SEC Announces Fraud Charges Against Purported Hedge Fund Manager

The Securities and Exchange Commission today charged a purported hedge fund manager in New York City with stealing money from his investors.

The SEC alleges that Moazzam “Mark” Malik falsely claimed to be operating a hedge fund with approximately $100 million in assets under management, and he solicited investors with promises of consistently high returns.  Although he raised $840,774 from investors, his fund never made real investments and never held more than $90,177 in assets as Malik continually withdrew the cash and spent it as his own.  Despite repeated demands from investors for the return of their money, Malik has flatly refused or delayed the bulk of their redemption requests.  He allegedly went so far as to create a fictitious ... Read More

Pamela C. Dyson Named SEC Chief Information Officer

The Securities and Exchange Commission today announced that Pamela C. Dyson has been appointed as the SEC’s Chief Information Officer (CIO) in charge of overseeing the agency’s information technology functions.

“Pam has been instrumental in our ongoing efforts to enhance the Commission’s information technology capabilities,” said SEC Chair Mary Jo White.  “I am confident she will provide the expertise, leadership, and vision necessary to further advance the Commission’s technology operations.

Ms. Dyson has served as Acting CIO since October 2014.  She has held key positions in the Office of Information Technology (OIT) since she came to the Commission in 2010, including Deputy CIO.

“Pam is a strong... Read More

SEC Announces Agenda, Panelists for Proxy Voting Roundtable

The Securities and Exchange Commission today announced the agenda and panelists for its February 19 roundtable on ways to improve the proxy voting process.

The roundtable, announced in January, will begin at 9:30 a.m. and will be divided into two panels.  Participants on the first panel will focus on the state of contested director elections and whether changes should be made to the federal proxy rules to facilitate the use of universal proxy ballots by management and proxy contestants.  Participants also will discuss the state law, logistical, and disclosure issues presented by a possible universal proxy ballot process. 

Participants on the second panel will focus on strat... Read More

SEC Charges Mutual Fund Adviser in Connection With Improper Handling of Fund Assets

The Securities and Exchange Commission today charged an investment adviser to several alternative mutual funds for maintaining millions of dollars of the funds’ cash collateral at broker-dealer counterparties instead of the funds’ custodial bank.  The violations were uncovered during an SEC examination of the firm and the funds it manages.

Water Island Capital LLC agreed to pay a $50,000 penalty to settle the SEC’s charges.

According to the SEC’s order instituting a settled administrative proceeding, an investment company that maintains its securities and similar investments in the custody of a qualified bank must likewise keep in the bank’s custody other cash assets of the investment company.  The SEC&rsqu... Read More

Heather Seidel Named Chief Counsel in SEC’s Division of Trading and Markets

The Securities and Exchange Commission today announced that Heather Seidel has been named Chief Counsel for the SEC’s Division of Trading and Markets.  Ms. Seidel, an Associate Director in the division’s Office of Market Supervision, will begin her new role immediately. 

The division’s Office of Chief Counsel provides legal and policy advice to the Commission on matters affecting broker-dealers and securities markets.  It also issues interpretations on matters arising under the Securities Exchange Act of 1934 and manages the division’s enforcement liaison functions.

“Heather brings a great deal of experience into her new position. Her participation in regulatory initiatives within Trading and Markets and the C... Read More

SEC Announces Charges Against Atlanta Man Accused of Insider Trading in Advance of Tender Offer

The Securities and Exchange Commission today announced charges against an Atlanta resident accused of insider trading in the stock of a technology company by exploiting nonpublic information he learned from the friend of a company executive.

The SEC’s Enforcement Division alleges that Charles L. Hill Jr. made approximately $740,000 in illicit profits by trading in Radiant Systems stock on the basis of confidential inside information about an impending tender offer by NCR Corporation to buy the company.  Hill was aware that his friend who shared this nonpublic information also was a friend of a Radiant Systems executive.  Hill purchased approximately 100,000 Radiant Systems shares that were valued at nearly $2.2 million on the last trading day befor... Read More

SEC Announces Half-Million Dollar Clawback from CFOs of Silicon Valley Company That Committed Accounting Fraud

The Securities and Exchange Commission today announced that two former CFOs have agreed to return nearly a half-million dollars in bonuses and stock sale profits they received while their Silicon Valley software company was committing accounting fraud.

According to the SEC’s order instituting a settled administrative proceeding, William Slater and Peter E. Williams III received $337,375 and $141,992 respectively during time periods when Saba Software presented materially false and misleading financial statements.  While not personally charged with the company’s misconduct, Slater and Williams are still required under Section 304 of the Sarbanes-Oxley Act to reimburse the company for bonuses and stock sale profits received while the fraud occurred.... Read More

SEC Charges Former Brokerage CEO for His Role in Fraudulent Scheme

The Securities and Exchange Commission today announced that the former CEO of a global investment services firm’s brokerage subsidiary agreed to pay more than $783,000 and admit wrongdoing to settle a case involving employees under his control misleading customers.

The SEC previously charged ConvergEx Group subsidiaries, which paid $107 million and admitted wrongdoing to settle the charges.  The SEC also charged two former employees in that enforcement action, and later separately filed a case against a different former ConvergEx subsidiary CEO that is pending in federal court.

... Read More

SEC Proposes Rules for Hedging Disclosure

The Securities and Exchange Commission today announced it has approved the issuance of proposed rules that would enhance corporate disclosure of company hedging policies for directors and employees, as mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act. 

The proposal would require disclosure about whether directors, officers and other employees are permitted to hedge or offset any decrease in the market value of equity securities granted by the company as compensation or held, directly or indirectly, by employees or directors.

“The proposed rules would provide investors with additional information about the governance practices of the companies in which they invest,” said SEC Chair Mary Jo White.  “Increasing tran... Read More

SEC Imposes Sanctions Against China-Based Members of Big Four Accounting Networks for Refusing to Produce Documents

The Securities and Exchange Commission today imposed sanctions against four China-based accounting firms that had refused to turn over documents related to investigations of potential fraud.  The China-based firms are members of large international networks associated with the “Big Four” accounting firms and registered with the Public Company Accounting Oversight Board (PCAOB).

As part of the settlement, the Commission censures the firms, which eventually began providing the documents, and requires them to perform specific steps to satisfy SEC requests for similar materials over the next four years.  Under the settlement, the firms each agreed to pay $500,000 and admit that they did not produce documents before the proceedings were instituted... Read More

SEC Charges Chicago-Area Alternative Energy Company for Accounting and Disclosure Violations

The Securities and Exchange Commission today charged a Chicago-area alternative energy company, its former CEO, and its CFO for accounting and disclosure violations that prevented investors from knowing that reduced business from two significant customers had caused substantial declines in the company’s long-term financial prospects.

The SEC alleges that senior management at Broadwind Energy anticipated substantial impairment of intangible assets associated with these customer relationships and privately shared this information with the company’s auditors, investment bankers, and lender.  Yet it wasn’t until several months later that Broadwind Energy finally recorded a $58 million impairment charge in its financial statements and disclosed it publicl... Read More

SEC Charges Four in California Insider Trading Ring

The Securities and Exchange Commission today charged a stock research analyst, a corporate insider, and two others involved in a California-based insider trading ring that generated nearly $750,000 in illegal profits by trading in advance of four corporate news announcements.

The SEC alleges that John Gray, then an analyst at Barclays Capital, and his friend Christian Keller traded on confidential merger information that Keller learned while working in finance at two Silicon Valley-based public companies.  Gray and Keller attempted to conceal the trades by placing them in a brokerage account held in the name of Gray’s friend Kyle Martin.  Gray also tipped a fourth participant, Aaron Shepard, with nonpublic information so he could trade in advance of some of... Read More