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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.

				

			

			
						
					
			

	
		
		

			

				
				
February 2, 2018

				 The Securities and Exchange Commission today charged a purported hedge fund manager in New York City with a brazen offering and investment adviser fraud thereby putting an end to an ongoing scheme. The SEC alleges that, since at least 2014, Nicholas Joseph Genovese and his hedge fund Willow Creek Investments LP raised more than $5.3 million from at least six investors by affirmatively misrepresenting his prior money-management, securities industry experience, and size of operations.聽In particular, the SEC charged that Genovese:聽falsely stated that he managed $4 billion of the Genovese Drug Store family's assets; falsely stated that his hedge fund's investment adviser had $30-39 billion of assets under management, when, in reality, it appears to have had less than $10 million in assets under management; falsely stated that his advisory firm had between 42 and 60 employees, when, in reality, it had less than 10 employees; and聽falsely stated that his hedge fund had investment gains of 30-40 percent聽per year, when, in reality, it sustained losses.聽In addition, in furtherance of his scheme, Genovese lied about his education and prior work experience, and concealed his criminal past from investors. The SEC also alleges that Genovese and his advisory firm Willow Creek Advisors LLC misappropriated investor funds to fund securities trading in Genovese's personal brokerage account, which sustained over $8 million of trading losses between 2015 and 2017, and Genovese's lifestyle by paying approximately $263,000 for, among other things, ATM cash withdrawals, food, hotel and transportation charges, including being chauffeured in a Bentley. 				 					 

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

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
February 2, 2018

				 The Securities and Exchange Commission today announced that the Miami-based businessman behind an alleged scheme involving investments in a Vermont-based ski resort has agreed to pay back more than $81 million of investor money that he used聽illegally. According to an聽SEC complaint filed in 2016聽in federal court in Miami, Ariel Quiros allegedly misused more than $50 million in investor funds to purchase a different ski resort and to fund personal expenses such as income taxes and two luxury New York City condominium聽purchases.聽Investors were told their money would specifically be used for construction projects at the Jay Peak Resort and a nearby proposed biomedical research facility. Companies owned by Quiros also allegedly failed to contribute approximately $30 million in investor funds toward Jay Peak construction, with two projects going uncompleted.聽This jeopardized investors'聽investments as well as their participation in the EB-5 Immigrant Investor Program under which Quiros and his businesses solicited the money. 				 					 

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

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
January 30, 2018

				 The Securities and Exchange Commission obtained a court order halting an allegedly fraudulent initial coin offering (ICO) that targeted retail investors to fund what it claimed to be the world鈥檚 first 鈥渄ecentralized bank.鈥� According to the SEC's complaint, filed in federal district court in Dallas on Jan. 25 and unsealed late yesterday, Dallas-based AriseBank used social media, a celebrity endorsement, and other wide dissemination tactics to raise what it claims to be $600 million of its $1 billion goal in just two months. AriseBank and its co-founders Jared Rice Sr. and Stanley Ford allegedly offered and sold unregistered investments in their purported "AriseCoin" cryptocurrency by depicting AriseBank as a first-of-its-kind decentralized bank offering a variety of consumer-facing banking products and services using more than 700 different virtual currencies.聽 AriseBank鈥檚 sales pitch claimed that it developed an algorithmic trading application that automatically trades in various cryptocurrencies. 				 					 

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

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
January 22, 2018

				 The Securities and Exchange Commission announced charges against six certified public accountants 鈥� including former staffers at the Public Company Accounting Oversight Board (PCAOB) and former senior officials at KPMG LLP 鈥� arising from their participation in a scheme to misappropriate and use confidential information relating to the PCAOB's planned inspections of KPMG. The SEC's Division of Enforcement and Office of the Chief Accountant allege聽that the former PCAOB officials made unauthorized disclosures of PCAOB plans for inspections of KPMG audits, enabling the former KPMG partners to analyze and revise audit workpapers in an effort to avoid negative findings by the PCAOB.聽Two of the former PCAOB officials had left the PCAOB to work at KPMG.聽The SEC's Enforcement Division and Office of the Chief Accountant聽allege聽the third official leaked PCAOB data at the time he was seeking employment with KPMG.聽The three former KPMG partners were all in the firm's national office.聽According to the SEC's order, the misconduct began in 2015 and persisted until February 2017.聽Soon after the conduct was discovered, the six respondents were terminated, resigned or placed on leave before separating from KPMG and the PCAOB, respectively. The six CPAs were Brian Sweet, Cynthia Holder, Jeffrey Wada, David Middendorf, Thomas Whittle, and David Britt.  For update on conviction at trial, see March 11, 2019.				 					 

						
Tagged in:
													  Accounting Fraud, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 21, 2017

				 The Securities and Exchange Commission聽today announced聽charges聽and an asset freeze聽against聽a group of unregistered funds and their聽owner who allegedly bilked聽thousands聽of聽retail investors, many of them seniors, in聽a $1.2 billion Ponzi scheme. SEC investigators filed this action to prevent further dissipation of investor assets after obtaining court orders in聽September聽and聽November聽in subpoena enforcement actions that forced the unregistered companies to open their books. According to the SEC鈥檚 complaint,聽unsealed today in federal court in Miami, Florida,聽Robert H. Shapiro聽and a group of聽unregistered investment companies called the聽Woodbridge聽Group of Companies LLC formerly headquartered in Boca Raton, Florida,聽defrauded more than 8,400 investors聽in unregistered Woodbridge funds.聽				 					 

						
Tagged in:
													  Ponzi Schemes, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 19, 2017

				 The Securities and Exchange Commission today charged a Wall Street stockbroker with illegally accepting more than $1 million in undisclosed kickbacks for giving certain customers preferential access to lucrative IPOs, enabling them to reap major trading profits in the secondary markets. The SEC alleges that Brian Hirsch subverted allocation policies and procedures at two brokerage firms where he worked on the wealth syndicate desk, making long-running arrangements with certain customers to give them larger allocations of coveted public offerings being marketed by the firms.聽 In most instances, the customers sold their stock into the market as soon as possible to turn a substantial profit at the expense of the firms鈥� other brokerage customers and the issuers鈥� interests in raising capital from long-term investors. 				 					 

						
Tagged in:
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 12, 2017

				 The Securities and Exchange Commission today charged a biopharmaceutical company with committing a series of accounting controls and disclosure violations, including the failure to properly report as compensation millions of dollars in perks provided to its then-CEO and then-CFO. According to the SEC, Tennessee-based Provectus lacked sufficient controls surrounding the reporting and disclosure of travel and entertainment expenses submitted by its executives.聽 The order further finds that Provectus鈥� former CEO, Dr. H. Craig Dees, obtained millions of dollars from the company using limited, fabricated, or non-existent expense documentation, and that these unauthorized perks and benefits were not disclosed to investors.聽 Provectus鈥� former CFO, Peter R. Culpepper, also allegedly obtained $199,194 in unauthorized and undisclosed perks and benefits. 				 					 

						
Tagged in:
													  Accounting Fraud, 
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 11, 2017

				 The Securities and Exchange Commission today charged a former day trader with making more than $1 million in illegal insider trading profits as part of a ring that allegedly stole confidential information from investment banks and clients so they could trade in advance of secondary stock offerings. The SEC alleges that Joseph Spera schemed with former colleagues, posing as legitimate portfolio managers to induce investment bankers to bring them ''over the wall''聽and share nonpublic details about upcoming secondary offerings while agreeing not to disclose the information to others or trade before the offerings were announced.聽 Spera and the others involved allegedly violated those agreements and tipped each other with confidential information that enabled them to trade for a profit ahead of public announcements. 				 					 

						
Tagged in:
													  Insider Trading, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 7, 2017

				 The Securities and Exchange Commission charged a registered representative in Pennsylvania with operating a long-running offering and investment advisory fraud. The SEC鈥檚 complaint, filed in federal court in Philadelphia, alleges that Paul W. Smith raised approximately $2.35 million from approximately 30 investors 鈥� many of whom were his brokerage customers 鈥� by representing that he would invest their money in publicly traded securities through The Haverford Group, an outside partnership that Smith formed and did not disclose to his broker-dealer employers. However, Smith allegedly made very few securities investments and instead largely used investors鈥� money to repay other investors and for his own personal use. 				 					 

						
Tagged in:
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
December 6, 2017

				 The Securities and Exchange Commission today continued its crackdown on brokers who defraud customers, charging two New York-based brokers with making unsuitable trades that were costly for customers and lucrative for the brokers.聽 The case follows similar charges of excessive trading by brokers brought in聽January,聽April,聽and聽September. The SEC鈥檚 complaint, filed in federal court in Manhattan, alleges that Zachary S. Berkey聽of Centerreach, New York, and Daniel T. Fischer聽of Greenwich, Connecticut, conducted in-and-out trading that was almost certain to lose money for customers while yielding commissions for themselves.聽 According to the complaint, 10 customers of Four Points Capital Partners LLC, where Berkey and Fischer previously worked, lost a total of $573,867 while Berkey and Fischer received approximately $106,000 and $175,000, respectively, in commissions. 				 					 

						
Tagged in:
													  Misrepresentations, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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