Financial Enforcement Actions | Week of December 23 to 28

FINRA

2 Enforcement Documents

$10,000,000.00 in Fines

Penalties: N/A
Respondent: Liju Varghese
Violation: Varghese indicated that he would not appear for on-the-record testimony that was requested pursuant to FINRA Rule 8210. As a result, Varghese violated FINRA Rules 8210 and 2010… Read More

Penalties: $10,000,000.00
Respondent: Morgan Stanley Smith Barney LLC
Violation: Beginning in 2011, Morgan Stanley failed to develop and implement an anti-money laundering (“AML”) program that was reasonably designed to achieve and monitor the Firm’s compliance with the requirements of the Bank Secrecy Act (“BSA”) and its implementing regulations. Specifically, the Firm failed to establish and implement policies and procedures that were reasonably expected to detect and cause the reporting of potentially suspicious activity in the following three respects… Read More

SEC

13 Enforcement Documents

$167,295,702.56 in Fines

Penalties: N/A
Respondent: Stephen T. Carbonella
Violation: Between about February 2003 through about April 2017, while employed at Webster Bank Corporation (“WBC”), a bank insured by the Federal Deposit Insurance Corporation, knowingly and willfully embezzled at least $879,016.48 from WBC, primarily by taking money from account holders’ Certificate of Deposit accounts. The criminal charge also alleged that Carbonella took affirmative steps to conceal his embezzlement, including forging customers’ signatures and fraudulently altering certificates of deposits… Read More

Penalties: TBD
Respondent: John Sherman Jumper
Violation: The Commission’s complaint alleged that, between March 2015 and February 2016, Jumper misappropriated approximately $5,700,000 from an employee pension plan by forging documents that purported to give him authority over the plan’s funds and their placement. Jumper used the funds for personal expenses and investments, as well as providing capital to other businesses he owned or co-owned… Read More

Penalties: N/A
Respondent: Alexander C. Burns
Violation: The Commission’s complaint alleged that, from March 2013 to February 2014, Burns, through SLM, acquired insurance companies and thereby obtained the ability to control the investment decisions for the insurance companies and those companies’ related reinsurance trusts… Read More

Penalties: TBD
Respondent: Cherubim Interests, Inc., PDX Partners, Inc., Victura Construction Group, Inc., and Patrick Jevon Johnson
Violation: Based on its ongoing investigation, the SEC has reason to believe that each company issued false public statements in January 2018 to “pump” their stock price, claiming that it had acquired hundreds of millions of dollars of “AAA-rated” assets, even though each company appeared to have little to no assets… Read More

Penalties: $100,000.00
Respondent: ADT Inc.
Violation: ADT did not afford equal or greater prominence to comparable GAAP financial measures in two of its earnings releases containing non-GAAP financial measures – ADT’s Q4 2017 and Fiscal Year 2017 Earnings Release dated and furnished to the Commission on March 15, 2018 (the “FY 2017 Earnings Release”) and ADT’s Q1 2018 Earning Release dated and furnished to the Commission on May 9, 2018 (the “Q1 2018 Earnings Release”)… Read More

Penalties: $135,177,678.94
Respondent: JPMorgan Chase Bank, N.A.
Violation: These proceedings arise out of JPMorgan’s improper practices involving the prerelease of American Depositary Receipts (“ADRs”)… Read More

Penalties: $16,306,336.00
Respondent: Polycom, Inc.
Violation: From 2006 through at least July 2014, 2 Polycom’s Vice President of China at Polycom’s China subsidiary, along with senior managers, provided significant discounts to Polycom’s distributors and/or resellers, knowing and intending that the distributors and/or resellers would use the discounts to make payments to officials at Chinese government agencies and government-owned enterprises in exchange for those officials’ assistance in obtaining orders for Polycom’s products… Read More

Penalties: $2,500,000.00
Respondent: Centrais Elétricas Brasileiras S.A.
Violation: Former officers at Eletrobras Termonuclear S.A (“Eletronuclear”), Eletrobras’s majority-owned (over 99%) nuclear power generation subsidiary, engaged in an illicit bid-rigging and bribery scheme involving the construction of a nuclear power plant (“UTN Angra III”) from approximately 2009 until 2015… Read More

Penalties: $10,000.00
Respondent: Walter John Dubiel
Violation: In approximately January 2015, Dubiel, without giving notice to the affected clients, shared his First Allied confidential client account log-in credentials with Woodard… Read More

Penalties: $25,000.00
Respondent: Nutriband, Inc., Gareth Sheridan, and Serguei Melnik
Violation: From approximately July 2016 until May 2018, Respondents made misleading statements in the company’s public filings concerning the jurisdiction of the Food and Drug Administration (“FDA”) over Nutriband’s products and failed to disclose that its products could not be lawfully marketed in the U.S. without FDA approval… Read More

Penalties: $400,000.00
Respondent: Lightyear Capital LLC
Violation: These proceedings arise from Lightyear’s failure to properly allocate certain expenses to the Employee Funds and co-investors and its failure to properly offset management fees in connection with undisclosed “fee-sharing agreements” with certain co-investors… Read More

Penalties: N/A
Respondent: New Global Energy, Inc.
Violation: New Global failed to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder, while its common stock was registered with the Commission, because it failed to file (i) its Annual Report on Form 10-K for the period ending December 31, 2016, and (ii) any periodic or quarterly reports on Form 10-Q since September 13, 2016… Read More

Penalties: $12,776,687.62
Respondent: Warren D. Nadel
Violation: Nadel fraudulently induced clients of RIA to invest tens of millions of dollars in what he falsely represented as a liquid, cash management investment program in which RIA clients would buy and sell preferred utility securities in the open market and hold them for short periods of time in order to generate either dividend income or capital appreciation (the “Strategy”)… Read More

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