SEC Releases Archives - Page 72 of 86

SEC Files Charges in Snack Company Investment Scam

The Securities and Exchange Commission today charged three individuals who defrauded investors in a company that falsely claimed to be developing a caffeinated chocolate snack and nearing an acquisition by Monster Energy or Coca-Cola Co.

The SEC’s complaint alleges that Lisa Bershan and her husband, Barry Schwartz, together with business associate Joel Margulies, falsely promised investors that after being acquired, Starship Snack Corp. investors would get a one-to-one exchange of Starship shares for Monster or Coca-Cola shares. According to the SEC’s complaint, Bershan and Margulies also falsely claimed that investors had “no down-side risk” and Bershan personally guaranteed that investors could get their investment back with 5 percent interest if the shares failed to appreciate over a year.

According to the SEC’s complaint, Starship had no agreement with Monster Energy or Coca-Cola , and Bershan and Schwartz used investor funds as their own personal piggy bank, spending them to rent and decorate a New York City apartment, and on travel, meals, and other personal expenses.

“As alleged in our complaint, investors trusted Bershan, Schwartz, and Margulies, but that trust was misplaced,” said Lara S. Mehraban, Associate Regional Director of the SEC’s New York Regional Office. “The defendants constantly reassured their investors with lies, all the while taking their money and spending it on themselves.”

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against the three defendants.

The SEC’s complaint, filed in federal court in Manhattan, charges Bershan, Margulies, and Schwartz with violating antifraud provisions of the federal securities laws and a related SEC antifraud rule. The SEC is seeking to have the defendants return their allegedly ill-gotten gains plus interest, pay penalties, and be subject to permanent injunctions.

The SEC’s investigation was conducted by Cynthia A. Matthews, Kerri Palen and Thomas P. Smith Jr., and the litigation will be led by Ms. Matthews and Richard Hong. The case is being supervised by Ms. Mehraban. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York and the Federal Bureau of Investigation.

SEC Files Charges in Snack Company Investment Scam

The Securities and Exchange Commission today charged three individuals who defrauded investors in a company that falsely claimed to be developing a caffeinated chocolate snack and nearing an acquisition by Monster Energy or Coca-Cola Co.

The SEC’s com…

SEC Proposes Rules to Implement FAST Act Mandate to Modernize and Simplify Disclosure

The Securities and Exchange Commission today voted to propose amendments to modernize and simplify disclosure requirements for public companies, investment advisers, and investment companies and to implement a mandate under the Fixing America’s Surface Transportation (FAST) Act. The proposed amendments would make adjustments to update, streamline or otherwise improve the Commission’s disclosure framework.

“The FAST Act has given the Commission the opportunity to update our rules, simplify our forms, and utilize technology to make disclosure more accessible,” said SEC Chairman Jay Clayton. “An effective disclosure regime provides investors with the information necessary to make informed investment choices without imposing unnecessary burdens of time and money on issuers, and today’s action embodies that goal.”

The proposal reflects changes based on recommendations in the staff’s FAST Act Report and amendments developed as part of a broader review of the Commission’s disclosure system.

* * *

Fact Sheet

FAST Act Modernization and Simplification of Regulation S-K

SEC Open Meeting

October 11, 2017

Action

The Commission will consider whether to propose amendments to modernize and simplify certain disclosure requirements in Regulation S-K, and related rules and forms, in a manner that reduces the costs and burdens on registrants while continuing to provide all material information to investors. The amendments are also intended to improve the readability and navigability of disclosure documents and discourage repetition and disclosure of immaterial information.

Highlights

Among other things, the proposed amendments would:

Revise rules or forms to update, streamline or otherwise improve the Commission’s disclosure framework by eliminating the risk factor examples listed in the disclosure requirement and revising the description of property requirement to emphasize the materiality threshold;
Update rules to account for developments since their adoption or last amendment by eliminating certain requirements for undertakings in registration statements;
Simplify disclosure or the disclosure process, including proposed changes to exhibit filing requirements and the related process for confidential treatment requests and changes to Management’s Discussion and Analysis that would allow for flexibility in discussing historical periods; and
Incorporate technology to improve access to information by requiring data tagging for items on the cover page of certain filings and the use of hyperlinks for information that is incorporated by reference and available on EDGAR.

The proposal also includes parallel amendments to several rules and forms applicable to investment companies and investment advisers, including proposed amendments that would require certain investment company filings to include a hyperlink to each exhibit listed in the exhibit index of the filings and be submitted in HyperText Markup Language (HTML) format.

Background

As mandated by the FAST Act, in November 2016 the staff published a report on modernizing and simplifying the disclosure requirements in Regulation S-K. The report provided specific and detailed recommendations on modernizing and simplifying Regulation S-K in a manner that reduces costs and burdens on companies while still providing all material information. The FAST Act also requires that the Commission issue a proposal to implement the recommendations in the report.

What’s next?

If approved, the Commission will seek public comment on the proposed rules for 60 days.

SEC Proposes Rules to Implement FAST Act Mandate to Modernize and Simplify Disclosure

The Securities and Exchange Commission today voted to propose amendments to modernize and simplify disclosure requirements for public companies, investment advisers, and investment companies and to implement a mandate under the Fixing America’s Surface…

Walter Jospin, Regional Director of the SEC’s Atlanta Office, to Leave the Agency

The Securities and Exchange Commission today announced that Walter E. Jospin, Regional Director of the agency’s Atlanta office, is leaving the agency. Mr. Jospin will remain in his position until his successor is selected.

“Walter and I met many years ago and I was taken with his wisdom, expertise, and care. He has brought those and many other fine characteristics to the Commission,” said SEC Chairman Jay Clayton. “We all are grateful that Walter re-entered public service after a distinguished career in the private sector, and his contributions to the Atlanta office and the Commission have been exemplary.”

Since February 2015, Mr. Jospin has led a staff of approximately 100 attorneys, accountants, compliance examiners, and other specialists involved in compliance inspections and the investigation and prosecution of SEC enforcement actions in the Atlanta region. Under Mr. Jospin’s supervision, the Atlanta office brought charges involving investment advisers, financial and disclosure fraud, insider trading, and those targeting retail investors, including:

The investment services subsidiary of SunTrust Banks for collecting more than $1.1 million in fees from clients by improperly recommending more expensive mutual fund share classes when cheaper shares of the same funds were available
KPMG LLP and an engagement partner, who agreed to pay more than $6.2 million for failing to properly audit the financial statements of an oil-and-gas company charged with accounting fraud
Four Atlanta-area brokers for fraudulently inducing federal employees to roll over holdings in their federal Thrift Savings Plan (TSP) retirement accounts into higher-fee, variable annuity products
Certain unknown traders who used brokerage accounts in London and Singapore to reap more than $3.6 million in alleged illegal insider trading profits ahead of the announcement that Japan-based Softbank Group Corp. agreed to acquire Fortress Investment Group LLC
A Tennessee-based lawyer who served on the board of directors of Nashville-based Pinnacle Financial Partners for illegal insider trading in the shares of an acquisition target done while board members were meeting to discuss the acquisition
A Nashville, Tenn.-based investment advisory firm and its owner for scheming to collect extra monthly fees from a pair of hedge funds they managed
Fraud charges against 11 former executives and board members at Superior Bank and its holding company for scheming to conceal the extent of loan losses as the bank was faltering in the wake of the financial crisis

Also under Mr. Jospin’s watch, the Atlanta office’s exam staff has increased collaboration with enforcement and generated substantial referrals, including those that led to several of the actions referenced above.

“Walter has been an insightful and innovative leader of the Atlanta office, and the office and the Enforcement Division have benefited from his experience and sound judgment,” said Stephanie Avakian, Co-Director of the SEC’s Enforcement Division. “He has led the Atlanta office to great success, and he will be sorely missed.”

“Walter’s work to implement positive changes in Atlanta and across the national examination program will have lasting impact,” said Pete Driscoll, Acting Director of the Office of Compliance Inspections and Examinations. “It has been a privilege to work with Walter.”

Mr. Jospin added, “Serving as Director of the Atlanta Regional Office has been an extraordinary opportunity, second only to working as an SEC enforcement lawyer early in my career. Both experiences have given me the chance to work with smart, talented people committed to the Commission’s mission. The SEC is an outstanding agency, and I will miss my wonderful colleagues. It has indeed been an honor to lead the Atlanta office.”

Mr. Jospin joined the SEC from the law firm of Paul Hastings LLP, where he was a long-time partner in the Atlanta office with a practice focusing on securities enforcement, internal investigations, corporate transactions, and corporate governance. Mr. Jospin previously worked in the SEC Enforcement Division from 1980 to 1983 in the Atlanta office. He graduated from the Wharton School at the University of Pennsylvania and from the Emory University School of Law.

Walter Jospin, Regional Director of the SEC’s Atlanta Office, to Leave the Agency

The Securities and Exchange Commission today announced that Walter E. Jospin, Regional Director of the agency’s Atlanta office, is leaving the agency. Mr. Jospin will remain in his position until his successor is selected.

“Walter and I met many year…

Robert Evans III Named Chief of the Office of International Corporate Finance in SEC’s Division of Corporation Finance

The Securities and Exchange Commission today announced that Robert Evans III has been named Chief of the Office of International Corporate Finance in the agency’s Division of Corporation Finance. The office spearheads the division’s outreach to non-U.S. issuers that access the U.S. capital markets. Mr. Evans recently joined the Division of Corporation Finance after many years of advising public and private companies on a broad range of matters.

SEC Chairman Jay Clayton noted that “Rob’s appointment reflects the importance of facilitating capital formation in the United States for non-U.S. issuers and increasing investment opportunities for America’s investors.”

“I am pleased that Rob will focus his efforts at the agency on working with companies from outside the U.S. that are considering registering offerings in the U.S. and listing on U.S. stock exchanges,” Corporation Finance Division Director Bill Hinman said. “I look forward to working with him as we support Chairman Clayton’s goal of facilitating a broader range of investment opportunities for Main Street investors.

Mr. Evans said, “I thank Bill for this exciting opportunity and look forward to working with my colleagues in the Division on this effort to engage with companies and regulators around the world.”

Mr. Evans received his bachelor’s degree from Harvard College and law degree from Boston University School of Law, both cum laude.

Robert Evans III Named Chief of the Office of International Corporate Finance in SEC’s Division of Corporation Finance

The Securities and Exchange Commission today announced that Robert Evans III has been named Chief of the Office of International Corporate Finance in the agency’s Division of Corporation Finance. The office spearheads the division’s outreach to non-U….

Investment Adviser Charged in Multi-Million Dollar Options Trading Scheme

The Securities and Exchange Commission today charged a Westchester, New York-based investment adviser with fraud stemming from lies to retail investors about the value of their investments in a Ponzi-like scheme.

The SEC alleges that, starting in approximately 2010, Michael Scronic began to raise money from at least 42 friends and acquaintances, many of whom were from his suburban community, in order to invest in a risky options trading strategy. He allegedly lured investors by informing them that he had a long and impressive track record of proven returns. He also allegedly lied to investors about the liquidity of investments, telling one investor that “what’s cool about my fund is that i’m [sic] only in publicly traded options and cash so any redemptions are met within 2 business days so if you do need to withdraw for your business needs it will be quick and painless.” However, the SEC alleges that Scronic was actually hemorrhaging investor money through massive trading losses, with at least $15 million in investment losses since April 2010. For the period ending June 30, 2017, Scronic allegedly reported to investors total assets of at least $21,837,475 while the balance in his brokerage account on June 30, 2017 was just under $27,500.

According to the SEC’s complaint, when certain investors attempted to redeem their investments, Scronic did not disclose his inability to repay them. Rather, he allegedly provided investors with a steady stream of implausible excuses for why he could not pay them back. In other instances, Scronic sought to obtain additional investment funds from new and existing investors in order to satisfy redemption requests from other investors.

“Scronic’s alleged scheme is just another example of a so-called investment professional acting as fiduciary, but failing to deal honestly with his investors for his own financial benefit,” said Lara S. Mehraban, Associate Regional Director of the SEC’s New York Regional Office. “Investors should be wary anytime they are promised high or consistently positive returns in a complex, hard to understand investment strategy.”

The SEC also alleges that Scronic began identifying himself as an investment adviser to a fictitious hedge fund in which he purported to sell interests, or “shares.” The SEC encourages investors to check the backgrounds of people selling investments by using the SEC’s Investor.gov website to quickly identify whether they are registered professionals and confirm their identity.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Scronic.

The SEC’s complaint charges Scronic with violating Section 17(a) of the Securities Act of 1933, Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder, as well as Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The SEC seeks a permanent injunction, disgorgement, and penalties against Scronic.

The SEC’s investigation was conducted by Lindsay S. Moilanen, Daphne Downes, and Sheldon L. Pollock, and the case was supervised by Ms. Mehraban. The litigation will be led by Nancy A. Brown and Ms. Moilanen. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York and the Federal Bureau of Investigation.