Securities Industry Commentator by Bill Singer Esq WEEK IN REVIEW
December 23, 2017
http://www.rrbdlaw.com/3734/securities-industry-commentator/
In today's
Securities Industry Commentator feed:
SEC
Charges Operators of $1.2 Billion Ponzi Scheme Targeting Main Street Investors
(SEC Press Release 2017-235) According to an SEC Complaint filed in the United
States District Court for the Southern District of Florida, Robert H. Shapiro
and a group of unregistered investment companies called the Woodbridge Group of
Companies LLC engaged in a $1.2 billion Ponzi scheme that defrauded over 8,400
investors, many of them senior citizens. READ the FULL TEXT SEC Complaint.
FINRA Fines
Raymond James Financial Services, Inc. $2 Million for Failing to Reasonably
Supervise Email Communications (FINRA Press Release) The Financial
Industry Regulatory Authority imposed a $2 million fine on member firm Raymond
James Financial Services for its alleged failure to maintain reasonably
designed supervisory systems and procedures for reviewing email communications.
READ the FULL TEXT Acceptance, Waiver and Consent settlement agreement
Has FINRA
Just Threatened To Shut Down Wall Street's Fantasy Leagues And Office Sports
Pools? (BrokeAndBroker.com Blog) A recent FINRA regulatory settlement
troubles and angers BrokeAndBroker.com Blog publisher Bill Singer, Esq. FINRA is so intent on ringing up the cash
register for fines and sending some small fry to the penalty box that the
self-regulator fails to see that hundreds of thousands of industry employee who
are in a fantasy sports league or who make a weekly wager on sports are
technically in violation of one of FINRA's most frequently enforced rules.
Among Bill's choice words for FINRA this featured settlement are hypocritical,
asinine, inane, moronic, stupid, pandering, insincere, sanctimonious,
self-righteous; specious, spurious, and glib.
Investment
Adviser Charged with Running Ponzi Scheme (SEC Litigation Release
24019) In a Complaint filed in federal court, the SEC alleged that Stephen C.
Peters, through his investment adviser firm VisionQuest Wealth Management, sold
promissory notes issued by another one of his companies, VisionQuest Capital,
to clients and other prospective investors while making false statements,
including that proceeds would be invested into revenue-producing businesses
with neither Peters nor his businesses receiving compensation. Peters allegedly
claimed that the VisionQuest Capital notes presented little or no risk of loss
and were "guaranteed." READ the FULL TEXT Complaint.
http://www.rrbdlaw.com/3732/securities-industry-commentator/
In today's Securities Industry Commentator feed:
Two Defendants Plead Guilty in Multimillion Dollar Prize Promotion Scams Targeting Elderly Victims (DOJ Press Release) In connection with their roles with two multi-million dollar prize promotion scams that defrauded many elderly victims out of over $20 million, Glen Burke and Michael Rossi entered guilty pleas in federal court. Previously, Burke had been subject to a 1998 court order in which the Federal Trade Commission had him permanently banned from telemarketing and making misrepresentations to consumers.
Former Chief Financial Officer at Publicly Traded Company Charged with Accounting and Securities Fraud Scheme (DOJ Press Release) Edward J. DiMaria, former chief financial officer for Bankrate Inc., a publicly traded financial services and marketing company, was charged in a federal Indictment. READ the FULL TEXT INDICTMENT The indictment alleges that between 2011 and 2014, DiMaria and his co-conspirators carried out a complex scheme to manipulate Bankrate's financial statements and artificially inflate Bankrate's earnings. According to the indictment, DiMaria and his co-conspirators allegedly engaged in so-called "cookie jar" or "cushion" accounting where over a million dollars in unsupported expense accruals were left on Bankrate's books and then selectively reversed in later quarters to meet earnings goals. In addition, DiMaria and his co-conspirators allegedly misrepresented certain company expenses as "deal costs" in order to artificially inflate publicly reported adjusted earnings metrics, and made materially false statements to conceal the improper accounting entries from Bankrate's auditors, shareholders and the investing public. The indictment further alleges that while Mr. DiMaria was misleading Bankrate's auditors and the public about the company's financial condition he realized millions of dollars from selling his own shares of Bankrate stock.
Arbitrators OK Raymond James Liquidation Of JTWROS Account For Broker Husband's Loan (BrokeAndBroker.com Blog) Today's BrokeAndBroker.com Blog deals with unanswered questions. We start with a fairly straightforward proposition of Raymond James wanting to be repaid the remaining balance on a loan it made to a former associated person. Fair enough. On the other hand, it seems that Raymond James is holding on for dear life to the former associated person's Joint Tenants With Right of Survivorship account, in which his wife is the other tenant. In filing its lawsuit, Raymond James named the husband as a Respondent and also named the wife as a Respondent. The wife refused to submit to FINRA arbitration. Now what? Can Raymond James essentially seize the assets in the JTWROS to satisfy the husband's debt if the wife is not subject to FINRA arbitration jurisdiction? Also, how come the wife isn't subject to FINRA jurisdiction? READ http://www.brokeandbroker.com/3733/raymond-james-jtwros/
Federal Court Orders Florida-based Mintco LLC and its Owners, Stuart Rubin and Richard Zimmerman, to Pay $340,000 in Civil Monetary Penalties for Engaging in Illegal Off-Exchange Precious Metals Transactions (CFTC Press Release) In connection with findings that Defendants had engaged in illegal off-exchange precious metals transactions and that the two individuals had also engaged in fraud, the CFTC obtained Consent Orders of Permanent Injunction against Defendants Mintco LLC and its owners Stuart Rubin and Richard Q. Zimmerman. Mintco is ordered to pay a $250,000 civil monetary penalty. Rubin and Zimmerman are each ordered to pay separate $45,000 civil monetary penalties. The three Defendants are prohibited from engaging in illegal, off-exchange precious metals transactions. A three-year trading and permanent registration ban is imposed on Rubin. In the event that Zimmerman seeks to become a CFTC-registered principal, he is required to provide pre-review promotional materials to the National Futures Association. The Orders also permanently prohibit the three Defendants from engaging in illegal, off-exchange precious metals transactions.
Bitcoin Promoter USI-Tech Hit With Emergency Order (Texas Securities Board Press Release) The Texas Securities Board entered an Emergency Cease and Desist Order against USI-Tech Limited, an overseas firm that is promising low-risk, triple-digit returns from investments tied to Bitcoin mining via Craiglist, YouTube, and other Internet activities. READ the FULL TEXT CFTC ORDER
SEC Obtains Final Judgment Against
Investment Adviser, Its Principal and Associate Who Boasted Phony Assets and
Track Record (SEC Litigation Release
24018) In Securities and Exchange Commission v. Matrix Capital Markets,
LLC, Nicholas M. Mitsakos and Courtlin L. Holt-Nguyen (SDNY,
16-CV-06395) the SEC charged Defendants with pretending to manage millions of
dollars in assets and fabricating a hypothetical portfolio of investments that
purportedly earned returns of 20 to 66 percent. According to the SEC's complaint,
Mitsakos and Matrix then stole money from the first client who invested with
them based on their misrepresentations. SDNY entered final judgments
permanently enjoining Matrix, Mitsakos and Holt-Nguyen from further violations
and ordered them to pay disgorgement of $861,163.62 plus $57,474.30 prejudgment
interest. The court also imposed an officer and director bar against Mitsakos
and ordered Holt-Nguyen to pay a $25,000 civil penalty. In separate
administrative proceedings, Mitsakos agreed to be barred from the securities
industry and from participating in penny stock offerings; Matrix agreed to be
censured; Holt-Nguyen agreed to an industry bar with the right to apply for
reentry after three years, but which permits him to continue his current employment
with an investment adviser, limiting him to providing only information
technology and administrative functions. In a parallel criminal action based on
the same conduct, Mitsakos was sentenced to a prison term of 30 months and was
ordered to pay $861,163.62 in restitution and $861,163.62 in forfeiture.
http://www.rrbdlaw.com/3730/securities-industry-commentator/
In today's
Securities Industry Commentator feed:
Jon-Jorge
Aras, Esq. joins Levan Legal, LLC.
http://levan.legal/jon-jorge-aras/
Up and coming securities-industry lawyer Jon-Jorge Aras has joined prominent
industry lawyer Richard Levan at Levan Legal, LLC http://levan.legal/about/.
Aras represents securities industry professionals and firms in enforcement
actions and investigations initiated by the United States Securities and
Exchange Commission and FINRA, among others. Aras litigates in federal and
state court, administrative forums and in arbitration and mediation settings.
Aras can be reached at jjaras@levan.legal or by phone at 484-431-0250.
Second Circuit Reinstates
BATS HFT Class Action
(BrokeAndBroker.com Blog)
After
Michael Lewis published "Flash Boys," the world awoke to a very dire
picture of high frequency trading ("HFT") and its corrosive and
corrupting influences on the so-called level playing field that Wall Street so
dearly wants to market to the public. The fact is -- and this is coming from a
35-year industry veteran -- there has never been a level playing field in the
financial markets. They want you to believe that fairy tale. You may actually
believe it. But the truth is that the cards are often marked, the wheels are
rigged, the dice loaded, and the House retains the odds (and, yes, there are
more than a few professional cheaters who make a nice living operating on the
fringe). Sorry to burst your bubble. All of which set the stage for the filing
of a number of lawsuits about the fraud perpetrated via HFT and how more than a
handful of self-regulatory organizations ("SROs") seemed to have either
looked askance or, worse, engaged in complicit behavior.
Broker Charged With Giving Special Access to IPOs for Cash Kickbacks (SEC Release) The Securities and Exchange Commission today charged Brian Hirsch with subverting allocation policies and procedures at two brokerage firms where he worked on the wealth syndicate desk. The U.S. Attorney's Office for the District of New Jersey has filed parallel criminal charges against Hirsch. Also charged in the SEC's Complaint is Hirsch's customer Joseph Spera, who allegedly made approximately $4 million in trading profits on the offering allocations he received from Hirsch. Spera allegedly paid Hirsch approximately $1 million in cash. READ the FULL TEXT SEC COMPLAINT
Georgia Real Estate
Investor Sentenced to 16 Months in Prison for Bid Rigging and Bank Fraud at
Public Foreclosure Auctions
(DOJ
Press Release)
https://www.justice.gov/opa/pr/georgia-real-estate-investor-sentenced-16-months-prison-bid-rigging-and-bank-fraud-public After a two-week federal trial, Douglas L.
Purdy was convicted of bid rigging and two counts of bank fraud. Purdy was
sentenced to 16 months in prison with three years supervised release, and
ordered pay $81,979.86 in restitution to victims. Purdy and his co-conspirators
agreed to not to compete for residential real estate at foreclosure auctions in
Forsyth County, Georgia and defrauded lender banks and homeowners via such
activity as secret "second auctions" of properties, dividing among themselves
the auction proceeds that should have gone to pay off debt vs against the
properties and, in some cases, to homeowners.
http://www.rrbdlaw.com/3728/securities-industry-commentator/
In
today's Securities Industry Commentator feed:
BREAKING
NEWS: City of Providence et al., Plaintiffs/Appellants, v. BATS Global Markets,
Inc., et al, Defendants/Appellees (Opinion, United States Court of
Appeals For the Second Circuit, No. 15‐3057-CV; December 19, 2017). The Second
Circuit vacates lower court and finds that plaintiffs sufficiently pled that
several national securities exchanges engaged in manipulative or deceptive
conduct in connection with certain products and services that the exchanges
sold to high‐frequency trading firms,
which purportedly created a two‐tiered system that favored those firms at the
plaintiffs' expense.
PIABA: NON-ATTORNEY REPRESENTATIVES ARE REAL AND GROWING "MENACE TO INVESTORS" IN FINRA ARBITRATION / NAR Firms Found to Include Individual Who Pled Guilty in Insurance Scheme and Brokers Barred from Industry; Unwary Investors Have None of the Protections of Dealing with Attorneys and Often Recover Little of Lost Funds. (PIABA Press Release) READ FULL TEXT PIABA NAR REPORT
Three Major New York Diagnostic Testing Facility Owners Charged for Their Roles in Alleged Multi-Million Dollar Health Care Fraud Scheme (DOJ Press Release) Tea Kaganovich and Ramazi Mitaishvili ( the co-owners of Sophisticated Imaging, East Coast Diagnostics, East Shore Diagnostics, East West Management and RM Global) and Syora Iskanderova aka Samira Sanders (the owner of Global Testing, Liberty Mobile Imaging, Liberty Mobile Testing, Med Tech Services and Scanwell Diagnostics) were each indicted on one count of health care fraud, two counts of making false claims to a federal agency, one count of conspiracy to pay health care kickbacks, two counts of paying health care kickbacks and four counts of money laundering. Kaganovich and Mitaishvili were also charged with one count of conspiracy to defraud the United States by obstructing the lawful functions of the IRS. Iskanderova was also charged with two counts of making false statements to federal agents.
A Little Bit Of FINRA Hypocrisy For $20,000 http://www.brokeandbroker.com/3729/finra-email-awc/ (BrokeAndBroker.com Blog) The laws
of physics don't always apply to the regulation of Wall Street. Sometimes,
things appear out of thin air and exist but then suddenly don't but then, just
as mystifying, return to our realm of existence . . . or do they? The one
constant throughout this metaphysical setting is that the Financial Industry
Regulatory Authority stands ready to impose fines. In a recent regulatory
settlement, FINRA seems to suggest that one of its small member firms had
written supervisory procedures but, then again, didn't, or, perhaps put another
way, maybe those procedures existed but were never fully compliant, but, on the
other hand, those procedures were compliant when first approved but lapsed into
non-compliance, but, oddly, it's not clear as to when things went from
compliant to non-compliant but, hey, a $20,000 fine should stop you from asking
more questions. Welcome to the world of hypocrisy.
SEC Obtains Final Judgment Against Former Boiler Room Operator (SEC
Litigation Release) The SEC obtained a judgment in Securities and Exchange
Commission v. Jason A. Wallace, (16-CV-01788 ; C.D. Cal.) , permanently
enjoining Jason A. Wallace, barring him from participating in any offering of a
penny stock, and ordering him to pay $512,048.80 in disgorgement and
prejudgment interest plus a $434,887.07 civil penalty. The SEC Litigation
Release characterizes Wallace as a "former boiler room operator charged with
participating in a fraudulent scheme to artificially inflate the per share
price of penny stocks.
http://www.rrbdlaw.com/3726/securities-industry-commentator/
In today's
Securities Industry Commentator feed:
Manhattan
U.S. Attorney Announces Charges Against President Of Park Avenue Art Gallery In
Manhattan For Defrauding Art Dealers And Collectors Of Valuable Artwork And
Millions Of Dollars / Gallery President Defrauded Art Dealers into Sending Him
Money and Artwork Worth Millions of Dollars (DOJ
Press Release) Ezra Chowaiki was charged with one count of conspiracy to commit wire fraud and one count of wire
fraud, each of which carries a maximum potential sentence of 20 years in
prison, and one count of interstate transportation of stolen goods, which
carries a maximum potential sentence of 10 years in prison. READ the FULL TEXT Criminal Complaint
Investment
Fund Manager Sentenced in Brooklyn Federal Court to 55 Months' Imprisonment for
Orchestrating Multi-Million Dollar Fraud Schemes / Defendant
Used Investors' Money to Pay for Outside Business Ventures and Personal
Expenses (DOJ Press Release)
After pleading guilty to two counts of securities fraud in connection with two
separate schemes, John R. Lakian, a manager of Capital L Financial Group, LLC
(Capital L) and Aegis Capital Fund, LLC (Aegis Capital Fund), was sentenced to 55
months' imprisonment and ordered to pay
$15,640,582.46 restitution. In February 2016, Lakian's co-defendant,
Diane Lamm, pleaded guilty and is awaiting sentencing in January 2018.
Victim
Blamed For Victimizing Victimizers In ATM Federal Appeal (BrokeAndBroker.com
Blog) Walking up to an ATM machine reminds me of the harrowing scene in the
movie "Marathon Man," when Laurence Olivier asks Dustin Hoffman:
"Is it safe?" From the second I place my bank card into the reader, I
imagine all sorts of things that are unsafe about the transaction. There could
be a skimmer on the ATM. Someone could be across the street with a telescope
trying to steal my password. The machine may be broken and I will be charged
for cash that I never got. My credit card may get stuck in the reader and I
can't retrieve it. That guy standing at the other machine may pull out a gun
and steal my money. Other than that, what's to worry about? In today's BrokeAndBroker.com
Blog we present the fascinating case of two ATM programmers who rigged the
machines to become very friendly piggy-banks. Not so much a Christmas layaway
as a takeaway but, these days, it's about as uplifting a Christmas tale as your
gonna get.
SEC
Charges Former Employee and Friend with Insider Trading in Securities of
International Rectifier Corporation (SEC Litigation Release 24015) In Securities and Exchange Commission v.
Lanny Brown, et al., (Complaint, United States
District Court for the District of Arizona, 17-CV-04630), the SEC charged
Defendants Brown and Fox with violating Section 10(b) of the Securities
Exchange Act of 1934 and Rule 10b-5 thereunder. The defendants consented to a
permanent injunction and are ordered to pay jointly and severally, $369,720
disgorgement with $43,147.79 prejudgment interest with a credit for the
monetary amount they have agreed to pay in a parallel criminal case. READ
the FULL TEXT SEC Complaint.