SEC Charges Former Software Executive With FCPA Violations

The Securities and Exchange Commission today announced that a former executive at a worldwide software manufacturer has agreed to settle charges that he violated the Foreign Corrupt Practices Act (FCPA) by bribing Panamanian government officials through an intermediary to procure software license sales.

An SEC investigation found that Vicente E. Garcia, the former vice president of global and strategic accounts for SAP SE, orchestrated a scheme to pay $145,000 in bribes to one government official and promised to pay two others in order to obtain four contracts to sell SAP software to the Panamanian government.  He essentially caused SAP, which is headquartered in Germany and executes most of its sales through a network of worldwide corporate partners, to sell software to a... Read More

SEC Charges ITG With Operating Secret Trading Desk and Misusing Dark Pool Subscriber Trading Information

The Securities and Exchange Commission today announced that ITG Inc. and its affiliate AlterNet Securities have agreed to pay $20.3 million to settle charges that they operated a secret trading desk and misused the confidential trading information of dark pool subscribers.

An SEC investigation found that despite telling the public that it was an “agency-only” broker whose interests don’t conflict with its customers, ITG operated an undisclosed proprietary trading desk known as “Project Omega” for more than a year.  While ITG claimed to protect the confidentiality of its dark pool subscribers’ trading information, during an eight-month period Project Omega accessed live feeds of order and execution information of its subscribers and used it to implement high-freque... Read More

SEC Charges 32 Defendants in Scheme to Trade on Hacked News Releases

The Securities and Exchange Commission today announced fraud charges against 32 defendants for taking part in a scheme to profit from stolen nonpublic information about corporate earnings announcements.  Those charged include two Ukrainian men who allegedly hacked into newswire services to obtain the information and 30 other defendants in and outside the U.S. who allegedly traded on it, generating more than $100 million in illegal profits.    

The SEC’s complaint unsealed today was filed under seal on August 10 in U.S. District Court in Newark, N.J., and the court entered an asset freeze and other preliminary relief that day.

“This international scheme is unprecedented in terms of the scope of the hacking, the number of traders, the number of securities traded and... Read More

Guggenheim Partners Investment Management LLC Settles Charges it Failed to Disclose Conflict to Clients

The Securities and Exchange Commission today announced that Guggenheim Partners Investment Management LLC has agreed to settle charges it breached its fiduciary duty by failing to disclose a $50 million loan that one of its senior executives received from an advisory client.   

Santa Monica, California-based Guggenheim, a subsidiary of global financial services firm Guggenheim Partners LLC, will pay $20 million to settle charges for the disclosure failure and other violations. 

According to the SEC’s order instituting a settled administrative proceeding, a senior Guggenheim executive obtained the loan in July 2010 so he could fund his personal investment in a corporate acquisition led by Guggenheim’s parent company.  In August 2010, Guggenheim invested certain of ... Read More

Miller Energy Resources, Former CFO, Current COO Charged With Accounting Fraud

The Securities and Exchange Commission today announced charges alleging that Miller Energy Resources Inc., its former chief financial officer, and its current chief operating officer inflated values of oil and gas properties, resulting in fraudulent financial reports for the Tennessee-based company.  The audit team leader at the company’s former independent auditor also was charged in the matter.

In an order instituting administrative proceedings, the SEC’s Division of Enforcement alleges that after acquiring oil and gas properties in Alaska in late 2009, Miller Energy overstated their value by more than $400 million, boosting the company’s net income and total assets.  The allegedly inflated valuation had a significant impact, turning a penny-stock company into one that e... Read More

SEC Adopts Rule for Pay Ratio Disclosure

The Securities and Exchange Commission today adopted a final rule that requires a public company to disclose the ratio of the compensation of its chief executive officer (CEO) to the median compensation of its employees.  The new rule, mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, provides companies with flexibility in calculating this pay ratio, and helps inform shareholders when voting on “say on pay.” 

“The Commission adopted a carefully calibrated pay ratio disclosure rule that carries out a statutory mandate,” said SEC Chair Mary Jo White.  “The rule provides companies with substantial flexibility in determining the pay ratio, while remaining true to the statutory requirements.”

The new rule will provide shareholders with informat... Read More

SEC Adopts Registration Rules for Security-Based Swap Dealers and Major Security-Based Swap Participants

The Securities and Exchange Commission today adopted new rules to provide a comprehensive, efficient process for security-based swap dealers and major security-based swap participants to register with the SEC.  The new rules mark a significant milestone in the SEC’s final implementation of Title VII of Dodd-Frank Wall Street Reform and Consumer Protection Act. 

“Today’s rules provide the Commission with the fundamental tool to supervise the business operations of dealers who occupy a critical role in the security-based swap market,” said SEC Chair Mary Jo White.  “These rules mark an important new phase in our implementation of a regulatory regime that protects investors and enhances the integrity of this market.”

The new rules address all aspects of the registrat... Read More

SEC Charges Houston-Area Businessman in Ponzi Scheme

The Securities and Exchange Commission today charged a Houston-area businessman with operating a $114 million Ponzi scheme that defrauded investors, some of whom were told that their money would fund technology to prevent accidents caused by drowsy driving.

The SEC’s case filed in federal court in Houston charged Frederick Alan Voight of Richmond, Texas with defrauding more than 300 investors in multiple offerings of promissory notes issued by two partnerships he owns, F.A. Voight & Associates LP and DayStar Funding LP.  While Voight’s latest offering promised investors returns as high as 42 percent a year from loans to small public companies, most of the funds went to pay earlier investors, the complaint alleges.  Approximately $22 million of Voight’s allegedly ill-go... Read More

SEC Charges Man With Microcap Fraud Involving Shares of Cynk Technology Corp.

The Securities and Exchange Commission today charged a Canadian citizen with conducting a scheme to conceal his control and ownership of a microcap company whose price quickly spiked last year.  The SEC suspended trading in the stock, Cynk Technology Corp., before the alleged schemer, Phillip Thomas Kueber, could profit on the gains from the stock’s rise to more than $21 from less than 10 cents per share.

The SEC alleges that Kueber was behind a false and misleading registration statement filed by Cynk and enlisted a small group of straw shareholders and sham CEOs to conceal his control of purportedly non-restricted shares in Cynk stock.  The complaint alleges that the straw shareholders – mainly Kuber’s family members and associates in British Columbia and California – ne... Read More

SEC Charges Operators of Fraud Based in Upstate New York

The Securities and Exchange Commission today charged two men and eight companies with defrauding investors, many of them upstate New York residents, who purchased the companies’ securities and so-called “charitable gift annuities.” 

According to the SEC’s complaint filed in U.S. district court in Syracuse, New York, the alleged scheme raised at least $8 million from 125 or more investors in shares and promissory notes issued by the companies over more than seven years, starting in 2007. 

The complaint names James P. Griffin, the founder and CEO of 54Freedom Inc., both of Cazenovia, New York, and James Wolle, 54Freedom’s Chief Financial Officer and Treasurer.  Six other Cazenovia, New York-based firms, 54Freedom Securities Inc., MoneyIns Inc., 54Freedom Foundation ... Read More

Daniel M. Hawke, Chief of Market Abuse Unit, to Leave SEC After 16 Years of Service

The Securities and Exchange Commission today announced that Daniel M. Hawke, chief of the Division of Enforcement’s Market Abuse Unit and former Director of the Philadelphia Regional Office, is leaving the agency after 16 years of service.  He will step down in August to return to the private sector. 

Mr. Hawke has headed the Market Abuse Unit since its inception in January 2010.  The unit, comprised of more than 60 attorneys and industry specialists in eight SEC offices, focuses on hard-to-detect insider trading activity, market structure violations, market manipulation, and other trading abuses.  Deputy Unit Chiefs Robert Cohen and Joseph Sansone will serve as co-acting Unit Chiefs follo... Read More

SEC Charges Mead Johnson Nutrition With FCPA Violations

The Securities and Exchange Commission today announced that Mead Johnson Nutrition Company has agreed to settle charges that its Chinese subsidiary made improper payments to health care professionals at government-owned hospitals to recommend the company’s infant formula to patients who were new or expectant mothers.  

Mead Johnson Nutrition agreed to pay $12 million to settle the SEC’s finding that it violated the Foreign Corrupt Practices Act (FCPA).    

An SEC investigation found that employees funded the improper payments through “distributor allowance” funds paid to third-party distributors who market, sell, and distribute the company’s products in China.  Although the funds contractually belonged to the distributors, employees exercised some control over how... Read More