Friday, June 6, 2014

Enforcement Actions: Week in Review

SEC ENFORCEMENT ACTIONS

SEC Obtains Final Judgment Against Charles J. Dushek, Charles S. Dushek, and Capital Management Associates, Inc.
, June 5, 2014, (Litigation Release No. 23015)

Final judgments have been entered against Charles J. Dushek, Charles S. Dushek, and their investment advisory firm, Capital Management Associates, Inc., for their involvement in a "cherry-picking" scheme that "garnered the Dusheks nearly $2 million in illicit profits." The final judgment permanently enjoins the defendants from future violations of the securities laws, orders them to pay over $2.6 million in disgorgement, prejudgment interest, and civil penalties combined. Additionally, the judgment bars the Dusheks from association "with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization" and names Margaret Dushek as a relief defendant, requiring her to disgorge over $1.8 million.

Court Enters Default Judgment Against SEC Defendant Malcolm Stockdale, June 4, 2014, (Litigation Release No. 23014)

A final judgment has been entered against Malcom Stockdale for his alleged involvement with Guiseppe Pino Baldassarre and Robert Mouallem in "a fraudulent broker bribery scheme designed to manipulate the market for the common stock of Dolphin Digital Media, Inc." The judgment orders him to pay over $72,000 in penalties, disgorgement, and prejudgment interest, imposes a penny stock bar against him, and enjoins him from future violations of the securities laws. $22,978.55 of the amount Stockdale was ordered to pay has been "deemed satisfied by the forfeiture orders entered against Stockdale and his co-defendants in a parallel criminal action."

SEC Obtains Judgment Against Georgia Man Charged with Insider Trading, June 4, 2014, (Litigation Release No. 23013)

A judgment has been entered by consent against Earl C. Arrowood, who allegedly "traded on the basis of material, non-public information regarding a potential merger of Matria Healthcare, Inc." The order permanently enjoins Arrowood from future violations of the securities laws and orders him to pay over $22,000 in disgorgement, prejudgment interest, and a civil penalty. Charges have voluntarily been dismissed against Arrowood's co-defendant, Parker H. Petit.

SEC Charges Albany, N.Y.-Based Investment Adviser with Defrauding Clients, June 4, 2014, (Litigation Release No. 23012)

An emergency enforcement action was filed to halt ongoing fraud by an investment adviser, Scott Valente, who allegedly lied "to clients about the success of their investments" raised through his firm, The ELIV Group LLC, "while stealing their money for his personal use." Additionally, Valente failed to tell his clients that he was expelled from the broker-dealer industry in 2009 by FINRA and he has filed for bankruptcy twice. The complaint (PDF) charges the defendants with violating the Exchange Act and Investment Advisers Act and seeks a temporary restraining order to freeze assets, as well as a final judgment that would order the defendants to pay disgorgement, prejudgment interest, and financial penalties.

Jury Finds T. Bradley Strickland, Peter Black, and Nelson Obus Not Liable for Insider Trading, June 2, 2014, (Litigation Release No. 23011)

Last week, "after a two week trial, a ten person federal jury in New York found T. Bradley Strickland, Peter Black, and Nelson Obus not liable for violating the insider trading provisions of the federal securities laws."

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