Financial Enforcement Actions | Week of July 25 to July 31

Enforcement Report July 25 - 31 feat img

FTC

11 Enforcement Documents

$0.00 in Fines

Penalties: N/A
Respondent: UNITED STATES OF AMERICA, MYLIFE.COM, INC., a corporation, JEFFREY TINSLEY, individually and as an officer of MYLIFE.COM, INC.,
Violation: They deceived consumers with “teaser background reports” that often falsely claimed to include
information about arrest, criminal, and sex offender records, and also engaged in misleading billing and marketing
practices. ... Read More

Penalties: N/A
Respondent: F & G International Group Holdings, LLC, a limited liability company, EQUITABLE RELIEF FG International, LLC, a limited liability company, and J. GLENN DAVIS, individually and as an officer of FG International, LLC, and F & G International Group Holdings, LLC,
Violation: The representations set forth in Paragraph 39 are false or misleading, or were not substantiated at the time the representations were made. Therefore, the making of the representations set forth in Paragraph 39 constitute deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a)... Read More

Penalties: N/A
Respondent: SPM THERMO-SHIELD, INC., a corporation, PETER J. SPISKA, individually and as an officer of SPM THERMO-SHIELD, INC., and GEORGE P. SPISKA, individually and as an officer of SPM THERMO-SHIELD, INC.,
Violation: In numerous instances in connection with the advertising, promotion, offering for sale, or sale of Thermo-Shield Coatings, as described in Paragraphs 13 to 48, Defendants have represented, directly or indirectly, expressly or by implication, that: A. Thermo-Shield Coatings have insulation values or insulation equivalent values of R-20, R-21, R-22, and R-40 when applied as Defendants instruct. B. Using Thermo-Shield Coatings will save consumers money, including, for example, by saving them up to 50% on heating and cooling costs... Read More

Penalties: N/A
Respondent: SUPERTHERM, Inc.
Violation: "In numerous instances in connection with the advertising, promotion, offering for sale, or sale of MultiCeramics Insulation, as described in Paragraphs 13-28, Defendants have represented, directly or indirectly, expressly or by implication, that MultiCeramics Insulation Coatings have insulation values or insulation equivalent values of R-19 when used at normal levels. The representation set forth in Paragraph 30 is false or misleading, or was not substantiated at the time the representations were made. Therefore, the making of the representation set forth in Paragraph 30 constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a)... Read More

Penalties: N/A
Respondent: SUPERIOR PRODUCTS INTERNATIONAL II, INC., a corporation, and JOSEPH E. PRITCHETT, individually and as an officer of SUPERIOR PRODUCTS INTERNATIONAL II, INC.,
Violation: The representations set forth in Paragraph 72 are false and misleading and were not substantiated at the time the representations were made. Therefore, the making of the representations as set forth in Paragraph 72 constitute deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. § 45(a)... Read More

Penalties: N/A
Respondent: SUPERIOR PRODUCTS INTERNATIONAL II, INC., a corporation, and JOSEPH E. PRITCHETT, individually and as an officer of SUPERIOR PRODUCTS INTERNATIONAL II, INC.,
Violation: In numerous instances in connection with the advertising, promotion, offering for sale, or sale of Super Therm and Sunshield, as described in Paragraphs 23-44, Defendants have represented, directly or indirectly, expressly or by implication, that: A. Super Therm has an R-value of R-19, or provides a benefit equivalent to R-19. B. Sunshield has similar performance characteristics as Super Therm. C. Using Super Therm or Sunshield will save consumers a significant amount of money, including of up to 78% on existing energy bills... Read More

Penalties: N/A
Respondent: MYLIFE.COM, INC., a corporation, and JEFFREY TINSLEY, individually and as an officer of MYLIFE.COM, INC.,
Violation: In fact, in many instances, the searched-for individuals do not have criminal or sexual offender records, or they have minor traffic citations only. Defendants’ representations to the contrary are false or misleading. Defendants’ practices as described above constitute deceptive acts or practices in violation of Section 5 of the FTC Act, 15 U.S.C. § 45(a)... Read More

Penalties: N/A
Respondent: Golden Sunrise Nutraceutical, Inc.
Violation: Plaintiff FTC, pursuant to Section 13(b) of the FTC Act, 15 U.S.C. § 53(b), and the Court’s own equitable powers, requests that the Court: a) Award Plaintiff such preliminary injunctive and ancillary relief as may be necessary to avert the likelihood of consumer injury during the pendency of this action and to preserve the possibility of effective final relief, including temporary and preliminary injunctions; b) Enter a permanent injunction to prevent future violations of the FTC Act; c) Award such relief as the Court finds necessary to redress injury to consumers resulting from Defendants’ violations of the FTC Act, including but not limited to, rescission or reformation of contracts, restitution, the refund of monies paid, and the disgorgement of ill-gotten monies; and d) Award Plaintiff the costs of bringing this action, as well as such other and additional relief as the Court may determine to be just and proper... Read More

FINRA

9 Enforcement Documents

$1,645,000.00 in Fines

Penalties: $650,000.00
Respondent: BNP Paribas Securities Corp.,
Violation: BNP Paribas failed to prevent the transmission of erroneous orders to the markets on at least two trade dates. By virtue of the conduct described herein, BNP Paribas violated Section 15(c)(3) of the securities Act of 1934, SEC Rule 15c3-5(b), (c)(1)(i), (c)(1)(ii), and (e); FINRA Rules 3110 (for conduct on and after December 1, 2014) and 2010; and NASD Rule 3010 (for conduct prior to December 1, 2014). By virtue of the foregoing, BNP Paribas violated Section 15(c)(3); SEC Rule 15c3- 5(b) and (c)(1)(i); NASD Rule 3010 (for conduct prior to December 1, 2014); and FINRA Rules 3110 (for conduct on and after December 1, 2014) and 2010... Read More

Penalties: N/A
Respondent: Ronald G. Richer CRD No. 2988381,
Violation: Richer then testified falsely at his on-the-record ("OTR") interview taken pursuant to FINRA Rule 8210. Richer denied altering any of the records that he produced to FINRA and denied accepting money from a firm customer. Only after he was confronted with the evidence of his misconduct later in the same OTR did he admit to altering the check images and to accepting a loan from Customer A. By providing altered documents to FINRA and testifying falsely to FINRA in response to requests for information and testimony issued pursuant to FINRA Rule 8210, Richer violated FINRA Rules 8210 and 2010.... Read More

Penalties: $55,000.00
Respondent: Christopher Duke Bennett,
Violation: Bennett failed to provide information and documents requested by FINRA pursuant to FINRA Rule 8210, in violation of FINRA Rules 8210 and 2010... Read More

Penalties: $5,000.00
Respondent: Keith Gaines Drago, Sr
Violation: A violation of FINRA Rule 3240 also violates FINRA Rule 2010, which requires associated persons to observe high standards of commercial honor and just and equitable principles of trade. RJA's written procedures prohibited its registered persons from borrowing money from its securities customers without its written approval. In 2017, while employed by RJA, Respondent borrowed $25,000 from a firm customer. Respondent did not notify the firm about the loan, and Respondent did not receive the firm's approval for the loan. Respondent has repaid the firm customer. Respondent also stated on two firm compliance certifications in 2017 and 2018 that he had not engaged in any lending or borrowing arrangement with any firm customer which was not true. By virtue of the foregoing, Respondent violated FINRA Rules 3240 and 2010... Read More

Penalties: $30,000.00
Respondent: CIM Securities, LLC,
Violation: "Between November 2016 and May 2018 (the ""Relevant Period""), the Firm failed to establish and maintain a supervisory system or written supervisory procedures reasonably designed to achieve compliance with its disclosure obligations under the federal securities laws in connection with private placements structured as contingency offerings... Read More

Penalties: $50,000.00
Respondent: J K R & Company, Inc.,
Violation: During a sales practice examination of JKR, FINRA staff discovered that between November 2012 and December 2016 (the "relevant period"), JKR failed to detect red flags of suspicious activity in four related accounts. These red flags included: common ownership of multiple accounts without an apparent business purpose for multiple accounts; one account owner with significant disciplinary history related to securities fraud; potentially manipulative trading activity, unusual transfer activity between related accounts that was inconsistent with expected activity in such accounts and without an apparent business purpose; and unexplained third-party wire transfers that were inconsistent with expected account activity. By failing to detect these red flags, investigate them, and report the activities as required, the firm violated FINRA Rules 3310(a) and 2010... Read More

Penalties: $5,000.00
Respondent: STEVEN HARRIS (CRD No. 2440292),
Violation: Harris moved for an extension of time in which to respond to the Complaint. That motion was granted, and the new deadline for Harris to file an Answer or otherwise respond to the Complaint became May 28, 2020. But Harris did not file an Answer by the new deadline, and on June 3, 2020, Enforcement served him with a Second Notice of Complaint and Complaint.'' Enforcement served the Second Notice and Complaint on Harris by the same methods to his CRD Address, Alternate Address, and email. The Second Notice of Complaint stated that Harris needed to file an Answer or otherwise respond to the Complaint by June 22, 2020. But Harris failed to file an Answer or otherwise respond to the Complaint. On July 1, 2020, Enforcement filed a Default Motion. Harris failed to respond to the Default Motion. Pursuant to FINRA Rules 9215(f) and 9269(a)(2), I grant the Default Motion. I find that Harris has defaulted and find the allegations in the Complaint admitted... Read More

Penalties: $150,000.00
Respondent: CHAMS KHWAJA (CRD No. 6906622)
Violation: Khwaja failed to respond to either the first or second Rule 8210 request, Enforcement filed and served a Complaint alleging that he had violated FINRA Rules 8210 and 2010. Enforcement served the Complaint and the First and Second Notices of Complaint in accord with FINRA Rules 9131 and 9134. Enforcement sent the Complaint and First Notice of Complaint to Khwaja’s CRD Address by the U.S. postal service first-class and certified mail and sent the Complaint and Second Notice of Complaint to the same address by the same means.13 Enforcement had no knowledge that Khwaja’s CRD Address was outdated.14 Under Rules 9131 and 9134, that is all that is necessary for constructive notice. Khwaja did not file an answer or otherwise respond to the Complaint. He also has not filed and served a response to the Default Motion, although it was properly served on him at his CRD Address. Accordingly, I find that Khwaja has defaulted... Read More

Penalties: N/A
Respondent: BRENDAN D. FEITELBERG
Violation: Feitelberg failed to exhaust his administrative remedies. But Feitelberg’s failure to avail himself of FINRA’s procedures for avoiding a suspension or bar appears to have resulted from the same illness that prevented him from filing a timely appeal with the Commission. And FINRA’s letter to Feitelberg stating that it would not reconsider the bar even after receiving Feitelberg’s response to its requests for information and explanation for his delay in responding did not include any justification as to why a bar was nonetheless appropriate in these circumstances. Indeed, FINRA’s letter did not even mention Feitelberg’s explanation for his belated response. We believe it is appropriate to remand the proceeding to FINRA for it to address the circumstances that led to the bar before determining whether Feitelberg failed to exhaust his administrative remedies... Read More

Penalties: $475,000.00
Respondent: Hilltop Securities, Inc.
Violation: "Hilltop failed to submit Form G-32 information to the Electronic Municipal Market Access System (“EMMA”) in connection with 122 primary offerings of municipal securities. The Firm also made four Form G-32 filings to EMMA that were between 1 and 3 days late. Such conduct violated MSRB Rule G-32. Furthermore, between January 2012 and September 2015, Hilltop failed to provide required MSRB Rule G-17 disclosure letters to issuers in connection with 119 of the 122 offerings plus one other offering, in violation of MSRB Rule G-17. Finally, from October 2014 to September 2015, in connection with 45 of the 122 offerings, the Firm failed to report on Form G-37 that it had conducted municipal securities business. As a result of this conduct, Hilltop violated MSRB Rule G-37... Read More

Penalties: $200,000.00
Respondent: BNP Paribas Securities Corp
Violation: During the periods from April 1, 2016 through June 30, 2016, and from January 1, 2017 through December 31, 2018 (the "Late Trade Review Period"), BNP failed to timely report over 10,000 transactions in TRACE-Eligible Corporate Debt Securities to TRACE, in violation of FINRA Rules 6730(a) and 2010. During the period between April 1, 2016 and September 30, 2016, BNP reported 135 transactions in TRACE-Eligible Corporate Debt securities with an inaccurate contraparty identifier to TRACE, in violation of FINRA Rules 6730(c)(6) and 2010. During the period from April 1, 2016 through January 31, 2019 (the "Supervisory Review Period"), BNP's supervisory system was not reasonably designed to achieve compliance with the firm's transaction reporting obligations for TRACE-Eligible Securities, in violation of FINRA Rules 3110 and 2010... Read More

Penalties: $25,000.00
Respondent: Stanley B. Secor,
Violation: In July 2020, during the course of an investigation, Secor informed FINRA staff that he would not provide information and documents requested by FINRA pursuant to FINRA Rule 8210. By refusing to provide information and documents requested pursuant to Rule 8210, Secor violated FINRA Rules 8210 and 2010... Read More

SEC

15 Enforcement Documents

$65,593,753.00 in Fines

Penalties: $125,000.00
Respondent: Celadon Financial Group LLC
Violation: Celadon failed to adequately review transactions involving low-priced securities to address the risks posed by that part of its business. Moreover, even when the firm’s monitoring did identify red flags, Celadon did not take the steps required by its WSPs. For example, when Celadon identified numerous instances of the firm’s daily trading in a particular stock constituting a substantial portion of the market volume in that security, as well as large price fluctuations in the security, Celadon did not conduct adequate further inquiry into those transactions. Throughout the Relevant Period, Celadon failed to file a single SAR. Celadon was, or should have been, aware of red flags indicating suspicious activity associated with the orders from its broker-dealer customers. However, as a result of the deficiencies in its implementation of its AML Policies, Celadon repeatedly failed to report suspicious transactions or conduct adequate inquiries concerning those transactions. Accordingly, Celadon did not comply with the requirements of the BSA and violated Section 17(a) of the Exchange Act and Rule 17a-8 thereunder... Read More

Penalties: $19,943,753.00
Respondent: VALIC Financial Advisors, Inc.
Violation: As a result of the conduct described above, VFA willfully violated Section 206(2) of the Advisers Act, which makes it unlawful for any investment adviser, directly or indirectly, to “engage in any transaction, practice or course of business which operates as a fraud or deceit upon any client or prospective client.” Scienter is not required to establish a violation of Section 206(2), but rather a violation may rest on a finding of negligence. SEC v. Steadman, 967 F.2d 636, 643 n.5 (D.C. Cir. 1992) (citing SEC v. Capital Gains Research Bureau, Inc., 375 U.S. 180,194-95 (1963)). 32. As a result of the conduct described above, VFA willfully violated Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder, which require a registered investment adviser to adopt and implement written compliance policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules thereunder... Read More

Penalties: N/A
Respondent: Mustafa David Sayid
Violation: The SEC's complaint, filed on April 12, 2017, charged Sayid with taking control of two microcap companies, Nouveau Holdings, Ltd. and Striper Energy, Inc., and causing them to issue convertible debt to him that could be redeemed for company stock, purportedly as payment for legal fees owed to him. Sayid then sold the convertible debt to a pair of stock manipulators for a profit. According to the complaint, Sayid hired Reynolds to issue false opinion letters. The letters, which Reynolds based on fabricated documentation from Sayid, persuaded Nouveau's transfer agent to remove restrictive legends from millions of shares of Nouveau. Reynolds drafted the letters while negotiating for payment from the anticipated proceeds of a pump and dump of Nouveau's stock by the stock manipulators who had purchased the stock from Sayid. On November 25, 2019, the court granted summary judgment on all of the SEC's claims against Sayid and Reynolds... Read More

Penalties: N/A
Respondent: Kevin R. Kuhnash and Jason P. Jimerson
Violation: Defendants Kuhnash and Jimerson violated 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]... Read More

Penalties: N/A
Respondent: Anthony Todd Johnson et al.
Violation: The SEC's complaint, filed in federal court in the Central District of California, charges the defendants (with the exception of Lloyd Marketing) 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 further charges all defendants with violating the registration provisions of Section 5 of the Securities Act and charges the Johnsons, Portillo, Lloyd, Heckele, Green Bud Initiatives, CIS Marketing, and Lloyd Marketing with violating the broker-dealer registration requirements of Section 15(a) of the Exchange Act. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and civil penalties. The SEC's investigation was conducted by Colleen M. Keating and Carol Kim and supervised by Victoria A. Levin of the SEC's Los Angeles Regional Office. The litigation will be led by Donald Searles and supervised by Amy Longo... Read More

Penalties: $250,000.00
Respondent: J. Michael Pearson
Violation: Pearson violated Rule 100(b) of Regulation G, which prohibits a registrant, or a person acting on its behalf, from making public a non-GAAP financial measure that, taken together with the information accompanying that measure and any other accompanying discussion of that measure, contains an untrue statement of a material fact or omits to state a material fact necessary in order to make the presentation of the non-GAAP financial measure, in light of the circumstances under which it is presented, not misleading. By its express terms, scienter is not required in order to violate Regulation G... Read More

Penalties: $100,000.00
Respondent: HOWARD B. SCHILLER,
Violation: Respondent Schiller violated Sections 17(a)(2) and 17(a)(3) of the Securities Act, which prohibit any person in the offer or sale of securities from directly or indirectly obtaining 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, or engaging in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser. Claims under Sections 17(a)(2) and 17(a)(3) of the Securities Act do not require a showing of scienter; instead, a showing of negligence is sufficient. Aaron v. SEC, 446 U.S. 680, 697 (1980); SEC v. Hughes Capital Corp., 124 F.3d 449, 453-54 (3d Cir. 1997)... Read More

Penalties: $100,000.00
Respondent: Birinyi Associates, Inc.
Violation: As a result of the conduct described above, Respondent willfully2 violated Section 206(2) of the Advisers Act, which prohibits an investment adviser from engaging in any transaction, practice, or course of business that operates as a fraud or deceit upon any client or prospective client. 16. As a result of the conduct described above, Respondent willfully violated Section 206(4) of the Advisers Act and Rule 206(4)-7 thereunder, which require registered investment advisers to adopt and implement written policies and procedures reasonably designed to prevent violations of the Advisers Act and the rules promulgated thereunder... Read More

Penalties: N/A
Respondent: Complete Business Solutions Group Inc. d/b/a/ Par Funding et al.,
Violation: According to the SEC's complaint, spouses Lisa McElhone and Joseph W. LaForte orchestrated a scheme to raise investor funds through unregistered securities offerings for the cash advance company they control, Complete Business Solutions Group Inc., doing business as Par Funding. According to the complaint, McElhone and LaForte made opportunistic loans, some of which charged more than 400% interest, to small businesses across America. The complaint alleges that, to fuel the loans, McElhone and LaForte, with the assistance of other Par Funding personnel, allegedly used a network of unregistered sales agents and affiliated entities to sell promissory notes to the public while lying to or misleading investors about Par Funding's business, how investor funds would be used, and LaForte's role and criminal history... Read More

Penalties: $75,0000.00
Respondent: Tanya R. Carro, CPA
Violation: Based on the foregoing and the conduct described herein, Carro willfully4 violated Sections 17(a)(2) and 17(a)(3) of the Securities Act and Rule 13b2-1 and Rule 100(b) of Regulation G of the Exchange Act and caused Valeant’s violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder... Read More

Penalties: $45,000,000.00
Respondent: VALEANT PHARMACEUTICALS INTERNATIONAL, INC., n/k/a BAUSCH HEALTH COMPANIES INC.,
Violation: Based on the foregoing and the conduct described herein, Valeant violated Sections 17(a)(2) and 17(a)(3) of the Securities Act and Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 and Rule 100(b) of Regulation G thereunder... Read More

Penalties: N/A
Respondent: Spotlight Innovation Inc. and Tempus Applied Solutions Holdings, Inc.,
Violation: TMPS (CIK No. 1628871) is a void Delaware corporation located in Newport News, Virginia with a class of securities registered with the Commission under Exchange Act Section 12(g). As of July 6, 2020, the common stock and warrants of TMPS (symbol TMPS) were quoted on OTC Link (formerly Pink Sheets) operated by OTC Markets Inc., had nine market makers, and were eligible for the “piggyback” exception of Exchange Act Rule 15c2-11(f)(3). TMPS 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, 2017... Read More

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