Weekly Enforcement Action Tracker (May 13 – May 18)

Financial Enforcement Action Summary

NYSE

Penalties: $20,000
Respondent: Citadel Securities
Violation: Citadel’s violation of NYSE Arca Rule 11.1(b) (Adherence to Law and Good Business Practice) for submitting a clearly erroneous execution petition at the request of its client when it knew the order’s terms were not erroneous… Read More

Penalties: $115,000.00
Respondent: Sea Otter Securities Group LLC
Violation: Violated: (i) NYSE Arca Rule 7.33-E, by populating approximately 25 million orders entered on the NYSE Arca Marketplace with the incorrect capacity code; (ii) NYSE Arca Rule 7.16-E and Rule 200(g) of Regulation SHO, by incorrectly marking 160 sell orders; (iii) NYSE Arca Rule 7.23-E, by failing to maintain continuous, two-sided trading interest in approximately 1,138 instances… Read More

FTC

Penalties: TBD
Respondent: Vision Solution Marketing LLC.
Violation: The defendants charge up to $13,995 – usually on consumers’ credit cards – for a purported business coaching program that provides information that is largely available for free on the Internet, and thousands of dollars more for other purported business development services… Read More

Penalties: TBD
Respondent: NutriMost Refunds
Violation: The marketers of the NutriMost weight-loss system made misleading claims that their “new technology” would allow users to lose substantial amounts of weight—typically 20 to 40 pounds or more in 40 days— safely, and without following a restrictive diet. The FTC also alleged that the defendants used misleading endorsements and prevented people who bought the system from posting negative comments or reviews… Read More

SEC

31 Enforcement Documents

$2,111,269.57 in Fines

Penalties: TBD
Respondent: Grey Fox Holdings Corp. f/k/a Gray Fox Petroleum Corp., Grey Fox Holdings Corp. (f/k/a Gray Fox Petroleum Corp.), Green Innovations Ltd. and Red Giant Entertainment, Inc.
Violation: All of the Respondents are delinquent in their periodic filings with the Commission, have repeatedly failed to meet their obligations to file timely periodic reports and failed to heed delinquency letters sent to them by the Division of Corporation Finance requesting compliance with their periodic filing obligations or… Read More

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Penalties: TBD
Respondent: Leon Vaccarelli
Violation: Vaccarelli fraudulently persuaded several elderly customers to invest with him. Instead of investing the customers’ money in such things as conventional brokerage accounts and so-called separately managed accounts as promised, Vaccarelli allegedly deposited customer funds into his personal and business bank accounts. He allegedly commingled the funds with his own money and used them for his own purposes, and in some instances, he used customer funds to pay returns to earlier investors. According to the SEC’s complaint… Read More

Penalties: TBD
Respondent: Timothy C. Scarpino
Violation: Engaged in the illegal distribution of the securities of Biozoom, Inc. (“Biozoom” or “BIZM”) by offering and selling shares of BIZM, which was quoted on the Over-the-Counter Bulletin Board (“OTCBB”), on behalf of four Argentine customers (the “Argentines”)… Read More

Penalties: N/A
Respondent: Angela Rubbo Beckcom Monaco
Violation: On May 1, 2018, Monaco 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… Read More

Penalties: $94,402.04
Respondent: Mark A. Karow and Legend Securities Inc.
Violation: From mid-May 2013 to mid-June 2013, Mark Karow (“Karow”), then a registered representative at registered broker-dealer Legend Securities, Inc. (“Legend”), willfully violated Sections 5(a) and (c) of the Securities Act when he engaged in the illegal distribution of the securities of Biozoom, Inc. (“Biozoom” or “BIZM”) by offering and selling shares of BIZM, which was quoted on the Over-the-Counter Bulletin Board (“OTCBB”), on behalf of four Argentine customers (the “Argentines”)… Read More

Penalties: TBD
Respondent: William M. Jordan
Violation: From 2011 until 2016, as he raised more than $71 million from approximately 100 advisory clients, Jordan lied to investors about how their funds would be invested, about their investments’ performance, and about his own disciplinary history. Jordan is alleged to have overstated the value of the assets in several of his 16 private investment funds… Read More

Penalties: N/A
Respondent: Hedgebrook, JayHawk Enerfy, Inc., and Rubicon Financial, Inc.
Violation: All of the Respondents are delinquent in their periodic filings with the Commission, have repeatedly failed to meet their obligations to file timely periodic reports, and failed to heed delinquency letters sent to them by the Division of Corporation Finance requesting compliance with their periodic filing obligations or, through their failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letters… Read More

Penalties: N/A
Respondent: SEC Complaint – Francisco Abellan Villena, Guillermo Ciupiak, James B. Panther, Jr., and Faiyaz Dean
Violation: Engaged in a fraudulent scheme to effect illegal, unregistered sales of and manipulate the market for shares of the micro-cap company Biozoom, Inc. (“Biozoom”). The scheme quickly generated roughly $34 million in illicit proceeds from sales of Biozoom shares to retail investors and others at artificially inflated prices… Read More

Penalties: N/A
Respondent: SEC Complaint – William M. Jordan
Violation: Defrauded his investment advisory clients over a period of years, before putting the WJA Funds into bankruptcy. Through offerings beginning in 2011 and lasting into 2016, Jordan raised more than $71 million from his advisory clients for sixteen investment funds. Jordan represented that investor money would be used for certain disclosed purposes; that his compensation would be limited to particular amounts; and that the WJA Funds were audited and custodied by third parties… Read More

Penalties: TBD
Respondent: Francisco Abellan Villena, Guillermo Ciupiak, James B. Panther, Jr., and Faiyaz Dean
Violation: The defendants manipulated the market for and illegally sold the stock of microcap issuer Biozoom Inc. As part of the alleged scheme, the defendants hid their ownership and sales of Biozoom shares by using offshore bank accounts, sham legal documents, a network of nominees, anonymizing techniques, and other deceptive practices. The defendants also allegedly directed a wide-ranging promotional campaign and employed sophisticated, manipulative trading techniques to artificially inflate Biozoom’s share price. The alleged scheme culminated in the defendants’ illegal sales of Biozoom, which netted them nearly $34 million in unlawful proceeds… Read More

Penalties: TBD
Respondent: Sonora Resources Corp.
Violation: The Respondent is delinquent in its periodic filings with the Commission, has repeatedly failed to meet its obligations to file timely periodic reports and failed to bring its filings current in response to the delinquency letter sent to it by the Division of Corporation Finance requesting compliance with its periodic filing obligations… Read More

Penalties: $1,000,000.00
Respondent: Chardan Capital Markets, LLC
Violation: During the relevant period, Chardan’s anti-money laundering (“AML”) policies and procedures stated that Chardan would file SARs “for transactions that may be indicative of money laundering activity,” including, among other things, “heavy trading in low-priced securities” and “trading that constitutes a substantial portion of all trading for the day in a particular security… Read More

Penalties: TBD
Respondent: Solaris Power Cells, Inc., Stragenics, Inc. and Ultimate Rack Inc.
Violation: All of the Respondents are delinquent in their periodic filings with the Commission, have repeatedly failed to meet their obligations to file timely periodic reports, and failed to heed delinquency letters sent to them by the Division of Corporation Finance requesting compliance with their periodic filing obligations or, through their failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letters… Read More

Penalties: N/A
Respondent: Abakan, Inc., Car Monkeys Group and Western Graphite, Inc.
Violation: Accordingly, notice is hereby given, pursuant to Rule 360(d) of the Commission’s Rules of Practice,1 that the initial decision of the administrative law judge has become the final decision of the Commission with respect to Abakan, Inc., Car Monkeys Group, and Western Graphite, Inc.2 The order contained in that decision is hereby declared final. The initial decision ordered that pursuant to Section 12(j) of the Securities Exchange Act of 1934, the registrations of the registered securities of Abakan, Inc., Car Monkeys Group, and Western Graphite, Inc., are revoked. The revocation is effective as of May 17, 2018… Read More

Penalties: TBD
Respondent: America Greener Technologies, Inc., MV Portfolios, Inc. and Trycera Financial, Inc.
Violation: All of the Respondents are delinquent in their periodic filings with the Commission, have repeatedly failed to meet their obligations to file timely periodic reports, and failed to heed delinquency letters sent to them by the Division of Corporation Finance requesting compliance with their periodic filing obligations or, through their failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letters… Read More

Penalties: $15,000.00
Respondent: Jerard Basmagy
Violation: Despite the evolution of Chardan’s Policies related to transactions in low-priced securities, Chardan failed to collect documents sufficient to show how each of its customers obtained their shares for dozens of transactions that should have raised red flags under Chardan’s Policies contemporaneously with customers’ trading. In addition, Basmagy engaged in insufficient monitoring of patterns of suspicious activity, as Chardan’s Policies required… Read More

Penalties: $860,000.00
Respondent: Industrial and Commercial Bank of China Financial Services, LLC
Violation: From at least October 2013 through June 2014 (the “relevant period”), ICBCFS cleared billions of shares of transactions in low-priced securities on behalf of certain of Chardan’s customers, primarily in delivery-versus-payment accounts. ICBCFS contacted Chardan numerous times about its customers’ transactions and ultimately ended trading in penny stocks by the relevant Chardan customers… Read More

Penalties: N/A
Respondent: CN Dragon Corp.
Violation: Accordingly, notice is hereby given, pursuant to Rule 360(d) of the Commission’s Rules of Practice,1 that the initial decision of the administrative law judge has become the final decision of the Commission with respect to CN Dragon Corp.2 The order contained in that decision is hereby declared final. The initial decision ordered that pursuant to Section 12(j) of the Securities Exchange Act of 1934, the registration of the registered securities of CN Dragon Corp. is revoked. The revocation is effective as of May 17, 2018… Read More

Penalties: N/A
Respondent: China Precision Steel, Inc.
Violation: Accordingly, notice is hereby given, pursuant to Rule 360(d) of the Commission’s Rules of Practice, that the initial decision of the administrative law judge has become the final decision of the Commission with respect to China Precision Steel, Inc.2 The order contained in that decision is hereby declared final. The initial decision ordered that, pursuant to Section 12(j) of the Securities Exchange Act of 1934, the registration of each class of registered securities of China Precision Steel, Inc., is hereby revoked. The revocation is effective as of May 17, 2018… Read More

Penalties: TBD
Respondent: Keenan Gracey
Violation: The unsealing of fraud charges against a defendant who stole at least $400,000 from investors through the sale of non-existent pre-IPO shares of stock. The SEC also obtained emergency relief, including an asset freeze and a temporary restraining order to halt the offering… Read More

Penalties: N/A
Respondent: Arrow Cars International, Inc., CDEX, Inc. and EFactor Group Corp.
Violation: Accordingly, notice is hereby given, pursuant to Rule 360(d) of the Commission’s Rules of Practice, that the initial decision of the administrative law judge has become the final decision of the Commission with respect to Arrow Cars International, Inc., CDEX, Inc., and EFactor Group Corp. The order contained in that decision is hereby declared final. The initial decision ordered that pursuant to Section 12(j) of the Securities Exchange Act of 1934, the registrations of the registered securities of Arrow Cars International, Inc., CDEX, Inc., and EFactor Group Corp. are revoked. The revocation is effective as of May 18, 2018… Read More

Penalties: N/A
Respondent: American Nano Silicon Technologies, Inc.
Violation: Accordingly, notice is hereby given, pursuant to Rule 360(d) of the Commission’s Rules of Practice,1 that the initial decision of the administrative law judge has become the final decision of the Commission with respect to American Nano Silicon Technologies, Inc.2 The order contained in that decision is hereby declared final. The initial decision ordered that, pursuant to Section 12(j) of the Securities Exchange Act of 1934, the registration of each class of registered securities of American Nano Silicon Technologies, Inc., is hereby revoked. The revocation is effective as of May 18, 2018… Read More

Penalties: TBD
Respondent: Play La Inc. and Titan Trading Analytics, Inc.
Violation: All of the Respondents are delinquent in their periodic filings with the Commission, have repeatedly failed to meet their obligations to file timely periodic reports, and failed to heed delinquency letters sent to them by the Division of Corporation Finance requesting compliance with their periodic filing obligations or, through their failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letters… Read More

Penalties: N/A
Respondent: Prospect Ventures, Inc., Starnet Pacific Co. Ltd. and Sunburst Acquisitions VI, Inc.
Violation: Accordingly, notice is hereby given, pursuant to Rule 360(d) of the Commission’s Rules of Practice,1 that the initial decision of the administrative law judge has become the final decision of the Commission with respect to Prospect Ventures, Inc., StarNet Pacific Co. Ltd., and Sunburst Acquisitions VI, Inc.2 The order contained in that decision is hereby declared final. The initial decision ordered that pursuant to Section 12(j) of the Securities Exchange Act of 1934, the registrations of each class of registered securities of Prospect Ventures, Inc., StarNet Pacific Co. Ltd., and Sunburst Acquisitions VI, Inc., are hereby revoked. The revocation is effective as of May 18, 2018… Read More

Penalties: TBD
Respondent: Apptigo International, Inc., et al.
Violation: All of the Respondents are delinquent in their periodic filings with the Commission, have repeatedly failed to meet their obligations to file timely periodic reports, and failed to heed delinquency letters sent to them by the Division of Corporation Finance requesting compliance with their periodic filing obligations or, through their failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letters… Read More

Penalties: $52,494.53
Respondent: Manhattan Transfer Registrar Company and John C. Ahearn
Violation: The fraudulent manufacture of undisclosed “blank check” companies (the “Blank Check Companies”) by a team of three undisclosed control persons (the “Control Persons”). The primary purpose of the fraud was to sell the entire float of purportedly unrestricted shares of the Blank Check Companies by a reverse merger. The Control Persons engaged a small number of professionals to effectuate their fraud, including Manhattan Transfer, a registered transfer agent… Read More

Penalties: N/A
Respondent: SEC Complaint – Keenan Gracey
Violation: Gracey takes investors’ money promising to invest in “pre-IPO” shares with a 6,000% return. In reality, these shares do not even exist—there is no planned IPO. Instead, Gracey just steals the money. So far, he has taken at least $400,000 from known investors, has received over $2 million through approximately 107 wire transfers into his various bank accounts since 2016, and continues to solicit new investors… Read More

Penalties: N/A
Respondent: SEC Complaint: Brent Borland, et al.
Violation: Defendants perpetuated their fraudulent scheme by secretly re-pledging the same collateral to multiple investors. Defendants led investors to believe that their Notes were secured by valuable real estate that was (a) worth at least twice as much as the amount of the Note, (b) secured only that individual Note, and (c) would not be encumbered by any other liens or security interests. In reality, Borland pledged the same parcels of real estate to multiple investors and reported fake valuations for the properties to investors to make it appear that the parcels were worth twice the face value of the Note… Read More

Penalties: TBD
Respondent: Brent Borland, et al.
Violation: Between 2014 and 2017, Brent Borland sold more than $21 million of promissory notes to dozens of investors, promising that the funds would be used as bridge financing for the development of an international airport in Placencia, Belize and that the investments would be protected by pledges of real estate as collateral. Borland marketed and sold the notes through two companies, Borland Capital Group LLC, which purports to be active in “alternative investment,” and Belize Infrastructure Fund I, LLC, which purports to be in the business of construction finance… Read More

Penalties: TBD
Respondent: PixarBio Corp. et al.
Violation: Misled investors with false claims about PixarBio’s progress in developing a purported method of delivering nonopiate, post-operative pain medication, including that they falsely told investors that the FDA had lowered PixarBio’s hurdles for regulatory approval. The complaint also alleges that Reynolds, Herod, and Stromsland engaged in a fraudulent scheme to acquire and merge PixarBio with a publicly traded company and to secretly manipulate the sales of shares in the new entity. From these sales, Reynolds and Herod pocketed about $400,000, and they used an additional $500,000 to keep PixarBio afloat as Reynolds misled investors about how much money they had raised in the unregistered offering… Read More

Penalties: $89,373.00
Respondent: Todd David Alpert
Violation: Shortly after learning about the potential deal in the course of his employment, Alpert breached a duty of trust and confidence by purchasing 1,000 shares of Heinz stock and 30 call options. The morning that the deal was announced, on February 14, 2013, Alpert sold these Heinz securities for total profits of nearly $44,000… Read More

FINRA

9 Enforcement Documents

$5,365,000.00 in Fines

Penalties: $5,000.00
Respondent: Andrew L. Denney
Violation: Over the course of nine months, Respondent disclosed nonpublic information (“NPI”) about approximately two dozen customers to a person who was statutorily disqualified from the brokerage industry (“SD”) and assisted SD’s efforts to act as an unregistered broker. Respondent also communicated about securities via a means—text messaging—that Cambridge prohibited and could not monitor. By doing so, Respondent violated FINRA Rule 2010… Read More

Penalties: $5,000.00
Respondent: Joshua David Stamm
Violation: In May 2014 and April 2015, while associated with Merrill Lynch, Stamm participated in two undisclosed private securities transactions in which a Merrill Lynch. customer and the company that customer-owned purchased a total of $500,000 in promissory notes. By virtue of his conduct, Stamm violated NASD Rule 3040 and PINRA Rule 2010… Read More

Penalties: $5,000.00
Respondent: Francisco Jose Ortiz
Violation: In May 2015, Francisco Jose Ortiz processed a customer wire transfer based on email instructions despite knowing that an unknown imposter had compromised the customer’s email account and that the wire request was fraudulent. In order to process the wire transfer, Ortiz falsely represented on a Wells Fargo Advisors LLC (“WFA”) wire transfer request form that the request had been orally confirmed with the customer causing WFA’s books and records to be inaccurate… Read More

Penalties: N/A
Respondent: Andrew L. Denney
Violation: Over the course of nine months, Respondent disclosed nonpublic information (“NPI”) about approximately two dozen customers to a person who was statutorily disqualified from the brokerage industry (“SD”) and assisted SD’s efforts to act as an unregistered broker. Respondent also communicated about securities via a means—text messaging—that Cambridge prohibited and could not monitor. By doing so, Respondent violated FINRA Rule 2010… Read More

Penalties: $5,300,000.00
Respondent: Industrial and Commercial Bank of China Financial Services LLC.
Violation: In late 2012, ICBCFS started a new business line involving the clearance and settlement of equity transactions. In connection with this new business, the Firm began carrying and clearing for dozens of new correspondent broker-dealers, including thousands of new introduced customers. Many of these newly introduced customers began purchasing and selling millions of dollars’ worth of low-priced equity securities (“penny stocks”) within a few months after the business was launched… Read More

Penalties: N/A
Respondent: Jonathan G. Sweeney
Violation: In November 2015, Sweeney made material misrepresentations and omitted to state material information when he made an unsuitable recommendation that caused his customer, ML, to surrender two variable annuities and use the proceeds to purchase two new variable annuities. In so doing, Sweeney (i) willfully violated Section 10(b) of the Securities and Exchange Act of 1934 (“Exchange Act”), Exchange Act Rule 10b-5, and FINRA Rules 2020 and 2010; and
(ii) violated FINRA Rules 2111, 2330(b), and 2010… Read More

Penalties: $10,000.00
Respondent: Zachary S. Brodt
Violation: In 2014, while registered with Accelerated, Brodt sent nonpublic personal customer information to non-affiliated third parties without the customers’ knowledge and consent. Brodt thereby violated FINRA Rule 2010 by causing his firm to violate SEC Regulation S-P. In addition, between November 2010 and November 2017, Brodt willfully failed to timely update his Form U4 to disclose a misdemeanor charge and guilty plea. Brodt thereby violated FINRA Rules 1122 and 2010 and Article V, Section 2(c) of FINRA’s By-Laws… Read More

Penalties: $40,000.00
Respondent: Cowen Execution Services LLC.
Violation: Matter No. 20140399420 resulted from the 2014 Trading and Financial Compliance Examination of the firm, in which FINRA’s Department of Market Regulation (the “Staff”), on behalf of FINRA and various other securities exchanges, conducted a review of the firm… Read More

Penalties: $20,676.56
Respondent: Michael Todd Clements
Violation: Respondent made material misrepresentations and omissions of material fact in connection with self-offerings to investors and failed to supervise his firm’s capital raising. Held, findings affirmed and sanctions affirmed in part, modified in part… Read More

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