Barclays to Pay $97 Million for Overcharging Clients

The Securities and Exchange Commission today announced an enforcement action requiring Barclays Capital to refund advisory fees or mutual fund sales charges to clients who were overcharged.

In a settlement of more than $97 million, Barclays agreed to settle three sets of violations that resulted in clients being overbilled by nearly $50 million.  The SEC’s order finds that two Barclays advisory programs charged fees to more than 2,000 clients for due diligence and monitoring of certain third-party investment managers and investment strategies when in fact these services weren’t being performed as represented.  Barclays also collected excess mutual fund sales charges or fees from 63 brokerage clients by recommending more expensive share classes when less expensive share classe... Read More

William Hinman Named Director of Division of Corporation Finance

The Securities and Exchange Commission today announced that William H. Hinman will be named the new director of the agency’s Division of Corporation Finance.

Mr. Hinman recently retired as a partner in the Silicon Valley office of Simpson Thacher & Bartlett LLP, where he was a recognized leader in advising public and private companies in corporate finance matters.  He has advised a wide range of issuers and underwriters in capital-raising transactions and corporate acquisitions, including in the technology, e-commerce, health care, and biopharmaceutical areas. 

Mr. Hinman also is respected for his advice to public companies and their boards on public reporting, governance, and other corporate matters, and he has significant experience regarding derivatives, novel secu... Read More

SEC Charges Former Staffer With Securities Fraud Violations

The Securities and Exchange Commission today charged a former employee with securities fraud in connection with his trading of options and other securities.

The SEC’s complaint alleges that David R. Humphrey, who worked at the SEC from 1998 to 2014, concealed his personal trading from the SEC’s ethics office and later misrepresented his trading activities to the SEC’s Office of Inspector General when questioned during an investigation. 

“As alleged in our complaint, Humphrey never sought pre-clearance for his prohibited options trades and he filed forms that falsely represented his securities holdings,” said Gerald W. Hodgkins, Associate Director in the SEC’s Division of Enforcement. 

SEC employees are subject to rigorous rules regarding securities transaction... Read More

SEC Announces Agenda for May 10 Meeting of the Advisory Committee on Small and Emerging Companies

The Securities and Exchange Commission today announced the agenda for the May 10 meeting of its Advisory Committee on Small and Emerging Companies.  The committee will discuss the underwriting of small offerings and will receive updates from SEC staff about the tick size pilot program and from state securities regulators about their latest enforcement report.  The committee also will consider recommendations on secondary market liquidity for Regulation A, Tier 2 securities and the treatment of so-called “finders” that assist companies in capital raising activities. The May 10 meeting will begin at 9:00 a.m. in the multipurpose room at the SEC’s headquarters at 100 F Street, N.E., Washington, D.C., and is open to the public.  ... Read More

Jay Clayton Sworn in as Chairman of SEC

Jay Clayton was sworn into office this afternoon by U.S. Supreme Court Justice Anthony M. Kennedy as the 32nd Chairman of the Securities and Exchange Commission.

"It is a tremendous honor to lead the SEC and to be sworn in by Justice Kennedy, whom I greatly admire," said Chairman Clayton. "The work of the SEC is fundamental to growing the economy, creating jobs, and providing investors and entrepreneurs with a share of the American Dream. I would like to thank Acting Chairman Piwowar for his leadership, and I look forward to working with my fellow Commissioners and the talented SEC staff to ensure that our markets remain the safest and most vibrant markets in the world."

Mr. Clayton was nominated to chair the U.S. ... Read More

Firm, CEO Settle Charges in Ponzi-Like Scheme Involving Life Settlements

The Securities and Exchange Commission today announced that a New Jersey-based firm and its CEO have agreed to pay more than $4 million to settle charges that they used new investor money to repay earlier investors in Ponzi-like fashion and tapped investor funds for the CEO’s personal use.

According to the SEC’s complaint, Verto Capital Management and William Schantz III raised approximately $12.5 million selling promissory notes to purportedly fund Verto Capital’s purchase and sale of life settlements, which are life insurance policies sold in the secondary market.  The SEC alleges that they misrepresented to investors that Verto Capital was a profitable company and investor funds would be used for general working capital purposes.  Verto Capital and other Schantz businesses... Read More

SEC Staff Supplements Quarterly Private Funds Statistics

The U.S. Securities and Exchange Commission staff today published a suite of new data and analyses of private fund statistics and trends.

The Private Funds Statistics, released quarterly since October 2015 by the Division of Investment Management’s Risk and Examinations Office, offers investors and other market participants valuable insights by aggregating data reported by private fund advisers on Form ADV and Form PF.  New analyses include information about the use of financial and economic leverage by hedge funds, and characteristics of private liquidity funds.

“We believe publishing these statistics provides the public with more transparency into and understanding of the ... Read More

SEC, FINRA Announce National Compliance Outreach Program for Broker-Dealers

Cybersecurity, investing by seniors, and other regulatory topics of interest will be discussed when the Securities and Exchange Commission and Financial Industry Regulatory Authority (FINRA) hold their National Compliance Outreach Program for Broker-Dealers on July 27. Registration opened today for the program, which is designed to provide an open forum for regulators and industry professionals, including compliance, audit, and other senior personnel of broker-dealer firms and branch offices, to discuss current compliance practices and promote an effective compliance structure for the protection of investors. The SEC’s Office of Compliance Inspections and Examinations (OCIE) and FINRA sponsor the program in coordination with the SEC’s Division of Trading and Markets.  It will be h... Read More

Whistleblower Award of More Than Half-Million Dollars for Company Insider

The Securities and Exchange Commission today announced that a company insider has earned a whistleblower award of more than $500,000 for reporting information that prompted an SEC investigation into well-hidden misconduct that resulted in an SEC enforcement action.

“This company employee saw something wrong and did the right thing by reporting what turned out to be hard-to-detect violations of the securities laws,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower.  “Company insiders are in a unique position to provide specific information that allows us to better protect investors and the marketplace.  We encourage insiders with information to bring it to our attention.”

The whistleblower award is the second announced by the SEC in the past week.  App... Read More

SEC and NYU to Host Forum on Reviving IPO Market to Help Drive Economy, Create Jobs

Going public has helped many companies grow and create jobs, so why has the number of initial public offerings (IPOs) decreased in recent years? What are the consequences of this trend on investors? The U.S. Securities and Exchange Commission and New York University’s Salomon Center will tackle those questions next week in New York City.

The Commission’s Division of Economic and Risk Analysis (DERA) is partnering with NYU’s Salomon Center for the Study of Financial Institutions to bring together regulators, practitioners, and academics for a half-day symposium on May 10 at NYU. Panelists will take a look at data and explore the economic causes and consequences of the perceived weakness in the IPO market, and discuss ways to encourage more capital-raising through IPOs.

Semiconductor Company and Former CFO Settle Accounting Fraud Charges

The Securities and Exchange Commission today announced that a South Korea-based semiconductor manufacturer and its former CFO have agreed to settle charges related to an accounting scheme to artificially boost revenue and manipulate the financial results reported to investors.

The SEC’s order finds that MagnaChip Semiconductor Corp. overstated revenues for nearly two years in response to immense pressure placed on employees each quarter to meet revenue and gross margin targets that had been communicated to the public.  Then-CFO Margaret Sakai directed or approved several fraudulent accounting practices to make it falsely appear the company had met those targets.  For example, MagnaChip recognized revenue on sales of incomplete or unshipped products, and the company delayed bo... Read More

SEC Charges EB-5 Operator With Securities Fraud

The Securities and Exchange Commission today announced that an Idaho man has agreed to pay back several million dollars he siphoned away for personal use rather than investing it as promised to create U.S. jobs through the EB-5 Immigrant Investor Program.

The SEC alleges that Serofim Muroff raised more than $140.5 million in EB-5 offerings to Chinese investors through his companies Blackhawk Manager and ISR Capital for the intended purposes of acquiring and developing luxury real estate in McCall, Idaho, and investing in gold mining ventures in Idaho and Montana.  Muroff allegedly misappropriated more than $5 million in investor funds for such unrelated uses as an investment in a zip line operation as well as his purchase of two personal residences, a Range Rover, and a BMW.<... Read More