Securities Industry Commentator by Bill Singer Esq

July 9, 2018
After a four-week trial, former hedge fund manager Vitaly Korchevsky, and securities trader Vladislav Khalupsky were convicted in the United States District Court for the Eastern District of New York on conspiracy to commit wire fraud, conspiracy to commit securities fraud and computer intrusion, conspiracy to commit money laundering and two counts of securities fraud in connection with their roles in an international scheme to hack into Marketwired L.P., PR Newswire Association LLC, and Business Wire, and steal yet-to-be published press releases containing non-public financial information that included, among hundreds of others: Align Technology Inc.; CA Technologies; Caterpillar Inc.; Hewlett Packard; Home Depot; Panera Bread Co.; and Verisign Inc. The trading produced about $30 million in illegal profits.  

Former CEO and CFO of ITT Barred and Ordered to Pay Penalties (SEC Press Release 2018-129)
Former ITT Educational Services Inc.CEO Kevin Modany and former CFO Daniel Fitzpatrick settled charges by the SEC, without admitting or denying the allegations, that they had fraudulently concealed the poor performance and looming financial impact of two student loan programs that ITT financially guaranteed.  Pursuant to the settlement, Modany and Fitzpatrick are barred from serving as officers and directors of public companies for five years, and are respectively ordered to pay penalties of $200,000 and $100,000, respectively. Modany and Fitzpatrick also agreed to be suspended from appearing and practicing before the SEC as accountants with permission to apply for reinstatement after five years.

Morgan Stanley Broker Wins Expungement After Firm Settled With Customer ( Blog)
Among any group of litigators in any industry is an unwritten book about lawyers and law firms that we somewhat derogatorily refer to as "settlers." No . . . we're not talking about the Wild West and those who trekked by wagon train. We're talking about folks who cave in after giving you the impression that they will fight to the bitter end. If the settler is part of the Defense Bar, we often say that dealing with such a lawyer or law firm is akin to backing up a Brinks truck and loading it up. If we're referring to the Claimant Bar, we often jokingly characterize such settlers as lawyers or law firms who turn a $1 million case into a $10,000 settlement. In order to get good settlements for your clients, you need to develop the reputation of going to the mat and to verdict. You need to be known as someone who is willing to try a case to the proverbial bitter end. You don't need to win the case but you need to leave your opponent coughing up blood and with sore ribs so that your opponent is not all that crazy for a re-match. In a recent FINRA public customer arbitration, Morgan Stanley settled with the claimants. It may have been a cheap price to pay and a wonderful result for the brokerage firm. Then again, when you read the arbitrators' analysis of the customers' case, you sort of wonder whether Morgan Stanley just doesn't have the stomach for a game of high-stakes litigation poker. In the bare knuckle, no-holds-barred world of Wall Street, you sure as hell better earn the rep as a Street Fightin' Man!
In a Complaint filed in the United States District Court for the District of Maryland, the SEC charged The Owings Group LLC, three Owings-related entities and Mark Johnson with violating Section 10(b) of the Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder and Section 17(a) of the Securities Act of 1933 ("Securities Act") and charges Johnson and Owings Capital Funds with violating Section 206(4) of the Investment Advisers Act of 1940 ("Advisers Act") and Rule 206(4)-8 thereunder. Also charged are Kevin Drost, Brian Koslow and David Waltzer with violating Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder and Section 17(a)(2) of the Securities Act and charges Drost, Koslow and Waltzer with aiding and abetting violations of Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c) thereunder and Section 17(a)(1) and (3) of the Securities Act. The complaint charges all defendants with violating the registration provisions of Sections 5(a) and (c) of the Securities Act and charges Johnson, Drost, Koslow and Waltzer with acting as unregistered broker-dealers in violation of Section 15(a) of the Exchange Act. The complaint also charges Johnson as a control person pursuant to Sections 20(a) of the Exchange Act and for committing violations by or through others pursuant to Section 20(b) of the Exchange Act for violations of Sections 15(a) and 10(b) of the Exchange Act and Rule 10b-5(b) thereunder and charges Johnson with aiding and abetting violations of Section 206(4) and Rule 206(4)-8 of the Advisers Act. The Complaint alleges that from 2013 until at least 2014, convicted felon Johnson orchestrated and operated a fraudulent investment scheme with the assistance of salesmen Drost, Koslow and Waltzer, in which investors were alleged defrauded into believing that Owings was successfully bringing companies public using a quick and efficient streamlined approach, called the Initial Registration Program ("IRP"). READ the FULL TEXT SEC Complaint