Securities and Exchange Commission Archives

Business

SEC Staff to Host July 9 Roundtable on Emerging Markets

Washington DC (STL.News) The Securities and Exchange Commission today announced July 9 as the date for its staff round-table to hear the views of investors, other market participants, regulators, and industry experts on the risks of investing in emerging markets, including China. Over the past decade, U.S. investors, and the U.S. capital markets more generally, have increased exposure to companies with significant operations in emerging markets, including China—the largest emerging market and the world’s second largest economy. Investments in emerging markets, including China, entail significant disclosure, financial reporting and other risks for U.S. investors. Significantly, while the U.S. securities laws and regulations applicable to emerging market companies listed on U.S. exchanges...

Business

Jefferies to Pay Nearly $4 Million for Improper Handling of ADRs

(STL.News) – The Securities and Exchange Commission today announced that broker-dealer Jefferies LLC will pay nearly $4 million to settle charges of improper handling of “pre-released” American Depositary Receipts (ADRs). ADRs are U.S. securities that represent foreign shares of a foreign company, and they require a corresponding number of foreign shares to be held in custody at a depositary bank. The practice of “pre-release” allows ADRs to be issued without the deposit of foreign shares, provided brokers receiving them have an agreement with a depositary bank and the broker or its customer owns the number of foreign shares that corresponds to the number of shares the ADRs represent. The SEC’s order finds that Jefferies improperly borrowed pre-released ADRs from other brokers when Jeff...

Business

Chief Administrative Law Judge Brenda Murray to Retire

(STL.News) – The Securities and Exchange Commission today announced that Chief Administrative Law Judge Brenda Murray is retiring after 50 years of federal service, including 25 years as Chief Administrative Law Judge of the SEC. As the Chief Judge of the Office of Administrative Law Judges, Judge Murray has led the office that is responsible for conducting hearings, issuing initial decisions, and adjudicating matters in administrative proceedings. She presided with impartiality and expertise over Commission cases against those charged with fraud and other violations of securities laws. During her tenure, the Commission came to rely on her clarity of opinions and thoughtful approach to this important role. “Judge Murray’s independent, fair-minded approach to the role of administrative ...

Business

SEC Charges Man for Defrauding Elderly Investors

(STL.News) – The Securities and Exchange Commission announced charges against an Arizona resident for fraudulently raising $700,000 from elderly investors between April 2017 and May 2018. According to the SEC's complaint, Conrad Coggeshall of Scottsdale, Arizona told investors that they were investing in Business Owners Tax Relief, LLC, a successful mergers and acquisitions firm based in New York that would pay investors periodic interest at fixed rates. Instead, the complaint alleges that no such firm existed and Coggeshall deposited investors' funds into brokerage and bank accounts for an Arizona company he owns with the same name. Coggeshall allegedly used those funds to trade securities, incurring significant losses, and to pay personal expenses, including the rent for his apartment....

Business

SEC Charges Former Top Executives of Healthcare Advertising Company With $487 Million Fraud

(STL.News) – The Securities and Exchange Commission today amended a complaint to charge four former executives of Outcome Health, a private healthcare advertising company, with fraud in raising nearly half a billion dollars by falsely portraying the company as an overwhelming success to investors, clients, and auditors. The SEC's amended complaint alleges that Outcome Health's former executives, CEO Rishi Shah, President Shradha Agarwal, CFO Brad Purdy, and Executive VP Ashik Desai, engaged in a fraudulent scheme to misrepresent the company's business successes while raising hundreds of millions of dollars from unsuspecting investors. Outcome Health charges pharmaceutical company clients to display ads in doctors' offices, and the amended complaint alleges the defendants were aware of or...

Business

SEC Announces Conference on Macroeconomic and Structural Trends and Dynamics Affecting the Capital Markets

(STL.News) – The Securities and Exchange Commission today announced that it will host a conference on Dec. 4 entitled “The State of Our Securities Markets.” The conference will bring together current and former government officials and experts from different areas of the private sector to explore and discuss the ever-changing economic, risk and market environment and what those changes mean for the structure and function of the securities markets. Areas of focus at the conference will include global macroeconomic trends—and their impacts on our capital markets; changes to the global equity and credit markets—including how today’s markets differ from those of the early 2000s and market concentration and fragmentation within certain areas of the securities markets, including relevant cause...

Business

Court Sentences Florida Resident to Prison and Orders Payment of Over $3 Million in Market Manipulation Scheme

(STL.News) – U.S. District Court for the District of Massachusetts sentenced St. Petersburg, Florida resident Gregory M. Bercowy in a criminal action brought by the United States Attorney for the District of Massachusetts in February 2019 charging securities fraud. In a parallel civil action arising from similar facts, the Securities and Exchange Commission had charged Bercowy in April 2018 with manipulating the stock price of Aureus, Inc., a penny stock company incorporated in Nevada. In the criminal matter, the court sentenced Bercowy to seventeen months imprisonment and one year of supervised release, and ordered him to pay $3,334,009 in restitution. Bercowy had pled guilty on March 27, 2019 to the charges of conspiracy to commit securities fraud. In the SEC's civil action, on May 2...

Business

SEC Charges Real Estate Company, Hartman Wright Group, LLC and its Founder, Tytus W. Harkings with $8.75 Million Offering Fraud

Washington DC (STL.News) - The Securities and Exchange Commission filed charges against Hartman Wright Group, LLC, a real estate company, and its founder, Tytus W. Harkins, for raising over $8 million in an unregistered real estate-based offering fraud. According to the SEC's complaint filed in the U.S. District Court for the District of Colorado, Hartman Wright Group, a Colorado company, and Harkins, a Montana resident, have operated a fraudulent scheme since January 2015, raising more than $8 million from at least 25 investors. The complaint alleges that Hartman Wright Group and Harkins solicited investors through paid finders, mailing lists, seminars, and the company's website, telling investors that the company found distressed or undervalued mobile home parks, purchased them and mad...

Business

SEC News: RSM US LLP Charged With Violating Auditor Independence Rules

Washington DC (STL.News) - The Securities and Exchange Commission today charged public accounting firm RSM US LLP with violations of the agency’s auditor independence rules in connection with more than 100 audit reports involving at least 15 audit clients. According to the SEC’s order, RSM US repeatedly represented that it was “independent” in audit reports issued on the clients’ financial statements, which were included or incorporated by reference in public filings with the Commission or provided to investors. Instead, the SEC found that RSM US or its associated entities, including other member firms of the RSM International network, provided non-audit services to, and had an employment relationship with, affiliates of RSM US audit clients, which violated the SEC’s auditor independence...

Business

SEC News: SEC Charges TherapeuticsMD With Regulation FD Violations

Washington DC (STL.News) - The Securities and Exchange Commission today charged TherapeuticsMD Inc., a pharmaceutical company headquartered in Boca Raton, Florida, with violations of Regulation FD based on its sharing of material, nonpublic information with sell-side research analysts without also disclosing the same information to the public. The SEC’s order finds that on two separate occasions in 2017, TherapeuticsMD selectively shared material information with analysts about the company’s interactions with the U.S. Food and Drug Administration (FDA). As detailed in the SEC’s order, on June 15, 2017, one day after a publicly-announced meeting with the FDA about a new drug approval, TherapeuticsMD sent private messages to sell-side analysts describing the meeting as “very positive and p...

Business

Cantor Fitzgerald and BMO Capital Charged for Improper Handling of ADRs

Washington DC (STL.News) - The Securities and Exchange Commission today announced that broker Cantor Fitzgerald & Co. will pay more than $647,000 and broker BMO Capital Markets Corporation will pay over $3.9 million to settle charges of improper handling of "pre-released" American Depositary Receipts (ADRs). With today's actions, the SEC has charged 13 financial institutions in its ongoing investigation into abusive ADR pre-release practices, which, thus far, has included monetary settlements exceeding $427 million. ADRs – U.S. securities that represent foreign shares of a foreign company – require a corresponding number of foreign shares to be held in custody at a depositary bank. The practice of "pre-release" allows ADRs to be issued without the deposit of foreign shares, provided...

Business

SEC News: Facebook to Pay $100 Million for Misleading Investors About the Risks It Faced From Misuse of User Data

Washington DC (STL.News) - The Securities and Exchange Commission (SEC) today announced charges against Facebook Inc. for making misleading disclosures regarding the risk of misuse of Facebook user data. For more than two years, Facebook’s public disclosures presented the risk of misuse of user data as merely hypothetical when Facebook knew that a third-party developer had actually misused Facebook user data. Public companies must identify and consider the material risks to their business and have procedures designed to make disclosures that are accurate in all material respects, including not continuing to describe a risk as hypothetical when it has in fact happened. Facebook has agreed to pay $100 million to settle the charges. According to the SEC’s complaint, in 2014 and 2015, the ...

Business

SEC Charges Securities Lawyer, William Scott Lawler and Microcap Agent, Natalie Bannister, with Fraud

Washington DC (STL.News) - The Securities and Exchange Commission (SEC) Friday charged an Arizona-based attorney and a Missouri-based agent of microcap shell companies with securities fraud and registration violations. According to the SEC's complaint, from February 2015 to April 2017, attorney William Scott Lawler engaged in schemes to fraudulently transfer control over the shares of two publicly-traded shell companies to his client. The SEC alleges that Lawler represented his client on the purchase of Broke Out Inc. (BRKO) and the predecessor to Immage Biotherapeutics Corp. (IMMG). Microcap agent Natalie Bannister participated in the BRKO scheme by arranging the sale of BRKO to the client. Among other deceptive conduct, the complaint alleges that Lawler directed and Bannister engaged...

Business

SEC News: John Berry, Associate Regional Director in Los Angeles Office, to Leave Agency

Washington DC (STL.News) - The Securities and Exchange Commission Wednesday announced that John W. Berry, Associate Regional Director for enforcement matters in the Los Angeles Regional Office, is leaving the agency this month after eight years of service. Mr. Berry joined the SEC in 2011 as Regional Trial Counsel for the Los Angeles office. In that role, he oversaw the office’s securities enforcement litigation. He was promoted to Associate Regional Director in 2016 and has co-supervised almost 60 enforcement attorneys, trial counsel, and accountants. “John has been a dedicated public servant who has made a significant impact on the SEC’s enforcement program both in Los Angeles and throughout the country,” said Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement. “His ...

Business

SEC Proposes to Align Margin Requirements for Security Futures With Requirements for Similar Financial Products

Washington DC (STL.News) - The Securities and Exchange Commission (SEC) announced yesterday that it has proposed to align the minimum margin required on security futures with other similar financial products. The proposal—which, if the CFTC votes in favor of, would be a joint CFTC-SEC proposal—would set the minimum margin requirement for security futures at 15 percent of the current market value of each security future. The SEC and the Commodity Futures Trading Commission (CFTC) (together, the Commissions) have joint rulemaking authority regarding margin requirements for security futures. In 2002, the Commissions adopted rules establishing margin requirements for unhedged security futures products at 20 percent. In light of lower margin requirements that have been established for compa...

Business

SEC Names Sagar Teotia As Chief Accountant

Washington DC (STL.News) - The Securities and Exchange Commission Wednesday announced that Sagar Teotia has been named the agency’s Chief Accountant. As Chief Accountant, Mr. Teotia will serve as the principal advisor to the Commission on accounting and auditing matters, and will lead the 45 dedicated staff in the Commission’s Office of the Chief Accountant. He also will be responsible for assisting the Commission with discharging its oversight of the Financial Accounting Standards Board and the Public Company Accounting Oversight Board. “In his role as acting Chief Accountant, Sagar has skillfully continued the exceptional leadership of the office and clearly has the support of his colleagues,” said SEC Chairman Jay Clayton. “I am pleased he will continue to promote the importance of ...

General

SEC Charges Colorado Divorce Lawyer, Michael J. Woodford, in Fraudulent Microcap Scheme

Washington (STL.News) - The Securities and Exchange Commission (SEC) Friday charged lawyer Michael J. Woodford for his role in a fraudulent scheme to conceal attorney Diane D. Dalmy's involvement in preparing legal opinion letters concerning the sale of certain microcap securities from transfer agents and brokerage firms. Dalmy was previously charged by the SEC in a complaint filed in federal court in Colorado in March 2019. Today's SEC action amended that complaint to add Woodford as a defendant for his role in the scheme. The initial complaint alleged that Dalmy recruited a lawyer to facilitate her scheme to circumvent the consequences of being placed on the OTC Market Group Inc.'s list of prohibited attorneys. The OTC Market Group owns and operates the largest U.S. electronic quotat...

Business

SEC Charges New Defendant, Jason Sugarman, in $43 Million Tribal Bonds Scheme

Washington DC (STL.News) - The Securities and Exchange Commission today charged a Los Angeles man for his role in a fraudulent scheme to gain undisclosed control over two registered investment advisers so that he, his partner, and their associates could steal $43 million of client funds they purported to invest in Native American tribal bonds. The SEC alleges that Jason Sugarman, formerly associated with a registered broker-dealer and investment adviser, directed the scheme along with Jason Galanis, whom the SEC has previously charged with securities fraud. According to the SEC’s complaint, Sugarman secured financing to acquire control of investment advisers so that he and his associates could use client funds to purchase Native American tribal bonds. The SEC further alleges that Sugarm...