SEC Obtains Asset Freeze in Ponzi Scheme Involving Loans to Professional Athletes

The Securities and Exchange Commission today announced fraud charges against a former professional football player and others, alleging they operated a Ponzi scheme that raised more than $31 million from investors who were promised profits from loans to professional athletes.

The SEC’s complaint was unsealed late yesterday.  It was filed under seal in federal court in Boston on April 1, and the court entered an asset freeze and other preliminary relief that same day against the defendants.

According to the SEC’s complaint, former professional football player William ("Will") D. Allen and his business partner Susan C. Daub claimed to make loans to professional athletes who were short of cash.  Allen and Daub told investors that they could profit b... Read More

SEC Charges Firms and Individuals for Defrauding Investors in Cellular Licensing Scheme

The Securities and Exchange Commission today charged 12 companies and six individuals with defrauding investors in a scheme involving applications to the Federal Communications Commission (FCC) for cellular spectrum licenses.

According to the SEC’s complaint filed in federal district court in Arizona, David Alcorn and Kent Maerki orchestrated the offering fraud through Janus Spectrum LLC, a Glendale, Ariz.-based company they founded and managed.  Janus Spectrum held itself out as a service provider that prepares cellular spectrum license applications on behalf of third parties.  The complaint alleges that although Alcorn and Maerki had third parties offer and sell securities based on the licenses to investors, the... Read More

SEC Charges Friends With Insider Trading on Acquisition of Cooper Tire

The Securities and Exchange Commission today charged two longtime friends who illegally profited from insider trading on news of a proposed acquisition of Cooper Tire and Rubber Company by Apollo Tyres Ltd.

In a complaint filed in U.S. district court in Connecticut, the SEC filed fraud charges against Amit Kanodia, of Brookline, Massachusetts, an entrepreneur and private equity investor, and Iftikar Ahmed, of Greenwich, Connecticut, a general partner at a venture capital firm.  The SEC named Rakitfi Holdings LLC, a company owned by Ahmed, and Lincoln Charitable Foundation, a supposed charity operated by Kanodia, as relief defendants.  The SEC is seeking to have the defendants return their allegedly ill-gotten gains with interest and pay civil monetary penalties.

T... Read More

SEC Charges North Carolina Executive With Fraud

Bloomingdale, Ill.-based PCTEL Inc. acquired assets of TelWorx Communications LLC and three related telecommunications companies owned or controlled by Scronce for cash... Read More

SEC: Companies Cannot Stifle Whistleblowers in Confidentiality Agreements

The Securities and Exchange Commission today announced its first enforcement action against a company for using improperly restrictive language in confidentiality agreements with the potential to stifle the whistleblowing process.

The SEC charged Houston-based global technology and engineering firm KBR Inc. with violating whistleblower protection Rule 21F-17 enacted under the Dodd-Frank Act.  KBR required witnesses in certain internal investigations interviews to sign confidentiality statements with language warning that they could face discipline and even be fired if they discussed the matters with outside parties without the prior approval of KBR’s legal department.  Since these investigations included allegations of possible securities law violations, the SEC found that... Read More

SEC Charges Former Polycom CEO With Hiding Perks From Investors

The Securities and Exchange Commission today charged the former CEO of Silicon Valley-based technology firm Polycom Inc. with using nearly $200,000 in corporate funds for personal perks that were not disclosed to investors.

The SEC alleges that Andrew Miller created hundreds of false expense reports with bogus business descriptions for his personal use of company dollars to pay for meals, entertainment, and gifts.  Furthermore, he used Polycom funds to travel with his friends and girlfriend to luxurious international resorts while falsely claiming the trips were business-related site inspections in advance of company sales retreats.  Miller hid the costs by directing a travel agent to bury them in fake budget line items.  In 2012 alone, Miller charged Polycom for more than... Read More

SEC Announces Fraud Charges Against Investment Adviser Accused of Concealing Poor Performance of Fund Assets From Investors

The Securities and Exchange Commission today announced fraud charges against an investment adviser and her New York-based firms accused of hiding the poor performance of loan assets in three collateralized loan obligation (CLO) funds they manage.

The SEC’s Enforcement Division alleges that Lynn Tilton and her Patriarch Partners firms have breached their fiduciary duties and defrauded clients by failing to value assets using the methodology described to investors in offering documents for the CLO funds, which have portfolios comprised of loans to distressed companies.  Instead, nearly all valuations of loan assets have been reported to investors as unchanged from the time they were acquired despite many of the companies making partial or no interest payments to the... Read More

SEC Charges New York-Based Brokerage Firm With Faulty Underwriting of Public Offering by China-Based Company

The Securities and Exchange Commission today announced charges against a New York-based brokerage firm responsible for underwriting a public offering despite obtaining a due diligence report indicating that the China-based company’s offering materials contained false information.

Macquarie Capital (USA) Inc., a wholly owned subsidiary of global financial services firm Macquarie Group Limited, has agreed to settle the SEC’s charges by paying $15 million and separately covering the costs of setting up a Fair Fund to compensate investors who suffered losses after purchasing shares in the public offering by Puda Coal.  The SEC previously charged the Puda Coal executives behind the off... Read More

SEC Charges Nearly Two Dozen Unregistered Broker-Dealers

The Securities and Exchange Commission today charged nearly two dozen companies and individuals who regularly bought and sold securities on behalf of a suburban Chicago-based trading firm without registering with the SEC as a broker-dealer as required under the federal securities laws.

The broker-dealer registration provisions of the securities laws ensure the protection of customers by requiring firms to undergo periodic inspections by the SEC and maintain books and records for their securities transactions.  An SEC investigation found that Global Fixed Income LLC, which was primarily in the business of purchasing investment grade corporate bonds, entered into agreements with third parties that acted as unregistered broker-dealers on its behalf and bought billion... Read More

SEC Adopts Rules to Facilitate Smaller Companies’ Access to Capital

The Securities and Exchange Commission today adopted final rules to facilitate smaller companies’ access to capital.  The new rules provide investors with more investment choices.

The new rules update and expand Regulation A, an existing exemption from registration for smaller issuers of securities.  The rules are mandated by Title IV of the Jumpstart Our Business Startups (JOBS) Act. 

The updated exemption will enable smaller companies to offer and sell up to $50 million of securities in a 12-month period, subject to eligibility, disclosure and reporting requirements. 

“These new rules provide an effective, workable path to raising capital that also provides strong investor protections,” said SEC Chair Mary Jo White.  “It is im... Read More

SEC Proposes Rule to Require Broker-Dealers Active in Off-Exchange Market to Become Members of National Securities Association

The Securities and Exchange Commission today proposed rule amendments to require that broker-dealers trading in off-exchange venues become members of a national securities association.  The amendments would enhance regulatory oversight of active proprietary trading firms, such as high frequency traders.

“This proposal embodies a simple but powerful principle of the federal securities laws – the protection of investors and the stability of our markets require that trading is overseen by both the Commission and a strong self-regulatory organization,” said SEC Chair Mary Jo White.  “Today’s proposed rules would close a regulatory gap by extending oversight to a significant portion of off-exchange trading.”

The proposed amendments to Rule 15b9-1 unde... Read More

Corporate Insiders Charged for Failing to Update Disclosures Involving “Going Private” Transactions

The Securities and Exchange Commission today charged eight officers, directors, or major shareholders for failing to update their stock ownership disclosures to reflect material changes, including steps to take the companies private.  Each of the respondents, without admitting or denying the SEC’s allegations, agreed to settle the proceedings by paying a financial penalty. 

The charges involve outdated disclosures in reports filed by “beneficial owners” who hold more than 5 percent of a company’s stock.  Federal securities laws require beneficial owners to promptly file an amendment when there is a material change in the facts previously reported by them on Schedule 13D, commonly referred to as a “beneficial ownership report.” The disclosure requirements include plans or p... Read More