The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
February 11, 2021
SEC Granted Injunction Against IIG Co-Founder (SEC Release)
NEWSFLASH: FINRA Observes Bad Actors In the Markets (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/5692/finra-notice-fraud/
A new FINRA Regulatory Notice asserts that there is a "long history of bad actors exploiting" microcaps and pennystocks. Sadly, FINRA thinks that merely urging its member firms to review their policies and procedures is going to weed out the bad actors. All of which makes you wonder what FINRA's 3,000-plus regulatory employees are doing each and every day?
https://www.justice.gov/opa/pr/man-purchased-lamborghini-after-receiving-39-million-ppp-loans
David T. Hines, 29, pled guilty in the United States District Court for the Southern District of Florida to one count of wire fraud after he had fraudulently obtained about $3.9 million in Paycheck Protection Program ("PPP") loans. As alleged in part in the DOJ Release:
[H]ines admitted that he fraudulently sought millions of dollars in PPP loans through applications to an insured financial institution on behalf of different companies. Hines caused to be submitted fraudulent loan applications that made numerous false and misleading statements about the companies' respective payroll expenses. The financial institution approved and funded approximately $3.9 million in PPP loans.Hines further admitted that within days of receiving the PPP funds, he used the funds to purchase a 2020 Lamborghini Huracan sports car for approximately $318,000. Plea documents indicate that in the days and weeks following the disbursement of PPP funds, Hines did not make payroll payments that he claimed on his loan applications. He did, however, use the PPP proceeds for personal expenses.
Former Investment Adviser Charged with Stealing Client Funds / Long Island Man Allegedly Stole More than $400,000 to Pay Gambling Debts and Credit Card Bills (DOJ Release)
https://www.justice.gov/usao-edny/pr/former-investment-adviser-charged-stealing-client-funds
In a Complaint filed in the United States District Court for the Eastern District of New York https://www.justice.gov/usao-edny/press-release/file/1366151/download, former registered investment advisor/broker Apostolos Pitsironis was charged with fraud. As alleged in part in the DOJ Release:
In approximately 2009, Pitsironis, who worked in the Melville office of a financial services firm ("Financial Services Firm"), began managing the investments of Victim-1 and Victim-2, a married couple who lived on Long Island (the "Victims"). Between May 2, 2019 and June 11, 2019, Pitsironis initiated 22 transfers totaling approximately $411,000 from one of the Victims' investment accounts at the Financial Services Firm to a bank account in the defendant's own name at another financial institution. Pitsironis falsely told the Financial Services Firm that Victim-2 owned the bank account receiving the funds and that Victim-2 had authorized the transfer of funds to that account. Pitsironis then transferred the stolen funds to other bank accounts that he controlled and used the stolen money to pay for his family's personal expenses, including casino gambling debts, credit card bills and the lease for a luxury car.
SEC Granted Injunction Against IIG Co-Founder (SEC Release)
https://www.sec.gov/litigation/litreleases/2021/lr25028.htm
In a Complaint filed in the United States District Court for the Southern District of New York in July 2020, the SEC charged International Investment Group's ("IIG's") Co-Founder/Chief Investment Officer David Hu with violating Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. Hu consented to a bifurcated settlement, agreeing to be permanently enjoined https://www.sec.gov/litigation/litreleases/2021/judgment25028.pdf from violations of the charged provisions with monetary relief in an amount to be determined by the court. In November 2019, the SEC charged IIG and revoked IIG's registration as an investment adviser. On March 30, 2020, the SEC obtained a final judgment on consent enjoining IIG from violating the antifraud provisions of the federal securities laws and requiring IIG to pay more than $35 million in disgorgement and prejudgment interest. As alleged in part in the SEC Release:
[F]rom October 2013, Hu orchestrated multiple frauds on IIG's investment advisory clients. As alleged, Hu grossly overvalued the assets in IIG's flagship hedge fund, resulting in the fund paying inflated fees to IIG, some of which went to Hu personally. In addition, through IIG, Hu allegedly sold at least $60 million in fake trade finance loans to other investors and used the proceeds to pay the redemption requests of earlier investors and other liabilities. The complaint alleges that Hu deceived IIG clients into purchasing the purported trade finance loans by directing others at IIG to create and provide to the clients fake loan documentation to substantiate the non-existent loans, including fake promissory notes and a forged credit agreement.