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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.

				

			

			
						
					
			

	
		
		

			

				
				
June 17, 2019

				 Audit and accounting firm KPMG LLP will pay a $50 million SEC penalty to resolve charges that the firm revised its audit workpapers in an effort to improve KPMG鈥檚 performance in PCAOB inspections planned for the audits in question after wrongfuly obtaining PCAOB lists of inspection targets.听 The SEC also found that numerous KPMG audit professionals cheated on internal training exams.听 In addition to the penalty, KPMG agreed to undertake specified compliance measures, including the retention of an independent consultant.听 Former KPMG officials face individual criminal charges.听 				 					 

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

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 14, 2019

				 In the SEC鈥檚 largest recovery from a broker for improper ADR practices, Industrial and Commercial Bank of China Financial Services LLC (ICBCFS) has agreed to pay more than $42 million for improperly handling pre-released American Depository Receipts (ADRs).听 Because ADRs represent foreign shares of a foreign company, they usually require a deposit of a corresponding number of foreign shares, but can be pre-released if certain conditions are met.听 ICBCFS allegedly facilitated the early issuance of ADRs in order to allow certain tax-advantaged borrowers to collect dividends without taxes.听 This left the door open for abusive practices such as the inflation of securities held by foreign issuers, short selling, and dividend arbitrage.听 				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 6, 2019

				 The SEC has filed a federal court action against Kik Interactive, Inc. The company, which previously offered an online messaging application, raised more than $100 million through the sale of "Kin" tokens, an unregistered digital asset.听 Kik marketed the Kin cryptocurrency as an investment which would trade on secondary markets, and which Kik would incorporate in its messaging platform, creating a Kin transaction network both on and off the messaging platform.听 According to the SEC's complaint, these Kik platforms did not, in fact, exist.听 Kik did not comply with securities registration requirements in offering the Kin tokens for sale, and the SEC alleges that in failing to do so, Kik violated Section 5 of the Securities Act of 1933.听 				 					 

						
Tagged in:
													  Cryptocurrency, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
June 3, 2019

				 The SEC made a $3 million whistleblower award to be shared by multiple anonymous whistleblowers who jointly submitted a tip to the SEC Whistleblower Program regarding their employer.听 The tip, reporting an alleged securities law violation that impacted retail investors, led to a successful enforcement action by the SEC.听 The SEC also noted that the whistleblowers had undertaken significant efforts to report the issues internally and seek to have them corrected.听 				 					 

						
Tagged in:
													  SEC Whistleblower Reward Program, 
													  Securities Fraud, 
													  Whistleblower Case, 
													  Whistleblower Rewards, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
May 24, 2019

				 The SEC announced an award of more than $4.5 million to an anonymous whistleblower.听 The whistleblower sent an anonymous tip to the company alleging significant wrongdoing, and also submitted the same information to the SEC within 120 days of reporting it to the company. The company opened an internal investigation as a result of the whistleblower's tip, and subsequently self-reported to the SEC and another agency, resulting in a recovery by the government.听 				 					 

						
Tagged in:
													  SEC Whistleblower Reward Program, 
													  Whistleblower Case, 
													  Whistleblower Rewards, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
May 7, 2019

				 The SEC has tentatively settled insider trading charges with a Nevada man who allegedly engaged in prohibited insider trading after he peeked at confidential details of a possible acquisition by Cintas Corporation while at the home of Cintas鈥檚 general counsel, a lifelong friend.听Armed with information about the company鈥檚 plan to acquire G&K Services, Brian Fettner purchased G&K stock through his ex-wife and ex-girlfriend鈥檚 brokerage accounts, then persuaded both a third love interest and his father to purchase G&K stock on their own.听When the merger was publicly announced in August 2016, accounts associated with Fettner netted profits exceeding $250,000.听Fettner is expected to pay a penalty of $252,995, and his ex-wife and ex-girlfriend is expected to disgorge of their illicit gains.听				 					 

						
Tagged in:
													  Financial and Investment Fraud, 
													  Insider Trading, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
May 3, 2019

				 New Hampshire-based GT Advanced Technologies, Inc. and its then-CEO Thomas Gutierrez have consented to entry of an order by the SEC finding that they publicly misrepresented the status of an agreement the company had with Apple to supply "sapphire glass" for iPhones, falsely stating that the company expected to hit performance targets under its agreement with Apple, securing funding from Apple and achieving sales projections.听 In fact, the company had repeatedly failed to meet Apple's performance milestones and faced liability to repay more than $300 million that Apple had advanced to GT.听 GT was also found to have misclassified this Apple debt in its financial reports.听 GT later filed for bankruptcy protection.听 The parties agreed to cease and desist from further violations, and Gutierrez agreed to pay a $140,000 monetary sanction.听 				 					 

						
Tagged in:
													  Accounting Fraud, 
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
April 25, 2019

				 Indianapolis-based trucking company Celadon Group, Inc., has agreed to pay $42.2 million in restitution to shareholders, $7 million of which will be credited to a disgorgement pursuant to agreement with the SEC, to settle allegations of accounting fraud.听 Celadon was alleged to have avoided the recognition of $20 million in impairment charges and losses by recording a series of equipment trades as sales at inflated values.听 Celadon management is further alleged to have falsely stated to its auditors that the equipment was sold at fair market value. Celadon has entered into a deferred prosecution agreement calling for specific compliance measures and cooperation in ongoing investigation of the accounting fraud.听 ; ; 				 					 

						
Tagged in:
													  Accounting Fraud, 
													  Criminal Proceedings, 
													  Financial and Investment Fraud, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
April 2, 2019

				 Former CEO of Jumio, Daniel Mattes, will pay more than $17 million to settle SEC charges of defrauding investors in the Silicon Valley based private mobile payments company. The SEC complaint alleges that Mattes exaggerated Jumio鈥檚 2013 and 2014 revenues while selling his personal shares to investors in the private, secondary market. When Jumio filed for bankruptcy in 2016, the shares became worthless and investors lost everything. Mattes is barred from being an officer or director of a publicly traded company in the U.S. Further, he must pay more than $16 million in disgorgement and prejudgment interest plus a $640,000 penalty.听The SEC also settled separate proceedings against Jumio鈥檚 former CFO, Chad Starkey, for failing to exercise reasonable care concerning the financial statements and signing stock transfer agreements that falsely implied that the board of directors had approved Mattes鈥� sales. 				 					 

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

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 29, 2019

				 A German provider of dialysis products and services has agreed to pay a total of $231 million to the DOJ and SEC for violating the Foreign Corrupt 91吃瓜网 Act (FCPA). Fresenius Medical Care AG & Co. KGaA (FMC) admitted to paying $30 million in bribes to government officials throughout Africa, the Middle East, and other regions, in order to procure business that eventually earned it over $140 million in profits. Although it voluntarily self-disclosed the misconduct in 2012, the misconduct continued in certain countries until 2016. As part of the resolution, Fresenius has entered into a non-prosecution agreement with the DOJ and will pay $85 million in criminal penalties to the DOJ, as well as $147 million in disgorgement and interest to the SEC. ; ; 				 					 

						
Tagged in:
													  FCPA, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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