SEC Charges California-Based Bio-Rad Laboratories With FCPA Violations

The Securities and Exchange Commission today charged a clinical diagnostic and life science research company based in California with violating the Foreign Corrupt Practices Act (FCPA) when its subsidiaries made improper payments to foreign officials in Russia, Vietnam, and Thailand in order to win business.

An SEC investigation found that Bio-Rad Laboratories lacked sufficient internal controls to prevent or detect approximately $7.5 million in bribes that were paid during a five-year period and improperly recorded in books and records as legitimate expenses like commissions, advertising, and training fees.  The improper payments enabled Bio-Rad to earn $35 million in illicit profits.

Bio-Rad, which self-reported its misconduct and extensively c... Read More

SEC Announces Fraud Charges Against New York Businessman

The Securities and Exchange Commission today announced securities fraud charges accusing a New York businessman and his software company of making false statements to investors while raising more than $3 million to fund operations.

The SEC’s Enforcement Division alleges that Gregory Rorke falsely told investors that he possessed millions of dollars in liquid assets to personally guarantee their purchase of promissory notes issued by Navagate Inc., which claimed to create and sell computer software to help companies automate certain processes in sales and customer relations.  Rorke emphasized that he was an experienced businessman and former professor at Columbia Business School, and he signed and distributed a personal financial statement to investors.  However, v... Read More

SEC and FINRA Warn Investors About Penny Stock Scams Hyping Dormant Shell Companies

The Securities and Exchange Commission’s Office of Investor Education and Advocacy and the Financial Industry Regulatory Authority (FINRA) today issued an alert warning investors that some penny stocks being aggressively promoted as great investment opportunities may in fact be stocks of dormant shell companies with little to no business operations.

The investor alert provides tips to avoid pump-and-dump schemes in which fraudsters deliberately buy shares of very low-priced, thinly traded stocks and then spread false or misleading information to pump up the price.  The fraudsters then dump their shares, causing the prices to drop and leaving investors with worthless or nearly worthless shares of stock.

“Fraudsters continue to try to use dormant shell company scams... Read More

SEC Announces Charges Against Investment Advisory Firm and Top Officials for Custody Rule Violations

The Securities and Exchange Commission today announced charges against an investment advisory firm and three top officials for violating the “custody rule” that requires firms to follow certain procedures when they control or have access to client money or securities.

Advisory firms with custody of private fund assets can comply with the custody rule by distributing audited financial statements to fund investors within 120 days of the end of the fiscal year.  This provides investors with regular independent verification of their assets as a safeguard against misuse or theft.  The SEC’s Enforcement Division alleges that Sands Brothers Asset Management LLC has been repeatedly late in providing investors with audited financial statements of its private funds, and the... Read More

Steven Levine Named Associate Director for Investment Adviser/Investment Company Exam Program in Chicago

The Securities and Exchange Commission today announced that it has named Steven J. Levine as the Associate Director for the Investment Adviser/Investment Company examination program in its Chicago office.  He will oversee the IA/IC examination program in nine Midwestern states, with a staff of approximately 65 examiners, accountants, and attorneys.

Mr. Levine joined the investment adviser and investment company examination program in Chicago in 2010 and has served as one of its two acting Associate Directors since March 2013.  He started his SEC career in the Enforcement Division of the SEC’s Chicago office in 2000.  As a senior trial counsel, he played a significant role in the SEC’s fraud case against Lord Conrad Black for diverting assets from the public company parent ... Read More

SEC Charges Texas-Based Layne Christensen Company With FCPA Violations

The Securities and Exchange Commission today charged a global water management, construction, and drilling company headquartered in Texas with violating the Foreign Corrupt Practices Act (FCPA) by making improper payments to foreign officials in several African countries in order to obtain beneficial treatment and reduce its tax liability.

After Layne Christensen Company self-reported its misconduct, an SEC investigation determined that the company received approximately $3.9 million in unlawful benefits during a five-year period as a result of bribes typically paid through its subsidiaries in Africa and Australia.  Some payments were funded through cash transfers from Layne’s U.S. bank accounts.

In addition to self-reporting the misconduct, Layn... Read More

SEC Sanctions Florida-Based Auditor for Circumventing Rules

The Securities and Exchange Commission today sanctioned a Florida-based auditor for violating federal laws and regulations requiring lead audit partners to periodically rotate off their audit engagements with a publicly traded company in order to preserve the integrity of the financial reporting process. 

The lead partner primarily responsible for the audit of a public company is prohibited from performing lead audit partner services for the same issuer for more than five consecutive fiscal years.  The SEC finds that Elliot Berman attempted to circumvent this auditor rotation requirement.  For the audit of a company that he conducted for the previous five years, Berman installed as lead audit partner an employee at his firm who was not a certified public accountant nor oth... Read More

SEC Charges New Jersey Man in Insider Trading Case Involving Pharmaceutical Companies

The Securities and Exchange Commission today announced insider trading charges against a New Jersey man who generated nearly $700,000 in illicit profits trading in the securities of two pharmaceutical companies that were about to be acquired.  The SEC charged his source of nonpublic information earlier this month. The SEC alleges that David Post of Livingston, N.J., was tipped with confidential details about the impending deals by his former business school classmate who was tasked with evaluating potential acquisitions in his financial analyst job at a major pharmaceutical company.  Post and his friend, Zachary Zwerko, used prepaid “burner” cell phones to exchange coded text messages in advance of P... Read More

Rengan Rajaratnam Agrees to Settle Insider Trading Charges

The Securities and Exchange Commission today announced that former hedge fund manager Rajarengan “Rengan” Rajaratnam has agreed to pay more than $840,000 and accept securities industry bars in order to settle the agency’s insider trading case against him.

The SEC filed civil charges in March 2013 against Rengan Rajaratnam for his role in the widespread insider trading scheme conducted by his brother Raj Rajaratnam and hedge fund advisory firm Galleon Management.  The insider trading occurred in securities of more than 15 companies for illicit gains totaling nearly $100 million.  The SEC has now obtained court judgments or settlements in Galleon-related enforcement actions against ... Read More

Six Federal Agencies Jointly Approve Final Risk Retention Rule

Six federal agencies approved a final rule requiring sponsors of securitization transactions to retain risk in those transactions.  The final rule implements the risk retention requirements in the Dodd-Frank Wall Str... Read More

Office of Municipal Securities Director John Cross to Leave SEC

The Securities and Exchange Commission today announced that John J. Cross III, Director of the Office of Municipal Securities, will leave the agency in November.

Since September 2012, Mr. Cross has served as the first Director of the Office of Municipal Securities, which was established under the Dodd-Frank Act to oversee the municipal securities market.  The Office of Municipal Securities administers the Commission’s rules for the municipal securities market and oversees rulemaking by the Municipal Securities Rulemaking Board, a self-regulatory organization.  The Office of Municipal Securities also advises the Commission and other SEC offices on policy matters, enforcement, current market issues, and other issues affecting the municipal securities area, including municipa... Read More

SEC Names Marc Wyatt as Deputy Director of National Exam Program

The Securities and Exchange Commission today announced that Marc Wyatt has been named Deputy Director of the agency's Office of Compliance Inspections and Examinations (OCIE).

Mr. Wyatt joined the SEC in December 2012 as a senior specialized examiner focused on examinations of advisers to hedge funds and private equity funds.  He also is the national co-coordinator of OCIE’s Private Fund Specialized Working Group and recently participated in the creation of its Private Fund Examination Unit, whose attorneys, accountants, and examiners specialize in examinations of advisers to private funds.  

“During his time here, Marc has demonstrated exceptional drive, judgment, and knowledge of the industry,” said OCIE Director Andrew Bowden.  “He is a superb manager and commu... Read More