Friday, February 15, 2013

SEC Litigation Releases: Week in Review

Court Enters Final Judgments Against Former Wall Street Banker, Downstream Russian Trader and Trader’s Wife in Insider Trading Scheme, February 13, 2013, (Litigation Release No. 22617)

A final judgment has been entered against Alexander Vorobiev and his wife, "relief defendant Tatiana Vorobieva," for their involvement in an insider trading scheme that resulted in over $1 million in illegal profits. Vorobiev traded using insider information regarding "numerous health care-related acquisitions, tender offers, and other transactions" involving UBS's Global Healthcare Group. He allegedly gained the information from Igor Poteroba, an investment banker with UBS Securities LLC. The final judgment permanently enjoins Vorobiev from future violations of the securities laws and orders him to pay over $2 million in disgorgement, prejudgment interest, and civil penalties. Vorobieva has been ordered to pay over $550,000 in disgorgement, prejudgment interest, and civil penalties.

SEC Obtains Judgment Against Investment Adviser in Connection with Cherry-Picking Scheme, February 12, 2013, (Litigation Release No. 22616)

A final judgment was entered against Howard B. Berger, whom the SEC charged with securities fraud and investment adviser fraud last September. Berger was the "founder and manager of Professional Traders Management, LLC and Professional Offshore Traders Management, LLC, which managed and acted as investment advisers for hedge funds Professional Traders Fund, LLC (“PTF”) and Professional Offshore Opportunity Fund (“POOF”)." According to the SEC's charges, Berger "cherry picked profitable trades from PTF...and allocated the trades to his wife’s brokerage account" as well as "allocated unprofitable trades to PTF and POOF." The final judgment permanently enjoins Berger from violating the securities laws and orders Berger along with relief defendant, wife Michelle Berger, to pay over $6.9 million jointly and severally in disgorgement, prejudgment interest, and civil penalties. Additionally, Berger has been barred from  associating with "any broker, dealer, investment adviser, municipal securities dealer, or transfer agent."

SEC Halts $150 Million Investment Scheme to Dupe Foreign Investors and Exploit Immigration Program, February 8, 2013, (Litigation Release No. 22615)

According to the complaint (opens to PDF), Anshoo R. Sethi "created A Chicago Convention Center  and Intercontinental Regional Center Trust of Chicago and fraudulently sold more than $145 million in securities," collecting $11 million in administrative fees from Chinese investors. Sethi allegedly told investors their investments would finance the "construction of the 'World’s First Zero Carbon Emission Platinum LEED certified' hotel and conference center near Chicago’s O’Hare Airport." He then purportedly misled investors to "believe their investments were simultaneously enhancing their prospects for U.S. citizenship through the EB-5 Immigrant Investor Pilot Program." Sethi claimed to have Hyatt, Intercontinental Hotel Group, and Starwood Hotels' participation in the project, but in reality " none of these hotel chains have executed franchise agreements to include a brand hotel in [the] project." Additionally, Sethi allegedly spent over 90 percent of the administrative fees, despite his promise to return them to investors "if their visa applications are denied." The SEC obtained an asset freeze against Sethi and his companies, and "seeks permanent injunctions and other monetary relief."

Former IndyMac CFO Dismissed from SEC Litigation, February 7, 2013, (Litigation Release No. 22614)

A motion for summary judgment was granted for A. Scott Keys, former chief financial officer of IndyMac Bancorp, Inc. The court issued a final judgment in his favor. The original complaint against Keys charged him with failing "to disclose IndyMac Bank’s deteriorating capital and liquidity positions in IndyMac’s offering materials for the sale of new stock to investors prior to [his] departure from IndyMac in April 2008."

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