Friday, July 31, 2015

Enforcement Actions: Week in Review

SEC ENFORCEMENT ACTIONS

SEC Charges Three Penny Stock Promoters Behind Pump-and-Dump Schemes
July 21, 2015 (Litigation Release No. 152)
Former Oppenheimer & Co. Inc. employees: Scott A. Eisler, Arthur W. Lewis and Robert Okin, agreed to settle the SEC’s charges involving unregistered sales of billions of shares of penny stocks on behalf of an Oppenheimer customer. Lewis and Okin failed to respond to red flags associated with sales that violated the federal securities laws and allowed unregistered transactions to occur from individuals that they supervised. Eisler agreed to settle the SEC’s charges by paying a $50,000 penalty, Lewis is paying a $50,000 penalty, and Okin is paying a $125,000 penalty. Eisler will be barred from engaging in penny stock sales and from working in the securities industry for at least one year while Lewis and Okin will be barred from working in the supervisory capacity in the securities industry for at least one year.

Former Oppenheimer Employees Settle Charges Involving Unregistered Sales of Penny Stocks
July 23, 2015 (Litigation Release No. 153)
The SEC charged Joshua Samuel Aaron, Gery Shalon, and Zvi Orenstein for manipulating the microcap market by promoting, through e-mail, penny stocks in a pump-and-dump scheme. Aaon, Shalon, and Orenstein pumped the prices of shares they had in serval penny stock companies to as high as 1,800 percent and then dumped the shares, illegally profiting at least $2.8 million. The SEC seeks to bar these three men from engaging in penny stocks, and criminal charges have been placed on them from the U.S. Attorney’s Office for the Southern District of New York.

SEC Charges Mead Johnson Nutrition With FCPA Violations
July 28, 2015 (Litigation Release No. 154)
Mead Johnson Nutrition Company has agreed to settle the SEC charges by paying $12 million for violating the Foreign Corrupt Practices Act (FCPA), inaccurately reflecting more than $2 million in improper payments in its books and records during a five-year period. The China-based unit made improper payments at state-owned hospitals and misused marketing and sales funds, bribing healthcare professionals to recommend the company’s infant formula to patients who were ne or expectant mothers.

Daniel M. Hawke, Chief of Market Abuse Unit, to Leave SEC After 16 Years of Service
July 29, 2015 (Litigation Release No. 155)
Former Director of the SEC’s Philadelphia Office and current Chief of the Division of Enforcement’s Market Abuse Unit Daniel M. Hawke is leaving the SEC in August and returning to the private sector, having worked at the SEC for 16 years. Hawke has been in charge of the Market Abuse Unit since it was created in 2010. Prior to joining the SEC in 1999, Hawke had a private practice in D.C. for ten years.

SEC Charges Operators of Fraud Based in Upstate New York
July 30, 2015 (Litigation Release No. 156)
54Freedom Inc., CEO James P. Griffin, CFO and Treasurer James Wolle, and seven other companies have been named in fraud charges by the SEC. The SEC alleges that Griffin and Wolle misled investors about their companies’ prospects including falsely claiming an exclusive relationship with Lloyd’s of London and that their “charitable gift annutiies” were backed by reputable insurance companies. Over the course of seven years, the named companies are alleged to have raised $8 million from more than 125 investors. Griffin was arrested under charges of fraud and money laundering by the U.S. Attorney’s Office for the Northern District of New York.

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