SEC v. John H. Pamplin, Jr., November 29, 2012, (Litigation Release No. 22550)
According to the complaint (opens to PDF), former TurboChef Technologies, Inc. employee John H. Pamplin, Jr. traded with insider information regarding TurboChef's pending acquisition by The Middleby Corporation in 2008 which resulted in a $68,000 illicit profit. According to the SEC, Pamplin violated the Exchange Act. The SEC seeks "permanent injunctive relief, disgorgement, prejudgment interest, and civil penalties."
SEC Charges Two Brokers with Insider Trading Ahead of IBM-SPSS Merger for $1 Million Profit, November 29, 2012, (Litigation Release No. 22549)
According to the complaint
(opens to PDF), in 2009 brokers Thomas C. Conradt and David J. Weishaus traded on nonpublic information regarding IBM Corporation's acquisition of SPSS Inc. Conradt allegedly learned of the acquisition from his roommate, a research analyst, who had learned the information "from an attorney working on the transaction." Conradt, Weishaus, and others they tipped earned over $1 million in illegal profits. In fact, "Conradt, Weishaus, and other downstream tippees invested so heavily in SPSS securities that the investments accounted for 76 percent to 100 percent of their various brokerage accounts." The SEC has charged Conradt and Weishaus with violating sections of the Exchange Act and seeks disgorgement, prejudgment interest, financial penalties and a permanent injunction against the defendants. Additionally, criminal charges have been announced against Conradt and Weishaus in a parallel action.
SEC Charges Chicago-Based Investment Adviser with Defrauding Investors in Failing Private Equity Fund, November 29, 2012, (Litigation Release No. 22548)
According to the complaint (opens to PDF), Joseph J. Hennessy and his firm, investment adviser Resources Planning Group, defrauded investors by falsely promising them high returns for investing in the Midwest Opportunity Fund. According to the complaint, Hennessy failed to tell investors that MOF was failing due to its inability to repay promissory notes. In 2007, "Hennessy financed MOF's acquisition of its largest portfolio company...by having the fund issue $1.65 million in promissory notes." When portfolio companies failed to pay management fees later that year, the MOF "lacked sufficient funds to repay the notes." From 2007 to 2010 Hennessy allegedly raised funds from investors by telling them "that MOF was viable and offered high returns" when in reality he was using their investments to make payments on the promissory notes. Additionally, Hennessy allegedly misappropriated $750,000 from three investors by using their "money to redeem another client's investment in the fund" instead of investing it in MOF. Twice in 2009, Hennessy allegedly "forged letters of authorization from a widowed RPG client to transfer $100,000 from her account to MOF in exchange for promissory notes that have yet to be repaid." Hennessey has been charged with violating sections of the Securities Act, Exchange Act, and Advisers Act and RPG has been charged with violating sections of the Advisers Act.
SEC Charges Oil Company CEO as Source in Insider Trading Case, November 28, 2012, (Litigation Release No. 22547)
The SEC announced this week that former Delta Petroleum Corporation CEO Roger Parker has been charged with illegally tipping his friend Michael Van Gilder about Tracinda's impending investment in Delta. Previously, the SEC had charged Van Gilder for his alleged insider trading in the case and now has charged Parker as Van Gilder's source. In addition to his acquisition tips, Parker allegedly tipped Van Gilder about Delta's quarterly earnings in late 2007. In total, the "insider trading in this case generated more than $890,000 in illicit profits." The SEC has charged Parker and Van Gilder with violating sections of the Exchange Act and seeks disgorgement, prejudgment interest, financial penalties and permanent enjoinment, as well as an officer and director bar against Parker.
Jury Returns Verdict of Liability Against Massachusetts Investment Adviser and His Advisory Firm, November 27, 2012, (Litigation Release No. 22546)
On November 26, 2012 a jury found investment adviser EagleEye Asset Management, LLC, and its sole principal, Jeffrey A. Liskov liable for securities fraud for their "fraudulent conduct toward advisory clients." According to the SEC's original complaint, between 2008 and 2010, Liskov convinced at least six clients to "liquidate investments in securities and instead invest the proceeds in foreign currency exchange trading." The forex investments "were not suitable for older clients with conservative investment goals" and resulted in almost $4 million of losses for the clients. However, Liskov and EagleEye earned over $300,000 in performance fees for these investments. Not only did Liskov allegedly fail "to disclose material information to clients concerning the nature of forex investments, the risks involved, and his poor track record in forex trading for himself and other clients," but he also liquidated securities of two clients without their consent by forging asset transfer forms. The SEC charged EagleEye and Liskov with violating sections of Exchange Act and Advisers Act. Based on the jury's verdict, a hearing will be held on the SEC's request for injunctive relief, disgorgement, prejudgment interest, and financial penalties against EagleEye and Liskov.
Court Orders Asset Freeze and Appointment of a Receiver in SEC Action Charging Hedge Fund Adviser and Its Principal with Securities Fraud, November 26, 2012, (Litigation Release No. 22545)
On November 21, 2012 the Court entered judgments against Berton M. Hochfeld and Hochfeld Capital Management, L.L.C. in response to the SEC's charges that Hochfeld and his firm engaged in securities fraud "by misappropriating assets and making material misstatements to" investors in the Heppelwhite Fund, LP. Hochfield, who managed the Heppelwhite Fund, was also charged with violating a "2006 SEC Order barring him from associating with any broker, dealer, or investment adviser." Allegedly, Hochfield misappropriated around $1.3 million from the Fund." Additionally, Hochfeld and Hochfeld Capital allegedly "made material misstatements to Fund investors" by overstating the value of investments on periodic statements and failing to disclose" the 2006 SEC order against Hochfeld. Hochfeld and Hochfeld Capital consented to the Court's judgments enjoining them from violating sections of the Exchange Act, Securities Act, and the Advisers Act. They also agreed to "provide a full accounting of all assets currently under their control," an asset freeze against the defendants as well as the Heppelwhite Fund, disgorgement, civil penalties, and "the appointment [of] a receiver over the Heppelwhite Fund and Hochfeld Capital."
Court Enters Final Judgments by Consent Against SEC Defendants Pantera Petroleum, Inc. and Bozidar "Bob" Vukovich, November 26, 2012, (Litigation Release No. 22544)
The Court entered a final judgment against Pantera Petroleum, Inc. and stock promoter, Bozidar "Bob" Vukovich, in response to the SEC's complaint that Vukovich along with Pantera's former President Christopher Metcalf "engaged in a fraudulent broker-bribery scheme designed to manipulate the market for Pantera common stock." Pantera and Vukovich agreed to final judgments enjoining them from violating sections of the Securities Act and Exchange Act. Vukovich also agreed to a penny stock bar and to pay over $260,000 in disgorgement, prejudgment interest, and penalties.
SEC Settles with Former Integral Systems Chief Financial Officer Charged with Securities Fraud, November 26, 2012, (Litigation Release No. 22543)
Elaine Brown, the former Chief Financial Officer of Integral Systems, Inc, agreed to pay a $25,000 civil penalty to settle SEC charges that charged her "in connection with the concealment at [Integral Systems] of a de facto officer who was a securities fraud felon."
Attorney Virginia K. Sourlis Found Liable for Aiding and Abetting Securities Fraud by Issuing False Legal Opinion in Connection with Illegal Stock Offering, November 26, 2012, (Litigation Release No. 22542)
On November 20, 2012, in SEC v. Greenstone Holdings, Inc., et al. a judgment was entered against attorney Virginia K. Sourlis that holds her liable "for aiding and abetting securities fraud." According to the SEC, in 2006 Sourlis "intentionally authored a materially false and misleading legal opinion, which Greenstone used to illegally issue over six million shares of stock in unregistered transactions." Based on the Court's judgment, the SEC will seek injunctive relief, financial penalties, disgorgement, and a penny stock bar against Sourlis.
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