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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.

				

			

			
						
					
			

	
		
		

			

				
				
March 6, 2018

				 The SEC announced that it charged the New York Stock Exchange and two affiliated exchanges with regulatory failures in connection with multiple episodes, including several disruptive market events.聽 The charges arose from five separate investigations and include the first-ever charged violation of Regulation SCI.聽 The Commission adopted Reg SCI to strengthen the technology infrastructure and integrity of the U.S. securities markets, and today charged two NYSE exchanges with violating Reg SCI鈥檚 business continuity and disaster recovery requirement.聽 In settlement, the exchanges agreed to pay a $14 million penalty.聽According to the SEC鈥檚 order, the violations include erroneously implementing a market-wide regulatory halt, negligently misrepresenting stock prices as 鈥渁utomated鈥� despite extensive system issues ahead of a total shutdown of two of the exchanges, and applying price collars during unusual market volatility on Aug. 24, 2015, without a rule in effect to permit them 鈥� a move that resulted in order imbalances being resolved more slowly.聽				 					 

						
Tagged in:
													  Financial Institution Fraud, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 5, 2018

				 The SEC charged a Edwin Shaw LLC with illegally brokering dozens of investments by foreign nationals seeking U.S. residency.聽Between April 2014 and March 2017, Edwin Shaw solicited foreign nationals to invest in securities issued by a taxi and limousine company based in Queens, New York.聽 The investments were marketed to investors interested in applying for legal residency through the federal government鈥檚 EB-5 Immigrant Investor Program, which provides a path to legal residency for foreigners who invest directly in a U.S. business or private 鈥渞egional centers鈥� that promote economic development in specific areas and industries.聽Edwin Shaw agreed to a cease-and-desist order and agreed to pay disgorgement of $400,000 plus prejudgment interest of $54,209.20 and a penalty of $90,535.聽				 					 

						
Tagged in:
													  Securities Fraud, 
													  Visa Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 2, 2018

				 The SEC announced securities fraud charges against a Beaufort Securities Ltd. and Peter Kyriacou in connection with manipulative trading in the securities of HD View 360 Inc., a U.S.-based microcap issuer.聽 The SEC also announced charges against HD View鈥檚 CEO Dennis Marcino, William T. Hirschy, and three entities they control for manipulating HD View鈥檚 securities as well as the securities of another microcap issuer, West Coast Ventures Group Corp.聽 The SEC further announced the institution of an order suspending trading in the securities of HD View.聽These charges arise in part from an undercover operation by the Federal Bureau of Investigation, which also resulted in related criminal prosecutions against these defendants by the Office of the United States Attorney for the Eastern District of New York.聽				 					 

						
Tagged in:
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
February 28, 2018

				 The SEC charged three-time recidivist Steven J. Muehler with operating an unregistered broker-dealer, facilitating an unregistered securities offering, and defrauding small businesses, while promising to help them raise money from investors.聽 Three companies under Muehler鈥檚 control, Muehler鈥檚 wife, Claudia M. Muehler, and his associate, Koorosh 鈥淒anny鈥� Rahimi, were also charged. 聽Because the scheme is ongoing, the SEC is also seeking a preliminary injunction to stop Muehler鈥檚 ongoing violations of the securities laws, pending trial of the action.聽The SEC鈥檚 complaint, which was filed in federal court in Los Angeles, also charges Muehler with violating a cease-and-desist order issued by the Commission in 2016 barring Muehler from associating with any broker-dealer.聽 The SEC has filed a parallel action in the same court to enforce that Commission order. According to the complaint, Muehler鈥檚 companies are not registered as broker-dealers.聽 But since at least November 2015, Muehler and his companies have nonetheless agreed to provide broker-dealers services to more than 20 small businesses, including identifying and soliciting investors and utilizing a purportedly proprietary online securities exchange to help raise funds from investors.聽 In return, Muehler and his companies received fees, the right to a percentage of any funds raised from investors, and the right to an equity stake in each small business customer.聽				 					 

						
Tagged in:
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
February 28, 2018

				 The SEC announced that Minnesota-based broker-dealer and investment adviser Ameriprise Financial Services 聽has agreed to settle charges for recommending and selling higher-fee mutual fund shares to retail retirement account customers and for failing to provide sales charge waivers.聽According to the SEC鈥檚 order, Ameriprise Financial Services Inc. disadvantaged certain retirement account customers by failing to ascertain their eligibility for less expensive mutual fund share classes. 聽Ameriprise recommended and sold these customers more expensive mutual fund share classes when less expensive share classes were available.聽 Ameriprise also failed to disclose that it would receive greater compensation from the purchases and that the purchases would negatively impact the overall return on the customers鈥� investments.聽The SEC鈥檚 order instituted a settled administrative and cease-and-desist proceeding. Ameriprise consented to a cease-and-desist order, a censure, and a penalty of $230,000.聽				 					 

						
Tagged in:
													  Financial Institution Fraud, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
February 21, 2018

				 The SEC charged BitFunder and its founder Jon E.聽Montroll聽with operating an unregistered securities exchange and defrauding users of that exchange.聽 The SEC also charged the operator with making false and misleading statements in connection with an unregistered offering of securities. The SEC alleges that BitFunder and its Montroll operated BitFunder as an unregistered online securities exchange and defrauded exchange users by misappropriating their bitcoins and failing to disclose a cyberattack on BitFunder鈥檚 system that resulted in the theft of more than 6,000 bitcoins. The SEC also alleges that Montroll sold unregistered securities that purported to be investments in the exchange and misappropriated funds from that investment as well.聽				 					 

						
Tagged in:
													  Cryptocurrency, 
													  Misrepresentations, 
													  Regulatory Violations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
February 16, 2018

				 The SEC announced charges against three Israeli residents, a Washington DC attorney, and an Israeli auditor for a fraudulent scheme to create a large amount of shell companies. The three Israeli residents were聽SharonePerlstein,听Aric Swartz, and聽Hadas听驰补谤辞苍. The three created at least 15 shell companies and filed false or misleading registration statements and reports with the SEC.聽Jonathan Strum聽was the DC attorney that helped the Israeli residents in establishing the shell companies and Baltimore-based Israeli auditor聽Alan Weinberg聽issued misleading audit reports for at least seven of the shell companies.聽聽The SEC charges resulted in penny stock bars for the Israeli residents and prohibitions for Strum and Weinberg from appearing before the SEC.聽				 					 

						
Tagged in:
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
February 16, 2018

				 The SEC announced the suspension聽聽of trading in three companies due to similar statements made about the acquisition of cryptocurrency and block-chain聽technologhy聽assets. The three companies affected by the suspension are聽Cherubim Interests, Inc.,听PDX Partners, Inc., and聽Victura聽Construction Group, Inc. All three companies had made statements about acquiring AAA-rated assets in cryptocurrency and聽blockchain聽technology with one of the companies (Cherubim) announcing a financing commitment for an initial coin offering. The SEC determined there were questions as to the accuracy of the nature of the companies鈥� business and value of their assets as reported in press releases.聽				 					 

						
Tagged in:
													  Cryptocurrency, 
													  Misrepresentations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
February 12, 2018

				 The SEC announced an enforcement action against聽Deutsche Bank Securities, Inc.聽that resulted in a repayment of more than $3.7 million to consumers, including $1.48 million in disgorgement payments. The enforcement action was based on an SEC investigation that found traders and salespeople making false and misleading statements when negotiating sales of commercial mortgage-backed securities. The false and misleading statements led customers to overpay聽聽for the securities and Deutsche Bank failed to have an adequate compliance program to prevent and detect the misconduct by its employees.聽				 					 

						
Tagged in:
													  Financial Institution Fraud, 
													  Housing and Mortgage Fraud, 
													  Misrepresentations, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
March 14, 2018

				 The SEC charged Jun Ying, a former chief information officer of a U.S. business unit of Equifax with insider trading in advance of the company鈥檚 September 2017 announcement about a massive data breach that exposed the social security numbers and other personal information of about 148 million U.S. customers.聽According to the SEC鈥檚 complaint, Ying, who was next in line to be the company鈥檚 global CIO, allegedly used confidential information entrusted to him by the company to conclude that Equifax had suffered a serious breach.聽 The SEC alleges that before Equifax鈥檚 public disclosure of the data breach, Ying exercised all of his vested Equifax stock options and then sold the shares, reaping proceeds of nearly $1 million.聽 According to the complaint, by selling before public disclosure of the data breach, Ying avoided more than $117,000 in losses.聽 See related post re: final judgment, July 18, 2019.				 					 

						
Tagged in:
													  Cybersecurity and Data Breaches, 
													  Insider Trading, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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