Financial Enforcement Actions | Week of August 26 to 31

Financial Enforcement Action Summary

Weekly Enforcement Action Tracker

FRS

1 Enforcement Document

$16,000.00 in Fines

Penalties: $16,000.00
Respondent: The Bank of New York Mellon
Violation: A pattern or practice of violations under Section 102(f)(2) of the Act, 42 U.S.C. § 4012a(f)(2)… Read More

FINRA

6 Enforcement Documents

$1,466,781.00 in Fines

Penalties: TBD
Respondent: Victoria Lucia DelloRusso
Violation: On September 26, 2017, while associated with RBC, DelloRusso possessed prohibited material during unscheduled breaks while taking the Series 7 examination, in violation of FINRA Rule 2010… Read More

Penalties: N/A
Respondent: J. Gordon Cloutier Jr.
Violation: Failing to appear and provide testimony under oath as requested pursuant to FINRA Rule 8210… Read More

Penalties: $5,000.00
Respondent: David W. Unsworth
Violation: Unsworth failed to disclose to NSC his participation in private securities transactions involving a private company. Unsworth sold his personal and business holdings in the company in March and April 2016 for proceeds totaling $68,237.99 to an individual without prior notice to NSC. Consequently, he violated FINRA Rules 3280 and 2010… Read More

Penalties: $1,011,781.00
Respondent: Matthew Evan Eckstein
Violation: Respondent made false and misleading statements in connection with purchases and sales of securities in willful violation of Section 10(b) of the Exchnage Act and Exchange Act Rule 10b-5, as well as FINRA Rules 2020 and 2010… Read More

Penalties: N/A
Respondent: David N. Winger
Violation: Between April 2015 and April 2018 (the “Relevant Period”), while associated with PFS, Winger converted customer funds in violation of FINRA Rules 2150(a) and 2010… Read More

Penalties: $450,000.00
Respondent: Electronic Transaction Clearing, Inc.
Violation: Respondent failed to submit, untimely submitted, or inaccurately submitted billions of ROEs over a four-year period… Read More

FTC

1 Enforcement Document

$21,000,000.00 in Fines

Image Source: Expert Senior Planning

Penalties: $21,000,000.00
Respondent: Lights of America Refunds
Violation: Violating federal law by overstating the light output and life expectancy of their LED bulbs, and falsely comparing the brightness of their LED bulbs with that of other light bulbs… Read More

SEC

53 Enforcement Documents

$204,564,562.59 in Fines

Penalties: N/A
Respondent: Rio Bravo Oil, Inc. and UAN Cultural & Creative Co., Ltd.
Violation: All of the Respondents are delinquent in their periodic filings with the Commission, have repeatedly failed to meet their obligations to file timely periodic reports, and failed to heed delinquency letters sent to them by the Division of Corporation Finance requesting compliance with their periodic filing obligations or, through their failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letters… Read More

Image Source: WacoTrib

Penalties: TBD
Respondent: Kendricks, et al.
Violation: After meeting at a party, Mychal Kendricks began receiving illegal tips from Damilare Sonoiki, an analyst at an investment bank who had access to confidential, nonpublic information about upcoming corporate mergers. Kendricks allegedly made $1.2 million in illegal profits by purchasing securities in companies that were soon to be acquired and then selling his positions after the deals were publicly announced, in one instance generating a nearly 400 percent return on his investment in just two weeks… Read More

Penalties: N/A
Respondent: David Gray
Violation: The defendants misrepresented to investors that their money would be used to develop and market LottoNet’s business, which purportedly facilitated online and cell phone sales of lottery tickets in various states, and that sales agents did not receive commissions. In fact, at least 35 percent of investor proceeds were allegedly paid to boiler room sales agents in the form of commissions, and Gray allegedly siphoned investor funds from LottoNet for personal spending on clothing, wedding-related expenses, and strip clubs… Read More

Penalties: $97,602,040.00
Respondent: AEGON USA Investment Management, LLC, et al.
Violation: Between July 2011 and June 2015 (the “Relevant Period”), Respondents violated the federal securities laws and rules thereunder while offering, selling, and managing 15 quantitative-model-based mutual funds, variable life insurance investment portfolios, and variable annuity investment portfolios (each of which was a registered investment company and collectively are the “Products”) and separately managed account (“SMA”) strategies (the “Strategies”) (collectively, the “Products and Strategies”)… Read More

Penalties: $25,000.00
Respondent: Kevin A. Giles
Violation: AUIM failed to adopt and implement certain compliance policies and procedures, including failing to take reasonable steps to ensure that: (1) its quantitative models worked as intended both before the Products’ launched and on a periodic basis after they launched; (2) it adopted and implemented reasonable controls regarding the testing, approval, and documentation of any changes to its quantitative models; and (3) the Products’ portfolio managers’ discretion to depart from model-directed trades was defined, monitored, and documented… Read More

Penalties: TBD
Respondent: Lynette M. Robbins
Violation: Between June 2014, and December 2017, Robbins, through Knowles, offered and sold Woodbridge securities. Neither Knowles, Robbins, nor Woodbridge were associated with Commission-registered broker dealers and none of Woodbridge’s securities offerings were registered with the Commission… Read More

Penalties: $69,004,988.00
Respondent: Legg Mason, Inc.
Violation: From approximately 2005 to 2008, Société Générale paid the Libyan Intermediary approximately $26.25 million for supposed “introductory” services. Nevertheless, by at least 2006, two Permal employees were aware that the intermediary was paying bribes to Libyan government officials in order to secure investments. These two now former Permal employees agreed to continue to use the Libyan Intermediary notwithstanding that knowledge… Read More

Penalties: N/A
Respondent: Micra Soundcards Inc., Mirex, Inc. and Myotec, Inc.
Violation: All of the Respondents are delinquent in their periodic filings with the Commission, have repeatedly failed to meet their obligations to file timely periodic reports, and failed to heed delinquency letters sent to them by the Division of Corporation Finance requesting compliance with their periodic filing obligations or, through their failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letters… Read More

Penalties: N/A
Respondent: IDO Security, Inc., Redify Group, Inc. and Spartan Gold Ltd.
Violation: All of the Respondents are delinquent in their periodic filings with the Commission, have repeatedly failed to meet their obligations to file timely periodic reports, and failed to heed delinquency letters sent to them by the Division of Corporation Finance requesting compliance with their periodic filing obligations or, through their failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letters… Read More

Penalties: TBD
Respondent: SEC Complaint – Sandy J. Masselli, Jr. et al.
Violation: This case involves a securities offering fraud perpetrated by Masselli, who misappropriated at least hundreds of thousands, and potentially millions, of dollars from retail investors for his own personal use… Read More

Penalties: $65,000.00
Respondent: Bradley J. Beman
Violation: Beman, despite being aware of the risks that the models would not work as intended, did not take sufficient steps to have AUIM confirm the accuracy of the models. He also did not identify the Analyst as the portfolio manager of certain of the Products despite being aware of his role in developing and managing the models… Read More

Penalties: N/A
Respondent: Equilar Capital Corp. and Neuro-Biotech Corporation
Violation: All of the Respondents are delinquent in their periodic filings with the Commission, have repeatedly failed to meet their obligations to file timely periodic reports, and failed to heed delinquency letters sent to them by the Division of Corporation Finance requesting compliance with their periodic filing obligations or, through their failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letters… Read More

Penalties: TBD
Respondent: SEC Complaint – Richard J. Greenlaw et al.
Violation: This case involves the unregistered offering and sale of securities in a Mainebased medical marijuana company NECS, by Greenlaw, the founder and managing member of NECS, as well the Cannabis-Related Entities in violation of the registration provisions of the federal securities laws… Read More

Penalties: TBD
Respondent: Sandy J. Masselli, Jr. et al.
Violation: Sold certain investors stock in the Carlyle entities, which were purportedly engaged in online gaming, by falsely claiming that the companies were on the verge of conducting a lucrative initial public offering (IPO) and were soon to be listed on major U.S. stock exchanges… Read More

Penalties: $390,142.00
Respondent: Richard J. Greenlaw et al.
Violation: Greenlaw sold ownership interests in the companies by posting advertisements on Craigslist. When prospective investors responded to his online ads, Greenlaw followed up with securities offering documents and sales materials describing the purported marijuana products. No registration statement was on file or in effect with the SEC with respect to this offering of securities… Read More

Penalties: TBD
Respondent: Equitybuild, Inc. et al.
Violation: The defendants sold at least $135 million in unregistered promissory notes to at least 900 investors throughout the country… Read More

Penalties: N/A
Respondent: Great Wall Builders Ltd., PuraMed BioScience, Inc. and TagLikeMe Corp.
Violation: All of the Respondents are delinquent in their periodic filings with the Commission, have repeatedly failed to meet their obligations to file timely periodic reports, and failed to heed delinquency letters sent to them by the Division of Corporation Finance requesting compliance with their periodic filing obligations or, through their failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letters… Read More

Penalties: $1,250,000.00
Respondent: Moody’s Investors Service, Inc.
Violation: This matter concerns Moody’s failure to establish, maintain, enforce and document policies and procedures reasonably designed to clearly define and consistently apply credit rating symbols as required by the Exchange Act… Read More

Penalties: $15,000,000.00
Respondent: Moody’s Investors Service, Inc.
Violation: From 2010 to 2013, MIS failed to establish, maintain, enforce, and document an effective internal control structure with regard to its use of certain models in its methodology for rating RMBS… Read More

Penalties: $10,779.65
Respondent: Delaney Equity Group LLC, David C. Delaney and Ian C. Kass
Violation: Between September 2009 and October 2013, three undisclosed control persons (the “Control Persons”) fraudulently manufactured at least 12 undisclosed “blank check” companies (the “Blank Check Companies”) for sale by reverse merger… Read More

Penalties: N/A
Respondent: John A. Henderson and Global Resources Leadership, LLC
Violation: The SEC is investigating potential violations of the federal securities laws in connection with Global Resources Leadership’s joint venture arrangement with a third party to raise money from investors to buy and sell crude oil. The joint venture arrangement was entered into in or about 2015… Read More

Penalties: $565,470.18
Respondent: David Michael Naylor, CPA
Violation: Engaged in an unregistered general solicitation of ITEC securities, obtained money or property by means of material misrepresentations in the offer or sale of ITEC securities, aided and abetted the making of numerous material misrepresentations in offering documents ITEC provided to prospective investors, and engaged in a fraudulent scheme which resulted in ITEC’s investor funds being misappropriated to pay for personal expenses of ITEC’s control persons and business expenses of entities that provided no services or other benefit to ITEC… Read More

Penalties: TBD
Respondent: 1 Global Capital, LLC, Carl Ruderman, et al.
Violation: Defrauding at least 3,400 retail investors, more than one-third of whom invested their retirement funds. The Florida-based cash advance company and former CEO Carl Ruderman allegedly fraudulently raised more than $287 million since 2014 in unregistered securities sold through a network that included barred brokers… Read More

Penalties: N/A
Respondent: Chad Anthony Lewis
Violation: Between September 2013 and July 2016, Lewis worked at different times both for Aegis Oil, LLC and 7S Oil & Gas, LLC, and offered and sold securities in connection with the respective offerings… Read More

Penalties: TBD
Respondent: Application – John A. Henderson and Global Resources Leadership, LLC
Violation: Respondents John r1. Henderson (“Henderson”) and CJlobal Resources Leadership, LLC (“GRL”) have failed and refused to compl~~ ~Uith subpoenas issued b5~ t~~e United States Securities and Exchange Commission (“SEC”) in connection with its formal investigation into potential violations of the fedeial securities laws, including possible violations of Sections 5(a), 5(c) end “17(a) of t~1e Securities Act of 1933 and Section 10(b) of the Securities Eschang~ Act of 1934 and Rule 10b-5 promulgated thereunder… Read More

Penalties: TBD
Respondent: SEC Complaint – 1 Global Capital, LLC, Carl Ruderman, et al.
Violation: The Commission brings this action as the result of a four-year-long unregistered securities offering fraud conducted by Defendant 1 Global Capital LLC, and overseen by Defendant Carl Ruderman, that victimized thousands of investors nationwide, many of whom used their retirement savings to invest… Read More

Penalties: $7,927,160.76
Respondent: Credit Suisse Securities (USA) LLC and Sanford Michael Katz – Distribution Plan
Violation: Credit Suisse’s disclosures did not adequately inform its advisory clients of the conflict of interest presented by its RMs’ share class selection practices or update or enhance its policies or procedures to address this issue… Read More

Penalties: N/A
Respondent: Visium Asset Management, LP
Violation: By order dated June 30, 2017, the Commission issued the “Omnibus Order Directing the Appointment of Tax Administrator in Administrative Proceedings that Establish Distribution Funds” (“Omnibus Order”),1 authorizing the Secretary to issue orders beginning June 2017 and for calendar year 2018 appointing, upon request by the Commission staff, Miller Kaplan Arase LLP… Read More

Penalties: N/A
Respondent: Credit Suisse Securities (USA) LLC and Sanford Michael Katz
Violation: Katz’s practice of putting advisory clients in Class A shares when those clients were eligible for less expensive institutional share classes resulted in Credit Suisse collecting approximately $3.2 million in 12b-1 fees, approximately $1.1 million of which was paid to Katz… Read More

Penalties: N/A
Respondent: Huntington Bancshares, Inc., et al.
Violation: In the Order, the Commission found that Huntington violated the federal securities laws by overstating its 2001 and 2002 operating earnings and that had it not been for the misstatements, Huntington’s reported operating earnings per share for 2001 and 2002 would have been short of analyst expectations… Read More

Penalties: $581,170.00
Respondent: Amer Deeba
Violation: When Qualys publicly announced its financial results, it reported that it had missed its previously-announced firstquarter revenue guidance and that it was revising its full-year 2015 revenue guidance downward. On the same day, Deeba sent a message to one of his brothers saying, “We announced the bad news today.” The next day, Qualys’s stock price dropped 25%. Although Deeba made no profits from his conduct, Deeba’s brothers collectively avoided losses of $581,170 by selling their Qualys stock… Read More

Penalties: $10,231,157.00
Respondent: Visium Asset Management, LP
Violation: From at least July 2011 to December 2012, Visium, through two of its portfolio managers, engaged in a mismarking scheme, using sham broker quotes to falsely inflate the value of securities held by a fund for which Visium acted as investment adviser (the “Credit Fund”)… Read More

Penalties: N/A
Respondent: SEC Complaint – Amer Deeba
Violation: Deeba tipping his brothers with material nonpublic information, both brothers sold all of their Qualys shares ahead of the announcement and avoided losses of $456,636 and $124,534, respectively… Read More

Penalties: TBD
Respondent: Grenda Group, LLC, et al.
Violation: In 2014, Walter Grenda sold his investment advisory assets, including his longstanding client base, to Grenda Group, LLC and his son, Gregory Grenda, in anticipation of a negative outcome in an SEC fraud investigation… Read More

Penalties: $10,000.00
Respondent: Philip R. Jacoby, Jr.
Violation: The Securities and Exchange Commission deems it appropriate to issue an order of forthwith suspension of Philip R. Jacoby, Jr. pursuant to Rule 102(e)(2) of the Commission’s Rules of Practice [17 C.F.R. § 201.102(e)(2)]… Read More

Penalties: $1,900,000.00
Respondent: Massachusetts Financial Services Company
Violation: This matter arises from material misstatements and omissions by registered investment adviser MFS to certain of its advisory clients and others concerning hypothetical stock returns associated with MFS’s blended research stock ratings. In 2001, MFS introduced its blended research strategies to investors. The blended research strategies combine research ratings from MFS’s fundamental analysts and quantitative models to manage portfolios of stocks for client investment… Read More

Penalties: N/A
Respondent: Bruce A. Broekhuizen
Violation: From at least 2008 to the present, Broekhuizen purchased new issue municipal bonds in primary offerings from underwriters, which he then immediately sold, or “flipped” to broker-dealer customers for a profit… Read More

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