SEC CHARGES FORMER COO WITH INSIDER TRADING

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

Litigation Release No. 23142 / November 25, 2014

Securities and Exchange Commission v. D. Michael Donnelly, Civil Action No. 4:14-cv-01970 (E.D. Mo., November 25, 2014)

SEC Charges Former Solutia Executive with Insider Trading

The Securities and Exchange Commission today charged D. Michael Donnelly, the former Chief Operating Officer of Solutia, Inc., with insider trading in the stock of Solutia based on material non-public information regarding Eastman Chemical Company’s offer to acquire Solutia.  On the morning of January 27, 2012, Solutia and Eastman announced that Eastman would acquire Solutia at an implied value of $27.65 per share for Solutia investors.  At the end of trading on January 27, 2012, Solutia’s stock price closed at $27.51 per share, approximately 41 percent higher than the previous day’s close.

According to the SEC’s complaint filed in the U.S. District Court for the Eastern District of Missouri, Donnelly knew of Eastman’s interest in acquiring Solutia and learned on November 18, 2011, that Eastman would be submitting an improved offer.  The complaint alleges that between November 18, 2011, and November 22, 2011, Donnelly made multiple purchases of Solutia stock totaling 8,130 shares in brokerage accounts in the names of his children.  The complaint also alleges that between February 2, 2012, and February 8, 2012, Donnelly sold all 8,130 shares of Solutia stock for a profit of $104,391.  The complaint alleges that Donnelly misappropriated this information for his own personal benefit and breached the duty of trust and confidence that he owed to Solutia and its shareholders.

Without admitting or denying the SEC’s allegations, Donnelly agreed to settle the case against him.  The settlement is pending final approval by the court.  Specifically, Donnelly consented to the entry of a final judgment permanently enjoining him from violations of Sections 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; requiring him to pay disgorgement of $104,391, the amount of his ill-gotten gains, plus prejudgment interest of $8,371.71, and a civil penalty of $104,391; and prohibiting him from serving as an officer and director of a public company.

SEC FILES ACTION AGAINST MAN WHO ALLEGEDLY DEFRAUDED INVESTORS

U.S. SECURITIES AND EXCHANGE COMMISSION

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

Litigation Release No. 23146 / December 2, 2014

Securities and Exchange Commission v. Levi Lindemann, Civil Action No. 0:14-cv-04834-PJS-JJK

On November 24, 2014, the Securities and Exchange Commission filed an emergency action alleging that Levi Lindemann, a former registered representative and resident of West Lakeland Minnesota, operated a fraudulent scheme through his private company, Gershwin Financial, Inc. and his sole proprietorship, Alternative Wealth Solutions. The SEC's complaint alleged that from at least September 2009 to August 2013, Lindemann raised approximately $976,000 from six investors located in Wisconsin, including elderly individuals and a member of his own family. The complaint further alleged that Lindemann told these investors that their money would be used to purchase a variety of purported investments including various notes and interests in a unit investment trust. The complaint alleged that in reality, none of these investments were ever made. The complaint charged Lindemann with violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.

After a hearing on November 24, 2014, the Honorable Patrick J. Schiltz of the United States District Court for the District of Minnesota issued an Order granting the relief sought by the SEC including a preliminary injunction, freezing assets and other emergency relief. Counsel for Lindemann consented to the relief sought by the SEC.

The SEC's investigation in this matter is continuing.

SEC CHARGES MAN WITH STEALING MONEY HE RECEIVED FROM INVESTORS

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

SEC Charges California Resident with Fraudulent Sales of Stock

The Securities and Exchange Commission today charged the owner of several now-defunct investment entities with fraudulently selling shares of stock that he claimed to own when he had actually purchased them for others a few years before.

The SEC alleges that Vinay Kumar Nevatia, who used several aliases while living in Palo Alto, Calif., sold approximately $900,000 worth of stock he supposedly owned in a privately-held information technology company called CSS Corp. Technologies (Mauritius) Limited. He deceived the buyers into believing that he owned the shares, orchestrated a series of secret wire transfers, and induced the stock transfer agent into recording his fraudulent sales. He stole the money he received from investors for his own use.

According to the SEC's complaint filed in federal district court in San Francisco, Kumar provided the true owners of the shares with fake updates on their investments for more than a year after he had disposed of their stock in these subsequent sales in 2011 and 2012. The actual owners had bought the CSS stock through Kumar in 2008. Kumar has never been registered with the SEC nor licensed to trade securities.

The SEC's complaint charges Kumar with violating Sections 17(a)(1), (a)(2), and (a)(3) of the Securities Act of 1933 as well as Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks permanent injunctions, the return of ill-gotten gains, and a financial penalty.

The SEC's investigation was conducted by William T. Salzmann, Jason H. Lee, and Cary S. Robnett of the San Francisco Regional Office with assistance from Kristin A. Snyder, Stephanie A. Wilson, Edward G. Haddad, Brian Applegate, Michael A. Tomars, and Tracey A. Bonner of the San Francisco office's examination program. Mr. Salzmann and Mr. Lee will lead the SEC's litigation. The SEC appreciates the assistance of the U.S. Attorney's Office for the Northern District of California, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority.

Remarks to the SEC Small Business Forum

Remarks to the SEC Small Business Forum

Statement on Court’s Final Judgment in Case Against Life Partners Holdings, Brian Pardo, and R. Scott Peden

Statement on Court’s Final Judgment in Case Against Life Partners Holdings, Brian Pardo, and R. Scott Peden

SEC ANNOUNCES PRISON SENTENCE FOR JEREMY FISHER FOR MISAPPROPRIATING INVESTOR FUNDS

U.S. SECURITIES AND EXCHANGE COMMISSION 

Litigation Release No. 23139 / November 24, 2014

Securities and Exchange Commission v. Jeremy Fisher, The Good Life Financial Group, Inc., and The Good Life Global, LLC, Civil Action No. 3:13-cv-00683

Jeremy Fisher Sentenced to 30 Months for Offering Fraud

The Securities and Exchange Commission announced today that on October 27, 2014, the Honorable John E. Steele of the United States District Court for the Middle District of Florida sentenced Jeremy S. Fisher to 30 months in prison, followed by 3years of supervised release and ordered him to forfeit $500,000. The Court has scheduled a hearing to set the amount of restitution to be ordered on December 15, 2014. Fisher, 44, of La Crescent, Minnesota, had previously pled guilty to two counts of wire fraud for his role in stealing over $1 million from 18 victims in an investment scam. The U.S. Attorney's Office for the Central District of Florida filed criminal charges against Fisher on January 14, 2014. Fisher was ordered to surrender on December 1, 2014, to begin serving his prison sentence.

The criminal charges arose out of the same facts that were the subject of a settled civil enforcement action that the Commission filed against Fisher on September 30, 2013. The Commission's complaint alleges that from at least August 2009 through December 2012, Fisher raised approximately $1.04 million from approximately 18 investors who invested in unregistered securities offerings conducted by Fisher through his two companies. Fisher offered investors the opportunity to invest their money through a "special trading platform" that supposedly generated significant returns. Fisher told investors that their money would be deposited in an overseas bank account and used as collateral for the purchase and sale of collateralized debt obligations and medium term notes on the trading platform. However, Fisher instead fraudulently misappropriated and converted investors' funds for his personal use to pay previous investors, to purchase a house and car and to pay his daughter's tuition and other personal and business expenses. Fisher also provided quarterly statements to investors which falsely represented that investors were earning money on their investments. The Commission's complaint alleged that Fisher and his companies violated Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint also alleged Fisher violated Section 15(a) of the Exchange Act.

On October 16, 2013 the Court in the Commission's case entered orders of permanent injunction and disgorgement, plus prejudgment, totaling $936,226 to be paid jointly and severally among Fisher and his companies and ordered Fisher to pay a civil penalty of $150,000. Fisher and his companies consented to the entry of the Court's orders.