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This is a photo of the National Register of Historic Places listing with reference number 7000063

Sunday, April 27, 2014

SEC FILES INSIDER TRADING CHARGES AGAINST FORMER NVIDIA CORP. ACCOUNTING MANAGER

FROM:  SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission filed insider trading charges against a former accounting manager at Nvidia Corp. who tipped a friend with confidential company information that set in motion a chain of tipping and illegal trading among a network of hedge fund traders who reaped millions of dollars in illicit gains.

The SEC alleges that Chris Choi of San Jose, Calif., tipped his friend Hyung Lim with nonpublic information about Nvidia’s financial performance in advance of the technology company’s quarterly earnings announcements in 2009 and 2010.  Lim relayed Choi’s information to a fellow poker player Danny Kuo, who was a hedge fund manager at Whittier Trust Company.  Kuo illegally traded on the inside information for his firm and passed it along to analysts at such other firms as Diamondback Capital Management, Level Global Investors LP, and Sigma Capital Management, which is an affiliate of S.A.C. Capital Advisors LP.  The analysts relayed Choi’s information to their portfolio managers who caused funds to conduct insider trading in Nvidia securities.

Choi, who agreed to settle the SEC’s charges, is the 45th defendant charged by the SEC in its ongoing investigation into the activities of expert networks.  The investigation has exposed widespread insider trading by investment professionals, hedge funds, and corporate insiders for illicit profits of approximately $430 million.  The SEC previously charged Choi’s tippees, including Lim as well as Kuo, Diamondback, and Level Global and Sigma Capital.  The expert networks investigation arose out of the SEC’s inquiry into Galleon Management and Raj Rajaratnam – a case in which the SEC has charged an additional 35 defendants whose insider trading generated illicit profits of more than $96 million.

“Insiders at public companies who are entrusted with confidential information are duty bound to protect it,” said Sanjay Wadhwa, senior associate director of the SEC’s New York Regional Office.  “Choi violated that sacred duty by regularly tipping his friend with nonpublic financial data that hedge fund traders exploited for millions of dollars in illegal profits.”

According to the SEC’s complaint filed in U.S. District Court for the Southern District of New York, Choi’s illegal tips enabled hedge funds to reap approximately $16.5 million in illicit profits and avoided losses.  Choi routinely provided Lim with nonpublic information about Nvidia’s highly confidential calculations of its revenues, gross profit margins, and other financial metrics ahead of its quarterly earnings announcements.

The SEC’s complaint charges Choi with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Section 17(a) of the Securities Act of 1933.  Choi has agreed to pay a $30,000 penalty and be barred from serving as an officer or director of a public company for five years.  Without admitting or denying the allegations, Choi agreed to be permanently enjoined from future violations of these provisions of the federal securities laws.  The settlement is subject to court approval.

The SEC’s investigation, which is continuing, has been conducted by Stephen Larson and Daniel Marcus of the Enforcement Division’s Market Abuse Unit in New York along with Matthew Watkins, Diego Brucculeri, James D’Avino, and Neil Hendelman of the New York Regional Office.  The case has been supervised by Sanjay Wadhwa and Joseph G. Sansone, deputy chief of the Enforcement Division’s Market Abuse Unit.  The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York and the Federal Bureau of Investigation.

Saturday, April 26, 2014

SEC ISSUES STOP ORDER, PREVENTS IPO DUE TO FALSE, MISLEADING INFORMATION ON REGISTRATION STATEMENT

FROM:  SECURITIES AND EXCHANGE COMMISSION 

Securities and Exchange Commission issued a stop order to prevent a Northern California-based company from issuing stock after including false and misleading information in its amended registration statement for an initial public offering (IPO).

Stop orders prevent the sale of privately held shares to the public under a registration statement that is materially misleading or deficient.  If a stop order is issued, no new shares can enter the market under that registration statement until the company has corrected the deficiencies or misleading information.

According to the SEC’s stop order against Comp Services Inc., its registration statement fails to disclose the identity of the control person and promoter behind the company, and falsely states that Comp Services earned revenue for providing computer services even though the company has never earned any revenue.  The registration statement has been amended 10 times, most recently in December 2013.

“Comp Services gave investors a false and misleading portrayal of the company as they were deciding whether or not to invest,” said Michele Wein Layne, director of the SEC’s Los Angeles Regional Office.  “This stop order ensures that Comp Services stock cannot be sold in the public markets under this misleading registration statement.”

Comp Services consented to the issuance of the stop order, which also triggers the bad actor disqualifications to prohibit Comp Services from engaging or participating in any unregistered offering conducted under Rule 506 of Regulation D for a five-year period.

The SEC’s investigation, which is continuing, has been conducted by Roberto Tercero and Spencer Bendell in the Los Angeles office.

Friday, April 25, 2014

PROSECUTORS CHARGE ALLEGED PONZI SCHEMER WITH VIOLATING SEC OBTAINED COURT ORDERS

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 
Federal Prosecutors Charge Massachusetts Resident with Criminal Contempt Based On Violations of Court Orders Obtained by the SEC

The Securities and Exchange Commission announced today that, on April 10, 2014, the United States Attorney's Office for the District of Massachusetts charged Steven Palladino with 25 counts of criminal contempt based on his repeated violations of Court orders obtained by the Commission in its civil action against Palladino and his Massachusetts-based company, Viking Financial Group, Inc. (collectively, "Defendants"). The Commission's action charged that Defendants were operating a fraudulent Ponzi scheme. The charging document filed by the United States Attorney's Office alleges that Palladino "knowingly and wilfully disobey[ed]" Court orders in the Commission's action that froze all of Defendants' assets, required that Defendants deposit all funds in their possession into a court-ordered escrow account, and required Palladino to purge himself of a prior order of civil contempt. If convicted, Palladino, who is currently serving a prison sentence based on convictions in state court for the same Ponzi scheme activity, could face additional incarceration.

On April 30, 2013, the Commission filed an emergency action against Defendants in federal district court in Massachusetts. In its complaint, the Commission alleged that, since April 2011, Defendants misrepresented to at least 33 investors that their funds would be used to conduct the business of Viking - which was purportedly to make short-term, high interest loans to those unable to obtain traditional financing. The Commission also alleged that Palladino misrepresented to investors that the loans made by Viking would be secured by first interest liens on non-primary residence properties and that investors would be repaid their principal, plus monthly interest at rates generally ranging from 7-15%, from payments that borrowers made on the loans. The complaint alleged that Defendants actually made very few real loans to borrowers, and instead used investors' funds largely to pay earlier investors and to fund the Palladino family's lavish lifestyle.

When the Commission first filed its action, it moved the Court for a temporary restraining order, asset freeze, and other emergency relief. On April 30, 2013, the Court issued a temporary restraining order, which included the asset freeze, and set the matter for further hearing on May 3, 2013. On May 3, 2013, the Court issued a revised restraining order, which included the same asset freeze. On May 15, 2013, the Court issued the order that Defendants deposit all funds in their possession into an escrow account. The asset freeze and escrow order have remained in effect at all times since April 30, 2013 and May 15, 2013, respectively.

Since September 2013, the Commission has filed four motions for civil contempt against Palladino. The Commission's first motion for contempt, filed on September 4, 2013, alleged that Palladino violated the asset freeze by transferring three vehicles that he owned (solely or jointly with his wife) into his wife's name and using the vehicles as collateral for new loans - effectively cashing out the equity in these vehicles. The motion also alleged that Palladino violated the escrow order by failing to deposit the funds he received from this cashing-out process into the escrow account. On November 15, 2013, the Court held Palladino in contempt and ordered that he restore ownership of the vehicles that he had transferred into his wife's name. Subsequently, Palladino reported to the Court that he had repaid all the new loans and restored ownership of two of the vehicles (but had failed to restore ownership of one vehicle). The Commission alleges that, in truth, the checks used to repay the new loans on the vehicles were all returned for insufficient funds. According to the Commission's allegations, to date, Palladino has not purged the civil contempt order against him. The Commission also filed three other contempt motions against Palladino charging that (i) he obtained a loan for $6,750 from a Viking investor and failed to deposit this amount into the escrow account; (ii) he sold a truck owned by him for $9,500 and failed to deposit this amount into the escrow account; and (iii) he opened new credit cards and ran up charges for cash advances, gold coins, luxury merchandise and fine dining and failed to deposit the cash and other assets obtained into the escrow account - all in violation of the asset freeze and escrow order. These three motions remain outstanding. The United States Attorney's Office's criminal charges arise from these same violations, as well as Palladino's alleged refusal to comply with the civil contempt order.

On July 15, 2013, the Court held that Defendants' conduct violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Section 17(a) of the Securities Act. On November 18, 2013, the Court entered orders that enjoined Defendants from further violations of the antifraud provisions of the securities laws and ordered them to pay disgorgement of $9,701,738, plus prejudgment interest of $122,370. On January 14, 2014, Palladino pled guilty in Suffolk Superior Court to various state criminal charges based on the same conduct alleged by the Commission in its case. Palladino is currently serving a 10-12 year prison sentence for his state court convictions.

The Commission acknowledges the continued assistance of Suffolk County (Massachusetts) District Attorney Daniel F. Conley's Office, whose office referred Palladino's and Viking's conduct to the Commission.

Thursday, April 24, 2014

SEC FILES ACTION AGAINST IMPRISONED FORMER STOCK PROMOTER

FROM:  SECURITIES AND EXCHANGE COMMISSION 
SEC Files Action Against Former Stock Promoter Now in Prison for Lying to SEC Investigators

On April 23, 2014, the Securities and Exchange Commission filed suit in United States District Court for the Southern District of Florida against defendants Robert J. Vitale ("Vitale") and Realty Acquisitions & Trust, Inc. ("RATI"), and relief defendant Coral Springs Investment Group, Inc. ("CSIG"). The Commission's complaint alleges that between 2004 and 2010, Vitale and RATI fraudulently raised at least $8.7 million from investors through four real estate securities offerings. According to the complaint, Vitale and RATI made numerous materially false and misleading statements and omissions concerning, among other things, the credentials and experience of Vitale and other purported RATI officers, Vitale's supposed reputation for honesty in the investment world, the safety of investing in RATI, and the ownership of the properties purchased with RATI investor proceeds. The complaint further alleges that Vitale also effected transactions in securities for the account of others without being registered as a broker in connection with his RATI activities, and, by so doing, violated both the unregistered-broker statute and a 2006 Commission Order that barred him from association with any broker or dealer. The complaint further alleges that no registration statement was on file with the Commission or in effect with respect to any of the RATI offerings or sales.

The Commission charges Vitale and RATI with violating Sections 5 and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. The Commission also charges Vitale with violating Sections 15(a) and 15(b)(6)(B) of the Exchange Act. The Commission seeks disgorgement of the ill-gotten gains related to these violations with prejudgment interest from Vitale, RATI, and relief defendant CSIG, and civil money penalties against Vitale and RATI.

Vitale is currently an inmate at the Federal Detention Center in Miami. He was sentenced in September 2013 to two years in prison after being convicted of obstruction of justice and providing false testimony in the investigation that led to the SEC case filed today.

The Commission acknowledges the assistance of the United States Attorney's Office, the Federal Bureau of Investigation, and the Florida Office of the Attorney General in this matter.

Wednesday, April 23, 2014

SEC CHARGES FORMER BIOPHARMACEUTICAL COMPANY EXECUTIVE, TWO OTHERS WITH INSIDER TRADING

FROM:  SECURITIES AND EXCHANGE COMMISSION 
The Securities and Exchange Commission today charged a former 

Former biopharmaceutical company executive and two others with insider trading on confidential information about the company’s key developmental drug.  The company’s stock price fell sharply when it announced clinical trial results for the drug.

Dr. Loretta Itri, president of pharmaceutical development and chief medical officer of Genta, Inc., her longtime friend, Dr. Neil Moskowitz, an emergency room physician, and one of his patients, were named in the insider-trading action.  In a complaint filed in U.S. District Court in New Jersey, the SEC alleged that Itri obtained material nonpublic information about Genta’s clinical trial results for an experimental drug designed to treat advanced melanoma.  In a telephone conversation just one day before the public announcement of the drug trial results, Itri provided Moskowitz with material nonpublic information.  Minutes after that, Moskowitz sold his Genta securities and tipped a friend and patient, Mathew Cashin, concerning the results.  As a result of their trading based on material nonpublic information, Moskowitz and Cashin reaped approximately $139,000 of illegal gains.

“Itri was entrusted with highly confidential information by Genta, but betrayed her duty as an executive allowing a friend to profit,” said Amelia A. Cottrell, associate director of the SEC’s New York Regional Office.  “We will continue to hold company insiders responsible and punish this type of betrayal of trust.”

According to the SEC’s complaint, Itri was directly involved in the drug trials at Genta, and was one of the first to learn of the results prior to the public announcement on October 29, 2009.  Genta’s stock dropped approximately 70 percent on the news, and the SEC alleges that Moskowitz and Cashin obtained illegal gains by selling their Genta stock the day before the announcement.

The SEC’s complaint charges Itri, Moskowitz, and Cashin with violating federal antifraud laws and the SEC’s antifraud rule.  Without admitting or denying the allegations in the complaint, the three defendants agreed to settle the SEC’s charges against them.

The settlement, which is subject to court approval, would enjoin the defendants from further violations of the federal securities laws and require Itri to pay civil penalty of approximately $64,000 and bar her from serving as an officer or director of a public company for five years.  The settlement also requires Moskowitz to return $64,300 of allegedly ill-gotten gains, plus prejudgment interest of $9,556, and pay a civil penalty of $64,300.  The settlement requires Cashin to return $75,140 of allegedly ill-gotten gains, plus prejudgment interest of $10,955, and pay a civil penalty of $37,570, which reflects the cooperation Cashin provided to the SEC’s investigation.

The SEC’s investigation was conducted by Shannon Keyes, Charles D. Riely and Ella Wraga, and was supervised by Amelia A. Cottrell of the SEC’s New York Regional Office. The SEC appreciates the assistance of the U.S. Attorney's Office for the District of New Jersey, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.

Tuesday, April 22, 2014

PYRAMID SCHEME TARGETING DOMINICAN, BRAZILIAN IMMIGRANTS HALTED BY SEC

FROM:  SECURITIES AND EXCHANGE COMMISSION 
SEC Halts Pyramid Scheme Targeting Dominican and Brazilian Immigrants

The Securities and Exchange Commission today announced that on Tuesday, April 15, 2014, it filed charges against the Massachusetts-based operators of a large pyramid scheme that mainly targeted Dominican and Brazilian immigrants in the U.S. The charges were filed under seal, in connection with the Commission's request for an immediate asset freeze. That asset freeze, which the U.S. District Court in Boston ordered on Wednesday, secured millions of dollars of funds and prevented the potential dissipation of investor assets. After the SEC staff implemented the asset freeze, at the SEC's request the Court lifted the seal today, permitting public announcement of the SEC's charges.

The SEC alleges that TelexFree, Inc. and TelexFree, LLC claim to run a multilevel marketing company that sells telephone service based on "voice over Internet" (VoIP) technology but actually are operating an elaborate pyramid scheme. In addition to charging the company, the SEC charged several TelexFree officers and promoters, and named several entities related to TelexFree as relief defendants based on their receipt of investor funds.

According to the SEC's complaint filed in federal court in Massachusetts, the defendants sold securities in the form of TelexFree "memberships" that promised annual returns of 200 percent or more for those who promoted TelexFree by recruiting new members and placing TelexFree advertisements on free Internet ad sites. The SEC complaint alleges that TelexFree's VoIP sales revenues of approximately $1.3 million from August 2012 through March 2014 are barely one percent of the more than $1.1 billion needed to cover its promised payments to its promoters. As a result, in classic pyramid scheme fashion, TelexFree is paying earlier investors, not with revenue from selling its VoIP product but with money received from newer investors.

According to the SEC's complaint, the defendants have continued enrolling new investors but recently changed TelexFree's method of compensating promoters, requiring them to actually sell the VoIP product to qualify for payments that TelexFree had previously promised to pay them. The complaint also alleges that since December 2013, TelexFree has transferred $30 million or more of investor funds from TelexFree operating accounts to accounts controlled by TelexFree affiliates or the individual defendants.

In addition to the TelexFree firms, the complaint charges TelexFree co-owner James Merrill, of Ashland, Mass., TelexFree co-owner and treasurer Carlos Wanzeler, of Northborough, Mass., TelexFree CFO Joseph H. Craft, of Boonville, Ind., and TelexFree's international sales director, Steve Labriola, of Northbridge, Mass. The SEC also charged four individuals who were promoters of TelexFree's program: Sanderley Rodrigues de Vasconcelos, formerly of Revere, Mass., now of Davenport, Fla., Santiago De La Rosa, of Lynn, Mass., Randy N. Crosby, of Alpharetta, Ga., and Faith R. Sloan, of Chicago.

The SEC's complaint alleges that TelexFree, Inc., TelexFree, LLC, Merrill, Wanzeler, Craft, Labriola, Rodrigues de Vasconcelos, De La Rosa, Crosby, and Sloan violated the registration and antifraud provisions of U.S. securities laws: Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. Among other things, the SEC's complaint seeks, against these primary defendants, permanent injunctions prohibiting further violations of the laws charged, disgorgement of ill-gotten gains plus prejudgment interest, and civil monetary penalties. The SEC also charged three entities related to TelexFree (TelexFree Financial, Inc., TelexElectric, LLLP, and Telex Mobile Holdings, Inc.) as relief defendants based on their receipt of investor funds, and seeks disgorgement of those funds plus prejudgment interest.

Monday, April 21, 2014

Looking at Corporate Governance from the Investor’s Perspective

Looking at Corporate Governance from the Investor’s Perspective

COMPANY TO PAY PENALTY FOR VIOLATING MINIMUM FINANCIAL REQUIREMENT RULES

FROM:  U.S. COMMODITY FUTURES TRADING COMMISSION 
Capital Market Services, LLC Ordered to Pay $275,000 Penalty to Settle CFTC Charges of Violating Minimum Financial Requirement Rules

Washington, DC–The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges that, between March 2009 and October 2012, Capital Market Services, LLC (CMS), a CFTC-registered Futures Commission Merchant (FCM) and former Retail Foreign Exchange Dealer (RFED) headquartered in New York, New York, failed to comply with minimum financial requirements for FCMs and RFEDs. The CFTC Order requires CMS to pay a $275,000 civil monetary penalty and to cease and desist from violating the Commodity Exchange Act and CFTC Regulations, as charged.

The Order recognizes CMS’s cooperation and corrective action it undertook after its deficiencies were discovered.

According to the Order, under CFTC regulations, an FCM must maintain adjusted net capital (ANC) equal to or in excess of the greatest of $1,000,000 or various other measures, including the “amount of [ANC] required by a registered futures association of which it is a member.” Between January 2009 and mid-December 2010, while a Forex Dealer Member (FDM) with the National Futures Association (NFA), CMS was subject to the NFA’s FDM Financial Requirements, which imposed ANC requirements that ranged between $15,000,000 and approximately $21,000,000. CFTC Regulations also require that an RFED maintains ANC of $20,000,000 plus five percent of its total retail forex obligation in excess of $10,000,000 at all times. CMS’s ANC requirement as an RFED was approximately $21,000,000.

CMS did not maintain its required ANC during at least 17 separate months between March 2009 and October 2012, with month-end ANC computations showing that CMS was undercapitalized by more than $19 million at one point, the Order finds.

CMS has been registered with the CFTC as an FCM since January 2002 and was registered as an RFED from September 2009 to mid-December 2010. CMS also operated as an FDM from approximately January 2009 until mid-December 2010.

The CFTC thanks the NFA for its assistance.

CFTC Division of Enforcement staff members responsible for this case are Kevin S. Webb, Brandon Tasco, Michael Solinsky, Charles D. Marvine, Paul G. Hayeck, and Richard Wagner. Annette Vitale of the CFTC’s Division of Swap Dealer and Intermediary Oversight also assisted in this matter.

Sunday, April 20, 2014

SEC TAKES ACTION IN FAILURE TO DISCLOSE CASE

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission announced enforcement actions against two leaders at a Las Vegas-based transfer agent firm who were responsible for disclosure failures in registration forms filed with the SEC.

Empire Stock Transfer Inc. and the two individuals agreed to settle the SEC’s charges.

Publicly traded companies typically use transfer agents to keep track of individuals and entities that own their stocks and bonds.  Transfer agents generally act as an intermediary for the company, issue and cancel certificates upon changes in ownership, and handle certificates that are lost, destroyed, or stolen.  Transfer agents must file registration forms with the SEC and include information about the individuals who control or finance the firm.  The forms must be amended whenever any information becomes inaccurate or incomplete.

An SEC examination and subsequent investigation found that Empire’s sole owner according to its registration forms – Patrick R. Mokros – failed to disclose that he relied on another individual to finance the purchase of the firm.  Also not disclosed in Empire’s forms is the fact that Mokros allowed his financier to play a significant role in the firm’s operations and receive a substantial portion of the profits.

The SEC also found that Empire’s registration forms failed to disclose the role of another leader at the firm – Matthew J. Blevins – who was hired in January 2007 to run Empire’s day-to-day operations and oversee the firm’s finances.  Empire didn’t update its registration forms to disclose the additional control person until last month as the SEC’s investigation was winding down.

“Transfer agents ensure the orderly transfer of securities, and it’s critical for such gatekeepers to accurately disclose who is financing and controlling their operations,” said Michele Wein Layne, director of the SEC’s Los Angeles Regional Office.  “Empire’s filings told a different story than what was actually happening behind the scenes.”

The SEC’s order instituting settled administrative proceedings finds that Empire, Mokros, and Blevins committed or caused violations of Sections 17(a)(3) and 17A(c)(2) of the Securities Exchange Act of 1934, and Rules 17Ac2-1(a) and (c).  Empire and Mokros agreed to pay a $50,000 penalty and Blevins agreed to pay a $25,000 penalty to settle the SEC’s charges.  Without admitting or denying the SEC’s findings, Empire, Mokros and Blevins agreed to a censure and must cease and desist from committing or causing further violations.  Empire must retain an independent compliance consultant.

The SEC’s investigation was conducted by Ronnie Lasky, Kelly Bowers, and Diana Tani of the Los Angeles Regional Office.  The examination that led to the investigation was conducted by Cindy Wong, Erik Barker, and Ed Brady of the Los Angeles office.

Saturday, April 19, 2014

HONOLULU RESIDENT CHARGED WITH USING SOCIAL MEDIA TO DEFRAUD INVESTORS

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission announced fraud charges against a Honolulu woman posing as an investment banker and soliciting investors through Twitter, Facebook, and other social media.

An SEC investigation found that Keiko Kawamura engaged in two separate fraudulent schemes to raise money from investors while casting herself as an investment and hedge fund expert when in fact she had virtually no prior trading experience.  In one scheme, she sought investors for her self-described hedge fund and posted on Twitter some screenshots of brokerage account statements suggesting she was personally obtaining incredible investment returns.  However, the account statements were not hers.  And instead of investing the money she raised from investors, she spent it on her own living expenses and luxury trips to Miami and London.  In a later scheme, Kawamura continued to boast phony experience to attract investors to her subscription service for investment advice.  She falsely told subscribers that she had been in the investment banking industry for nearly a decade and had achieved 800 percent returns in her personal brokerage account.

“As alleged in our case, Kawamura used social media to ensnare investors and raise money to support her lifestyle,” said Michele Wein Layne, director of the SEC’s Los Angeles Regional Office.  “Investors should beware of fraudsters who use social media to hide behind anonymity and reach many investors with little to no cost or effort.”

The SEC’s order instituting administrative proceedings alleges that Kawamura willfully violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 20(4)-8.  The administrative proceedings will determine any remedial action or financial penalties that are appropriate in the public interest against Kawamura.

The SEC’s investigation was conducted by Brent Smyth and Finola H. Manvelian of the Los Angeles Regional Office.  The SEC’s litigation will be led by Donald Searles.

Friday, April 18, 2014

Closing Remarks at the SEC's 24th Annual International Institute for Market Development

Closing Remarks at the SEC's 24th Annual International Institute for Market Development

FLORIDA MAN AND HIS COMPANIES ORDERED TO CEASE FICTITIOUS PRECIOUS METALS SALES

FROM:  COMMODITY FUTURES TRADING COMMISSION 
CFTC Orders Florida Resident Derek J. Bridges and His Companies, Empire Sterling Metals Corp. and I.P.M. Investments, Inc., to Cease Illegal Fictitious Precious Metals Sales

Order includes restitution award and prohibitions against future activity

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today issued an Order filing and simultaneously settling charges against Derek J. Bridges, a resident of Coral Springs, Florida, and his companies, Empire Sterling Metals Corp. (Empire) and I.P.M. Investments, Inc. (I.P.M.), for engaging in illegal, off-exchange precious metals transactions.

The CFTC Order requires Bridges and Empire jointly to pay restitution totaling $243,456.61 and Bridges and I.P.M. jointly to pay restitution totaling $14,854.41 to their customers. In addition, the Order imposes permanent registration and trading bans on Bridges, Empire, and I.P.M.

As explained in the Order, financed transactions in commodities with retail customers, like those engaged in by Empire and I.P.M., must be executed on or subject to the rules of an exchange approved by the CFTC. The CFTC Order finds that for two years beginning in July 2011, Empire, and subsequently I.P.M., solicited retail customers to engage in financed precious metals transactions, which were executed through Hunter Wise Commodities, LLC (Hunter Wise). Bridges directly solicited customers and supervised other telemarketers involved in solicitation. Bridges and the other telemarketers represented that a customer could purchase precious metals with just a deposit, such as 20 percent, and that the customer would receive a loan for the remaining 80 percent, according to the Order. In addition to interest on the “loan,” the customer also had to pay a commission and a mark-up on the total value of the metal. If the customer agreed to the transaction, the customer sent the deposit, commission, and mark-up to Empire or I.P.M., and the funds were ultimately transferred to Hunter Wise. In return, Hunter Wise paid Empire and I.P.M. a portion of the customer commissions and fees. Neither Empire, I.P.M., nor Hunter Wise bought, sold, loaned, stored, or transferred any physical metals for these transactions. Neither Empire, I.P.M., nor Hunter Wise actually delivered any precious metals to any customer. Notwithstanding the fact that no physical metal was involved, Empire’s and I.P.M.’s transactions were illegal because they were not executed on a registered exchange.

On December 5, 2012, the CFTC sued Hunter Wise in federal court in Florida charging it with engaging in the same type of illegal, off-exchange precious metals transactions engaged in by Empire and I.P.M. through Hunter Wise. In addition, the CFTC charged Hunter Wise with fraud and other violations (see CFTC Press Release 6447-12). On February 25, 2013, the Florida court granted a preliminary injunction against Hunter Wise, froze the firm’s assets, and appointed a corporate monitor to assume control over those assets (see CFTC Press Release 6522-13). On February 19, 2014, the court entered judgment against Hunter Wise for engaging in illegal precious metals transactions.

CFTC Division of Enforcement staff members responsible for this case are Daniel Jordan, Michael Loconte, and Rick Glaser.

Tuesday, April 15, 2014

The Future of Capital Formation

The Future of Capital Formation

CHARGES FILED IN ILLEGAL MANIPULATIVE TRADING CASE

FROM:  SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission charged the owner of a Holmdel, N.J.-based brokerage firm with manipulative trading of publicly traded stocks through an illegal practice known as “layering” or “spoofing.” 

The SEC also charged the owner and others for registration violations.  Two firms and five individuals agreed to pay a combined total of nearly $3 million to settle the case.

In layering, the trader places orders with no intention of having them executed but rather to trick others into buying or selling a stock at an artificial price driven by the orders that the trader later cancels.  An SEC investigation found that Joseph Dondero, a co-owner of Visionary Trading LLC, repeatedly used this strategy to induce other market participants to trade in a particular stock.  By placing and then canceling layers of orders, Dondero created fluctuations in the national best bid or offer of a stock, increased order book depth, and used the non-bona fide orders to send false signals to other market participants who misinterpreted the layering as true demand for the stock.

“The fair and efficient functioning of the markets requires that prices of securities reflect genuine supply and demand,” said Sanjay Wadhwa, senior associate director of the SEC’s New York Regional Office.  “Traders who pervert these natural forces by engaging in layering or some other form of manipulative trading invite close scrutiny from the SEC.”
Joseph G. Sansone, co-deputy chief of the SEC Enforcement Division’s Market Abuse Unit, added, “Week after week, Dondero lined his pockets by placing phony orders and tricking others into trading with him at distorted prices.  The fact that Dondero perpetrated this deceit through the entry of trade orders did not allow him to evade detection.”

The SEC additionally charged Dondero, Visionary Trading, and three other owners with operating a brokerage firm that wasn’t registered as required under the federal securities laws.  New York-based brokerage firm Lightspeed Trading LLC is charged with aiding and abetting the registration violations, and its former chief operating officer is charged with failing to supervise one of the Visionary owners who shared with his co-owners commission payments that he received from Lightspeed while he was simultaneously working as a registered representative there.

According to the SEC’s order instituting settled administrative proceedings, the misconduct occurred from May 2008 to November 2011.  Visionary Trading and its four owners – Dondero, Eugene Giaquinto, Lee Heiss, and Jason Medvin – illegally received from Lightspeed a share of the commissions generated from trading by Visionary customers.  Lightspeed aided and abetted the violation by ignoring red flags that Visionary and its owners were receiving transaction-based compensation while Visionary and its owners were not registered as a broker or dealer or associated with a registered broker-dealer firm. 

According to the SEC’s order, Lightspeed also failed to establish reasonable policies and procedures designed to prevent and detect the improper sharing of commissions between its registered representatives such as Giaquinto, who was associated with Lightspeed for part of the relevant period, and others who were not registered with the SEC in any capacity.  Lightspeed’s former COO Andrew Actman failed reasonably to supervise Giaquinto by not taking appropriate steps to address red flags indicating that Giaquinto was sharing commission payments that he received from Lightspeed with the other Visionary owners. 
The SEC’s order finds that Dondero violated Sections 9(a)(2) and 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5.  Visionary and its owners willfully violated Section 15(a)(1) of the  Exchange Act.  Giaquinto willfully aided and abetted and caused Visionary’s and his co-owners’ violations of Exchange Act Section 15(a)(1).  Lightspeed willfully aided and abetted and caused Visionary’s and its owners’ violations of Exchange Act Section 15(a)(1).  Lightspeed and Actman failed reasonably to supervise Giaquinto. 

In settling the SEC’s charges, Dondero agreed to pay disgorgement of $1,102,999.96 plus prejudgment interest of $46,792 and penalties of $785,000 for a total exceeding $1.9 million. He agreed to a bar from the securities industry.  Giaquinto, Heiss, and Medvin must each pay disgorgement of $118,601.96 plus prejudgment interest of $14,391.32 and a penalty of $35,000 for a combined total of more than $500,000 from the three of them.  They are barred from the securities industry for at least two years.  Lightspeed must pay disgorgement of $330,000 plus prejudgment interest of $43,316.54, post-order interest of $4,900.38, and a penalty of $100,000 for a total of approximately $478,000.  Actman agreed to a penalty of $10,000 and a supervisory bar for at least one year.

The SEC’s investigation was conducted by Jason Burt, a member of the Market Abuse Unit in Denver, and Thomas P. Smith, Jr. of the New York Regional Office.  It was supervised by Mr. Sansone, Mr. Wadhwa, and Daniel M. Hawke, chief of the Enforcement Division’s Market Abuse Unit.  The SEC appreciates the assistance of the Financial Industry Regulatory Authority.

Sunday, April 13, 2014

Remarks Before the SEC / Academy of Finance Student Shadowing Program

Remarks Before the SEC / Academy of Finance Student Shadowing Program

MAN CHARGED BY SEC WITH DEFRAUDING HIS ADVISORY CLIENTS

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 
SEC Charges James Y. Lee for Defrauding His Advisory Clients

On February 13, 2014, the Securities and Exchange Commission filed charges against James Y. Lee, a resident of La Jolla, California, alleging he defrauded his advisory clients.

The SEC's complaint, filed in federal district court in San Diego, alleges that Lee portrayed himself to prospective clients as a highly successful financial industry expert. According to the complaint, Lee recruited clients to open online brokerage accounts, including margin accounts in which he had discretionary authority to trade in options. He also charged his clients a management fee of as much as 50% of their monthly realized profits and promised clients that he would share equally in 50% of their realized losses. But when Lee's clients suffered large realized losses, he failed to reimburse most of them for his promised share.

The complaint alleges that Lee defrauded his clients in several ways. He charged some clients fees for the month of February 2011 based on false performance and concealed from them that they had actually incurred realized losses that month. In addition, he misled clients about his background, including failing to disclose a criminal conviction for embezzlement and an SEC cease-and-desist order for his role in illegal unregistered penny stock offerings. He also misled clients about his promise to share in realized losses and the risks of his options trading strategy. Furthermore, he traded in penny stocks in client accounts outside of his discretionary authority, and fraudulently induced one client to loan money to a penny stock company.

The complaint charges Lee with violating the antifraud provisions of the federal securities laws - Section 17(a) of the Securities Act of 1933, Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934, and Section 206(1) and (2) of the Investment Advisors Act of 1940. The SEC is seeking a permanent injunction as well as disgorgement, prejudgment interest and civil penalties against Lee.

The complaint names several relief defendants including Lee's girlfriend, his son and his close business associate as well as their respective companies. According to the complaint, Lee diverted investor funds to all of the relief defendants to avoid holding assets in his own name.

In a related matter, on February 12, 2014, the SEC settled administrative and cease-and-desist proceedings against Ronald E. Huxtable II, of Palm Coast Florida. (Rel. 33-9547) In those proceedings the SEC found that Huxtable, one of Lee's clients, aided, abetted and caused Lee's violations by helping Lee charge certain clients fees for the month of February 2011 based on false performance and conceal the fact that they had actually incurred net realized losses for that month.

The SEC's investigation was conducted by Jennifer Peltz and Delia Helpingstine and supervised by Paul Montoya. The SEC's litigation will be led by Michael Foster.

Friday, April 11, 2014

TWO WILL PAY $5 MILLION TO RESOLVE ALLEGATIONS OF SUSPICIOUS TRADING IN CALL OPTIONS OF H.J. HEINZ COMPANY

FROM:  SECURITIES AND EXCHANGE COMMISSION 
Two Previously Unknown Insider Traders in Heinz Ordered to Pay Nearly $5 Million

The Securities and Exchange Commission obtained court approval of a settlement that requires two brothers in Brazil to pay nearly $5 million to resolve charges that they were behind suspicious trading in call options of H.J. Heinz Company ("Heinz") the day before the company publicly announced its acquisition.

Final judgments entered on April 2, 2014 by the Honorable Jed S. Rakoff of the U.S. District Court for the Southern District of New York permanently enjoin Rodrigo Terpins and Michel Terpins from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The judgments also order them to disgorge, jointly and severally with Alpine Swift Ltd., a Cayman Islands entity, $1,809,857 in illegal profits made from their Heinz trading, and for each of the Terpins brothers to pay $1.5 million in civil penalties.

The SEC filed an emergency enforcement action against previously unknown traders in Heinz securities in February 2013 to freeze assets of a Swiss-based trading account used to reap $1,809,857 from trading in advance of the Heinz announcement. The SEC filed an amended complaint in October 2013 alleging that the Terpins brothers were behind that trading, which occurred through an account that belonged to Alpine Swift.

Wednesday, April 9, 2014

SEC CHARGES MAN WITH INSIDER TRADING AHEAD OF ORACLE'S ACQUISITION OF ACME PACKET INC.

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission charged a Silicon Valley man with insider trading ahead of Oracle Corporation's acquisition of Acme Packet Inc. based on confidential details he learned from his wife, a finance manager at Oracle.

The SEC alleges that Tyrone Hawk of Los Gatos, Calif., violated a duty of trust by trading after he overheard work calls made by his wife, a finance manager at Oracle Corp., regarding her company's plan to acquire Acme Packet Inc. Hawk also had a conversation with his wife in which she informed him that there was a blackout window for trading Oracle securities because it was in the process of acquiring another company. According to the SEC's complaint, Hawk bought Acme Packet shares before the acquisition was announced in February 2013, and reaped approximately $150,000 by selling after the stock price rose 23 percent on the news. Without admitting or denying the allegations, Hawk agreed to pay more than $300,000 to settle the SEC's charges.

The SEC's complaint charges Hawk with violations of Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. Hawk has settled the SEC's charges without admitting or denying the allegations. He has agreed to the entry of a judgment enjoining him from future violations of the relevant provisions of the Exchange Act, and to pay disgorgement and prejudgment interest of $154,134.50, and an additional penalty equal to his profits of $151,480.00.

The SEC's investigation was conducted by Jennifer J. Lee under the supervision of Michael S. Dicke and Jina L. Choi of the San Francisco Regional Office. The SEC acknowledges the assistance of the Financial Industry Regulatory Authority (FINRA) in this matter.

Sunday, April 6, 2014

COURT ORDERS FLORIDA MAN, COMPANY TO PAY $5.7 MILLION FOR ROLES IN COMMODITY POOL PONZI SCHEME

FROM:  COMMODITY FUTURES TRADING COMMISSION 
Federal Court Orders Ward Onsa of Marco Island, Florida and His Company, New Century Investment Management LLC of Southampton, Pennsylvania to Pay $5.7 Million Civil Monetary Penalty for Operating a Commodity Pool Ponzi Scheme

Washington, DC — The U.S. Commodity Futures Trading Commission (CFTC) today announced that on March 20, 2014, Judge Mary A. McLaughlin of the U.S. District Court for the Eastern District of Pennsylvania entered a final judgment Order imposing a civil monetary penalty of almost $6 million against Defendants Ward Onsa of Marco Island, Florida, and his company, New Century Investment Management LLC (New Century), of Southampton, Pennsylvania, in a CFTC enforcement action. The court’s March 20, 2014, Order followed an earlier default judgment Order entered on December 5, 2011, finding that the Defendants had committed fraud and imposing registration and trading bans.

The Orders stem from a CFTC Complaint filed on April 5, 2011, in which the CFTC charged Onsa and New Century with solicitation fraud, misappropriation, and issuing false account statements to commodity pool participants while operating a commodity pool Ponzi scheme (see CFTC Release 6016-11, April 6, 2011).

The court’s partial default judgment Order finds that through Onsa’s fraudulent misrepresentations at least 12 pool participants invested a total of more than $2.2 million with New Century Hedge Fund Partners I, LP to trade commodity futures and options contracts. The Order further finds that the Defendants misappropriated pool participants’ funds and used them to pay personal expenses and to pay earlier participants with newer participants’ funds in the manner of a Ponzi scheme. The Order imposes permanent trading and registration bans on Onsa and New Century, and prohibits them from violating the anti-fraud provisions of the Commodity Exchange Act, as charged.

The court’s final judgment Order concludes that based on the deterrent purposes of a civil monetary penalty (CMP), the egregiousness of the Defendants’ intentional conduct, the length of time of the Defendants’ wrongful trading activity, and the Defendants’ failure to attempt to ameliorate their wrongful conduct, the CFTC’s request for a CMP of triple Defendants’ gain is appropriate and orders Onsa and New Century to jointly pay a CMP of $5.7 million, in addition to post-judgment interest.

The Order provides that all payments made by Onsa pursuant to the Order will be applied first to satisfy Onsa’s criminal restitution obligation in U.S. v. Ward Onsa, Docket No. 10-CR-730 (DLI) (U.S. District Court for the Eastern District of New York) and, upon satisfaction of that obligation, thereafter will be applied to Defendants’ CMP obligation. In that criminal case, on July 26, 2012, Onsa was sentenced to 78 months imprisonment and on August 21, 2012, was ordered to pay restitution of $3,135,132.22 to 26 victims of various criminal schemes perpetrated by him, including the scheme involving the defrauding of New Century pool participants. Onsa is currently incarcerated at the Federal Correctional Institution located in Estill, South Carolina.

The CFTC appreciates the assistance of the Office of the United States Attorney for the Eastern District of New York.

CFTC Division of Enforcement staff members responsible for this case are Elizabeth Brennan, Philip Rix, Steven Ringer, Lenel Hickson, Jr., and Manal M. Sultan.

Thursday, April 3, 2014

CFTC ACTING CHAIRMAN WETJEN STATEMENT ON END-USERS AND DODD-FRANK

FROM:  COMMODITY FUTURES TRADING COMMISSION 
Statement of Acting Chairman Mark Wetjen at Roundtable on Dodd-Frank End-User Issues

April 3, 2014

Washington, DC—Commodity Futures Trading Commission Acting Chairman Mark Wetjen made the following statement at the public roundtable on end-users and the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).

“I am pleased the staff has convened today’s roundtable focusing on end-user issues and the Dodd-Frank Wall Street Reform and Consumer Protection Act. Congress was crystal clear that commercial end-users, which make up the overwhelming majority of companies in America, did not cause the crisis. Further, Congress was equally clear that in putting in place the significant derivatives reforms contained in Dodd-Frank, the derivative markets needed to remain accessible to end-users who rely on these markets for hedging and price-discovery needs.

“Looking ahead, the Commission must continue to remain open to revisiting certain rules and making adjustments as necessary. For example, the de minimis exception in the swap dealer definition for Special Entities – defined in the Dodd Frank Act to include federal, state, and municipal entities – was making it difficult for government-owned electric utilities to hedge key operational risks. In response, Commission staff recently issued temporary no-action relief that allows counterparties to exclude utility operations-related swaps from the 25 million dollar threshold.”

“Today, I am pleased to announce that I am putting into circulation a Notice of Proposed Rulemaking (NPRM) that would amend the de minimis exception to address this issue. Once the Commission issues the proposal, I look forward to receiving comment from the public and interested parties on this issue. I would like to thank the hardworking staff of the CFTC for convening this roundtable. I am looking forward to hearing the thoughts of everyone participating in the roundtable.”

Taking an Informed Approach to Issues Facing the Mutual Fund Industry

Taking an Informed Approach to Issues Facing the Mutual Fund Industry

SUMMARY JUDGEMENT GRANTED IN INSIDER TRADING CASE

FROM:  SECURITIES AND EXCHANGE COMMISSION 
SEC Granted Summary Judgment in Insider Trading Case Against John Kinnucan and His Expert Consulting Firm

The Securities and Exchange Commission announced that earlier today Judge Alison J. Nathan of the United States District Court for the Southern District of New York entered final judgments in the SEC's civil injunctive action against John Kinnucan and his Portland, Oregon-based expert consulting firm Broadband Research Corporation. The Court imposed judgments of $6,533,492.88 against each defendant on a joint and several basis, including disgorgement of $1,583,445.96 together with prejudgment interest of $199,790.14 and a civil penalty of $4,750,337.88. The defendants were also permanently enjoined from future violations of the Securities Exchange Act of 1934 and Rule 10b-5.

The charges against Kinnucan and Broadband stemmed from the SEC's ongoing investigation of insider trading involving expert networks. In a parallel criminal case, Kinnucan previously pled guilty to two counts of securities fraud and one count of conspiracy to commit securities fraud. Kinnucan is currently incarcerated in California.

In its complaint, filed on February 17, 2012, the SEC alleged that Kinnucan and Broadband claimed to be in the business of providing clients with legitimate research about publicly-traded technology companies, but instead routinely tipped clients with material nonpublic information that Kinnucan obtained from prohibited sources inside the companies. Clients then traded on the inside information. Portfolio managers and analysts at prominent hedge funds and investment advisers paid Kinnucan and Broadband significant consulting fees for the information that Kinnucan provided. Kinnucan in turn compensated his sources with cash, meals, ski trips and other vacations, and even befriended some sources to gain access to confidential information.

The SEC's complaint specifically alleged that in July 2010, Kinnucan obtained material nonpublic information from a source at F5 Networks Inc., a Seattle-based provider of networking technology. On the morning of July 2, Kinnucan learned that F5 had generated better-than-expected financial results for the third quarter of its 2010 fiscal year, with the public announcement scheduled for July 21. Within hours of learning the confidential details, Kinnucan had phone conversations or left messages with several clients to convey that F5's revenues would exceed market expectations. At least three clients — an analyst and two portfolio managers — caused trades at their respective investment advisory firms on the basis of Kinnucan's inside information. The insider trading resulted in profits or avoided losses of nearly $1.6 million, the amount that Kinnucan and Broadband have been ordered to disgorge.

Wednesday, April 2, 2014

TWO PRINCIPALS AND COMPANY CHARGED WITH COMMODITY POOL FRAUD BY CFTC

FROM:  COMMODITY FUTURES TRADING COMMISSION 
CFTC Charges New York-Based SK Madison Commodities, LLC and its principals, Michael James Seward and Yan Kaziyev, with Commodity Pool Fraud and Other Violations

Federal Court Issues Emergency Order Freezing Assets and Protecting Books and Records

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that on March 24, 2014, Judge Sidney Stein of the U.S. District Court for the Southern District of New York (Manhattan) issued an emergency Order freezing and preserving the remaining pool participant assets under the control of Michael James Seward, Yan Kaziyev, and their company SK Madison Commodities, LLC (SKMC), a Commodity Pool Operator based in New York City. The Order also freezes assets controlled by a successor company, SK Madison, LLC, prohibits Seward, Kaziyev, and SKMC from destroying books and records, and allows the CFTC immediate access to those records.

This emergency Order is part of a CFTC enforcement action filed on March 24, 2014. The CFTC Complaint alleges that, from as early as October 2010, Seward and Kaziyev, by and through SKMC (collectively, Defendants), fraudulently solicited more than $1.3 million from members of the public to trade futures in a commodity pool by, among other things, misrepresenting their trading practices and historical trading returns. The Complaint further alleges that the Defendants prepared and distributed to pool participants false account statements and performance reports showing huge profits, while at the same time Defendants were losing money trading futures and diverting large amounts of pool participants’ funds for Defendants’ own use. In addition to fraud, the Complaint alleges that the Defendants committed certain registration violations.

In its continuing litigation, the CFTC seeks full restitution to defrauded pool participants, disgorgement of any ill-gotten gains, the payment of appropriate civil monetary penalties, permanent registration and trading bans, and a permanent injunction from future violations of federal commodities laws, as charged.

Tuesday, April 1, 2014

MAN ACCUSED OF TRADING AHEAD OF BAD NEWS

FROM:  SECURITIES AND EXCHANGE COMMISSION 
Charges Massachusetts Resident with Insider Trading

The Securities and Exchange Commission today charged David J. Cancian of Lexington, Massachusetts, with insider trading ahead of an April 5, 2011 announcement by Massachusetts-based American Superconductor Corporation that caused the company’s stock price to tumble 42%. Cancian made profits and avoided losses of over $46,000.  Cancian has agreed to pay a total of $97,843 in disgorgement of ill-gotten gains, prejudgment interest, and a civil penalty to settle the insider trading charges.

According to the SEC’s complaint, filed in federal district court in Boston, Cancian, while having drinks on April 1, 2011 with a friend who was a senior executive at the company, learned that American Superconductor’s stock price was likely to drop.  The next trading day, April 4, 2011, Cancian sold the majority of American Superconductor stock he owned and sold “covered call options” to offset losses on the stock he continued to hold.  On April 5, 2011, after the close of trading, American Superconductor announced that its financial results for its fourth quarter and fiscal year ended March 31, 2011 would be lower than expected due to a deteriorating relationship with its primary customer, Sinovel Wind Group Co., Ltd., of China.  American Superconductor’s stock price plummeted 42% the next day.  As a result of Cancian’s trading ahead of the company’s announcement of negative news, he made profits and avoided losses of $46,930.

Cancian has agreed to settle this case, without admitting or denying the allegations in the SEC’s complaint, by consenting to a judgment enjoining him from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and ordering him to pay disgorgement of $46,930 (representing his ill-gotten gains) plus prejudgment interest of $3,983 and a civil penalty of $46,930.

The SEC’s investigation was conducted by Asita Obeyesekere, Michael Foster, and Kevin Kelcourse in the SEC’s Boston Regional Office.  The Commission acknowledges the assistance of the Options Regulatory Surveillance Authority and the Financial Industry Regulatory Authority in this matter.  The SEC’s investigation is ongoing.

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