Securities Industry Commentator by Bill Singer Esq

July 30, 2018

Recidivist Securities Fraudster Charged with Multi-million Dollar Stock Manipulation Scheme (DOJ Press Release)
Former stockbroker Howard M. Appel was charged today in a criminal Information in the United States District Court for the Eastern District of Pennsylvania with one count of conspiracy to commit securities fraud. Appel purportedly had two prior securities fraud-related convictions. Parallel civil enforcement proceeding were filed by the SEC. SEC Charges Recidivist in Stock Manipulation Scheme (SEC Release 2018-148)
READ the FULL TEXT SEC Complaint
The DOJ Press Release asserts in part that Appel had:

secretly acquired large blocks of stock in publicly traded companies, including Virtual Piggy, Inc. (ticker symbol "VPIG"), and Red Mountain Resources, Inc. (ticker symbol "RDMP"), to manipulate the market in those stocks.  As alleged, Appel acquired title to the shares in the names of nominees in order to hide his ownership block from investors and made between $3,000,000 and $4,000,000 from his scheme.  Using nominee accounts was necessary because he previously lost his license and was barred by the Financial Industry Regulatory Authority ("FINRA") from selling securities or associating with any member firm.

The information further alleges that Appel and his co-schemers manipulated the stock price by taking numerous actions that were hidden from investors and security regulators including: working as a paid "consultant" to recruit investors, raise capital, and get the companies running; engaging in coordinated buying and selling, which he closely monitored, to raise the share price; and preventing co-conspirators from selling their shares without his permission.  The information further alleges that Appel encouraged unwitting investors to buy large blocks of stock by touting the companies' supposed impending success while, at the same time, selling off shares from his nominee accounts-sometimes to those same investors.  Appel also allegedly traded on inside information that he obtained as a result of his "consulting" work for the companies, including the status of the companies' efforts to get listed on NASDAQ.  As alleged, none of these facts was disclosed to the investing public in any of the public filings the company and Appel were required to make.

Justice Department Announces Resolution With Swiss Financial And Asset Management Firm Mirelis Holding S.A. (DOJ Press Release)
According to the terms of the Non-Prosecution Agreement ("NPA"), Mirelis Holding S.A. (formerly known as Mirelis InvestTrust S.A.) agrees to cooperate in any related criminal or civil proceedings, demonstrate its implementation of controls to stop misconduct involving undeclared U.S. accounts, and pay $10.245 million to the United States, in return for the Department's agreement not to prosecute this entity for tax-related criminal offenses. DOJ alleged that since Mirelis began its operations, the company was aware that its U.S. taxpayer-clients had a legal duty to report to the IRS, pay taxes on the basis of, all of the income, including income earned in accounts at Mirelis.  Notwithstanding, Mirelis opened, maintained, and serviced accounts for U.S. taxpayer-clients where Mirelis knew or had reason to know that the U.S. taxpayer-clients were not complying with these obligations or were using their accounts outside of the United States to evade U.S. taxes and reporting requirements, filing false tax returns with the IRS, and/or concealing assets maintained outside of the United States from the IRS (hereinafter, "undeclared assets"). DOJ alleged that Mirelis facilitated the concealment of U.S. taxpayer-clients' undeclared accounts through the closure of accounts and transfer of account funds (in whole or in part and temporarily or permanently) to other accounts held at Mirelis where the named account holder and/or beneficial owner were not U.S. persons and may or may not have been related to the U.S. taxpayer-client. READ the FULL TEXT Non-Prosecution Agreement

The 93 Year Old Customer With Dementia, The Guardian, The Stockbroker, And The Compliance Officer ( Blog)
Today's Blog offers a chilling a tale about misconduct on Wall Street. We got a 93-year-old retiree with dementia and a court-appointed guardian. During a four-year period, we got a stockbroker who racks up 3,500 transactions, $723,000 in trading losses, and $735,000 in commissions and markups. We got a $470,000 settlement and the stockbroker gets barred from the industry. Did anyone at the broker-dealer notice the activity in the elderly client's accounts? Did anyone at the broker-dealer do anything about it?