SEC Secures Trial Victory and Obtains Over $2.1 Million in Disgorgement and Penalties in Market Manipulation Case, December 6, 2012, (Litigation Release No. 22561)
A final judgment was entered against brothers Mayer Amsel and David Amsel "following a bench trial in a market manipulation case involving the securities of a company known as East Delta Resources Corp." The final judgment orders the brothers to pay, jointly and severally, over $2.4 million in disgorgement, prejudgment interest, and civil penalties. In addition, the judgment enjoins the brothers from violating sections of the Exchange Act and Securities Act, and it imposes a penny stock bar against both brothers and an eight year officer or directory bar against David Amsel.
SEC Charges Ten in Insider Trading Ring Around Investment Banker's Illegal Tips on Impending Mergers, December 6, 2012, (Litigation Release No. 22560)
According to the complaint (opens to PDF), investment banker John W. Femenia and his longtime broker friend, Shawn C. Hegedus, illegally tipped a chain of friends about four separate merger transactions resulting in more than $11 million in illegal profits. The illegal trading occurred from July 2010 to July 2012 surrounding the acquisitions of ATC Technology Corporation by GENCO Distribution Systems, Smurfit-Stone Container Corp. by Rock-Tenn Company, K-Sea Transportation Partners by Kirby Corporation, and The Shaw Group by Chicago Bridge & Iron Co. The tippees included Aaron M. Wens, Matthew Musante, Anthony Musante, Danielle Laurenti, Roger A. Williams, Frank M. Burgess, Jr., James A. Hayes IV, and Kenneth M. Raby. In addition, the SEC alleges that two companies with ties to Hegedus or Laurenti, Coram Real Estate Holdings Inc. and Goldstar P.S., were involved in the illegal trading. "Femenia’s girlfriend Kristine Lack and Anthony Musante’s wife Christine Musante" have also been charged as relief defendants. The SEC has charged the defendants with violating sections of the Exchange Act and the Court "entered a temporary restraining order freezing the assets of the defendants and relief defendants."
Court Enters Final Judgment by Default Against SEC Defendant John Zanic, December 6, 2012, (Litigation Release No. 22559)
A final judgment was entered against John Zanic for his alleged involvement in "a fraudulent broker bribery scheme designed to manipulate the market for the common stock of Guyana Gold, Corp." The judgment enjoins Zanic from violating sections of the Securities Act and Exchange Act, and imposes a penny stock bar against him. In addition, Zanic has been ordered to pay over $216,000 in disgorgement, prejudgment interest, and penalties.
Defendant in SEC Action Pleads Guilty to Criminal Charges and is Barred from the Securities Industry, December 4, 2012, (Litigation Release No. 22558)
Arnett L. Waters, principal of A.L. Waters Capital, LLC and Moneta Management, LLC, pleaded guilty to criminal charges of "sixteen counts of securities fraud, mail fraud, money laundering, and obstruction of justice." In May 2012, the SEC charged Waters with defrauding investors by "misappropriating investor funds and spending [the funds] on personal expenses." Criminal charges were brought against Waters in August 2012 based on the same allegations. Based on his guilty plea, Waters has been barred from the securities industry.
Former Fair Finance Company CEO Sentenced to 50 Years in Prison for Conducting $200 Million Fraud Scheme, December 3, 2012, (Litigation Release No. 22557)
Former CEO of Fair Finance Company, Timothy S. Durham, has been sentenced to 50 years in prison for "orchestrating a $200 million scheme that defrauded more than 5,000 investors over almost five years." In addition, Fair Finance's board chairman, James F. Cochran, and the firm's chief financial officer, Rick D. Snow, have been sentenced to 25 years and 10 years in prison, respectively.
Court Enters Final Judgment Against SEC Defendants Christopher W. Bass and His Companies, December 3, 2012, (Litigation Release No. 22556)
A final judgment was entered against "Christopher W. Bass, Swiss Capital Harbor-USA, LLC, Swiss Capital Harbor Fund A Partners, L.P., Swiss Capital Harbor Fund B Partners, L.P. and Swiss Capital Harbor Fund C Partners, L.P." for their alleged involvement in a Ponzi scheme "through which they defrauded over 400 investors." The final judgment enjoins the defendants from violating sections of the Securities Act and Exchange Act, and orders them to pay jointly and severally over $5.2 million in disgorgement and prejudgment interest.
SEC v. Joseph P. Cillo, November 30, 2012, (Litigation Release No. 22555)
A final judgment was entered against Joseph P. Cillo for his alleged violation of "a 1995 Commission order which barred [him] from participating in the offering of any penny stock." The judgment orders Cillo to pay over $80,000 in disgorgement, prejudgment interest, and penalties within 30 days. In addition, the judgment enjoins Cillo from violating sections of the Exchange Act and imposes a penny stock bar against him.
Brazilian Ex-Banker to Pay $5.1 Million for Insider Trading in Burger King Stock, November 30, 2012, (Litigation Release No. 22554)
According to the complaint (opens to PDF), Igor Cornelsen and his firm, Brainbridge Group Inc., made over $1.68 million in illegal profits by using insider information to trade Burger King options "ahead of the company’s September 2010 announcement that it was being acquired by a New York private equity firm." The SEC alleges that Cornelsen gained the information from his broker Waldyr Da Silva Prado Neto, who stole the inside information from a "Wells Fargo brokerage customer involved in the Burger King deal." The complaint charges Cornelsen and Brainbridge Group with violating sections of the Securities Act and seeks enjoinment from future violations. Cornelsen and Brainbridge Group have agreed to pay over $5.1 million to settle the charges.
SEC Charges Westport, Connecticut Resident with Insider Trading in the Shares of Patriot Capital Funding, Inc., November 30, 2012, (Litigation Release No. 22553)
According to the complaint (opens to PDF), Joseph Massoud, founder of Compass Group Management, traded on nonpublic information regarding a merger between Patriot Capital and Prospect Capital Corporation. Massoud allegedly learned of the merger by particpating in "a nonpublic bidding process in 2009" that Patriot Capital held "to entertain proposals for strategic investments and the possible sale of the company." To participate in this process, Massoud "directed Compass Group to execute a confidentiality agreement with Patriot Capital." With the agreement, Massoud gained access to an online dataroom that "provided various reports containing material, nonpublic information." According to the SEC, despite his agreement with Patriot Capital, Massoud then traded based on this insider information. Massoud has been charged with violating sections of the Exchange Act and has agreed to pay over $1.4 million in disgorgement, prejudgment interest, and penalties to settle the charges. In addition, he has agreed to a penny stock bar, officer or director bar, and a bar from association with "any broker, dealer, investment adviser, municipal securities dealer, municipal adviser, transfer agent, or national recognized statistical rating organization."
Sec Files Fraud Charges Against China North East Petroleum Holdings Limited; Its Ceo, President and Former Chairman; Its Founder and Former Director; and Its Vice President and Secretary, November 30, 2012, (Litigation Release No. 22552)
According to the complaint
(opens to PDF), in 2009 "China North East Petroleum Holdings; its CEO, President and former Chairman of the Board of Directors, Wang Hongjun; its founder, former director and Wang's mother, Ju Guizhi; and its Vice President of Corporate Finance and Secretary, Jiang Chao...diverted offering proceeds to the personal accounts of corporate insiders and their immediate family members." In addition, the defendants also allegedly "engaged in fraudulent conduct in connection with at least 176 undisclosed transactions between the company and its insiders or their immediate family members." In total, these undisclosed transactions were approximately $59 million. The SEC has charged the defendants with violating sections of the Securities Act and Exchange Act and seeks permanent injunctive relief, disgorgement, prejudgment interest, and civil penalties. In addition, the SEC seeks officer and director bars against Wang, Ju, and Jiang Chao and disgorgement from two relief defendants, Wang's wife, Sun Jishuang, and Jiang Chao's father, Jiang Mingfu.
Sec Obtains Final Judgments in Case Involving Ponzi Scheme and Promotion of China Voice Holding Corp., November 30, 2012, (Litigation Release No. 22551)
A final judgment was entered against Alex Dowlatshahi, Christopher Mills, and Robert Wilson for their alleged involvement in a $8.6 million Ponzi scheme involving China Voice. In addition, Wilson has been charged for his alleged involvement in "blast fax campaign regarding China Voice Holding Corp." The judgment enjoins the defendants from violating sections of the Exchange Act and Securities Act. In addition, the judgment orders Dowlatshahi and his companies, Lucrative Enterprise Corp, Synergetic Solutions LLC, Integrity Driven Network Corp, and Darius Assets Holding Corp. to pay over $879,000 in disgorgement, prejudgment interest, and penalties. Mills and his companies, Sleeping Bear LLC and Silver Summit Holdings LLC, have been ordered to pay over $280,000 in disgorgement, prejudgment interest, and penalties. The judgment orders Wilson and his companies, Strategic Capital and Green Horseshoe Holdings, Inc., to pay over $1.5 million in disgorgement, prejudgment interest, and penalties. Finally, the judgment imposes a penny stock bar against Wilson.
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