Friday, June 26, 2015

Enforcement Actions: Week in Review

SEC ENFORCEMENT ACTIONS

SEC Charges Unregistered Brokers in EB-5 Immigrant Investor Program
June 23, 2015 (Litigation Release No. 127)
Ireeco LLC and its successor Ireeco Limited were charged with being unregistered brokers after the firms handled more than $79 million of investments. Ireeco brokered investments for more than 150 foreign investors through the governments EB-5 program. The EB-5 program allows foreigners who invest directly in a U.S. business or private “regional centers” that promote economic development a chance at gaining legal residency. Ireeco promised to guide investors to the right regional centers and businesses, but they directed the majority of their clients to a handful of region centers that gave Ireeco commissions of about $35,000 per investor. Ireeco has agreed to be censured and to cease and desist from committing similar violations in the future.

SEC Obtains Asset Freeze against China-Based Trader for Suspicious Activity Last Week
June 23, 2015 (Litigation Release No. 128)
The SEC alleges that Haijian Luo profited by more than $1 million by trading on private information on China-based Company Qihoo 360 Technology. Luo, who had no prior trading history with Qihoo 360, purchased around $700,000 of out-of-the-money options. Briefly following Luo’s order, Qihoo announced a buyout offer at a significant premium and Qihoo’s stock rose sharply. Luo consequently sold all of the options and transferred more than half of his $1 million proceeds to a foreign bank account. The SEC believes the timing of Luo’s order is suspicious and has frozen Luo’s brokerage account to prevent him from destroying any evidence.

SEC Charges Microcap Promoter with Illegally Selling Penny Stock Shares
June 23, 2015 (Litigation Release No. 129)
The SEC alleges Gregg R. Mulholland illegally liquated shares of Vision Plasma Systems, where he was the majority share owner. Mulholland accumulated over 84 percent of the company through various offshore front companies to gain effective control of the company. Subsequently, Mullholland sold his shares for proceeds of around $21 million without filing a registration statement. This is not Mullholland’s first run-in with the SEC as in 2011 the SEC charged him with a pump-and-dump manipulation of a sports drink company.

John Roeser Named Associate Director of the Office of Market Supervision
June 25, 2015 (Litigation Release No. 130)
The SEC named John C. Roeser as the Associate Director and deputy head of the Office of Market Supervision in the Division of Trading and Markets. The previous associate director, Heather Seidel, was named Chief Counsel for the Division of Trading and Markets in February. The Office of Market Supervision oversees U.S. securities exchanges, alternative trading systems, and self-regulatory organizations.


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