SEC Publishes Request for Public Comment on Exchange-Traded Products

The Securities and Exchange Commission today announced that it is seeking public comment to help inform its review of the listing and trading of new, novel, or complex exchange-traded products (ETPs).  The request for comment addresses key issues that arise when exemptions are sought by a market participant to trade a new ETP or when a securities exchange seeks to establish standards for listing new ETPs.  Due to the expansion of ETP investment strategies in recent years that has led to a significant increase in the number and complexity of these requests, the Commission determined it would be beneficial to receive public input on these issues.

“Exchange-traded products have become an increasingly important investment vehicle to market participants ranging from individuals... Read More

SEC Charges Phony Hedge Fund Manager With Theft of Money Invested by Small Businesses

The Securities and Exchange Commission today announced fraud charges against a New Jersey man accused of posing as a hedge fund manager and defrauding small companies out of more than $4 million.

The SEC alleges that Nicholas Lattanzio falsely promised small businesses that he would arrange project financing for them and generate substantial returns on money they invested in his Black Diamond Capital Appreciation Fund.  He told them they could withdraw their money if the promised project financing didn’t materialize, and he claimed his fund had as much as $800 million under management and a proven track record of producing double-digit returns.

According to the SEC’s complaint filed in federal court in New Jersey, the fund never had more than app... Read More

SEC Charges Biotech Employee, Two Stockbrokers With Insider Trading on Nonpublic Information About Pharmaceutical Trials and Merger

The Securities and Exchange Commission today charged three men living in California with insider trading in the stock and options of a biotechnology company where one of them worked.

The SEC alleges that Michael J. Fefferman learned material nonpublic information as senior director of information technology at Ardea Biosciences Inc.  He tipped his brother-in-law Chad E. Wiegand in advance of major public announcements related to two pharmaceutical trials, a licensing agreement for a cancer drug, and eventually the acquisition of the company by AstraZeneca PLC.  Wiegand, a stockbroker, purchased Ardea stock in various customer accounts based on the confidential information he received from Fefferman, and he tipped his friend and fellow stockbroker Akis C. Eracleous... Read More

Trader to Pay $1 Million for Short Selling Violations

The Securities and Exchange Commission today announced that a trader residing in Canada has agreed to pay more than $1 million to settle charges that he shorted U.S. stocks in companies planning follow-on offerings and then illegally bought shares in the follow-on offerings to lock in significant profits with little to no market risk.

An SEC investigation found that Andrew L. Evans through his firm Maritime Asset Management violated an anti-manipulation provision of the federal securities laws known as Rule 105 on nearly a dozen occasions.  Rule 105 prohibits short selling an equity security during a restricted period (generally five business days before a public offering) and then purchasing that same security through the offering.  By purchasing lower-priced sha... Read More

Agencies Issue Final Standards for Assessing Diversity Policies and Practices of Regulated Entities

Federal agencies today issued a final interagency policy statement establishing joint standards for assessing the diversity policies and practices of the entities they regulate.

Section 342 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 required the Federal Reserve Board, the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Securities and Exchange Commission to establish an Office of Minority and Women Inclusion (OMWI) at each agency to be responsible for all matters relating to diversity in management, employment, and business activities.  The Dodd-Frank Act also instructed each OMWI director to develop standards for as... Read More

SEC Names Richard R. Best as Regional Director of Salt Lake Office

The Securities and Exchange Commission today named Richard R. Best as Regional Director of its Salt Lake office.  

He will succeed Karen Martinez, who is retiring from public service and leaving the agency at the end of this month.

Mr. Best joins the SEC from the Financial Industry Regulatory Authority (FINRA) in New York, where he is a senior director and chief counsel in its Department of Enforcement.  He supervises a team handling investigations and disciplinary hearings involving regulated entities and associated persons.  Mr. Best previously held other supervisory and investigative positions within FINRA’s Enforcement function. 

Before joining FINRA, Mr. Best spent approximately 10 years as a prosecutor in the Office of the... Read More

Daniel Gregus Named Associate Director for Broker-Dealer Exam Program in Chicago

The Securities and Exchange Commission today announced that it has named Daniel R. Gregus as the Associate Director for the broker-dealer examination program in its Chicago Regional Office.  

Mr. Gregus joined the SEC’s broker-dealer examination program in Chicago in February 2007 and has been its acting Associate Director since February 2014.  He began his SEC career in the Enforcement Division in Chicago in 1993 and was later named Assistant Regional Director for enforcement.  

While in the Enforcement Division, Mr. Gregus conducted and supervised more than 100 investigations into accounting fraud, insider trading, compliance violations, and other matters.  More recently, he led the Chicago Regional Office’s municipal advisor task force, which helped develop the... Read More

SEC Charges CSC and Former Executives With Accounting Fraud

The SEC filed complaints in federal court in Manhattan against former CSC finance executives Robert Sutcliffe, Edward Parker, and Chris Edwards, who are contesting the charges against them.  Sutcliffe was CSC’s finance director for its multi-billion dollar contract with the United Kingdom’s National Health Service (NHS).

Make Sure Your Firm is SEC Compliant

The SEC alleges that CSC’s accounting and disclosure fraud began after the company learned it would lose money on the NHS contract because it was unable to meet certain deadlines.  To avoid the large hit to its earnings that CSC was required to record, Sutcliffe allegedly added it... Read More

SEC Freezes Profits From Scheme to Manipulate Avon Stock

The Securities and Exchange Commission today announced an emergency asset freeze of two U.S. brokerage accounts connected to schemes to manipulate Avon and other stocks, thwarting any ability to cash in on ill-gotten proceeds.

According to an SEC complaint filed in federal court in Manhattan, the agency has tracked a filing on its EDGAR system last month about a false Avon tender offer to a foreign entity using an IP address located in Sofia, Bulgaria.  A Bulgarian trader named Nedko Nedev controlled at least one of the two now-frozen brokerage accounts, and his account held a substantial position in Avon contracts-for-difference (CFDs) that were losing value in recent months.  The SEC alleges that Nedev generated approximately $5,000 in excess profits by selling ... Read More

SEC Staff Provides Additional Analysis Related to Proposed Pay Ratio Disclosure Rules

The Securities and Exchange Commission staff today made available additional analysis related to its proposed rules for pay ratio disclosure.  The analysis by the Division of Economic and Risk Analysis (DERA) considers the potential effects of excluding different percentages of employees from the pay ratio calculation. 

The analysis is posted on the SEC’s website as part of the comment file for rules proposed by the Commission in September 2013 that would require the disclosure of the median of the annual total compensation of all employees of the issuer; the annual total compensation of the chief executive officer of the issuer; and the ratio of the median of the annual total compensation of all employees of the issuer to the annual total compensation of the chief executi... Read More

SEC Warns of Purported Financial Professionals Using False Credentials to Attract Investors

The Securities and Exchange Commission today warned investors to thoroughly check the claimed credentials of people soliciting their investments to ensure they are not falsifying, exaggerating, or hiding facts about their backgrounds.  The agency has brought several recent enforcement cases along these lines, including two actions announced today.

An investor alert issued by the SEC’s Office of Investor Education and Advocacy cautions, “Do not trust someone with your investment money just because he or she claims to have impressive credentials or experience, or manages to create a ‘buzz of success.’”  The alert notes that investors sometimes uninten... Read More

SEC Charges Four With Insider Trading Ahead of Secondary Offerings

The Securities and Exchange Commission today announced insider trading charges against four individuals stealing confidential information from investment banks and their public company clients in order to trade in advance of secondary stock offerings.  The scheme allegedly involved at least 15 stocks and generated more than $4.4 million in illegal trading profits.

The SEC alleges that a former day trader living in California, Steven Fishoff, schemed with two friends and his brother-in-law to pose as legitimate portfolio managers and induce investment bankers to bring them “over the wall” and share confidential information about an upcoming secondary offering.  After promising they wouldn’t disclose the nonpublic information to others or trade an issuer’s stock bef... Read More