Friday, May 31, 2013

SEC Litigation Releases: Week in Review

District Court Enters Judgment Against Medical Software Company and Its CEO and CFO, May 30, 2013, (Litigation Release No. 22709)

Default judgments were entered against MedLink International, Inc., its CEO, Aurelio Vuono, and its CFO, James Rose, for allegedly "filing an annual report falsely stating that its audit had been completed and...defrauding a MedLink investor." The judgment orders permanent injunctions from violating sections of the Securities Act and Exchange Act and orders the defendants to pay over $930,000 combined in disgorgement, prejudgment interest, and civil penalties. Additionally, penny stock bars and officer and director bars were ordered against Vuono and Rose.

SEC Obtains Final Judgment and Issues Administrative Orders Against John A. ("Jack") Grant, May 30, 2013, (Litigation Release No. 22708)

A final judgment was entered against lawyer and former stockbroker, John A. Grant, for his alleged violation of "a July 1988 order barring him from association with brokers, dealers, and investment advisers." In 1988, the SEC charged Grant with selling $5.5 million of unregistered securities and misappropriating investors' funds. According to the SEC, Grant violated the bar "by associating with his son Lee Grant’s investment advisory firm, Sage Advisory Group LLC, and by acting as an investment adviser himself." Furthermore, "Jack Grant, Lee Grant, and Sage failed to inform their advisory clients that Jack Grant is barred from associating with investment advisers." Jack Grant has consented to a final judgment that orders him to pay over $201,000, permanently enjoins him from violations of the Investment Advisors Act, orders him to comply with the 1988 bar, orders him to notify his clients of the final judgment, and permanently bars him from associating with "any broker, dealer, or investment adviser" as well as permanently suspends him from practicing before the SEC as an attorney.

The SEC's case against Lee Grant and Sage remains pending.

SEC Charges Dallas-Based Trader with Front-Running, May 24, 2013, (Litigation Release No. 22707)

According to the complaint (PDF), Daniel Bergin, a trader with Cushing MLP Asset Management, LP, engaged in "trading ahead of client trades, insider trading, and failing to report trades to his employer" which resulted in at least $1.7 million in illegal profits. Bergin allegedly used his wife's brokerage accounts to conceal the trades. The SEC has named his wife, Jacqueline Zaun, as a relief defendant.

An emergency court order was granted that has frozen Bergin and Zaun's assets. The SEC has charged Bergin with violating the Exchange Act and Investment Company Act and seeks disgorgement, prejudgment interest, civil penalties, and a permanent injunction.

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