COURT ORDERS COLORADO MAN TO PAY $1.2 MILLION TO SETTLE CFTC FRAUD CHARGES

FROM: U.S. COMMODITY FUTURES TRADING COMMISSION

Federal Court in Colorado Orders Michael Gale to Pay More than $1.2 Million to Settle Fraud Charges in CFTC Enforcement Action


Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained a federal court Order against Defendant Michael Gale of Littleton, Colorado, individually and doing business as Capital Management Group, requiring him to pay $479,402.35 in restitution to defrauded customers. The Consent Order of Permanent Injunction, entered on June 25, 2013, by Senior U.S. District Judge John L. Kane of the District of Colorado, also imposes a $750,000 civil monetary penalty. The Order imposes permanent trading and registration bans against Gale and prohibits him from violating the anti-fraud provisions of the Commodity Exchange Act (CEA), as charged.

The Order stems from a CFTC Complaint filed July 25, 2012, that charged Gale with fraudulently operating a commodity futures pool, making false statements and providing false tax records to prospective and actual pool participants, misappropriation of pool funds, commingling of pool funds, and failing to register with the CFTC as a commodity pool operator (see CFTC Press Release 6324-12).


The Order finds that Gale solicited and accepted approximately $900,000 from at least nine participants to invest in his commodity pool. Gale lied about his trading record and the pool’s profitability and value, and rather than trade the pool participants’ funds, Gale deposited only a fraction of the funds into an account for trading, and used much of the pool participant money to pay his business and personal expenses, the Order finds. In order to perpetuate the fraud, Gale continued to represent that investments in his pool were profitable and distributed false account performance documentation and false tax records to actual and prospective pool participants, according to the Order. In fact, the Order finds, Gale knew the representations were false because he knew his trading was not profitable and that he had misappropriated significant portions of the pool’s money.

CFTC Division of Enforcement staff members responsible for this case are Allison Passman, Mary Elizabeth Spear, Ava Gould, Scott Williamson, Rosemary Hollinger, and Richard Wagner.

CFTC COMMISSIONER CHILTON'S ADRESS TO THE TRADING SHOW CHICAGO 2013

FROM: U.S. COMMODITY FUTURES TRADING COMMISSION,

"The Anatomy of Speed"

Keynote Address of Commissioner Bart Chilton to the Trading Show Chicago 2013, Chicago, Illinois
June 24, 2013
Jambo!

Jambo! Hello. I wanted to lay a little Swahili greeting on you this morning because we are going to talk a little about Tanzania and technology. Isn’t that what you were expecting, a little Tanzania and technology? Jambo … and you say … Jambo. That’s very good! A hearty hello to you. See how we are already learning and having some fun. Let’s keep it going. I have some new information and data to share with you later.



Magazines
Does anyone here still read magazines, ya know made of paper, that sorta stuff? I do. I still do. Remember when folks used to collect magazines? One collectable magazine was usually stored in your father’s closet.

The other one I’m thinking of was stored in a den or basement. It was a different size and had a yellow binder. I want you guys to all say it out loud. One thoughtful guess in: three, two one, go! You got it, National Geographic. Whoever said the phone book must have had a late night.

We still get Nat Geo at our house and I love it. Sure I enjoy Bloomberg Businessweek but that’s so much like work for me, it’s not very relaxing. I categorically enjoy Rolling Stone, especially Matt Taibbi’s great writing (although sometimes that’s a little like work for me), but the rest of Rolling Stone is just entertaining and enjoyable fun stuff. I can never get enough of Mick and Keith or the Boss. But Nat Geo is really neat in that it takes you to faraway places and has those wonderful photographs.

Last November I was reading a Nat Geo and there’s this story "Cheetahs on the Edge" written by Roff Smith with photos by Frans Lanting. It’s really very well done. It starts off in Tanzania. (How do you say hello in Swahili? Jambo!)

The story describes how the cheetahs live, how they can survive in the cold and heat, and how they are so very adept at knowing the territory and terrain to provide their prey the fewest opportunities to escape. I just couldn’t help but think of the similarities between actual cheetahs and market cheetahs. Quite frankly, I have not once felt that I gave HFTs an incorrect moniker. Reading this article confirms it all in my mind. It is very apt, indeed.

Market cheetahs are out there almost all of the time searching for their food—micro dollars—in milliseconds. They know the market terrain super well, just like cheetahs in the wild in Tanzania.

The Nat Geo story conveys how cheetahs have been, and are today, highly-prized. Well, I’m sure there are a lot of law firms that would like to have a few highly-prized cheetahs on retainer. I’m sure a lot of politicians would value a good campaign-related relationship with some of these cheetahs. Strike that; I know many already do have those relationships right here in this town.

The Nat Geo story also notes that cheetahs are actually a breed apart, a distinct genus, in fact—unlike the other big cats. Cheetahs have claws that are only semi-retractable and work like a sprinter’s shoes which allow them to go from zero to 60 mph in three seconds! And cheetahs aren’t just fast; they have a super short turning radius. They can change directions in a flash, or quicker than a flash. Well, duh on the market cheetahs. They may be like automated trading systems (ATSs) in some ways, like cheetahs in the wild are similar to lions, but they are both distinctly different from other cats in the wild and in markets. The speed of our market cheetahs make them definitively diverse from anything we have seen before. They are a breed apart.

Finally, a study late last year, which was conducted in conjunction with the CFTC, said in essence that cheetah trading imposes quantifiable costs on small investors. Aggressive cheetahs make a lot of money, and they make their biggest paydays when they trade with small, traditional traders. A cheetah trading with a fundamental trader makes $1.92 on a $50,000 trade but if that same trade is made with a small trader, the number goes up to $3.49. This could end up pushing smaller, non-cheetah traders out of markets.

All this is to say that the term cheetah for HFTs is more fitting today than ever. For the record, the word for cheetah in Swahili is "duma." Sounds like puma, but duma with a "d." Got it? Good, there may be a quiz.


The PROTECT Act—HR 2292
One thing I dislike is repeating things I’ve said, particularly when someone in the audience may have heard me discuss the matter before. One can’t avoid it all the time, but I try. In this regard, I’ll just say that I’ve been calling for a few key things to regulate the cheetahs over the years. I won’t go through them all because thankfully there has been some new and thoughtful leadership on these issues in Congress.

Representative Ed Markey has been one of my heroes since I began working in the House of Representatives back in 1985. I couldn’t be more impressed that he has taken it upon himself and his staff to work in this regard and I’m very supportive of his thoughtful legislation, HR 2292, the PROTECT Act. The legislation would require cheetah registration, testing, kill switches, and increased penalties for violations of the Commodity Exchange Act (CEA). The provisions of the PROTECT Act related to penalties aren’t just for cheetahs, but for all violations of the CEA. It would increase penalties from the current $140,000 fine per violation to $1,000,000 for individuals and $10,000,000 for entities. And the PROTECT Act gives discretion to the CFTC for how often a violation occurs. Currently, a violation has been considered to be only once per day. That makes no sense in today’s millisecond market environment. It is my hope that the PROTECT Act will become part of legislation to reauthorize the CFTC this year.


Cheetahs Today—New Data
Alright, with all that done, let’s get to some new stuff, shall we? Cheetahs are relatively new to markets. There isn’t one single word in any of the recent financial reform law—Dodd-Frank—about HFTs. Yet, they comprise a large percentage of the daily trading volume—roughly 30 to 50 percent. That’s an average. There are times—feeding times—when they have a much greater percentage of the volume. In fact, some new data I’m discussing for the first time today is fascinating.

Here it is: During the last year, we looked at 20 million trading seconds. Of those 20 million, we pinpointed 189,000 seconds, primarily around the open and close of markets. In those 189,000 seconds we found something astounding: Cheetahs traded at rates of 100-500 trades per second in a major commodity market! By any standards that exist, or have ever been discussed in public, that’s a shell-shocker data point. Trading 100 to 500 times per second, as a cluster, in one commodity contract? Holy mother of cheetahs! That's a mammoth market number any way you look at it. It’s actually pretty hard to even comprehend. This is my head exploding—pooofff!

If anyone says they know all about what’s going on with these cheetahs and markets, don’t believe them. How could they? Are they from another planet and have superhuman supercomputer powers? The best case is that some very smart folks know a portion of what is going on. But to suggest that they understand all of this isn’t correct. And, what is going on at this incomprehensible rate raises all sorts of policy, oversight and enforcement issues that our Commission needs to consider.


Fantasy Liquidity
One such issue has been sort of a dirty little secret. That’s the matter of fantasy liquidity created by what are called "wash" trades.

If one trades with yourself, that is putting a price out and hitting that price for yourself, you take no risk, yet create the market impression that a legitimate trade has occurred. It appears to the market as if there is liquidity. If this was only for a few trades, it wouldn’t make much of a difference to the market. It wouldn’t seem like much liquidity. However, if there is a lot of trading going on with only one trader "washing" the trades by themselves, that is not only wrong; it is illegal.

Section 4c of the Commodity Exchange Act states that it is: "unlawful for any person to offer to enter into, or confirm the execution of a transaction involving the purchase or sale of any commodity for future delivery … if the transaction … (i) is, of the character of, or is commonly known to the trade as, a ‘‘wash sale."

At the same time, there are exchange rules out there that say, "No person shall place or accept buy and sell orders in the same product and expiration month … where the person knows or reasonably should know that the … transaction(s) [is a] wash sale(s). Buy and sell orders for different accounts with common beneficial ownership that are entered with the intent to negate market risk or price competition shall also be deemed to violate the prohibition on wash trades." Another exchange rule says, "No Market Participant shall … make or report any wash trade...."

Wash sales are clearly a violation of the law, and against exchange rules. When they occur, they create fantasy liquidity. However, given the enormous volumes, I believe some cheetahs are engaging in this type of activity—that is, trading that arguably could qualify as "wash" trading under the CEA.

I’ve asked: Why would cheetahs do that? Are they trying to create fantasy liquidity in an effort to entice easy prey into the markets so that the cheetahs can pounce? That theory is something I’ve suggested we review at the Agency.

Here’s another theoretical answer to my question about why cheetahs might be engaged in creating fantasy liquidity: Many cheetahs are part of exchange market maker programs. Market maker programs pay traders for providing liquidity. When there’s lots of what is perceived as trading volume, it encourages others to trade. When there’s lots of liquidity, exchanges can boast their markets are deep and liquid. So, exchanges often pay cheetahs and other market makers to trade.

However, if a cheetah is truly washing the trades, they aren’t taking on any market risk whatsoever and they are violating the law. The fantasy liquidity may make it appear positive for exchanges, but the exchanges can’t allow that to occur.

By the way, wash trading is clearly unfair to other traders and, if it impacts price discovery, unfair to consumers.


Wash Blockers—For Cleaner Markets
So, one might think the exchanges would put in place what are called "wash blockers." And great, "wash blockers—for cleaner markets!" Guess what, proposed guidance from an exchange—the CME—on this issue is on the table right now.

You might think that as a regulator who has complained about voluminous wash sales that I’d be all for it. You exchange folks go to town—implement, implement, implement. But, whoa doggies, not so fast. What is it they are going to do exactly? How are they going to do it? Are all exchanges going to do the same thing? If not, does one exchange have a better idea than the other? Do we have a better idea? Are there any mitigating circumstances that the Commission needs to consider prior to allowing the exchanges to implement these wash blocker measures?

Well, for me, all of those questions, as well as a few others, need to be vetted internally before we allow the exchanges to self-certify and move forward.

My concern is the same concern that I’ve had with cheetahs and technology in markets, in general. We have all too often just accepted things that are occurring or that folks want to do. The results are that we see market SNAFUs all the time. I used to keep a list of all of the tech issues gone bad. It became too long. We need to take a deep breath and ensure that we know, to the best of our ability, what might occur. Regulators are always so darn reactive. Rather, we need to be more nimble and quick and think about what might be around the corner.

That’s why today, I’m suggesting that we take a chill pill on allowing the new wash blocker guidance without a more thorough review. I’m not saying in a few weeks or so we won’t give the go ahead. I’m just saying, right now there are simply too many unanswered questions that need to be addressed from an oversight and surveillance perspective, and potentially from an enforcement perspective.


Looking into your Dens
On that happy note, I guess I want to leave our fine furry cheetah friends with a message. You are the fastest predators in the market and we are watching you. That doesn’t mean we have all the tools or resources we need or want. We don’t. But, we are working on it. We have, as of fairly recently, developed the capacity to see trades in the milliseconds. That is, one-one-thousandth of a second. We can see what you are doing. We can see all of your trading, even when it is many, many times per second. We won’t stop at getting your instant messages, your emails or your text messages. We are going to come into your dens and look and analyze with experts your algo programs to see if you are violating the law. New regulatory world order, cats. If you are playing by the rules, and I know many of you are, all will be cool. You won’t have anything to worry about. If you aren’t playing by the rules, watch out. You can’t hide. We may be slower than you, but we are a persistent breed of our own.


Asante!
Finally, we all want efficient and effective markets that are devoid of fraud, abuse, manipulation and things like wash trading. Right? Right. That will make it better for everyone. It will make it better for other market participants, but it will make it better for consumers and our nation’s economy.

Asante! That means thanks. Asante, asante, guys. Thank you

CHICAGO RESIDENT ORDERED TO PAY OVER $1.3 MILLION TO SETTLE SETTLE FOREX PONZI SCHEME

FROM: U.S. COMMODITY FUTURES TRADING COMMISSION
Federal Court Orders Chicago Resident Christopher Varlesi to Pay over $1.3 Million to Settle Ponzi Scheme Fraud and Misappropriation Action

Varlesi used misappropriated investor funds for business and personal expenses, such as entertainment, travel, restaurants, his children’s tuition, and spa treatments

Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today announced that it obtained a federal court Order against Defendant Christopher Varlesi of Chicago, Illinois, individually and doing business as Gold Coast Futures and Forex, requiring him to pay restitution of more than $638,000 to defrauded investors and a $700,000 civil monetary penalty. The consent Order of permanent injunction, entered June 12, 2013, by Judge James B. Zagel of the U.S. District Court for the Northern District of Illinois, also imposes permanent trading and registration bans against Varlesi and prohibits him from violating the anti-fraud provisions of the Commodity Exchange Act (CEA), as charged.

The Order stems from a CFTC Complaint filed March 7, 2012, charging Varlesi with fraudulently operating a commodity pool to trade commodity futures and off-exchange foreign currency (forex), making false statements to pool participants, misappropriating pool funds, and failing to register with the CFTC as a Commodity Pool Operator.

The Order finds that Varlesi solicited and accepted at least $1.7 million from at least 20 individuals to trade commodity futures and forex contracts by touting his past trading record and ability to profitably trade futures and forex contracts. In exchange for their investment, Varlesi issued promissory notes to pool participants purportedly paying a fixed monthly interest rate on principal, according to the Order. However, Varlesi used no more than $220,000 of the $1,716,169 that he accepted from pool participants to trade commodity futures and forex contracts, the Order finds. Varlesi spent misappropriated investor funds on business and personal expenses, including food, utilities, gas, life insurance, entertainment, travel, restaurants, his children’s tuition, and spa treatments and used approximately $1,343,471 to pay participants purported profits in the manner of a Ponzi scheme, according to the Order.

To perpetuate the fraud, Varlesi made false verbal representations and provided pool participants with fabricated account statements and false account performance documentation, showing that their investments were growing, according to the Order. In fact, the Order finds that Varlesi knew the representations, statements, and account performance documentation were false because he failed to disclose to pool participants that he had misappropriated a significant amount of the pool’s money.

In or around March 2011, Varlesi stopped making interest payments on the promissory notes and admitted to a pool participant that there was no money in his account, the Order finds. Furthermore, despite subsequent promises to repay the pool participants, Varlesi has not done so and still owes 17 pool participants approximately $638,227, the Order finds.

The CFTC appreciates the assistance of the United States Attorney’s Office for the Northern District of Illinois and the Illinois Secretary of State Securities Department.

CFTC Division of Enforcement staff members responsible for this case are Robert Howell, Mary Elizabeth Spear, Ava M. Gould, Scott Williamson, Rosemary Hollinger, and Richard Wagner.

SEC CHARGES COMPANY AND OWNER WITH MAKING MISLEADING STATEMENTS REGARDING FDA APPROVAL

FROM: U.S. SECURITIES AND EXCHANGE COMMISSION

SEC Files Charges in Investment Scheme Involving Company Promoting Purported Alzheimer's Treatment
 The Securities and Exchange Commission announced that it filed a civil lawsuit against Nevada corporation Your Best Memories International Inc. and its president, Robert Hurd, of Los Angeles, California, for misleading investors in Your Best Memories about how their funds would be used and for making misleading statements that one of the products touted to investors had received approval from the U.S. Food and Drug Administration as a treatment for Alzheimer's Disease. Also charged was Kenneth Gross, of Porter Ranch, California, for selling Your Best Memories stock without being registered as a broker-dealer as required by the federal securities laws.


According to the SEC's complaint, Your Best Memories purportedly was in the business of raising money from investors on behalf of Moving Pictures, Inc., a Massachusetts-based company in the business of developing products intended to improve memory function in individuals suffering from Alzheimer's disease, dementia or memory loss. The complaint alleges that, in total, Your Best Memories raised approximately $1.2 million from more than 50 investors in an offering of securities that was not registered with the SEC as required under the federal securities laws.

Specifically, the complaint alleges that investors were told by Hurd and Your Best Memories that their funds would, in large part, fund the development and marketing of Moving Pictures' memory enhancing products. According to the complaint however - unbeknownst to investors and contrary to Hurd and Your Best Memories' representations - a mere 17% of the funds raised by Your Best Memories was forwarded to Moving Pictures for their intended purposes. The SEC alleges that Hurd funneled at least 37% of investor funds to himself, by transferring money to another of his companies, Smokey Canyon Financial, Inc., or simply by making cash withdrawals of investor funds. The SEC named Smokey Canyon as a relief defendant, alleging that it was unjustly enriched by its receipt of investor funds. The SEC also alleges that Hurd and Your Best Memories further defrauded investors by making Ponzi payments (using investors' principal to make payments purporting to be investment returns to other investors) and that Hurd and Your Best Memories misled investors by falsely stating that they had secured FDA approval to sell coconut oil as a treatment for Alzheimer's disease, when in fact the FDA never approved such a claim.

The SEC's complaint charges Hurd and Your Best Memories with violations of Sections 5(a) and (c) and 17(a) of the Securities Act of 1933 as well as Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and charges Hurd with aiding and abetting violations by Your Best Memories of Section 17(a)(2) of the Securities Act as well as with control person liability under Section 20(a) of the Exchange Act. The complaint also charges Gross with violations of Sections 5(a) and (c) of the Securities Act and Section 15(a) of the Exchange Act. The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest and civil penalties against Your Best Memories, Hurd and Gross. The SEC is also seeking disgorgement and prejudgment interest against relief defendant Smokey Canyon.







































 

PENNY STOCK PROMOTER CHARGED FOR ATTEMPTING TO GENERATE FALSE APPEARANCE

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION

SEC Charges San Diego-Based Promoter in Penny Stock Scheme

The Securities and Exchange Commission today charged a penny stock promoter in the San Diego area for fraudulently arranging the purchase of $2.5 million worth of shares in a penny stock company in an attempt to generate the false appearance of market interest and induce other investors to purchase the stock.

The SEC alleges that David F. Bahr of Rancho Santa Fe, Calif., artificially increased the trading price and volume of iTrackr Systems stock when he conspired with a purported businessman with access to a network of corrupt brokers. What Bahr didn't know was that the purported businessman was actually an undercover FBI agent. During a test run of their arrangement, Bahr paid a $3,000 kickback in exchange for the initial purchase of $14,000 worth of iTrackr shares.
In a parallel action, the U.S. Attorney's Office for the Southern District of California today filed criminal charges against Bahr.

The SEC also has issued an order to suspend trading in iTrackr securities.
According to the SEC's complaint filed in federal court in San Diego, Bahr set out to give the markets a false impression of supply and demand in iTrackr stock where none actually existed. He coordinated the purchase of iTrackr shares so the stock price could remain high enough for him to effectively promote it at a later date and artificially inflate the price even higher. Bahr arranged for the dissemination of promotional material that overstated the likelihood of iTrackr's success and future profits.

According to the SEC's complaint, Bahr connected with the undercover agent in November 2012 and was told that that he represented a group of registered representatives who had trading discretion over certain client accounts. In exchange for a 30 percent kickback, the brokers could arrange to purchase iTrackr stock through their customers' accounts and hold the shares for up to a year in order to avoid sales that might decrease iTrackr's stock price. Bahr agreed to pay the kickback and sought the purchase of 10 million iTrackr shares at an average of 25 cents per share for a total of $2.5 million. Bahr agreed not to disclose the kickback to any iTrackr investors.

According to the SEC's complaint, Bahr agreed to a test run involving the purchase of modest amounts of iTrackr stock on the open market, and Bahr would then pay a small commission. During the first week of December 2012, a total of 135,000 iTrackr shares were purchased, which represented approximately 32 percent of iTrackr's trading volume during that time. Bahr was then informed that the test purchases totaled approximately $14,000, and he owed a $4,000 commission. Bahr paid $3,000 through a wire transfer, and he asked another person to pay the remaining $1,000.
The SEC's complaint alleges that Bahr violated Section 17(a)(1) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint seeks financial penalties, a penny stock bar, and a permanent injunction against Bahr.

The SEC's investigation, which is continuing, has been conducted by Marc Blau and Sara Kalin of the Los Angeles Regional Office. The SEC acknowledges the assistance of the U.S. Attorney's Office for the Southern District of California, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority (FINRA).

SEC CHARGES PENNY STOCK PROMOTER WITH FRAUD

FROM: U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C., June 18, 2013 — The Securities and Exchange Commission charged a penny stock promoter in the San Diego area for fraudulently arranging the purchase of $2.5 million worth of shares in a penny stock company in an attempt to generate the false appearance of market interest and induce other investors to purchase the stock.

The SEC alleges that David F. Bahr of Rancho Santa Fe, Calif., artificially increased the trading price and volume of iTrackr Systems stock when he conspired with a purported businessman with access to a network of corrupt brokers. What Bahr didn’t know was that the purported businessman was actually an undercover FBI agent. During a test run of their arrangement, Bahr paid a $3,000 kickback in exchange for the initial purchase of $14,000 worth of iTrackr shares.

In a parallel action, the U.S. Attorney’s Office for the Southern District of California today filed criminal charges against Bahr.

"Bahr tried to artificially inflate the price and volume of iTrackr shares to the detriment of retail investors who wouldn’t have known the real story behind the flurry of market activity," said Michele Wein Layne, Director of the SEC’s Los Angeles Office. "Working with criminal authorities, we were able to stop Bahr’s misconduct before he could seriously impact the markets and harm investors."

According to the SEC’s complaint filed in federal court in San Diego, Bahr set out to give the markets a false impression of supply and demand in iTrackr stock where none actually existed. He coordinated the purchase of iTrackr shares so the stock price could remain high enough for him to effectively promote it at a later date and artificially inflate the price even higher. Bahr arranged for the dissemination of promotional material that overstated the likelihood of iTrackr’s success and future profits.

According to the SEC’s complaint, Bahr connected with the undercover agent in November 2012 and was told that that he represented a group of registered representatives who had trading discretion over certain client accounts. In exchange for a 30 percent kickback, the brokers could arrange to purchase iTrackr stock through their customers’ accounts and hold the shares for up to a year in order to avoid sales that might decrease iTrackr’s stock price. Bahr agreed to pay the kickback and sought the purchase of 10 million iTrackr shares at an average of 25 cents per share for a total of $2.5 million. Bahr agreed not to disclose the kickback to any iTrackr investors.

According to the SEC’s complaint, Bahr agreed to a test run involving the purchase of modest amounts of iTrackr stock on the open market, and Bahr would then pay a small commission. During the first week of December 2012, a total of 135,000 iTrackr shares were purchased, which represented approximately 32 percent of iTrackr’s trading volume during that time.

Bahr was then informed that the test purchases totaled approximately $14,000, and he owed a $4,000 commission. Bahr paid $3,000 through a wire transfer, and he asked another person to pay the remaining $1,000.

The SEC’s complaint alleges that Bahr violated Section 17(a)(1) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5. The complaint seeks financial penalties, a penny stock bar, and a permanent injunction against Bahr.

The SEC’s investigation, which is continuing, has been conducted by Marc Blau and Sara Kalin of the Los Angeles Regional Office. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of California, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority (FINRA).