SEC Charges Five With Insider Trading, Including Two Attorneys and an Accountant

The Securities and Exchange Commission today charged five Florida residents – including two lawyers and an accountant – with insider trading in advance of the acquisition of Pharmasset Inc. by Gilead Sciences Inc.

In a complaint filed in federal court in Newark, New Jersey, the SEC alleged that attorneys Robert L. Spallina and Donald R. Tescher and accountant Steven G. Rosen illegally traded on confidential information obtained from a mutual client who served on the board of directors of Princeton, New Jersey-based Pharmasset. 

According to the complaint, during a meeting on November 8, 2011, regarding year-end personal tax and estate planning, the Pharmasset board member and his advisers, including Spallina, Tescher, and Rosen, discussed the fact that the Pharmas... Read More

SEC Charges Hitachi With FCPA Violations

The Securities and Exchange Commission today charged Tokyo-based conglomerate Hitachi, Ltd. with violating the Foreign Corrupt Practices Act (FCPA) when it inaccurately recorded improper payments to South Africa’s ruling political party in connection with contracts to build two multi-billion dollar power plants.

Hitachi has agreed to pay $19 million to settle the SEC charges.

The SEC alleges that Hitachi sold a 25-percent stake in a South African subsidiary to a company serving as a front for the African National Congress (ANC).  This arrangement gave the front company and the ANC the ability to share in the profits from any power station contracts that Hitachi secured.  Hitachi was ultimately awarded two contracts to build power stations in South Africa and paid ... Read More

SEC Publishes Request for Comment on Regulation S-X

The Securities and Exchange Commission announced today that it is seeking public comment on the effectiveness of financial disclosure requirements in Regulation S-X.  The request for comment focuses on the requirements for the form and content of financial disclosures that companies must file with the Commission about acquired businesses, affiliated entities, and guarantors and issuers of guaranteed securities.  

“This is an important step in our review of the disclosure requirements that apply to public companies,” said SEC Chair Mary Jo White.  “We are interested in feedback from investors, companies, and other market participants to help us evaluate potential changes to Regulation S-X that would benefit both investors and companies.”

The request for comment is ... Read More

SEC Charges Former Officers of SMF Energy With Fraud

The Securities and Exchange Commission today announced financial fraud charges against four former SMF Energy Corp. officers, alleging that former CEO Richard E. Gathright, former chief financial officer Michael S. Shore, former chief accounting officer Laura P. Messenbaugh, and former senior vice president of sales and investor relations officer Robert W. Beard vastly inflated SMF’s revenues through a fraudulent billing scheme.

The SEC’s action, filed in U.S. District Court for the Southern District of Florida, alleges that SMF overbilled certain mobile fueling customers, including the U.S. Postal Service, by charging for fuel that was not delivered and adding surcharges that the customers’ contracts did not permit. As a result, the SEC alleges that Fort Lauderdale, Flori... Read More

SEC Proposes to Amend Rules Governing Administrative Proceedings

The Securities and Exchange Commission today announced it has voted to propose amendments to rules governing its administrative proceedings. “The proposed amendments seek to modernize our rules of practice for administrative proceedings, including provisions for additional time and prescribed discovery for the parties,” said SEC Chair Mary Jo White. The proposals include three primary changes to the Commission’s Rules of Practice that:

• Adjust the timing of administrative proceedings, including by extending the time before a hearing occurs in appropriate cases
• Permit parties to take depositions of witnesses as part of discovery
• Require parties in administrative proceedings to Read More

SEC Charges Six in Stock Fraud Scheme

The Securities and Exchange Commission today charged six men, including a father and three sons, with defrauding investors in Gerova Financial Group Ltd., whose shares once traded on the New York Stock Exchange. 

The SEC’s complaint, filed in U.S. District Court in Manhattan, charges John Galanis, his sons Jason Galanis, Derek Galanis, and Jared Galanis, along with Gerova president and chairman Gary T. Hirst and investment adviser Gavin Hamels.  John Galanis has been a defendant in numerous SEC enforcement actions dating back to the early 1970s and his son Jason Galanis was charged by the SEC in 2007.

According to the SEC’s complaint, in early 2010, Jason Galanis and Hirst orchestrated a scheme to secretly issue $72 million of unrestricted Gerova shares to a Galan... Read More

SEC Charges Individual and Firm for Manipulative Press Release Announcing Takeover Bid

The Securities and Exchange Commission today charged Michael A. Glickstein and his New York-based investment advisory firm with fraud based on a misleading press release announcing their offer to purchase a majority stake in retail bookseller Barnes & Noble.

According to the SEC’s order instituting a settled administrative proceeding, Glickstein and G Asset Management LLC issued a press release on Feb. 21, 2014 announcing that G Asset had offered to purchase a majority interest in Barnes & Noble for $22 per share.  In a matter of seconds after the announcement, Barnes & Noble’s stock price rose from $17.05 per share to $18.99 per share, causing the New York Stock Exchange to temporarily halt trading in the stock.

The SEC’s order found that G Asset’s pr... Read More

SEC Approves Renewal of Advisory Committee on Small and Emerging Companies

The Securities and Exchange Commission today announced it has approved the renewal of its Advisory Committee on Small and Emerging Companies, which will continue to focus on interests and priorities of small businesses and smaller public companies. 

“This committee plays an integral role in advising the Commission on the important issues that affect small businesses,” said SEC Chair Mary Jo White.  “Renewing the charter enables the Commission to continue to benefit from the committee’s expertise and advice.”

Since the committee was established in October 2011 and renewed in September 2013, it has provided recommendations to the Commission regarding rules, regulations, and policies as they relate to emerging companies with less than $250 million in public market ca... Read More

SEC Charges Consultant and Friend With Insider Trading in Advance of P.F. Chang’s Merger

The Securities and Exchange Commission today charged a consultant and his friend with insider trading in the options of P.F. Chang’s China Bistro based on nonpublic information about an impending acquisition offer.

The SEC alleges that Richard G. Condon, a consultant to Panda Restaurant Group, tipped Jonathan Ross with confidential details about the bidding process for P.F. Chang’s that he learned while providing executive coaching services to Panda’s top management executives.  Panda was involved in the bidding process, but did not ultimately make a tender offer for P.F. Chang’s.  According to the SEC’s complaint, Ross then purchased risky, out-of-the-money call options for P.F. Chang’s securities and tipped his friend Ali Sagheb so he could do the same.  Ross, Sagheb, an... Read More

SEC Charges Two Philadelphia Area Men For Defrauding Friends And Family In Private Equity Fund

The Securities and Exchange Commission today announced settled charges with two Philadelphia-area men and their investment advisory firm who allegedly defrauded investors in a private equity fund they managed.  Under the settlement, the respondents will owe approximately $6.8 million to the SEC.  The SEC intends to distribute collected money to harmed investors.

According to the SEC’s order instituting administrative proceedings, William B. Fretz, Jr. and John “Jack” P. Freeman orchestrated the fraud through their unregistered adviser, Covenant Capital Management Partners, L.P. and the private equity fund they managed, Covenant Partners, L.P.  Fretz and Freeman sold partnership interests in the fund to family and friends but rather than investing the money as promised, the... Read More

Lara Shalov Mehraban Named Associate Director for Enforcement in SEC’s New York Regional Office

The Securities and Exchange Commission today announced that Lara Shalov Mehraban has been named Associate Regional Director for Enforcement in the agency’s New York Regional Office. 

Ms. Mehraban has been an Assistant Regional Director in the New York office since 2012.  In her new role, she will help supervise a staff of approximately 185 attorneys, investigators, accountants, and paralegals in the New York office’s enforcement program.  Ms. Mehraban fills the position previously held by Amelia Cottrell, who left the agency in July.

“Lara has made outstanding contributions to the New York Regional Office and the enforcement division on a variety of challenging investigations and matters, displaying a keen intellect and strong judgment,” said Andrew J. Ceresney, D... Read More

SEC Charges Investment Adviser With Failing to Adopt Proper Cybersecurity Policies and Procedures Prior To Breach

The Securities and Exchange Commission today announced that a St. Louis-based investment adviser has agreed to settle charges that it failed to establish the required cybersecurity policies and procedures in advance of a breach that compromised the personally identifiable information (PII) of approximately 100,000 individuals, including thousands of the firm’s clients.  

The federal securities laws require registered investment advisers to adopt written policies and procedures reasonably designed to protect customer records and information.  An SEC investigation found that R.T. Jones Capital Equities Management violated this “safeguards rule” during a nearly four-year period when it failed to adopt any written policies and procedures to ensure the security and confidential... Read More