Friday, January 30, 2015

Enforcement Actions: Week in Review

SEC ENFORCEMENT ACTIONS

SEC Charges Oppenheimer With Securities Law Violations Related to Improper Penny Stock Sales
January 27, 2015 (Litigation Release No. 14)
The SEC has charged Oppenheimer & Co. with breaking federal securities law over illegal sales of penny stocks. They are accused of allowing non-registered sales in their accounts, ignoring red-flags and failing to file Suspicious Activity Reports. Gibralter Global Securities, a Bahamas-based brokerage firm, is one customer alleged to have ordered sales, executed by Oppenheimer, of billions of shares of penny stocks, despite not being registered to do business in the US. Gibralter Global Securities has been charged separately. A second investigation has found Oppenheimer to have executed roughly $12 million in sales, of which $588,400 Oppenheimer collected in commissions. That investigation is ongoing. Oppenheimer has agreed to settle the charges for $10 million and admit to wrongdoing. They will also pay another $10 million to settle charges with the Treasury Department’s Financial Crimes Enforcement Network.

SEC to Hold Roundtable on Proxy Voting
January 27, 2015 (Litigation Release No. 15)
On February 19, the SEC will host a roundtable for the purpose of improving the proxy voting process. This roundtable will be held at the SEC’s Washington D.C. headquarters, and the roundtable will be open to the public as well as webcast which will be live on the SEC’s website. The roundtable will be divided into two panels, and the discussion will be focused on ways of improving the proxy voting proxy will be towards universal proxy ballots and retail participation.

SEC Names Erin Schneider as Associate Regional Director in San Francisco Office
January 28, 2015 (Litigation Release No. 16)
Today the SEC announced that Erin Schneider was named Associate Regional Director for enforcement in the San Francisco office. Schneider’s job will be to oversee the San Francisco office’s enforcement efforts for northern California and the Pacific Northwest. Schneider’s qualifications include working for the past 10 years with the SEC, she has investigated and litigated enforcement actions that have dealt with a variety of securities law violations, and she even has previous professional experience making her qualified for her new appointment.

Robert E. Rice, Chief Counsel to SEC Chair, to Leave SEC
January 29, 2015 (Litigation Release No. 17)
At the end of February, Chief Counsel to SEC Chair Mary Jo White, Robert E. Rice, will be leaving the agency by the end of February. Rice was named Chief Counsel in June 2013, and has been a senior legal and policy advisor to Chair White. Rice has worked on a variety of important enforcement and regulatory issues, serving as a great asset to Chair White. Rice has a variety of previous professional experience from other companies such as Deutsche Bank AG in New York before coming to the SEC.

SEC Charges Stock-Based Lender With Selling Billions of Penny Stock Shares as Unregistered Broker-Dealer
January 29, 2015 (Litigation Release No. 18)
The SEC has charged Chicago-based International Capital Group (ICG), its two co-founders Brian R. Nord and Larry Russell Jr., and its former COO Todd J. Bergeron with selling over nine billion shares of penny stocks without registering as a broker-dealer with the SEC. ICG acquired and sold these penny stocks via stock-based loans they issued. The stocks, obtained as collateral for the loan, were sometimes sold to the full amount of the loan, before customers received any money. On average, ICG started selling shares three days prior to funding a loan. The company and executives have agreed to settle charges for a total of $4.3 million.
 

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