SEC Names Peter Uhlmann Managing Executive in Chairman’s Office

The Securities and Exchange Commission today announced that Peter Uhlmann has been named the managing executive in the Office of Chairman Jay Clayton. Mr. Uhlmann will advise Chairman Clayton in matters relating to agency administration, operations, and management, and will serve as the Chairman’s primary liaison to divisions and offices on these matters.

“I am pleased that Pete has taken on the managing executive role and that I will be able to draw on his experience, judgment, and knowledge of the agency. It is clear that Pete is a dedicated professional committed to ensuring the SEC’s continued operational effectiveness and responsiveness,” said Chairman Clayton. 

Mr. Uhlmann has served in a variety of senior leadership positions during his tenure at the SEC. Most recently, Mr. Uhlmann served as managing executive for then-Acting Chairman Michael S. Piwowar. Prior to that, he was managing executive of the SEC’s Division of Corporation Finance, where he oversaw the internal business operations that support the division’s personnel. He has also worked as a senior advisor to the executive director, where he led initiatives to assess and improve the effectiveness of SEC operations.

Mr. Uhlmann also served at the SEC as chief of staff and senior advisor to former Chairman Christopher Cox.

Mr. Uhlmann is a graduate of Yale University.

SEC Files Charges in Trading Scheme Involving Confidential Government Information

The Securities and Exchange Commission today announced charges in an alleged insider trading scheme involving tips of nonpublic information about government plans to cut Medicare reimbursement rates, which affected the stock prices of certain publicly traded medical providers or suppliers.

The SEC’s complaint alleges that David Blaszczak, a former government employee turned political intelligence consultant, obtained key confidential details about upcoming decisions by the Centers for Medicare and Medicaid Services (CMS) from his close friend and former colleague at the agency, Christopher Worrall.  According to the SEC’s complaint, Worrall serves as a health insurance specialist in the Center for Medicare and tipped Blaszczak about at least three pending CMS decisions that affected the amount of money that companies receive from Medicare to provide services or products related to cancer treatments or kidney dialysis. 

Blaszczak allegedly tipped two analysts at a hedge fund advisory firm that paid him as a consultant.  The analysts, Theodore Huber and Jordan Fogel, allegedly used the nonpublic information to recommend that the firm trade in the stocks of four health care companies whose stock prices would likely be affected by the decisions once CMS announced them publicly.  The alleged scheme resulted in more than $3.9 million in illicit profits. 

“As alleged in our complaint, a federal employee breached his duty to protect confidential information by tipping a political consultant who then passed along those illegal tips,” said Stephanie Avakian, Acting Director of the SEC Enforcement Division.  “There’s no place on Wall Street or in our government for such blatant misuse of highly confidential information.”

According to the SEC’s complaint, Blaszczak’s firms were paid at least $193,000 in a 19-month period by the hedge fund where the analysts worked.  

“We remain committed to using all resources available to detect sophisticated schemes and stop those who try to create a revenue stream by tipping or trading on material, nonpublic information,” said Robert A. Cohen, Co-Chief of the SEC Enforcement Division’s Market Abuse Unit.

The SEC’s complaint, filed in U.S. District Court for the Southern District of New York, charges Blaszczak, Worrall, Huber, and Fogel with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 as well as Section 17(a) of the Securities Act of 1933.  The complaint seeks disgorgement of ill-gotten gains plus interest, penalties, and permanent injunctions.  

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

The SEC’s investigation, which is continuing, has been conducted by Ann Rosenfield, Patrick McCluskey, and Carolyn Welshhans in the Market Abuse Unit.  The case has been supervised by Mr. Cohen.  The litigation will be led by Gregory Bockin and A. Kristina Littman and supervised by Cheryl Crumpton.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York, the Federal Bureau of Investigation, and the Department of Health and Human Services Office of Inspector General.  

SEC and MSRB to Hold Webinar on Series 50 Exam for Municipal Advisors

The Securities and Exchange Commission (SEC) and the Municipal Securities Rulemaking Board (MSRB) today announced a joint educational webinar to assist municipal advisors with understanding their professional qualification requirements. The live webinar, scheduled for Thursday, June 15, 2017, from 3-4 p.m. ET, will provide information on signing up for the MSRB’s Municipal Advisor Representative Qualification Examination (Series 50 exam), preparing to take the Series 50 exam, and fulfilling municipal advisor firms’ SEC registration obligations.

“Providing and maintaining accurate and up-to-date information on municipal advisor firms’ initial registration forms and subsequent amendments is essential to ensuring the effectiveness of the municipal advisor registration system,” said Jessica Kane, Director of the SEC’s Office of Municipal Securities. “In particular, information about associated persons on Form MA-I promotes confidence in the municipal advisor registration regime and helps protect municipal entities, obligated persons, the public, and, ultimately, investors. The Office of Municipal Securities is pleased to partner with the MSRB on this webinar.”

The MSRB’s recent regulatory notice reminded municipal advisor firms that after Sept. 12, 2017, only associated persons who have passed the Series 50 exam can engage in municipal advisory activity on behalf of the firm.

“We hope that this webinar will address questions municipal advisor firms have about the process for enrolling their associated persons to take the exam by the deadline,” said MSRB Executive Director Lynnette Kelly. “The webinar should be particularly valuable for those firms that do not yet have a single Series 50-qualified municipal advisor representative associated with the firm nor any individual scheduled to sit for the exam.”

The MSRB makes available on its website a list of Series 50-qualified municipal advisor representatives and their associated municipal advisor firms. Qualification information is updated weekly and is dependent on the quality of the data municipal advisor firms submit to the SEC through Form MA-I.

During the free webinar, staff of the SEC and MSRB will review the standards of professional qualification for municipal advisors, discuss the enrollment process for taking the Series 50 exam, and highlight relevant municipal advisor SEC registration obligations. Members of the public interested in viewing the webinar should register here.  

SEC Charges Fake Filer With Manipulating Fitbit Stock

The Securities and Exchange Commission today filed fraud charges against a Virginia-based mechanical engineer accused of scheming to manipulate the price of Fitbit stock by making a phony regulatory filing.

According to the SEC’s complaint, Robert W. Murray purchased Fitbit call options just minutes before a fake tender offer that he orchestrated was filed on the SEC’s EDGAR system purporting that a company named ABM Capital LTD sought to acquire Fitbit’s outstanding shares at a substantial premium.  Fitbit’s stock price temporarily spiked when the tender offer became publicly available on Nov. 10, 2016, and Murray sold all of his options for a profit of approximately $3,100. 

The SEC alleges that Murray created an email account under the name of someone he found on the internet, and the email account was used to gain access to the EDGAR system.  Murray then allegedly listed that person as the CFO of ABM Capital and used a business address associated with that person in the fake filing.  The SEC also alleges that Murray attempted to conceal his identity and actual location at the time of the filing after conducting research into prior SEC cases that highlighted the IP addresses the false filers used to submit forms on EDGAR.  According to the SEC’s complaint, it appeared as though the system was being accessed from a different state by using an IP address registered to a company located in Napa, California. 

“As alleged in our complaint, Murray used deceptive techniques in a concerted effort to evade detection, but we were able to connect the dots quickly and hold him accountable,” said Stephanie Avakian, Acting Director of the SEC Enforcement Division.

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

The SEC’s complaint charges Murray with violating antifraud provisions of the federal securities laws, including Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 14(e) of the Securities Exchange Act of 1934, and Rules 10b-5 and 14e-8. 

The SEC’s continuing investigation is being conducted by David W. Snyder, Assunta Vivolo, Kelly L. Gibson, and Patrick A. McCluskey in the Market Abuse Unit in Philadelphia.  The case is being supervised by unit co-chiefs Robert A. Cohen and Joseph G. Sansone.  The litigation will be led by Julia C. Green and Christopher R. Kelly of the Philadelphia office.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York and the U.S. Postal Inspection Service.

David Peavler, Associate Director of Enforcement in Fort Worth Office, to Leave SEC

The Securities and Exchange Commission today announced that David L. Peavler, Associate Director of Enforcement in the Fort Worth Regional Office, is leaving the agency this month after more than 15 years of service.

Mr. Peavler joined the SEC staff as a Staff Attorney and went on to serve as a Branch Chief and then an Assistant Director before being named Associate Director in November 2011.  Mr. Peavler has supervised a staff of more than 60 attorneys and other professionals responsible for investigating potential violations of the federal securities laws by a wide range of market participants.

Mr. Peavler received the SEC’s Irving Pollack Award last year in recognition of his “fairness and compassion in dealings with the public and staff, scholarship and professional expertise in execution of their legal duties, and adherence to the highest standards of personal and professional integrity.”  He received the agency’s Arthur F. Mathews Award in 2004 for “sustained demonstrated creativity in applying federal securities laws for the benefit of investors.” 

Stephanie Avakian, Acting Director of the SEC’s Enforcement Division, said, “David is an exceptional attorney and a dedicated public servant who has led and supervised an array of complex and high-impact actions.  He has demonstrated time and time again his commitment to protecting investors and our markets.”

Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office, added, “David’s consistency, creativity, professionalism, and integrity are unparalleled, and he has led not only by word but by example.  His leadership of Fort Worth’s enforcement program will be emulated but never duplicated.”

Mr. Peavler said, “I’m fortunate to have served with so many skilled and dedicated people.  Their untiring commitment to investor protection has truly been inspirational, and I’m proud of our achievements.”

Among the enforcement actions taken by the SEC’s Fort Worth office under Mr. Peavler’s leadership:

• Seaboard Corporation, in which the SEC first set forth its corporate cooperation guidance.
• Royal Dutch Shell, which paid $120 million to settle fraud charges arising from its 4.5 billion barrel proved reserves misstatement.
• i2 Technologies and three of its former senior officers, who collectively paid more than $20 million to settle fraud charges relating to a billion dollar software revenue overstatement.
• The former CEO and CFO of Quest Resources Corporation, who were charged with misappropriating millions of dollars through undisclosed insider loans.
• Millennium Bank and its founder, who operated a $100 million international Ponzi scheme.
• Life Partners Holdings and its former senior officers, who a jury found liable for fraud in connection with disclosures and accounting for life settlements.  They were ordered to pay millions of dollars in penalties.
• KBR Inc. and SandRidge Energy, which each settled allegations arising from their use of improper non-disclosure agreements that inhibited employees from reporting fraud and misconduct to the SEC.

Mr. Peavler received his undergraduate degree in accounting and economics from Baylor University in 1989 and his law degree from the University of Texas in 1992.

SEC Names Robert B. Stebbins as General Counsel

The Securities and Exchange Commission today announced that Robert B. Stebbins has been named General Counsel of the agency.

The General Counsel is the chief legal officer of the agency, providing a variety of legal services to the Commission and staff.

“Bob is an exceptional attorney and counselor, and I know his depth of knowledge and experience managing a wide range of securities-related issues will benefit the SEC,” said Chairman Jay Clayton. “I thank Bob for his commitment to serving his country and our agency, and I look forward to his steadfast guidance as the Commission’s chief legal officer.”

“I have always had a great deal of respect for the SEC’s staff and their commitment to the agency’s core mission, and I am proud to be part of the team,” said Mr. Stebbins. “I look forward to sharing my experience with this talented group of professionals, and I am grateful for this tremendous opportunity.”

Mr. Stebbins has practiced law at Willkie Farr & Gallagher LLP since 1993, first as an associate and beginning in 2001 as a partner.  At Willkie, Mr. Stebbins focused on mergers and acquisitions, private equity and venture capital, investment funds, and capital markets transactions. He also advised clients on SEC compliance issues and corporate governance matters.

Mr. Stebbins earned a J.D. from the University of Pennsylvania and a B.S. from Central Michigan University, where he was an Academic All-American football player. He is a member of the American Bar Association and the New York City Bar Association and is a fellow of the American College of Investment Counsel.

SEC Names Jaime Klima Chief Counsel

The Securities and Exchange Commission today announced that Jaime Klima has been named Chief Counsel to Chairman Jay Clayton. 

As Chief Counsel, Ms. Klima will be senior legal and policy adviser, and will coordinate the rulemaking agenda of the Commission.  She will also serve as the Chairman’s representative on the Deputies Committee of the Financial Stability Oversight Council.

“I am thrilled that Jaime has agreed to serve the Commission in this key role,” said Chairman Jay Clayton. “I am pleased that Jaime’s legal acumen and experience will continue to benefit the SEC and its team of committed professionals.”

Most recently, Ms. Klima served as SEC co-chief of staff under then-Acting Chairman Michael S. Piwowar, advising on all issues of agency management and policy.  Before that, she was counsel to Commissioner Piwowar and Commissioner Troy A. Paredes. In those roles, Ms. Klima covered a wide range of issues including rulemaking and enforcement matters.

Prior to working at the SEC, Ms. Klima practiced law at Wilmer Cutler Pickering Hale and Dorr LLP, specializing in broker-dealer compliance and regulation. She also clerked for the Honorable Richard Lowell Nygaard of the U.S. Court of Appeals for the Third Circuit. 

Ms. Klima earned her J.D., cum laude, from Duke University School of Law, a Master of Public Policy, also from Duke, and an undergraduate degree in Systems Engineering, with distinction, from the University of Virginia.

SEC Names Sean Memon Deputy Chief of Staff

The Securities and Exchange Commission today announced that Sean Memon has been named the agency’s deputy chief of staff.

“Sean has proven to have extensive knowledge of financial regulation and coordination across our various markets. I commend his willingness to share his expertise here at the SEC as we further the agency’s important mission,” said Chairman Jay Clayton.

Mr. Memon arrived at the SEC with experience providing advice to public and private companies in both legal and financial roles. Immediately prior to joining the SEC, Mr. Memon practiced law at Sullivan & Cromwell LLP in Washington, D.C., where he advised clients in regulatory and transactional matters, including with respect to capital raisings, mergers and acquisitions and joint ventures. Mr. Memon also advised companies on matters involving financial technology and the development of new products and services.

Previously, Mr. Memon was a member of the Finance and Acquisitions department at Time Warner Inc., where he worked on long-term business planning efforts and performed quantitative valuation and financial impact analysis for potential new business initiatives and transactions. Prior to Time Warner, Mr. Memon was an analyst in the investment banking groups of Raymond James & Associates and Morgan Stanley & Co., where he worked with technology companies on capital raising activities and mergers and acquisitions.

Mr. Memon received J.D. and MBA degrees from Duke University and an A.B. in economics from Harvard College.

SEC Charges Former Head Traders at Nomura With Fraud

The Securities and Exchange Commission today charged a pair of former head traders who ran the commercial mortgage-backed securities (CMBS) desk at Nomura Securities International Inc. with deliberately lying to customers in order to inflate the profits of the CMBS desk and line their own pockets as a result.

The SEC alleges that James Im and Kee Chan each misrepresented price information while acting as intermediaries on trades with Nomura’s customers who sought to buy and sell CMBS on the secondary market.  In certain instances, Im and Chan allegedly pretended they were still negotiating bond purchases with a third-party seller at higher prices when Nomura had already acquired the bonds at a lower price.

The SEC alleges that in one instance, Im bragged about his purposeful deception of a customer, and Chan once altered an email to a customer to prop up his lie about the bid price for a bond.  According to the SEC’s complaints, Chan and Im fraudulently generated more than $750,000 in extra trading profits for the CMBS desk, and they received substantial bonuses based largely on the desk’s performance.

Chan agreed to settle the charges by paying $51,965 in disgorgement plus $11,758 in interest and a $150,000 penalty.  Without admitting or denying the allegations, Chan also agreed to be barred from the securities industry with the right to reapply after three years.  The settlement is subject to court approval.  The case continues against Im.

“As alleged in our complaints, Im and Chan operated under cover of an opaque CMBS secondary market to gain illegal trading profits and potentially larger bonuses by lying to firms on the other side of their trades about the prices at which they were buying and selling securities,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.

The SEC’s complaints, filed in federal court in Manhattan, charge Chan and Im with violating 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 ongoing, has been conducted by Ladan Stewart, Chevon Walker and George Stepaniuk of the New York office.  The litigation against Im will be handled by Richard Hong, Ms. Stewart and Ms. Walker.  The case is being supervised by Sanjay Wadhwa.

Law Firm Partner and Neighbor Charged in $1 Million Insider Trading Scheme

The Securities and Exchange Commission today charged a former partner at an international law firm and his neighbor with making more than $1 million in illicit profits by insider trading around corporate announcements.

The SEC alleges that Walter C. Little accessed confidential documents on his law firm’s internal computer network related to at least 11 impending announcements involving law firm clients, none of which he personally advised or billed for services.  Little then allegedly traded in advance of each announcement and often tipped his neighbor Andrew M. Berke with material nonpublic information so he could similarly trade in company stocks before the announcements were made publicly.  According to the SEC’s complaint, the insider trading occurred from February 2015 to February 2016.

“As alleged in our complaint, Little used highly-confidential information about his law firm’s clients to make more than $1 million for himself and his neighbor through illegal insider trading and tipping,” said Stephanie Avakian, Acting Director of the SEC’s Enforcement Division.

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

The SEC’s complaint charges Little and Berke with violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 as well as Section 17(a) of the Securities Act of 1933.  The complaint seeks disgorgement of ill-gotten gains plus prejudgment interest, penalties, and permanent injunctions.

The SEC’s investigation was conducted by Richard Kutchey and Gregory Faragasso.  The case was supervised by Gerald Hodgkins, and the litigation is being led by Kevin Lombardi and Charles Stodghill.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York, Federal Bureau of Investigation, and Financial Industry Regulatory Authority.

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 classes were available.  Another 22,138 accounts paid excess fees to Barclays due to miscalculations and billing errors by the firm.

“Barclays failed to ensure that clients were receiving the services they were paying for,” said C. Dabney O’Riordan, Co-Chief of the SEC Enforcement Division’s Asset Management Unit.  “Each set of clients who were harmed are being refunded through the settlement.”

The SEC’s order finds that Barclays violated Sections 206(2), 206(4) and 207 of the Investment Advisers Act of 1940 and Rule 206(4)-7 as well as Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933.

Without admitting or denying the SEC’s findings, Barclays agreed to create a Fair Fund to refund advisory fees to harmed clients.  The Fair Fund will consist of $49,785,417 in disgorgement plus $13,752,242 in interest and a $30 million penalty.  Barclays will directly refund an additional $3.5 million to advisory clients who invested in third-party investment managers and investment strategies that underperformed while going unmonitored.  Those funds also will go to brokerage clients who were steered into more expensive mutual fund share classes.

The SEC’s investigation was conducted by Gwen Licardo of the Asset Management Unit, and the case was supervised by Valerie A. Szczepanik of the New York Regional Office.  An SEC examination that led to the investigation was conducted by investment adviser examiners in the New York Regional Office.

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 securities, and private placements.  He has spoken on these subjects at the Annual Institutes on Securities Laws sponsored by the Practising Law Institute and has taught International Securities Regulation at Stanford Law School and the U.C. Berkeley School of Law.

“Bill is widely recognized for his judgment and expertise in the area of corporate finance. He also is a proven leader, mentor, and counselor. I know the SEC and the people it serves will benefit greatly from his valuable experience,” said SEC Chairman Jay Clayton. “He has spent the last 37 years working in our public and private markets, and he understands the SEC’s mission to promote capital formation while ensuring that investors have the information necessary to make informed decisions.”

Mr. Hinman added, “I am greatly honored to have the opportunity to serve this agency and the American people who rely on its work.  I have worked closely with the dedicated and talented staff of the Division of Corporation Finance throughout my career in private practice, and it will be a privilege to work with them to advance the SEC’s mission.”

Prior to joining Simpson Thacher as a partner in 2000, Mr. Hinman was the managing partner of Shearman & Sterling’s San Francisco and Menlo Park offices.  He received his B.A. from Michigan State University with honors in 1977 and his J.D. in 1980 from Cornell University Law School, where he was a member of the Editorial Board of the Cornell Law Review.  He is a member of the Bar Association of the State of California and the Association of the Bar of the City of New York.  Mr. Hinman also is a fellow of the American Bar Foundation.