Weekly Enforcement Action Tracker (July 29 – August 03)

Financial Enforcement Action Summary

Weekly Enforcement Action Tracker

FTC

2 Enforcement Documents

$0.00 in Fines

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

Penalties: TBD
Respondent: Tate’s Auto Center
Violation: Falsifying consumers’ income and down payment information on vehicle financing applications and misrepresenting important financial terms in vehicle advertisements… Read More

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

FINRA

10 Enforcement Documents

$92,500.00 in Fines

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

Penalties: TBD
Respondent: Brian Colin Doherty
Violation: Violated Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act), Exchange Act Rule 10b-5 thereunder, and FINRA Rules 2010 and 2020 in May and June 2015, by engaging in nineteen prearranged transactions involving various securities, causing SUI, another FINRA-regulated broker-dealer, to suffer approximately $55,773 in losses… Read More

Penalties: $7,500.00
Respondent: EBH Securities, Inc.
Violation: Between May 2015 and January 2017, EBH failed to provide notice that it was below certain net capital related levels, in violation of Exchange Act Rule 17a-11 and FINRA Rule 2010, and also failed to suspend its business operations while below those levels, in violation of FINRA Rules 4110 and 2010… Read More

Penalties: TBD
Respondent: Farrukh S. Kazmi
Violation: Between October 2010 and October 2014, while registered with Berthel, Fisher & Co. Financial Services, Inc. (“Berthel Fisher”), the Respondent, Farrukh Kazmi, regularly used instant messaging and text messaging to communicate with at least 14 Berthel Fisher customers to conduct securities business… Read More

Penalties: $10,000.00
Respondent: Patrick Jermaine Phillips
Violation: In April and December 2009 (the “Relevant Period”), Phillips, during his association with Baird, accepted two loans from a Firm customer totaling $70,000, thereby violating NASD Rule 2370 and FINRA Rule 2010… Read More

Penalties: $5,000.00
Respondent: Darnell K. Mote
Violation: From February 2015 through November 2015, Mote engaged in an outside business activity without providing notice to his Firm. By virtue of this conduct, Mote violated FINRA Rules 3270 and 2010… Read More

Penalties: $15,000.00
Respondent: Frank T. Marino
Violation: Between October 2014 and August 2015 (the “relevant period”), Marino was responsible for the content of an investment-related website that did not comply with FINRA rules regarding communications with the public. He thereby violated FINRA Rules 2210(d)(1) and 2010… Read More

Penalties: $5,000.00
Respondent: Ethan De Naray
Violation: From approximately January 2016 through February 2017 (the “Relevant Period”), while employed at Merrill Lynch, De Naray exercised discretion without written authorization in the accounts of one customer, in violation of NASD Rule 2510 and FINRA Rule 2010… Read More

Penalties: $40,000.00
Respondent: Seven Points Capital, LLC
Violation: Between January 2013 and June 2015 (the “Relevant Period”), SEVP failed to develop and implement an anti-money laundering (“AML”) program that was reasonably designed to achieve and monitor compliance with the Bank Secrecy Act and implementing regulations. Specifically, the Firm failed to establish and implement policies and procedures that could reasonably be expected to detect and cause the reporting of potentially suspicious activity relating to the liquidation of billions of shares of low-priced securities. As a result, SEVP violated FINRA Rules 3310(a) and 2010… Read More

SEC

22 Enforcement Documents

$3,927,049.77 in Fines

Penalties: $3,167,072.00
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 conviction for a separate securities fraud scheme… 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: $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… 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: $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

Penalties: TBD
Respondent: SEC Complaint – Madan
Violation: In July 2016, Defendant Dr. Anup Madan (“Madan”) engaged in insider trading in the securities of Sequenom, Inc. (“Sequenom”), a San Diego life sciences company that provides molecular diagnostic testing services, with an emphasis on noninvasive prenatal testing. Madan, a scientist at Laboratory Corporation of American Holding (“LabCorp”), misappropriated material nonpublic information from his employer relating to LabCorp’s bid to acquire Sequenom through a tender offer. Madan knowingly used this material nonpublic information to place illegal trades in Sequenom stock before the public announcement of the acquisition… Read More

Penalties: TBD
Respondent: SEC Complaint, – Lozuk
Violation: Lozuk, a high-level officer at Sequenom, breached a duty he owed to his employer when he knowingly provided his friend-tippee (“Individual A”) with material nonpublic information relating to Laboratory Corporation of American Holding’s (“LabCorp”) bid to acquire Sequenom through a tender offer… Read More

Penalties: $28,046.00
Respondent: Madan
Violation: Madan purchased 9,300 shares of Sequenom stock despite having signed a company insider trading policy that prohibited trading based upon confidential information that he acquired in the course of performing his job duties. On the date of the public announcement, Sequenom’s stock price increased 176%, allowing Madan to sell his shares that same day for a profit of over $14,000… Read More

Penalties: N/A
Respondent: Deferred Prosecution Agreement – Lozuk
Violation: On or about July 22-25, 2016, violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder, by trading ahead of the July 27, 2016, public announcement that Laboratory Corporation of America Holdings, through its wholly-owned subsidiary Savoy Acquisition Corp., would acquire all outstanding stock of Sequenom, Inc. in a cash tender offer of $2.40 per share while he was in possession of material, nonpublic information concerning the transaction… Read More

Penalties: $55,466.25
Respondent: Lozuk
Violation: Lozuk was not only subject to Sequenom’s written policy and to certain obligations as an officer of the company, but he had also signed a confidentiality letter acknowledging his obligation not to disclose to anyone the company’s plans. Nevertheless, Lozuk tipped Individual A, and over the next two trading days, Individual A purchased a total of 18,000 Sequenom shares. On the date of the public announcement, Sequenom’s stock price increased 176%, allowing Individual A to sell his shares that same day for a profit of over $26,000… Read More

Penalties: $455,358.00
Respondent: Kurt J. Bordian, CPA
Violation: Bordian, who worked as an accountant and personal assistant for a member of InterOil’s board of directors, traded on material nonpublic information that InterOil was entering into an agreement to be acquired. The complaint alleged that Bordian made $220,500 in illicit profits from this insider trading… Read More

Penalties: N/A
Respondent: Steven J. Dykes
Violation: On April 26, 2018, Dykes pleaded guilty to one count of conspiracy to commit mail and wire fraud in violation of 18 U.S.C. § 1349, and one count of engaging in a monetary transaction in property derived from specified unlawful activity in violation of 18 U.S.C. § 1957 before the United States District Court for the District of Colorado, in United States v. Steven Dykes, Criminal Case No. 17-cr-417-RBJ… Read More

Penalties: TBD
Respondent: Palm House Hotel LLLP, et al.
Violation: Walsh misappropriated more than $13 million of the investor funds and that Matthews misappropriated approximately $8 million, some of which he used to acquire a 151-foot yacht and to purchase his former Connecticut home out of foreclosure… Read More

Penalties: $119,429.00
Respondent: Fei Yan, et al.
Violation: Fei Yan purchased stocks and options in advance of two corporate acquisitions based on confidential information obtained from his wife, an associate at a law firm that worked on the deals. According to the SEC’s complaint, Yan then sold his holdings following public announcements that the issuers would be acquired by other companies. Yan then allegedly attempted to conceal his illegal activity by placing the illicit trades in a brokerage account bearing the name of his mother, who lives in China… Read More

Penalties: TBD
Respondent: Moddha Interactive, Inc., Marianne Veronika Sandor, Edward Michael Porrazzo, and Spar Street
Violation: Sandor and Porrazzo stole hundreds of thousands of dollars in investor funds to support their lifestyle, and that Moddha Interactive paid over $200,000 in sales commissions to Spar Street, who illegally sold Moddha Interactive’s shares to investors… Read More

Penalties: N/A
Respondent: deVere USA, Inc.
Violation: On June 4, 2018, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”) against deVere USA, Inc. (the “Respondent”), an investment adviser… Read More

Penalties: TBD
Respondent: Gilbert Fluetsch
Violation: Misused substantial amounts of NEON funds, resulting in a total loss to investors. By engaging in this conduct, Fluetsch committed violations of Section 17(a)(2) of the Securities Act and aided and abetted Vazquez’s and Hoplon’s violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder… Read More

Penalties: N/A
Respondent: Voya Investments, LLC and Directed Services, LLC
Violation: The Order required the Respondents, jointly and severally, to disgorge $2,635,490.25, and to pay $511,978.89 in prejudgment interest and $500,000 in civil penalties. Of this total payment of $3,647,469.14, the Commission directed payment of $1,623,113.66, comprised of the ordered civil penalties, prejudgment interest, and a portion of disgorgement, to the United States Treasury (“U.S. Treasury”)… Read More

Penalties: N/A
Respondent: Weatherford International PLC, et al. and Ernst & Young LLP, Craig R. Fronckiewicz, CPA, and Sarah E. Adams, CPA
Violation: Accordingly, IT IS ORDERED that Miller Kaplan, pursuant to and in accordance with the Omnibus Order, is appointed the Tax Administrator for the QSF in the above-referenced proceeding… Read More

Penalties: N/A
Respondent: William Z. Mcfarland
Violation: From at least 2015 through 2017, Respondent made use of the mails or other means or instrumentalities of interstate commerce to effect transactions in, and induce or attempt to induce the purchase or sale of shares of stock and convertible promissory notes in Fyre Media, Fyre Festival, and Magnises… Read More

Penalties: TBD
Respondent: SEC Complaint – Palm House Hotel LLLP, et al.
Violation: Between November 2012 and at least December 2014, the offering materials misrepresented that investor funds would be loaned to Palm House to acquire, develop and operate the Hotel… Read More

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