Financial Enforcement Actions | Week of September 28 to October 04

Financial-Enforcement-Actions-Week-of-September-28-to-October-04

Financial-Enforcement-Actions-Week-of-September-28-to-October-04

CFPB

2 Enforcement Documents

$0.00 in Fines

Penalties: N/A
Respondent: Katharine Snyder, Performance Arbitrage Company, Inc., and Life Funding Options, Inc.
Violation: On October 1, 2019, the Consumer Financial Protection Bureau and the South Carolina Department of Consumer Affairs filed a lawsuit in federal district court in the District of South Carolina against Katharine Snyder, Performance Arbitrage Company, Inc., and Life Funding Options, Inc… Read More

FRS

1 Enforcement Document

$0.00 in Fines

Penalties: N/A
Respondent: John D. Evans
Violation: Evans has consented to the issuance of this Order by the Board of Governors and has agreed to comply with each and every provision of this Order, and has waived any and all rights he might have pursuant to 12 U.S.C. § 1818, 12 C.F.R. Part 263, or otherwise: (a) to the issuance of a notice of intent to prohibit on any other matter implied or set forth in this Order; (b) to a hearing for the purpose of taking evidence with respect to any matter implied or set forth in this Order; (c) to obtain judicial review of this Order or any provision hereof; and (d) to challenge or contest in any manner the basis, issuance, terms, validity, effectiveness, or enforceability of this Order or any provision hereof… Read More

FTC

5 Enforcement Documents

$0.00 in Fines

Penalties: N/A
Respondent: Alliance Document Preparation (EZ Doc Preps)
Violation: The FTC alleged in its complaint that the defendants deceptively telemarketed their document preparation service by misrepresenting an affiliation with the Department of Education or consumers’ loan servicers, and that consumers who paid defendants an up-front fee were qualified for or approved to receive permanently reduced monthly payments or their student loans would be forgiven or discharged… Read More

Penalties: N/A
Respondent: Zurixx, LLC
Violation: The FTC brings this action under Sections 13(b) and 19 of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. §§ 53(b) and 57b, and the Consumer Review Fairness Act (“CRFA”), 15 U.S.C. § 45b, to obtain temporary, preliminary, and permanent injunctive relief, rescission or reformation of contracts, restitution, the refund of monies paid-, disgorgement of ill-gotten monies, and other equitable relief for Defendants’ acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a), and the CRFA, 15 U.S.C. § 45b… Read More

Penalties: N/A
Respondent: AdvoCare International, L.P.
Violation: The FTC brings this action under Section 13(b) of the Federal Trade Commission Act (“FTC Act”), 15 U.S.C. § 53(b), to obtain permanent injunctive relief, rescission or reformation of contracts, restitution, the refund of monies paid, disgorgement of ill-gotten monies, and other equitable relief for Defendants’ acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a) in connection with the advertising, marketing, promotion, and operation of a multi-level marketing business opportunity… Read More

SEC

58 Enforcement Documents

$6,927,094.10 in Fines

Penalties: N/A
Respondent: Michael Ajzenman and Cutting Edge Business Services, Inc.
Violation: The complaint alleges that Ajzenman negotiated the purchases only with Bebida’s CEO, which was inconsistent with Ajzenman’s standard business practice. As alleged, within days of purchasing each of the notes, Ajzenman, acting through Cutting Edge, began exercising the convertible feature of the notes and selling the resultant Bebida stock into the public market when no registration statement was in effect and no exemption from registration was available… Read More

Penalties: N/A
Respondent: Michigan Advisorsm, Inc.
Violation: Respondent and its related broker received 12b-1 fees in connection with these investments. Respondent failed to disclose in its Form ADV or otherwise the conflicts of interest related to (a) its receipt of 12b-1 fees, and/or (b) its selection of mutual fund share classes that pay such fees. During the Relevant Period, Respondent and its related broker received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes… Read More

Penalties: N/A
Respondent: Investment Partners, Ltd
Violation: Respondent or its associated persons received 12b-1 fees in connection with these investments. Respondent failed to disclose in its Form ADV or otherwise the conflicts of interest related to (a) its receipt of 12b-1 fees, and/or (b) its selection of mutual fund share classes that pay such fees. During the Relevant Period, Respondent or its associated persons received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes… Read More

Penalties: N/A
Respondent: Hilltop Securities, Inc. and Hilltop Securities Independent Network, Inc.
Violation: Respondents failed to disclose in their Forms ADV or otherwise the conflicts of interest related to (a) their receipt of 12b-1 fees, and/or (b) their selection of mutual fund share classes that pay such fees. During the Relevant Period, Respondents received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes… Read More

Penalties: N/A
Respondent: Essex Financial Services, Inc.
Violation: Respondent received 12b-1 fees in connection with these investments. Respondent failed to disclose in its Form ADV or otherwise the conflicts of interest related to (a) its receipt of 12b-1 fees, and/or (b) its selection of mutual fund share classes that pay such fees. During the Relevant Period, Respondent received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes. Respondent self-reported to the Commission the violations discussed in this Order pursuant to the Division of Enforcement’s (the “Division”) Share Class Selection Disclosure Initiative (“SCSD Initiative”). 2 Accordingly, this Order and Respondent’s Offer are based on the information self-reported by Respondent… Read More

Penalties: N/A
Respondent: Equity Services, Inc.
Violation: Respondent received 12b-1 fees in connection with these investments. Respondent failed to disclose in its Form ADV or otherwise the conflicts of interest related to (a) its receipt of 12b-1 fees, and/or (b) its selection of mutual fund share classes that pay such fees. During the Relevant Period, Respondent received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes… Read More

Penalties: N/A
Respondent: Bill Few Associates, Inc.
Violation: Respondent’s affiliated broker and its associated persons received 12b-1 fees in connection with these investments. Respondent failed to disclose in its Form ADV or otherwise the conflicts of interest related to (a) its receipt of 12b-1 fees, and/or (b) its selection of mutual fund share classes that pay such fees. During the Relevant Period, Respondent’s affiliated broker and its associated persons received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes… Read More

Penalties: N/A
Respondent: Mid Atlantic Financial Management, Inc.
Violation: MAFM failed to adopt and implement written compliance policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules thereunder in connection with its mutual fund share class selection practices. MAFM, although eligible to do so, did not self-report to the Commission pursuant to the Division of Enforcement’s (the “Division”) Share Class Selection Disclosure Initiative (“SCSD Initiative”)… Read More

Penalties: N/A
Respondent: Wedbush Securities, Inc.,
Violation: Respondent and its associated persons received 12b-1 fees in connection with these investments. Respondent failed to disclose in its Form ADV or otherwise the conflicts of interest related to (a) its receipt of 12b-1 fees, and/or (b) its selection of mutual fund share classes that pay such fees. During the Relevant Period, Respondent and its associated persons received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes… Read More

Penalties: N/A
Respondent: Saxony Capital Management, LLC
Violation: Respondent, its affiliated broker, and its associated persons received 12b-1 fees in connection with these investments. Respondent failed to disclose in its Form ADV or otherwise the conflicts of interest related to (a) its receipt of 12b-1 fees, and/or (b) its selection of mutual fund share classes that pay such fees. During the Relevant Period, Respondent, its affiliated broker, and its associated persons received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes… Read More

Penalties: N/A
Respondent: IPG Investment Advisors, LLC.
Violation: Respondent, its affiliated broker, and its associated persons received 12b-1 fees in connection with these investments. Respondent failed to disclose in its Form ADV or otherwise the conflicts of interest related to (a) its receipt of 12b-1 fees, and/or (b) its selection of mutual fund share classes that pay such fees. During the Relevant Period, Respondent, its affiliated broker, and its associated persons received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes… Read More

Penalties: N/A
Respondent: IC Advisory Services, Inc.
Violation: Respondent and its affiliated broker received 12b-1 fees in connection with these investments. Respondent failed to disclose in its Form ADV or otherwise the conflicts of interest related to (a) its receipt of 12b-1 fees, and/or (b) its selection of mutual fund share classes that pay such fees. During the Relevant Period, Respondent and its affiliated broker received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes… Read More

Penalties: N/A
Respondent: Henley & Company Wealth Management, LLC
Violation: Respondent, its affiliated broker, and its associated persons received 12b-1 fees in connection with these investments. Respondent failed to disclose in its Form ADV or otherwise the conflicts of interest related to (a) its receipt of 12b-1 fees, and/or (b) its selection of mutual fund share classes that pay such fees. During the Relevant Period, Respondent, its affiliated broker, and its associated persons received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes… Read More

Penalties: $93,632.1
Respondent: Comprehensive Capital Management, Inc.
Violation: Respondent and/or its affiliated broker received 12b-1 fees in connection with these investments. Respondent failed to disclose in its Form ADV or otherwise the conflicts of interest related to (a) its receipt of 12b-1 fees, and/or (b) its selection of mutual fund share classes that pay such fees. During the Relevant Period, Respondent and/or its affiliated broker received 12b-1 fees for advising clients to invest in or hold such mutual fund share classes… Read More

Penalties: N/A
Respondent: James T. Booth
Violation: Booth allegedly deposited investors’ funds into a bank account of an entity he controlled, and then moved the funds into his personal accounts and used them to pay for business and personal expenses, including meals, entertainment and numerous trips to casinos. According to the complaint, Booth supplied his clients with detailed false account statements showing securities that he purportedly purchased on their behalf, many of which showed gains over time from the fictitious investments… Read More

Penalties: N/A
Respondent: Marcus Beam
Violation: Beam primarily spent it on his personal and business expenses. According to the complaint, to conceal his misappropriation, Beam sent fraudulent account statements to investors. When they attempted to redeem their investments, Beam did not return any of their money. As alleged, Beam also lied to at least one of his clients by falsely claiming that he held a Series 65 securities license… Read More

Penalties: N/A
Respondent: Mark Ray, et al.
Violation: The complaint charges Ray and the entities under his control with violating the registration provisions of Section 5 of the Securities Act of 1933 (Securities Act) and the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder. The complaint charges Stachniw and Throgmartin with aiding and abetting defendants’ violations of the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder… Read More

Penalties: N/A
Respondent: Yellowstone Partners, LLC, David H. Hansen, and Cameron G. High
Violation: The SEC’s complaint, filed in federal district court in Pocatello, Idaho, charges the defendants with violating the antifraud provisions of Sections 206(1) and (2) of the Investment Advisers Act of 1940 (Advisers Act) and the recordkeeping provisions of Section 204(a) of the Advisers Act and Rules 204- 2(a)(10) and 204-2(e)(1) thereunder. The SEC seeks permanent injunctions and monetary relief… Read More

Penalties: N/A
Respondent: Longfin Corp. and Venkata S. Meenavalli
Violation: Longfin and Meenavalli, as alleged, then distributed over 400,000 free Longfin shares to insiders and affiliates, and misrepresented the number of qualifying shareholders and shares sold in the offering to meet Nasdaq listing requirements. The SEC’s complaint also alleged that Longfin and Meenavalli recorded more than $66 million in fictitious revenue from sham commodities transaction, amounting to more than 90% of Longfin’s total 2017 reported revenue. Both the SEC’s action against Meenavalli, and a related criminal action filed by the U.S. Attorney’s Office for the District of New Jersey, are ongoing… Read More

Penalties: N/A
Respondent: Dana J. Bradley; Marlin S. Hershey; D. Bradley Inc.; Bryant Boys, LLC; Distressed Lending Fund, LLC; Erndit LLC; Hershey Enterprises, Inc.; MW Enterprises, LLC; Performance Holdings, Inc.; Performance Retire on Rentals, LLC
Violation: The SEC’s complaint charges Bradley, Hershey, and entities under their control 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 complaint also charges Bradley and Hershey with violating the broker-registration provisions of Section 15(a) of the Exchange Act, and entities under their control with aiding and abetting those violations… Read More

Penalties: N/A
Respondent: IFS Securities
Violation: On June 27, 2019, the Commission simultaneously instituted and settled an administrative and cease and desist proceeding against IFS Securities (“IFS” or “Respondent”). These proceedings arise out of IFS’s violation of Municipal Securities Rulemaking Board’s Rule G-17 and, by reason of that violation, Section 15B(c)(1) of the Securities Exchange Act of 1934 (the “Exchange Act”). In the Matter of IFS Securities, Admin. Proc. File No. 3-19220 (the “OIP”).1 In the OIP, the Commission ordered that IFS be censured and comply with certain undertakings… Read More

Penalties: $359,837.00
Respondent: Sarkauskas, Associates, Inc. and James M. Sarkauskas
Violation: On September 13, 2013 the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Section 15(b) of the Securities Exchange Act of 1934, Sections 203(e), 203(f) and 203(k) of the Investment Advisers Act of 1940, and Section 9(b) of the Investment Company Act of 1940, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”)1 against Sarkauskas and Associates, Inc. (“Adviser”) and James M. Sarkauskas (“Sarkauskas”) (collectively, the “Respondents”)… Read More

Penalties: N/A
Respondent: Marla P. Manowitz, CPA, Thomas R. Vreeland, CPA and Kenneth J. Gralak, CPA
Violation: Respondents failed to comply with the standards of the Public Company Accounting Oversight Board (“PCAOB”) when they did not: (1) identify and properly audit related party transactions; (2) obtain sufficient appropriate audit evidence; (3) conduct appropriate procedures to obtain reasonable assurance that the financial statements were free of material misstatements caused by fraud; (4) conduct appropriate procedures upon the subsequent discovery of facts existing at the date of a previous audit report; (5) conduct appropriate procedures in connection with a review of interim financial information; (6) properly plan the audit and assess and respond to risks of material misstatement; (7) conduct proper engagement quality reviews; and (8) exercise due professional care and professional skepticism… Read More

Penalties: $207,410.00
Respondent: Outset Global LLP,
Violation: Global engaged in the solicitation and provision of brokerage services to U.S. investors without registering as a broker-dealer or otherwise meeting the conditions for an exemption from registration for foreign broker-dealers provided by Rule 15a-6 of the Exchange Act. Accordingly, Outset Global violated Section 15(a) of the Exchange Act… Read More

Penalties: N/A
Respondent: Schulman Lobel Zand Katzen Williams & Blackman, LLP a/k/a Schulman Lobel LLP
Violation: SL willfully violated Section 10A(a)(2) of the Exchange Act when it conducted the 2013 and 2015 Form 10-K/A Audits without including procedures that were adequately designed to identify related party transactions. Finally, SL willfully violated Rule 2-02(b)(1) of Regulation S-X when it stated that the 2013, 2014, and 2015 Form 10-K/A Audits had been conducted in accordance with PCAOB standards, when the audits had not been… Read More

Penalties: N/A
Respondent: Bluepoint Investment Counsel, et al.
Violation: The complaint also alleges that the defendants and their entities engaged in self-dealing and failed to disclose their conflicts of interest, which included numerous undisclosed short-term loans to the fund some of them with annualized interest rates exceeding 100%, and the fund’s undisclosed payment of service fees to entities owned by Nohl and Hull… Read More

Penalties: N/A
Respondent: David Sechovicz and Peter Szatmari
Violation: The complaints allege that defendants, acting as “affiliate marketers,” also exposed millions of prospective investors in the United States to professional looking, but false, videos. The videos, which depicted purported investors enjoying lavish lifestyles from trading binary options and showed “live” demonstrations of investors opening and funding binary option trading accounts and watching their trading balances increase automatically, were, according to the complaint, pure fiction… Read More

Penalties: N/A
Respondent: Peter Szatmari
Violation: Defendant violated the antifraud provisions of Section 17(a) of the Securities Act of 1933 (the “Securities Act”), 15 U.S.C. § 77q(a), and Section 10(b) of the Exchange Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78j(b), and Rule 10b-5 thereunder, 17 C.F.R. 240.10b-5. 10. Defendant was also a necessary factor and substantial participant in an illegal offering or sale of unregistered securities and also violated the registration provisions of Section 5 of the Securities Act, 15 U.S.C. § 77e… Read More

Penalties: N/A
Respondent: Gil Beserglik, et al.
Violation: According to the complaint, call center employees lied to investors about their names, location and expertise in trading securities and they falsely told investors that the brokers only earned money if investors made money. In reality, the brokers earned money only from investor losses and thus had no incentive to advise investors on how to trade binary options profitably. The complaint alleges that most investors who traded binary options through the three brokers lost money, and some individual retirees lost their entire savings amounting to hundreds of thousands of dollars. The SEC also alleges that the brokers largely refused to honor investor requests to withdraw money from their trading accounts… Read More

Penalties: N/A
Respondent: Westport Capital Markets, LLC and Christopher E. McClure
Violation: The court’s order holds that defendants acted at least negligently when they failed to disclose their conflicts of interest, and that the SEC therefore is entitled to summary judgment on its claims that defendants violated Section 206(2) of the Investment Advisers Act of 1940 and that Westport Capital violated Section 206(3) of the Advisers Act, and McClure aided and abetted that violation. The court reserved for trial questions of material fact as to whether defendants acted intentionally, knowingly, or recklessly under the antifraud provisions of Section 206(1) of the Advisers Act, and as to whether defendants acted willfully under the antifraud provisions of Advisers Act Section 207… Read More

Penalties: $224,602.00
Respondent: Nebulous, Inc.,
Violation: Nebulous is a Massachusetts-based business that describes itself as a designer and developer of decentralized cloud data storage technology. During 2014 and 2015, Nebulous offered and sold securities that were required to be registered with the Commission pursuant to Section 5 of the Securities Act. Nebulous violated Sections 5(a) and 5(c) of the Securities Act by offering and selling these securities without a registration statement filed or in effect with the Commission and without qualifying for exemption from registration… Read More

Penalties: $5,911,613.00
Respondent: PlexCorps, Dominic Lacroix, and Sabrina Paradis-Royer
Violation: According to the SEC’s complaint, filed Dec. 1, 2017, PlexCorps, and its proprietors Dominic Lacroix and Sabrina Paradis-Royer, fraudulently raised millions of dollars in virtual and fiat currency from the unregistered sales of securities called PlexCoin based on a series of false and misleading statements to potential and actual investors, including misrepresentations about the size and scale of PlexCorps’ operations, the use of funds raised in the PlexCoin ICO, and the amount of funds raised in the PlexCoin ICO… Read More

Penalties: N/A
Respondent: Fact Corporation and Tandy Brands Accessories Inc.
Violation: FCTOA has failed to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder because it has not filed any periodic reports with the Commission since the period ended September 30, 2011… Read More

Penalties: $130,000.00
Respondent: Woojae (“Steve”) Jung, et al.
Violation: On September 30, 2019, a federal court judge entered a final judgment in the SEC’s action against Woojae (“Steve”) Jung, a former employee of a prominent investment bank charged with repeatedly using his access to highly confidential information in order to place illicit and profitable trades in advance of deals on which the bank was providing investment banking services… Read More

Penalties: N/A
Respondent: Christopher J. Spencer and John Busshaus
Violation: Spencer and Busshaus have violated Sections 17 (a)(2) and (3) of the Securities Act of 1933 (“Securities Act”), 15 U.S.C §77q(a)(2) and (3)… Read More

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