SEC Releases Archives - Page 74 of 86

Former Corporate Insider, Middleman Tipper, and Six Traders Charged With Insider Trading

The Securities and Exchange Commission today charged a former executive at Life Time Fitness Inc., a middleman tipper, and six traders with insider trading ahead of the announcement that the company would be purchased and taken private.

In a complaint…

Fee Rate Advisory #2 for Fiscal Year 2018

When fiscal year 2018 starts on Oct. 1, 2017, the Securities and Exchange Commission will be operating under a short-term continuing resolution, and thus will not have received a regular appropriation for FY 2018.

Accordingly, the fees paid under Section 31 of the Securities Exchange Act will remain at their current rate until 60 days after the date of enactment of a regular appropriation for the SEC.

The SEC is required to publish a revised fee rate 30 days after the date of enactment of a new fiscal year appropriation, and the new rate takes effect 60 days after the date of enactment. Until then, the Section 31 fee rate will remain at the current rate of $23.10 per million for securities transactions, and the assessment on round turn transactions in security futures will remain at $0.0042 per transaction.

For questions on Section 31 fees, please contact the Office of Interpretation and Guidance in the SEC’s Division of Trading and Markets at (202) 551-5777 or by e-mail at tradingandmarkets@sec.gov.

The Commission will issue further notices on its website as appropriate to keep the public informed of developments relating to the effective dates of the fee rates under Section 31.

Fee Rate Advisory #2 for Fiscal Year 2018

When fiscal year 2018 starts on Oct. 1, 2017, the Securities and Exchange Commission will be operating under a short-term continuing resolution, and thus will not have received a regular appropriation for FY 2018.

Accordingly, the fees paid under Sec…

Barred Broker Charged in Real Estate Investment Scheme

The Securities and Exchange Commission today charged a former broker, his company, and his business partner in an alleged real estate investment scheme utilizing high-pressure sales tactics to pilfer $6 million from retirees and other investors while using the proceeds to fund the broker’s lavish lifestyle and start e-cigarette businesses.

The SEC alleges that Leonard Vincent Lombardo, who once worked at Stratton Oakmont and has long since been barred from the brokerage industry by the Financial Industry Regulatory Authority for multiple violations, operated the scheme from behind the scenes at his Long Island-based company The Leonard Vincent Group (TLVG) with assistance from its CFO Brian Hudlin.

According to the SEC’s complaint, more than 100 investors were defrauded with false claims that their money would be invested in distressed real estate, and some were told their investments had increased by more than 50 percent in a matter of months when in fact there were no actual earnings on their investments. Lombardo allegedly invested only a small fraction of investor money in real estate and used the bulk of it for separate business ventures into the cigarette industry and personal expenses such as car payments on his BMW and Mercedes, marina fees on his boat, and visits to tanning salons.

“As alleged in our complaint, retirees entrusted their money to TVLG believing they were investing in high-return real estate investments, not electronic cigarettes or trips to the tanning salon,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office. “This is another case involving a fraudster trying to look the part of a wealthy financial advisor while doing nothing more than trying to separate people from their hard-earned money.”

The SEC received complaints from investors about how their investments were being handled, and the agency identified the perpetrators and gathered evidence to hold them accountable. The SEC encourages investors to alert the agency by filing complaints when they suspect illegal conduct, and proactively check the background of anyone selling them investments before handing over any money, including by doing a simple search on the SEC’s investor.gov website.

“Investors should be suspicious anytime they are guaranteed high investment returns,” said Lori J. Schock, Director of the SEC’s Office of Investor Education and Advocacy. “High investment returns typically involve high risk, and cannot be guaranteed.”

TLVG, Lombardo, and Hudlin have agreed to settlements that are subject to court approval. TLVG and Lombardo agreed to pay disgorgement of $5,878,729.41. Lombardo has pled guilty in a parallel criminal case brought by the U.S. Attorney’s Office for the Eastern District of New York. Without admitting or denying the SEC’s allegations, Hudlin agreed to pay a $40,000 penalty.

The SEC’s investigation was conducted by Prashant Yerramalli, Desiree Marmita, Kerri Palen and Sheldon L. Pollock in the SEC’s New York office. Paul Gizzi served as the senior trial counsel, and the case is being supervised by Lara S. Mehraban. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Eastern District of New York, the Federal Bureau of Investigation, and the Pennsylvania Department of Banking and Securities.

Barred Broker Charged in Real Estate Investment Scheme

The Securities and Exchange Commission today charged a former broker, his company, and his business partner in an alleged real estate investment scheme utilizing high-pressure sales tactics to pilfer $6 million from retirees and other investors while u…

SEC Provides Regulatory Relief and Assistance for Hurricane Victims

The Securities and Exchange Commission today announced that it is providing regulatory relief to publicly traded companies, investment companies, accountants, transfer agents, municipal advisors and others affected by Hurricane Harvey, Hurricane Irma, and Hurricane Maria. The loss of property, power, transportation, and mail delivery due to the hurricanes poses challenges for some individuals and entities that are required to provide information to the SEC and shareholders.

To address compliance issues caused by Hurricane Harvey, Hurricane Irma, and Hurricane Maria, the Commission issued an order that conditionally exempts affected persons from certain requirements of the federal securities laws for periods following the weather events.

The Commission also adopted interim final temporary rules that extend the filing deadlines for specified reports and forms that companies must file pursuant to Regulation Crowdfunding and Regulation A.

The exemptive relief and rules are structured for a broad class of companies and others affected by the hurricanes and their respective aftermaths. Some companies and other affected persons may require additional or different assistance in their efforts to comply with the requirements of the federal securities laws. The Commission staff will address these and any disclosure-related issues on a case-by-case basis in light of their fact-specific nature. Those affected by the hurricanes that require additional assistance are encouraged to contact Commission staff for individual relief or interpretive guidance.

* * *

ADDITIONAL INFORMATION

In connection with the relief, issued in an order and interim final temporary rules, the Commission staff will take the following positions under the Exchange Act, the Securities Act, and the Investment Advisers Act:

For purposes of eligibility to use Form S-3 (and for well-known seasoned issuer status, which is based in part on Form S-3 eligibility), a company relying on the exemptive order will be considered current and timely in its Exchange Act filing requirements during the applicable relief period if it was current and timely as of the first day of the applicable relief period. After the applicable relief period, a company will continue to be considered current and timely if it files any required report on or before Oct. 10, 2017 for those relying on the exemptive order due to Hurricane Harvey, Oct. 19, 2017 for those relying on the exemptive order due to Hurricane Irma, and Nov. 2, 2017 for those relying on the exemptive order due to Hurricane Maria

For purposes of the Form S-8 eligibility requirements and the current public information eligibility requirements of Rule 144(c), a company relying on the exemptive order will be considered current in its Exchange Act filing requirements during the applicable relief period if it was current as of the first day of the applicable relief period. After the applicable relief period, a company will continue to be considered current if it files any required report on or before Oct. 10, 2017 for those relying on the exemptive order due to Hurricane Harvey, Oct. 19, 2017 for those relying on the exemptive order due to Hurricane Irma, and Nov. 2, 2017 for those relying on the exemptive order due to Hurricane Maria

Companies that receive an extension on filing Exchange Act annual reports or quarterly reports pursuant to the order will be considered to have a due date of Oct. 10, 2017 for those relying on the exemptive order due to Hurricane Harvey, Oct. 19, 2017 for those relying on the exemptive order due to Hurricane Irma, and Nov. 2, 2017 for those relying on the exemptive order due to Hurricane Maria for those reports for purposes of Exchange Act Rule 12b-25. As such, those companies will be permitted to rely on Rule 12b-25 where they are unable to file the required reports on or before the applicable due date.

During the period from Aug. 25, 2017 to Nov. 1, 2017, a registered open-end investment company and a registered unit investment trust will be considered to have satisfied the requirements of Section 5(b)(2) of the Securities Act to deliver a summary or a statutory prospectus, as applicable, to an investor, provided that: (1) the sale of shares to the investor was not an initial purchase by the investor of shares of the company or unit investment trust; (2) the investor’s mailing address for delivery, as listed in the records of the company or unit investment trust, has a ZIP code for which the common carrier has suspended mail service, as a result of Hurricane Harvey, Hurricane Irma, or Hurricane Maria, of the type or class customarily used by the company or unit investment trust, to deliver summary or statutory prospectuses; and (3) the company, or unit investment trust, or other person promptly delivers the summary or statutory prospectus, as applicable either (a) if requested by the investor, or (b) by the earlier (i) of Nov. 2, 2017 or (ii) the resumption of the applicable mail service.

A registered investment adviser will be considered to have satisfied Form ADV filing requirements under Section 204(a) of the Advisers Act and Rule 204-1 thereunder, if: (1) the registrant’s Form ADV filing deadline falls within the period from Aug. 25, 2017 to Oct. 6, 2017; (2) the registrant was or is not able to meet its filing deadline due to Hurricane Harvey; and (3) the registrant makes the required Form ADV filing by Oct. 10, 2017.

A registered investment adviser will be considered to have satisfied Form ADV filing requirements under Section 204(a) of the Advisers Act and Rule 204-1 thereunder, if: (1) the registrant’s Form ADV filing deadline falls within the period from Sept. 6, 2017 to Oct. 18, 2017; (2) the registrant was or is not able to meet its filing deadline due to Hurricane Irma; and (3) the registrant makes the required Form ADV filing by Oct. 19, 2017.

A registered investment adviser will be considered to have satisfied Form ADV filing requirements under Section 204(a) of the Advisers Act and Rule 204-1 thereunder, if: (1) the registrant’s Form ADV filing deadline falls within the period from Sept. 20, 2017 to Nov. 1, 2017; (2) the registrant was or is not able to meet its filing deadline due to Hurricane Maria; and (3) the registrant makes the required Form ADV filing by Nov. 2, 2017.

During the period from Aug. 25, 2017 to Nov. 1, 2017, a registered investment adviser will be considered to have satisfied the requirements of Section 204 of the Advisers Act and Rule 204-3(b) thereunder to deliver the written disclosure statements required thereunder to its advisory client, provided that: (1) the client’s mailing address for delivery, as listed in the records of the investment adviser, has a ZIP code for which the common carrier has suspended mail service, as a result of Hurricane Harvey, Hurricane Irma, or Hurricane Maria, of the type or class customarily used by the adviser to deliver written disclosure statements; and (2) the investment adviser or other person promptly delivers the written disclosure statement either (a) if requested by the client, or (b) at the earlier of (i) Nov. 2, 2017 or (ii) the resumption of the applicable mail service.

SEC Provides Regulatory Relief and Assistance for Hurricane Victims

The Securities and Exchange Commission today announced that it is providing regulatory relief to publicly traded companies, investment companies, accountants, transfer agents, municipal advisors and others affected by Hurricane Harvey, Hurricane Irma, and Hurricane Maria. The loss of property, power, transportation, and mail delivery due to the hurricanes poses challenges for some individuals and entities that are required to provide information to the SEC and shareholders.

To address compliance issues caused by Hurricane Harvey, Hurricane Irma, and Hurricane Maria, the Commission issued an order that conditionally exempts affected persons from certain requirements of the federal securities laws for periods following the weather events.

The Commission also adopted interim final temporary rules that extend the filing deadlines for specified reports and forms that companies must file pursuant to Regulation Crowdfunding and Regulation A.

The exemptive relief and rules are structured for a broad class of companies and others affected by the hurricanes and their respective aftermaths. Some companies and other affected persons may require additional or different assistance in their efforts to comply with the requirements of the federal securities laws. The Commission staff will address these and any disclosure-related issues on a case-by-case basis in light of their fact-specific nature. Those affected by the hurricanes that require additional assistance are encouraged to contact Commission staff for individual relief or interpretive guidance.

* * *

ADDITIONAL INFORMATION

In connection with the relief, issued in an order and interim final temporary rules, the Commission staff will take the following positions under the Exchange Act, the Securities Act, and the Investment Advisers Act:

For purposes of eligibility to use Form S-3 (and for well-known seasoned issuer status, which is based in part on Form S-3 eligibility), a company relying on the exemptive order will be considered current and timely in its Exchange Act filing requirements during the applicable relief period if it was current and timely as of the first day of the applicable relief period. After the applicable relief period, a company will continue to be considered current and timely if it files any required report on or before Oct. 10, 2017 for those relying on the exemptive order due to Hurricane Harvey, Oct. 19, 2017 for those relying on the exemptive order due to Hurricane Irma, and Nov. 2, 2017 for those relying on the exemptive order due to Hurricane Maria

For purposes of the Form S-8 eligibility requirements and the current public information eligibility requirements of Rule 144(c), a company relying on the exemptive order will be considered current in its Exchange Act filing requirements during the applicable relief period if it was current as of the first day of the applicable relief period. After the applicable relief period, a company will continue to be considered current if it files any required report on or before Oct. 10, 2017 for those relying on the exemptive order due to Hurricane Harvey, Oct. 19, 2017 for those relying on the exemptive order due to Hurricane Irma, and Nov. 2, 2017 for those relying on the exemptive order due to Hurricane Maria

Companies that receive an extension on filing Exchange Act annual reports or quarterly reports pursuant to the order will be considered to have a due date of Oct. 10, 2017 for those relying on the exemptive order due to Hurricane Harvey, Oct. 19, 2017 for those relying on the exemptive order due to Hurricane Irma, and Nov. 2, 2017 for those relying on the exemptive order due to Hurricane Maria for those reports for purposes of Exchange Act Rule 12b-25. As such, those companies will be permitted to rely on Rule 12b-25 where they are unable to file the required reports on or before the applicable due date.

During the period from Aug. 25, 2017 to Nov. 1, 2017, a registered open-end investment company and a registered unit investment trust will be considered to have satisfied the requirements of Section 5(b)(2) of the Securities Act to deliver a summary or a statutory prospectus, as applicable, to an investor, provided that: (1) the sale of shares to the investor was not an initial purchase by the investor of shares of the company or unit investment trust; (2) the investor’s mailing address for delivery, as listed in the records of the company or unit investment trust, has a ZIP code for which the common carrier has suspended mail service, as a result of Hurricane Harvey, Hurricane Irma, or Hurricane Maria, of the type or class customarily used by the company or unit investment trust, to deliver summary or statutory prospectuses; and (3) the company, or unit investment trust, or other person promptly delivers the summary or statutory prospectus, as applicable either (a) if requested by the investor, or (b) by the earlier (i) of Nov. 2, 2017 or (ii) the resumption of the applicable mail service.

A registered investment adviser will be considered to have satisfied Form ADV filing requirements under Section 204(a) of the Advisers Act and Rule 204-1 thereunder, if: (1) the registrant’s Form ADV filing deadline falls within the period from Aug. 25, 2017 to Oct. 6, 2017; (2) the registrant was or is not able to meet its filing deadline due to Hurricane Harvey; and (3) the registrant makes the required Form ADV filing by Oct. 10, 2017.

A registered investment adviser will be considered to have satisfied Form ADV filing requirements under Section 204(a) of the Advisers Act and Rule 204-1 thereunder, if: (1) the registrant’s Form ADV filing deadline falls within the period from Sept. 6, 2017 to Oct. 18, 2017; (2) the registrant was or is not able to meet its filing deadline due to Hurricane Irma; and (3) the registrant makes the required Form ADV filing by Oct. 19, 2017.

A registered investment adviser will be considered to have satisfied Form ADV filing requirements under Section 204(a) of the Advisers Act and Rule 204-1 thereunder, if: (1) the registrant’s Form ADV filing deadline falls within the period from Sept. 20, 2017 to Nov. 1, 2017; (2) the registrant was or is not able to meet its filing deadline due to Hurricane Maria; and (3) the registrant makes the required Form ADV filing by Nov. 2, 2017.

During the period from Aug. 25, 2017 to Nov. 1, 2017, a registered investment adviser will be considered to have satisfied the requirements of Section 204 of the Advisers Act and Rule 204-3(b) thereunder to deliver the written disclosure statements required thereunder to its advisory client, provided that: (1) the client’s mailing address for delivery, as listed in the records of the investment adviser, has a ZIP code for which the common carrier has suspended mail service, as a result of Hurricane Harvey, Hurricane Irma, or Hurricane Maria, of the type or class customarily used by the adviser to deliver written disclosure statements; and (2) the investment adviser or other person promptly delivers the written disclosure statement either (a) if requested by the client, or (b) at the earlier of (i) Nov. 2, 2017 or (ii) the resumption of the applicable mail service.

SEC Provides Regulatory Relief and Assistance for Hurricane Victims

The Securities and Exchange Commission today announced that it is providing regulatory relief to publicly traded companies, investment companies, accountants, transfer agents, municipal advisors and others affected by Hurricane Harvey, Hurricane Irma, …

SEC Detects Brokers Defrauding Customers

The Securities and Exchange Commission today charged three New York-based brokers with making unsuitable recommendations that resulted in substantial losses to customers and hefty commissions for the brokers. One of the brokers agreed to pay more than $400,000 to settle the charges.

Brokers must make recommendations that are compatible with their customers’ financial needs, investment objectives, and risk tolerances. An SEC examination of the firm Alexander Capital L.P. detected potential misconduct among certain brokers, and the ensuing investigation has led to the filing of an SEC complaint against William C. Gennity and Rocco Roveccio. The SEC also issued an order against Laurence M. Torres.

The SEC’s complaint alleges that Gennity and Roveccio recommended investments that involved frequent buying and selling of securities without any reasonable basis to believe their customers would profit. According to the complaint, since customers incur costs with every transaction, the price of the security must increase significantly during the brief period it is held in an account for even a minimal profit to be realized.

The SEC further alleges that Gennity and Roveccio churned customer accounts, engaged in unauthorized trading, and concealed material information from their customers – namely that the transaction costs associated with their recommendations (commissions, markups, markdowns, postage, fees, and margin interest) would almost certainly outstrip any potential monetary gains in the accounts. According to the SEC’s complaint, customer losses totaled $683,038 while Gennity and Roveccio received approximately $280,000 and $206,000, respectively, in commissions and fees.

“We have no tolerance for unscrupulous brokers, and our examiners and enforcement investigators are working together to proactively catch insidious practices before they spread and impact even more customer accounts,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office and Co-Chair of the Enforcement Division’s Broker-Dealer Task Force.

“As alleged in our complaint, Gennity and Roveccio each misled several customers by touting their ability to outperform the market while concealing that the cost to customers for this excessive in-and-out trading doomed any realistic possibility of these brokers making money for anyone other than themselves,” Mr. Calamari added.

The SEC’s order against Torres finds that he had no reasonable basis to believe it was suitable to recommend a high-cost pattern of frequent trading that gave his customers virtually no chance of making even a minimal profit. Torres also engaged in churning and made unauthorized trades. Without admitting or denying the findings, Torres agreed to be barred from the securities industry and penny stock trading, and he must pay $225,359.36 in disgorgement plus $25,748.02 in interest, and a $160,000 penalty.

The SEC’s litigation against Gennity and Roveccio will proceed in federal district court in Manhattan, with the complaint charging them with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.

The SEC’s investigation, which is continuing, has been conducted by David Oliwenstein, David Stoelting, Roseann Daniello, and Steven G. Rawlings. The litigation will be led by Mr. Stoelting and Mr. Oliwenstein, and the case is being supervised by Sanjay Wadhwa. The examination that led to the investigation was conducted by Shereion Clarke, Margaret Lett, and Jennifer Grumbrecht. The SEC appreciates the assistance of the Financial Industry Regulatory Authority and the Office of Montana State Auditor, Commissioner of Securities and Insurance.