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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.

				

			

			
						
					
			

	
		
		

			

				
				
November 2, 2017

				 The Securities and Exchange Commission today charged a Maryland-based biotech company and four former top executives with prioritizing revenue growth over lawful accounting and misleading investors in the process. The SEC alleges that Osiris Therapeutics routinely overstated company performance and issued fraudulent financial statements for a period of nearly two years.聽 According to the SEC鈥檚 complaint, the company improperly recognized revenue using artificially inflated prices, backdated documents to recognize revenue in earlier periods, and prematurely recognized revenue upon delivery of products to be held on consignment.聽 Osiris Therapeutics and its executives also allegedly used pricing data that they knew was false and attempted to book revenue on a fictitious transaction, among other accounting improprieties. 				 					 

						
Tagged in:
													  Accounting Fraud, 
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
November 1, 2017

				 A petroleum engineer who worked at Texas-based energy company Apache Corporation has agreed to settle SEC charges that he conducted insider trading ahead of a market-moving announcement about the company鈥檚 discovery of a significant new oil source. The SEC alleges that Christopher J. Lollar traded on nonpublic information while working in the company鈥檚 San Antonio office that was performing the geologic and geophysical work to explore and develop the newly discovered resource play called Alpine High.聽 Lollar allegedly conducted trades in Apache shares and call options in the days and weeks leading up to the company鈥檚 Alpine High announcement on Sept. 7, 2016.聽 The value of Lollar鈥檚 brokerage account skyrocketed approximately 2,700 percent after the announcement, and his alleged profits from insider trading totaled $214,295.07. 				 					 

						
Tagged in:
													  Insider Trading, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 31, 2017

				 Investment advisory firm Millennium Management LLC has agreed to pay more than $630,000 to settle charges that it shorted U.S. stocks in companies planning follow-on offerings and then illegally bought shares in the follow-on offerings.聽 聽 An SEC investigation found that Millennium violated an anti-manipulation provision of the federal securities laws known as Rule 105 on four occasions in 2012.聽 Rule 105 prohibits short selling an equity security during a restricted period (generally five business days before a covered public offering) and then purchasing that same security through the offering.聽 By illegally purchasing shares in the follow-on offerings, Millennium reaped $286,889 in illicit profits. 				 					 

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

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 30, 2017

				 The Securities and Exchange Commission today charged Joseph P. Willner with participating in a scheme to access the brokerage accounts of more than 100 unwitting victims and make unauthorized trades to artificially affect the stock prices of various companies. The SEC alleges that Willner generated at least $700,000 in illicit profits by trading in the same securities in his own accounts and taking advantage of the artificial stock prices that resulted from the unauthorized trades placed in the victims鈥� accounts. Willner鈥檚 activities were detected despite his efforts to disguise his real identity while communicating with at least one other individual through online direct messaging applications using a pseudonym, according to the SEC鈥檚 complaint.聽 鈥淟egal trading too hard鈥� is among the online messages noted in the SEC鈥檚 complaint. 聽To mask his payments to the other individual as part of a profit-sharing arrangement, Willner allegedly transferred proceeds of profitable trades to a digital currency company that converts U.S. dollars to Bitcoin and then transmitted the bitcoins as payment.聽				 					 

						
Tagged in:
													  Cryptocurrency, 
													  Misrepresentations, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 25, 2017

				 The Securities and Exchange Commission today charged Mohammed Ali Rashid, a former senior partner at Apollo Management L.P., with defrauding his fund clients by secretly billing them for approximately $290,000 in personal expenditures, including his family vacations, visits to a hair salon, and purchases of designer clothing and high-end electronics. The SEC鈥檚 complaint alleges that Rashid falsely claimed that certain individuals accompanied him to dinners to make it appear various personal expenses had a business purpose, and he doctored a receipt in an effort to justify his purchase of a $3,500 suit for his father as a business expense. 				 					 

						
Tagged in:
													  Misrepresentations, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 17, 2017

				 The Securities and Exchange Commission today charged mining company Rio Tinto and two former top executives with fraud for inflating the value of coal assets acquired for $3.7 billion and sold a few years later for $50 million. The SEC鈥檚 complaint, which was filed in federal court in Manhattan, alleges that Rio Tinto, its former CEO Thomas Albanese, and its former CFO Guy Elliott failed to follow accounting standards and company policies to accurately value and record its assets.聽 Instead, as the project began to suffer one setback after another resulting in the rapid decline of the value of the coal assets, they sought to hide or delay disclosure of the nature and extent of the adverse developments from Rio Tinto鈥檚 Board of Directors, Audit Committee, independent auditors, and investors. 鈥淎s alleged in our complaint, Rio Tinto鈥檚 top executives allegedly breached their disclosure obligations and corporate duties by hiding from their board, auditor, and investors the crucial fact that a multi-billion dollar transaction was a failure,鈥� said Stephanie Avakian, Co-Director of the SEC鈥檚 Enforcement Division. 				 					 

						
Tagged in:
													  Accounting Fraud, 
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 12, 2017

				 The Securities and Exchange Commission today announced that a whistleblower has earned an award of more than $1 million for providing the SEC with new information and substantial corroborating documentation of a securities law violation by a registered entity that impacted retail customers. 鈥淭oday鈥檚 award reflects the impact that whistleblower information can have in uncovering violations that harm the retail investor,鈥� said Jane Norberg, Chief of the SEC鈥檚 Office of the Whistleblower.聽 鈥淲e welcome high-quality information about potential securities-law violations from those in and outside a company.鈥� More than $162 million has been awarded to 47 whistleblowers.聽 By law, the SEC protects the confidentiality of whistleblowers and does not disclose information that might directly or indirectly reveal a whistleblower鈥檚 identity.聽 Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action.聽				 					 

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

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 11, 2017

				 The Securities and Exchange Commission today James M. Schneider and Andrew H. Wilson alleging they helped facilitate a microcap fraud scheme involving undisclosed 鈥渂lank check鈥� companies secretly bound for reverse mergers. In complaints filed in the U.S. District Court for the Southern District of Florida, the SEC alleges that Schneider of Hillsboro Beach, Florida, and Wilson of Nevada City, California, contributed to a fraud involving at least 22 undisclosed blank check companies. Such companies have no operations, making them attractive targets for those seeking reverse mergers for use in pump-and-dump schemes. 聽Despite claims of legitimate business plans, separate management, and independent shareholders, the 22 companies and their securities were secretly controlled by Steven Sanders, along with Daniel P. McKelvey or Alvin S. Mirman, and sold in reverse mergers.聽 The SEC previously filed聽, who were separately convicted of related criminal charges and sentenced to prison. 				 					 

						
Tagged in:
													  Market Manipulation and Trading Violations, 
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 11, 2017

				 The Securities and Exchange Commission today charged Lisa Bershan, her husband Barry Schwartz, and their business associate Joel Margulies for defrauding investors in a company that falsely claimed to be developing a caffeinated chocolate snack and nearing an acquisition by Monster Energy or Coca-Cola Co. The SEC鈥檚 complaint alleges Bershan, Schwartz, and Margulies, falsely promised investors that after being acquired, Starship Snack Corp. investors would get a one-to-one exchange of Starship shares for Monster or Coca-Cola shares. According to the SEC鈥檚 complaint, Bershan and Margulies also falsely claimed that investors had 鈥渘o down-side risk鈥� and Bershan personally guaranteed that investors could get their investment back with 5 percent interest if the shares failed to appreciate over a year. According to the SEC鈥檚 complaint, Starship had no agreement with Monster Energy or Coca-Cola , and Bershan and Schwartz used investor funds as their own personal piggy bank, spending them to rent and decorate a New York City apartment, and on travel, meals, and other personal expenses. 				 					 

						
Tagged in:
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
October 5, 2017

				 The Securities and Exchange Commission today charged Michael Scronic with fraud stemming from lies to retail investors about the value of their investments in a Ponzi-like scheme. The SEC alleges that, starting in approximately 2010, Scronic began to raise money from at least 42 friends and acquaintances, many of whom were from his suburban community, in order to invest in a risky options trading strategy.聽He allegedly lured investors by informing them that he had a long and impressive track record of proven returns.聽He also allegedly lied to investors about the liquidity of investments, telling one investor that "what's cool about my fund is that i'm [sic] only in publicly traded options and cash so any redemptions are met within 2 business days so if you do need to withdraw for your business needs it will be quick and painless."聽However, the SEC alleges that Scronic was actually hemorrhaging investor money through massive trading losses, with at least $15 million in investment losses since April 2010.聽For the period ending June 30, 2017, Scronic allegedly reported to investors total assets of at least $21,837,475 while聽the balance in his brokerage account on June 30, 2017 was just under $27,500. 				 					 

						
Tagged in:
													  Misrepresentations, 
													  Ponzi Schemes, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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