Friday, April 5, 2013

SEC Litigation Releases: Week in Review

SEC Obtains Final Judgment Against Former Chief Investment Officer of Gibraltar Asset Management Group, LLC, April 3, 2013, (Litigation Release No. 22665)

A final judgment was entered against Maurice G. Taylor in relation to charges that he collaborated with Garfield M. Taylor, Benjamin C. Dalley, Randolph M. Taylor, William B. Mitchell, and Jeffrey A. King in a "multi-million dollar Washington-area Ponzi scheme operated through Gibraltar Asset Management Group, LLC and Garfield Taylor, Inc." The judgment orders him to pay over $514,000 in disgorgement and prejudgment interest and permanently enjoins him from future violations of the Securities Act.

The SEC's case remains pending against defendants Garfield M. Taylor, Jeffrey A. King, GTI, Gibraltar, and The King Group, LLC.

Father and Son Found Guilty in Real Estate Investment Fraud, April 1, 2013, (Litigation Release No. 22664)

Last week, John J. Bravata was convicted on "one count of conspiracy and 14 counts of wire fraud" and his son, Antonio M. Bravata was convicted on "one count of conspiracy to commit wire fraud" for their role "in the fraudulent BBC Equities securities offering, which raised more than $50 million from...investors by offering them membership interests in a purported real estate investment fund with promised annual returns of 8 to 12 percent." Richard J. Trabulsy, John Bravata's partner, "previously pleaded guilty in the same action."

The criminal charges arose from an SEC civil action filed in 2009. "The SEC's action was stayed during the parallel criminal case, and remains pending."

Foreign Traders Agree to Pay $3.3 Million to Settle Charges in Nexen Insider Trading Case, April 1, 2013, (Litigation Release No. 22663)

On March 29, 2013, Ren Feng and his wife, Zeng Huiyu, agreed to settle SEC charges that "they loaded up on the securities of Nexen Inc. while in possession of nonpublic information about an impending announcement that the company was being acquired by China-based CNOOC Ltd." According to the complaint (opens to PDF), Ren and Zeng along with "Ren's private investment company CT Prime Assets Limited and four of Zeng's brokerage customers on whose behalf she traded" made over $2.3 million in illicit profits from the trading. Ren, Zeng, CT Prime, and Zeng's brokerage customers, Wong Chi Yu and her company Giant East Investments Limited, Wang Wei, and Wang Zhi Hua have agreed to pay over $3.3 million combined in disgorgement and penalties.

District Judge Approves SEC Settlement with Sigma Capital, April 1, 2013, (Litigation Release No. 22662)

The court approved a settlement reached with Sigma Capital Management in which Sigma Capital and hedge fund affiliates, Sigma Capital Associates and S.A.C. Select Fund, "agreed to pay nearly $14 million to settle charges that [they] engaged in insider trading based on nonpublic information obtained through...analysts about the quarterly earnings of Dell and Nvidia Corporation." Last year the SEC charged several hedge fund managers and analysts "including Jon Horvath, a former analyst at Sigma Capital,...[who] agreed to a settlement in March 2013 in which he admitted liability."

"Bob" Hancher Sentenced to Over 8 Years in Prison and Ordered to Pay Restitution of Over $ 3.1 Million, April 1, 2013, (Litigation Release No. 22661)

Last week, Lowell Gene "Bob" Hancher was sentenced "to 97 months in prison on one count of wire fraud and one count of securities and commodities fraud and pay $3,139,232 in restitution to his victims." In January 2011, the SEC filed an action against Hancher for allegedly "misappropriating funds from [Cycle Country Accessories Corporation] and engaging in a manipulative stock trading scheme involving shares of a third company." The $3.1 million Hancher has been ordered to pay includes "funds that [he] stole from investors in a fraudulent stock offering he led on behalf of Scott Contracting, Inc.,...and funds that [he] misappropriated from Cycle Country."

Previously, Hancher was permanently enjoined from violating various provisions of the securities laws, ordered to pay over $3.1 million in disgorgement, prejudgment interest, and fees, as well as banned "from serving as an officer or director of a public company or participating in a penny stock offering."

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