Securities Industry Commentator by Bill Singer Esq

June 12, 2018

R.I.P. PCAOB Audits by Stephen Kohn ( Guest Blog)
FINRA Small Firm advocate and industry reformer Stephen Kohn views the PCAOB Audi as "one of the most egregious requirements stuffed down our throats that I can remember in my 22 years of small firm ownership." Kohn reports that bi-partisan Senate and House Bills are attempting to make their way to the respective floors for approval. Learn more about the proposed changes and what you can do to further the effort. FULL TEXT Bills and Congressional Contact Lists online.

Taiwo Musiliudeen Idris was charged in a criminal complaint in the United States District Court for the Western District of Pennsylvania with one count of conspiracy to commit money laundering as part of a Business Email Compromise (BEC) scheme, which  targets businesses that regularly perform wire transfer payments, as well as individuals, including the elderly and purchasers of real estate. A BEC scheme typically involve impersonating a key employee or other party in order to gain access to that person's email account and then dupe victims into wiring funds. Idris was allegedly one of 29 individuals arrested in Nigeria caught as the result of Operation Wire Wire, a coordinated law enforcement effort by the U.S. Department of Justice, U.S. Department of Homeland Security, U.S. Department of the Treasury, and the U.S. Postal Service, to disrupt Business Email Compromise (BEC) schemes. Idris allegedly conspired with Ismail Shitu, Nathanael Nyamekye, Adnan Ibrahim, and Akintayo Bolorunduro to launder over $411,000 in fraudulently obtained real estate settlement proceeds from victimized sellers of residential property in Maryland, along with their real estate company, and the settlement company. Shitu, Ibrahim, and Bolorunduro pleaded guilty to conspiracy to commit money laundering. Bolorunduro was sentenced to 63 months' imprisonment. 

In the Matter of Play La Inc. and Titan Trading Analytics, Inc. (Order Regarding Service and Postponing Hearing, Admin. Proc. Rul. Rel. No. 5788; Admin. Proc. File No. 3-18492  / June 11, 2018)
SEC Chief Administrative Law Judge Brenda P. Murray considered the manner of service on a British Virgin Islands corporation of an order instituting proceedings ("OIP:). In part the ALJ found that:

On June 7, 2018, the Division of Enforcement submitted a declaration regarding service of the OIP on Respondents. Play La Inc. is a British Virgin Islands corporation. The Division sent the OIP to Play La by UPS. Delivery was attempted, but the package was refused on May 25, 2018. This attempted service is not one of the methods authorized for international service by 17 C.F.R. § 201.141(a)(2)(iv). It fails under (iv)(A) because attempted delivery is only effective when the OIP is sent by "U.S. Postal Service certified, registered, or Express Mail." See id. § 201.141(a)(2)(ii). It does not satisfy (iv)(B) because the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents does not "affirmatively authorize[] service by mail"-it merely does not interfere with the freedom to serve process through postal channels. Water Splash, Inc. v. Menon, 137 S. Ct. 1504, 1513 (2017); see Brockmeyer v. May, 383 F.3d 798, 804 (9th Cir. 2004) (holding that service by mail is not an "internationally agreed means reasonably calculated to give notice, such as those means authorized by the Hague Convention"). It does not qualify under (iv)(C) because there is no evidence this method is "prescribed by" Virgin Islands law and there was no 2 letter rogatory or "delivery." Finally, (iv)(D) is not satisfied because there was no order by the Commission or hearing officer authorizing this method.1 The Division should attempt to serve Play La by one of the methods in Rule 141(a)(2)(iv)(A)-(D). 

SEC Obtains Emergency Order Halting Securities Offering Scheme (DOJ Litigation Release No. 24162)
The SEC filed a Complaint in the United States District Court for the Southern District of Florida charging Dragon-Click Corp, Isaac Grossman, Adriana Grossman and Dragon Management, LLC with violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and 10b-5(c) thereunder, and Dragon-Click Corp and Isaac Grossman with additional violations of Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder. The Complaint alleges that Dragon-Click Corp, its president Isaac Grossman, his wife Adriana Grossman, and her unregistered investment adviser Dragon Management, LLC with an ongoing fraudulent offering of Dragon-Click stock and membership interests in Dragon Partners, LLC. The Grossmans allegedly misused at least $1.3 million in investor funds to pay their personal living expenses and to fund their lifestyle, which included funding Isaac Grossman's gambling habits as well as the purchase of luxury vehicles and jewelry. The Court ordered a halt to the alleged ongoing fraud and approved an emergency asset freeze. READ the FULL TEXT SEC Complaint