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SEC Enforcement Actions

					
The  (SEC) is the United States agency with primary responsibility for enforcing federal securities laws. Whistleblowers with knowledge of violations of the federal securities laws can submit a claim to the SEC under the SEC Whistleblower Reward Program, and may be eligible to receive 聽monetary rewards and protection against retaliation by employers.


Below are summaries of recent SEC settlements or successful prosecutions. If you believe you have information about fraud which could give 聽rise to an SEC enforcement action and claim under the SEC Whistleblower Reward Program, please contact us to speak with one of our experienced whistleblower attorneys.

				

			

			
						
					
			

	
		
		

			

				
				
August 30, 2021

				 Cambridge Investment Research Inc. and related entities will pay $250,000 to resolve SEC charges that the investment advisor and broker-dealer violated Regulation S-P regarding the safeguarding of customer records and information. The SEC alleged that between January 2018 and June 2021, email accounts of Cambridge personnel were taken over by unauthorized third parties, resulting in the exposure or potential exposure of personally identifying information of approximately 5,000 Cambridge customers and clients.聽 The SEC found that Cambridge discovered the first email account takeover in January 2018, but failed to adopt and implement firm-wide enhanced security measures for cloud-based email accounts until 2021, resulting in the exposure and potential exposure of additional customer and client records and information.聽 				 					 

						
Tagged in:
													  Cybersecurity and Data Breaches, 
													  Financial and Investment Fraud, 
													  Financial Institution Fraud, 
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 30, 2021

				 Cetera Advisor Networks LLC and related entities will pay $300,000 to resolve SEC charges that the investment advisor and broker-dealer violated Regulation S-P regarding the safeguarding of customer records and information and provision of breach notification to customers. The SEC alleged that between November 2017 and June 2020, email accounts of Cetera personnel were taken over by unauthorized third parties, resulting in the exposure of personally identifying information of more than 4,000 Cetera customers and clients.聽 The accounts were not protected with multi-factor authentication, even though Cetera鈥檚 policies required MFA.聽 				 					 

						
Tagged in:
													  Cybersecurity and Data Breaches, 
													  Financial and Investment Fraud, 
													  Financial Institution Fraud, 
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 27, 2021

				 Five whistleblowers whose information and assistance led to three separate SEC enforcement actions have been awarded approximately $2.6 million.聽 In the first award, one whistleblower received $1.2 million for developing a complex algorithm, applying it to publicly available data, and providing the agency with independent analysis that saved valuable time and resources.聽 In the second award, three whistleblowers received over $1 million for reporting information after reporting internally failed to achieve results.聽 In the third award, one whistleblower received $350,000 for providing independent analysis based on patterns detected in publicly available data, which required expertise developed over many years.聽 				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  SEC Whistleblower Reward Program, 
													  Whistleblower Rewards, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 24, 2021

				 Healthcare Services Group, Inc., which provides housekeeping, dining, and other services to healthcare facilities, will pay $6 million to resolve charges of improper accounting.聽 The SEC alleged that the company failed to comply with GAAP in 2014 and 2015 by failing to timely accrue for and disclose material loss contingencies related to litigation against the company despite evidence that liability was probable and reasonably estimable.聽 As a result, the company was able to report earnings per share that matched market expectations.聽 The SEC investigation resulted from its 鈥淓PS Initiative,鈥� which uses data analytics to identify improper accounting and disclosure practices.聽 HCSG's former CFO John C. Shea and its controller, Derya Warner, will pay penalties of $50,000 and $10,000, respectively.聽 				 					 

						
Tagged in:
													  Accounting Fraud, 
													  Financial and Investment Fraud, 
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 17, 2021

				 Investment advisor Murchinson Ltd., together with associated individuals Marc Bistricer and Paul Zogala, will pay restitution, interest, and penalties totaling nearly $9 million to resolve allegations that they caused a hedge fund client to violate Regulation SHO regarding uncovered short sales and other problematic trading practices.聽 Respondents allegedly provided erroneous order-marking information, thereby causing the hedge fund brokers to mismark the hedge funds鈥� sales as 鈥渓ong,鈥� and resulting in their failure to borrow or locate shares prior to executing the sales.聽 				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Financial Institution Fraud, 
													  Market Manipulation and Trading Violations, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 16, 2021

				 Education publishing company Pearson plc agreed to pay $1 million to resolve an SEC investigation into its disclosures regarding a 2018 data breach that resulted in the exposure of millions of student and school administrator records, including birthdates, e-mail addresses, user names, and hashed passwords.聽 The SEC found that Pearson understated the nature and scope of the incident, overstated the company鈥檚 data protections, and had inadequate controls and procedures regarding the assessment and reporting of cybersecurity incidents.聽 Pearson, which is publicly traded in the UK, is a foreign private issuer with ADRs trading on the NYSE. 				 					 

						
Tagged in:
													  Cybersecurity and Data Breaches, 
													  Defendants, 
													  Financial and Investment Fraud, 
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 10, 2021

				 The SEC has made awards of nearly $6 million total to two whistleblowers.聽 According to the agency, one whistleblower received $3.5 million for providing valuable new information that expanded the geographic scope of an existing investigation.聽 The second whistleblower received more than $2.4 million for providing information about previously unknown conduct.聽 				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  SEC Whistleblower Reward Program, 
													  Whistleblower Rewards, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 9, 2021

				 Cryptocurrency trading platform Poloniex LLC has agreed to pay more than $10 million in disgorgement, interest, and penalties to settle charges that it operated an unregistered online digital asset exchange.聽 The SEC found that between 2017 and 2019 the Poloniex trading platform met the criteria of an 鈥渆xchange鈥� as defined by the securities laws but was neither registered as a national securities exchange nor subject to an exemption from registration. 				 					 

						
Tagged in:
													  Cryptocurrency, 
													  Financial and Investment Fraud, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 6, 2021

				 Blockchain Credit Partners, which did business as DeFi Money Market, and its principals, Gregory Keough and Derek Acree, have agreed to disgorge $12.85 million and cease and desist from the unregistered sale of securities using smart contracts and so-called 鈥渄ecentralized finance鈥� (DeFi) technology.聽 The SEC found that defendants offered and sold mTokens and DMG governance tokens purporting to pay interest and profits, and told purchasers that that DeFi Money Market would pay them those amounts by using investor assets to buy 鈥渞eal world鈥� income-generating assets like car loans. However, these income-generating assets did not generate enough income to cover appreciation of the investors鈥� principal, largely as a result of the price volatility of the digital assets used to purchase the tokens.聽 Rather than disclose this to investors, defendants used other funds, including personal funds, to make principal and interest payments for mToken redemptions. Keough and Acree have each also agreed to pay penalties of $125,000.聽 				 					 

						
Tagged in:
													  Cryptocurrency, 
													  Financial and Investment Fraud, 
													  Misrepresentations, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 6, 2021

				 The SEC has awarded more than $3.5 million to three whistleblowers whose information and assistance led to two separate enforcement actions.聽 In the first order, an individual received approximately $2 million for providing information that launched an investigation into an ongoing fraud.聽 In the second order, one whistleblower received approximately $1 million and a second whistleblower received approximately $500,000 for providing information that assisted the agency in an existing investigation.聽 				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  SEC Whistleblower Reward Program, 
													  Whistleblower Rewards, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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