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.
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
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
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
September 13, 2021
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
August 30, 2021
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
August 30, 2021
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.
August 8, 2021
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
July 24, 2021
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
July 11, 2021
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
June 27, 2021
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