Alliance for Fair Board Recruitment; National Center for Public Policy Research, Petitioners, v. Securities and Exchange Commission, Respondent. (Opinion, United States Court of Appeals for the Fifth Circuit, No. 21-60626)
https://www.ca5.uscourts.gov/opinions/pub/21/21-60626-CV0.pdf
As set fort in the preamble to the Opinion:

The “fundamental purpose” of the Securities Exchange Act of 1934 (Exchange Act), codified as amended at 15 U.S.C. § 78a et seq., is to enforce “a philosophy of full disclosure . . . in the securities industry.” Affiliated Ute Citizens of Utah v. United States, 406 U.S. 128, 151 (1972) (quoting SEC v. Capital Gains Rsch. Bureau, 375 U.S. 180, 186 (1963)); e.g., Lorenzo v. SEC, 139 S. Ct. 1094, 1103 (2019); Kokesh v. SEC, 581 U.S. 455, 458 n.1 (2017); SEC v. Zandford, 535 U.S. 813, 819 (2002); Cent. Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A., 511 U.S. 164, 171 (1994); Basic Inc. v. Levinson, 485 U.S. 224, 230 (1988); Santa Fe Indus., Inc. v. Green, 430 U.S. 462, 477-78 (1977). Consistent with this goal, Nasdaq Stock Market, LLC (Nasdaq) proposed a rule that would require companies listed on its stock exchange to disclose information about their board members, as well as a rule that would give certain companies access to a board recruiting service. After the Securities and Exchange Commission (SEC or Commission) approved these rules, Alliance for Fair Board Recruitment (AFBR) and the National Center for Public Policy Research (NCPPR) petitioned for review. Because the SEC’s Approval Order complies with the Exchange Act and the Administrative Procedure Act (APA), the petitions are DENIED.

Interactive Brokers LLC, Plaintiff, v. Jack Delaporte, Dillon Springer, Helena Yost, Jason Merritt, Jeffrey Rosenthal, Lisa Rosenthal, Brett Leve, David Simkins, Individually and as Trustee of the David Simkins Grantor Trust and the Leon Simkins Non-Exempt Trust FBO David Simkins, Bruce Clay, Matthew Clay, Michelle Simkins Rubell, Individually and as Trustee of the Michelle Simkins Rubell Grantor Trust, Taylor Simkins, Dramm, Inc., and Jody Levy, Defendants (Memorandum And Order, United States District Court For The Southern District Of New York, No. 23 Civ. 5555 (NRB))
https://scholar.google.com/scholar_case?case=5226410593301553712&hl=en&as_sdt=6,33

On June 28, 2023, plaintiff Interactive Brokers LLC ("IBKR") filed this action against defendants Jack Delaporte, Dillon Springer, Helena Yost, Jason Merritt, Jeffrey Rosenthal, Lisa Rosenthal, Brett Leve, David Simkins, individually and as trustee of the David Simkins Grantor Trust and the Leon Simkins Non-Exempt Trust FBO David Simkins, Bruce Clay, Matthew Clay, Michelle Simkins Rubell, individually and as trustee of the Michelle Simkins Rubell Grantor Trust, Taylor Simkins, Dramm, Inc., and Jody Levy (hereafter, collectively "defendants"), seeking to permanently enjoin defendants from proceeding with an arbitration they had commenced against plaintiff before the Financial Industry Regulatory Authority ("FINRA") (Jack Delaporte, Dillon Springer, Helena Yost, Jason Merritt, Jeffrey Rosenthal, et al. vs. Interactive Brokers LLC, FINRA Case No. 23-01592, or the "Arbitration"). Concurrently with the filing of the complaint, plaintiff moved for a preliminary injunction enjoining the arbitration. The parties agreed to stay the arbitration until the earlier of ten days after this Court's ruling on plaintiff's motion or October 14, 2023. See ECF No. 12.

For the reasons stated below, the Court grants plaintiff's motion and, pursuant to Rule 65(a)(2), issues a preliminary injunction enjoining defendants from pursuing the Arbitration against plaintiff.

In pertinent part, SDNY explains that:

ii. Application 

Defendants claim that they are entitled to arbitrate this dispute under FINRA Rule 12200 because of the existence of "written agreement" requiring arbitration. Defs. Opp. at 6. Regardless of whether a valid written agreement provides defendants the right to compel arbitration, in order to satisfy prong two of Rule 12200, defendants must also establish that they were either customers of IBKR or customers of an associated person of IBKR. FINRA Rule 12200(ii). However, defendants do not contend that they are customers of IBKR or of a person associated with IBKR. In fact, defendants appear to disclaim that argument in their opposition brief. Defs. Opp. at 1 ("Plaintiff incorrectly assumed that Defendants sought to satisfy the `customer' requirements of FINRA Rule 12200(2) as the basis for demanding arbitration.").

Even so, applying Abbar's bright-line definition of "customer" to the facts presented here, defendants have not established that they are customers of IBKR. Defendants have not identified any evidence suggesting that they "purchase[d] a good or service" from IBKR or an associated person of IBKR, Abbar, 761 F.3d at 275, and defendants do not claim to have maintained brokerage accounts with IBKR. Compl ¶ 7; see generally Defs. Opp.; Statement of Claim.

The Court therefore finds that defendants have not established themselves as customers of IBKR or an associated person of IBKR for purposes of FINRA Rule 12200. Because defendants fail to satisfy prong two of Rule 12200, there is no need for the Court to address whether defendants have a basis to compel arbitration based on the alleged existence of a written agreement requiring arbitration pursuant to the FINRA Code. Accordingly, defendants also cannot compel IBKR to arbitrate under Rule 12200.

Attorney General James Sues Cryptocurrency Companies Gemini, Genesis, and DCG for Defrauding Investors / Sweeping Lawsuit Details How Genesis and DCG Concealed $1.1 Billion in Losses and Alleges Gemini Repeatedly Lied to Investors / AG James Seeks Restitution for Hundreds of Thousands of Investors Who Lost More Than $1 Billion (NYAG Release)
https://ag.ny.gov/press-release/2023/attorney-general-james-sues-cryptocurrency-companies-gemini-genesis-and-dcg#:~:text=NEW%20YORK%20%E2%80%93%20New%20York%20Attorney,and%20Digital%20Currency%20Group%2C%20Inc.
In part the NYAG Release alleges that:

New York Attorney General Letitia James today filed a sweeping lawsuit against cryptocurrency companies Gemini Trust Company (Gemini), Genesis Global Capital, LLC and its affiliates (Genesis), and Digital Currency Group, Inc. (DCG) for defrauding more than 230,000 investors, including at least 29,000 New Yorkers, of more than $1 billion. An investigation by the Office of the Attorney General (OAG) found that Gemini lied to investors about an investment program it ran with Genesis called Gemini Earn. Gemini repeatedly assured investors that investing with Genesis through their Gemini Earn program was a low-risk investment. However, OAG’s investigation found that Gemini’s internal analyses of Genesis showed that the company’s financials were risky. The lawsuit alleges that Gemini knew Genesis’ loans were undersecured and at one point highly concentrated with one entity, Sam Bankman-Fried’s Alameda, but did not reveal this information to investors.

The lawsuit also charges Genesis, its former CEO Soichiro Moro, its parent company, DCG, and DCG’s CEO Barry Silbert with defrauding investors and the public by trying to conceal more than $1.1 billion in losses, which were borne by investors. As a result of these misleading claims and deceptions, thousands of investors lost millions of dollars and, in some instances, lost their lifesavings. Through this lawsuit, Attorney General James seeks to ban Gemini, Genesis, and DCG from the financial investment industry in New York, and seeks restitution for investors and disgorgement of ill-gotten gains.

READ the FULL TEXT NYAG Complaint https://ag.ny.gov/sites/default/files/court-filings/nysoag-complaint-against-gemini-et-al.pdf

DOJ

Friend Of Pfizer Employee Pleads Guilty To Insider Trading Based On Non-Public Drug Trial Results For COVID-19 Treatment (DOJ Release)
https://www.justice.gov/usao-sdny/pr/friend-pfizer-employee-pleads-guilty-insider-trading-based-non-public-drug-trial
In the United States District Court for the Southern District of California, Atul Bhiwapurkar pled guilty to one count of securities fraud. As alleged in part in the DOJ Release:

In November 2021, BHIWAPURKAR participated in an insider trading scheme to reap illicit profits from options trading based on inside information about the results of clinical trials of Paxlovid, a medicine used to treat COVID-19.  BHIWAPURKAR was provided material, non-public information about the Paxlovid trial by an employee of Pfizer who assisted in managing the data analysis in certain clinical drug trials. 

On November 4, 2021, prior to the public announcement that a Pfizer trial of the drug Paxlovid, a medicine designed to treat mild to severe COVID‑19 infection, had produced positive results, BHIWAPURKAR received a tip from a Pfizer insider with confidential information about the positive results and the timing of the upcoming press release.  On that same day, BHIWAPURKAR purchased short-dated, out-of-the-money Pfizer call options that expired days and weeks later.  BHIWAPURKAR also tipped another friend (“Individual-1”), who similarly purchased short-dated, out-of-the-money Pfizer call options that expired approximately three weeks later.

The following day, on November 5, 2021, and before the market opened, Pfizer publicly released results of its Paxlovid study.  That same day, following the publication of the positive results, Pfizer’s stock price increased substantially, opening — and eventually closing — more than 10% higher than the prior day’s closing price.  In the following weeks, BHIWAPURKAR and Individual-1 sold their Pfizer call options at significant profits.

New Jersey Real Estate Investor and Online Influencer Charged with Multimillion-Dollar Investment Fraud Scheme (DOJ Release)
https://www.justice.gov/usao-nj/pr/new-jersey-real-estate-investor-and-online-influencer-charged-multimillion-dollar
In a Complaint https://www.justice.gov/d9/2023-10/pina.complaint.pdf filed in the United State District Court for the District of New Jersey, Cesar Humberto Pina was charged with one count of wire fraud.  As alleged in part in the DOJ Release:

Pina partnered with a celebrity disc jockey and radio personality to conduct real estate seminars around the country. Through these seminars, self-promotional efforts, and other marketing strategies, Pina developed a significant social media following.

Starting in 2017, Pina began accepting investments from victim investors for the alleged purchase, remodel, and sale of specific real estate projects in New Jersey and other states. To induce his victims, Pina often promised 20 to 45 percent returns on investment within five months. But instead of using victims’ investments as promised, Pina engaged in a Ponzi-like scheme by commingling victim money, using new victim investments to pay off prior victims, and spending victim funds on personal expenditures. The investigation has revealed that Pina defrauded dozens of investors of millions of dollars.

Silicon Valley Executive Sentenced for Defrauding Investors and Participating in COVID-19 and Allergy Testing Scheme / First Criminal Securities Fraud Case Related to COVID-19 Pandemic Charged by Justice Department and First Criminal COVID-19 Health Care Fraud Case Brought to Trial (DOJ Release)
https://www.justice.gov/opa/pr/silicon-valley-executive-sentenced-defrauding-investors-and-participating-covid-19-and
In the United States District Court for the Northern District of California, Mark Schena, 60, was convicted following a jury trial of one count of conspiracy to commit health care fraud and conspiracy to commit wire fraud, two counts of health care fraud, one count of conspiracy to pay kickbacks, two counts of payment of kickbacks, and three counts of securities fraud. Schena was sentenced to eight years in prison and ordered to pay $24 million in restitution. As alleged in part in the DOJ Release, Schena:

was the president of Arrayit Corporation. Schena engaged in a scheme to defraud Arrayit’s investors by claiming that he had invented a revolutionary technology to test for virtually any disease using a single drop of blood from a finger stick sample. In meetings with investors, Schena and his publicist claimed that Schena was the “father of microarray technology” and that he was on the shortlist for the Nobel Prize. Schena also falsely represented to investors that Arrayit could be valued at $4.5 billion. 

. . .

In furtherance of the scheme, Schena failed to release Arrayit’s financial disclosures – as required by the Securities and Exchange Commission (SEC) – and concealed that Arrayit was on the verge of bankruptcy. Schena lulled investors who were concerned that the company was a “scam” by engaging in television appearances and filming videos that fraudulently portrayed the laboratory as busy and high-tech. Schena also issued false press releases and public statements on social media that Arrayit had entered into lucrative partnerships with companies, government agencies, and public institutions, including a children’s hospital and a major California health care provider. The press releases and statements falsely claimed that such entities had agreed to use the Arrayit technology, when in fact no such agreements existed or were of minimal value. 

. . .

Schena also orchestrated an illegal kickback and health care fraud scheme that involved submitting fraudulent claims to Medicare and private insurance for unnecessary allergy testing. Arrayit ran allergy screening tests on every patient for 120 different allergens regardless of medical necessity. To obtain patient blood specimens, Schena paid kickbacks to marketers in violation of the Eliminating Kickbacks in Recovery Act and orchestrated a deceptive marketing plan that falsely claimed that the Arrayit test was highly accurate in diagnosing allergies, when it was not, in fact, a diagnostic test. The Health Care Fraud Unit’s Data Analytics Team supported the prosecution and, as the evidence at trial showed, Arrayit billed more per patient to Medicare for blood-based allergy testing than any other laboratory in the United States.

. . .

In early 2020, Schena falsely announced that Arrayit “had a test for COVID-19.” Schena told federal agents that it was simple to develop a test for COVID-19 because the switch from testing for allergies to testing for COVID-19 was “like a pastry chef” who switches from selling “strawberry pies” to selling “rhubarb and strawberry pies.” Seeking to capitalize on the nationwide shortage of COVID-19 testing, Schena orchestrated a deceptive marketing scheme that falsely claimed that Dr. Anthony Fauci and other prominent government officials had mandated testing for COVID-19 and allergies at the same time, and required that patients receiving the Arrayit COVID-19 test also be tested for allergies. Schena also concealed from investors and patients that the Food and Drug Administration had informed him that the Arrayit test was not accurate enough to receive an Emergency Use Authorization for use in the United States.

Suburban Chicago Man Charged With Insider Trading (DOJ Release)
https://www.justice.gov/usao-ndil/pr/suburban-chicago-man-charged-insider-trading
In the United States District Court for the Northern District of Illinois, an Information https://www.justice.gov/media/1320116/dl?inline was filed that charged Brian Rubin with with one count of securities fraud. As alleged in part in the DOJ Release:

In the spring of 2019, BRIAN RUBIN made $90,450 in illegal profits from the purchase and sale of stock options in the Colorado-based biotech company that employed Rubin’s spouse, according to the criminal information filed Tuesday in U.S. District Court in Chicago.  Unbeknownst to his spouse, Rubin used material, non-public information obtained from her about the biotech company’s successful development of certain products and its expected acquisition by the New York-based pharmaceutical company to purchase the options ahead of a public announcement of the acquisition in June 2019, the charge alleges.  After the announcement, the biotech company’s stock price increased and Rubin exercised the options for the profit, the charge alleges.  Rubin’s spouse had learned the information through her position as an account director for the biotech company’s Midwest operations, the charge alleges.

Miami man sentenced to five and a half years in prison for running fraudulent cryptocurrency and stock investment scheme (DOJ Release)
https://www.justice.gov/usao-sdfl/pr/miami-man-sentenced-five-and-half-years-prison-running-fraudulent-cryptocurrency-and
In the United States District Court for the Southern District of Florida, Ryan James Crawford a/k/a "Brody," 30, was charged in an Indictment with eight counts of wire fraud; and he was sentenced to 66 months in prison and order to forfeit $988,895.85. NOTE: The DOJ Release fails to assert whether the sentence was imposed after trial or pursuant to a plea; and, further, fails to discloses the number of counts upon which sentencing was pronounced. As alleged in part in the DOJ Release:

From June 2020 through March 2022, Ryan James Crawford, aka “Brody,” 30, tricked victims into investing almost $1 million in his scheme by: falsely claiming to be a highly successful licensed stockbroker who had made tens of millions of dollars through similar cryptocurrency and stock investments; falsely claiming to have access to enough money to timely repay potential investors; falsely claiming that he had developed an artificial intelligence trading software that “never lost,” and misrepresenting the investment as low-risk and high reward, among other things.

Crawford did not return any victim funds, or generate the exponential returns he promised. Rather, on some occasions, he simply diverted investors’ funds and cryptocurrency for his own personal use, including to pay for luxury rental cars and gambling at the casino.

Statement on Exchanges’ Volume-Based Rebates and Fees by SEC Chair Gary Gensler
https://www.sec.gov/news/statement/gensler-volume-based-rebates-and-fees-101823

Today, the Commission is considering a proposal regarding exchanges’ volume-based rebates and fees. I am pleased to support this proposal because it will elicit important public feedback on how the Commission can best promote competition amongst equity market participants.

Congress long has mandated that the SEC work to promote competition in the capital markets. In 1975, Congress amended the Exchange Act largely to address anticompetitive practices by market intermediaries. Congress added the word “competition” to the Exchange Act 20 times.[1]

In those 1975 provisions, Congress also mandated that exchanges’ rules “not [be] designed to permit unfair discrimination between customers, issuers, brokers, or dealers” and “provide for the equitable allocation of reasonable dues, fees, and other charges among its members.”[2]

Later, in 1996, Congress mandated that, in addition to investor protection and public interest, the SEC consider efficiency and competition, as well as capital formation, when considering rules.[3]

In light of these mandates, I think it’s appropriate that the Commission make today’s proposal along with alternatives requesting public feedback on a practice the exchanges use called volume-based transaction pricing—or, what one might call volume-based discounts.

Currently, the playing field upon which broker-dealers compete is unlevel. Mid-sized and smaller broker-dealers effectively pay higher fees than larger brokers to trade on most exchanges. This is because exchanges generally charge brokers net trading fees or pay rebates back to brokers that vary depending on the brokers’ trading volume. As a consequence, brokers with the largest trading volume receive the largest rebates and thus pay the lowest net fees. Sometimes, large brokers get rebates that are even larger than the fees they paid—leading to a situation where the exchange actually pays on net large brokers for their order flow.

These larger trading firms thus are able to offer customers more favorable transaction prices than smaller brokers. Further, this has contributed to a practice whereby mid-sized or smaller brokers—in an effort to capture higher rebates—route their orders through a handful of the largest brokers. A handful of the largest brokers are then able to collect a fee for that service and use that volume to qualify for even better tiers for themselves and other customers. What’s more, some have suggested that there might be some information leakage to the largest brokers due to these routing practices.

We have heard from a number of market participants that volume-based transaction pricing along with these market practices raise concerns about competition in the markets.

In response, through today’s proposal, we request public comment regarding whether volume-based discounts should be prohibited, and if so to what degree. In addition, we request public input regarding the role that new disclosure requirements could play to address these practices.

Today’s release offers a number of alternatives for public comment regarding both possible prohibitions and disclosure requirements.

In addition, today’s release includes questions about how to promote competition amongst and between trading venues as well as brokers.

I look forward to the public’s input on these matters.

I’d like to thank members of the SEC staff for their work on this proposal, including:

• Haoxiang Zhu, David Saltiel, Andrea Orr, David Shillman, Eric Juzenas, Richard Holley, Terri Evans, Yvonne Fraticelli, Julia Zhang, Yue Ding, Sharon Park, and Roni Bergoffen in the Division of Trading and Markets;
• Jessica Wachter, Jill Henderson, Oliver Richard, Paul Barton, Ariel Lohr, Sherry Wu, John Ritter, Caroline Schulte, Lauren Moore, Charles Woodworth, Parhaum Hamdi, Gregory Scopino, and Julie Marlowe in the Division of Economic and Risk Analysis;
• Megan Barbero, Meredith Mitchell, Robert Teply, Janice Mitnick, Cynthia Ginsberg, and Ronesha Butler in the Office of the General Counsel;
• John Polise, Connie Kiggins, Michael Hershaft, and Carrie O’Brien in the Division of Examinations;
• Jane Patterson in the EDGAR Business Office;
• Charlotte Buford and Kerry Knowles in the Division of Enforcement; and
• Kevin Burris and David Fernandez in the Office of Legislative and Intergovernmental Affairs.

= = =

[1] See Securities Acts Amendments of 1975, available at https://www.govtrack.us/congress/bills/94/s249.

[2] Ibid.

[3] See National Securities Markets Improvement Act of 1996, available at https://www.govtrack.us/congress/bills/104/hr3005.

Bill Singer's Comment: When the SEC comes under criticism for the hidden costs of unconstrained rulemaking, the concerns are not simply whether a "good idea" is a good idea. Without question, Chair Gensler is spot on when he notes that "volume-based transaction pricing along with these market practices raise concerns about competition in the markets."

So, this is not about whether reforms are needed -- they are.

This is not about whether anticompetitive practices on Wall Street should be eradicated -- they should.

The larger issue is at what point is enough enough?

When do the adults in the room tell the kids that they can't buy every piece of candy in the candy store?

When does someone question the wisdom of proposing yet another commendable reform on top of an already steamy, hot, mess of a pile of other commendable reforms?

At the SEC, too much of a good thing is, in fact, too much. Add up all the names of the SEC Staff that Chair Gensler thanked for working on the volume-based pricing proposal, and you come up with this laughably absurd array:

1. Haoxiang Zhu
2. David Saltiel
3. Andrea Orr
4. David Shillman
5. Eric Juzenas
6. Richard Holley
7. Terri Evans
8. Yvonne Fraticelli
9. Julia Zhang
10. Yue Ding
11. Sharon Park
12. Roni Bergoffen
13. Jessica Wachter
14. Jill Henderson
15. Oliver Richard
16. Paul Barton
17. Ariel Lohr
18. Sherry Wu
19. John Ritter
20. Caroline Schulte
21. Lauren Moore
22. Charles Woodworth
23. Parhaum Hamdi
24. Gregory Scopino
25. Julie Marlowe
26. Megan Barbero
27. Meredith Mitchell
28. Robert Teply
29. Janice Mitnick
30. Cynthia Ginsberg
31. Ronesha Butler 
32. John Polise
33. Connie Kiggins
34. Michael Hershaft
35. Carrie O’Brien
36. Jane Patterson
37. Charlotte Buford
38. Kerry Knowles
39. Kevin Burris
40. David Fernandez

Nothing better underscores the hidden costs of the SEC's excessive rulemaking than the absurd and indefensible allocation of some 40 staffers to a proposal. Imagine if those same 40 SEC staffers were assigned to communicate with victimized investors or to clear up the regulator's backlog of Whistleblower cases. Imagine if those same 40 folks were assigned to provide support to SEC trial staff. Oh, how our imagination could run wild if we had 40 SEC staff to task with something more important than a proposal to do something that will likely never get done during whatever time remains in SEC Chair Gensler's administration. See: Scrambling to Keep Pace With The Unbearable Load of SEC Rulemaking (BrokeAndBroker.com Blog)

ADDITIONAL SEC COMMISSIONERS' STATEMENTS ON
VOLUME-BASED TRANSACTION PROPOSAL

READ: SEC Proposes Rule to Address Volume-Based Exchange Transaction Pricing for NMS Stocks

SEC Obtains Judgment Against Issuer and CEO for Unregistered Crypto Asset Securities Offering (SEC Release)
https://www.sec.gov/litigation/litreleases/lr-25884
The United States District Court for the Northern District of California granted a Default Final Judgment https://www.sec.gov/files/litigation/litreleases/2023/judg25884.pdf against Thor Technologies, Inc. and its Chief Executive Officer/Co-Founder David Chin. Previously, the Court had enjoined Thor and Chin from violating the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act and from participating in any crypto asset securities offering. The Court ordered Thor to pay disgorgement of $744,555 with prejudgment interest of $158,638.06 and ordered Thor and Chin to each pay penalties of $150,000. As alleged in part in the SEC Release:.

[B]etween March and May 2018, the defendants offered and sold crypto assets designated as “Thor Tokens” to the general public for the purpose of funding Thor’s business, which was to develop a software platform for “gig” economy workers and companies. As alleged, Thor and Chin marketed the Thor Tokens as an investment opportunity by promoting the potential increase in value of the tokens and claiming that the tokens would be made available on crypto asset trading platforms. According to the complaint, at the time of the offering, no development work had yet occurred on the Thor platform, and there was no other place to use Thor Tokens. The complaint further alleges that the offers and sales of Thor Tokens, which raised approximately $2.6 million in cash and crypto assets from investors, were not registered with the SEC and did not qualify for any exemption from registration.

SEC Charges Illinois Resident with Insider Trading (SEC Release)
https://www.sec.gov/litigation/litreleases/lr-25882
In the United States District Court for the Northern District of Illinois, the SEC filed a Complaint https://www.sec.gov/files/litigation/complaints/2023/comp25882.pdf alleging that Brian Marc Rubin unlawfully traded Array stock options based on material, nonpublic information about the acquisition that he learned about and then misappropriated from his spouse, who worked at Array. As alleged in part in the SEC Release:

Rubin has consented to the entry of a judgment, subject to court approval, which would permanently enjoin him from violating the antifraud provisions of Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder, order him to pay disgorgement in the amount of $90,458 plus prejudgment interest in the amount of $16,914, and order him to pay a civil penalty in an amount to be determined by the court at a later date.

In a parallel action, the U.S. Attorney’s Office for the Northern District of Illinois announced criminal charges against Rubin.

SEC Obtains Emergency Relief To Halt Nearly $130 Million Fraud Targeting Indian American Community (SEC Release)
https://www.sec.gov/news/press-release/2023-223
In the United States District Court for the Eastern District of Texas, the SEC filed a Complaint https://www.sec.gov/files/litigation/complaints/2023/comp-pr2023-223.pdf that charges Nanban Ventures LLC, its three founders Gopala Krishnan (a/k/a GK), Manivannan Shanmugam, and Sakthivel Palani Gounder (collectively,  the "Founders"), and three other entities that the Founders control with violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. Further, the Complaint charges the Founders and Nanban Ventures with violating the antifraud provisions of Section 206 of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. As alleged in part in the SEC Release:

[D]efendants raised more than $89 million from more than 350 investors for investments in purported venture capital funds that the Founders managed through Nanban Ventures LLC and more than $39 million from 10 investors that invested directly in the three other entities controlled by the Founders. The SEC’s complaint alleges that the Founders overstated the profitability of the investments and paid investors at least $17.8 million in fake profits that were actually Ponzi payments. The SEC’s complaint further alleges that defendants misrepresented Krishnan’s expertise and success using his eponymous “GK Strategies” options trading method. According to the SEC’s complaint, Krishnan claimed in a YouTube video that he achieved returns of “more than a hundred percent,” and Nanban Ventures claimed in its venture capital funds’ private placement memorandums that Krishnan would manage the funds to generate returns that would “consistently overperform the S&P 500 Index.” The SEC’s complaint further alleges that the actual trading returns using GK Strategies were, with limited exceptions, lower than the returns of the S&P 500 index, lower than the percentage returns that Krishnan claimed in YouTube videos, and negative on numerous occasions.

. . .

The SEC’s complaint also alleges that Nanban Ventures and the Founders were all investment advisers who violated their fiduciary duties by causing the venture capital funds to invest more than $70 million into companies the Founders controlled. According to the SEC’s complaint, the Founders commingled that money with more than $39 million from at least 10 other investors and then used the commingled funds to, among other things, make Ponzi payments and pay themselves at least $6 million.

SEC Division of Examinations Announces 2024 Priorities (SEC Release)
https://www.sec.gov/news/press-release/2023-222
The SEC Division of Examinations released its 2024 Examination Priorities report https://www.sec.gov/files/2024-exam-priorities.pdf The Division tells you what it would like to accomplish. They do this every year. Then the next year they pretty much tell you that the stuff that they had hoped to accomplish the prior year didn't actually get done but, hey, we're going to try again next year. It's a FABULOUS read (not).

Cybersecurity Alert - Ongoing Phishing Campaign (FINRA Guidance)
https://www.finra.org/rules-guidance/guidance/cybersecurity-alert-ongoing-phishing-campaign-101323

FINRA has warned member firms of an ongoing phishing campaign that involves fraudulent emails purporting to be from FINRA and using the domain name “@rfs-finra.org,” which is not connected to FINRA. Firms are urged to delete all emails originating from this domain. The email originating from the domain “rfs-finra.org” states:

Dear [Individual],

By way of introduction, my name is [Imposter] from the department overseeing your firm's operation.

The following request has been provided for your firm. You are required to complete the request following the instruction in the attached file.

Please respond to this email for additional information.

Disclosure

Request               Published Date  Firm       Due Date             

Report Filing     12/10/2023         [Firm name]   17/10/2023        

Sincerely, 

[Imposter]

[Imposter]

Financial Industry Regulatory Authority (FINRA).

1735 K Street
NW Washington,
DC 20006 

Confidentiality Notice:: This email may include non-public, proprietary, confidential or legally privileged information. If you are not an intended recipient or an authorized agent of an intended recipient, you are hereby notified that any dissemination, distribution or copying of the information contained in or transmitted with this e-mail is unauthorized and strictly prohibited.

FINRA reminds firms to verify the legitimacy of any suspicious email prior to responding to it, opening any attachments, or clicking on any embedded links. FINRA has requested that the Internet domain registrar suspend services for "rfs-finra.org”.