Friday, February 8, 2013

SEC Litigation Releases: Week in Review

Steven Harrold Settles SEC Insider Trading Charges, February 6, 2013, (Litigation Release No. 22613)

A final judgment was entered against Steven Harrold, former executive at a Coca-Cola bottling company, for his alleged insider trading "based on confidential information he learned on the job" concerning Coca-Cola Enterprises Inc.'s planned acquisition of The Coca-Cola Company's " bottling operations in Norway and Sweden." The judgment permanently enjoins Harrold from future violations of various sections of the Exchange Act and orders him to pay over $180,000 in disgorgement, prejudgment interest, and civil penalties. In addition, an officer and director bar has been placed against Harrold.

SEC v. James Balchan, February 6, 2013, (Litigation Release No. 22612)

According to the complaint (opens to PDF), James Balchan traded with inside information ahead of Texas Instrument's acquisition of National Semiconductor Corporation, gaining almost $30,000 in illegal profits. Balchan allegedly "gleaned [the information] from his wife, a partner at a large law firm that was consulted on the deal." Balchan has agreed to pay over $60,000 in disgorgement, prejudgment interest, and penalties to settle the charges.

SEC Obtains Judgments Against Former Officers of Gibraltar Asset Management Group LLC, February 5, 2013, (Litigation Release No. 22611)

Final judgments were entered against four defendants for their alleged involvement in "a multi-million dollar Washington-area Ponzi scheme operated through Gibraltar Asset Management Group, LLC and Garfield Taylor, Inc." Benjamin C. Dalley, former Vice President of Operations at Gilbratar, Randolph M. Taylor, former Vice President for Organizational Development at Gibraltar, William B. Mitchell, former Vice President for Finance at GTI and Executive Vice President of Strategic Planning at Gibraltar, and relief defendant, Reverb Enterprises LLC, have been ordered to pay over $320,000 total in disgorgement, prejudgment interest, and penalties. Dalley, Taylor, and Mitchell have also been permanently enjoined from violating various sections of the securities laws. In addition, Mitchell has been barred from associating with "any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization" and has also been barred from "from participating in any offering of a penny stock." The SEC's case is still pending against: Garfield M. Taylor, Jeffrey A. King, Maurice G. Taylor, GTI, Gibraltar, and The King Group, LLC.

SEC v. Patrick M. Carroll, James P. Carroll, William T. Carroll, David Mark Calcutt, Christopher Calcutt, David Stitt, John Monroe and Stephen Somers, February 5, 2013, (Litigation Release No. 22610)

Four executives from Steel Technologies, Inc. and two of their tippees have agreed to pay over $630,000 to settle SEC charges of insider trading. According to the SEC's 2011 complaint, Patrick M. Carroll, James P. Carroll, William T. Carroll, David Mark Calcutt, Christopher T. Calcutt, and David Stitt all engaged in insider trading in connection with Mitsui & Co.'s acquisition of Steel Technologies, Inc. The SEC's charges against John Monroe and Stephen Somers still remain pending.

Former Investment Adviser Sentenced to 12 Years for Misappropriating Client Assets, February 5, 2013, (Litigation Release No. 22609)

Charges were entered against Timothy J. Roth, a former investment adviser at Comprehensive Capital Mangement, Inc., sentencing him to 151 months in prison as well as ordering him to pay over $16 million in restitution to his victims. The criminal judgment stems from a 2011 SEC charge that Roth misappropriated "over $16 million worth of mutual funds from the accounts of eleven clients between 2004 and 2011."

SEC Charges We The People, Inc., of The United States and Three Individuals In Offering Fraud Scheme, February 4, 2013, (Litigation Release No. 22608)

The SEC has filed complaints against We The People, Inc. and Richard and Susan Olive, former chief of program services and former chief of finance and adminstration, respectively. The SEC alleges that the Olives preyed on senior citizens across the U.S, orchestrating a "fraudulent scheme that raised more than $75 million" through We The People, Inc. We The People and the Olives allegedly "lured investors by making various false and misleading statements regarding, among other things, the value of the products sold and the safety and security of the investments." In addition, the Olives failed to disclose to investors "indictments and regulatory sanctions issued against them for fraudulently selling similar products." The SEC seeks permanent enjoinment from future violations of the securities laws against the Olives and seeks disgorgement, pre- and post-judgment interest, as well as monetary penalties. We The People settled the SEC's charges by agreeing to a judgment that provides injunctive relief, as well as orders payment of disgorgement and the appointment "of a receiver to protect the more than $60 million of investor assets still held by We The People."

A separate complaint was filed against William Reeves, We The People's in-house counsel, for his alleged involvement in the scheme. Reeves has settled the charges by agreeing to a judgment that provides injunctive relief, orders him to pay a civil penalty to be determined at a later date, and suspends him from practicing as an attorney in front of the SEC.

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