyhe Becker has been named as an Associate Director in the Division of Economic and Risk Analysis (DERA).  The appointment is effective immediately.

Dr. Becker assumes a new position in the division’s Office of Litigation Economics, created to reflect the significance of data-driven economic and statistical analysis in investigations and litigated cases.  The office has almost tripled in size in the past three years, growing to a staff of 26 from nine, and has expanded to five regional offices in addition to the SEC’s Washington, D.C. headquarters.

“We are very fortunate to have someone with Chyhe’s talents and management expertise to lead our litigation economics efforts,” said DERA Director and SEC Chi... Read More

SEC Halts $32 Million Scheme That Promised Riches From Amber Mining

The Securities and Exchange Commission today announced it has filed fraud charges and obtained asset freezes against the operator of a worldwide pyramid scheme that falsely promised investors would profit from a venture purportedly backed by the company’s massive amber holdings.

California resident Steve Chen and 13 California-based entities, including USFIA Inc., are at the center of the alleged scheme, the SEC said in a complaint filed in federal court in Los Angeles.  According to the SEC’s complaint, USFIA and Chen’s other entities have raised more than $32 million from investors in and outside the U.S. since at least April 2013.  The SEC’s complaint alleges that Chen and his companies misled investors about a lucrative initial public offering for USFIA that never happ... Read More