Financial Enforcement Actions | Week of June 16 to June 21

Financial Enforcement Actions | Week of June 16 to June 21

Financial Enforcement Actions | Week of June 16 to June 21

Penalties: N/A
Respondent: Grand Teton Professionals, LLC; 99th Floor, LLC; Mait Management Inc.; Demand Dynamics LLC; Atomtum Corps Inc.; Atomium Corps Inc.; Startup Masters NJ Inc.; First Incorporatio N Services Inc.; Douglas C. Filter; Marcio G. Andrade
Violation: Defendants made misrepresentations Regarding Credit Repair Services and thereby violated Section S(a) of the FTC Act, 15. U.S.C. § 45(a)… Read More

Penalties: N/A
Respondent: LightYear Dealer Technologies, LLC, d/b/a Dealerbuilt
Violation: Respondent’s failure to employ reasonable measures to protect personal information caused or is likely to cause substantial injury to consumers that is not outweighed by countervailing benefits to consumers or competition and is not reasonably avoidable by consumers themselves. This practice is an unfair act or practice… Read More

Penalties: N/A
Respondent: Grand Teton Professionals, LLC; 99th Floor, LLC; Mait Management Inc.; Demand Dynamics LLC; Atomtum Corps Inc.; Atomium Corps Inc.; Startup Masters NJ Inc.; First Incorporatio N Services Inc.; Douglas C. Filter; Marcio G. Andrade
Violation: Defendants made misrepresentations Regarding Credit Repair Services and thereby violated Section S(a) of the FTC Act, 15. U.S.C. § 45(a)… Read More

Penalties: N/A
Respondent: UnitedHealth Group Incorporated; Collaborative Care Holdings, LLC; DaVita Inc.; DaVita Medical Holdings, LLC
Violation: On December 5, 2017, UnitedHealth Group entered into an equity purchase agreement to acquire DaVita’s DMG division for approximately $4.9 billion in cash. The Proposed Acquisition constitutes an unfair method of competition in violation of Section 5 of the FTC Act, as amended, 15 U.S.C. § 45, and if consummated, may substantially lessen competition in the relevant markets in violation of Section 5 of the FTC Act, as amended, 15 U.S.C. § 45, and Section 7 of the Clayton Act, as amended, 15 U.S.C. § 18… Read More

FINRA

11 Enforcement Documents

$935,516.44 in Fines

Penalties: N/A
Respondent: Shawna Choate
Violation: “In 2014 and 2015, respondent Shawna Choate falsified dozens of forms by using a stamp to affix a registered principal’s signature to the forms, representing that the principal had reviewed and approved deposits of penny stocks even though—as Choate knew—the principal had not done so. The falsified forms were subsequently provided to a clearing firm and FINRA. By knowingly falsifying those documents, Choate failed to observe high standards of commercial honor and just and equitable principles of trade, and thus violated FINRA Rule 2010″… Read More

Penalties: $40,000.00
Respondent: Edward D. Jones & Co., L.P.
Violation: Edward Jones’ disclosures to FINRA of seventy-nine customer complaints over a two-year period understated the customers’ alleged damages. Those misleading filings violated FINRA Rules 1122 and 2010 and Article V, Section 2(c) of FINRA’s by-laws… Read More

Penalties: N/A
Respondent: Andrew Patrick Yoro
Violation: Andrew Patrick Yoro cheated on the Series 7 qualification exam. During unscheduled breaks during that exam, he consulted prohibited study materials and then changed some of his answers. He did so after acknowledging and agreeing to follow FINRA’s Rules of Conduct for the exam, which prominently prohibited consulting study materials for the duration of the exam and prohibited locker access during unscheduled breaks. By cheating on, and possessing unauthorized materials during, the Series 7 exam, Yoro violated NASD Rule 1080 and FINRA Rule 2010… Read More

Penalties: $377,488.59
Respondent: Citigroup Global Markets Inc.
Violation: From February 2011 to February 2017 (the “Relevant Period”), CGMI failed to identify and apply sales charge discounts to certain eligible purchases of Unit Investment Trusts (“UITs”), in violation of FINRA Rule 2010… Read More

Penalties: $8,027.85
Respondent: Steven M. Roffman
Violation: In September 2015 Roffman executed two unauthorized transactions in one customer’s account in violation of F1NRA Rule 2010. In addition, during the period June 2015 to November 2015, Roffman mismarked 21 order tickets in the accounts of six customers as unsolicited, when, in fact, the trades were solicited. Accordingly, Roffinan violated FINRA Rules 4511(a) and 2010… Read More

Penalties: $5,000.00
Respondent: Lindsey Lee Burik
Violation: From April 2015 through October 2016, over a period of approximately 18 months, Burik improperly used Firm funds by submitting expense reports in which she mischaracterized personal meals with her family as business-related in order to obtain reimbursement to which she was not entitled, in violation of FINRA Rule 2010… Read More

Penalties: $470,000.00
Respondent: Crown Capital Securities, L.P.
Violation: Between June 2011 and July 2014 (the “relevant period”), Crown Capital failed to establish and maintain a supervisory system, including written supervisory procedures, for reviewing and monitoring mutual fund switches reasonably designed to achieve compliance with FINRA suitability requirements and failed to reasonably supervise short-term switches of Class A mutual fund shares conducted by two firms registered representatives, and thus Crown Capital violated NASD Rule 3010(a), NASD Rule 3010(b), and FINRA Rule 2010… Read More

Penalties: $20,000.00
Respondent: Michael Allen Kamperman
Violation: Kamperman made unsuitable investment recommendations in the retirement accounts of eight customers. Specifically, he over concentrated the customers’ accounts in high risk, speculative energy sector securities. Kamperman also recommended that one of the eight customers purchase and hold a leveraged inverse exchange-traded note (“ETN”), which was designed to only be held for one trading day, in his 401(k) retirement account for nearly 16 months. Kamperman’s conduct violated NASD Rule 2310 (for conduct on or before July 8, 2012) and FINRA Rules 2111(a) (for conduct on or after July 9, 2012), and 2010… Read More

Penalties: $5,000.00
Respondent: Charles L. Laubach
Violation: From July 2016 through March 2018, Laubach exercised discretion without written authorization in the accounts of nine customers, in violation of NASD Rule 2510(b) and FINRA Rule 2010… Read More

Penalties: $10,000.00
Respondent: Adriana Marcela Agha
Violation: Agha improperly obtained credit for herself in another individual’s name by submitting two false credit card applications to her bank employer using the name and credit history of an acquaintance, FF. As a result, Agha exposed FF and the credit card issuer to the risk of financial loss. By virtue of this conduct, Agha violated FINRA Rule 2010… Read More

Penalties: N/A
Respondent: Amanda Justine Sarabia
Violation: Sarabia, an associated employee with NMIS, a FINRA regulated broker-dealer, converted funds from a Firm co-worker. In connection with the investigation, between July 2018 and March 2019, Enforcement requested, pursuant to FINRA Rule 8210, that Sarabia provides documents and information, and appear and provide testimony. Sarabia failed to comply with these requests, in violation of FINRA Rules 8210 and 2010… Read More

Penalties: £45,500,000.00
Respondent: Bank of Scotland plc
Violation: BOS failed to be open and cooperative with the Authority and failed to disclose information appropriately (in breach of Principle 11 )in relation to BOS’s suspicions that fraud may have taken place within its London and South East Regional Impaired Assets office headquartered in Reading (“IAR”)… Read More

Penalties: N/A
Respondent: Lynden Gerard Scourfield
Violation: Mr. Scourfield is not a fit and proper person to perform any function in relation to any regulated activity carried on by any authorized person, exempt person or exempt professional firm, as his conduct has demonstrated a serious lack of honesty and integrity. Specifically, Mr. Scourfield was convicted, upon his own confession, on 12 August 2016, of 1 count of conspiracy to corrupt, contrary to section 1 of the Criminal Law Act 1977 and 4 counts of fraudulent trading, contrary to section 458 of the Companies Act 1985… Read More

Penalties: N/A
Respondent: Mark Dobson
Violation: Mr. Dobson is not a fit and proper person to perform any function in relation to any regulated activity carried on by any authorized person, exempt person or exempt professional firm, as his conduct has demonstrated a serious lack of honesty and integrity. Specifically, Mr Dobson was tried and convicted on indictment, on 30 January 2017, of 1 count of conspiracy to corrupt, contrary to section 1 of the Criminal Law Act 1977 and 1 count of conspire to conceal/ disguise/ convert/ transfer/ remove criminal property, contrary to section 1 of the Criminal Law Act 1977… Read More

Penalties: N/A
Respondent: KTS Enterprises Limited
Violation: KEL has failed to comply with the regulatory requirement to submit the Return. KEL has not been open and co-operative in all its dealings with the Authority, in that KEL has failed to respond adequately to the Authority’s repeated requests for it to submit the Return, and has thereby failed to comply with Principle 11 of the Authority’s Principles for Businesses and to satisfy the Authority that it is ready, willing and organized to comply with the requirements and standards under the regulatory system… Read More

Penalties: N/A
Respondent: Direct Shelving Service Ltd
Violation: DSSL has failed to comply with the regulatory requirement to submit the Return. DSSL has not been open and co-operative in all its dealings with the Authority, in that DSSL has failed to respond adequately to the Authority’s repeated requests for it to submit the Return, and has thereby failed to comply with Principle 11 of the Authority’s Principles for Businesses and to satisfy the Authority that it is ready, willing and organized to comply with the requirements and standards under the regulatory system… Read More

Penalties: N/A
Respondent: Oldham Athletic (2004) Association Football Club Limited
Violation: OAAFCL has failed to comply with the regulatory requirement to submit the Return. OAAFCL has not been open and co-operative in all its dealings with the Authority, in that OAAFCL has failed to respond adequately to the Authority’s repeated requests for it to submit the Return, and has thereby failed to comply with Principle 11 of the Authority’s Principles for Businesses and to satisfy the Authority that it is ready, willing and organized to comply with the requirements and standards under the regulatory system… Read More

Penalties: N/A
Respondent: David John Mills
Violation: Mr. Mills is not a fit and proper person to perform any function in relation to any regulated activity carried on by any authorized person, exempt person or exempt professional firm, as his conduct has demonstrated a serious lack of honesty and integrity. Specifically, Mr. Mills was tried and convicted on indictment, on 30 January 2017, of 1 count of conspiracy to corrupt, contrary to section 1 of the Criminal Law Act 1977, 4 counts of fraudulent trading and 1 count of conspiring to conceal/disguise/convert/transfer/remove /criminal property… Read More

Penalties: N/A
Respondent: Alison Mary Mills
Violation: Mrs. Mills is not a fit and proper person to perform any function in relation to any regulated activity carried on by an authorized person, as she has engaged in a financial crime offence. Mrs. Mills was tried and convicted on indictment, on 30 January 2017, of 1 count of conspiring to conceal/disguise/convert/transfer/remove criminal property, contrary to section 1 of the Criminal Law Act 1977… Read More

SEC

24 Enforcement Documents

$226,705,053.00 in Fines

Penalties: $50,000,000.00
Respondent: KPMG LLP
Violation: From 2015 to 2017, now-former senior members of KPMG’s Audit Quality and Professional Practice group (“AQPP” or “National Office”) – which is responsible for the firm’s system of quality control – improperly obtained and used confidential information belonging to the Public Company Accounting Oversight Board (“PCAOB” or “Board”) in an effort to improve the results of the PCAOB’s annual inspections of KPMG audits… Read More

Penalties: $4,577,650.00
Respondent: Jaswant Gill
Violation: Gill defrauded investors and obtained money and property by means of materially false and misleading statements in connection with the same offering fraud and Ponzi scheme… Read More

Penalties: $2,949,991.00
Respondent: Maxwell Technologies Inc.; Van M. Andrews; David J. Schramm; James W. DeWitt, Jr.
Violation: 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: N/A
Respondent: Michael Santicchia
Violation: The Commission’s order involved misconduct by Santicchia in completing surprise exams pursuant to Section 206(4) of the Advisers Act of 1940 and Rule 206(4)-2 thereunder (the “Custody Rule”). Freedom One Investment Advisors, Inc. (“Freedom One”), a formerly registered investment adviser, had custody of client assets and was required by the Custody Rule to have an independent public accountant conduct annual surprise exams to verify those assets. For 2006 and 2008, Freedom One engaged UHY LLP to perform the surprise exams… Read More

Penalties: N/A
Respondent: Stephen D. Cheaney
Violation: The Commission’s order involved misconduct by Cheaney in completing a surprise exam pursuant to Section 206(4) of the Advisers Act of 1940 and Rule 206(4)-2 thereunder (the “Custody Rule”). Freedom One Investment Advisors, Inc. (“Freedom One”), a formerly registered investment adviser, had custody of client assets and was required by the Custody Rule to have an independent public accountant conduct annual surprise exams to verify those assets… Read More

Penalties: $99,731.00
Respondent: Raymond Starker
Violation: Starker, a resident of Englishtown, New Jersey, had longtime personal relationships with an Energy Focus director, a company executive, and an individual affiliated with an investment bank that sought to participate in the offering. According to the complaint, Starker communicated regularly with these individuals and received confidential information about the planned secondary offering… Read More

Penalties: $8,790,000.00
Respondent: Equal Earth, Inc., et al
Violation: Equal Earth, CEO Andrew J. Duggan of San Diego, California, and COO Ghassan “Mark” Hamade of Santa Monica, California, fraudulently induced investments in Equal Earth, raising approximately $5.6 million from at least 266 investors. As alleged in the complaint, Duggan and Hamade made materially false and misleading representations to investors concerning Equal Earth’s financial health and suggested, incorrectly, that Equal Earth was a fastgrowing company that would soon go public by telling investors that the company had significant historical revenues, had acquired multiple companies that could generate future revenue, and had projects with significant power generation capacity… Read More

Penalties: $7,303,608.00
Respondent: Wedbush Securities, Inc.
Violation: From at least November 2011 until approximately September 2013, Wedbush was a Pre-Release Broker that obtained pre-released ADRs directly from four Depositaries pursuant to Pre-Release Agreements. Contrary to certain provisions in the Pre-Release Agreements and the Deposit Agreements, associated persons on Wedbush’s securities lending desk regularly obtained pre-released ADRs from Depositaries and loaned them to counterparties without taking reasonable steps to determine whether the requisite number of ordinary shares was owned and custodied by Wedbush or its counterparties. The result of this conduct was the issuance of ADRs that in many instances were not backed by ordinary shares as required by the Deposit Agreements. This conduct violated Section 17(a)(3) of the Securities Act… Read More

Penalties: $144,691,172.00
Respondent: Walmart Inc.
Violation: This matter concerns violations of the books and records and internal accounting controls provisions of the Foreign Corrupt Practices Act (“FCPA”) by Walmart, a global retailer. From in or around July 2000 through in or around April 2011, Walmart’s subsidiaries in Brazil, China, India, and Mexico operated without a system of sufficient anti-corruption related internal accounting controls. As a result, during this time period, those Walmart subsidiaries paid certain third-party intermediaries (“TPIs”) without reasonable assurances that certain transactions were consistent with their stated purpose or consistent with the prohibition against making improper payments to government officials… Read More

Penalties: $4,577,370.00
Respondent: Javier Rios
Violation: In connection with the sale of two products to investors, the “Promissory Conversion Investment Note Agreement” (or some variant thereof), and the “Fixed Index Investment Agreement,” Rios engaged in a Ponzi scheme, made material misrepresentations to investors, misappropriated investor funds, and otherwise engaged in a variety of conduct which operated as a fraud and deceit on investors… Read More

Penalties: $100,000.00
Respondent: Benjamin H. Gordon
Violation: Gordon did not exercise reasonable care in ensuring the accuracy of these proxy materials, which Cambridge filed with the Commission and which were provided to the Cambridge shareholders. The proxy statement specifically stated that Cambridge had “conduct[ed] a thorough due diligence review” of Ability. However, Gordon and his company had not conducted additional third-party due diligence on ULIN, its ownership, or the revised backlog and pipeline figure presented in the November 2015 roadshow… Read More

Penalties: N/A
Respondent: Edward Lee Moody, Jr.
Violation: Moody operated a Ponzi scheme and defrauded dozens of investors by, among other things, misusing and misappropriating investor funds, falsely telling investors that their funds had been profitably invested, and sending out false account statements indicating that investors funds were fully invested and earning returns… Read More

Penalties: N/A
Respondent: Andrew J. Kandelapas
Violation: Between December 2012 and June 2015, Kandalepas bought and sold shares of WCUI for the purpose of artificially inflating the stock price. Many of his trades occurred at or near the close of normal trading hours in a form of market manipulation known as “marking the close.” According to the plea agreement, Kandalepas netted at least $136,176 in trading profits for his personal use… Read More

Penalties: $3,057,248.00
Respondent: Edward Lee Moody, Jr., et. al
Violation: Edward Lee Moody, Jr. and his wholly-owned investment adviser firm CM Capital Management, LLC, with operating a Ponzi scheme that defrauded dozens of retail investors over a period of at least nine years. In settling the SEC’s charges against him, Moody acknowledged that he pled guilty in a parallel criminal action to operating a scheme to defraud investors. In that matter, Moody admitted that he fraudulently represented to investors that he would invest their funds on their behalf, when, in fact, he misappropriated investor funds for his personal benefit… Read More

Penalties: N/A
Respondent: Daryl M. Payton
Violation: Payton committed insider trading by trading on material, nonpublic information that he received in breach of duty regarding July 28, 2009, acquisition of SPSS Inc. by International Business Machines Corporation. The complaint further alleged that Payton’s ill-gotten gains from his insider trading exceeded $243,000… Read More

Penalties: $558,283.00
Respondent: Gregory T. Dean; Donald J. Fowl
Violation: The broker, Donald J. Fowler, while registered with J.D. Nicholas & Associates Inc., a now-defunct broker-dealer located in Syosset, New York, engaged in fraud when he deployed an in-and-out trading scheme that was unsuitable for his customers in order to generate large commissions for himself. The evidence showed that Fowler failed to do any reasonable due diligence to determine whether his trading, which involved frequent buying and selling of securities, could deliver a profit for his customers. Indeed, the SEC’s proof showed that the cumulative commissions Fowler charged were so high that investors would have needed to generate, on average, a 142% return simply to break even… Read More

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