SEC Sanctions Two Former Defense Contractor Employees for FCPA Violations

The Securities and Exchange Commission today sanctioned two former employees in the Dubai office of a U.S.-based defense contractor for violating the Foreign Corrupt Practices Act (FCPA) by taking government officials in Saudi Arabia on a “world tour” to help secure business for the company.  The two employees later falsified records in an attempt to hide their misconduct. Stephen Timms and Yasser Ramahi, who worked in sales at FLIR Systems Inc., agreed to settle the SEC’s charges and pay financial penalties.  The SEC’s investigation is continuing. “This case shows we will pursue employees of public companies who think it is acceptable to buy foreign officials’ loyalty with lavish gifts and travel,” said Andrew J. Ceresney, Director of the SEC Enforcement Division. “By making ille... Read More

SEC Charges Three Penny Stock Promoters Behind Pump-and-Dump Schemes

The Securities and Exchange Commission today charged three penny stock promoters with conducting pump-and-dump schemes involving stocks they were touting in their supposedly independent newsletters. The SEC alleges that Anthony Thompson, Jay Fung, and Eric Van Nguyen worked in coordinated fashion to gain control of a large portion of shares in the stock of microcap companies and then hyped those stocks in newsletters they distributed to prospective investors.  After creating demand for the stock and increasing the value, they sold their holdings at the higher prices and earned significant profits.  Once they stopped their promotional efforts, the demand for the stocks subsided and the prices dropped, leaving investors who had purchased the promoters’ shares with significant losses. ... Read More

SEC Charges San Francisco-Based Penny Stock Company CEO for Defrauding Investors in Pump-and-Dump Scheme

The Securities and Exchange Commission today charged a San Francisco-based penny stock company CEO with defrauding investors by issuing false and misleading press releases portraying his purported marketing and infomercial company as a successful venture in order to drive the stock price up while he covertly sold millions of shares into the public market for more than $300,000 in illicit profits.

According to the SEC’s complaint filed against Joseph A. Noel in federal district court in San Francisco, the deceptive press releases about his company YesDTC Holdings touted exclusive distribution rights, licensing agreements, and certain products purportedly certified by the government.  Noel’s promotional campaigns based on such false information caused a spike in Yes... Read More

SEC Charges Business Owner and Stockbroker in Maryland-Based Offering Fraud

The Securities and Exchange Commission today charged the owner of a Maryland-based real estate company with conducting an offering fraud and spending investor money on such personal expenses as his mortgage, country club dues, and season tickets to the Baltimore Ravens.  The agency also charged a former stockbroker for participating in the scheme.

The SEC alleges that Wilfred T. Azar III sold investors purported bonds in his company Empire Corporation, which he touted as a successful and profitable business with the resources to pay promised annual returns of 10 percent.  Along with Joseph A. Giordano, Azar and his company raised more than $7 million by making these and other false and misleading statements exaggerating the safety and low risk of the bonds.  Howev... Read More

SEC Announces Agenda and Panelists for Small Business Forum

The Securities and Exchange Commission today announced the agenda and panelists for next week’s Government-Business Forum on Small Business Capital Formation. The November 20 event will begin at 9 a.m. and include two morning panel discussions. The first panel will focus on secondary market liquidity for securities of small businesses. The second panel will focus on the accredited investor definition. In the afternoon session, breakout groups will develop recommendations on a variety of issues related to small business capital formation. The small business forum, held annually at the agency’s Washington D.C. headquarters at 100 F Street, NE, is open to the public and morning portion will be webcast live at ... Read More

SEC and SBA to Host Event on Small Business Capital Raising Prior to Small Business Forum

The Securities and Exchange Commission, in partnership with the U.S. Small Business Administration, today announced they will jointly host an event on November 19, a day prior to this year’s Government-Business Forum on Small Business Capital Formation, to inform small business owners and entrepreneurs about new options that are and will become available for capital raising under the Jumpstart Our Business Startups (JOBS) Act.

The event is designed for existing and aspiring small businesses, including those that are minority-owned, women-owned, and veteran-owned, and will discuss the JOBS Act, which expands the options that businesses may use to raise capital.  One change already in place gives firms the ability ... Read More

SEC Announces Charges Against India-Based Operators of High-Yield Investment Scheme Using Social Media

The Securities and Exchange Commission today announced charges against two India-based operators of an alleged high-yield investment scheme seeking to exploit investors through pervasive social media pitches on Facebook, YouTube, and Twitter. The SEC’s Enforcement Division alleges that Pankaj Srivastava and Nataraj Kavuri offered “guaranteed” daily profits as they anonymously solicited investments for their purported investment management company called Profits Paradise.  They invited investors to deposit funds that supposedly would be pooled with money from other investors and traded on foreign exchanges as well as in stocks and commodities.  They created a Profits Paradise website and related social media sites to describe the profits as “huge,” “lucrative,” and “handsome,” and the... Read More

SEC Charges California Lawyer and Two Massachusetts Men Behind Scheme to Manipulate Stock of Sports Ticket Broker

The Securities and Exchange Commission today charged an attorney in Orange County, Calif., and two men in Massachusetts behind a pump-and-dump scheme that defrauded investors in a Boston-based ticket brokering business.

The SEC alleges that Richard Weed, a partner in a Newport Beach law practice, facilitated a scheme to pump and dump the stock of CitySide Tickets Inc., which he helped structure into a publicly traded company through reverse mergers.  Weed created backdated promissory notes and authored false legal opinion letters that enabled Thomas Brazil and Coleman Flaherty to obtain millions of purportedly unrestricted shares of stock in the company.  Investors were then blitzed with a false and misleading promotional campaign touting CitySide Tickets as a bud... Read More

SEC Charges Allen Park, Mich. and Two Former City Leaders in Fraudulent Muni Bond Offering for Movie Studio Project

The Securities and Exchange Commission today announced fraud charges against the City of Allen Park, Mich., and two former city leaders in connection with a municipal bond offering to support a movie studio project within the city. An SEC investigation found that offering documents provided to investors during the Detroit suburb’s sale of $31 million in general obligation bonds contained false and misleading statements about the scope and viability of the movie studio project as well as Allen Park’s overall financial condition and its ability to service the bond debt. The city and the two officials – former mayor Gary Burtka and former city administrator Eric Waidelich – have agreed to settle the SEC’s charges. “Municipal bond disclosures must provide investors with an accurate... Read More

SEC Sanctions 10 Companies for Disclosure Failures Surrounding Financing Deals and Stock Dilution

The Securities and Exchange Commission today announced enforcement actions against 10 companies for failing to make the required disclosures about financing deals and other unregistered sales that diluted their stock.

Companies are required to file a Form 8-K to inform investors when shares of common stock are sold in transactions that are not registered with the SEC under the federal securities laws and constitute at least five percent of the total stock held by their shareholders.  Companies also must report when they’ve entered into a financing agreement not made in the ordinary course of business.  These disclosures enable investors to be aware that stock dilution has occurred as a company issues additional shares in a financing transaction or other unregister... Read More

SEC Charges Two Canadian Citizens With Penny Stock Fraud Involving Tennessee Coal Mining Company

The Securities and Exchange Commission today charged a pair of Canadian citizens with conducting an international microcap fraud scheme by stockpiling shares in a coal mining company and funding a multi-million dollar promotional campaign to hype the stock while simultaneously dumping their shares and routing the proceeds through offshore accounts. The SEC alleges that after Bruce D. Strebinger facilitated a reverse merger between shell company Americas Energy Company-AECo and a private start-up company in Knoxville, Tenn., he and Brent Howard Chapman each acquired substantial positions of more than 5 percent of the common stock without publicly disclosing their beneficial ownership stake as required under the federal securities laws.  Meanwhile, Strebinger and Chapman orchestrated a... Read More

SEC Sanctions 13 Firms for Improper Sales of Puerto Rico Junk Bonds

The Securities and Exchange Commission today sanctioned 13 firms for violating a rule primarily designed to protect retail investors in the municipal securities market.

All municipal bond offerings include a “minimum denomination” that establishes the smallest amount of the bonds that a dealer firm is allowed to sell an investor in a single transaction.  Municipal issuers often set high minimum denomination amounts for so-called “junk bonds” that have a higher default risk that may make the investments inappropriate for retail investors.  Because retail investors tend to purchase securities in smaller amounts, this minimum denomination standard helps ensure that dealer firms sell high-risk securities only to investors who are capable of making sizeable investments... Read More