Financial Enforcement Actions | Week of May 02 to May 08

Enforcement Report May 02 - 08 feat

Enforcement Report May 02 - 08

CFTC

3 Enforcement Documents

$0.00 in Fines

Penalties: N/A
Respondent: Daniel Fingerhut, Digital Platinum Inc., Digital Platinum Ltd., Huf Mediya, Ltd., Tal Valariola, and Itay Barak
Violation: "Between June 2014 and October 2016, Fingerhut, while acting as AIP’s agent violated Section 4c(b), 4o(1), and 6(c)(1) of the Act, 7 U.S.C. §§ 6c(b), 6o(1), 9(1) (2018) and Regulations 32.9 and 180.1(a)(1)-(3), 17 C.F.R. §§ 32.9, 180.1(a)(1)-(3) (2019), which prohibit commodity options fraud, fraud by a Commodity Trading Advisor (“CTA”), and deceptive devices, schemes and/or artifices in connection with, among other things, commodities in interstate commerce and/or swap transactions (“swaps fraud”); (b) Between October 2013 and November 2016, DPL, Valariola, and Barak willfully aided and abetted AIP’s and Fingerhut’s violations of 7 U.S.C. §§ 6c(b), 9(1) and 17 C.F.R. §§ 32.9 and 180.1(a)(1)-(3), which prohibit commodity options fraud and swaps fraud... Read More

Penalties: N/A
Respondent: Phy Capital Investments, LLC and Fabio Bretas de Freitas,
Violation: Pursuant to Section 8a(2)(E) of the Act, 7 U.S.C. § 12(a)(2)(E) (2018), the Commission may revoke the registration of any person who has been found, in a proceeding brought by the Commission, to have violated the Act by committing fraud or misappropriation of funds within ten years preceding the filing of the registration application or any time thereafter... Read More

Penalties: N/A
Respondent: Cayley Investment Management, LLC, et al
Violation: During the Relevant Period, Khorrami, on behalf of CIM, engaged in wash sales in violation of Section 4c(a)(l) and (2) of the Act, 7 U.S.C. § 6c(a)(l), (2) (2018). Khorrami entered bids and offers of similar quantities in the same futures product for trading accounts that had the same beneficial owner and which were intended to and did in fact offset each other upon execution. By intentionally entering these offsetting orders in this manner and achieving the goal of having these bids and offers offset each other upon execution, Khorrami negated the risk or price competition incidental to an open and competitive marketplace and thus engaged in noncompetitive transactions in violation of Regulation 1.38(a), 17 C.F.R. § 1.38(a) (2019)... Read More

SEC

14 Enforcement Documents

$8,078,196.84 in Fines

Penalties: N/A
Respondent: Barry R. Bekkedam
Violation: The Commission’s complaint alleged that, from April through October 2009, Bekkedam fraudulently induced, or assisted in inducing, his advisory clients and others to invest approximately $100 million in a fund being promoted by an individual named George Levin that purportedly purchased lawsuit settlements from now-convicted Ponzi-schemer Scott Rothstein. When soliciting his advisory clients and other prospective investors, inter alia, Bekkedam made material misrepresentations and omissions regarding the level of due diligence that he and Ballamor had performed, including their access to information confirming the existence of the settlement funds, the authenticity of Rothstein’s investment program, and the overall safety of investing in the Rothstein settlements... Read More

Penalties: $500,000.00
Respondent: Bloomberg Tradebook LLC,
Violation: As a result of the conduct described above, Tradebook willfully violated Section 17(a)(2) of the Securities Act, which makes it unlawful for “any person in the offer or sale of any securities … directly or indirectly … to obtain money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances in which they were made, not misleading... Read More

Penalties: N/A
Respondent: CAN Capital, Inc.
Violation: According to the SEC's complaint, CAN Capital's offering involved the securitization of a revolving pool of merchant cash advances and small business loans. The complaint alleges that CAN Capital disclosed to investors that it was required to maintain a minimum amount of receivables in the revolving pool, which included writing off delinquent accounts and replacing them with performing assets. According to the complaint, however, CAN Capital failed to disclose its practice of granting forbearance, known as grace days, to certain accounts unable to make loan payments. The complaint alleges that these accounts often remained as collateral for the securitization, even as they became non-performing. By November 2016, CAN Capital's collateral for the securitization allegedly contained millions of dollars of non-performing assets that should have been removed from the securitization, which resulted in losses to investors... Read More

Penalties: N/A
Respondent: Damon Elliott, et al.
Violation: The SEC's complaint, filed in federal court in Massachusetts, charges Elliott and Piptastic with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks permanent injunctive relief, civil penalties, and disgorgement with prejudgment interest. The complaint also names DSE Retail Limited, a second Elliott-controlled entity; Rose and his entity Unique Asset Management Limited; and Sharon Elliott as relief defendants in connection with their receipt of illgotten gains without a legitimate claim to those funds... Read More

Penalties: $5,252,449.70
Respondent: Lisa Bershan, Barry Schwartz, and Joel Margulies
Violation: "IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is permanently restrained and enjoined from violating, directly or indirectly, Section l0(b) of the Securities Exchange Act of 1934 (the ""Exchange Act"") [15 U.S.C. § 78j(b)] and Rule lOb-5 promulgated thereunder [17 C.F.R. § 240.lOb-5], by using any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of any security: (a) to employ any device, scheme, or artifice to defraud; to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or ( c) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person."... Read More

Penalties: $2,325,747.14
Respondent: Barry B. Schwartz
Violation: "IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendant is permanently restrained and enjoined from violating, directly or indirectly, Section l0(b) of the Securities Exchange Act of 1934 (the ""Exchange Act"") [15 U.S.C. § 78j(b)] and Rule lOb-5 promulgated thereunder [17 C.F.R. § 240.lOb-5], by using any means or instrumentality of interstate commerce, or of the mails, or of any facility of any national securities exchange, in connection with the purchase or sale of any security: (a) to employ any device, scheme, or artifice to defraud; to make any untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; or ( c) to engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person."... Read More

Penalties: N/A
Respondent: Jeffery A. Curran, CA
Violation: The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted against Jeffery A. Curran (“Respondent” or “Curran”) pursuant to Rule 102(e)(3)(i) of the Commission’s Rules of Practice... Read More

Penalties: N/A
Respondent: Damon Elliott, et al.
Violation: "Defendants violated, and unless restrained and enjoined will continue to violate, Section 17(a) of the Securities Act of 1933 (“Securities Act”) [15 U.S.C. § 77q(a)], Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) [15 U.S.C. § 78j(b) and §78o(a)] and Rule 10b-5 thereunder [17 C.F.R. § 340.10b-5]."... Read More

Penalties: N/A
Respondent: Lisa Bershan, Barry Schwartz, and Joel Margulies
Violation: The SEC's complaint alleged that Lisa Bershan and Barry Schwartz, of California, and Joel Margulies, of Tennessee, falsely claimed that Starship Snack Corp. was developing and ready to mass produce its own caffeinated snack, and that investors would receive a one-to-one exchange of Starship shares for Monster or Coca-Cola shares after Starship was acquired by those companies. The SEC's complaint further alleged that Starship had no agreement with Monster Energy or Coca-Cola, and that Bershan and Schwartz used investor funds as their own personal piggy bank, spending them to rent and decorate a New York City apartment and on travel, meals, and other personal expenses. Investors were defrauded out of more than $2.3 million... Read More

Penalties: N/A
Respondent: Zhuobin Hong, et al.
Violation: By engaging in the conduct described above, defendants Ben Hong and Caixia Jiang, directly or indirectly, violated, and unless restrained and enjoined will continue to violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]. By engaging in the conduct described above, defendants Ben Hong and Caixia Jiang, and each of them, directly or indirectly, violated Section 14(e) of the Exchange Act [15 U.S.C. § 78n(e)] and Rule 14e-3 thereunder [17 C.F.R. § 240.14e-3], and unless restrained and enjoined will continue to violate them... Read More

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