Financial Enforcement Actions | Week of September 21 to September 27
Respondent: The Co-operative Bank p.l.c.
Violation: The relevant term in the contract stated “If we agree additional borrowing, it will be charged at the interest rate applicable at the time……” We were concerned that the wording “the interest rate applicable at the time” was ambiguous as it was not clear what interest rate would be charged. The term had the potential to give the firm the discretion to charge any number of interest rates. This could cause detriment to consumers as they would be unable to understand what rate of interest they would pay… Read More
Respondent: FCO Holding, Inc., Fair Collections & Outsourcing, Inc., Fair Collections & Outsourcing of New England, Inc., FCO Worldwide, Inc. and Michael E. Sobota
Violation: FCO violated the Fair Credit Reporting Act and Regulation V by failing to maintain reasonable policies and procedures regarding the accuracy and integrity of the information it furnishes, including the handling of consumer disputes, failing to conduct reasonable investigations of certain consumer disputes, and failing to cease furnishing information that was alleged to have been the result of identity theft before it made any determination of whether the information was accurate… Read More
Respondent: Bettie McGuire Shomaker
Violation: In violation of Bank policy, generated loans for relatives, did not send these loans to the Bank’s loan operations department for booking, and used one of these loans for her own benefit… Read More
Respondent: Match Group, Inc.
Violation: The FTC is authorized to initiate federal district court proceedings, by its own attorneys, to enjoin violations of the FTC Act and ROSCA and to secure such equitable relief as may be appropriate in each case, including rescission or reformation of contracts, restitution, the refund of monies paid, and the disgorgement of ill-gotten monies. 15 U.S.C. §§ 53(b), 56(a)(2)(A), 56(a)(2)(B), 57b, and 8404. The FTC is also authorized to obtain civil penalties for violations of ROSCA. See 15 U.S.C. § 45(m)(1)(a)… Read More
Respondent: Strategic Planning Group Inc., David A. Rourke, and Jarrod A. Sherman
Violation: Respondents failed to disclose that Rourke and Sherman had been contractually retained by Ecoark for three years beginning in May 2013 to provide consulting services in exchange for each receiving 100,000 shares (later split-adjusted to 50,000 shares) of Ecoark common stock. As a result, Respondents negligently breached their fiduciary duties to SPG’s clients in violation of Section 206(2) of the Advisers Act by failing to disclose Rourke and Sherman’s connections to Ecoark and the resulting inherent conflict of interest under which Rourke and Sherman had a potential incentive to invest SPG clients’ funds in Ecoark to support or increase Ecoark’s stock price…. Read More
Respondent: Anthony Vassallo
Violation: The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 203(f) of the Investment Advisers Act of 1940 (“Advisers Act”) against Anthony Vassallo (“Respondent” or “Vassallo”)… Read More
Respondent: James Wallace Nall, III, et al
Violation: According to the SEC’s complaint, Nall received the information for a legitimate purpose from a member of Golden Enterprises’ board of directors. Nall did not trade on the information, but he tipped his close friend and business partner, Michael Hale Smith, who did trade on it. Smith’s father, Michael Dwaine Smith; his brother, Robert Walter Smith; and his boss, Walter Vice Tutt, also traded on the information. As alleged, Tutt and the three Smiths all knew Nall and understood his relationship with a director of Golden Enterprises when they traded Golden Enterprises’ stock in advance of the merger announcement, collectively realizing profits of approximately $437,000… Read More
Respondent: Efuel EFN Corp., et al.
Violation: In addition, the complaint alleges the defendants issued numerous press releases over the course of over a year that claimed that the mines contained “substantial mineral, gold, silver and other precious gems and minerals” worth $500 million, that the mines could reap as much as $2-$3 billion in mineral deposits, that the company’s valuation claims were supported by geologic and scientific studies, and that a recent scientific study proved that there was more than $5 billion worth of gold in the mines. The complaint further alleges that the defendants told the public that it had scientists conducting detailed studies on the gold mines, and that exploratory and development efforts were ongoing… Read More
Respondent: Scott G. Huish
Violation: Huish willfully aided and abetted and caused Partners’ violations of Sections 203A of the Advisers Act and Rule 203A-1 promulgated thereunder, which generally prohibit an investment adviser that is regulated or required to be regulated in the State in which it maintains its principal office and place of business from registering with the Commission unless it has assets under management of not less than $25 million, or such higher amount as the Commission may, by rule, deem appropriate or is an adviser to an investment company registered under the Investment Company Act… Read More
Respondent: Pro Squared, Inc. and Protech Global Holdings Corp.
Violation: 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. As a result of the foregoing, Respondents failed to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder… Read More
Respondent: Roman Sledziejowski
Violation: Sledziejowski pleaded guilty alleges that the SEC had commenced an investigation into sales of certain securities and that Sledziejowski intentionally endeavored corruptly to influence, obstruct and impede the investigation. Specifically, the superseding information alleges Sledziejowski gave evasive and misleading answers in August 2012 testimony before FINRA concerning the identities of individuals in Poland who received funds from Innovest, the owner of TWS, following the sale the of securities knowing that his answers would likely impede the SEC’s investigation… Read More
Respondent: TMC Bonds LLC,
Violation: TMC violated Rule 301(b)(10) of Regulation ATS by failing to establish adequate safeguards and procedures to protect subscribers’ confidential trading information and to implement adequate oversight procedures to ensure that these safeguards and procedures were followed. Although TMC had written policies requiring generally that subscriber-identifying information be kept confidential, TMC failed to provide adequate training to its employees on these policies and failed to implement adequate procedures or controls to ensure that such confidential information was actually being safeguarded… Read More
Respondent: Serge Matta
Violation: Matta violated Rule 13a-14 promulgated under the Exchange Act, which requires that the principal executive and principal financial officers of an issuer that files a report pursuant to Section 13(a) of the Exchange Act sign a certification that, among other things and based on their knowledge, the periodic report filed with the Commission does not contain any untrue statement of material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading and the financial statements fairly present in all material respects the financial condition, results of operations, and cash flows for the periods presented… Read More
Respondent: Comscore, Inc.,
Violation: “Comscore made false or misleading disclosures regarding two important performance metrics. In 2014 and 2015, Comscore disclosed inflated customer totals that falsely conveyed a consistent increase in the number of net new customers added. In fact, the number of net new customers was declining. Comscore disclosed these overstated numbers in its periodic filings with the Commission and Matta highlighted them during earnings calls with investors. Also, in the third and fourth quarters of 2015, Comscore disclosed misstated revenue
growth percentages concerning one of its flagship data analytic products. Matta described this
purported revenue growth in earnings calls.”… Read More
Respondent: Robert Hillis Miller
Violation: Miller violated the registration and antifraud provisions of the Securities Act [15 U.S.C. §§ 77e(a), (c) and 77q(a)]; the antifraud, beneficial ownership reporting, and CEO certification provisions of the Exchange Act, and rules thereunder [15 U.S.C. §§ 78j(b), 78m(d) and 78p, and 17 C.F.R. §§ 240.10b-5, 13a-14, 13d-1, 13d-2, 16a-2 and 16a-3]; and aided and abetted Abakan’s violations of the annual reporting provisions of the Exchange Act and rules thereunder [15 U.S.C. § 78m(a) and 17 C.F.R. §§ 240.13a-1 and 12b-20]. Miller will continue to violate the aforementioned provisions unless restrained or enjoined by this Court. Accordingly, the Commission seeks injunctive relief, disgorgement of ill-gotten gains, prejudgment interest, civil penalties, and other appropriate and necessary equitable and ancillary relief… Read More
Respondent: Gerald C. Parker
Violation: The SEC’s complaint alleges that Parker violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, and the securities registration provisions of Securities Act Sections 5(a) and 5(c) and the broker dealer registration provision of Section 15(a)(1) of the Exchange Act. The SEC seeks a permanent injunction, disgorgement of ill-gotten gains and a civil penalty against Parker… Read More
Respondent: Albert K. Hu
Violation: The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 203(f) of the Investment Advisers Act of 1940 (“Advisers Act”) against Albert K. Hu (“Respondent” or “Hu”)… Read More
Respondent: James Alex Irvin
Violation: The SEC’s complaint, filed in the U.S. District Court for the Southern District of Florida, alleges that James Alex Irvin, of Boca Raton, Florida, repeatedly traded in the securities of his employer, PetMed Express, Inc., on the basis of confidential information he obtained as PetMed’s Director of Marketing and a member of its Management Committee.The SEC further alleges that Irvin engaged in insider trading based on tipping confidential information concerning PetMed’s positive fiscal 2017 fourth quarter and yearend financial results to his close personal friend, who made modest profits from his trading… Read More
Respondent: William M. Apostelos, et al.
Violation: The court entered a final judgment against Apostelos, permanently enjoining him from violating the antifraud provisions of Section 17(a) of the Securities Act of 1933 (Securities Act), Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and Section 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder, and the registration provisions of Sections 5(a) and 5(c) of the Securities Act and Section 15(a) of the Exchange Act… Read More
Respondent: David R. Gibson, et al.
Violation: The judgment against Gibson enjoins him from future violations of Section 17(a) of the Securities Act of 1933 and Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5, 13a-14, and 13b2-1 thereunder, and further enjoins him from aiding and abetting future violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a1, 13a-11, and 13a-13 thereunder… Read More
Respondent: Strong Investment Management, et al.
Violation: SIM and Bronson violated the antifraud provisions of Sections 17(a)(1) and 17(a)(2) of the Securities Act of 1933 (“Securities Act”), Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 (“Advisers Act”). In addition, defendants SIM and Bronson violated Section 207 of the Advisers Act by willfully making false statements in Forms ADV filed with the SEC. Defendant SIM also violated Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder… Read More
Respondent: Hefren-Tillotson, Inc.,
Violation: The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are, instituted pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940 (“Advisers Act”) and Section 15(b)(4) of the Securities Exchange Act of 1934 (“Exchange Act”) against Hefren-Tillotson, Inc. (“Hefren” or “Respondent”)… Read More
Respondent: Leonardo Cornide and Jorge Falcon
Violation: Cornide and Falcon own Silverback, own PSPC’s holding company, and are directors of PSPC and had financial conflicts of interest both with respect to PSPC’s investment in the note with Silverback and the personal loans. Since Respondents did not disclose these conflicts and get client consent to the conflicted transactions, Respondents violated Section 206(2) of the AdvisersAct… Read More
Respondent: Cetera Investment Advisers LLC,
Violation: Cetera willfully violated Section 206(4) of the Advisers Act and Rule 206(4)-3 thereunder, which prohibit a registered investment adviser from paying a cash fee, directly or indirectly, to a solicitor with respect to solicitation activities unless, among other things, the adviser enters into a written agreement with each solicitor and requires the solicitor to provide the client with a current copy of the adviser’s brochure and a separate written disclosure document containing, among other things… Read More
Respondent: Three Bridge Wealth Advisors, LCC.
Violation: In two separate instances in 2015, Three Bridge, a registered investment adviser, voted proxies with respect to client securities held in dozens of client accounts, notwithstanding Three Bridge’s representations in its Form ADV Part 2A brochure and written advisory agreements that it did not accept proxy voting authority over client securities. In doing so, Three Bridge violated Section 206(2) of the Advisers Act… Read More
Respondent: Harding Advisory LLC and Wing F. Chau
Violation: Harding and Chau negligently breached their obligations to the Issuers by failing to use reasonable care in selecting for inclusion in the portfolios of Neo and Lexington, millions of dollars’ worth of BBB-rated notes from a CDO, known as Norma. The Norma BBB-rated notes represented approximately 1.6% of the value of the asset portfolios of each of Lexington and Neo… Read More
Respondent: ECP Manager LP
Violation: Respondent violated Section 206(4) of the Advisers Act and Rule 206(4)-8 thereunder, which make it unlawful for any investment adviser to a pooled investment vehicle to “engage in any act, practice, or course of business that is fraudulent, deceptive, or manipulative with respect to any investor or prospective investor in the pooled investment vehicle.” Proof of scienter is not required to establish a violation of Section 206(4) of the Advisers Act or the rules thereunder. Steadman, 967 F.2d at 647… Read More
Respondent: Herbalife Nutrition Ltd.,
Violation: Herbalife violated Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and Rules 12b-20, 13a-1, and 13a-13 thereunder, which require every issuer of a security registered pursuant to Section 12 of the Exchange Act file with the Commission, among other things, annual and quarterly reports as the Commission may require, and mandate that periodic reports contain such further material information as may be necessary to make the required statements not misleading… Read More
Respondent: Hologram USA Networks Inc. and Alkiviades (“Alki”) David
Violation: As presented on the website, Hologram USA’s business plan included, in major part, the creation of “resurrection” performances in which the holograms of famous deceased artists would be used to create “live” concerts with the deceased. As alleged in the SEC’s complaint, a slide deck available on the website for investors and potential investors contained false and misleading information concerning Hologram USA’s right to present these shows, and its current theater network in which it planned to broadcast them… Read More
Respondent: Mylan N.V.
Violation: Mylan misclassified EpiPen and thereby overcharged the government for EpiPen sales to Medicaid patients. During the investigation, DOJ issued multiple subpoenas and investigative demands, rejected Mylan’s arguments to close the investigation, and indicated its intent to sue Mylan if Mylan failed to make a settlement offer. As alleged in the complaint, Mylan produced documents and other information to DOJ, including providing potential damages calculations and making offers of settlement… Read More
Respondent: Jonathan E. Shoucair
Violation: On July 1, 2019, the Securities and Exchange Commission (“Commission”) instituted public administrative proceedings against Jonathan E. Shoucair (“Shoucair” or “Respondent”) pursuant to Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”)… Read More
Respondent: GFI Securities LLC,
Violation: GFI willfully1 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 under which they were made, not misleading… Read More
Respondent: Iquantifi, Inc. and Thomas F. White
Violation: As a result of the conduct described above, Respondents violated Section 5(a) of the Securities Act, which prohibits the sale of securities through interstate commerce or the mails unless a registration statement is in effect, and Section 5(c) of the Securities Act, which prohibits the offer to sell any security through interstate commerce or the mails, unless a registration statement has been filed as to such security with the Commission… Read More