Securities Industry Commentator by Bill Singer Esq

September 10, 2018

SEC Charges Microcap Fraudsters for Roles in Lucrative Market Manipulation Schemes (SEC Release 2018-182)
In a Complaint filed in the United States District Court for the Southern District of New York, the SEC charged Barry Honig, John Stetson, Michael Brauser, John R. O'Rourke III, Mark Groussman, Frost, Elliot Maza, Robert Ladd, Brian Keller, John H. Ford, Alpha Capital Anstalt, ATG Capital LLC, GRQ Consultants Inc., HS Contrarian Investments LLC, Grander Holdings Inc., Melechdavid Inc., OPKO Health Inc., Frost Gamma Investments Trust, Southern Biotech Inc., and Stetson Capital Investments Inc. with violating antifraud, beneficial ownership disclosure, and registration provisions of the federal securities laws and seeks monetary and equitable relief.. The Complaint alleges that the Defendants generated over $27 million from unlawful stock sales  from 2013 to 2018 via their use of pump-and-dump schemes. READ the FULL TEXT COMPLAINT

Attorney in SEC Enforcement Action Indicted for Penny Stock Fraud (SEC Litigation Release No. 24261)
In a Complaint filed in the United States District Court for the Eastern District of New York, the SEC alleged that attorney Christopher K. Davies (whose license to practice law has been suspended) had engaged in a pump-and-dump scheme that included his recruitment of strawmen to serve as CEOs of American Transportation Holdings Inc. (ATHI), which was in fact a shell company with no operations.  Allegedly,Davies was responsible for misleading statements about purported business ventures that ranged from home health care and gold trading to transportation services and game development; and he allegedly orchestrated a series of press releases falsely claiming that the company had entered into agreements with a National Indoor Football League.  As an alleged response to the fraud, ATHI's market capitalization rose to nearly $3 billion. READ the FULL TEXT SEC COMPLAINT
Davis was indicted in the United States District Court for the Eastern District of New York on one count each of securities fraud, conspiracy to commit securities fraud, wire fraud, and aggravated identity theft in connection with a market manipulation scheme.  
For Details About Davies' Background:
In a Fourth Superseding Indictment filed in the United States District Court for the Southern District of New York, Andrei Tyurin  a/k/a "Andrei Tiurin" was charged with one count each of conspiracy to commit computer hacking, wire fraud, conspiracy to commit securities fraud, conspiracy to violate the Unlawful Internet Gambling Enforcement Act, conspiracy to commit wire fraud and bank fraud, and aggravated identity theft; and four counts of computer hacking. The charges are in connection with allegations that Tyruin participated in a massive computer hacking campaign targeting U.S. financial institutions, brokerage firms, financial news publishers, and other American companies.  These hacks included the largest theft of customer data from a U.S. financial institution in history.  Tyruin allegedly enaged in securities market manipulation, illegal online gambling, and payment processing fraud schemes with Gery Shalon, a/k/a "Garri Shalelashvili," a/k/a "Gabriel," a/k/a "Gabi," a/k/a "Phillipe Mousset," a/k/a "Christopher Engeham"; Joshua Samuel Aaron, a/k/a "Mike Shields"; and Ziv Orenstein, a/k/a "Aviv Stein," a/k/a "John Avery,"  Shalon, Aaron, Orenstein, and their co-conspirators. READ the FULL TEXT Fourth Superseding Indictment
As alleged in part in the DOJ Release:

From approximately 2012 to mid-2015, TYURIN engaged in an extensive computer hacking campaign targeting financial institutions, brokerage firms, and financial news publishers in the United States, including the theft of personal information of over 100 million customers of the victim companies.  TYURIN's hack of one financial institution headquartered in Manhattan resulted in the theft of personal information of over 80 million customers, making it the largest theft of customer data from a U.S. financial institution in history.  TYURIN engaged in these crimes at the direction of Shalon and in furtherance of other criminal schemes overseen and operated by Shalon and his co-conspirators, including securities fraud schemes in the United States.  For example, in an effort artificially to inflate the price of certain stocks publicly traded in the United States, Shalon and his co-conspirators marketed the stocks in a deceptive and misleading manner to customers of the victim companies whose contact information TYURIN stole in the intrusions.

In addition to the U.S. financial sector hacks, TYURIN also conducted cyberattacks against numerous U.S. and foreign companies in furtherance of various criminal enterprises operated by Shalon and his co-conspirators, including unlawful internet gambling businesses and international payment processors.  Nearly all of these illegal businesses, like the securities market manipulation schemes, exploited the fruits of TYURIN's computer hacking campaigns.  Through these various criminal schemes, TYURIN, Shalon, and their co-conspirators obtained hundreds of millions of dollars in illicit proceeds.

Florida Man Pleads Guilty To $2 Million Insider Trading Scheme Involving Confidential Information Misappropriated From An Investment Bank (DOJ Release)
Roberto Rodriguez pled guilty in the United States District Court  for the Southern District of New York to one count of conspiracy to commit securities fraud and fraud in connection with a tender offer. Rodriguez, Michael Siva, Rodolfo Sablon, and Jeffrey Rogiers were charged in a 54-count Indictment for their involvement in three insider trading schemes, all stemming from securities trades based on information misappropriated by Daniel Rivas, who was employed as a technology consultant in the Research and Capital Markets Technology Group of an investment bank.  Rivas. James Moodhe, Sablon, and Rogiers, also pled guilty.  Rodriguez and Sablon, planned to use the trading proceeds as seed money to start their own investment fund, intending to give an ownership stake to Rivas. 

Stockbroker An Unintended Bystander Victim In Drive-By Customer Complaint ( Blog)
On Wall Street, not every angry communication from every unhappy customer is supposed to be viewed as a formal Complaint against a stockbroker. Sometimes customers are upset about with the policies of their brokerage firm. The customers don't like the commission schedule or the amount of a margin charge or the 20 minute wait on the customer service line or the frequent outages on the trading platform. It's not always a sales practice issue involving misconduct by a stockbroker. Unfortunately, the way things get handled at Wall Street's compliance departments is to take the path of least resistance and deem any expression of dissatisfaction from any customer as a reportable Complaint, which gets disclosed on the record of any stockbroker who may have had any contact with the sender. In a recent FINRA expungement arbitration, we witness how an assembly line approach to regulation and compliance imposes an unfair burden on a stockbroker who was merely following her firm's orders. It all takes on the appearance of a drive-by shooting with the stockbroker an unintended  bystander victim.