SEC Releases Archives - Page 73 of 86

SEC Charges Penny-Stock Operators in Push to Crack Down on Repeat Offenders

The Securities and Exchange Commission today charged two individuals with defrauding investors in penny stock companies that claimed to have valuable patents. One of those charged had been barred from the penny stock business based on his role in another securities scheme and neither he nor his companies had ever been issued any patents by the U.S. Patent and Trademark Office, the SEC alleged.

The SEC’s complaint, filed in U.S. District Court for the Southern District of Florida, charged Rockey “Roc” G. Hatfield, of Safety Harbor, Florida, Steve E. Lovern, of Atlanta, Belize-based N1 Technologies Inc., and Wyoming-based NanoSave Technologies Inc. Hatfield is a repeat offender whose prior securities schemes resulted in a criminal conviction, injunctions, a contempt of court finding, and broker-dealer, investment adviser, and penny-stock bars. The SEC’s complaint alleges Hatfield controlled the two companies but concealed his role in them by having his wife and Lovern named as corporate officers and directors.

The U.S. Attorney’s Office for the Southern District of Florida today filed related criminal charges against Hatfield, Lovern, and others, and the SEC announced a trading suspension in NanoSave Technologies (NNSV).

According to the SEC’s complaint, the defendants hired unregistered brokers to cold call investors and pitch investments in “patent units,” using scripts written by Hatfield, including one that falsely claimed N1 Technologies had patented a cure for staph infections. Investors were told that purchasing an $80,000 unit could yield as much as $1 million based on sales of similar patents, the SEC alleged. The SEC alleged that although investors were told that their money would help fund further research and development, the defendants used most of it for personal expenditures and to pay sales commissions of up to 40 percent.

“As alleged in our complaint, Hatfield is a recidivist who fraudulently raised money by selling investors interests in non-existent patents,” said Eric I. Bustillo, Director of the SEC’s Miami Regional Office. “This action is part of the Miami Regional Office’s Recidivist Initiative and the Commission’s efforts to pursue recidivist violators and hold them accountable.”

The SEC is seeking return of the defendants’ allegedly ill-gotten gains, with interest, a civil monetary penalty, a court injunction, and other relief.

The SEC’s investigation, which is continuing, is being conducted by Jordan A. Cortez and Mark Dee in the Miami Regional Office. The case is being supervised by Eric. R. Busto and the SEC’s litigation is being led by Alejandro Soto. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of Florida, the Federal Bureau of Investigation’s Miami Field Office, and the Financial Industry Regulatory Authority.

SEC Charges Penny-Stock Operators in Push to Crack Down on Repeat Offenders

The Securities and Exchange Commission today charged two individuals with defrauding investors in penny stock companies that claimed to have valuable patents. One of those charged had been barred from the penny stock business based on his role in anot…

World Investor Week Brings Together Securities Regulators on Six Continents to Promote Investor Education and Protection

The Securities and Exchange Commission, along with the U.S. Commodity Futures Trading Commission (CFTC) and the Financial Industry Regulatory Authority (FINRA), is leading efforts in the U.S. to raise awareness about the importance of investor education and protection as part of a global effort. World Investor Week, promoted by the International Organization of Securities Commissions (IOSCO), takes place October 2-8, 2017, marking the first time securities regulators on six continents are joining together to highlight what it means to be a smart investor as well as ways to avoid fraud.

During World Investor Week, SEC staff is participating in events around the country amplifying vital messages to investors, such as:

Going to Investor.gov before investing
Doing a background check on an investment professional
Conducting research on products before investing
Knowing the risks and fees associated with all investments
Recognizing the importance of diversification and the power of compound interest
Setting investment goals
Learning how to avoid fraud

In addition, the SEC’s Office of Investor Education and Advocacy today issued a joint investor bulletin with the CFTC, FINRA, and the North American Securities Administrators Association (NASAA) to promote these key messages.

“The best way to protect Main Street investors from becoming victims of fraud is to educate them. We want investors to ask smart questions. It’s good for them and it’s good for our markets,” said SEC Chairman Jay Clayton. “The SEC remains committed to helping all Americans reach their investment goals and protect their hard-earned money, and that’s why events like World Investor Week and the continued efforts of the Office of Investor Education and Advocacy are instrumental to the mission of this agency.”

“I see first-hand the positive impact of our investor education efforts, whether it’s our outreach team conducting in-person events, online resources on Investor.gov and public service campaigns or our assistance team that handles investor complaints and solves problems on a daily basis,” said Lori Schock, Director of the SEC’s Office of Investor Education and Advocacy. “This week-long global effort reinforces the importance of what we and others do every day on behalf of America’s investors.”

SEC staff outreach events include: an information session with seniors answering questions on investing, retirement and ways to protect against fraud, a Twitter chat about the various issues surrounding investing with robo-advisers, a Thrift Savings Plan (TSP) program for federal employees covering TSP distribution options, withdrawals, fees and how to avoid scams, and numerous saving and investing presentations for students and military service members.

For a list of other SEC outreach activities or to learn more about this global effort to promote investor education and protection and how investors can get involved, visit Investor.gov.

World Investor Week Brings Together Securities Regulators on Six Continents to Promote Investor Education and Protection

The Securities and Exchange Commission, along with the U.S. Commodity Futures Trading Commission (CFTC) and the Financial Industry Regulatory Authority (FINRA), is leading efforts in the U.S. to raise awareness about the importance of investor education and protection as part of a global effort. World Investor Week, promoted by the International Organization of Securities Commissions (IOSCO), takes place October 2-8, 2017, marking the first time securities regulators on six continents are joining together to highlight what it means to be a smart investor as well as ways to avoid fraud.

During World Investor Week, SEC staff is participating in events around the country amplifying vital messages to investors, such as:

Going to Investor.gov before investing
Doing a background check on an investment professional
Conducting research on products before investing
Knowing the risks and fees associated with all investments
Recognizing the importance of diversification and the power of compound interest
Setting investment goals
Learning how to avoid fraud

In addition, the SEC’s Office of Investor Education and Advocacy today issued a joint investor bulletin with the CFTC, FINRA, and the North American Securities Administrators Association (NASAA) to promote these key messages.

“The best way to protect Main Street investors from becoming victims of fraud is to educate them. We want investors to ask smart questions. It’s good for them and it’s good for our markets,” said SEC Chairman Jay Clayton. “The SEC remains committed to helping all Americans reach their investment goals and protect their hard-earned money, and that’s why events like World Investor Week and the continued efforts of the Office of Investor Education and Advocacy are instrumental to the mission of this agency.”

“I see first-hand the positive impact of our investor education efforts, whether it’s our outreach team conducting in-person events, online resources on Investor.gov and public service campaigns or our assistance team that handles investor complaints and solves problems on a daily basis,” said Lori Schock, Director of the SEC’s Office of Investor Education and Advocacy. “This week-long global effort reinforces the importance of what we and others do every day on behalf of America’s investors.”

SEC staff outreach events include: an information session with seniors answering questions on investing, retirement and ways to protect against fraud, a Twitter chat about the various issues surrounding investing with robo-advisers, a Thrift Savings Plan (TSP) program for federal employees covering TSP distribution options, withdrawals, fees and how to avoid scams, and numerous saving and investing presentations for students and military service members.

For a list of other SEC outreach activities or to learn more about this global effort to promote investor education and protection and how investors can get involved, visit Investor.gov.

World Investor Week Brings Together Securities Regulators on Six Continents to Promote Investor Education and Protection

The Securities and Exchange Commission, along with the U.S. Commodity Futures Trading Commission (CFTC) and the Financial Industry Regulatory Authority (FINRA), is leading efforts in the U.S. to raise awareness about the importance of investor educatio…

Chairman Clayton Provides Update on Review of 2016 Cyber Intrusion Involving EDGAR System

SEC Chairman Jay Clayton today provided an update on the status of the agency’s review and investigation of the 2016 intrusion into the EDGAR system. In addition to updating previous disclosures, today’s announcement also includes additional information on the agency’s efforts to strengthen its cybersecurity risk profile going forward.

The ongoing staff investigation of the 2016 intrusion has now determined that an EDGAR test filing accessed by third parties as a result of that intrusion contained the names, dates of birth and social security numbers of two individuals. This determination is based on forensic data analysis conducted since the agency’s Sept. 20th disclosure of the intrusion which relied on the latest information available at that time.

Chairman Clayton was informed by staff of this new information this past Friday, and staff are reaching out to the two individuals to notify them and offer to provide them with identity theft protection and monitoring services. Should the agency’s review uncover additional such individuals whose sensitive information may have been accessed, the staff will contact them and offer them identity protection and monitoring as well.

“The 2016 intrusion and its ramifications concern me deeply. I am focused on getting to the bottom of the matter and, importantly, lifting our cybersecurity efforts moving forward,” said Chairman Clayton. “While our review and remediation efforts are ongoing and may take substantial time to complete, I believe it is important to provide new information regarding the scope of the 2016 intrusion and provide an update on the steps we are taking to assess and improve the cybersecurity risk profile of our EDGAR system and of the agency’s systems more broadly.”

The agency’s efforts going forward are organized into five principal work streams:

1) The review of the 2016 EDGAR intrusion by the Office of Inspector General. Staff have been instructed to provide their full cooperation with this effort

2) The investigation by the Division of Enforcement into the potential illicit trading resulting from the 2016 EDGAR intrusion

3) A focused review of and, as necessary or appropriate, uplift of the EDGAR system. The EDGAR system has been undergoing modernization efforts. The agency has added, and expects to continue to add, additional resources to these efforts, which are expected to include outside consultants, and will increase the focus on cybersecurity matters

4) The more general assessment and uplift of the agency’s cybersecurity risk profile and efforts that were initiated shortly after the Chairman’s arrival at the Commission this past May, including, without limitation, the identification and review of all systems, current and planned (e.g., the Consolidated Audit Trail or CAT), that hold market sensitive data or personally identifiable information

5) The agency’s internal review of the 2016 EDGAR intrusion to determine, among other things, the procedures followed in response to the intrusion. This review is being overseen by the Office of the General Counsel and has an interdisciplinary investigative team that includes personnel from regional offices and will involve outside technology consultants

Each of these efforts is moving forward and, as is the nature of matters of this type, will require substantial time and effort to complete. Chairman Clayton has pledged to keep Congress informed of the ultimate findings and conclusions of the agency’s internal review into the 2016 intrusion.

Looking forward, and to further the efforts discussed above, Chairman Clayton has authorized the immediate hiring of additional staff and outside technology consultants to aid in the agency’s efforts to protect the security of its network, systems and data. Chairman Clayton also has directed the staff to take a number of steps designed to strengthen the agency’s cybersecurity risk profile, with an initial focus on EDGAR. This effort includes assessing the types of data the SEC takes in through the EDGAR system, and whether EDGAR is the appropriate mechanism to obtain that data. Another part of this effort includes reviewing the security systems, processes and controls in place to protect data submitted through EDGAR.

The staff also will conduct similar reviews of other systems in use at the SEC, assessing the types of data the agency keeps and the related security systems, processes and controls. The staff also will work to enhance escalation protocols for cybersecurity incidents in order to enable greater agency-wide visibility and understanding of potential cyber vulnerabilities and attacks.

More broadly, the agency is evaluating its cybersecurity risk governance structure, which has included the establishment of a senior-level cybersecurity working group and may include additional enhancements to promote the management and oversight of cybersecurity across the SEC’s divisions and offices.

Other initiatives resulting from the general cybersecurity assessment Chairman Clayton initiated in May are ongoing or will commence shortly. These include internal, Commission-level incident response exercises and continued interaction on cybersecurity efforts with other government agencies and committees, including the Department of Homeland Security, the Government Accountability Office and the Financial and Banking Information Infrastructure Committee.

This update also is being included as part of Chairman Clayton’s written testimony submitted to the U.S. House of Representatives Committee on Financial Services in connection with the Committee’s upcoming hearing titled “Examining the SEC’s Agenda, Operations, and Budget.”

Chairman Clayton Provides Update on Review of 2016 Cyber Intrusion Involving EDGAR System

SEC Chairman Jay Clayton today provided an update on the status of the agency’s review and investigation of the 2016 intrusion into the EDGAR system. In addition to updating previous disclosures, today’s announcement also includes additional informati…

SEC Exposes Two Initial Coin Offerings Purportedly Backed by Real Estate and Diamonds

The Securities and Exchange Commission today charged a businessman and two companies with defrauding investors in a pair of so-called initial coin offerings (ICOs) purportedly backed by investments in real estate and diamonds.

The SEC alleges that Maksim Zaslavskiy and his companies have been selling unregistered securities, and the digital tokens or coins being peddled don’t really exist. According to the SEC’s complaint, investors in REcoin Group Foundation and DRC World (also known as Diamond Reserve Club) have been told they can expect sizeable returns from the companies’ operations when neither has any real operations.

Zaslavskiy allegedly touted REcoin as “The First Ever Cryptocurrency Backed by Real Estate.” Alleged misstatements to REcoin investors included that the company had a “team of lawyers, professionals, brokers, and accountants” that would invest REcoin’s ICO proceeds into real estate when in fact none had been hired or even consulted. Zaslavskiy and REcoin allegedly misrepresented they had raised between $2 million and $4 million from investors when the actual amount is approximately $300,000.

According to the SEC’s complaint, Zaslavskiy carried his scheme over to Diamond Reserve Club, which purportedly invests in diamonds and obtains discounts with product retailers for individuals who purchase “memberships” in the company. Despite their representations to investors, the SEC alleges that Zaslavskiy and Diamond have not purchased any diamonds nor engaged in any business operations. Yet they allegedly continue to solicit investors and raise funds as though they have.

The SEC obtained an emergency court order to freeze the assets of Zaslavskiy and his companies.

The SEC’s Office of Investor Education and Advocacy recently issued an investor alert warning about the risks of ICOs.

“Investors should be wary of companies touting ICOs as a way to generate outsized returns,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office. “As alleged in our complaint, Zaslavskiy lured investors with false promises of sizeable returns from novel technology.”

The SEC’s complaint, filed in federal district court in Brooklyn, N.Y., charges Zaslavskiy, REcoin, and Diamond with violations of the anti-fraud and registration provisions of the federal securities laws. The complaint seeks permanent injunctions and disgorgement plus interest and penalties. For Zaslavskiy, the SEC also seeks an officer-and-director bar and a bar from participating in any offering of digital securities.

The SEC’s investigation, which is continuing, has been conducted by Jorge Tenreiro, Pamela Sawhney and Valerie A. Szczepanik. The case is being supervised by Lara S. Mehraban. The SEC encourages victims of the alleged fraud to contact Ms. Szczepanik at (212) 336-1100.