SEC Charges New Jersey Fund Manager With Securities Fraud

The Securities and Exchange Commission today charged a New Jersey fund manager and his firm with defrauding investors by lying about his credentials, concealing trading losses, and using investor funds to make Ponzi-like payments to other investors.

The SEC’s complaint filed in federal court in Manhattan alleges that William J. Wells, of River Vale, New Jersey, falsely told some investors that he was a registered investment adviser and would invest their money in specific stocks.  Instead, Wells and his firm, Promitor Capital Management LLC, are alleged to have invested mainly in high-risk options with poor results that Wells concealed with phony investor account statements that grossly inflated performance.  Wells further attempted to hide the losses by using funds from n... Read More

SEC Charges Two Grant Thornton Firms With Violating Auditor Independence Rules

The Securities and Exchange Commission today charged Grant Thornton India LLP and Australia-based Grant Thornton Audit Pty Limited with auditor independence violations that occurred when two Grant Thornton Mauritius partners served on the boards of Mauritius-based subsidiaries of companies that were Grant Thornton audit clients and performed non-audit services prohibited under the SEC’s auditor independence rules.

According to the SEC’s orders instituting settled administrative proceedings, the two Grant Thornton International LLP member firms represented in audit reports that they were independent of their respective audit clients when the audit clients paid fees to a consulting firm owned by two Grant Thornton Mauritius partners who served as board members for these audi... Read More

SEC Charges Executives for Defrauding Investors in Financial Fraud Scheme

The Securities and Exchange Commission today charged two former executives of ContinuityX Solutions Inc. with fabricating nearly all of the company’s revenue and enriching themselves in the process.  Metamora, Illinois-based ContinuityX was a publicly traded company that claimed to sell Internet services to businesses.  The company is now in bankruptcy and its former CEO was criminally charged last year with six counts of wire fraud for conduct related to the SEC’s allegations.

The SEC’s complaint charges ContinuityX’s former CEO David P. Godwin and former chief financial officer Anthony G. Roth with engineering a scheme to inflate the company’s revenues.  ContinuityX reported revenues of $27.2 million from April 2011 to September 2012, but the complaint alleges that 99 pe... Read More

Fee Rate Advisory #2 for Fiscal Year 2016

When fiscal year 2016 starts on October 1, 2015, the Securities and Exchange Commission does not expect to have received a regular appropriation for FY 2016.  Accordingly, the fees paid under Section 31 of the Securities Exchange Act will remain at their current rate until 60 days after the enactment of a regular appropriation for the SEC.

The SEC is required to publish a revised fee rate 30 days after enactment of the new fiscal year appropriation and the new rate takes effect 60 days after the appropriation is enacted.  Until then, the Section 31 fee rate will remain at the current rate of $18.40 per million for securities transactions and the assessment on round turn transactions in security futures will remain at $0.0042 per transaction.

For questions on Secti... Read More

Latour Trading Charged With Market Structure Rule Violations

The Securities and Exchange Commission today charged Latour Trading LLC with violating SEC rules designed to ensure safe and efficient markets. Latour, a high-frequency proprietary trading firm, agreed to a settlement in which it will pay a $5 million civil penalty and more than $3 million of disgorgement of gross trading profits, rebates paid to it by exchanges, and prejudgment interest.

An SEC investigation found that Latour violated the SEC rules – the Market Access Rule and Regulation National Market System – over a nearly four-year period in which Latour sent millions of non-compliant orders to U.S. exchanges.  According to the order:

• Latour shared portions of its electronic trading infrastructure with its parent company, Tower Research.  Some Tower R... Read More

SEC Sanctions 22 Underwriting Firms for Fraudulent Municipal Bond Offerings

The Securities and Exchange Commission today announced enforcement actions against 22 municipal underwriting firms for violations in municipal bond offerings.  The actions are the second round of filings against underwriters under the Municipalities Continuing Disclosure Cooperation (MCDC) Initiative, a voluntary self-reporting program targeting material misstatements and omissions in municipal bond offering documents.

In today’s actions, the SEC found that between 2010 and 2014, the 22 underwriting firms violated federal securities laws by selling municipal bonds using offering documents that contained materially false statements or omissions about the bond issuers’ compliance with contin... Read More

SEC Names William Royer to Lead Exam Program in Atlanta Office

The Securities and Exchange Commission today announced that William Royer has been named the new head of the examination program in the Atlanta Regional Office.

In his role as Associate Director of the examination program in the Atlanta office, Mr. Royer will oversee a staff of approximately 40 examiners, accountants, and attorneys responsible for examining broker-dealers, investment advisers, investment companies, transfer agents, and other SEC registrants.  Mr. Royer has served as the Acting Associate Director of the Atlanta office’s exam program since June.

“Bill brings a great mix of experience in both the private and public sectors, particularly with regard to compliance and our exam process,” said Marc Wyatt, Acting Director of the Office of Compliance Inspe... Read More

SEC Charges Investment Adviser With Fraud

The Securities and Exchange Commission today announced fraud charges against a registered investment adviser and its owner for allegedly engaging in self-dealing and failing to disclose material facts to clients regarding conflicts of interest, use of investor funds, and the risks of the investments they recommended.

In a complaint filed in U.S. District Court for the District of Massachusetts, the SEC alleges that Family Endowment Partners LP and its owner, Lee Dana Weiss, of Newton, Massachusetts, urged their clients to invest more than $40 million in illiquid securities issued by several related companies without disclosing that Weiss had an ownership interest in the parent company of these entities and received payments from these entities.

In addition, the SE... Read More

SEC Charges UBS Puerto Rico and Two Individuals in Actions Relating to Former Broker’s Fraud

The Securities and Exchange Commission today charged UBS Financial Services Inc. of Puerto Rico and a former branch manager for failing to supervise a former broker who had customers invest in UBSPR affiliated mutual funds using money borrowed from a UBSPR affiliated bank.  UBSPR and the bank prohibited using such loans to purchase securities and the practice exposed investors to losses while producing profits for the former UBSPR broker, the SEC alleged.

UBSPR agreed to settle the SEC’s charges by paying $15 million in disgorgement, interest, and penalties, which will be placed into a fund for harmed investors.  The former branch officer, Ramiro L. Colon III, agreed to a settlement in which he will pay a $25,000 penalty and be suspended from a supervisory role for one yea... Read More

SEC to Hold Equity Market Structure Advisory Committee Meeting on October 27

The Securities and Exchange Commission today announced that its Equity Market Structure Advisory Committee will hold its second meeting on October 27, beginning at 9:30 a.m. ET.   The Commission established the advisory committee in February to provide a formal mechanism through which the Commission can receive advice and recommendations on equity market structure issues. 

The meeting will focus on two important market structure topics – Rule 610 of SEC Regulation NMS and the regulatory structure of trading venues. 

The committee will discuss the impact of the access fees and rebates that today are widely used by exchanges and other trading venues.  This fee structure generally provides rebates to those placing resting orders on the exchange and charges relatively... Read More

SEC Charges Trinity Capital Corporation and Former Bank Executives With Accounting Fraud

The Securities and Exchange Commission today announced that Trinity Capital Corporation and its wholly-owned subsidiary, Los Alamos National Bank, have agreed to pay $1.5 million to settle accounting fraud charges.

An SEC investigation found that Trinity materially misstated its provision for loan losses and its allowance for loan and lease losses in its quarterly and annual filings with the Commission during 2010, 2011, and the first two quarters of 2012.  Specifically, Trinity understated its reported 2011 net loss available to common shareholders by $30.5 million, reporting income of $4.9 million instead of a $25.6 million loss.

Five current or former executives also are charged in the case that involves fraudulent manipulation of the company’s financial result... Read More

Credit Suisse to Pay $4.25 Million and Admits to Providing Deficient “Blue Sheet” Trading Data

The Securities and Exchange Commission today charged Credit Suisse Securities (USA) LLC with submitting deficient information to the agency over a two-year period about trades done by its customers, commonly referred to as “blue sheet data.”

Credit Suisse Securities (USA) LLC, which is headquartered in New York, New York, agreed to settle the charges by paying a $4.25 million penalty and admitting it violated the recordkeeping and reporting provisions of the federal securities laws.  It also agreed to be censured and to cease and desist future violations of the books and records provisions of the federal securities laws.

According to the SEC’s order instituting settled administrative proceedings, broker-dealers like Credit Suisse are required upon request to elect... Read More