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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.

				

			

			
						
					
			

	
		
		

			

				
				
October 3, 2017

				 The Securities and Exchange Commission today charged Rockey 鈥淩oc鈥� G. Hatfield, Steve E. Lovern, and NanoSave Technologies Inc 聽with defrauding investors in penny stock companies that claimed to have valuable patents.聽 One of those charged had been barred from the penny stock business based on his role in another securities scheme and neither he nor his companies had ever been issued any patents by the U.S. Patent and Trademark Office, the SEC alleged. Hatfield is a repeat offender whose prior securities schemes resulted in a criminal conviction, injunctions, a contempt of court finding, and broker-dealer, investment adviser, and penny-stock bars.聽 The SEC鈥檚 complaint alleges Hatfield controlled the two companies but concealed his role in them by having his wife and Lovern named as corporate officers and directors. According to the SEC鈥檚 complaint, the defendants hired unregistered brokers to cold call investors and pitch investments in 鈥減atent units,鈥� using scripts written by Hatfield, including one that falsely claimed N1 Technologies had patented a cure for staph infections. 				 					 

						
Tagged in:
													  Misrepresentations, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 29, 2017

				 The Securities and Exchange Commission today charged Maksim Zaslavskiy and his companies with defrauding investors in a pair of so-called initial coin offerings (ICOs) purportedly backed by investments in real estate and diamonds. The SEC alleges that Zaslavskiy and his companies have been selling unregistered securities, and the digital tokens or coins being peddled don't really exist.聽According to the SEC's complaint, investors in REcoin Group Foundation and DRC World (also known as Diamond Reserve Club) have been told they can expect sizeable returns from the companies'聽operations when neither has any real operations. Zaslavskiy allegedly touted REcoin as "The First Ever Cryptocurrency Backed by Real Estate."聽 Alleged misstatements to REcoin investors included that the company had a "team of lawyers, professionals, brokers, and accountants"聽that would invest REcoin's ICO proceeds into real estate when in fact none had been hired or even consulted.聽Zaslavskiy and REcoin allegedly misrepresented they had raised between $2 million and $4 million from investors when the actual amount is approximately $300,000. 				 					 

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

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 29, 2017

				 The Securities and Exchange Commission today charged Shane P. Fleming, a former executive at Life Time Fitness Inc., a middleman tipper, and six traders with insider trading ahead of the announcement that the company would be purchased and taken private. In a complaint filed in U.S. District Court in the Northern District of Illinois, the SEC alleges that Fleming, a former vice president of sales at Life Time Fitness, learned of the merger discussions on or before Feb. 23, 2015 and tipped his friend and business partner Bret J. Beshey with the understanding that Beshey would use the information to make a profit and split those profits with Fleming.聽 The SEC alleges that rather than trade in his own name, Beshey tipped his friends Christopher M. Bonvissuto and Peter A. Kourtis with the understanding that both men would kick back a portion of their trading proceeds to Beshey.聽 According to the SEC鈥檚 complaint, Kourtis tipped his friends Alexander T. Carlucci, Dimitri A. Kandalepas, Austin C. Mansur, and Eric L. Weller, and asked Carlucci, Mansur, and Weller to give him a portion of any profits they made from trading on the information, which they agreed to do. 				 					 

						
Tagged in:
													  Insider Trading, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 29, 2017

				 The Securities and Exchange Commission today charged Leonard Vincent Lombardo, The Leonard Vincent Group (TLVG), and Brian Hudlin 聽in an alleged real estate investment scheme utilizing high-pressure sales tactics to pilfer $6 million from retirees and other investors while using the proceeds to fund the broker鈥檚 lavish lifestyle and start e-cigarette businesses. The SEC alleges that Lombardo, who once worked at Stratton Oakmont and has long since been barred from the brokerage industry by the Financial Industry Regulatory Authority for multiple violations, operated the scheme from behind the scenes at his Long Island-based company TLVG with assistance from the CFO, Hudlin.聽According to the SEC鈥檚 complaint, more than 100 investors were defrauded with false claims that their money would be invested in distressed real estate, and some were told their investments had increased by more than 50 percent in a matter of months when in fact there were no actual earnings on their investments.聽 Lombardo allegedly invested only a small fraction of investor money in real estate and used the bulk of it for separate business ventures into the cigarette industry and personal expenses such as car payments on his BMW and Mercedes, marina fees on his boat, and visits to tanning salons. 				 					 

						
Tagged in:
													  Misrepresentations, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 28, 2017

				 The Securities and Exchange Commission today charged three New York-based brokers with making unsuitable recommendations that resulted in substantial losses to customers and hefty commissions for the brokers.聽 One of the brokers agreed to pay more than $400,000 to settle the charges. Brokers must make recommendations that are compatible with their customers鈥� financial needs, investment objectives, and risk tolerances.聽 An SEC examination of the firm Alexander Capital L.P. detected potential misconduct among certain brokers, and the ensuing investigation has led to the filing of an SEC complaint against William C. Gennity and Rocco Roveccio.聽 The SEC also issued an order against Laurence M. Torres. The SEC鈥檚 complaint alleges that Gennity and Roveccio recommended investments that involved frequent buying and selling of securities without any reasonable basis to believe their customers would profit.聽 According to the complaint, since customers incur costs with every transaction, the price of the security must increase significantly during the brief period it is held in an account for even a minimal profit to be realized.聽				 					 

						
Tagged in:
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 28, 2017

				 The South Korean subsidiary of Alere Inc. has agreed to pay more than $13 million to settle charges that it committed accounting fraud through its subsidiaries to meet revenue targets and made improper payments to foreign officials to increase sales in certain countries. The Securities and Exchange Commission issued an order finding that Alere, which produces and sells diagnostic testing equipment, improperly inflated revenues by prematurely recording sales for products that were still being stored at warehouses or otherwise not yet delivered to the customers.聽 According to the SEC鈥檚 order, Alere also engaged in improper revenue recognition practices at several other subsidiaries. 				 					 

						
Tagged in:
													  Accounting Fraud, 
													  FCPA, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 26, 2017

				 The Securities and Exchange Commission today charged Jason Napodano with insider trading prior to the publication of research reports and articles he authored with the false disclaimer that he wasn鈥檛 trading in the companies being covered.聽 He agreed to settle the charges and be barred from trading in penny stocks for the rest of his life. The SEC alleges that Napodano, who headed a division called Zacks Small Cap Research within a larger investment research firm, misled investors in penny stocks by representing that he wasn鈥檛 trading or holding positions in the companies he was writing about while secretly trading the same stocks based on nonpublic information about the publication date of his research.聽 In an effort to evade detection, Napodano allegedly limited his profits from each illegal trade by taking small positions and closing the positions shortly after his reports and articles were published. In addition to a permanent penny stock bar, Napodano agreed to pay full disgorgement of his insider trading profits totaling $143,865.48 plus interest of $17,620.87 and a penalty of $143,865.48.聽 The settlement is subject to court approval. 				 					 

						
Tagged in:
													  Insider Trading, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 22, 2017

				 The Securities and Exchange Commission today filed fraud charges against Aegerion Pharmaceuticals for exaggerating how many new patients actually filled prescriptions for an expensive drug that was its sole source of revenue. Aegerion, now a subsidiary of Novelion Therapeutics, has agreed to pay a $4.1 million penalty to settle the charges that it misled investors on multiple occasions in 2013.聽 The SEC鈥檚 complaint alleges that Aegerion told investors that the number of unfilled prescriptions for Juxtapid was not material and the 鈥渧ast majority鈥� of patients receiving prescriptions ultimately purchased the drug.聽 The SEC alleges that Aegerion鈥檚 records reflect that it was actually around 50 percent of prescriptions that resulted in actual drug purchases. 				 					 

						
Tagged in:
													  Misrepresentations, 
													  Pharma Fraud, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 22, 2017

				 The Securities and Exchange Commission today suspended trading in Grupo Resilient International 聽amid questions surrounding its statements about sending response teams and equipment to help with Hurricane Harvey disaster recovery efforts in Houston and surrounding areas. The聽SEC鈥檚 trading suspension order聽says that a recent press release issued by Texas-based Grupo Resilient claimed that the company added a 鈥淔EMA approved contractor鈥� to the board of its subsidiary and was deploying workers and preparing to deploy a network of mobile broadband trailers to assist in relief efforts. The SEC鈥檚 order also says there are questions regarding the adequacy and accuracy of statements made by the company on other matters in prior press releases.聽 Grupo was previously known as Paradise Ridge Hydrocarbons and trades under the ticker symbol GRUI. 				 					 

						
Tagged in:
													  Misrepresentations, 
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 21, 2017

				 Sweden-based telecommunications provider Telia Company AB has agreed to pay $965 million in a global settlement with the Securities and Exchange Commission, U.S. Department of Justice, and Dutch and Swedish law enforcement to resolve charges related to violations of the Foreign Corrupt 91吃瓜网 Act (FCPA) to win business in Uzbekistan. According to the SEC鈥檚 order, Telia entered the Uzbek telecommunications market by offering and paying at least $330 million in bribes to a shell company under the guise of payments for lobbying and consulting services that never actually occurred.聽 The shell company was controlled by an Uzbek government official who was a family member of the President of Uzbekistan and in a position to exert significant influence over other Uzbek officials, causing them to take official actions to benefit Telia鈥檚 business in Uzbekistan. 				 					 

						
Tagged in:
													  FCPA, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			


											

						

								

									
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