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Financial Fraud

City of Rochdale, LLC to Pay over $30 Million Dollars for Investment Fraud

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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Crypto Currency Fines

BlockFi Charged By SEC For Selling Unregistered Crypto Based Loans

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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SEC Charges Stockbroker In Ponzi Scheme

Florida Stockbroker Charged By SEC for Federal Securities Violations

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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Business man trader investor analyst using mobile phone app analytics for cryptocurrency financial stock market analysis analyze graph trading data index investment growth chart on smartphone screen.

NASAA Reports Top Investor Threats for 2022

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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Wedbush Charged $1.2 Million In Settlements For Securities Fraud

Wedbush Securities Inc. To Pay Over $1.2 Million In Charges For Unregistered Equities Sales

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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Nikola Motor Company Stock

SEC Announces $125 Million Settlement with Nikola Corporation

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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SEC alleges that the Heartland defendants made five fraudulent and unregistered offerings for oil-and-gas projects in Texas.

SEC Files Charges Against Heartland Group Ventures, LLC

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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SEC Obtains Final Judgement Against Paulson

SEC Obtains Final Judgement Against Paulson

December 6, 2021
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.
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SEC Charges Welsh

SEC Charges Welsh

November 22, 2021
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
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Honor Finance Auto

Honor Finance Faces Charges

October 25, 2021
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
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SEC Charges Choice

SEC Charges Choice Advisors

September 27, 2021
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
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