Effective Disclosure for the 21st Century Investor

Effective Disclosure for the 21st Century Investor

HEDGE FUND MANAGER HAS EMERGENCY ENFORCEMENT ACTION FILED AGAINST HIM BY SEC

Litigation Release No. 23197 / February 13, 2015
Securities and Exchange Commission v. Mozzam "Mark" Malik and American Bridge Investment Group, LLC, d/b/a Wolf Hedge LLC, Civil Action No. 15-1025 (RJS)
SEC Charges Hedge Fund Manager Mark Malik With Stealing Investor Funds

The Securities and Exchange Commission filed an emergency enforcement action to halt an ongoing fraud by Moazzam "Mark" Malik, a Pakistani citizen and New York City resident. The SEC charged Malik and his hedge fund with stealing money from his investors.

The SEC alleges that Moazzam "Mark" Malik falsely claimed to be operating a hedge fund with approximately $100 million in assets under management, and he solicited investors with promises of consistently high returns. Although he raised $840,774 from investors, his fund never made real investments and never held more than $90,177 in assets as Malik continually withdrew the cash and spent it as his own. Despite repeated demands from investors for the return of their money, Malik has flatly refused or delayed the bulk of their redemption requests. He allegedly went so far as to create a fictitious fund employee who sent one investor an e-mail claiming that Malik had died.

According to the SEC's complaint filed in U.S. District Court for the Southern District of New York, Malik has been continuing to solicit investors amid the redemption requests. His fund has changed its name several times since he created it in 2010. Malik initially called it Wall Street Creative Partners before changing it to Seven Sages Capital LP and then American Bridge Investment Group LLC. Most recently it has been known as Wolf Hedge LLC. Malik described his fund as "a privately held Global Investment Management firm dedicated to the individuals and institutions around the world."

The SEC alleges that Malik created a fictitious "Amanda Ebert" who was identified with a title of "Investor Relations, Wolf Hedge LLC" in e-mail communications with several investors. Malik included in the e-mails a purported photograph of Ebert that he copied off the Internet. The real-life woman in the photo does not know Malik and never authorized the use of her image in the e-mails.

The SEC's complaint charges Malik and American Bridge with violating 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, and charges Malik with violations of Sections 206(1), 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The SEC is seeking a temporary restraining order to freeze their assets and prohibit them from committing further violations of the federal securities laws. The SEC seeks a final judgment ordering them to disgorge their ill-gotten gains plus prejudgment interest and pay financial penalties.

Ensuring the Proxy Process Works for Shareholders

Ensuring the Proxy Process Works for Shareholders

Statement on Making the Municipal Securities Market More Transparent, Liquid, and Fair

Statement on Making the Municipal Securities Market More Transparent, Liquid, and Fair

SEC ANNOUNCES CHARGES AGAINST MANY FOR INSIDER TRADING OBTAINED FROM A FRIEND OF A COMPANY EXECUTIVE

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

The Securities and Exchange Commission announced charges against an Atlanta resident accused of insider trading in the stock of a technology company by exploiting nonpublic information he learned from the friend of a company executive.

The SEC’s Enforcement Division alleges that Charles L. Hill Jr. made approximately $740,000 in illicit profits by trading in Radiant Systems stock on the basis of confidential inside information about an impending tender offer by NCR Corporation to buy the company.  Hill was aware that his friend who shared this nonpublic information also was a friend of a Radiant Systems executive.  Hill purchased approximately 100,000 Radiant Systems shares that were valued at nearly $2.2 million on the last trading day before the acquisition was publicly announced in July 2011.  Hill had not purchased equity securities in the previous four years, and had never before bought Radiant Systems stock.

“The SEC has rules designed to protect against misuse of nonpublic tender offer information.  We will take action against individuals who acquire such information from insiders and exploit it for their own trading benefit,” said William P. Hicks, Associate Regional Director of the SEC’s Atlanta office.

The SEC’s Enforcement Division alleges that Hill violated Section 14(e) of the Securities Exchange Act of 1934 and Rule 14e-3.  The matter will be scheduled for a public hearing before an administrative law judge for proceedings to adjudicate the Enforcement Division’s allegations and determine what, if any, remedial actions are appropriate.

The SEC appreciates the assistance of the Financial Industry Regulatory Authority.

SEC CHARGES 5 OFFSHORE BUSINESSES WITH THE OFFER AND SALE OF UNREGISTERED PENNY STOCKS INTO PUBLIC MARKETS

FROM:  U.S. SECURITIES AND EXCHANGE COMMISSION 

Litigation Release No. 23195 / February 11, 2015

Securities and Exchange Commission v. Caledonian Bank Ltd., et al., Civil Action No. 15-CV-00894

The Securities and Exchange Commission has charged five offshore entities with offering and selling unregistered penny stocks into the public markets.

According to the SEC's complaint filed on February 6, 2015, Cayman Islands-based, Caledonian Bank Ltd. and Caledonian Securities Ltd., Belize-based, Clear Water Securities, Inc. and Legacy Global Markets S.A., and Panama-based, Verdmont Capital S.A. (collectively, the "Defendants") conducted unregistered sales of securities, reaping over $75 million in illegal sales proceeds. Simultaneous with filing its complaint, the SEC obtained an emergency court order freezing assets of the Defendants located in the United States.

The SEC alleges that the Defendants sold penny stocks in unregistered distributions from their U.S. brokerage accounts of four shell company issuers, namely, Swingplane Ventures, Inc., Goff Corp., Norstra Energy Inc. and Xumanii, Inc. Each of the unregistered distributions took place through virtually the same scheme. The issuers first filed with the Commission bogus Forms S-1 that purported to register sales of securities to public investors when, in fact, no bona fide sales occurred because the securities purportedly sold remained in the control of the issuers and their affiliates. In the sham offerings, the issuers pretended to sell securities to investors residing in such places as Serbia, Mexico, Ireland, Norway, Panama, and Jamaica, while the issuers or their affiliates maintained control and possession of the stock certificates in a scheme where: (1) restricted stock was passed off as "free trading" unrestricted stock; (2) the share certificates issued were subsequently transferred, without restrictive legends, to the Defendants; and (3) the Defendants deposited the shares into their U.S. brokerage accounts and sold the shares to the public.

The complaint further alleges that the issuers or their affiliates directed the transfers of restricted securities to the Defendants, often through various offshore nominee entities intended to conceal beneficial ownership of the securities. Once the shares, which were controlled throughout by the issuers or its affiliates, were held in names of the Defendants, the shell company issuers announced a reverse-merger or business combination with a purportedly operating enterprise. The Defendants then offered and sold into the public markets hundreds of millions of shares of the four issuers in unregistered distributions simultaneously with aggressive and extensive promotion campaigns. Each of the four stocks lost virtually all of their market value within months of the unregistered sales. In doing so, the complaint alleges that the Defendants operated as affiliates, dealers, sales outlets and underwriters by offering and selling the penny stocks from brokerage accounts in the United States.

The SEC's complaint, which was filed in the U.S. District Court for the Southern District of New York, seeks, among other things, to permanently enjoin the Defendants from violating Section 5(a) and 5(c) of the Securities Act of 1933, prohibiting the Defendants from participating in an offering of penny stock, the disgorgement of all proceeds obtained in the unregistered distributions, and civil penalties.

Following the SEC's complaint, the Cayman Islands Monetary Authority issued a public notice on February 10, 2015 advising that it appointed two Controllers to assume control of the affairs of Caledonian Securities Limited and Caledonian Bank Limited. That same day, Caledonian Bank's shareholders voted to place the bank into voluntary liquidation.

The SEC's investigation, which is continuing, is being conducted by Ernesto Amparo and supervised by Anita B. Bandy. The SEC's litigation will be led by Richard E. Simpson and A. David Williams. The SEC appreciates the assistance of Financial Industry Regulatory Authority, the Cayman Islands Monetary Authority, the Quebec Autorité de Marchés Financiers, and the Republic of Serbia Securities Commission.