Availability of Staff Analysis on Reporting and Dissemination of Security-Based Swap Information

The staff of the Securities and Exchange Commission today made available analyses of data on the reporting and dissemination of security-based swap transaction information. The analyses are posted on the SEC’s website as part of the comment file for rules proposed by the SEC in November 2010, and re-proposed in May 2013, on the reporting and dissemination of security-based swap transaction information.  The analyses were conducted by staff in the SEC’s Division of Economic and Risk Analysis and the Division of Trading and Markets and examine:

• The effect of the Commodity Futures Trading Commission’s mandated post-trade transparency in the index credit default swaps (CDS) market on total credit exposure, trading volume, and trade size in the index CDS market
• Re... Read More

SEC Charges Staten Island Man With Conducting Fraudulent Offerings and Stealing Investor Funds

The Securities and Exchange Commission today charged the operator of an online stock recommendation business with conducting several fraudulent securities offerings and siphoning some of the money raised from investors for a Caribbean vacation and plastic surgery. An SEC investigation found that Anthony Coronati, who lives on Staten Island, initially held himself out as an investment adviser to a hedge fund that he claimed would invest in equity securities.  But the hedge fund was fictitious and Coronati used investor money for other purposes.  When the money began drying up, he went on to defraud investors in additional schemes involving his New Jersey-based company Bidtoask LLC.  Coronati and Bidtoask sold membership interests in the company for the purpose of investing in promisin... Read More

SEC Announces Date for Annual Government-Business Forum on Small Business Capital Formation

The Securities and Exchange Commission today announced that it will hold its annual Government-Business Forum on Small Business Capital Formation at its Washington, D.C. headquarters on November 20. The morning session of the forum will feature panel discussions on the definition of an accredited investor and secondary market liquidity for securities of small businesses.  During the afternoon session, participants will work in groups to formulate specific policy recommendations. Information on the panel participants and the full agenda for the forum will be announced in November and available on the forum webpage. The forum, which begins at 9 a.m., is open to the public and will be webcast live on the SEC’s website.  ... Read More

SEC’s FY 2014 Enforcement Actions Span Securities Industry and Include First-Ever Cases

The Securities and Exchange Commission today announced that in fiscal year 2014, new investigative approaches and the innovative use of data and analytical tools contributed to a very strong year for enforcement marked by cases that spanned the securities industry.  

In the fiscal year that ended in September, the SEC filed a record 755 enforcement actions covering a wide range of misconduct, and obtained orders totaling $4.16 billion in disgorgement and penalties, according to preliminary figures.  In FY 2013, the Commission filed 686 enforcement actions and obtained orders totaling $3.4 billion in disgorgement and penalties.  In FY 2012, the Commission filed 734 enforcement actions and obtained orders totaling $3.1 billion in disgorgement and penalties.

... Read More

SEC Charges New York-Based High Frequency Trading Firm With Fraudulent Trading to Manipulate Closing Prices

The Securities and Exchange Commission today sanctioned a New York City-based high frequency trading firm for placing a large number of aggressive, rapid-fire trades in the final two seconds of almost every trading day during a six-month period to manipulate the closing prices of thousands of NASDAQ-listed stocks.  This marks the first high frequency trading manipulation case. An SEC investigation found that Athena Capital Research used an algorithm that was code-named Gravy to engage in a practice known as “marking the close” in which stocks are bought or sold near the close of trading to affect the closing price.  The massive volumes of Athena’s last-second trades allowed Athena to overwhelm the market’s available liquidity and artificially push the market price – and therefore the... Read More

SEC Announces Enforcement Action Against Former Wells Fargo Advisors Compliance Officer for Altering Document

The Securities and Exchange Commission today announced an enforcement action against a former Wells Fargo Advisors compliance officer who allegedly altered a document before it was provided to the SEC during an investigation.

According to the SEC’s order instituting an administrative proceeding against Judy K. Wolf, she was responsible for identifying potentially suspicious trading by Wells Fargo personnel or the firm’s customers and clients and then analyzing whether the trades may have been based on material nonpublic information.  Wolf created a document in September 2010 to summarize her review of a particular Wells Fargo broker’s trading, and she closed her review with no findings.  The SEC Enforcement Division alleges that Wolf altered that document in Decem... Read More

SEC Announces Insider Trading Charges Against Former Financial Analyst at Pharmaceutical Company

The Securities and Exchange Commission today announced insider trading charges against a Massachusetts man who allegedly tipped his friend with nonpublic information about potential acquisition targets of the pharmaceutical company where he worked.

The SEC alleges that Zachary Zwerko was tasked with evaluating potential acquisitions, and he repeatedly accessed confidential files about his employer’s acquisition targets and passed details onto a friend from business school so he could purchase securities prior to public announcements.  Zwerko accessed and shared information about a deal he was assigned to work on as well as a potential acquisition tasked to others.  The illegal tips enabled his friend to make approximately $683,000 in illicit profits. 

SEC Staff Issue Risk Alert and FAQs on Customer Sales of Securities

The Securities and Exchange Commission today announced publication of a Risk Alert and FAQs to remind broker-dealers of their obligations when they engage in unregistered transactions on behalf of their customers.  The publication of the staff guidance was accompanied by the announcement of an enforcement action against two firms for improperly selling billions of shares of penny stocks through such unregistered offerings.

The Risk Alert summarizes deficiencies that were discovered by the SEC’s Office of Compliance Inspections and Examinations (OCIE) during a targeted sweep of 22 bro... Read More

SEC Charges Current and Former E*TRADE Subsidiaries With Improperly Selling Penny Stocks Through Unregistered Offerings

The Securities and Exchange Commission today announced an enforcement action against current and former brokerage subsidiaries of E*TRADE Financial Corporation that failed in their gatekeeper roles and improperly engaged in unregistered sales of microcap stocks on behalf of their customers. An SEC investigation found that E*TRADE Securities and E*TRADE Capital Markets sold billions of penny stock shares for customers during a four-year period while ignoring red flags that the offerings were being conducted without an applicable exemption from the registration provisions of the federal securities laws.  E*TRADE Securities remains an E*TRADE subsidiary while E*TRADE Capital Markets was sold earlier this year and is now called G1 Execution Services. E*TRADE Securities and G1 Executio... Read More

SEC, FINRA and the MSRB to Hold Compliance Outreach Program for Municipal Advisors

The Securities and Exchange Commission, Financial Industry Regulatory Authority (FINRA), and the Municipal Securities Rulemaking Board (MSRB) today announced the opening of registration for the first Compliance Outreach Program for Municipal Advisors that will take place in Chicago on November 3. The SEC’s Office of Compliance Inspections and Examinations, in coordination with the SEC's Office of Municipal Securities, is partnering with FINRA and the MSRB to sponsor the program.  Similar to the compliance outreach programs for broker-dealers and investment advisers, the municipal advisor program will provide municipal advisor professionals a forum for discussions with regulators about risk management, regulatory issues, and compliance practices. “The municipal advisor program will... Read More

Fee Rate Advisory #2 for Fiscal Year 2015

When fiscal year 2015 starts on October 1, 2014, the Securities and Exchange Commission expects to be operating under a continuing resolution that will extend until December 11, 2014.  Accordingly, the fees paid under Section 31 of the Securities Exchange Act will remain at their current rate until 60 days after the enactment of a regular appropriation for the SEC. The SEC is required to publish a revised fee rate 30 days after enactment of the new fiscal year appropriation and the new rate takes effect 60 days after the appropriation is enacted.  Until then, the Section 31 fee rate will remain at the current rate of $22.10 per million for securities transactions and the assessment on round turn transactions in security futures will remain at $0.0042 per transaction. For questions... Read More

SEC Charges Two with Insider Trading on Pershing Square’s Announcement on Herbalife

The Securities and Exchange Commission today announced charges against two individuals for insider trading on a prominent hedge fund manager’s announcement that his hedge fund had formed a negative view of Herbalife Ltd. and taken a $1 billion short position in its securities. 

The SEC’s orders find that Filip Szymik of New York City and Jordan Peixoto of Toronto engaged in insider trading in Herbalife securities in advance of hedge fund manager William Ackman’s December 20, 2012 announcement of the views of his hedge fund, Pershing Square Management, L.P. 

According to the SEC’s orders, Szymik learned from his roommate, then a Pershing analyst, that Pershing planned to publicly announce its negative view of Herbalife.  Szymik tipped Peixoto, who purchased Herbali... Read More