The Latest News About the Lawsuit

The recent, abrupt collapse of Silicon Valley Bank (SVB) has sent shockwaves through the banking industry, as it is the second-biggest bank failure in U.S. history. As reported in the media, there are several reasons why many believe SVB failed. Some have argued that rollbacks in 2018 of the Dodd-Frank legislation’s credit requirements led to SVB’s demise, as Dodd-Frank required banks with at least $50 billion in assets to be subject to stress tests and to maintain certain levels of capital.  Others contend that SVB’s risk management was inept, pointing to SVB’s lack of an active chief risk

The cryptocurrency exchange, FTX Inc., recently shocked crypto investors by filing for bankruptcy. FTX had agreed to sell itself to its main rival, Binance, due to a liquidity crunch after its FTT token crashed. But Binance backed out of the deal, and FTX was forced to file for bankruptcy.   Many politicians now are calling for government regulation of digital assets, warning that investors must be protected from the seemingly endless cycle of cryptocurrency fraud. Some, like the chair of the House Financial Services Committee, Rep. Maxine Waters, are concerned FTX customers may not be able

RSM US LLP (“RSM”) recently paid a $3.75 million penalty to the SEC for failing to properly audit the financial statements of Revolution Lighting Technologies, Inc. (“Revolution”), while Revolution was artificially inflating revenues over a four-year period. According to the SEC’s order, RSM failed to comply with the Public Company Accounting Oversight Board’s auditing and quality control standards, in finding that Revolution’s inflated revenues were immaterial to investors.  Gurbir Grewal, the SEC’s Director of the Division of Enforcement, stated, "Auditors are important checks against

The Securities and Exchange Commission recently charged Bellatorum Resources, LLC ("Bellatorum") and its principal, Christopher Bentley of Texas, with fraud in connection with the nearly complete loss of over $30 million that was invested in three private funds: Bellatorum Land & Minerals, LP; Bellatorum Phalanx Investments, LP; and Sentinel Energy Investments, LP. The SEC alleges Bellatorum and Bentley raised $31.5 million of investor money to trade mineral rights through the funds—but instead secretly transferred money from the funds while hiding the trading losses. The SEC claims that

The SEC recently announced that registered investment adviser City National Rochdale, LLC (CNR) will pay over $30 million to resolve charges relating to conflicts of interest that were not disclosed to the firm’s clients. This money will be put into an SEC Fair Fund for the benefit of harmed investors. The SEC’s Order states that CNR failed to disclose its practice of using discretionary authority to invest client assets in proprietary mutual funds that charged higher fees than lesser expensive competitor funds. According to the SEC, the fees charged by the proprietary funds benefitted CNR

The SEC recently charged BlockFi Lending LLC (BlockFi) for selling an unregistered retail crypto-lending product. The case was the first of its kind relating to the crypto-lending industry.  BlockFi has agreed to settle the SEC’s charges by paying a $50 million fine, and ceasing its sales of the lending product, BlockFi Interest Accounts (BIAs). BlockFi also has agreed to pay further fines totaling $50 million to 32 states to settle similar charges brought separately. BlockFi’s parent company announced that it intends to register its new lending product under federal securities laws.   As

The SEC recently charged German Nino, a former stockbroker for UBS Financial Services Inc., with stealing $5.8 million from a client. The SEC claims that over a period of 6 years, Nino, of Weston, Florida, stole millions of dollars from his client's accounts. The SEC further alleges that Nino used $4.2 million to purchase gifts for multiple women whom he had romantic relationships with, including buying them vacations and luxury cars, and paying for school tuition. The SEC alleges that Nino hid the theft by providing phony account statements, forging signatures, and disabling wire transfer

The North American Securities Administrators Association (NASAA) recently published its annual list of top investor threats. At the top of the list are cryptocurrency and digital assets – which isn’t surprising considering their volatility and unregulated status.   As stated by Enforcement Section Committee Co-Chair and Alabama Securities Commission Director, Joseph P. Borg: “By far, NASAA’s securities regulators revealed that investments related to cryptocurrencies and digital assets is our top investor threat. Stories of ‘crypto millionaires’ attracted some investors to try their hand at

The SEC has announced that Wedbush Securities Inc. will pay over $1.2 million to settle charges relating to the unregistered sales of over 100 million shares of 50 low-priced microcap companies. The SEC Order finds that Wedbush made unregistered sales of large blocks of low-priced equities in 2017 and 2018 that were part of the illegal, unregistered distribution of securities by Silverton SA (a/k/a Wintercap SA), an ex-customer located offshore. As stated in the Order, Wedbush failed to engage in proper diligence before making the sales. Wedbush’s sales thus did not qualify for the

The SEC recently announced a $125 million settlement with Nikola Corporation, a publicly traded company that offers electric trucks, over charges that it misled investors about its products, technical achievements, and business prospects.  According to the SEC Order entered in connection with the settlement, Nikola’s founder and former CEO, Trevor Milton, engaged in a public relations campaign to artificially inflate the company’s stock price. The Order finds that Milton misled investors about technological milestones, production capabilities, hydrogen production, truck reservations, and

The SEC recently filed fraud charges relating to unregistered oil-and-gas offerings that raised $122 million from over 700 investors over the past few years. The charges were filed against Heartland Group Ventures, LLC and other affiliated entities, as well as four Heartland-affiliated individuals, James Ikey, John Muratore, Thomas Brad Pearsey, Rustin Brunson, and several oil-and-gas operators, Manjit Singh Sahota, ArcoOil Corp. and Barron Petroleum LLC. A federal district court in Texas has entered a temporary restraining order and freeze order, and appointed a receiver. The SEC

The SEC recently obtained a final judgment against John A. Paulson, a former managing director and fixed-income analyst at a broker-dealer for aiding and abetting a pay-to-play scheme involving the New York State Common Retirement Fund. Under the Judgment, Paulson must pay a $100,000 civil penalty. After a virtual bench trial in July 2020, a federal district court judge ruled Paulson was liable on all counts, and made the following findings: (1) From 2014 until February 2016, Navnoor Kang was the Funds Director of Fixed Income, with responsibility for $50 billion of the Funds assets.

The SEC recently charged Kenneth Welsh, who worked for Wells Fargo Clearing Services, LLC in Fairfield, New Jersey during the relevant time period, with misappropriating nearly $3 million from his customers, some of whom were elderly and financially unsophisticated.  According to the SEC, Welsh used his clients’ funds to buy precious metals, pay off credit cards, and buy luxury items for himself. The SEC alleges that from January 2016 to January 2021, Welsh transferred funds from his client accounts to pay off credit cards held in the names of his wife and parents.  The SEC further alleges

The SEC recently brought fraud charges against two former executives of a subprime automobile finance company, Honor Finance LLC, alleging that they misled investors about the auto subprime loans underlying a $100 million offering. The SEC claims that that the two former Honor principals, James Collins and Robert DiMeo, were responsible for false and deceptive representations relating to the Honor Automobile Trust Securitization 2016-1 (HATS). According to the SEC’s complaint, Honor grouped together thousands of auto loans as collateral for the HATS offering, which raised $100 million from

The SEC recently charged a municipal advisor, Choice Advisors, LLC, and its two principals, Matthias O'Meara and Paula Permenter, with providing unregistered municipal advisory services to charter school clients.  This is the first time the SEC has ever brought a case enforcing Municipal Securities Rulemaking Board Rule G-42 relating to the obligations of non-solicitor municipal advisors. The SEC asserts that O'Meara and Permenter left a national municipal underwriting firm in May 2018 to start Choice, a municipal advisor that concentrated on advising charter schools. The SEC alleges that O

The SEC recently charged seven individuals and Elite Aerospace Group, Inc., a California airplane-parts manufacturer, for making two allegedly fraudulent securities offerings that raised about $70 million. The SEC claims that Michael Owens – with the knowledge of or help from Elite’s executive officers , Dustin Tillman and Zeeshawn Zia, as well as Dawson Davenport  and Andrea Lindstrom –  operated a boiler room that raised $67 million for investments in Elite from 2014 to 2018.  The SEC also alleges in its Complaint that Elite paid secret commissions to unregistered salespeople, and didn’t

The SEC recently obtained a temporary restraining order, an asset freeze, and the appointment of a receiver to stop a Ponzi scheme allegedly perpetrated by Coral Springs, Florida resident Johanna M. Garcia and two of her companies.
The SEC filed an emergency action in federal court in the Southern District of Florida, alleging that Garcia raised at least $70 million from over 2,000 investors since June 2020 in a fraudulent securities offering. The SEC claims that Garcia, and her companies MJ Capital Funding, LLC and MJ Taxes and More, Inc. represented that investor moneys would fund small

The SEC has filed an emergency action to stop an alleged Ponzi scheme allegedly operated by John Woods of Marietta, Georgia, and his two companies: registered investment adviser Livingston Group Asset Management Company, d/b/a Southport Capital (Southport), and investment fund Horizon Private Equity, III LLC (Horizon). Shortly after the filing, a Georgia federal court granted a temporary restraining order and asset freeze, among other relief. The SEC’s complaint states that the defendants have raised over $110 million from 400-plus investors by selling Horizon membership interests.

The SEC recently charged two Florida men and their Cayman Islands company, Blockchain Credit Partners, for unregistered sales of over $30 million of securities using so-called “decentralized finance” (DeFi) technology.  The SEC also charged them with making misrepresentations about their business, DeFi Money Market, to investors.    The SEC found in its Order that Gregory Keough, Derek Acree, and their company, Blockchain Credit Partners (BCP), made unregistered offerings and sales of securities through DeFi Money Market from February 2020 to February 2021. The SEC found that they sold two

The SEC recently settled against UBS Financial Services Inc. for compliance failures on sales of an exchange-traded product (ETP) that was tied to volatility. As the SEC’s order states, the ETP in question aimed to track short-term volatility sentiments in the market.  The order provides that the ETP issuer told UBS that the product should not be held for lengthy periods.  The order further states that the offering documents made clear that the product was more likely to lose value when held over a lengthy period.  The order finds that although UBS barred its stockbrokers from

The Securities and Exchange Commission recently announced that JPMorgan Chase & Co.’s subsidiary, Neovest Inc., an electronic trading platform provider that operates an order and execution management system (OEMS), has consented to a $2.75 million penalty for failing to register as a broker-dealer.   As set forth in the SEC’s order, Neovest operates an OEMS that enables customers to send trade orders to over 360 destination brokers for execution.  The SEC’s Order finds that even though Neovest terminated its broker-dealer registration after JPMorgan Chase acquired it, it continued to

The SEC recently charged an offshore mutual fund and two individuals with securities fraud, and obtained an asset freeze to prevent dissipation of any remaining investor moneys. The SEC claims that Ofer Abarbanel of California and Victor Chilelli of Delaware and New York have defrauded investors over the past few years in their offshore mutual fund, the Income Collecting 1-3 Months T-Bills Mutual Fund.  The SEC alleges that Abarbanel told investors that the fund would mostly invest in U.S. Treasuries, including reverse repurchase agreements  collateralized by U.S. Treasury securities.  But

The SEC recently charged Colorado and Florida residents Randy King, Matthew King, and Andrea Trout, and three companies they ran, The Legacy Group, Inc., Colorado Ventures I, LLC, and Radiant Holdings, LLC, with defrauding over 200 investors by selling them $29 million of unregistered securities. The SEC alleges that the defendants told investors they were seeking funds for real estate ventures, mostly in California and Colorado. The SEC claims that Legacy, the Kings, and Trout, however, used the funds on other ventures instead.  According to the SEC, they also misrepresented the risks of

The SEC recently announced whistleblower awards totaling about $22 million.  The awards were made to two whistleblowers who gave critical information and help to the SEC with regard to successful enforcement actions brought against a financial services firm.  The first whistleblower received an $18 million award, and the second whistleblower received a $4 million award.  The larger award acknowledges that the first whistleblower was the original source of the investigation, while the second whistleblower provided help later on, after the investigation began.         Emily Pasquinelli

The SEC recently charged Under Armour Inc., the well known sports apparel company, with misleading investors on revenue growth and failing to disclose known uncertainties affecting revenue forecasts. Under Armour has settled the charges, agreeing to pay a $9 million penalty. The SEC’s Order finds that, in the second half of 2015, Under Armour's internal revenue growth forecasts indicated that the company would miss analysts' revenue estimates.  The Order finds that, in response, for six consecutive quarters starting in the third quarter of 2015, Under Armour "pulled forward" $408 million in

The SEC recently charged former race car team owner, Andrew Franzone, and his investment advisory firm, FF Fund Management, LLC (FFM), with defrauding investors of tens of millions of dollars relating to the sales of limited partnership interests in FF Fund I, LP (Fund).  The SEC alleges that Franzone misrepresented the Fund’s strategy and investments, didn’t disclose conflicts of interest, misappropriated Fund assets, and falsely stated that the Fund would be subject to periodic audits.  The SEC claims Franzone raised nearly $40 million by telling prospective investors that the Fund would

The Securities and Exchange Commission recently charged a Bahamian brokerage firm, MintBroker International Ltd., f/k/a Swiss America Securities, Ltd. and d/b/a as SureTrader, with illegally conducting business as broker-dealer in the U.S. without being registered. The SEC also charged Guy Gentile, SureTrader's founder, owner, and CEO, with control-person violations. The SEC alleges that from March 2016 through November 2019, SureTrader operated an offshore brokerage firm that touted its ability to assist U.S. day traders to avoid pattern day-trading regulations

Morgan & Morgan’s securities attorneys are investigating investor claims relating to Morgan Stanley and its registered representative, Barry Martin Speyer. Speyer works in Morgan Stanley’s Beverly Hills office. He may have engaged in unsuitable options strategies that resulted in substantial investment losses.  According to FINRA’s BrokerCheck, Speyer previously has been the subject of multiple customer complaints, some of which resulted in monetary settlements and arbitration awards.  More recently, Speyer may have improperly used short leaps and other short options strategies that

The Securities and Exchange Commission recently charged George Heckler, of Charleston, South Carolina, for conducting an alleged fraud via two private hedge funds, Cassatt Short Term Trading Fund LP and CV Special Opportunity Fund LP.  The SEC alleges that Heckler formed the two hedge funds to hide huge losses incurred by another fund that Heckler operated, Conestoga Holdings LP. According to the SEC's complaint, Heckler allegedly carried out the scheme over a ten-year period. The SEC alleges that Heckler moved Conestoga's poorly performing assets to Cassatt and CV Special, and then

The Securities and Exchange Commission recently suspended two ex-KPMG auditors from practicing before the SEC.  The suspension stems from settled charges against them for misconduct when auditing the not-for-profit College of New Rochelle, which has since closed its doors. The SEC previously charged the college’s controller with fraud relating to the college’s financial statements for 2015. As described in the SEC’s orders, former KPMG partner Christopher Stanley and former KPMG senior manager Jennifer Stewart approved or authorized an audit opinion on the college’s 2015 financial

The Securities and Exchange Commission recently brought a civil action claiming that Morningstar Credit Ratings LLC breached federal securities laws when rating commercial mortgage-backed securities (CMBS) by failing to make certain disclosures and maintain adequate internal controls. Market participants use credit ratings as part of their analysis when making investment decisions. Federal securities laws require credit rating agencies to accurately describe their procedures and methodologies employed to determine credit ratings. Under federal securities laws

The Securities and Exchange Commission recently charged several defendants with operating a $1.7 billion Ponzi scheme. The scheme allegedly raised funds from securities issued by GPB Capital, a registered investment advisor based in New York. The SEC also charged GPB Capital for whistleblower law violations. According to the SEC, David Gentile (GPB Capital’s owner and CEO) and Jeffry Schneider (the owner of Ascendant Capital, the placement agent for GPB Capital) misled investors about the monetary source used to pay an 8% annualized distribution payment to investors. The SEC alleges that

Present Biden has nominated Gary Gensler to serve as Chairman of the SEC. Gensler is the former chair of the CFTC, and is seen by many as unafraid to impose tough rules on Wall Street. Investor advocates are optimistic that Gensler will protect investors in stocks, bonds, and mutual funds by strengthening regulations. Barbara Roper, director of investor protection at the Consumer Federation of America, stated: “He knows the markets as well as anyone on Wall Street. He cares about investor protection, he knows how to write and pass regulations that can stand the test of time, and he's not

FINRA recently announced that Transamerica Financial Advisors, Inc. (TFA) has agreed to pay $4.4 million in restitution to over 2,000 customers for failing to supervise its stockbrokers’ recommendations of variable annuities, mutual funds, and 529 plans. TFA also will pay a $4.4 million fine. According to FINRA, from May 2010 to May 2016, TFA did not properly supervise its registered representatives’ recommendations to buy variable annuities. FINRA found that TFA’s commissions from variable annuities sales during this six-year period comprised more than 40 percent of the firm’s total

The Securities and Exchange Commission recently charged a British financial services firm, Global Investment Strategy UK Ltd. (GIS), with registration violations, alleging that GIS illegally cleared and settled billions of dollars of U.S. securities transactions without registering as a broker-dealer in the U.S. The SEC also charged GIS’s founder and principal, John William Gunn, with aiding and abetting the violations. According to the SEC's complaint, GIS provided clearance and settlement services from 2015 through 2019 to hundreds of U.S. customers involving billions of dollars' worth of

The Securities and Exchange Commission recently charged John Stumpf (former Wells Fargo & Co. CEO and chairman) and Carrie Tolstedt (former head of Wells Fargo’s Community Bank) for allegedly misleading investors about Wells Fargo’s core banking business by including fake accounts in assessing the bank’s success. The SEC alleged that from 2014 to 2016, Tolstedt publicly endorsed Wells Fargo’s “cross-sell metric” as a way to measure Wells Fargo’s financial success, even though unauthorized and unused (i.e., fake) accounts artificially inflated the metric. In the

The Securities and Exchange Commission recently obtained a final consent judgment against Garrett O'Rourke, a Florida resident, for running a multi-million dollar pump-and-dump scheme targeting elderly investors. O’Rourke will be required to disgorge over $5.7 million, plus prejudgment interest. The SEC alleged that O'Rourke partnered with Maryland resident Michael Black to fraudulently sell stocks of several microcap companies to retail investors, including many elderly investors. The SEC accused O’Rourke and Black of using high-pressure sales tactics, including

Morgan & Morgan’s Business Trial Group and its securities attorneys are investigating investment losses in Blue Crest Capital International (BCI). The Securities and Exchange Commission (SEC) has proclaimed that UK-based investment adviser BlueCrest Capital Management Limited will pay $170 million to settle charges for misrepresentations and omissions relating to moving its top traders from its premier client fund of BCI to a proprietary fund, BSMA Limited. The SEC also found that BlueCrest failed to properly disclose that it had replaced those traders with an

Morgan & Morgan’s Business Trial Group and its securities attorneys are investigating improper early sales and switches of Unit Investment Trusts (UITs). Earlier this year, Stifel Nicolaus – a FINRA-member brokerage firm – agreed to pay more than $3.6 million for improper sales and premature rollovers of UITs. Of the $3.6 million, $1.9 million repaid over-charges to over 1,700 customers, and a $1.75 million fine was imposed for allegedly providing inaccurate information on rollover costs and for related supervisory breaches. Stifel allegedly failed to detect potentially improper early

Morgan & Morgan’s Business Trial Group and its securities attorneys are investigating financial losses in volatility-linked investments. The SEC recently settled enforcement proceedings against five investment advisory and/or brokerage firms for selling customers unsuitable volatility products.  The firms include Securities America Advisors Inc., Summit Financial Group Inc., American Portfolios Financial Services/American Portfolios Advisors Inc., Benjamin F. Edwards & Company Inc., and Royal Alliance Associates Inc. The settlements will return $3 million to harmed

A new rule adopted by FINRA aims to limit stockbrokers from being named as a customer's beneficiary, trustee, or executor.  FINRA Rule 3241, which takes effect on February 15, 2021, requires all FINRA-member brokerage firms to address any situation where a customer appoints a firm’s stockbroker as beneficiary, trustee, or executor. The rule requires the brokerage firm to affirmatively permit or prohibit the stockbroker from acting in such capacity or receiving a bequest from a customer’s estate.  The rule does not prohibit a stockbroker from being named a

Our securities attorneys are investigating bond funds that allegedly inflated returns to attract investments and win high ratings from Morningstar. A recent study published by professors at the University of Stuttgart and the College of William and Mary finds that many start-up bond funds invest in bond securities (like mortgage-backed securities) in small “odd lots,” or increments of less than $1 million. These "odd lots" frequently trade at a discount to larger, “round lot” positions.  However, according to the study, some bond funds do not always apply those discounts when they mark

The Securities and Exhange Commission announced a $114 million whistleblower award to someone who provided information that resulted in a successful enforcement action. This is a record for the whistleblower program. It is more than double the next highest award of $50 million made in June 2020. According to Jane Norberg, chief of the SEC’s Office of the Whistleblower, the actions of the whistleblower awarded were extraordinary.  "After repeatedly reporting concerns internally, and despite personal and professional hardships, the whistleblower alerted the SEC

The Securities and Exchange Commission recently charged Houston-based seismic data company, SAExploration Holdings Inc. (SAE), and several former executives with perpetrating an alleged accounting fraud. Morgan & Morgan’s Business Trial Group and its securities attorneys are investigating this alleged accounting fraud involving SAE. According to the SEC, SAE and its execs perpetrated a multi-year accounting fraud starting in 2015 that inflated SAE’s revenue by about $100 million. The SEC also alleges that the executives stole millions of dollars. The SEC’s complaint asserts that four SAE

JPMorgan Chase & Co. recently agreed to pay over $920 million in criminal penalties, restitution, and disgorgement for fraudulent spoofing trades in futures markets for U.S. Treasuries and precious metals. JPMorgan agreed to the payment under a three-year deferred prosecution agreement with the U.S. Department of Justice. JPMorgan’s subsidiaries, J.P. Morgan Securities LLC and JPMorgan Chase Bank NA, also are parties to the agreement. Under the agreement with the DOJ, JPMorgan admitted that, from 2008 to 2016, its traders placed purchase and sale orders for U.S

The Securities and Exchange Commission settled charges recently against a Colorado man for defrauding investors, including U.S. military service members and others. The SEC’s complaint alleges that Milton J. Dosal, Jr. raised nearly $100,000 over a two-year period from approximately 41 investors — about a quarter of which were cadets at the U.S. Air Force Academy — under the guise that he would day-trade stocks on their behalf. Dosal met a number of investors through car club events, the SEC says. According to the complaint, Dosal falsely held himself out as a securities professional. In

Morgan & Morgan’s Business Trial Group and its securities attorneys are investigating investment losses in the Geode Diversified Fund (Geode Fund), which was allegedly sold by Fidelity Institutional Asset Management (FIAM) and affiliated Fidelity and FIAM entities (collectively, Fidelity). Earlier this year, the Geode Fund suffered heavy losses due to its extremely high-risk investment strategy of shorting volatility. Fidelity purportedly recommended and sold the Geode Fund to many investors, including institutional investors – and even to investors who had a low

The Securities and Exchange Commission recently filed an emergency action regarding an alleged fraudulent scheme that enabled a technology company called NS8, Inc. to raise about $123 million from investors. Morgan & Morgan’s securities attorneys are investigating claims regarding this and similar schemes. According to the SEC, NS8 is a Las Vegas company that provides e-commerce merchants with fraud detection and prevention software. The SEC alleges that the former CEO of NS8, Adam Rogas, falsely claimed NS8 had collected millions of dollars in revenues. According to the SEC’s complaint

Senior citizens are becoming increasing targets of financial exploitation, which can result in significant losses. Recently, a Colorado federal court entered a consent judgment against an investment advisor relating to his alleged misappropriation of more than $450,000 from an elderly client. The final judgment orders Rodemer to pay a civil penalty totaling $385,536. The Securities and Exchange Commission alleged that Steven Rodemer was an investment advisor to an elderly, widowed client. The SEC’s complaint states that Rodemer used his power of attorney over the client’s assets to write

Many of AllianzGI’s “Structured Alpha” funds have suffered catastrophic losses this year, according to reports. Morgan & Morgan’s experienced securities attorneys are investigating claims involving losses in these Structured Alpha funds. In early 2020, AllianzGI allegedly told investors that its Structured Alpha US Equity 500 hedge fund was positioned well if an extreme correction occurred or volatility spiked, according to reports. However, when equity markets crashed in February and March, AllianzGI allegedly failed to properly re-balance, hedge positions, or reduce leverage. AllianzGI

Morgan & Morgan’s securities attorneys are investigating an alleged $27 million fraudulent scheme that The Smart Partners LLC and 1st Million LLC perpetrated against over 1,000 investors – most of whom are African immigrants. The Securities and Exchange Commission recently charged Smart Partners, 1st Million, and their principals (Dennis Jali, John Frimpong, and Arley Johnson) with violations of federal securities laws for operating an alleged Ponzi scheme. The SEC alleges that the defendants engaged in an affinity scheme by targeting African immigrants and

Morgan & Morgan’s Business Trial Group is investigating investment losses in volatility-related exchanged traded products (ETPs) sold by JP Morgan Securities LLC and other brokerage firms. JP Morgan recently entered into a settlement with FINRA that requires the firm to pay more than $650,000 in fines and restitution to customers for improper sales of volatility ETPs. According to FINRA, JP Morgan did not ensure that its brokers and customers understood the risks of holding volatility ETPs for long periods of time. The brokerage firm also solicited clients to purchase volatility ETPs

Electronic broker-dealer Interactive Brokers LLC was recently fined $15 million by FINRA for widespread failures in its anti-money laundering (AML) program. From 2013 to 2018, Interactive Brokers grew substantially to become one of the largest electronic broker-dealers in the United States based on shares traded. The electronic broker-dealer also cleared transactions for more foreign financial institutions than any other broker-dealer in the United States. However, according to FINRA, Interactive Brokers did not adjust and did not dedicate the necessary resources to meet its AML

The Securities and Exchange Commission recently halted an alleged fraudulent scheme perpetrated by Complete Business Solutions Group Inc. (d/b/a Par Funding). The scheme raised about $500 million from more than 1,000 investors. Morgan & Morgan’s securities attorneys are investigating potential claims involving Par Funding’s scheme. The SEC’s complaint alleges that spouses Joseph LaForte and Lisa McElhone masterminded the scheme, which raised investment funds via unregistered securities offerings for their cash advance company, Par Funding. According to the SEC, Par Funding loaned

VALIC Financial Advisors Inc. was charged with failing to disclose conflicts of interest regarding more expensive mutual fund investments. According to the Securities and Exchange Commission, VALIC earned millions of dollars in revenues from placing clients in these more expensive mutual funds, which it never disclosed to clients. The SEC’s Order found that VALIC routinely selected new mutual fund investments for clients that were part of the firm’s clearing broker’s no-transaction fee program (NTF Program). These mutual funds, which were more expensive than other mutual funds, would not

The Securities and Exchange Commission charged former Georgia state legislator Clarence Dean Alford in an alleged $23 million Ponzi scheme, and our experienced securities attorneys are investigating these claims. According to the SEC, Alford defrauded about 100 investors, mostly Indian-American professionals, in Allied Energy Services LLC, his energy development company that now is bankrupt. Alford misrepresented Allied as a thriving business, when in fact it wasn’t, the SEC says. The SEC claims that Alford raised $23 million from investors by selling promissory notes that he

Integrity Aviation & Leasing (IAL) has been charged in a $14 million fraudulent scheme that allegedly victimized many San Antonio police officers and other first responders. Morgan & Morgan’s securities attorneys are investigating the alleged fraudulent scheme. The Securities and Exchange Commission announced charges against IAL and its owner, Victor Lee Farias, for allegedly defrauding investors. The SEC alleges that Farias and IAL raised $14 million from investors, and said would use these funds to purchase engines and aircraft parts for leasing to major

The securities attorneys at Morgan & Morgan are investigating the alleged theft of client funds by a former registered representative and investment advisor of Morgan Stanley. The Securities and Exchange Commission charged Michael B. Carter with fraud based on allegations that he stole millions of dollars from brokerage and advisory customers. When the thefts allegedly occurred, Carter was working for Morgan Stanley as a financial advisor in the firm’s McLean, Virginia office. According to the SEC, Carter made millions of dollars of unauthorized wire transfers

Morgan & Morgan’s securities attorneys are investigating an alleged $60 million Ponzi scheme involving International Investment Group LLC (IIG). The former registered investment advisor had been previously charged in late 2019 with fraud by the Securities and Exchange Commission. At this time, the SEC revoked IIG’s registration. Then, in March 2020, the SEC obtained a final consent judgment requiring IIG to pay more than $35 million in disgorgement and interest. On July 17, 2020, the SEC charged IIG’s co-founder David Hu with fraud for his role in the scheme. The U.S. Attorney’s

The Commodity Futures Trading Commission settled charges against registered futures commission merchant Cunningham Commodities, LLC. According to the CFTC, Cunningham Commodities failed to properly supervise accounts brought to the firm by an introducing broker, whose activities it guaranteed from March to December 2019. According to the CFTC’s Order, Cunningham Commodities agreed to guarantee the introducing broker’s activities even though it knew the broker offered an options trading program to customers without being registered as a commodity trading advisor. Many of the customers

Shares of German payment processor company Wirecard recently crashed when it became known that nearly $2 billion in cash on its balance sheet allegedly does not exist. Then, Wirecard’s CEO was arrested. Recently, it has come to light that Credit Suisse allegedly sold about $1 billion in convertible bonds from Wirecard after entering into a strategic partnership with it in September 2019, according to reports. Those bonds now trade for 12% of face value. Investors in the bonds have suffered huge losses, but allegedly Credit Suisse has limited exposure. Credit

German payment processor Wirecard’s shares recently plummeted by more than 60 percent after its auditor alleged that it can’t find evidence for a quarter of the company’s cash on its balance sheet. According to reports, Wirecard’s auditor Ernst & Young didn’t have sufficient evidence for $1.9 billion euros that Wirecard’s balance sheet reflected were held in cash. This comes after the Financial Times reported in October 2019 that Wirecard appeared to have inflated sales and profits at subsidiaries. If your financial advisor over-concentrated your investments in Wirecard shares, or if you

The Securities and Exchange Commission recently awarded almost $50 million to a whistleblower who provided a detailed account of a company’s misconduct. This reported misconduct led the SEC to bring an enforcement action, and the The SEC ultimately was able to return substantial amounts to harmed investors According to Jane Norberg, chief of the SEC’s Office of the Whistleblower, this award marks several milestones for the whistleblower program. “This award is the largest individual whistleblower award announced by the SEC since the inception of the program, and brings the total awarded

The Securities and Exchange Commission recently charged Kinetic Investment Group LLC and its managing member, Michael Scott Williams, in connection with an alleged fraudulent, unregistered securities offering. According to the SEC, the fraudulent offering raised approximately $39 million from at least 30 investors located mostly in Florida and Puerto Rico. If you’ve been the victim of a fraudulent or unregistered securities offering, you may have legal recourse. According to the SEC’s Complaint, Kinetic Group and Williams raised millions of dollars by making material misrepresentations

The securities attorneys at Morgan & Morgan’s Business Trial Group are investigating investment losses in UBS Wealth Management’s Yield Enhancement Strategy (YES). The financial firm marketed YES as a conservative, market-neutral strategy and bond-portfolio enhancer. This strategy, according to UBS, would generate consistent income while limiting risks to the premiums paid, even if markets turned bearish. UBS represented to investors that YES would limit exposure to substantial market moves, whether up or down. The firm also told investors YES would use protective options strategies to

Morgan & Morgan’s securities attorneys are investigating investment losses in pre-IPO shares and products sold by WestPark Capital, Inc. These pre-IPO products include the Horizon Select Technology Fund LLC and Horizon Select Technology Fund II LLC (collectively, “Horizon Funds”). Pre-IPO shares include Uber, Lyft, Palantir Technologies, Spotify, Pinterest, Dropbox, SpaceX, MagicLeap, Cloudera, AliphCom (d/b/a Jawbone), and Airbnb. We have learned that WestPark may have solicited investors to invest in various special-purpose investment vehicles such as the Horizon Funds. WestPark allegedly

The securities attorneys at Morgan & Morgan’s Business Trial Group are investigating investment losses in Exchange Traded Products (ETP) that recently closed after suffering massive losses this year. Amid the markets’ extreme volatility in 2020, an unusually high number of Exchange Traded Funds (ETF) and Exchange Traded Notes (ETN) have closed. Many of the ETFs and ETNs that have closed were leveraged or inverse products. Leveraged and inverse ETPs are extremely high-risk investments that typically are suitable only for the most speculative of investors. While leveraged ETPs can produce

Morgan & Morgan’s securities attorneys within our Business Trial Group are investigating losses in oil and energy investments, including losses in the United States Oil Fund LP. Oil prices have crashed to multi-decade lows amidst drastically reduced demand during the COVID-19 pandemic. The most heavily traded crude contracts recently fell to their lowest level in over 20 years. And one contract for U.S crude oil fell into negative territory for the first time ever – meaning that sellers had to pay buyers to take barrels. Energy producers like Royal Dutch Shell PLC and BP PLC have

The securities attorneys at Morgan & Morgan’s Business Trial Group are investigating losses that leveraged investment products have experienced recently during the 2020 market crash. Leveraged products – more specifically leveraged exchange-traded funds or exchange-traded notes – allow investors to gain greater exposure to the market without increasing their capital investment. By doing so, these products amplify the potential profit and loss for an investor, which can also present more risks. For this reason, leveraged ETFs are not usually suitable for the average investor. A

During this most recent period of market volatility and decline, it’s become difficult to trade certain options. That has been the case recently with options on iShares iBoxx USD High Yield Corporate Bond Exchange-Traded Fund, a high-yield bond ETF whose price has declined drastically. If you have suffered large or disproportionate losses in this ETF, you may have legal recourse. Please contact one of our experienced securities attorneys today. The securities attorneys at the Morgan & Morgan Business Trial Group handle all investment cases on a contingency-fee

The Consumer Financial Protection Bureau — along with the South Carolina Department of Consumer Affairs and Arkansas Attorney General — recently filed a lawsuit against a South Carolina law firm that worked with several companies that brokered contracts offering high-interest credit to consumers, primarily disabled veterans. The Complaint, filed in federal district court in the District of South Carolina, alleges that Candy Kern-Fuller, Howard Sutter III, and Upstate Law Group LLC violated the Consumer Financial Protection Act’s prohibition against deceptive practices and

The Securities and Exchange Commission is warning investors about potential coronavirus investment scams. The SEC’s Office of Investor Education and Advocacy issued an Investor Alert that warns investors about fraudulent claims that a company’s products or services will be used to help stop the coronavirus outbreak. “We have become aware of a number of Internet promotions, including on social media, claiming that the products or services of publicly-traded companies can prevent, detect, or cure coronavirus, and that the stock of these companies will dramatically increase in

The Securities and Exchange Commission recently settled charges against Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network for failing to adequately supervise advisers and registered representatives who recommended single-inverse ETF investments to retail investors. According to the SEC, Wells Fargo also lacked proper compliance policies and procedures for ensuring the suitability of these recommendations. The recommendations occurred from April 2012 through September 2019. The SEC ordered Wells Fargo to pay a $35 million penalty, which will be distributed to harmed

The Securities and Exchange Commission recently announced an emergency enforcement action to stop an alleged fraud by EquiAlt LLC, a Florida real estate firm . The SEC alleges that EquiAlt, its CEO, and its managing director, orchestrated a Ponzi scheme involving $170 million in investor funds raised through fraudulent unregistered securities offerings. Many of the investors were elderly. A federal judge has granted the SEC’s request for a temporary restraining order, an asset freeze, and an accounting against EquiAlt and others affiliated with the alleged scheme. According to the SEC

The Securities and Exchange Commission recently settled charges against a blockchain technology startup for conducting an unregistered initial coin offering (ICO). Enigma MPC, a blockchain technology startup, has agreed to return funds to harmed investors. It also has agreed to register its tokens as securities, file periodic reports with the SEC, and pay a $500,000 penalty. According to the SEC’s order, Enigma raised about $45 million from sales of its digital assets, called “ENG Tokens.” The SEC’s Order finds that ENG Tokens are securities, Enigma did not register its

The Securities and Exchange Commission recently filed charges against Michael Ackerman, alleging that the Ohio businessman defrauded about 150 investors (including many physicians) in a $33 million digital asset scheme. The SEC claims that Ackerman told investors that he had created an algorithm that enabled extraordinary profits from cryptocurrency trades. According to the SEC’s complaint, Ackerman ultimately raised $33 million for investment in his Q3 Trading Club and Q3 I LP. Many of the investors were physicians. The SEC alleges that Ackerman misrepresented

SeaWorld Entertainment Inc. recently settled a securities class action for $65 million, where investors alleged SeaWorld misled them about park attendance declines following the release of the 2013 documentary ,“Blackfish.” The documentary depicted the brutality involved in capturing killer whales and the hazards that SeaWorld’s trainers faced. The securities class action – filed in 2014 – alleged that SeaWorld blamed poor attendance on factors other than the documentary before ultimately admitting that Blackfish-related issues were the cause. The plaintiffs

The Securities and Exchange Commission recently issued an investor alert urging caution when considering investments in initial exchange offerings (IEOs) and initial coin offerings (ICOs). “The past few years have seen opportunistic fraudsters take advantage of the quickly evolving investment space around digital assets, cryptocurrencies, and ICOs to conduct fraudulent schemes,” the alert states. “The development of IEOs provides a similar opportunity for fraudsters. Investors should be careful.” IEOs, which are similar to ICOs, are initial offerings of digital assets —

We are currently investigating claims against Catalyst Capital Advisors LLC for alleged misrepresentations regarding risk management in a mutual fund. The Securities and Exchange Commission recently announced charges against Catalyst (an investment advisory firm) and its Chief Executive Officer, Jerry Szilagyi. Catalyst and Szilagyi agreed to pay a total of $10.5 million to settle the charges. The SEC also filed a complaint against Senior Portfolio Manager, Edward Walczak, for misrepresenting how he would manage the fund’s risks. According to the SEC’s settled o

Many companies today use initial coin offerings or initial exchange offerings to raise capital or provide investment opportunities. These offerings may, in fact, involve the sale of securities – which means they need to be registered under federal securities laws. And, as with any offering, issuers may not misrepresent or omit important facts to investors. We are currently investigating offerings issued by Bitfinex. If you invested in any initial coin or exchange offerings with Bitfinex, or purchased any tokens from Bitfinex, you may have legal options. Please

The Securities and Exchange Commission recently settled charges against Block.one for allegedly making an unregistered initial coin offering (ICO) of digital tokens that raised several billion dollars. The blockchain technology company paid a $24 million penalty to resolve the charges. The SEC’s Order finds that Block.one conducted an ICO between June 2017 and June 2018, selling 900 million tokens and raising several billion dollars’ worth of digital assets. According to the SEC, Block.one did not register its ICO as a securities offering under federal securities

The Commodity Futures Trading Commission (CFTC) recently announced a $1 million whistleblower award to a tipster who helped uncover Commodity Exchange Act (CEA) violations. Notably, the tipster first provided the information to another regulator before it reached to the CFTC. CFTC Director of Enforcement James McDonald stated, “Today’s award shows how referrals from other regulators can have a meaningful impact on the Commission’s enforcement program, and lead to whistleblower awards from the CFTC. We are committed to continuing to work with other regulators to