The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
September 18, 2018
Motherhood and Humble Pie: Remarks before the Cato Institute's FinTech Unbound Conference (Speech by SEC Commissioner Hester Peirce)
https://www.sec.gov/news/speech/speech-peirce-091218
https://www.sec.gov/news/speech/speech-peirce-091218
Commissioner Peirce discusses her dissent from the SEC's decision to reject a bitcoin-related exchange-traded product as announced in Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Order Setting Aside Action by Delegated Authority and Disapproving a Proposed Rule Change, as Modified by Amendments No. 1 and 2, to List and Trade Shares of the Winklevoss Bitcoin Trust (SEC (Release No. 34-83723; File No. SR-BatsBZX-2016-30)) Commissioner Perice's Dissent https://www.sec.gov/news/public-statement/peirce-dissent-34-83723
https://www.sec.gov/rules/other/2018/34-83723.pdf In part, Peirce cogently stakes out her position with this observation:
The focus on the lack of regulation of cryptocurrencies particularly troubled me. What authority do we have to require that assets underlying securities be regulated as if they were securities? Even if we had this authority, private markets can and do regulate themselves. The crypto community includes lots of people who are very willing to speak up, criticize one another, and bring to light technological, corporate governance, and other perceived weaknesses in cryptocurrencies.[14] Although not formal regulation, this kind of market discipline can be valuable in identifying problems. In addition to this self-policing, there have been discussions about setting up self-regulatory organizations.[15] The Commission should not default to a demand that the crypto markets be subject to comprehensive government regulation as a precondition to allowing products linked to those markets to be traded in markets that we regulate.
GUEST BLOG: A Tale of Two Tables by Aegis J. Frumento Esq (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/4191/frumento-lehman/
http://www.brokeandbroker.com/4191/frumento-lehman/
If the truth were known, many of these uber finance bros would to be eating at Forlini's -- while being prosecuted! I know they won't be, but I still wonder if they feel uncomfortable and disconcerted, even a little. Do they worry, as they rate each other's tables, that the weight of student loans is preventing millennials from starting families and buying homes? Or that wage earners and nations alike can only get by on borrowed money? Or that almost half of corporate debt is barely better than junk-rated? Including that of most of the companies that produce the cheap fracked oil we depend on, but who can't seem to turn a profit? Or that every single bit of it rides on interest rates that have nowhere to go but up?
Orders Vacating Investment Adviser, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars (SEC Orders)
At its discretion, the SEC vacated several Orders to the extent that each had prohibited a respondent from associating with such organizations as an investment adviser, municipal securities dealer, municipal advisor, transfer agent, and/or nationally recognized statistical rating organization. The vacaturs were prompted by the SEC's determination that each had been imposed based solely on conduct occurring prior to July 22, 2010, the effective date of the Dodd-Frank Wall Street Reform and Consumer Protection Act. See Bartko v. SEC, 845 F.3d 1217, 1225 (D.C. Cir. 2017); Commission Statement Regarding Decision in Bartko v. SEC (Feb. 23, 2017), available at
https://www.sec.gov/news/statement/commission-statement-regarding-bartko-v-sec.html.
Also read:
- SEC Will Not Appeal Bartko And Posts Online Form For Reversing Collateral Bars (BrokeAndBroker.com Blog, February 24, 2017)
- SEC Hit By Wave Of Petitions For Removal of Post-Bartko Collateral Bars (BrokeAndBroker.com Blog, February 3, 2017)
- Collateral Bars Set Aside In Dramatic Bartko Victory (BrokeAndBroker.com Blog, January 18, 2017)
| 34-84159 | Sep. 17, 2018 | Mark Steven Berg (Order Vacating Investment Adviser, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) |
| 34-84157 | Sep. 17, 2018 | James R. Holdman (Order Vacating Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Orgnaization Bars) Other Release No.: IA-5028 |
| 34-84156 | Sep. 17, 2018 | Benjamin R. Daniels (Order Vacating Investment Adviser, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) |
| 34-84155 | Sep. 17, 2018 | Stephen M. Strauss (Order Vacating Investment Adviser, Municipal Securities Dealer, and Transfer Agent Bars) |
| 34-84154 | Sep. 17, 2018 | Charles M. Vaughn (Order Vacating Investment Adviser, Municipal Securities Dealer, and Transfer Agent Bars) |
| 34-84153 | Sep. 17, 2018 | Charles Mark Hall (Order Vacating Investment Adviser, Municipal Securities Dealer, and Transfer Agent Bars) |
| 34-84152 | Sep. 17, 2018 | Scott D. Farah (Order Vacating Investment Adviser, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) |
| 34-84151 | Sep. 17, 2018 | Fabrizio Neves (Order Vacating Investment Adviser, Municipal Securities Dealer, and Transfer Agent Bars) |
| 34-84150 | Sep. 17, 2018 | Behrooz Sarafraz (Order Vacating Investment Adviser, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) |
| 34-84149 | Sep. 17, 2018 | Enrica Cotellessa-Pitz (Order Vacating Municpal Securities Dealer and Transfer Agent Bars) Other Release No.: IA-5024 |
| 34-84148 | Sep. 17, 2018 | David Gengler (Order Vacating Investment Adviser, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) |
| 34-84146 | Sep. 17, 2018 | Paul T. Mannion, Jr. and Andrew S. Reckles (Order Vacating Municipal Securities Dealer and Transfer Agent Bars) Other Release Nos.: IA-5023, IC-33232 |
| 34-84145 | Sep. 17, 2018 | Phillip Dennis Murphy (Order Vacating Municipal Securities Dealer and Transfer Agent Bars) Other Release No.: IA-5022 |
| 34-84144 | Sep. 17, 2018 | Nova Dean Pack, Esq. (Order Vacating Investment Adviser, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) |
| 33-10549 | Sep. 17, 2018 | Wing F. Chau (Order Vacating Broker, Dealer, Municipal Securities Dealer, and Transfer Agent Bars) Other Release Nos.: IA-5032, IC-33236 |
| 33-10548 | Sep. 17, 2018 | Terry M. Deru (Order Vacating Municipal Securities Dealer and Transfer Agent Bars) Other Release Nos.: 34-84158, IA-5031, IC-33235 |
| 33-10547 | Sep. 17, 2018 | David R. Smith (Order Vacating Investment Adviser, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) Other Release Nos.: 34-84147, IC-33233 |
| IA-5030 | Sep. 17, 2018 | Evan Andrew Zarefsky (Order Vacating Broker, Dealer, Municipal Securities Dealer, and Transfer Agent Bars) |
| IA-5029 | Sep. 17, 2018 | Anthony Scolaro (Order Vacating Broker, Dealer, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) |
| IA-5027 | Sep. 17, 2018 | Matthew G. Teeple (Order Vacating Broker, Dealer, Municipal Securities Dealer, and Tranfer Agent Bars) |
| IA-5026 | Sep. 17, 2018 | James E. Putman (Order Vacating Broker, Dealer, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) |
| IA-5025 | Sep. 17, 2018 | Walter J. Clarke (Order Vacating Broker, Dealer, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) Other Release No.: IC-33234 |
| IA-5021 | Sep. 17, 2018 | Karl Motey (Order Vacating Broker, Dealer, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) |
| IA-5020 | Sep. 17, 2018 | Daniel Moshe Naeh (Order Vacating Broker, Dealer, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) |
| 34-84139 | Sep. 14, 2018 | Charles M. Raspa (Order Vacating Investment Adviser, Municipal Securities Dealer, and Transfer Agent Bars) |
| 34-84138 | Sep. 14, 2018 | Jose Luis Luna (Order Vacating Investment Adviser, Municipal Securities Dealer, and Transfer Agent Bars) |
| 34-84137 | Sep. 14, 2018 | Brian Scott Zwerner (Order Vacating Municipal Securities Dealer, Municipal Advisor, Tranfer Agent, and Nationally Recognized Statistical Rating Organization Bars) Other Release No.: IA-5017 |
| 34-84136 | Sep. 14, 2018 | Charles C. Slowey, Jr. (Order Vacating Investment Adviser, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) |
| 34-84135 | Sep. 14, 2018 | Frank R. Peperno (Order Vacating Investment Adviser, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) Other Release No.: IA-5016 |
| 34-84134 | Sep. 14, 2018 | Matthew Crisp (Order Vacating Broker, Dealer, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) Other Release Nos.: IA-5015, IC-33231 |
| 34-84133 | Sep. 14, 2018 | John J. Bravata and Antonio M. Bravata (Order Vacating Investment Adviser, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) Other Release No.: IA-5014 |
| 34-84132 | Sep. 14, 2018 | Matthew Adam Rothman (Order Vacating Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) Other Release No.: IA-5013 |
| 34-84129 | Sep. 14, 2018 | Jay L. Lebouef (Order Vacating Investment Adviser, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) |
| 34-84128 | Sep. 14, 2018 | Edward L. Maggiacomo, Jr. (Order Vacating Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) Other Release Nos.: IA-5011, IC-33229 |
| IA-5019 | Sep. 14, 2018 | Douglas F. Whitman (Order Vacating Broker, Dealer, Municipal Securities Dealer, and Transfer Agent Bars) |
| IA-5018 | Sep. 14, 2018 | I. Joseph Massoud (Order Vacating Broker, Dealer, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) |
| IA-5012 | Sep. 14, 2018 | Frances M. Guggino a/k/a Frances Favata (Order Vacating Broker, Dealer, Municipal Securities Dealer, Municipal Advisor, Transfer Agent, and Nationally Recognized Statistical Rating Organization Bars) Other Release No.: IC-33230 |
Former Officer Of Cocoa Trading Company Sentenced To 30 Months In Prison For $350 Million Fraud (DOJ Release)
https://www.justice.gov/usao-sdny/pr/former-officer-cocoa-trading-company-sentenced-30-months-prison-350-million-fraud
From at least 2014 through at least December 2016, closely-held, family-run cocoa commodity trading company Transmar Commodity Group Ltd. maintained a credit facility with banks of between $250 million to about $400 million, which was secured and maintained through misrepresentations about the company's finances by Peter B. Johnson, Peter G. Johnson (Vice President of Finance), Thomas Reich, and others. The fraud utilized the submission of periodic borrowing base reports that overstated eligible collateral. By the time Transmar owed about $360 million to the lending banks, the fraud had been discovered and the company filed for bankruptcy in December 2016. Peter B. Johnson pled guilty in the United States District Court for the Southern District of New Jersey to one count of conspiracy to commit bank fraud and wire fraud affecting a financial institution and was sentenced to 30 months in prison plus two two years of supervised release, and ordered to forfeit $1,790,000. Peter G. Johnson was sentenced to three years in prison; and Thomas Reich is awaiting sentencing.
SEC Charges Former Owner of Investment Education Franchise with Misleading Investors (SEC Litigation Release No. 24270)
https://www.sec.gov/litigation/litreleases/2018/lr24270.htm
https://www.sec.gov/litigation/litreleases/2018/lr24270.htm
In a Complaint filed in the United States District Court for the Northern District of Texas, the SEC charged Thomas J. Caufiled, the former owner of a Texas-based investment education franchise, with violations of the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, as well as the registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933. Allegedly, Caufield fraudulently marketed high-yield promissory notes to over 40 investors, who invested over $6 million. Caufield purportedly misled investors about the franchise's bleak financial condition, used new investor money to repay earlier investors a la Ponzi, and falsely claimed that investors' notes were secured by assets. Without admitting or denying the allegations in the SEC's complaint, Thomas J. Caufield consented to the entry of a final judgment that permanently restrains and enjoins him from violating these provisions, and from engaging in certain future activities in connection with the purchase, offer and sale of securities. The final judgment orders disgorgement of $614,815.14 plus prejudgment interest of $126,032.11, both of which will be deemed satisfied by proceeds repaid to certain investors from Caufield's 2018 sale of the franchise. Caufield also agreed to a $160,000 civil penalty and will be barred from further association with certain regulated entities.
READ the FULL TEXT SEC Complaint https://www.sec.gov/litigation/complaints/2018/comp24270.pdfRhode Island Woman Convicted at Trial Following Her Involvement in International Lottery Fraud Scheme (DOJ Release)
https://www.justice.gov/opa/pr/rhode-island-woman-convicted-trial-following-her-involvement-international-lottery-fraud
https://www.justice.gov/opa/pr/rhode-island-woman-convicted-trial-following-her-involvement-international-lottery-fraud
Following a week-long jury trial in the United States District Court for the District of North Dakota, Melinda Bulgin was convicted on 15 counts of conspiracy and substantive mail fraud and wire fraud charges, as well as one count of money laundering conspiracy. Bulgin worked with members of a Jamaican lottery fraud conspiracy in the United States and Jamaica, and had multiple roles in the scheme, which targeted victims over the age of 55 with promises that they had won large cash prizes and cars, but would need first to pay taxes and fees. Conspirators identified themselves as FBI, IRS or other trusted authorities, who falsely confirmed that the prize winnings were real. Some victims lost their savings, their life insurance and their homes before running out of money and turning to public or family assistance. Victims lost anywhere from $200 to more than $100,000. In addition to Bulgin, 14 other defendants from Jamaica and the United States were also indicted.