Financial Enforcement Actions | Week of August 5 to 10

Financial Enforcement Action Summary

Weekly Enforcement Action Tracker

FTC

1 Enforcement Document

$0.00 in Fines

Penalties: TBD
Respondent: Sellers Playbook
Violation: Defendants lure consumers into purchasing expensive business opportunities by deceptively offering consumers a “full-service, turnkey package” for getting their “piece of the $400 Billion Amazon Pie.” They represent that purchasers are likely to earn thousands of dollars a month by implementing 2 CASE 0:18-cv-02207-DWF-TNL Document 1 Filed 07/30/18 Page 2 of 54 Defendants’ “customized system to perfect the individual’s ability to sell on Amazon effectively and profitably.” Defendants’ earnings claims are false and unsubstantiated. Contrary to Defendants’ representations, purchasers of Defendants’ business opportunities are unlikely to earn the advertised income… Read More

NYSE

1 Enforcement Document

$345,000.00 in Fines

Penalties: $345,000.00
Respondent: Casey Securities, LLC
Violation: Violated: (i) NYSE Arca Options Rule 6.77A, by failing to obtain customer approval for busting and adjusting trades and by adjusting trades to take advantage of intra-day price movement; (ii) NYSE Arca Options Rule 6.46, by failing to use due diligence to execute orders at the best prices available… Read More

FINRA

11 Enforcement Documents

$931,175.06 in Fines

Penalties: $15,000.00
Respondent: Roy Aurelio Gaytan
Violation: From approximately December 1, 2016 through April 1, 2017, Gaytan used discretionary authority to execute securities transactions in a customer’s brokerage account at another FINRA member firm, using the customer’s login credentials, and failed to notify his employing member of this discretionary account. As a result, Gaytan violated NASD Rule 3050(c) and FINRA Rule 2010… Read More

Penalties: $3,718.81
Respondent: Bradley C. Reifler
Violation: Refusing to answer questions in two sessions of on-the-record testimony… Read More

Penalties: $22,456.25
Respondent: The Oak Ridge Financial Services Group, Inc.
Violation: The Financial Industry Regulatory Authority’s (“FINRA”) Department of Market Regulation, Fixed Income Investigations Team (“staff”), conducted a review of the firm’s pricing of corporate bond transactions and related supervisory requirements during the period of July 1, 2016, through September 30, 2016 (the “review period”). As detailed below, during the review period, the firm violated FINRA Rules 2121, 3110, and 2010… Read More

Penalties: N/A
Respondent: Alex G. Herrera
Violation: In 2018, Herrera refused to provide information requested by FINRA staff pursuant to FINRA Rule 8210. Herrera thereby violated FINRA Rules 8210 and 2010… Read More

Penalties: N/A
Respondent: Pamela Shuttleworth
Violation: In July 2018, Shuttleworth refused to provide on-the-record testimony requested by FINRA pursuant to FINRA Rule 8210 in connection with a FINRA investigation. By virtue of the foregoing, Shuttleworth violated Rule 8210 and 2010… Read More

Penalties: TBD
Respondent: Devin Lamarr Wicker
Violation: Between March 2016 and November 2016, while he was associated with, and a 60% owner of, former member firm Bonwick Capital Partners, LLC (CRD No. 156469), Respondent Devin Lamarr Wicker used a customer’s funds to pay Bonwick’s business expenses without the customer’s authorization or approval… Read More

Penalties: $875,000.00
Respondent: Nomura Securities International, Inc.
Violation: From March 3, 2014 through February 20, 2015 (the “Relevant Period”), Nomura incorrectly calculated its Proprietary Accounts of Broker-Dealers (“PAB”) reserve computation, resulting in a shortfall in the Firm’s PAB reserve account for all but one week of the Relevant Period… Read More

Penalties: $5,000.00
Respondent: Polizois P. Katsaros
Violation: While registered with FINRA, Katsaros willfully failed to timely amend his Uniform Application for Securities Industry Registration or Transfer (“Form U4”) to disclose that he had been charged with, and pled guilty to, a felony, in violation of Article V, Section 2(c) of FINRA’s By-Laws and FINRA Rules 1122 and 2010… Read More

Penalties: N/A
Respondent: Thrivent Investment Management Inc.
Violation: By failing to reasonably supervise mutual fund sales to ensure that Eligible Customers received the benefit of applicable sales charge waivers and breakpoint discounts, Thrivent violated NASD Rule 3010 (for misconduct before December 1, 2014), FINRA Rule 3110 (for misconduct on or after December 1, 2014), and FINRA Rule 2010… Read More

Penalties: TBD
Respondent: John W. Cutshall
Violation: Between 2012 and 2014 (the “Relevant Period”), General Securities Representative John Cutshall abused his position as trustee for trusts that he administered on behalf of deceased and elderly customers by converting and improperly using funds from the trusts, and he thwarted his member firms’ ability to supervise his trustee activities by failing to disclose that he had been named as a beneficiary to a trust for which he had been serving as trustee… Read More

Penalties: $10,000.00
Respondent: Robert Edward White
Violation: Between 2010 and 2016, White accepted a total of $58,000 in monetary gifts from a firm customer, in violation of FINRA Rule 2010… Read More

FRS

1 Enforcement Document

$8,600,000.00 in Fines

Penalties: $8,600,000.00
Respondent: Citigroup, Inc.
Violation: Engaged in unsafe or unsound banking practices within the meaning of section 8 of the FDI Act… Read More

SEC

29 Enforcement Documents

$12,921,080.63 in Fines

Penalties: $7,900,000.00
Respondent: Murakami, et al.
Violation: Murakami misappropriated investor funds for business and personal expenses and made approximately $1.3 million in Ponzi-like payments… Read More

Penalties: $5,000.00
Respondent: Gregory G. Young
Violation: On November 28, 2016, the Commission obtained a temporary restraining order and asset freeze against Blackbird, Kelley, and Shumway, based on evidence that they fraudulently collected at least $3.1 million from investors through the use of falsified documents and material misrepresentations and omissions regarding the amount of funds controlled by Blackbird, the use of investor funds, and the past performance and expected profitability and safety of invested funds… Read More

Penalties: $1,970,000.00
Respondent: Ribbon Communications Inc., Mark Greenquist, and Michael Swade
Violation: This matter concerns two material misstatements made by Sonus Networks, Inc. (“Sonus”)2 on January 8, 2015 and February 18, 2015, concerning its quarterly revenue estimates and guidance for the three months ended March 27, 2015 (“Q1 2015”)… Read More

Penalties: $84,361.63
Respondent: Aaron R. Smith
Violation: These proceedings arise out of insider trading by Aaron R. Smith in the securities of Valley Commerce Bancorp (“Valley Commerce”), a publicly-traded Northern California bank… Read More

Penalties: TBD
Respondent: City of Victorville, et al.
Violation: The city and the airport authority defrauded bond investors by failing to disclose that the projected tax revenues used to repay the bonds were based on inflated property valuations and were overstated by 36 percent… Read More

Penalties: $85,894.00
Respondent: Christopher Collins, et al., Lauren Zarksy, Dorothy Zarsky
Violation: Christopher Collins learned of the negative clinical trial results on the evening of June 22, 2017, in an email from Innate’s CEO to the board of directors, which stated that the CEO had “extremely bad news” indicating that drug trial results “pretty clearly indicate ‘clinical failure’.” The SEC alleges that Christopher Collins replied to the CEO’s email within minutes, expressing his surprise at the results, and then called and spoke to his son minutes later… Read More

Penalties: TBD
Respondent: SEC Complaint – Salvadore D. Palermo
Violation: Defendant Salvadore D. Palermo (“Defendant” or “Palermo”), a former fixed-income trader for J.P. Turner, L.L.C. (“J.P. Turner”), a now-defunct broker-dealer formerly registered with the Commission, knowingly entered a series of fictitious sales of certain financial instruments which resulted in J.P. Turner’s creating and maintaining inaccurate financial books, records, and reports… Read More

Penalties: $100,000.00
Respondent: Daniel M. Fitzpatrick, CPA
Violation: ITT engaged in conduct that violated certain provisions of the federal securities laws with respect to two student loan programs guaranteed by ITT and in connection with ITT’s books and records and certain public filings for the year-end 2012 and the first three quarters of the fiscal year 2013… Read More

Penalties: N/A
Respondent: Receivership Order – Arthur Lamar Adams and Madison Timber Properties, LLC
Violation: Defendants engaged in a multi-million dollar Ponzi scheme that defrauded hundreds of investors. This order appoints a receiver to manage Defendants’ estates and describes the scope of receivership… Read More

Penalties: N/A
Respondent: Dennis Swerdlen
Violation: Swerdlen made numerous materially false and misleading statements to induce investors to provide him and his co-conspirators money, including that: (i) N1 had and possessed actual patents on its inventions; (ii) an investor was purchasing an ownership unit of a patent with a corresponding United States Patent and Trademark Office number; (iii) the value of the N1 patients were worth millions; and (iv) investors funds would be used by N1 on things other than commissions and fees… Read More

Penalties: N/A
Respondent: Robert J. Brehl, CPA
Violation: Brehl willfully aided and abetted and caused the violation of the federal securities laws while serving as the Chief Accounting Officer of an issuer with securities registered with the Commission under Section 12(b) of the Securities Exchange Act of 1934… Read More

Penalties: TBD
Respondent: Salvadore D. Palermo
Violation: Entering fictitious sales of market-linked certificates of deposit (MLCDs) in order to avoid J.P. Turner’s inventory limitations for the fixed income products… Read More

Penalties: $200,000.00
Respondent: Kevin M. Modany, CPA
Violation: ITT engaged in conduct that violated certain provisions of the federal securities laws with respect to two student loan programs guaranteed by ITT and in connection with ITT’s books and records and certain public filings for the year-end 2012 and the first three quarters of the fiscal year 2013… Read More

Penalties: N/A
Respondent: Steve Bailen
Violation: During the period of his offenses described below in Section III.3, Bailen acted as an unregistered broker-dealer who, for compensation in the form of undisclosed commissions taken directly from investor proceeds, engaged in the business of soliciting and 2 advising others as to the advisability of investing in, purchasing, or selling securities in the form of fractionalized interests in claimed patents tied to N1 Technologies, Inc. (“N1”), which were often sold as convertible into stock… Read More

Penalties: N/A
Respondent: Paula Saccomanno
Violation: During the period of her offenses described below in Section III.3, Saccomanno acted as an unregistered broker-dealer who, for compensation in the form of undisclosed commissions taken directly from investor proceeds, engaged in the business of 2 soliciting and advising others as to the advisability of investing in, purchasing, or selling securities of N1 Technologies, Inc. (“N1”)… Read More

Penalties: TBD
Respondent: Arthur Lamar Adams and Madison Timber Properties, LLC
Violation: Bilking hundreds of investors in a multimillion-dollar Ponzi scheme. The defendants agreed to permanent injunctions, an asset freeze, and expedited discovery. Adams, who was criminally charged, pled guilty on May 9, 2018… Read More

Penalties: N/A
Respondent: William Paul Hamilton
Violation: From approximately 2012 through 2017, Hamilton conspired with the principals of N1 and others in a scheme to defraud over 70 individuals through the sale of stock and fractionalized interests in claimed patents tied to N1, ultimately raising approximately $3 million from the fraudulent scheme… Read More

Penalties: $1,575,825.00
Respondent: Jinesh P. Brahmbhatt
Violation: Failure to disclose conflicts of interest to his investment advisory clients… Read More

Penalties: TBD
Respondent: SEC Complaint – John C. Maccoll
Violation: Between approximately 2008 and March 2018, Maccoll defrauded at least 15 of his retail brokerage customers out of nearly $4 million. During that time period, Maccoll worked as a registered representative associated with a large, nationwide broker-dealer and investment adviser dually registered with the Commission (“Broker-Dealer A”)… Read More

Penalties: $50,000.00
Respondent: Ramnik S. Aulakh
Violation: From February 2009 through at least February 2013 (the “relevant period”), Jade Private Wealth Management, LLC (“Jade”) and its principal and majority owner (“Jade Principal”) failed to disclose conflicts of interest to their investment advisory clients… Read More

Penalties: $50,000.00
Respondent: Knowledge Leaders Capital, LLC
Violation: Knowledge Leaders failed to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules thereunder in connection with identification and disclosure of conflicts of interest… Read More

Penalties: TBD
Respondent: John C. Maccoll
Violation: Defrauding his brokerage customers out of nearly $4 million in a long-running investment scam… Read More

Penalties: N/A
Respondent: Melvin Leonard Wimmer, Jr.
Violation: From 2010 to 2017, Wimmer knowingly and willfully devised a scheme and artifice to defraud and to obtain money and property by means of false and fraudulent pretenses, representations, and promises in connection with the purchase and sale of a security of an issuer with a class of securities registered under Section 12 of the Securities Exchange Act of 1934… Read More

Penalties: TBD
Respondent: Dorothy Zarsky Complaint – Christopher Collins, et al., Lauren Zarksy, Dorothy Zarsky
Violation: In June 2017, Dorothy Zarsky engaged in illegal insider trading. On June 22, 2017, Christopher Collins, then a director of Innate Immunotherapeutics, Ltd. (“Innate”) received highly confidential and material information about negative clinical trial results for a drug being developed by Innate. Christopher Collins tipped that information to his son, Cameron Collins. Cameron Collins immediately tipped his then-girlfriend and now fiancée, who owned Innate stock. Cameron Collins and his girlfriend then tipped Cameron Collins’s girlfriend’s mother, Dorothy Zarsky, who also owned Innate stock… Read More

Penalties: TBD
Respondent: SEC Complaint – Roger Duffield and Plandai Biotechnology, Inc.
Violation: This matter concerns violations of the federal securities laws by Plandai, a penny stock company that purports to have developed a technology to extract live plant material for use in the health and wellness industry, and Duffield, Plandai’s President and Chief Executive Officer… Read More

Penalties: TBD
Respondent: Lauren Zarsky Complaint, – Christopher Collins, et al., Lauren Zarksy, Dorothy Zarsky
Violation: In June 2017, Lauren Zarsky engaged in illegal insider trading. On June 22, 2017, Christopher Collins, then a director of Innate Immunotherapeutics, Ltd. (“Innate”), learned highly confidential and material information about negative clinical trial results for a drug being developed by Innate. Christopher Collins tipped that information to his son, Cameron Collins, who, in turn, tipped his girlfriend (now fiancée), Lauren Zarsky… Read More

Penalties: $900,000.00
Respondent: Hamlin Capital Management, LLC
Violation: Hamlin also failed to adopt and implement reasonably designed policies and procedures concerning the valuation of its clients’ assets and its cross trading practices as required by Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder… Read More

Penalties: TBD
Respondent: Christopher Collins, et al. Complaint, – Christopher Collins, et al., Lauren Zarksy, Dorothy Zarsky
Violation: On Thursday, June 22, 2017, Christopher Collins, then a member of the board of directors of Innate Immunotherapeutics, Ltd. (“Innate”) and a U.S. Congressman representing the 27th Congressional District of New York, learned material, nonpublic information about clinical trial results for a drug being developed by Innate. That evening, Innate’s CEO emailed Christopher Collins and other members of Innate’s board to report “extremely bad news” that the trial results “pretty clearly indicate[d] ‘clinical failure.”… Read More

Penalties: TBD
Respondent: Roger Duffield and Plandai Biotechnology, Inc.
Violation: From November 2013 through January 2015, Plandai, acting through Roger Duffield, made unregistered offers and sales of Plandai common stock to at least two unaccredited and unsophisticated investors… Read More

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