SEC Charges Investment Adviser With Defrauding Retired Teachers

The Securities and Exchange Commission today charged an investment adviser in Miami with siphoning money from his investment fund and defrauding investors, including several local teachers and law enforcement officers.

The SEC alleges that Phil Donnahue Williamson conducted a Ponzi scheme with money he raised for the Sterling Investment Fund, which purportedly invested in mortgages and properties in Florida and Georgia.  Many of Williamson’s investors were public sector retirees such as teachers and law enforcement officers who sought safe investments for their retirement savings.  Williamson assured investors there was no risk involved and they would receive annual returns of 8 to 12 percent.  But rather than invest their money as promised, he used the majority of fund as... Read More

Merrill Lynch Admits Using Inaccurate Data for Short Sale Orders, Agrees to $11 Million Settlement

The Securities and Exchange Commission today charged two Merrill Lynch entities with using inaccurate data in the course of executing short sale orders.  Merrill Lynch agreed to admit wrongdoing, pay nearly $11 million, and retain an independent compliance consultant in order to settle the charges.

According to the SEC’s order instituting a settled administrative proceeding, Merrill Lynch and other broker-dealers are routinely asked by customers to “locate” stock for short selling, and firms prepare easy-to-borrow (ETB) lists comprised of stocks they have deemed readily accessible for the purpose of granting locates.  At times during the course of a trading day, some securities that Merrill Lynch placed on its ETB list that morning became no longer easily availabl... Read More

SEC Charges Two Stock Promoters With Conducting Market Manipulation Schemes

The Securities and Exchange Commission today charged a pair of penny stock promoters in Canada with manipulating two microcap stocks to create the false appearance of market interest.

The SEC alleges that Mike Taxon and Itamar Cohen distributed promotional mailings of glossy “newsletters” with fake publication names like “Stock Trend Report” and “Global Investor Watch” in order to tout the stocks of purported gold and silver exploration company Raven Gold Corporation (RVNG) and natural gas production company Kentucky USA Energy (KYUS).  The newsletters misled investors with purportedly positive – but fake – price and volume trends for these stocks and other false information about the promoters’ identity, compensation, and control of the stock. In reality, most of... Read More

SEC Names Andrew J. Donohue as Chief of Staff

The Securities and Exchange Commission today announced that Andrew J. “Buddy” Donohue has been named the agency’s chief of staff.  Mr. Donohue will replace Lona Nallengara who will leave the agency in June.

As chief of staff, Mr. Donohue will be a senior adviser to the Chair on all policy, management, and regulatory issues.

“I am thrilled that Buddy will be returning to the SEC to provide his extensive knowledge and expertise to the agency,” said SEC Chair Mary Jo White.  “Buddy is a seasoned professional whose previous SEC and private sector experience will be invaluable in advancing all aspects of the agency’s mission.  His deep knowledge of asset management will be especially useful as the Commission advances its rulemaking agenda for addressing potential risks... Read More

SEC Announces Charges Against Compliance Director Accused of Defrauding Investors and Stealing Brokerage Firm Assets

The Securities and Exchange Commission today announced fraud charges against a Long Island man accused of fleecing investors and stealing money from a brokerage firm where he worked as the director of compliance.

The SEC’s Enforcement Division alleges that William Quigley was involved in a scheme to solicit investors to buy stock in well-known companies or supposed start-ups on the verge of going public, but the securities were never actually purchased for them.  Instead, after investors wired their funds to bank and brokerage accounts that Quigley set up and controlled, the money was quickly wired to a bank account in the Philippines or withdrawn in small increments from ATM machines in the vicinity of Quigley’s home and office.  Quigley allegedly worked in conce... Read More

SEC Announces Agenda for June 3 Meeting of the Advisory Committee on Small and Emerging Companies

The Securities and Exchange Commission today announced that the next meeting of its Advisory Committee on Small and Emerging Companies will focus on public company disclosure effectiveness, intrastate crowdfunding, venture exchanges, and treatment of “finders.”

“The agenda reflects the important scope of the advisory committee’s mandate,” said SEC Chair Mary Jo White.  “Topics I am particularly interested in are the advisory committee’s views on disclosure effectiveness and initiatives that will inform our capital formation efforts.”  

At its upcoming meeting on June 3, the advisory committee also is expected to vote on a recommendation to the Commission regarding the “Section 4(a)(1½) exemption” some... Read More

SEC Charges New York Lawyer and Two Promoters With Market Manipulation

The Securities and Exchange Commission today announced fraud charges against a securities lawyer who used his New York law office as the headquarters for planning and implementing market manipulation schemes.  Also charged are two stock promoters from Canada who assisted him.

The SEC alleges that Adam S. Gottbetter orchestrated promotional campaigns that touted the prospects of microcap companies and enticed investors to buy their stock at inflated prices so he and his cohorts could sell shares they controlled and reap massive profits.  Gottbetter enlisted Mitchell G. Adam and K. David Stevenson to help him in the last of three schemes he conducted in a six-year period.  They repeatedly cautioned each other about the dangers of missteps that might draw law enforce... Read More

SEC Charges Deutsche Bank With Misstating Financial Reports During Financial Crisis

The Securities and Exchange Commission today charged Deutsche Bank AG with filing misstated financial reports during the height of the financial crisis that failed to take into account a material risk for potential losses estimated to be in the billions of dollars.

Deutsche Bank agreed to pay a $55 million penalty to settle the charges.

An SEC investigation found that Deutsche Bank overvalued a portfolio of derivatives consisting of “Leveraged Super Senior” (LSS) trades through which the bank purchased protection against credit default losses.  Because the trades were leveraged, the collateral posted for these positions by the sellers was only a fraction (approximately 9 percent) of the $98 billion total in purchased protection.  This leverage cr... Read More

SEC Announces Charges Against Investment Firm and Two Executives Accused of Defrauding Police and Firefighter Pension Funds

The Securities and Exchange Commission today announced fraud charges against an Atlanta-based investment advisory firm and two executives accused of selling unsuitable investments to pension funds for the city’s police and firefighters, transit workers, and other employees.

The SEC’s Enforcement Division alleges that Gray Financial Group, its founder and president Laurence O. Gray, and its co-CEO Robert C. Hubbard IV breached their fiduciary duty by steering these public pension fund clients to invest in an alternative investment fund offered by the firm despite knowing the investments did not comply with state law.  Georgia law allows most public pension funds in the state to purchase alternative investment funds, but the investments are subject to certain restri... Read More

SEC Names Rebecca Olsen Deputy Director of Municipal Securities Office

The Securities and Exchange Commission today announced that Rebecca J. Olsen has been named deputy director in the agency’s Office of Municipal Securities, having served as chief counsel since April 2014.  Ms. Olsen replaces Jessica Kane who was announced as director of the office today.

In her new position, Ms. Olsen will continue to play a leading role in overseeing all aspects of the Office of Municipal Securities. 

“Rebecca’s extensive experience in municipal securities will be invaluable as she takes on this new leadership role,” said SEC Chair Mary Jo White.  “We will continue to rely on her very sound judgment and expertise in this important area.”

“I am honored to take on this new leadership position,” said Ms. Olsen.  “It is a privilege to work w... Read More

SEC Names Jessica Kane Director of Municipal Securities Office

The Securities and Exchange Commission today announced that Jessica Kane has been named the director of the agency’s Office of Municipal Securities, having served as deputy director since April 2014.  Ms. Kane replaces former director John Cross.

As deputy director, Ms. Kane oversaw all aspects of the office.  She played a leading role in the implementation and operation of the municipal advisor registration regime, including the issuance of staff interpretive guidance on certain aspects of the SEC’s final rules for municipal advisor registration.  Ms. Kane also led efforts in the oversight of Municipal Securities Rulemaking Board (MSRB) rulemaking, including the SEC’s approval of the MSRB’s best execution rule for the municipal securities market.  She previously served as... Read More

SEC Proposes Rules to Modernize and Enhance Information Reported by Investment Companies and Investment Advisers

The Securities and Exchange Commission today proposed rules, forms and amendments to modernize and enhance the reporting and disclosure of information by investment companies and investment advisers.  The new rules would enhance the quality of information available to investors and would allow the Commission to more effectively collect and use data provided by investment companies and investment advisers.

“These recommendations will vastly improve the type and format of the information that funds provide to the Commission and to investors,” said SEC Chair Mary Jo White.  “Investors will have better quality and greater access to information about their fund investments and investment advisers, and the SEC will have more and better information to monitor risks in th... Read More