Friday, July 17, 2015

Enforcement Actions: Week in Review

SEC ENFORCEMENT ACTIONS

SEC Announces Settlement With Cooperator in Grand Central Post-It Notes Insider Trading Case
July 13, 2015 (Litigation Release No. 143)
The SEC announced a settlement with Frank Tamayo for cooperating in a continuing insider trading investigation where illegal information was passed via Post-It notes at Grand Central Terminal. Tamayo was alleged to distributing received tips from a law firm clerk to a stockbroker that he would meet up with at Grand Central Terminal, presenting the ticker symbol of the company that would be acquired on a post-it note or napkin. Mr. Tamayo was identified as the middleman in a previous charge against a law firm clerk and a stock broker last year involving insider trading which was filed in feral court New Jersey. Tamayo will not face a monetary penalty, but he is ordered to disgorge more than $1 million of his illegal profits from the insider trading scheme. He will be permanently prohibited from future violations.

Release of Joint Staff Report on October 15, 2014
July 13, 2015 (Litigation Release No. 144)
The US Department of Treasury, the Federal Reserve Board, the Federal Reserve Bank of New York, the US Securities and Exchange Commission and the US Commodity Futures Trading Commission issued a joint report analyzing the significant volatility in the US Treasury market on October 15, 2014. The joint report provides insight and thorough analysis of the market conditions, offers a number of developments that aid in clarifying its volatility, highlights the changing structure of the U.S. Treasury market, and offers future steps for additional enhancement of the public and private sectors’.

OZ Management LP Admits Providing Inaccurate Data, Impacting Brokers’ Records and “Blue Sheets”
July 14, 2015 (Litigation Release No. 145)
OZ Management LP has been charged by the SEC for supplying inaccurate trade data to four prime brokers, leading to inaccurate books and records, including “blue sheets” provided to the SEC. The SEC alleges that for six years OZ Management inconsistently identified trades as long or short. OZ Management has agreed to settle the charges with a $4.25 million penalty.

SEC Charges 34 Defendants in Microcap Market Manipulation Schemes
July 14, 2015 (Litigation Release No. 146)
19 entities and 15 individuals have been charged by the SEC for involvement in alleged microcap market manipulation schemes. The charges include: fraud, touting, manipulative trading, and registration violations. Nine defendants have also been charged criminally. Those involved in the multiple schemes were stock promoters, microcap issuers, owners and employees of six firms, as well as customers.

SEC Chair White, Federal Agencies Join Forces for Military Consumer Protection Day 2015
July 15, 2015 (Litigation Release No. 147)
This past Wednesday, SEC Chair Mary Jo White led a Military Consumer Protection Day event at the Joint Base McGuire-Dix-Lakehurst. The event’s focus was on how military service members could best protect and manage their finances. Also in attendance were officials from the U.S. Postal Inspection Service, the Department of Justice’s Services Members and Veterans Initiative, the U.S. Attorneys’ Housing and Civil Enforcement Section of the Fair Housing Program, the FBI’s Securities Fraud Program and the U.S. Secret Service.

SEC Charges Purported Investment Adviser in San Diego With Stealing Client Funds and Conducting a Ponzi Scheme
July 16, 2015 (Litigation Release No. 148)
San Diego-based investment advisor Paul Lee Moore has been charged by the SEC for stealing clients’ funds and running a Ponzi scheme. The SEC alleged that Moore and his firm, Coast Capital Management, raised $2.6 million, $2 million of which Moore stole for personal use. The remaining funds were used to repay earlier clients making redemption requests. Coast Capital, now defunct, was not registered with the SEC or state regulators as an investment advisor. Moore also faces criminal charges.

SEC Charges Pennsylvania Attorney with Insider Trading in Advance of Merger Announcement
July 16, 2015 (Litigation Release No. 149)
Hebert K. Sudfeld has been charged with insider trading of Harleysville Group, Inc. stocks in advance of the 2011 $760 million merge announcement between Harleysville and Nationwide Mutual Insurance Company, violating the antifraud provisions of the federal securities laws and an SEC antifraud rule. Mr. Sudfeld stole inside information without being involved in the merger, illegally trading news that increased Harleysville’s stock price by 87% when the merger was announced in September 2011. Using the stolen information, Sudfeld purchased Harleysville stock and then sold the purchased shares once the merger was announced, leading to approximately $79,000 in illegal profits. The SEC seeks to place penalties against Sudfeld, requesting the return of the illegal profits as well as prejudgment interest.

SEC Pays More Than $3 Million to Whistleblower
July 17, 2015 (Litigation Release No. 150)
The SEC has awarded over $3 million to a company insider who provided useful information that contributed to a successful enforcement action against a complex fraudulent scheme. This payout is the third highest award to date under the SEC’s whistleblower program. Under the whistleblower program, whistleblower identities are protected and whistleblower awards can range from 10 percent to 30 percent of the money collected when penalties exceed $1 million.

Michele Anderson Named Associate Director in the Division of Corporation Finance
July 17, 2015 (Litigation Release No. 151)
The SEC promoted Michele Anderson to be positioned as the Associate Director in the agency’s Division of Corporation Finance where she will supervise the Office of Mergers and Acquisitions and its Office of International Corporate Finance. Ms. Anderson’s qualifications include: serving as the SEC’s Chief of Office of Mergers and Acquisitions since 2008, serving as an attorney-advisor from 2004 to 2008, and serving as Legal Branch Chief of the Office of Telecommunications.

 

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