SEC Announces Fraud Charges Against Two Executives in Scheme Involving Fake Occupants at Senior Residences

The Securities and Exchange Commission today announced fraud charges against two former top executives at a Wisconsin-based assisted living provider accused of listing fake occupants at some senior residences in order to meet the requirements of a lease to operate the facilities. The SEC Enforcement Division alleges that then-CEO Laurie Bebo and then-CFO John Buono devised a scheme involving false disclosures and manipulation of internal books and records when it appeared likely that their company Assisted Living Concepts Inc. (ALC) would default on financial promises known as covenants in a lease agreement with a Chicago-based real estate investment trust called Ventas Inc., which owned the facilities.  The financial covenants required ALC to maintain minimum occupancy rates and cov... Read More

SEC Charges California Resident With Fraudulent Sales of Stock

The Securities and Exchange Commission today charged the owner of several now-defunct investment entities with fraudulently selling shares of stock that he claimed to own when he had actually purchased them for others a few years before.

The SEC alleges that Vinay Kumar Nevatia, who used several aliases while living in Palo Alto, Calif., sold approximately $900,000 worth of stock he supposedly owned in a privately-held information technology company called CSS Corp. Technologies (Mauritius) Limited.  He deceived the buyers into believing that he owned the shares, orchestrated a series of secret wire transfers, and induced the stock transfer agent into recording his fraudulent sales.  He stole the money he received from investors for his own use.

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SEC Names Kevin Kelcourse as Associate Director for Exam Program in Boston

The Securities and Exchange Commission today announced that it has named Kevin M. Kelcourse as the associate director for the Office of Compliance Inspections and Examinations (OCIE) in Boston.  In that role, he will oversee the SEC’s exam program in six New England states with a staff of approximately 65 examiners, accountants and attorneys.

Mr. Kelcourse has spent 15 years in the SEC’s Boston office, starting as a senior counsel in the Enforcement Division in 1999 and later serving as a branch chief.  Since 2010, he has been an assistant regional director and an assistant director in the Enforcement Division’s Asset Management Unit, and he has worked with the exam program since 2011, serving on the office’s joint Enforcement Examination ... Read More

SEC Charges HSBC’s Swiss Private Banking Unit With Providing Unregistered Services to U.S. Clients

The Securities and Exchange Commission today charged HSBC’s Swiss-based private banking arm with violating federal securities laws by failing to register with the SEC before providing cross-border brokerage and investment advisory services to U.S. clients.

HSBC Private Bank (Suisse) agreed to admit wrongdoing and pay $12.5 million to settle the SEC’s charges.

“HSBC’s Swiss private banking unit illegally conducted advisory or brokerage business with U.S. customers,” said Andrew J. Ceresney, Director of the SEC’s Division of Enforcement.  “HSBC Private Bank’s efforts to prevent registration violations ultimately failed because their compliance initiatives were not effectively implemented or monit... Read More

SEC Charges Penny Stock Company Executives in New Jersey With Issuing False Press Releases to Inflate Stock Price

The Securities and Exchange Commission today charged father-and-son executives at a New Jersey-based penny stock company for issuing false and misleading press releases while secretly selling thousands of their own stock shares into the market.  They agreed to pay nearly $325,000 and accept officer-and-director bars to settle the SEC’s charges.

Conolog Corporation’s public filings state that it manufactures communications equipment primarily for use by electric utilities, fiber optic service providers, and the military.  The SEC alleges that Conolog issued three consecutive press releases in early 2010 with distorted information at the behest of chairman and then-CEO Robert Benou with assistance from his son and company president Marc Benou.&... Read More

SEC Charges CEO and Close Friend With Insider Trading Ahead of Company Sale

The Securities and Exchange Commission today announced insider trading charges against a then-CEO and a close friend he provided with confidential details about his New Jersey-based company’s nonpublic merger discussions that enabled the friend to make $164,260 in trading profits after it was sold to a private equity firm.

The SEC alleges that William E. Redmond Jr. frequently dined at a Manhattan restaurant managed by Stefano Signorastri, with whom he eventually became good friends and discussed personal matters as well as his work at GenTek Inc., an engineering and chemical company where he served on the board of directors in addition to being CEO.  GenTek’s nonpublic negotiations to find suitors for a company sale were among the topics that Red... Read More

Wedbush Securities and Two Officials Agree to Settle SEC Case

The Securities and Exchange Commission today announced that Los Angeles-based broker-dealer Wedbush Securities agreed to settle a pending SEC case for market access violations by admitting wrongdoing, paying a $2.44 million penalty, and retaining an independent consultant.

The SEC’s order finds that Wedbush violated the market access rule by failing to have adequate risk controls in place before providing customers with access to the market, including some customer firms with thousands of essentially anonymous overseas traders.  The order also finds that Wedbush committed other violations in connection with its market access business.

“Wedbush ac... Read More

SEC Suspends Trading in Companies Touting Operations Related to Prevention or Treatment of Ebola

The Securities and Exchange Commission today suspended trading in four companies that claim to be developing products or services in response to the Ebola outbreak, citing a lack of publicly available information about the companies’ operations.

The SEC simultaneously issued an investor alert warning about the potential for fraud in microcap companies purportedly involved in Ebola prevention, testing, or treatment, noting that scam artists often exploit the latest crisis in the news cycle to lure investors into supposedly promising investment opportuniti... Read More

SEC Announces Next Meeting of the Advisory Committee on Small and Emerging Companies

The Securities and Exchange Commission today announced that its Advisory Committee on Small and Emerging Companies will hold its next meeting on Wednesday, Dec. 17, beginning at 9:30 a.m. ET.  The committee will focus on the interests and priorities of emerging and smaller public companies. “Small and emerging companies contribute greatly to the strength of our nation’s economy,” said SEC Chair Mary Jo White.  “We welcome the valuable input of the Advisory Committee members who bring a wealth of expertise from across the small business community.” The co-chairs of the committee are Stephen M. Graham, Managing Partner in Fenwick & West LLP’s Seattle office, and M. Christine Jacobs, member of the board of directors of McKesson Corporation and former Chairman, CEO, and President ... Read More

SEC Adopts Rules to Improve Systems Compliance and Integrity

The Securities and Exchange Commission today voted to adopt new rules designed to strengthen the technology infrastructure of the U.S. securities markets.  The rules – together comprising Regulation Systems Compliance and Integrity (Regulation SCI) – impose requirements on certain key market participants intended to reduce the occurrence of systems issues and improve resiliency when systems problems do occur.

“The rules adopted today mark an historic shift in the Commission’s regulation of the U.S. securities markets that will better protect investors by requiring comprehensive new controls for the technological systems that form the core of our current markets,” said SEC Chair Mary Jo White.  “The rules provide greate... Read More

SEC Charges Unregistered Broker in Tampa Area With Stealing From Investors in Fraudulent Day Trading Scheme

The Securities and Exchange Commission today charged an unregistered broker living outside Tampa, Fla., with stealing investor funds as part of a fraudulent day trading scheme. The SEC alleges that Albert J. Scipione and his business partner solicited investors to establish accounts at their company called Traders Café for the purposes of day trading, which entails the rapid buying and selling of stocks throughout the day in hope that the stock values continue climbing or falling for the seconds to minutes they own them so they can lock in quick profits.  Scipione touted Traders Café’s software trading platform and made a series of false misrepresentations to investors about low commissions and fees, high trading leverage, and safety of their assets.  More than $500,000 was raised fr... Read More

SEC Staff Releases Accounting Bulletin to Update Guidance on Pushdown Accounting

The Securities and Exchange Commission’s Office of the Chief Accountant and Division of Corporation Finance today released a Staff Accounting Bulletin (SAB) to rescind portions of the interpretive guidance included in its SAB Series for what’s known as pushdown accounting. 

In order to reflect private sector developments in U.S. Generally Accepted Accounting Principles, the SEC’s Staff Accounting Bulletin No. 115 rescinds SAB Topic 5.J. entitled New Basis of Accounting Required in Certain Circumstances.  The new bulletin brings existing guidance into conformity with Accounting Standards Update No. 2014-17 – Business Combinations (Topic 805): Pushdown Accounting, a consensus of the FASB Emerging Issues Task Force,... Read More