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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.

				

			

			
						
					
			

	
		
		

			

				
				
September 20, 2017

				 The Securities and Exchange Commission today charged Peter C. Chang with insider trading in company stock by using secret brokerage accounts held in the names of his wife and brother. The SEC alleges that Chang, who also was the founder and chairman of the board at Alliance Fiber Optic Products, generated more than $2 million in illicit profits and losses avoided by trading on nonpublic information and tipping his brother ahead of two negative earnings announcements and the company鈥檚 merger. 聽 According to the SEC鈥檚 complaint, Chang was the company鈥檚 largest shareholder and required under the federal securities laws to disclose his ownership of company securities as an officer and director.聽 Chang allegedly traded company shares secretly in the family member accounts, often times from his work computer after attending board meetings where confidential information was discussed.聽				 					 

						
Tagged in:
													  Insider Trading, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 14, 2017

				 The Securities and Exchange Commission today charged the investment services subsidiary of SunTrust Banks with collecting more than $1.1 million in avoidable fees from clients by improperly recommending more expensive share classes of various mutual funds when cheaper shares of the same funds were available. SunTrust Investment Services has agreed to pay a penalty of more than $1.1 million to settle the charges.聽 SunTrust separately began refunding the overcharged fees plus interest to affected clients after the SEC started its investigation.聽 SEC examiners cited the practice during a compliance review of the firm in mid-2015.聽 More than 4,500 accounts were affected. 				 					 

						
Tagged in:
													  Regulatory Violations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 7, 2017

				 The Securities and Exchange Commission today announced insider trading charges against Brett Kennedy who allegedly leaked confidential information to his former fraternity brother in advance of a company earnings announcement so they could turn an illegal profit.聽 The college friend and his trading partner also are charged in the SEC鈥檚 complaint. The SEC alleges that Kennedy accessed nonpublic 2015 first quarter earnings information without authorization while working at Amazon and shared it with Maziar Rezakhani, who illegally traded on the financial results before their public release to make more than $116,000 in illicit profits. 				 					 

						
Tagged in:
													  Insider Trading, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 7, 2017

				 The Securities and Exchange Commission today announced that State Street has agreed to pay more than $35 million to settle charges that it fraudulently charged secret markups for transition management services and separately omitted material information about the operation of its platform for trading U.S. Treasury securities. An SEC order finds that State Street鈥檚 scheme to overcharge transition management customers generated approximately $20 million in improper revenue for the firm.聽 State Street used false trading statements, pre-trade estimates, and post-trade reports to misrepresent its compensation on various transactions, especially purchases and sales of bonds and other securities that trade outside large transparent markets. 				 					 

						
Tagged in:
													  Dark Pools, 
													  Financial Institution Fraud, 
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 6, 2017

				 The Securities and Exchange Commission today charged Craig Carton and Joseph Meli with stealing millions of dollars from investors who were allegedly promised their funds would be used for the purchase and resale of concert tickets. In a complaint filed in federal district court in Manhattan, the SEC alleges that Carton and Meli falsely claimed they had access to large blocks of face value tickets to popular concert performances.聽 According to the SEC鈥檚 complaint, investors were falsely promised high returns from the price markups in ticket resales.聽 But instead of purchasing tickets for resale, Carton and Meli allegedly misappropriated at least $3.6 million to repay earlier investors and cover such other expenses as Carton鈥檚 gambling debts. 				 					 

						
Tagged in:
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
September 6, 2017

				 The Securities and Exchange Commission today charged Scott Newsholme with stealing more than $1 million from clients to support his gambling habit and other personal expenditures.聽 The SEC alleges that Newsholme of Farmingdale, New Jersey, fabricated account statements, doctored stock certificates, and forged promissory notes as part of a scheme in which he convinced clients seeking his financial planning advice to give him their money to invest in various securities.聽 Instead of investing clients鈥� money, Newsholme allegedly cashed their investment checks at a check-cashing store and pocketed the funds while assuring clients that their assets were safe and flourishing. 				 					 

						
Tagged in:
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 31, 2017

				 The Securities and Exchange Commission today charged an accountant and three others with insider trading on market-moving news about the New Jersey-based pharmaceutical company where the accountant formerly worked. The SEC's complaint, filed in federal court in New Jersey, alleges that Evan R. Kita, a CPA and former accountant at Celator Pharmaceuticals Inc., tipped two of his friends with confidential information about the clinical trial results for Celator鈥檚 cancer drug and its acquisition by Dublin-based Jazz Pharmaceuticals Plc almost three months later.聽 Celator's stock rose more than 400 percent in March 2016 when it announced positive results for its drug to treat leukemia, and Jazz Pharmaceuticals offered to pay a hefty premium in May 2016 to acquire Celator.聽According to the SEC's complaint, Daniel Perez and Richard Yu purchased Celator stock based on Kita's tips before the two announcements and agreed to share their trading profits with him.聽 The SEC alleges that Richard Yu passed Kita's tips to his father, Chiang Yu, who also traded in advance of both announcements.聽 To avoid detection, Kita allegedly communicated with Perez and Richard Yu through an encrypted smartphone application. 				 					 

						
Tagged in:
													  Insider Trading, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 23, 2017

				 The Securities and Exchange Commission today announced that the Beaumont Financing Authority, and its then-executive director have agreed to settle charges that they made false statements about prior compliance with continuing disclosure obligations in five bond offerings. Also settling charges are O鈥機onnor & Company Securities Inc., the underwriting firm behind those offerings and its co-founder for failing to conduct reasonable due diligence on the continuing disclosure representations. The SEC鈥檚 Enforcement Division uncovered the violations as part of a review of municipal issuers and underwriters that did not voluntarily self-report under the agency鈥檚聽Municipalities Continuing Disclosure Cooperation (MCDC) Initiative.聽 The Beaumont Financing Authority and O鈥機onnor & Company 聽would have been eligible for more lenient remedies had they self-reported during the MCDC Initiative. 				 					 

						
Tagged in:
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 22, 2017

				 The Securities and Exchange Commission today charged investment adviser Jeremy Drake with defrauding two clients, a high profile professional athlete and the athlete鈥檚 wife, by deceiving them about the investment advisory fees they were paying.聽 The SEC alleges that Drake went to elaborate lengths to conceal his fraud, including creating and sending false documents and masquerading as another person to corroborate his lies.聽The SEC alleges that Drake, then with Los Angeles-based HCR Wealth Advisors, deceived the clients for more than three years, telling them that they paid a special 鈥淰IP鈥� annual rate of 0.15 to 0.20 percent of their assets under management when in fact they paid 1 percent.聽 Drake鈥檚 deception led the clients to pay $1.2 million more in management fees than Drake represented.聽 Drake personally received approximately $900,000 of incentive-based compensation based on the fees paid by the clients during the course of his deception. 				 					 

						
Tagged in:
													  Misrepresentations, 
													  Securities Fraud, 
												
						

					
	
							
	
		
		
	


 			




	
		
		

			

				
				
August 21, 2017

				 The Securities and Exchange Commission today announced that hedge fund advisory firm Deerfield Management Company L.P. has agreed to pay more than $4.6 million to settle charges that it failed to establish, maintain, and enforce policies and procedures reasonably designed to prevent the misuse of inside information, including information about confidential government decisions. The case relates to聽insider trading charges聽that the SEC recently filed against current and former Deerfield analysts, a political intelligence analyst who passed them information, and an employee at the Centers for Medicare and Medicaid Services (CMS).聽According to the SEC鈥檚 order, Deerfield conducted extensive research in the health care sector to help inform its investment decisions, and engaged research firms specializing in political intelligence about upcoming regulatory and legislative decisions. 聽But Deerfield鈥檚 policies and procedures required only an initial review of the research firms鈥� own policies and procedures, and Deerfield otherwise placed the burden on its own employees to police themselves by identifying issues and informing supervisors. 				 					 

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

					
	
							
	
		
		
	


 			


											

						

								

									
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