Weekly Enforcement Action Tracker (July 22 – July 31)

Financial Enforcement Action Summary

Weekly Enforcement Action Tracker

NYSE

1 Enforcement Document

$0.00 in Fines

Penalties: TBD
Respondent: Quattro M Securities Inc. – Complaint
Violation: This matter concerns the systemic failure by Quattro M Securities Inc. (“Quattro” or the “Firm”) to oversee and supervise the trading activities of its direct market access clients in disregard of its obligation to implement required risk management and supervisory controls to protect the integrity of the marketplace… Read More

FTC

2 Enforcement Documents

$184,000.00 in Fines

Penalties: $184,000.00
Respondent: Delaware Solutions
Violation: Delaware Solutions ignored evidence that the debts were invalid, failed to identify themselves as debt collectors, falsely portrayed themselves as process servers or attorneys, and falsely threatened arrest or litigation for failure to pay… Read More

Penalties: TBD
Respondent: Corporate Compliance Services
Violation: Tricking business owners into buying labor law protesters by sending mailers that mimic invoices from a government agency or authority… Read More

FINRA

12 Enforcement Documents

$2,827,500.00 in Fines

Penalties: $2,500.00
Respondent: Marvin Sneider
Violation: From at least October 2014 through May 2017 (the “Relevant Period”), Sneider used a personal email address to communicate with securities customers concerning business-related matters, causing his member firm to fail to review the emails and retain them among its books and records, in violation of FINRA Rules 4511 and 2010… Read More

Penalties: N/A
Respondent: Steven A. Horwitz
Violation: While registered with Westminster Financial Securities, Inc. (“Westminster” or “the Firm”), Respondent Steven A. Horwitz failed to amend his Uniform Application for Securities Industry Registration (“Form U4”) to disclose his May 2012 indictment and May 2016 conviction on three felony charges… Read More

Penalties: $1,690,000.00
Respondent: IFC Holdings, Inc. (a/k/a) INVEST Financial Corporation, SII Investments, Inc., Investment Centers of America, Inc., National Planning Corporation
Violation: Between January 2013 and June 2015, NPC, ICA, SII, and IFC failed to establish, maintain and enforce a supervisory system and written procedures, and develop and document specific training reasonably designed to ensure that representatives’ recommendations of variable annuities complied with applicable securities laws and regulations, and FINRA Rules… Read More

Penalties: $1,000,000.00
Respondent: Woodbury Financial Services, Inc., SagePoint Financial, Inc., FSC Securities Corporation, Royal Alliance Associates, Inc.
Violation: Royal Alliance (between February 2014 and December 2015) and FSC, SagePoint, and Woodbury (between January 2013 and December 2014) failed to establish, maintain and enforce a supervisory system and written procedures designed to reasonably supervise representatives’ sale of multi-share class variable annuities and failed to provide training to their representatives and principals on the sale and supervision of multi-share class variable annuities… Read More

Penalties: $105,000.00
Respondent: Barry Champney and Vanderbilt Securities, LLC
Violation: Between March 2011 and March 2015 (the “Relevant Period”), Vanderbilt failed to establish and maintain a supervisory system, including written procedures, reasonably designed to identify and prevent unsuitable excessive trading and churning in customer accounts. Vanderbilt, through Champney, failed to reasonably supervise Mark Kaplan, a registered representative who engaged in churning and unsuitable excessive trading in the brokerage accounts of a senior customer… Read More

Penalties: $5,000.00
Respondent: Frederick M. Miller
Violation: From November 2009 until August 2016 (the “Relevant Period”), Respondent failed to timely disclose six federal tax liens, twelve state tax liens, and a voluntary bankruptcy petition. The liens totaled approximately $292,000. By failing to make timely disclosures as required, Miller violated Article V, Section 2(c) of FINRA’s By-Laws and FINRA Rules 1122 and 2010… Read More

Penalties: N/A
Respondent: Christine D. Memet
Violation: Memet was associated with PNC from January 2011 until March 2017. On April 7, 2017, PNC reported to FINRA that it terminated Memet because she failed to honestly explain why she had copies of customer account statements mailed to her home address and that, after her termination, Memet transferred PNC customer information to her personal email address… Read More

Penalties: $5,000.00
Respondent: Francisco Jose Faraco
Violation: In 2016, while registered with Morgan Stanley and serving as a financial advisor, Faraco submitted forged and falsified documents to Morgan Stanley Private Bank N.A. (the “Bank”) to assist an institutional customer in securing a $15 million loan that the customer wanted from the Bank. Specifically, Faraco altered the expiration date on a passport and forged signatures on two assurance documents regarding collateral. As a result, Faraco violated FINRA Rule 2010… Read More

Penalties: $5,000.00
Respondent: Kenny Danny Mezher
Violation: Between January 2017 and March 2017 (the “Relevant Period”), Mezher participated in four private securities transactions by selling $179,500 in limited partnership interests in the Crescent Ridge Volatility Fund (“CRVF”) to five investors without providing prior written notice to, or receiving approval from, the Firm. As a result of the foregoing, Mezher violated FINRA Rules 3280 and 2010… Read More

Penalties: $5,000.00
Respondent: Robert Rushby Humberston
Violation: From September 2016 through January 2018 (the “Relevant Period”), Humberston violated FINRA Rule 2010 by failing to comply with the Firm’s policies and procedures requiring him to disclose that his Firm customer had designated him as a beneficiary of her estate… Read More

Penalties: $5,000.00
Respondent: Eric S. Korhut
Violation: In March and June 2016, Korhut executed 10 unauthorized trades totaling S40,004 in the accounts of two customers. As a result, Korhut violated FINRA Rule 2010… Read More

Penalties: $5,000.00
Respondent: Cheryl A. George (“George” or “Respondent”)
Violation: In June 2017, George received an email from an individual (the “imposter”) purporting to be a customer of RBC requesting that George wire transfer the customer’s funds to a third party. In order to generate funds for the requested wire transfer, George sold securities from the customer’s account without authorization from the customer or the imposter, thereby violating FINRA Rule 2010… Read More

FRS

1 Enforcement Document

$4,750,000.00 in Fines

Penalties: $4,750,000.00
Respondent: Community Trust Bank Inc.
Violation: Since December 2008, the Bank collected the fixed monthly fee payments by debiting the accounts of at least approximately 6,700 accountholders, despite the accountholders not receiving all of the benefits included in IPP. The deficiencies specified in paragraphs A. through I. above resulted in unfair or deceptive acts or practices in or affecting commerce, within the meaning of section 5(a)(1) of the FTC Act (15 U.S.C. § 45(a (1)), and unsafe or unsound banking practices… Read More

SEC

25 Enforcement Documents

$12,443,323.52 in Fines

Penalties: $134,042.00
Respondent: Sycamore Lane Partners LLC
Violation: Under Regulation SHO Rule 200(g), Sycamore Lane’s sales of Issuer A ADRs from November 1, 2013 to February 4, 2014, and Issuer B common stock from November 14, 2013 to January 28, 2014, should have been identified by Sycamore Lane to its brokers as short sales because, although Sycamore Lane’s brokerage accounts showed long and short positions in the securities of Issuer A and Issuer B, Sycamore Lane’s net aggregate position in each security was not net long… Read More

Penalties: $1,250,000.00
Respondent: Mizuho Securities USA LLC
Violation: Mizuho’s failure to maintain and enforce policies and procedures reasonably designed to prevent the misuse of material nonpublic customer order information concerning the repurchase of shares by issuers (“customer buyback order information”), in violation of Section 15(g) of the Exchange Act… Read More

Penalties: N/A
Respondent: Richard T. Cunniffe
Violation: On May 14, 2016, Cunniffe pleaded guilty to: (i) conspiracy to commit securities fraud and fraud in connection with a tender offer in violation of 18 U.S.C. § 371; (ii) conspiracy to commit wire fraud in violation of 18 U.S.C. § 1349; (iii) three counts of securities fraud in violation of 15 U.S.C. §§ 78j(b) and 78ff, 17 C.F.R. §§ 240.10b5 and 240.10b5-2, and 18 U.S.C. § 2; and (iv) securities fraud in connection with a tender offer in violation of 15 U.S.C. §§ 78n(e) and 78ff… Read More

Penalties: TBD
Respondent: SEC Complaint – Matthew Brunstrum and Susan Brunstrum
Violation: From at least 2013 through 2017, McFarland—both directly and through Fyre Media and Magnises—fraudulently induced over 100 investors to invest more than $27.4 million in Fyre Media and Magnises, as well as in a third business founded by McFarland, Fyre Festival, LLC (“Fyre Festival”)… Read More

Penalties: $10,000.00
Respondent: Melanie Ryan
Violation: TFrom at least 2011 through August 2015, BISC’s securities lending desk engaged in improper practices involving the pre-release of American Depositary Receipts (“ADRs”)… Read More

Penalties: TBD
Respondent: Matthew Brunstrum and Susan Brunstrum
Violation: As a result of their illegal trading, Matthew Brunstrum avoided losses and earned profits in the amount of $159,904, and Susan Brunstrum avoided losses and earned profits in the amount of $170,252… Read More

Penalties: $50,000.00
Respondent: William Z. (“Billy”) McFarland et al.
Violation: McFarland fraudulently induced investments into his companies Fyre Media, Inc., Fyre Festival LLC, and Magnises, Inc., including in connection with McFarland’s failed venture to host a “once-in-a-lifetime” music festival in the Bahamas. With substantial assistance from Grant H. Margolin, his Chief Marketing Officer, and Daniel Simon, an independent contractor to his companies… Read More

Penalties: N/A
Respondent: Jack Jarrell
Violation: From at least 2012 through 2016, Jarrell offered and sold unregistered promissory notes issued by Providence Financial Investments, Inc. (“PFI”) and Providence Fixed Income Fund, LLC (“PFIF”) to investors without being registered as a broker-dealer or associated with a registered broker-dealer. Jarrell sold notes to investors with whom he had an investment advisory agreement in place… Read More

Penalties: $415,468.00
Respondent: Yao Li
Violation: From June 2014 through February 2016, Li, by virtue of his position as a senior executive at AFOP, learned highly sensitive information about AFOP’s financial performance in the weeks before its quarterly earnings announcements. In violation of the duty of trust and confidence he owed to AFOP and its shareholders, Li traded the securities of AFOP based on this material nonpublic information by short-selling AFOP stock for a realized profit of $120,124 and selling AFOP stock to avoid losses of $76,079 in advance of three disappointing earnings announcements for Q2 2014, Q3 2015, and Q4 2015… Read More

Penalties: TBD
Respondent: SEC Complaint – Matthew Brunstrum and Susan Brunstrum
Violation: This case arises from insider trading and tipping by Defendant Matthew Brunstrum and insider trading by his mother and tippee, Defendant Susan Brunstrum (collectively, “Defendants”)… Read More

Penalties: $1,122,000.00
Respondent: Christopher A. Faulkner, et. al.
Violation: Roles in an alleged $80 million oil-and-gas securities fraud scheme… Read More

Penalties: TBD
Respondent: SEC Complaint – Richard T. Cunniffe
Violation: This matter involves an unlawful, serial insider trading scheme orchestrated by three financial industry professionals, in which investment banker Sean R. Stewart (“S. Stewart”) tipped material, nonpublic information to his father accountant Robert K. Stewart (“R. Stewart”), who partnered with his friend a professional trader, Cunniffe, to exploit this information by placing highly profitable securities trades… Read More

Penalties: TBD
Respondent: Richard T. Cunniffe
Violation: Robert Stewart recruited his friend, defendant Richard T. Cunniffe to place trades based on inside information that Robert received from his son, Sean Stewart, an investment banker. Cunniffe allegedly cashed in on those tips by placing trades for himself and Robert. The SEC’s complaint charges Cunniffe with violating antifraud provisions of the federal securities laws… Read More

Penalties: TBD
Respondent: SEC Complaint – John A. Paulsen
Violation: Paulsen knowingly provided substantial assistance to Kelley and Kang by participating in the entertainment of Kang, then hiding his and Kelley’s provision of benefits to Kang by submitting false expense reports, and lying to the internal investigators. Paulsen also facilitated Kang’s and Kelley’s quid pro quo scheme by allowing it to go undetected by the Broker-Dealer and the Fund. In doing so, Paulsen aided and abetted Kelley’s and Kang’s violations of Section 10(b) of the Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b) ], Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5], and Sections 17(a)(1) and 17(a)(3) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. §§ 77q(a)(1), (a)(3)]…. Read More

Penalties: $1,610,000.00
Respondent: Robert Gadimian
Violation: Robert Gadimian pocketed more than $1.1 million in illicit profits by secretly purchasing Puma stock and short-term call options based on nonpublic information that he learned about positive developments in two clinical trials for Puma’s cancer drug, neratinib. Gadimian allegedly bought Puma securities before the results from the first trial were announced in December 2013, and again before the results of the second trial were announced in July 2014… Read More

Penalties: TBD
Respondent: SEC Complaint – Rudden, et al.
Violation: This SEC enforcement action concerns a Ponzi scheme perpetrated by Rudden through Financial Visions, Inc., Financial Visions West, LLC, Financial Visions West 1, and FV-2, LLC (the “Financial Visions Companies”), which he owns and controls. Rudden has repeatedly admitted – in writing to Financial Visions Companies investors, to law enforcement, and on television – that this enterprise was, in fact, a Ponzi scheme… Read More

Penalties: TBD
Respondent: John A. Paulsen
Violation: From early 2014 until February 2016, Navnoor S. Kang was the Fund’s Director of Fixed Income, with investment responsibility for approximately $50 billion of the Fund’s assets. According to the SEC’s complaint, Kang used his position at the Fund to solicit and receive improper entertainment from Paulsen and Deborah D. Kelley, a registered representative at the broker-dealer. In exchange, Kang directed millions of dollars in state business to the broker-dealer, generating sizable commissions… Read More

Penalties: TBD
Respondent: Rudden, et al.
Violation: Daniel B. Rudden and a group of companies operating under the name Financial Visions, which issued promissory notes to fund its operations in short-term financing for funeral services and related expenses, defrauded as many as 150 investors after promising them annual returns of 12% or more… Read More

Penalties: $2,949,991.00
Respondent: Maxwell Technologies, Inc., et al.
Violation: The Commission found that, from December 2011 through January 2013, Maxwell, a California-based company that develops, manufactures, and markets energy storage and power delivery products, through its former officers Andrews, Schramm, and DeWitt, engaged in an accounting fraud scheme that improperly recognized over $19 million in revenue from future quarters in violation of U.S. Generally Accepted Accounting Principles… Read More

Penalties: TBD
Respondent: Howard M. Appel
Violation: Appel secretly acquired ownership or control over sufficient shares of the companies so that he and his associates could manipulate their stocks through coordinated trading activity… Read More

Penalties: TBD
Respondent: SEC Complaint – David A. Harbour
Violation: Between July 2014 and August 2016, Harbour, through various entities he managed and controlled, raised money from his friends and business acquaintances by representing to them that their funds would be used to finance various businesses, including an American Indian business entity engaged in high-interest installment lending to consumers… Read More

Penalties: $97,678.52
Respondent: Fred Tinker
Violation: In July and August 2015, Tinker learned, in the course of his employment, material nonpublic information regarding a potential acquisition of Synaptics by a Chinese investment group. While he was aware of that information, in August and September of 2015, Tinker purchased a total of 10,000 Synaptics shares in his wife’s brokerage account. On 2 September 30, 2015, Bloomberg reported that Synaptics had rejected an acquisition offer from a Chinese investment group, that talks were ongoing, and that Synaptics may be holding out for a higher price. Shares of Synaptics closed at $80.41 on October 1, 2015, up 24% from the $64.77 closing price on September 29, 2015. Tinker generated $89,171.88 in unrealized gain from these trades… Read More

Penalties: $4,799,144.00
Respondent: David A. Harbour
Violation: Between July 2014 and August 2016, Harbour raised money from four friends and business acquaintances by representing to them that their funds would be used to finance various businesses, including an American Indian business entity engaged in high-interest installment lending to consumers… Read More

Penalties: TBD
Respondent: SEC Complaint – Howard M. Appel
Violation: From approximately 2012 through 2013 (the “Relevant Period”), defendant rappel orchestrated a fraudulent scheme to manipulate the prices of three microcap companies’ stock. During part of the Relevant Period, Appel was on supervised release following his crunuial conviction for a separate securities fraud scheme… Read More

Penalties: $5,000.00
Respondent: Brandon T. Neff
Violation: Blackbird’s principals, Kelley and Shumway, solicited individuals to invest money with Blackbird, an entity that was registered as a Commodity Trading Advisor and/or through separate “Family and Friends” accounts, which they claimed Kelley managed as proprietary trading funds. Neff, acting as an unregistered sales agent of Blackbird, offered and sold Blackbird’s securities to investors and earned transaction-based compensation, in the form of ownership interest in a limited liability company, from each sale… Read More

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