Articles Posted in Securities and Exchange Commission

Foreign Soil SEC Corruption Cases Are Now Up Against a Ticking Clock

SEC corruptionA Supreme Court ruling, this summer, has put the U.S. Securities and Exchange Commission against the clock to wrap up foreign corruption cases.  According to an article by the Wall Street Journal, the recent ruling may impact SEC corruption cases when it comes to international anti-bribery laws.

The Ruling

The Securities and Exchange Commission has charged seven individuals  generating millions in profits by trading on confidential information about dozens of impending mergers and acquisitions. In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today unsealed criminal charges against the same seven individuals.

According to the SEC’s complaint,insider trading complaiint  Daniel Rivas, a former IT employee of a large bank, was at the center of the alleged scheme, misusing his access to a bank computer system to tip four individuals who traded on the information.  He allegedly tipped others who also traded and passed along the tips.  According to the complaint, the traders profited on market-moving news related to 30 impending corporate deals from October 2014 to April 2017.

The SEC’s complaint alleges that Rivas frequently tipped his girlfriend’s father, James Moodhe, who traded on the information and used coded conversations and in-person meetings to relay the tips to his friend, Michael Siva, a financial advisor at a brokerage firm.  Siva allegedly used the confidential information to make profitable trades for his brokerage firm clients, earning commissions for himself in the process, and he passed numerous tips along to a client who traded on them.  The complaint alleges that Siva also traded on behalf of himself and his wife based on two of the tips he got from Moodhe, a former financial services company treasurer.

The Securities and Exchange Commission charged two former senior employees  of Ariad Pharmaceuticals, Inc. with insider trading aheadof announcements about U.S. Food and Drug Administration decisions involving main cancer drug. According to the SEC’s complaint, Harold Altvater, whose wife was an Ariad employee, allegedly made multiple illegal trades in Ariad stock on the basis of non-public information he learned from her. Maureen Curran, a former Ariad executive, sold Ariad stock in December 2012, after she had attended meetings with the FDA and had learned material nonpublic information regarding a forthcoming FDA decision. Susan Dubuc, another former executive, allegedly tipped relatives in October 2013, one day before Ariad publicly announced a pause in all clinical trials for its FDA-approved drug.

The SEC accused Dubuc of tipping off her relatives in 2013 that Ariad would halt trials of the drug, allowing them to avoid nearly $2,888 in losses. Altvater, for his part, earned more than $100,000 in profits and avoided losses by trading in advance of news about Ariad’s dealings with the FDA, the SEC alleged. According to the SEC, Altvater concealed his activities from his wife, who had told him on at least one occasion not to trade Ariad stock.

Without admitting or denying wrongdoing, Curran and Dubuc have agreed to settle the allegations by paying fines of around $20,000 and $6,000, respectively, the SEC said. The case against Altvater is continuing.

The United States Securities and Exchange Commission (SEC) has ordered F-Squared Investments Inc. the largest U.S. exchange traded funds (ETF) strategist to pay $35 million to settle charges it made false claims about the performance of its flagship investment product.
The SEC had charged F-Squared with touting a seven-year track record in its AlphaSector strategy that was not based on strategies connected to real money, as well as with using faulty calculations to inflate results. F-Squared reported $25 billion in ETF-managed-portfolio assets as of September, according to Morningstar Inc. AlphaSector grew to become one of the most popular  ETF strategies with portfolio managers, who used the funds as building blocks and often promoted them as mitigating the risks of a stock market rout after the 2008 financial crisis.

F-Squared, which also manages a suite of five mutual funds for Virtus Investment Partners Inc., agreed to retain for an additional nine months a compliance consultant hired earlier this year. Virtus (VRTS) shares rose 1.57% in afternoon trading Monday.

The operator of a stock exchange that allowed clients to use bitcoins to trade in certain securities was ordered by U.S. regulators to pay $68,000 to resolve claims that he did not register the exchanges.  Ethan Burnside and his company, BTC Trading Corp, operated two online exchanges through which account holders could buy, sell and trade securities of companies in the virtual currency business, the Securities and Exchange Commission said on Monday in announcing the settlement.

Burnside agreed to be barred from the securities industry but would be able to reapply after two years. His lawyer, Steve Ungar, said in a statement that they were pleased the SEC had approved the settlement, and that Burnside worked to protect website users and to cooperate with the SEC.

The exchanges had solicited more than 10,000 users who opened online accounts and executed more than 425,000 trader, the SEC said.

The Securities and Exchange Commission has filed civil fraud charges against two Massachusetts men and a California lawyer saying they falsely hyped a stock in a company called CitySide Tickets Inc. They touted the company as a ticket reseller that would be a good target for takeover by Ticketmaster.

The Boston-based stock promoters, Coleman Flaherty of Hingham and Thomas Brazil of Topsfield, were charged by the US Attorney with conspiracy, securities fraud, and wire fraud. The third man, attorney Richard Weed of Newport Beach, Calif., was charged with the same thing.

The men apparently raised over $3 million which the SEC wants returned plus interest and penalties.

The U.S. Securities and Exchange Commission  barred Edward L. Maggiacomo Jr. and Edward J. Hanrahan for five years, from working in the securities industry for five years for their roles as brokers in an investment scheme that exploited terminally ill Rhode Islanders.

scheme to steal and use the identities of terminally ill and elderly people to obtain $25 million in illicit gains.

A federal grand jury indicted another person, not a broker, who owned Estate Planning Resources, and his employee, Raymour Radhakrishnan, in 2011 on 60-plus counts, including conspiracy, mail fraud, wire fraud, identity theft, aggravated identity theft and money laundering related to a complex investment strategy that targeted dozens of people, many with only months to live.

Yesterday, the Securities and Exchange Commission announced its largest award to date to w foreign whistleblower who revealed an ongoing financial fraud which “would have been very difficult to detect,” according to Andrew Ceresney Director of the SEC’s enforcement division.

This came just a week after Attorney General Eric Holder said he wanted to boost payouts to motivate whistleblowers to submit information about financial wrongdoing.

The difference between the SEC program and other whistleblower programs is that the tipster can retain their anonymity and file through their counsel without fear of disclosure. The False Claims Act doesn’t allow for this. It is thought that this will allow whistleblowers to retain their positions within companies violating laws by committing fraud on investors.

AgFeed, a Tennessee based hog production company, which was based in China, will pay $18 million to settle a Securities and Exhange Commission investigation which alleged that it reported false revenues to boost its stock price the SEC has announced. According to the agency, AgFeed inflated the revenue by $239 million by creating false invoices for the sale of feed and sales of hogs that didn’t actually exist

The case against AgFeed is among more than 20 the SEC has filed against U.S.-traded Chinese companies and their officials over alleged accounting fraud and other issues. Over the past few years, regulators, auditors and investors have raised questions about more than 170 U.S.-traded Chinese companies about their accounting and disclosure practices.

The $18 million settlement will be distributed to victims of the company’s fraud, the SEC said. The settlement is subject to approval by both the Tennessee court where the SEC’s lawsuit was filed and the Delaware court overseeing AgFeed’s bankruptcy.

The Securities and Exchange Commission has issued its first whistleblower award of $300,000 to a compliance auditor for a company. The whistleblower reported financial wrongdoing to the SEC after the company failed to take action after the employee reported it internally.

The Securities and Exchange Commission announced Friday that is has awarded its first whistleblower award to an employee who performed audit and compliance functions.

The employee, who was awarded more than $300,000, reported wrongdoing to the SEC after the company failed to take action when the employee reported it internally.