March 20, 2023
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
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November 14, 2022
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
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November 8, 2022
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
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August 25, 2022
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
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March 22, 2022
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
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February 15, 2022
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
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January 27, 2022
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
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January 17, 2022
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
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January 3, 2022
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
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December 27, 2021
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
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December 13, 2021
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
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