Rhea Dignam Named as Senior Counsel To OCIE Director

The Securities and Exchange Commission today announced that Rhea Kemble Dignam has been named as senior counsel to the director of the Office of Compliance Inspections and Examinations (OCIE). 

Ms. Dignam will begin her new position when her successor as the regional director of the SEC’s Atlanta Regional Office begins in that position later this fall.  Ms. Dignam joined the SEC as the Atlanta Regional Office director in March 2010. 

“Rhea is a proven and valued member of the Commission and the National Exam Program,” said Andrew J. Bowden, OCIE director.   “I am delighted that she has agreed to serve as senior counsel.” 

Ms. Dignam will focus on communicating examination findings to key stakeholders inside and outside the SEC in furtherance of OCIE’s mis... Read More

SEC Announces Arrival of New Administrative Law Judge

The Securities and Exchange Commission today announced that Jason S. Patil begins work at the agency this week as an Administrative Law Judge. Earlier this summer, the SEC announced the hiring of Administrative Law Judge James E. Grimes and three law clerks who along with Mr. Patil nearly double the staff of the Office of Administrative Law Judges, which received more than 200 assignments to conduct public hearings and issued 34 Initial Decisions in fiscal year 2013. Mr. Patil assumes his new role on September 22.  He began his legal career at the U.S. Department of Justice, where he worked from 1998 to mid-2012.  He started as an attorney in the Executive Office for Immigration Revie... Read More

Wells Fargo Advisors Admits Failing to Maintain Controls and Producing Altered Document, Agrees to Pay $5 Million Penalty

The Securities and Exchange Commission today charged Wells Fargo Advisors LLC with failing to maintain adequate controls to prevent one of its employees from insider trading based on a customer’s nonpublic information.  The SEC also charged Wells Fargo for unreasonably delaying its production of documents during the SEC’s investigation and providing an altered internal document related to a compliance review of the broker’s trading.

Wells Fargo, which admits wrongdoing, has agreed to pay a $5 million penalty to settle the SEC’s charges, which are the first-ever against a broker-dealer for failing to protect a customer’s material nonpublic information.

According to the SEC’s order instituting a settled administrative proceeding, Wells Fargo highli... Read More

SEC Announces Largest-Ever Whistleblower Award

The Securities and Exchange Commission today announced an expected award of more than $30 million to a whistleblower who provided key original information that led to a successful SEC enforcement action. 

The award will be the largest made by the SEC’s whistleblower program to date and the fourth award to a whistleblower living in a foreign country, demonstrating the program’s international reach.

“This whistleblower came to us with information about an ongoing fraud that would have been very difficult to detect,” said Andrew Ceresney, Director of the SEC’s Division of Enforcement.  “This record-breaking award sends a strong message about our commitment to whistleblowers and the value they bring to law enforcement.”

Sean McKessy... Read More

SEC Charges New York-Based Private Equity Fund Adviser With Misallocation Of Portfolio Company Expenses

The Securities and Exchange Commission today charged a New York-based investment advisory firm with breaching its fiduciary duty to a pair of private equity funds by sharing expenses between a company in one’s portfolio and a company in the other’s portfolio in a manner that improperly benefited one fund over the other.

An SEC investigation found that while Lincolnshire Management integrated the two portfolio companies and managed them as one, the funds were separately advised and had distinct sets of investors.  Despite developing an expense allocation policy as part of the integration, it was not followed on some occasions, resulting in the portfolio company owned by one fund paying more than its fair share of joint expenses that benefited the companies of both ... Read More

SEC Charges Brooklyn Man for Facilitating Insider Trading Scheme Via Post-It Notes at Grand Central Terminal

The Securities and Exchange Commission today charged a Brooklyn man with facilitating a $5.6 million insider trading scheme that typically involved the passing of illegal tips via napkins or post-it notes at Grand Central Terminal.

Earlier this year, the SEC charged a stockbroker and a law firm managing clerk with insider trading and alleged they were connected by a mutual friend who served as a “middleman” in an effort to keep the two unlinked.  In a separate complaint filed today in U.S. District Court for the District of New Jersey, the SEC identifies Frank Tamayo as that middleman.  The SEC alleges that Tamayo received material nonpublic information from Steven Metro about 13 ... Read More

Jim Burns, Deputy Director of Trading and Markets, to Leave SEC

The Securities and Exchange Commission today announced that James R. Burns, Deputy Director in the Division of Trading and Markets, will leave the agency in October.

Since 2012, Mr. Burns has overseen core regulatory functions within the division, including market supervision, analytics and research, derivatives policy and trading practices, and the chief counsel and enforcement liaison offices. 

“During his tenure at the Commission, Jim provided valuable leadership on important rulemaking and policy initiatives.  His unwavering commitment to the investing public and his commitment to promoting strong capital markets served the agency well,” said Chair Mary Jo White.

“Jim played an instrumental role in the Division of Trading an... Read More

SEC Charges Eight for Roles in Widespread Pump-and-Dump Scheme Involving California-Based Microcap Company

The Securities and Exchange Commission today charged a ring of eight individuals for their roles in an alleged pump-and-dump scheme involving a penny stock company based in California that has repeatedly changed its name and purported line of business over the past several years. The SEC alleges that the scheme was orchestrated by Izak Zirk de Maison, who was named Izak Zirk Engelbrecht before taking the surname of his wife Angelique de Maison.  Both de Maisons are charged by the SEC in the case along with others enlisted to buy, sell, or promote stock in the company now called Gepco Ltd.  Zirk de Maison installed some of these associates as officers and directors of Gepco while he secretly ran the company behind the scenes.  Collectively, they amassed large blocks of shares of Gepco... Read More

SEC Charges Tacoma, Wash.-Area Firm for Undisclosed Principal Transactions and Misleading Performance Advertisements

The Securities and Exchange Commission today charged an investment advisory firm located outside Tacoma, Wash., with engaging in hundreds of principal transactions through its affiliated broker-dealer without informing clients or obtaining their consent. 

Strategic Capital Group LLC, which is additionally charged with distributing false and misleading advertisements to investors, agreed to pay nearly $600,000 to settle the SEC’s charges.  The firm’s CEO N. Gary Price was charged with causing some of the firm’s violations, and agreed to pay a $50,000 penalty to settle the charges against him.

In a principal transaction, a firm acting for its own account or through an affiliated broker-dealer buys a security from a client account or sells a securit... Read More

Former Hedge Fund Manager in Bay Area Charged With Taking Excess Management Fees to Make Lavish Purchases

The Securities and Exchange Commission today announced charges against a former hedge fund manager accused of fraudulently taking excess management fees from the accounts of fund clients and using their money to remodel his multi-million dollar home and buy a Porsche.

An SEC Enforcement Division investigation found that Sean C. Cooper improperly withdrew more than $320,000 from a hedge fund he managed for San Francisco-based investment advisory firm WestEnd Capital Management LLC.  While WestEnd disclosed to clients the withdrawal of annual management fees of 1.5 percent of each investor’s capital account balance, Cooper actually withdrew amounts that far exceeded that percentage.  He then tra... Read More

SEC Charges N.Y.-Based High Frequency Trading Firm With Violating Net Capital Rule For Broker-Dealers

The Securities and Exchange Commission today charged a New York-based high frequency trading firm with violating the net capital rule that requires all broker-dealers to maintain minimum levels of net liquid assets or net capital.  The firm’s former chief operating officer is charged with causing the extensive violations.

An SEC investigation found that Latour Trading LLC operated without maintaining its required minimum net capital on 19 of 24 reporting dates during a two-year period, and the firm missed the mark by large amounts ranging from $2 million to $28 million.  During this period, Latour’s trading at times accounted for as much as 9 percent of the trading volume in equity securities for the entire U.S. market.  

To settle the SEC’s char... Read More

SEC Obtains Asset Freeze Against Company in Turks and Caicos Islands Behind South Florida-Based Ponzi Scheme

The Securities and Exchange Commission today announced an emergency asset freeze against a company located in Turks and Caicos Islands in connection with its operation of a South Florida-based Ponzi scheme.

The SEC’s request for the emergency asset freeze against Abatement Corp. Holding Company Limited was granted in the U.S. District Court for the Southern District of Florida last week.  The SEC’s complaint alleged that Abatement Corp. and its now-deceased principal Joseph Laurer – who commonly used the name Dr. Josef V. Laurer – falsely promised investors safe, guaranteed returns while engaging in an offering fraud and Ponzi scheme from November 2004 until Laurer’s death on May 15, 2014. 

The SEC’s complaint also names Laurer’s widow Brenda Dav... Read More