SEC Issues Annual Staff Reports on Credit Rating Agencies

The Securities and Exchange Commission today issued its annual staff report on the findings of examinations of credit rating agencies registered as nationally recognized statistical rating organizations (NRSROs) and submitted a separate report on NRSROs to Congress. 

“These reports provide the most current and comprehensive picture of the credit rating industry,” said SEC Chair Mary Jo White.  “The SEC’s enhanced oversight of NRSROs, informed by risk assessment, regular examinations and policy considerations, provides increasingly robust and effective oversight of the industry, as reflected by overall improvements in compliance, documentation, and board oversight.”

The 2010 Dodd-Frank Act requires the SEC to examine each NRS... Read More

SEC Charges California-Based Stock Promoter With Defrauding Investors Seeking Pre-IPO Facebook and Twitter Shares

The Securities and Exchange Commission today charged a stock promoter based in Santa Barbara, Calif., with fraudulently raising nearly $3.5 million from investors purportedly to purchase Facebook and Twitter shares prior to their initial public offerings (IPOs).

The SEC alleges that instead of purchasing the shares in the secondary market as promised, Efstratios “Elias” Argyropoulos and his firm Prima Capital Group misappropriated investor funds.  They used the money primarily for day trading of stocks and options as well as to pay off certain investors who complained when they didn’t receive the promised Facebook or Twitter shares.

Argyropoulos agreed to settle the SEC’s charges and be barred from working for an inve... Read More

SEC Charges Two Traders in Chile With Insider Trading

The Securities and Exchange Commission today charged two business associates in Chile with insider trading on nonpublic information that one of them learned while serving on the board of directors of a pharmaceutical company.  The agency obtained a court order to freeze assets in the U.S. brokerage accounts used to conduct the trading.

The SEC alleges that Juan Cruz Bilbao Hormaeche exploited highly confidential information from CFR Pharmaceuticals S.A. board meetings at which a tender offer by Abbott Laboratories was discussed.  In a U.S. brokerage account of which he is the beneficiary, Bilbao caused the purchase of millions of dollars’ worth of American Depositary Shares (ADS) of CFR Pharmaceuticals on the basis of nonpublic information about pr... Read More

SEC Charges Corporate Attorney and Wife With Insider Trading on Client’s Confidential Information

The Securities and Exchange Commission today charged a California-based attorney and his wife with insider trading on confidential information obtained from a corporate client.

The SEC alleges that while serving as outside counsel to Spectrum Pharmaceuticals last year, Shivbir Grewal learned that the company was on the brink of announcing a significant decline in expected revenue due to an unanticipated drop in orders for its top-selling drug.  Grewal sold his entire investment in Spectrum stock within 48 hours of getting the nonpublic information from company officials who sought the disclosure advice of his law firm.  He tipped his wife Preetinder Grewal, who also sold all of her Spectrum shares on the basis of the nonpublic information.  The day ... Read More

SEC Charges Investment Manager F-Squared and Former CEO With Making False Performance Claims

The Securities and Exchange Commission today announced that investment management firm F-Squared Investments has agreed to pay $35 million and admit wrongdoing to settle charges that it defrauded investors through false performance advertising about its flagship product. The SEC separately charged the firm’s co-founder and former CEO Howard Present with making false and misleading statements to investors as the public face of F-Squared. According to the SEC’s order instituting a settled administrative proceeding against Massachusetts-based F-Squared, which is the largest marketer of index products using exchange-traded funds (ETFs), the firm began receiving signals from a third-party data provider in September 2008 indicating when to buy or sell an investment.  The signals were ba... Read More

SEC Proposes Amendments to Implement JOBS Act Mandate for Exchange Act Registration Requirements

As mandated by the Jumpstart Our Business Startups Act (JOBS Act), the Securities and Exchange Commission has approved the issuance of proposed amendments to revise the rules related to the thresholds for registration, termination of registration, and suspension of reporting under Section 12(g) of the Exchange Act. 

The Commission voted yesterday on a proposal that would implement the mandate of the JOBS Act by:

• Amending Exchange Act Rules 12g-1 through 4 and 12h-3 which govern the procedures relating to registration, termination of registration under Section 12(g), and suspension of reporting obligations under Section 15(d) to reflect the new thresholds established by the JOBS Act
• Revising the rules so that savings and loan holding compa... Read More

SEC Charges Staten Island-Based Firm With Operating Boiler Room Scheme Targeting Seniors

The Securities and Exchange Commission today charged a Staten Island, N.Y.-based firm, its former president, and two sales representatives involved in a fraudulent boiler room scheme targeting seniors to invest in speculative start-up companies.

The SEC alleges that Dwayne Malloy, Chris Damon, and Theirry Ruffin treated vulnerable older investors as their personal ATM machines.  They cold-called names from a list they maintained at Premier Links Inc. and used high-pressure sales tactics to convince seniors to invest in companies purportedly on the brink of conducting initial public offerings (IPOs).  They never disclosed to the investors that only a small fraction of the money would be transmitted to the promoted companies, and Premier Links diverted inv... Read More

SEC Names Deputy Directors in the Division of Trading and Markets

The Securities and Exchange Commission today announced that Gary Barnett and Gary Goldsholle have been named as deputy directors in the Division of Trading and Markets.

“I am pleased to announce these additions to our staff,” said Stephen Luparello, Director of the Division of Trading and Markets. “Each brings a wealth of experience that will help us execute our broad and important policy agenda.”

Mr. Barnett and Mr. Goldsholle succeed former deputy directors James Burns and John Ramsay who left the agency earlier this year.  Mr. Barnett will have responsibility for the Office of Broker-Dealer Finances and the Office of Derivatives Policy and Trading Practices.  Mr. Goldsholle will oversee the offices of the Chief Counsel, Clearan... Read More

SEC Charges Avon With FCPA Violations

The Securities and Exchange Commission today charged global beauty products company Avon Products Inc. with violating the Foreign Corrupt Practices Act (FCPA) by failing to put controls in place to detect and prevent payments and gifts to Chinese government officials from employees and consultants at a subsidiary.

Avon entities agreed to pay a total of $135 million to settle the SEC’s charges and a parallel case announced today by the U.S. Department of Justice and the U.S. Attorney’s Office for the Southern District of New York.

The SEC alleges that Avon’s subsidiary in China made $8 million worth of payments in cash, gifts, travel, and entertainment to gain access to Chinese officials implementing and overseeing direct selling... Read More

SEC Imposes Sanctions Against Hong Kong-Based Firm and Two Accountants for Audit Failures

The Securities and Exchange Commission today imposed sanctions against a Hong Kong-based audit firm and two accountants for failing to properly audit year-end financial statements of a company that the SEC has charged with fraud.

An SEC investigation found that Baker Tilly Hong Kong Limited, its director Andrew Ross, and its former director Helena Kwok ignored red flags surrounding approximately $59 million in related-party transactions reflected in internal accounting records of China North East Petroleum Holdings Limited but not adequately disclosed in year-end 2009 financial statements.  Baker Tilly and the two accountants failed to plan and implement an appropriate audit response to ... Read More

SEC Announces Charges in Alleged Gold Mining Investment Scheme

The Securities and Exchange Commission today announced charges against two individuals and their companies behind an alleged gold mining investment scheme based in Miami.

The SEC Enforcement Division alleges that Michael Crow and Alexandre Clug promised investors a stake in so-called “quick-to-production” gold mines that their company Aurum Mining LLC purported to own and operate in Brazil and Peru.  Crow, who had filed for personal bankruptcy, teamed up with Clug to raise approximately $3.9 million from seniors and other investors in Florida.  Despite highly optimistic statements that the gold mines would yield millions of dollars, the investors never received any money back from their investments.

According to an order ins... Read More

SEC Announces Charges Against Owner of Equity Research Firm Accused of Manipulative Trading

The Securities and Exchange Commission today announced charges against a Phoenix-based equity research firm owner who allegedly manipulated the market for a publicly traded stock he was soliciting investors to purchase.

The SEC Enforcement Division alleges that after a company hired his firm to assist in two private placement offerings, Paul Pollack repeatedly engaged in wash trading, which involves the simultaneous or near-simultaneous purchase and sale of a security to make it appear actively traded without an actual change in beneficial ownership of the stock.  According to the order instituting an administrative proceeding, Pollack conducted approximately 100 wash trades where the buy or sell orders came within 90 seconds of each other at prices and quantities that were... Read More