Securities Industry Commentator by Bill Singer Esq

March 19, 2018

North Suburban Trader Facing Federal Criminal Charge for Allegedly Defrauding Investors
Richard D. Carter was a trader at Blue Guru Trading LLC , which claimed to specialize in trading futures contracts. Beginning in June 2016 and running to January 2018, Carter allegedly prepared fraudulent documentations showing that the firm's proprietary trading model was profitable.At a time when Blue Guru held about $9,000 in investor funds, Carter's fabricated statements showed over $6.1 million. Carter was charged in a federal criminal complaint with one count of wire fraud in connection with misappropriating at least $750,000. Previously, the Commodity Futures Trading Commission filed a civil enforcement lawsuit against Carter.

In the Matter of Rosalind Herman (Order, Admin. Proc. Rul. Rel. No. 5650, Admin. Proc. File No. 3-17828 / March 16, 2018)
In a follow-on proceeding of United States v. Herman, No. 1:12-cr-10015 (D. Mass. Aug. 1, 2016), ECF Nos. 299-300, aff'd, 848 F.3d 55 (1st Cir. 2017), cert. denied, 137 S. Ct. 1603 (2017), in which Rosalind Herman was convicted of securities and wire fraud and other crimes, the SEC Division of Enforcement filed a motion for summary disposition. Respondent Herman filed on March 2, 2018, a "Motion for Assistance of Counsel at Administrative Proceedings," in which she requested the SEC Administrative Law Judge to appoint counsel to assist her in the SEC proceeding. In denying that request, the ALJ states in part that:

the Commission does not appoint counsel to represent respondents in administrative proceedings. 

Respondent Herman cites Jenkins v. McKeithen, 395 U.S. 411 (1969), but it is unclear how this precedent supports her contention that she has a constitutional right to appointed counsel. To the contrary, it is well established that there is no such right in a Commission administrative proceeding, and the Commission does not appoint counsel to represent respondents. See Boruski v. S.E.C., 340 F.2d 991, 992 (2d Cir. 1965) ("We know of no requirement that counsel be appointed in these administrative proceedings. The [Commission] orders [revoking respondent's broker-dealer registration and denying his application for investment registration], although serious in their effect, are not criminal judgments.") . . .

FINRA Arbitrators Deem CRD / U5 Disclosures Defamatory 
( Blog)
It's one of the most common questions asked of industry lawyers when approached by an angry former employee looking to sue the former employer firm: Can I win? Hand in hand with such a preliminary query are the questions of how much is my case worth and is there anything you can do about that crap they posted on my Form U5? A recent FINRA Arbitration answers some of those nagging questions. Whether or not the answers are satisfactory depends on a number of factors. READ

Woman Sentenced for $1.3 Million Investment Frauds (DOJ Press Release)
Grenetta Wells was the Chief Operating Officer of Micro-Enterprise Management Group (MEMG), which allegedly helped poor people in developing countries by providing small, short-term loans to start or expand existing businesses by working with a network of established micro-finance institutions. Wells worked with Terry Wayne Millender, the former senior pastor of Victorious Life Church in Alexandria and Chief Executive Officer of MEMG, and his wife Brenda Millender, who was a founding member of MEMG to solicit investors. After guaranteeing investors rates of return and promising the safety of loan principal, the Wells and the Millenders used the funds to conduct risky trading on the foreign exchange currency market and day trading by Wells. Wells pled guilty to conspiracy to commit wire fraud and was sentenced to 30 months in prison and ordered to pay $1.3 million in restitution. Following their convictions, the Millenders are awaiting sentencing.

Facebook posting from prison leads to new charges against federal inmate (DOJ Press Release)
On January 5, 2018, Joe L. Fletcher arrived at the United States Penitentiary in Atlanta, Georgia to serve his sentence for drug trafficking and illegal possession of a firearm. On January 27, 2018, he posted a 49-minute video to his public Facebook page. The recording was of a phone conversation Fletcher was having with family members and friends. During the conversation, he allegedly bragged that he could possess a phone in any prison and that he was enjoying his time inside USP Atlanta. As set forth in part in the DOJ Press Release:

After calling himself "a motivational speaker for gangsters," Fletcher then claimed credit for committing a murder in 2010 in Akron, Ohio.  The day after the Facebook posting, corrections officers searched Fletcher's cell and found two concealed cell phones plugged into the ceiling light fixtures. 

On March 16, 2018, Fletcher was indicted for illegally possessing a communication device inside a federal prison.