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Google Romney going to jail
http://www.dailypaul.com/247860/attorney-richard-gilbert-could-romney-go-to-jail-for-85-billion-fraud
SEC Charges Boiler Room Operators in Penny Stock Manipulation Scheme
01/26/2012 04:24 PM EST
Max - Thank you for your reply. I'm not a member so can't respond privately. I share you concerns (unrelated to Tytan). Happy holidays to you and yours as well.
Max - You've left TYTN. I see that you have VUIFinancial down as one of the crooked IR firms which TYTN had used but supposedly fired. Would you be willing to share what led to your seeming change of heart with TYTN (besides the .0002 share price)?
TIA
Add Robert Thayer of SMVI. Blatant scam of a company. Some DD by other scammed investors (including myself) uncovers that Thayer is a crook. See the SMVI IHub board.
The company is now dark (OTCMarkets.com) and so is investors' money.
SEC Toughens standards for Reverse Merger Companies
SEC Approves New Rules to Toughen Listing Standards for Reverse Merger Companies
thanks its all team effort to show scams
SEC Microcaps Roundtable "NOTES & Hilites"
Roundtable on the Execution, Clearance and Settlement of Microcap Securities
Roundtable Agenda
U.S. Securities and Exchange Commission
100 F Street N.E. Washington, DC
Station Place I Multipurpose Room
October 17, 2011
1:00 p.m. Call to Order and Opening Remarks: Chairman Mary Schapiro and Robert Khuzami, Director of the Division of Enforcement
Panel 1 — Compliance Challenges Associated with Microcap Securities
Moderator: Peter Curley, Associate Director, Division of Trading and Markets.
Panelists:
Claire Santaniello — Managing Director and Chief Compliance Officer, Pershing
Mihal Nahari — Chief Compliance Officer, The Depository Trust & Clearing Corporation (“DTCC”)
Thomas Merritt — Senior Managing Director, Deputy General Counsel and Corporate Secretary, Knight Capital Group
Steven Nelson — Chairman, Continental Stock Transfer and Trust Company
Marvin Pickholz — Partner, Duane Morris
Brian Lebrecht — Founder, The Lebrecht Group, APLC
David Chapman — Director, Department of Market Regulation, FINRA
Panel 2 — Anti-Money Laundering Monitoring
Moderator: Sarah Green, Bank Secrecy Act Specialist for the Office of Market Intelligence
Panelists:
Betty Santangelo — Partner, Schulte Roth & Zabel
Susan DeSantis — Managing Director and Deputy Chief Compliance Officer, DTCC
Lynne Johnston — US Head of Anti-Money Laundering Compliance, RBC Capital Markets
Harold Crawford — Global Director of Anti-Money Laundering & Sanctions, Brown Brothers Harriman & Co.
Aaron Fox — Managing Director, IPSA International Inc.
Jeff Horowitz — Managing Director and Chief Anti-Money Laundering and OFAC Officer, Pershing
Bill Park — Director, FINRA Department of Enforcement
Panel 3: Potential Changes to the Regulatory Framework Concerning Microcap Securities
Moderator: John Polise, Associate Director, Office of Compliance, Inspections and Examinations.
Panelists:
David Feldman — Partner, Richardson & Patel LLP
Susan Merrill — Partner, Bingham McCutchen
Chris Stone— Vice President of Equity Products, FINRA
Susan Grafton — Of Counsel, Gibson, Dunn & Crutcher
Walter Van Dorn — Partner, SNR Denton US LLP
R. Cromwell Coulson — President, Chief Executive Officer and Director, OTC Markets Group
SEC Roundtable on MicroCaps "Video" has been archived now. It's worth listening to even if it's over 3 Hrs long :)
Roundtable on the Execution, Clearance and Settlement of Microcap Securities Monday, October 17, 2011
http://www.sec.gov/news/otherwebcasts/2011/microcaproundtable101711.shtml
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=68186849 (posted by Janice Shell)
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 22126 / October 14, 2011
Securities and Exchange Commission v. Joseph P. Cillo, Civil Action No. 8:11-cv-02320 (M.D. Fla. October 14, 2011)
On October 14, 2011, the Securities and Exchange Commission (“Commission”) filed a Complaint for Injunctive and Other Relief (“Complaint”) in the United States District Court for the Middle District of Florida in Tampa against Joseph P. Cillo (“Cillo”). This matter involves repeated violations of a penny stock bar by Cillo over a three year period from December 2007 through December 2010.
The Complaint alleges that in November 2007, through a reverse merger with a penny-stock shell company, Cillo became the CEO and controlling shareholder of eFUEL EFN Corp. (“eFUEL”), a purported web development company then based in Tampa, Florida and listed on the OTC Market Group’s “OTC Pink” market tier (formerly the “Pink Sheets”) under the symbol “EFUL.” It further alleges that in connection with an ongoing market manipulation investigation involving eFUEL and other related entities and individuals, the SEC determined that Cillo engaged in various activities related to, and for the purpose of, issuing, trading, and inducing the purchase of eFUEL’s stock. Specifically, Cillo (1) offered and/or issued hundreds of millions of shares of eFUEL stock to third-parties as purported payment for debts and services, (2) drafted and approved multiple press releases touting the company’s business plan and development prospects, and (3) prepared, signed, and submitted periodic reports to the OTC Markets Group in order to comply with the Pink Sheets’ minimal requirements for “adequate current information.” These activities constituted violations of a 1995 Commission order barring Cillo from participating in the offering of any penny stock.
The Complaint alleges that the defendant has violated Sections 21(d)(1) and (e) of the Securities Exchange Act of 1934 (“Exchange Act”) based on his violations of the previous Commission order and Section 15(b)(6)(B)(i) of the Exchange Act. The Commission seeks permanent injunctive relief, an order commanding future compliance with the Commission’s bar, disgorgement plus prejudgment interest, and civil penalties.
http://www.sec.gov/litigation/litreleases/2011/lr22126.htm
i cant pm you. what r u angry about. i hope you know better not to make decisions based on what other people say. or maybe you're just happy bc you think i lost money- thats odd.
i didnt see the tankage coming yet i managed to get out green. why havent you posted in public ever since 4/13/09?
Trade for Trade status = Good or Bad ?
"shifting any security to trade-for-trade certainly protects the interests of the existing investors and it also keeps speculative forces/players at bay from manipulating large intra day movements of the price."
Penson Important Info Links
Penson is a clearing firm for lots of discounted brokers and causing lots of problems for traders.
> Penson under investigation Over Possible Violations Of Securities Laws
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=66717518
> Multi Class Action Lawsuits Against Penson Worldwide
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=66717401
> What Triggered Pensons Problems
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=66834506
> Penson's restructuring plans & Letter of New Low price Security Policy
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=66717970
> MicroCap Stocks under a Dime "Article" (Non-DTCC / PENSON / Broker situation)
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=66687899
> Penson Discontinues Execution for Certain Non-DTCC Eligible Securities (incl. Non-DTCC stock list)
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=66063696
> Non-DTCC Eligible Search Utility
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=66063830
$POS
List of Market Makers
http://www.otcmarkets.com/otc-pink/marketActivity/market-maker-info
$TIPS
LFBG - Splitting 1 for 500. From PRE 14c filed 9/23/11:
"This Information Statement informs stockholders of actions taken and approved on September 23, 2011 by the principal stockholders of the Company’s Common Stock and Series C Preferred having the voting rights equivalency of 10,122,333,092 shares of Common Stock (collectively, the “Majority Stockholders”). The Majority Stockholders are the beneficial owners of approximately 55.04% of the issued and outstanding shares of voting capital stock of the Company. The only item approved by written consent of the Majority Stockholders was as follows:
(i)
To effect a One (1) for Five Hundred (500) reverse stock split (1:500), whereby, on October 24, 2011 (subject to FINRA review of the reverse split and its notification date to the markets), for every five hundred shares of Common Stock then owned, each stockholder shall receive one share of Common Stock, with fractional shares being rounded up the nearest whole number.
On the date of the actions taken and approved by the written consent by the Majority Stockholders, there were issued and outstanding (i) 8,379,641,409 shares of Common Stock, (ii) 3,586,245 shares of Series A Preferred Stock, (iii) 7,890,529 shares of Series B Preferred Stock, (iv) 10,000 shares of Series C Preferred Stock, and (v) 9 shares of Series D Convertible Preferred Stock (collectively, the “Preferred Stock”). Each share of Common Stock, Series A Preferred Stock and Series B Preferred Stock is entitled to one vote. Each share of Series C Preferred Stock has the voting equivalency of one million (1,000,000) shares of Common Stock which means the 10,000 issued and outstanding shares of Series C Preferred Stock have the voting equivalency to 10 billion shares of Common Stock. All of the issued and outstanding shares of Series C Preferred Stock is held by Troy A. Lyndon, the Company’s Chief Executive Officer, President and Chairman. The shares of Series D Convertible Preferred Stock have no voting rights, however, each share of Series D Convertible Preferred Stock is immediately convertible into one million (1,000,000) shares of the Company’s Common Stock."
Ways of a Market Maker: Market Maker Speaks Out
I was an OTC MM for about 10 years ending in the late 80's. Since then I have been strictly an investor. Since I have not been that up to date in MM rules I will only make statements that I feel fairly confident are still accurate regarding these activities. By and large most MM don't have a clue nor do they care to learn, about the fundamentals of the stocks they trade.
They just try to make orderly markets. When dealing with BB stocks it is very easy for a MM to get trapped into being short in dealing in a fast moving market. Reason being; most of the MM's in this stock are what are called "wholesalers" this means they don't have retail brokers "working" the stocks.
So they have to rely on what's known as the "call" from larger retail houses. If a "Big" retail firm like an E-trade calls up a market maker to purchase say 5,000 shares of a stock, they expect to get an "execution" from that market maker. If he turns them down, or only gives a partial then the "Big" firm will go to another MM.
If this second MM "fills the order" then that "Big" firm has a moral obligation to continue to give future "business" in that stock to that MM who performed (his life blood). This will go on until he "fails" to perform and so on.
Contrary to popular opinion the "Big" firms Do NOT neccessarily go to the "Low Offer" to fill a buy order (Or high bid for a sell). They "Go" to who they think will perform to fill the order and expect that MM to "match" the "low offer" in the case of a buy (bid in the case of a sell). Even though this MM might in fact be the "high bid" and not really want to sell any more.
As a wholesaler he must perform or he will get a reputation as a "non-performer" with the "Big" houses and will cease getting "calls" which means he will soon go out of business. I mentioned above that this activity is very significant to BB stocks. I say this because most of the trades in these BB stocks are "unsolicited" and are done through discount houses.
With the above groundwork laid, let me try to explain how market makers get short even if they like the Company; Lets say that a stock (shell) has been lying quietly at $.25 bid $.50 offered. A limit order comes into one of the MM's to Buy at $.50 for a thousand shares. Prior to this trade that MM may be "flat" (neither long or short any shares). He fills the order and is now short 1,000 shares. He may raise his bid hoping to find a seller to "flatten" out his position. But before he realizes it a wave of buyers have come in and cleared out all the $.50 offers. Now the stock is $.50 bid .75 offered. Here comes that "Big" firm he just sold the 1,000 shares to at .50 with another bid for 1000 at .75. He makes this print. Now he is short 2,000 at an average of .625. The market keeps moving and now its .75 bid 1.00 offered. Now he has to make a decision.
Just like investors, MM Hate to take a loss. So 9 times out of 10 he will now sell 2000 at 1.00 making him short 4000 but with an average .81. At this time he would love to see a seller at .75 so he can cover his short and make a few bucks.
But instead the market keeps moving up. Now it is 1.00 to 1.25 and here comes the buyer again at 1.25. He doesn't want to lose the call so now he needs to sell 4,000 at 1.25 to keep his break even point above the bid. Now he is short 8,000. Market moves up to 1.25 bid 1.50 offer here comes the buyer now he feels he must sell 8000 here because "stocks don't go up forever".
Now he is short 16,000. And so on and so on. If the stock keeps moving up, before he realizes it he could be short 50k or 100k shares (depending how big his bank is). _________________________
Finally the market closes for the day and on paper he may look all right in that his "break even" price may be around the closing price. But now he has to figure out how to entice sellers so he can cover this short. It is important to note that if this happened to one MM it has probably happened to most all of them.
Some ways MM's entice sellers; Run the stock up with a "tight spread" in a fast market, then "open" up the spread to slow down the buying interest. After it has "cooled off" for a little while lower the offer below the last trade right after a small piece trades on the offer then tighten the spread so that the sellers feel they can take a "quick profit" by "hitting the bid" on the tight spread.
Once the selling starts the MM's will walk it down quickly by only making small prints on the way down with the tight spread. Another way is by running the stock up in the morning, averaging up their short then use the above technique to walk it down in the afternoon.
Hopefully after doing this for several days, it will demoralize the buyers. The volume will dry up and the sellers will materialize thinking that the game is over.
Contrary to popular opinion, MM usually Do Not Cover in Fast moving markets either Up or Down if they are short. They Short More. They usually try to cover after the frenzy is out of the market. There are many other techniques they use but the above are the most popular.
This technique works about 9 times out of 10 particularly in a BB market. However that is because 9 out of 10 BB stocks are BS. Remember what I said above. Most MM's don't have a clue as to the value of a Company until they get trapped. If the Company has solid fundementals and a bright future. Then the stock will do very well. And the activity that caused the situation will prove to even help the future stock activity because it created an audience."
posted by Lowman http://investorshub.advfn.com/boards/read_msg.aspx?message_id=15625415
MARKET MAKERS SHAKEDOWN: A MUST READ!!!!!!!!
More and more investors are winning the game nowadays despite all bashers that float through the Internet that has become part of the game. Floor traders of market makers often watch CNBC, news wires and bulletin boards in order to follow the market during trading session. OTC BB market makers (MMs) don't use fundamental and technical analysis. However, what they do realize is a lot of dumb money does use this newest niche charting or TA (Technical Analysis) to run a stock either up or down. To the MMs this is like taking candy from a baby. Simply they will paint the tape and use whatever tactic to affect the charting bands. Thus the public and dumb money they will have eating out of their hands. Effectively the MMs can show a strong stock growing weak by manipulating the close price in order to generate selling volume, delaying trading time to manipulate trading activities, or even stalling the ask without honoring orders to hold a stock price.
MMs follow a simple code of business when making a market in a atock especially an OTC BB / PS. That is the level that stocks will seek that yields the most volume. Now this is very important because they make money on the volume buying at the bid and selling at the ask. In other words, by making the market they are buying low and selling high. Now smart money adheres to that rule, so do all the market makers. They could careless whether the
stock is at $22 or at $0.0002. All they care about is the action thus being able to sell stock at the offer (The high) and buy stock at the bid (The low). To increase their profitability, they make the spread as great as possible on as many shares as they can especially if the volume falls off.
When they have mostly all "buy" orders, that's not the price that's going to yield the most volume. They need both buy and sells to get the maximum action. Remember, MMs play the volume. If the volume decreases and there are mostly Buys that become a one way volume, Buy volume. So what they do is let the stock run up to a price where it runs out of steam. They fill all the buy orders there that they can and then comes the pullback one way or another naturally or induced. During the pull back they can buy tons of shares and flip them to those averaging down or trying to catch the bounce. At some price, the stock will be relatively stable and yield the most volume. Now that is the average price you will see.
The average price is the point where a stock seeks a level where MMs can profit on the most volume. So during the day that is the price that MMs and momentum/day traders want to see the stock at. Why? Because they know the public and dumb money was chasing the price thing up. Most of the time, the MMs love a flurry of Market Orders which is a dead sign of an artificial run or momentum. Merely it is money in the bank for them. Most get hung in a momentum or day trade or by the tactics of Market makers, who are in the business to screw the public every chance they get. They are merely making the market liquid is their reasoning.
The market makers have created an added complication to the OTCBB's /PS chaos of the already volatile intra-day price movements created by dumb money, momentum and day-traders. MMs can not relate to long-term holders in the OTC BB / PS. That makes absolutely no sense what so ever. They feel a large percentage of trades in the OTC BB / PS market consist of short-term or day-trades, MMs merely view the barrage of buy and sell orders as relatively neutral to the market. How they figure it is when the average dumb money buys shares in a company, the MMs feel or rather know with some certainty it is very likely that dumb money will want to sell back those shares relatively quick on the slightest drop.
Now somewhat comfortable with this logic the MMs merely short sells into the buying and attempts to take the stock down in an effort to "shake out" the weak. Since it is tough to know for sure whether a move is the beginning of a trend, or a routine shake out, this type of deception works quite well for the MMs. What the long-termers do to a stock is surprise the MMs because instead of falling, the shorting has no effect and the price goes up. Now that puts the MM at selling low through shorting and thus having to buy high in order to cover.
Boy, when this happens, the MMs are not very happy campers. The investors and traders aren't supposed to be doing that to them. Now it becomes time to pull out every trick and tactic in the book in order to attempt to get a Bear Raid at every dollar/cent mark or percent from where the stock started. Could be a fraction of a penny in smaller priced securities. What MMs do is give you a chance to make a small amount of money for your momentum and day trading style by shorting it at these levels and trying to get a bear raid each time. Each failure is compounding the MMs short position so they let it go to the next level. Now come more deliberate tactics MMs use to coerce Bear Raid or panic selling.
Once the MM is caught short and the strength of the buy is overpowering the MM will want to cover his short position. So the MMs call up one of his friendly MMs and says some like "the weather is sure rough today." The MM along with the other "friendly MM initiates a down tick about the same time. Now this can also be done with a certain amount of shares such as an infamous 100 shares flag. This down tick gives the illusion of weakness designed to hopefully begin the bear raid of selling. The fickle, fearful, day trader, momentum and short term begin to sell out allowing the MM to cover his short position at lower prices. They will move it down quickly to get it to a price of least financial damage. Problem they have is long-term investors in the OTC BB / PS. They start accumulating and buying comes flying in when they take it too far thus the MMs took it to the point of volume again and not only investors the other MMs step in the make money on the spread.
Alas the poor MM does not get to cover. Now comes various tactics like stalling, boxing, or even locking the Bid and Ask for a while. Of course, MMs aggressively deny any sort of collusion designed to fix quotes or spreads.
MMs have a vast resource of tactics and it would take probably more than a lifetime to figure them all out.
So how do investors somehow manage to overcome the obvious deception in OTCBB arena? One answer is indirection trading style by going long which the MMs do not expect. In the war between investors and public companies on the OTC BB / PS vs the MMs, if the MMs have all the advantages due to position or other factors, direct confrontation such as momentum or day trading hitting the stock is a definite death sentence.
However, an indirect approach tends to weaken the path of least resistance before slowly overcoming it. The most effective way is long-term investors slowly accumulating and holding thus drawing the MMs out of its defenses making them as naked as their short position. This is war so this slow accumulation and holding for the long term easily achieves the desired effect to force MMs to cover and knock off the tactics or bury themselves deeper.
The MMs when caught will especially use every trick and tactic in the book to get a Bear Raid thus playing on the individual fear of most people. The MMs feel they have information and position
advantages over the investors as long as the holding of the stock is in weak hands or short term holders. Since they are OTC BB MMs who believe all OTCBB companies are not worth investing and management is ineffective regardless what is happening within the company. Furthermore, MMs know they are in the position to impose a great deal of influence in OTC BB stocks trading when it suits
their needs.
This inherent power of position enables the MMs to move the markets at any time up or down. As a result, the only way to draw them out of their favorable position is going long. Now this does not mean just any company but to effectively nail the MMs, Longs must find the great company on the floor and accumulate long before the MM tactics and games begin.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=62830080 (posted by SJJNAMARTIN)
SEC Announces Roundtable on Microcap Securities
Besides crooked CEOs, do they have any familiars besides MMs that help them defraud their trusting investors ?
To: MaxShockeR
I need to know more about the possible negative relationships that may exist between CEOs, and their Investor Relations people.
What exactly is a MM, in all possibilities ?
CEOs charged with conspiring to manipulate stock prices
* One defendant enters plea agreement -- lawyer
By Jonathan Stempel
NEW YORK, June 30 (Reuters) - Three chief executives and two stock promoters were criminally charged with engaging in fraudulent penny stock schemes, after a probe that involved undercover FBI agents, federal investigators said on Thursday.
The U.S. Department of Justice said the executives charged include Donald Klein, 40, of KCM Holdings Corp (KCMH.PK); Douglas Newton, 66, of Real American Capital Corp (RLABD.PK); and Thomas Schroepfer, 54, of Smokefree Innotec Inc (SFIO.PK).
Also charged were Charles Fuentes, 66, accused of promoting Smokefree stock; and Brian Gibson, 63, accused of promoting stock of Xtreme Motorsports International Inc (XTMM.PK).
Each defendant was charged with conspiracy to defraud the investing public and faces a maximum of five years in prison plus fines.
The U.S. Securities and Exchange Commission also filed civil fraud charges against the defendants. The charges were brought in the U.S. District Court for the Southern District of Florida.
Investigators said the defendants manipulated the shares of thinly-traded companies that traded on the Pink Sheets.
Most of the schemes involved kickbacks to a purportedly corrupt pension fund or a broker who agreed to buy shares, while Gibson's scheme involved the alleged creation of a fake website to tout Xtreme stock, the SEC said.
According to the SEC, one example of FBI involvement was when an agent, posing as a corrupt pension fund trustee, met with Newton and agreed to buy Real American stock in exchange for a 30 percent kickback.
A day later, the FBI wired funds to Real American's Billy Martin's USA affiliate, which then issued a check to a bogus consulting firm set up to conceal the kickback, the SEC said.
"Investors deserve better than secret investment strategies based on kickbacks and bribes," SEC enforcement chief Robert Khuzami said in a statement. "These CEOs got more than they bargained for but exactly what they deserved."
Jeffrey Cox, a lawyer for Klein, said his client entered a plea agreement in his criminal case. The other defendants' lawyers were not immediately available to comment on their behalf. (Reporting by Jonathan Stempel, editing by Gerald E. McCormick)
I miss Doc Rock. He was a good guy.
How Penny Stock Pumps Use Buyins.Net To Squeeze Short Sellers, Fail & Encourage Us To Short Sell More oops!
Posted by Timothy Sykes on Wed 3rd of Nov, 2010 03:00:58 PM Watch these 20 free video trading lessons and Apply for my Trading Challenge
ShareShare The event of the year
UPDATE: This post was all written a few weeks before the Coastal Pacific Mining Corp (CPMCF) paid pump, but that didn’t stop this latest pump from employing the EXACT same strategy as pumps of the past…absolute morons…I won’t debate “the science” behind BuyIns.net as they’d inevitably claim they have sophisticated software/algorithms to detect how many shares are short on any one of “their clients”, but their word means about as little to me as DoublingStocks.com which claim computer geeks pick the stocks but when you read and LOL at the hard-to-read disclaimer, you see their “picks” are actually just paid pumps…which is why I focus on the disclaimer used by BuyIn.net “clients”, read the CPMCF press release which looks to have been paid by a promoter or shareholder, not CPMCF:
A third party has paid $1,667 per month to purchase data to be provided in six monthly reports. CPMCF has not approved the statements made in this release.
Also interesting to note is that BuyIns.net has gone up in price from $995 per month to $1,667 per month and the promoters, shareholders and companies gladly pay because they think it will squeeze short sellers…the irony is that anytime I or any other short seller with any intelligence greater than the Neanderthals who run these companies/promotions see a “SqueezeTrigger” press release, it doesn’t scare us, read the title, IT ENCOURAGES US TO SHORT SELL MORE!
Just about every company that has ever issued these SqueezeTrrigger press releases or their shareholders or promoters issue press releases, whatever, has dropped 90%+ in the next few months, making these a GREAT short selling indicator. If I could, I would short the heck out of BuyIns.net, the company and their revenue and any of the owners’ mortgages because they are promoting a service that works in the exact opposite way their clientele expects….truly one of the best jokes in recent memory, thanks BuyIns.net for providing the punchline!
This past weekend, doing some research on behalf of some PennyStocking Silver subscribers, I was casually looking at some recent press releases of the blatant pump CrowdGather Inc (CRWG) (still not convinced, see the evidence with their $200,000 promotional pumping mailer and their $300,000 pumping mailer too) and saw this beauty of a PR “BUYINS.NET Updates CrowdGather SqueezeTrigger Report”
The article said blah blah blah, which has been purposely deleted as anything said is nullified by the disclaimer “CRWG has paid $995 per month to purchase data to be provided in six monthly reports.”
As of the date of this blog post, I have been only somewhat right about CRWG as its tanked roughly 40% from $1.75ish to $1ish since I’ve been exposing them as a pump (the CEO refuses to debate me despite my many offers, which is ironic given that his company and shareholders have have paid for exposure with tens of thousands, even hundreds of thousands of dollars and shares to other media outlets and yet my little media outlet has greater viewers than all of them…actually I still don’t know if Michael Arrington of TechCrunch was paid to feature CRWG or if it was just harmless penny stock ignorance there) and hasn’t dropped the 90%+ I was expecting…so far.
But when I read this press release, my confidence in Crowdgather’s demise has grown as I thought back to similar press releases from similar paid-for pumps like Mesa Energy Holdings, Inc. (MSEH) and NXT Nutritionals Holdings Inc (NXTH) both of whose CEOs publicly attacked me (MSEH put me in an SEC filing while NXTH’s CEO blamed his stock’s drop from $3 to $2 on short sellers like me, slurring my name on Huffington Post)
Remember MSEH’s CEO even talked about the hiring of BuyIns.Net with The Dallas Morning News, saying “When Sykes’ blog posting went up in late March, Mesa’s advisers suggested it hire an Internet firm, Buyins.net, to spotlight the short sellers’ positions in Mesa shares. Buyins.net, which cost Mesa $995 a month, found the number of Mesa shares in “short” positions – meaning the trader bets the shares will fall – rose tenfold in just a month. The reports show that if shares of Mesa continued to rise, the short sellers would get “squeezed” out of their positions.
…evidenced nicely by press releases aimed at publicly blaming and squeezing short sellers like THIS and THIS, despite the stock’s rather perfect drop was caused entirely, if not mostly, by company insiders selling more than 6 million shares as the CEO played dumb.
Now that the SEC is investigating Mesa Energy, I wonder just how dumb the CEO Randy Griffin is “playing”.
And NXTH had a similar BuyIns.Net press release entitled “BUYINS.NET: NXT Nutritionals (NXTH) Has Been On BUYINS.NET Naked Short List For 13 Consecutive Trading Days.” apparently trying to blame/scare short sellers…look at their longterm chart and see if it worked:
The reality is that no matter what the pump does, whether hiring Buyins.net or bribing or taking advantage of penny stock ignorant media outlets, they can’t escape the fact that they’re a blatant pump and will end under 5-10-20 cents/share within a few weeks/months.
Nice try Sanjay/Crowdgather; I look forward to short selling your carcass of a stock even more now
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Related Posts
Who Hires Buyins.Net Besides Blatant Pumps? [6 EXAMPLES] Who Hires Buyins.Net Besides Blatant Pumps? [6 EXAMPLES] Catching SEC-Busted Stansberry Research In 4 Blatant Lies & Why Porter Stansberry Is The Real Life Hyman Roth Dear Michael Arrington & TechCrunch, Please Don’t Feature Penny Stock Pump & Dumps Tags: Basics, Buyins.net, CPMCF, CRWG, Manipulation, Misinformation, MSEH, NXTH, Stock Promoters
**ADVISORY WARNING** Penson Under Investigation
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=64619230 (posted by SJJNAMARTIN)
Motivations of a Pumper
Another good read, basically the opposite of the original from Vantillian (by Doctor Rockzo)
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=64571816
Motivations of a "BASHER" (by Vantillian)
interesting read
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=64571728
8 WAYS TO RECOGNIZE A POTENTIAL PUMP & DUMP
Interesting article on PumpandDumps.com just passing it on: (posted by $toney)
Pump & dumps are illegal stock hypes, usually within the penny or microcap market, performed to artificially raise the trading volume and often the price of a stock ("pumping") through a campaign of hype which may include misinformation and/or misrepresentation. This enables insiders or other large shareholders to sell their stock ("dumping"). Dupes purchase the stock and unwittingly create a façade of legitimacy. This can entice even more people to believe the hype and buy even more shares. Once the schemers have sold their shares, the pumping ends, and the share price plummets.
Pump & dumps are indicated by...
1. SPAM EMAIL
A legitimate company will never send you spam email. First of all, spam is illegal. Secondly, all the information that they would need to get out to the public is disseminated though press releases. If they need to make themselves aware to the public, they do it through a number of legitimate campaigns such as advertising, technology fairs and the like.
2. STOCK TOUTS
Sometimes emails received are from a free subscription based touting service. Sign-ups are how these touts get around spam laws. However, the intent is the same: to con you out of your money. These touts are paid by the people intending to dump their stock on you and usually say so in the fine print of their promotions. While their names are constantly changing currently subscriptions are available to StocksGoneWild.com, EpicStockPicks.com and countless others. These sites often tout the same stock and there is a good reason for that. Touts usually own many touting sites and promote under various names in order to give the perception of a wide following for the particular stock they are touting.
MoneyTV with Donald Baillargeon is another touting service paid for by insiders wishing to promote their stock under the perception of a TV interview show. The fact is that these insiders pay to be on this "show" and just about the only place you'll see the interview is on MoneyTV's own website. The insiders will usually disseminate a press release bragging about how they were interviewed on MoneyTV in an effort towards self-importance.
3. THE BACKGROUND OF THE OFFICERS
There's an old saying, "Once a crook, always a crook", and that's why it's always a good idea to see who is running the show at the company. Verify his resume. Most companies at one time, will offer up the qualifications of the President, CEO or other officers. Check his past involvement with public companies and the past performance of that stock. Chances are that if he's been involved with past pump and dumps or other schemes, you're now looking at one that is heading in that direction. Also, it is a good idea to look into court records of the individual(s) involved and their previous companies and see if anyone has been involved in civil or criminal proceedings, especially for fraud.
4. MESSAGE BOARD CONTENT
Yes, forums such as investorshub.com, siliconinvestor.com or the Yahoo Finance Message Boards usually contain contributions from child-like posters who are there for no other reason than to try and convince themselves that they made a good investment. But you can often find the touts or Investor Relations guy posting anonymously trying to keep the pom poms shaking and keeping the naysayers in check. They know that people who are apt to follow spam email or stock touts probably consider these message boards to be research so they want to bluster about their great investment and brag about all the money they are supposedly making. These are the guys who call anybody negative or questioning the company a "paid basher" (there is no such thing) or the ones who claim they have done their "DD" ( due diligence) when there is really none to be done. When you ask what DD they did, they will be vague with their answer or give a non-answer, with a "Because I said so" kind of response. They are also the ones who offer up lame excuses for down days such as naked short selling (does not occur in the penny stock market) or MM (market maker) manipulation. They are also the ones who make bold and baseless predictions like, "This is an easy ten-bagger" (stock price will increase by a multiple of ten).
5. CLAIMS OF BREAKTHROUGHS
Beware if the company claims to be an industry leader (do you really think a penny stock can be a leader in anything except possibly scams?) or has made a breakthrough discovery. A company with legitimate breakthrough technology is unlikely to be promoting itself on the penny stock market and will most likely have funding available to it within a variety of partnerships with major companies. These same companies will not likely be interested in dealing with a penny stock company.
6. PRICE AND VOLUME UPSWING ON NO NEWS
If a stock's trading volume and price per share, show a recent and sudden increase, there is a good chance that the stock is being set up for a pump and dump. Especially if it has been involved in one in the past.
7. FINANCIALS (or lack thereof)
A legitimate company will always make recent financials available, even if it is a penny stock that is not required to file financials with the SEC. And if there are financials are they fabricated? Would a billion dollar company be found within a penny stock?
8. ISSUED AND OUTSTANDING
If nobody will tell you how many shares are out on the street or if that number is disproportionate to the stock price (a billion shares of a stock trading @ one tenth of a penny for example, stay away. Chances are a reverse split is coming and you will be left with only a few shares worth a fraction of what you spent.
hey if u have stuff to add i would be happy to add u as a mod.. if you would like!
i added a link to this board in my ibox on my board and ill quote some of your post sometimes.
also it would be good to put a list of Ceo names to warn others to stay away, i have 5 & 2 IR firms but im sure there is a lot more thats out there.
BTW keep up the good work
FOR IMMEDIATE RELEASE SEC Suspends 17 Companies in Proactive Effort to Combat Microcap Stock Fraud
http://www.sec.gov/news/press/2011/2011-120.htm
2011-120
Excerpts From Internet Promotional Campaigns
Calypso Wireless Inc.
Emerging Healthcare Solutions Inc.
Montvale Technologies Inc.
Washington, D.C., June 7, 2011 — The Securities and Exchange Commission today suspended trading in 17 microcap stocks because of questions about the adequacy and accuracy of publicly available information about the companies, which trade in the over-the-counter (OTC) market.
The trading suspensions spring from a joint effort by SEC regional offices in Los Angeles, Miami, New York, and Philadelphia; its Office of Market Intelligence; and its new Microcap Fraud Working Group, which uses a coordinated, proactive approach to detecting and deterring fraud involving microcap securities. The trading suspensions follow a similar suspension last week against Uniontown Energy Inc. (UTOG), based in Henderson, Nev., and Vancouver, Canada.
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Additional Materials
Trading Suspension
Order
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“They may be called ‘penny stocks,’ but victims of microcap fraud can suffer devastating losses,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “The SEC’s new Microcap Fraud Working Group is targeting the insiders and promoters, as well as the transfer agents, attorneys, auditors, broker-dealers, and other “gatekeepers” who flourish in the shadows of this less-than-transparent market.”
George Canellos, Director of the SEC’s New York Regional Office, added, “The investing public does not have accurate or adequate information about these securities to use in making informed investment decisions. Nonetheless, stock-touting websites, twitter users, and often anonymous individuals posting to Internet message boards have hyped many of these companies, and these promotional campaigns have been followed by spikes in share price and trading volume.”
The 17 companies and their ticker symbols are:
American Pacific Rim Commerce Group (APRM), based in Citra, Fla.
Anywhere MD, Inc. (ANWM), based in Altascadero, Calif.
Calypso Wireless Inc. (CLYW), based in Houston.
Cascadia Investments, Inc. (CDIV), based in Tacoma, Wash.
CytoGenix Inc. (CYGX), based in Houston.
Emerging Healthcare Solutions Inc. (EHSI), based in Houston.
Evolution Solar Corp. (EVSO), based in The Woodlands, Texas.
Global Resource Corp. (GBRC), based in Morrisville, N.C.
Go Solar USA Inc. (GSLO), based in New Orleans.
Kore Nutrition Inc. (KORE), based in Henderson, Nev.
Laidlaw Energy Group Inc. (LLEG), based in New York City.
Mind Technologies Inc. (METK), based in Cardiff, Calif.
Montvale Technologies Inc. (IVVI), based in Montvale, N.J.
MSGI Security Solutions Inc. (MSGI), based in New York City.
Prime Star Group Inc. (PSGI), based in Las Vegas, Nev.
Solar Park Initiatives Inc. (SOPV), based in Ponte Verde Beach, Fla.
United States Oil & Gas Corp. (USOG), based in Austin, Texas.
Some examples of the promotions are as follows:
Calypso Wireless Inc. has not filed periodic reports since February 2008, when it filed a report for the period ending Sept. 30, 2007. Despite that, the company’s share price rose from 4 cents on Sept. 21, 2010 to an intra-day high of 17 cents on Sept. 24, 2010. Over the same period, trading volume jumped to nearly six million shares, up from 376,000 shares. On Sept. 24, 2010, a stock-promoting website encouraged investors to continue buying Calypso Wireless shares (PINK: CLYW, CLYW message board), stating, in part, “Over the week, CLYW stock has been running wild … This CLYW stock rush happened just like that, on no company’s news and on old, well known SEC filings, done for the investment community.”
Shares in Kore Nutrition Inc. began to spike on Aug. 31, 2010, following the release of a company-paid research report setting a target price of $10.50. Moreover, on Sept. 1 and 8, 2010, the company issued press releases announcing new distribution agreements to market its energy drinks. The research report and distribution agreement claims were reiterated on numerous stock-promotion websites, touting Kore Nutrition as a “winner.” Kore Nutrition’s quarterly report for the period ending Sept. 30, 2010, filed with the SEC on Nov. 15, 2010, made no mention of the announced distribution agreements.
Montvale Technologies Inc. announced the dissolution of the company on Feb. 12, 2010, and last filed financial statements with the SEC for the third quarter of 2009. The company’s shares have nonetheless continued to trade, and to be promoted. On Dec. 22, 2010, a website recommended a “closer look” at Montvale Technologies, claiming it “has the potential to do very well in the short term.” That day, the share price rose 75 percent from 12 cents to 20 cents, and trading volume soared 500 percent over the prior day.
The Microcap Fraud Working Group is a joint initiative of the SEC’s Division of Enforcement and Office of Compliance Inspections and Examinations. The Working Group is pursuing a strategic approach to combating microcap fraud by focusing on recidivists and insiders, and on the attorneys, auditors, broker-dealers, transfer agents and other gatekeepers that facilitate a large volume of the fraud in this sector. The Working Group is comprised of staff from the SEC’s headquarters in Washington D.C., each of its 11 regional offices, and from the Office of Market Intelligence, Division of Corporation Finance, Division of Risk, Strategy, and Financial Innovation, Office of General Counsel, Division of Trading and Markets, and the Division of Investment Management.
For additional information about trading suspensions, including answers to frequently asked questions, read the SEC’s Investor Bulletin on Trading Suspensions available at www.sec.gov/investor.shtml as well as on www.Investor.gov.
# # #
For more information about this enforcement action, contact:
Michael Paley
Assistant Regional Director, SEC’s New York Regional Office
(212) 336-0145
Elisha L. Frank
Assistant Regional Director, SEC’s Miami Regional Office
305) 982-6392
http://www.sec.gov/news/press/2011/2011-120.htm
SEC Approves Amendments to Establish Regulation
NMS-Principled Rules in Market for OTC Equity
Securities
http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p122114.pdf
SEC Charges Johnson & Johnson With Foreign Bribery
J&J to Pay $70 Million to Settle Cases Brought by SEC and Criminal Authorities
FOR IMMEDIATE RELEASE
2011-87
Washington, D.C., April 7, 2011 – The Securities and Exchange Commission today charged Johnson and Johnson (J&J) with violating the Foreign Corrupt Practices Act (FCPA) by bribing public doctors in several European countries and paying kickbacks to Iraq to illegally obtain business.
The SEC alleges that since at least 1998, subsidiaries of the New Brunswick, N.J.-based pharmaceutical, consumer product, and medical device company paid bribes to public doctors in Greece who selected J&J surgical implants, public doctors and hospital administrators in Poland who awarded contracts to J&J, and public doctors in Romania to prescribe J&J pharmaceutical products. J&J subsidiaries also paid kickbacks to Iraq to obtain 19 contracts under the United Nations Oil for Food Program.
Additional Materials
* SEC Complaint
* Litigation Release No. 21922
J&J agreed to settle the SEC’s charges by paying more than $48.6 million in disgorgement and prejudgment interest. J&J also agreed to pay a $21.4 million fine to settle parallel criminal charges announced by the U.S. Department of Justice (DOJ) today. A resolution of a related investigation by the United Kingdom Serious Fraud Office is anticipated.
“The message in this and the SEC’s other FCPA cases is plain – any competitive advantage gained through corruption is a mirage,” said Robert Khuzami, Director of the SEC's Division of Enforcement. “J&J chose profit margins over compliance with the law by acquiring a private company for the purpose of paying bribes, and using sham contracts, off-shore companies, and slush funds to cover its tracks.”
Cheryl J. Scarboro, Chief of the SEC Enforcement Division’s Foreign Corrupt Practices Act Unit, added, “Bribes to public doctors can have a detrimental effect on the public health care systems that potentially pay more for products procured through greed and corruption.”
According to the SEC’s complaint filed in federal court in the District of Columbia, public doctors and administrators in Greece, Poland, and Romania who ordered or prescribed J&J products were rewarded in a variety of ways, including with cash and inappropriate travel. J&J subsidiaries, employees and agents used slush funds, sham civil contracts with doctors, and off-shore companies in the Isle of Man to carry out the bribery.
Without admitting or denying the SEC’s allegations, J&J has consented to the entry of a court order permanently enjoining it from future violations of Sections 30A, 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934; ordering it to pay $38,227,826 in disgorgement and $10,438,490 in prejudgment interest; and ordering it to comply with certain undertakings regarding its FCPA compliance program. J&J voluntarily disclosed some of the violations by its employees and conducted a thorough internal investigation to determine the scope of the bribery and other violations, including proactive investigations in more than a dozen countries by both its internal auditors and outside counsel. J&J’s internal investigation and its ongoing compliance programs were essential in gathering facts regarding the full extent of J&J’s FCPA violations.
Kelly G. Kilroy and Tracy L. Price of the Enforcement Division’s FCPA Unit and Brent S. Mitchell and Reid A. Muoio conducted the SEC’s investigation. The SEC acknowledges the assistance of the U.S. Department of Justice, Fraud Section; Federal Bureau of Investigation; Serious Fraud Office in the United Kingdom; and 5th Investigation Department of the Regional Prosecutor’s Office in Radom, Poland. The SEC's investigation is continuing.
# # #
For more information about this enforcement action, contact:
Cheryl J. Scarboro
Chief, Foreign Corrupt Practices Act Unit, Division of Enforcement
202-551-4403
http://www.sec.gov/news/press/2011/2011-87.htm
SEC Charges India-Based Affiliates of PWC for Role in Satyam Accounting Fraud
FOR IMMEDIATE RELEASE
2011-82
Washington, D.C., April 5, 2011 – The Securities and Exchange Commission today sanctioned five India-based affiliates of PricewaterhouseCoopers (PwC) that formerly served as independent auditors of Satyam Computer Services Limited for repeatedly conducting deficient audits of the company’s financial statements and enabling a massive accounting fraud to go undetected for several years.
The SEC found that the audit failures by the PW India affiliates – Lovelock & Lewes, Price Waterhouse Bangalore, Price Waterhouse & Co. Bangalore, Price Waterhouse Calcutta, and Price Waterhouse & Co. Calcutta – were not limited to Satyam, but rather indicative of a much larger quality control failure throughout PW India.
Additional Materials
* SEC Order Against PW India Affiliates
The PW India affiliates agreed to settle the SEC’s charges and pay a $6 million penalty, the largest ever by a foreign-based accounting firm in an SEC enforcement action.
In addition, the PW India affiliates agreed to refrain from accepting any new U.S.-based clients for a period of six months, establish training programs for its officers and employees on securities laws and accounting principles; institute new pre-opinion review controls; revise its audit policies and procedures; and appoint an independent monitor to ensure these measures are implemented.
In a related settlement today, Satyam agreed to settle fraud charges, pay a $10 million penalty, and undertake a series of internal reforms. Since the fraud came to light, the India government seized control of the company by dissolving its board of directors and appointing new government-nominated directors, among other things. Additionally, India authorities filed criminal charges against several former officials as well as two lead engagement partners from PW India.
"PW India violated its most fundamental duty as a public watchdog by failing to comply with some of the most elementary auditing standards and procedures in conducting the Sataym audits. The result of this failure was very harmful to Satyam shareholders, employees and vendors," said Robert Khuzami, Director of the SEC's Division of Enforcement.
Cheryl Scarboro, Chief of the SEC’s Foreign Corrupt Practices Act Unit, added, “PW India failed to conduct even the most fundamental audit procedures. Audit firms worldwide must take seriously their critical gate-keeping duties whenever they perform audit engagements for SEC-registered issuers and their affiliates, and conduct proper audits that exercise professional skepticism and care.”
The SEC’s order instituting administrative proceedings against the firms finds that PW India staff failed to conduct procedures to confirm Satyam’s cash and cash equivalent balances or its accounts receivables. Specifically, the order finds that PW India’s “failure to properly execute third-party confirmation procedures resulted in the fraud at Satyam going undetected” for years. PW India’s failures in auditing Satyam “were indicative of a quality control failure throughout PW India” because PW India staff “routinely relinquished control of the delivery and receipt of cash confirmations entirely to their audit clients and rarely, if ever, questioned the integrity of the confirmation responses they received from the client by following up with the banks.”
After the fraud at Satyam came to light, PW India replaced virtually all senior management responsible for audit matters. The affiliates suspended its Satyam audit engagement partners from all work and removed from client service all senior audit professionals on the former Satyam audit team.
In addition to the $6 million penalty and previously listed reforms, the PW India affiliates have consented to a censure, as well as the entry of a cease-and-desist order finding that they violated Section 10A(a) of the Exchange Act and were a cause of Satyam’s violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and relevant Rules thereunder.
PCAOB Proceeding
In a related proceeding, the PW India affiliates also reached a settlement with the Public Company Accounting Oversight Board (PCAOB) in which the PW India firms have been censured and agreed to extensive undertakings substantially similar to those set forth in the SEC administrative order. Additionally, Lovelock & Lewes and Price Waterhouse Bangalore have agreed to pay the PCAOB a $1.5 million penalty for their violations of PCAOB rules and standards in relation to the Satyam audit engagement.
The Commission acknowledges the assistance of the PCAOB. The SEC’s investigation is continuing.
# # #
For more information about this enforcement action, contact:
Cheryl J. Scarboro
Chief, FCPA Unit of the SEC Division of Enforcement
202-551-4403
http://www.sec.gov/news/press/2011/2011-82.htm
SEC Charges Satyam Computer Services With Financial Fraud
FOR IMMEDIATE RELEASE
2011-81
Washington, D.C., April 5, 2011 – The Securities and Exchange Commission today charged India-based Satyam Computer Services Limited with fraudulently overstating the company’s revenue, income and cash balances by more than $1 billion over five years.
The SEC’s complaint, filed in U.S. District Court in Washington, D.C., alleges that former senior officials at Satyam – an information technology services company based in Hyderabad, India – used false invoices and forged bank statements to inflate the company’s cash balances and make it appear far more profitable to investors. Although Satyam’s shares primarily traded on the Indian markets, its American depository shares traded on the New York Stock Exchange.
Additional Materials
* SEC Complaint
* Litigation Release No. 21915
According to the SEC’s complaint, shortly after the fraud came to light in January 2009, the India government seized control of the company by dissolving Satyam’s board of directors and appointing new government-nominated directors; removed former top managers of the company; and oversaw a bidding process to select a new controlling shareholder in Satyam. In addition, India authorities filed criminal charges against several former officials.
In addition to the actions taken by the India authorities, Satyam, whose new leadership cooperated with the SEC’s investigation, has agreed to pay a $10 million penalty to settle the SEC’s charges, require specific training of officers and employees concerning securities laws and accounting principles, and improve its internal audit functions. Satyam also agreed to hire an independent consultant to evaluate the internal controls the company is putting in place.
In a related settlement, the SEC sanctioned Satyam’s former independent auditors for violations of federal securities laws and improper professional conduct while auditing the company’s financial statements from 2005 through January 2009.
“The actions of Indian and U.S. authorities have transformed Satyam into a new company with new management, directors and investors and state-of-the art controls, resulted in criminal charges against seven former executives and given harmed shareholders the chance to recoup losses,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “This comprehensive and thoughtful response underscores the ability of regulators across the globe to respond to cross-border misconduct in a coordinated manner.”
Cheryl Scarboro, Chief of the SEC’s Foreign Corrupt Practices Act Unit, added, “The fact that Satyam’s former top officers were able to maintain a fraud of this scale represents a company-wide failure of extreme proportions that cut across a wide array of functions from customer invoicing to cash management.”
According to the SEC’s complaint, Satyam’s former senior managers engineered a scheme that created more than 6,000 phony invoices to be used in Satyam’s general ledger and financial statements. Satyam employees created bogus bank statements to reflect payment of the sham invoices. This resulted in more than $1 billion in fictitious cash and cash-related balances, representing half the company’s total assets.
The SEC alleges that when the fraud was finally revealed, Satyam’s then-Chairman, B. Ramalinga Raju, declared that maintaining Satyam’s inflated revenues and profits “was like riding a tiger, not knowing how to get off without being eaten.”
Raju and other former senior and mid-level Satyam executives, as well as two lead engagement partners from Satyam’s former external audit firm, are defendants in a criminal trial now underway in India.
Without admitting or denying the allegations in the SEC’s complaint, Satyam agreed to a permanent injunction against future violations of the periodic reporting provisions of Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 10b-5, 12b-20 13a-1 and 13a-16. As previously mentioned, the settlement also requires Satyam to pay a $10 million penalty, to hire an independent consultant and to comply with certain undertakings. In bringing this settled enforcement action, the SEC balanced the scope and severity of Satyam’s misconduct and harm to holders of Satyam’s American Depository Shares against the unique and significant remediation efforts made after the fraud became public in 2009.
The SEC’s investigation is continuing.
# # #
For more information about this enforcement action, contact:
Cheryl J. Scarboro
Chief, FCPA Unit of the SEC Division of Enforcement
202-551-4403
http://www.sec.gov/news/press/2011/2011-81.htm
SEC Announces Securities Laws Violations by Wachovia Involving Mortgage-Backed Securities
FOR IMMEDIATE RELEASE
2011-83
Washington, D.C., April 5, 2011 – The Securities and Exchange Commission today announced that Wells Fargo Securities LLC agreed to settle charges that Wachovia Capital Markets LLC engaged in misconduct in the sale of two collateralized debt obligations (CDOs) tied to the performance of residential mortgage-backed securities as the U.S. housing market was beginning to show signs of distress in late 2006 and early 2007.
The SEC’s order found that Wachovia Capital Markets violated the securities laws in two respects. First, Wachovia Capital Markets charged undisclosed excessive markups in the sale of certain preferred shares or equity of a CDO called Grand Avenue II to the Zuni Indian Tribe and an individual investor. As detailed in the order, Wachovia Capital Markets marked down $5.5 million of equity to 52.7 cents on the dollar after the deal closed and it was unable to find a buyer. Months later, the Zuni Indian Tribe and the individual investor paid 90 and 95 cents on the dollar. Unbeknownst to them, these prices were over 70 percent higher than the price at which the equity had been marked for accounting purposes.
Additional Materials
* SEC Order Against Wells Fargo Securities
Second, Wachovia Capital Markets misrepresented to investors in a CDO called Longshore 3 that it acquired assets from affiliates “on an arm’s-length basis” and “at fair market prices” when, in fact, 40 residential mortgage-backed securities were transferred from an affiliate at above-market prices. Wachovia Capital Markets transferred these assets at stale prices in order to avoid losses on its own books. The SEC’s order does not find that Wachovia Capital Markets acted improperly otherwise in structuring the CDOs or in the way it described the roles played by those involved in the structuring process.
Wachovia Capital Markets has since been renamed Wells Fargo Securities. Wells Fargo Securities agreed to settle the SEC’s charges by paying more than $11 million in disgorgement and penalties, much of which will be returned to harmed investors through a Fair Fund.
“Wachovia caused significant losses to the Zuni Indians and other investors by violating basic investor protection rules – don’t charge secret excessive markups, and don’t use stale prices when telling buyers that assets are priced at fair market value,” said Robert Khuzami, Director of the SEC Division of Enforcement.
Kenneth Lench, Chief of the SEC Division of Enforcement’s Structured and New Products Unit, added, “We are committed to uncovering misconduct involving complex financial instruments and opaque markets and, where appropriate, compensating defrauded investors for their losses.”
Without admitting or denying the findings, Wells Fargo Securities consented to the entry of an administrative order directing that it cease and desist from committing or causing any violations and any future violations of Section 17(a)(2) and (3) of the Securities Act of 1933. Wells Fargo agreed to pay disgorgement of $6.75 million and a penalty of $4.45 million. A total of $7.4 million of those amounts will be returned to investors pursuant to the Fair Fund provisions of Section 308(a) of the Sarbanes-Oxley Act of 2002.
Brent Mitchell, Jeffrey Leasure, Jason Anthony and Reid A. Muoio, who are members of the Structured and New Products Unit in Washington, D.C., conducted the SEC’s investigation.
# # #
For more information about this enforcement matter, contact:
Robert S. Khuzami
Director, SEC Division or Enforcement
202-551-4500
Lorin L. Reisner
Deputy Director, SEC Division of Enforcement
202-551-4787
Kenneth R. Lench
Chief, Structured and New Products Unit, SEC Division of Enforcement
202-551-4938
http://www.sec.gov/news/press/2011/2011-83.htm
SEC Charges Corporate Attorney and Wall Street Trader in $32 Million Insider Trading Ring
FOR IMMEDIATE RELEASE
2011-85
Chart: Tracking
the Trades
View "Chart: Tracking the Trades"
Full-size (PDF)
Washington, D.C., April 6, 2011 – The Securities and Exchange Commission today charged a corporate attorney and a Wall Street trader with insider trading in advance of at least 11 merger and acquisition announcements involving clients of the law firm where the attorney worked.
The SEC alleges that Matthew H. Kluger, who formerly worked at Wilson Sonsini Goodrich & Rosati, and Garrett D. Bauer did not have a direct relationship with each other, but were linked only through a mutual friend who acted as a middleman to facilitate the illegal scheme. Kluger and Bauer communicated with the middleman using public telephones and prepaid disposable mobile phones in order to avoid detection. According to the SEC’s complaint, Kluger accessed information on 11 mergers and acquisitions involving the law firm’s clients and then tipped the middleman. In at least nine instances, the middleman passed the information on to Bauer, who illegally traded for illicit profits totaling nearly $32 million.
Additional Materials
* SEC Complaint
* Litigation Release No. 21917
In a parallel criminal action, the U.S. Attorney’s Office for the District of New Jersey today announced the arrests of Kluger and Bauer.
“They plotted to fly under law enforcement radar by using disposable phones to hide their communications, cash withdrawals to obscure the flow of tainted money, and a middleman to conceal Kluger as the secret source of inside information,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Now, those same schemes and devices serve only to make it clear beyond any doubt that Kluger and Bauer were involved in an illegal scheme.”
Daniel M. Hawke, Chief of the SEC’s Market Abuse Unit and Director of its Philadelphia Regional Office, added “This was a brazen and deplorable scheme in which Kluger, a lawyer, repeatedly abused his access to confidential client information. As this and recent cases demonstrate, the Division of Enforcement is working aggressively to root out and identify hard-to-detect insider trading by connecting patterns of trading to sources of material non-public information - whether those sources are law firms or others who are under a duty to keep such information confidential.”
According to the SEC’s complaint filed in federal court in Newark, N.J., Kluger, Bauer and the middleman deliberately structured their communications and trading so that Kluger and the middleman could share in the insider trading proceeds while Bauer could illegally trade and profit without being connected to Kluger as a possible source of information. Bauer withdrew cash from his bank accounts and kicked back hundreds of thousands of dollars to the middleman, who in turn delivered at least $500,000 to Kluger for his role in the scheme.
According to the SEC’s complaint, over the past five years Kluger accessed and then tipped confidential information in advance of the following 11 mergers and acquisitions between April 2006 and March 2011:
* The acquisition of Advanced Digital Information Corp. by Quantum Corp., announced May 2, 2006.
* The acquisition of Acxiom Corp. by multiple entities, announced on May 17, 2007.
* The strategic recapitalization of Palm Inc. with Elevation Partners LP, announced June 4, 2007.
* The planned acquisition of 3Com Corp. by Bain Capital LLC, announced Sept. 28, 2007.
* The acquisition of Visual Sciences Inc. by Omniture Inc., announced Oct. 25, 2007.
* The acquisition of Ansoft Corp. by Ansys Inc., announced March 31, 2008.
* The acquisition of Sun Microsystems Inc. by Oracle Corp., announced April 20, 2009.
* The acquisition of Omniture Inc. by Adobe Systems Inc., announced Sept. 15, 2009.
* The acquisition of 3Com Corp. by Hewlett-Packard Co., announced Nov. 11, 2009.
* The acquisition of McAfee Inc. by Intel Corp., announced Aug. 19, 2010.
* The acquisition of Zoran Corp. by CSR PLC, announced Feb. 20, 2011.
The middleman traded in two deals on the basis of information that he received from Kluger and profited at least $690,000.
The SEC alleges that Kluger and Bauer violated Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rules 10b-5 and 14e-3 thereunder. The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.
The SEC’s investigation was conducted by Colleen K. Lynch, David W. Snyder and John S. Rymas, members of the Market Abuse Unit in the Philadelphia Regional Office. G. Jeffrey Boujoukos and Scott A. Thompson are handling the litigation.
The SEC brought this enforcement action in coordination with the U.S. Attorney’s Office for the District of New Jersey. The SEC also appreciates the assistance of the Federal Bureau of Investigation, the Financial Industry Regulatory Authority and the Options Regulatory Surveillance Authority.
The SEC’s investigation is continuing.
# # #
For more information about this enforcement action, contact:
Daniel M. Hawke
Chief of SEC Market Abuse Unit and Director of SEC Philadelphia Regional Office
(267) 226-7081
Elaine C. Greenberg
Associate Regional Director, Philadelphia Regional Office
(215) 597-3107
Sanjay Wadhwa
Deputy Chief, Market Abuse Unit and Associate Director, New York Regional Office
(212) 336-0181
http://www.sec.gov/news/press/2011/2011-85.htm
ZLUS Suspension of Trading
Mar 31, 2011
OTC Disclosure & News Service
Washington, D.C. -
UNITED STATES OF AMERICA
Before the
SECURITIES AND EXCHANGE COMMISSION
SECURITIES EXCHANGE ACT OF 1934
Release No. 64155 / March 31, 2011
The Securities and Exchange Commission (“Commission”) announced the temporary
suspension, pursuant to Section 12(k) of the Securities Exchange Act of 1934 (the “Exchange
Act”), of trading in the securities of Corestream Energy, Inc. (“Corestream”), formerly known as
Zealous, Inc., of Las Vegas, Nevada, at 9:30 a.m. EDT on March 31, 2011, and terminating at
11:59 p.m. EDT on April 13, 2011.
The Commission temporarily suspended trading in the securities of Corestream because of a lack
of current and accurate information about the company because it failed to file certain periodic
reports with the Commission and because of questions regarding the accuracy and adequacy of
publicly disseminated information concerning, among other thing, the acquisition of certain oil
wells.
The Commission cautions brokers, dealers, shareholders, and prospective purchasers that they
should carefully consider the foregoing information along with all other currently available
information and any information subsequently issued by the company.
Further, brokers and dealers should be alert to the fact that, pursuant to Rule 15c2-11 under the
Exchange Act, at the termination of the trading suspension, no quotation may be entered unless
and until they have strictly complied with all of the provisions of the rule. If any broker or dealer
has any questions as to whether or not he has complied with the rule, he should not enter any
quotation but immediately contact the staff in the Division of Trading and Markets, Office of
Interpretation and Guidance, at (202) 551-5777. If any broker or dealer is uncertain as to what is
required by Rule 15c2-11, he should refrain from entering quotations relating to Corestream’s
securities until such time as he has familiarized himself with the rule and is certain that all of its
provisions have been met. If any broker or dealer enters any quotation which is in violation of
the rule, the Commission will consider the need for prompt enforcement action.
If any broker, dealer or other person has any information which may relate to this matter, Burk
Burnett of the New York Regional Office of the Securities and Exchange Commission should be
telephoned at (212) 336-0037.
The above news release has been provided by the above company via the OTC Disclosure and News Service. Issuers of news releases and not OTC Markets Group, Inc. are solely responsible for the accuracy of such news releases.
SEC Charges FDA Chemist With Insider Trading Ahead of Drug Approval Announcements
FOR IMMEDIATE RELEASE
2011-76
Chart: Tracking
the Trades
Chart: Tracking the Trades
Full-size (PDF)
Washington, D.C., March 29, 2011 – The Securities and Exchange Commission today charged a U.S. Food and Drug Administration (FDA) chemist with insider trading on confidential information about upcoming announcements of FDA drug approval decisions, generating more than $3.6 million in illicit profits and avoided losses.
The SEC alleges that Cheng Yi Liang illegally traded in advance of at least 27 public announcements about FDA drug approval decisions involving 19 publicly traded companies. Some announcements concerned the FDA’s approval of new drugs while others concerned negative FDA decisions. In each instance, he traded in the same direction as the announcement. Liang went to great lengths to conceal his insider trading. He traded in seven brokerage accounts, none of which were in his name. One belonged to his 84-year-old mother who lives in China.
Additional Materials
* SEC Complaint
* Litigation Release No. 21907
In a parallel action, criminal charges filed by the Department of Justice against Liang were unsealed today.
“Liang victimized both the investors who were disadvantaged by his theft of inside information and the American citizens whose trust he violated by placing private gain above public good,” said Robert Khuzami, Director of the SEC’s Division of Enforcement.
Daniel M. Hawke, Chief of the SEC’s Market Abuse Unit, added, “The insider trading laws apply to employees of the federal government just as they do to Wall Street traders, corporate insiders, or hedge fund executives. Many government agencies like the FDA routinely possess and generate confidential market-moving information. Federal employees who misappropriate such information to engage in insider trading risk exposing themselves to potential civil and criminal charges for violating the federal securities laws.”
According to the SEC’s complaint filed in the U.S. District Court for the District of Maryland (Greenbelt Division), Liang works in the FDA’s Center for Drug Evaluation and Research. Beginning as early as July 2006, Liang purchased shares for a profit before 19 positive announcements regarding FDA decisions, shorted stock for a profit before six negative announcements, and sold shares to avoid losses before two negative announcements.
For example, the SEC alleges that Liang traded in advance of an FDA announcement approving Clinical Data’s application for the drug Viibryd. Liang accessed a confidential FDA database that contained critical documents and information about the FDA’s review of Clinical Data’s application, and then used that information to purchase more than 46,000 shares of Clinical Data at a cost of more than $700,000. After the markets closed on Friday, Jan. 21, 2011, the FDA issued a press release approving Viibryd. Clinical Data’s stock price rose by more than 67 percent the following Monday and Liang sold his entire Clinical Data position in less than 15 minutes for a profit of approximately $380,000.
The SEC alleges that Liang used the trading profits for his own personal benefit. Checks totaling at least $1.2 million were written from the accounts he used for trading to a bank account in his name, to him or his wife directly, or to credit card companies to pay off balances in accounts in his or his wife’s name. Nearly $65,000 worth of checks were written from the brokerage accounts to car dealerships to purchase vehicles later registered to Liang and his wife.
The SEC’s complaint alleges that Liang violated 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, and seeks a permanent injunction against future violations, disgorgement of unlawful trading profits and losses avoided plus prejudgment interest, and a financial penalty. The SEC’s complaint names Liang’s wife Yi Zhuge and the account holders for the seven trading accounts he used – Liang’s mother Hui Juan Chen, his son Andrew Liang, Shuhua Zhu, Zhongshan Chen, and Honami Toda – as relief defendants for the purpose of recovering ill-gotten funds to which they have no legitimate claim. Criminal charges by the Department of Justice against Andrew Liang were unsealed today in the District of Maryland.
The SEC’s investigation was conducted by Deborah Tarasevich, Carolyn Welshhans, Owen Granke, and Ricky Sachar – members of the SEC’s Market Abuse Unit in Washington, D.C. The SEC’s litigation effort will be led by Matthew Martens and David Williams. The SEC thanks the Department of Justice’s Criminal Fraud Section, the Federal Bureau of Investigation, the Department of Health and Human Services Office of Inspector General, and the U.S. Attorney’s Office for the District of Maryland for their ongoing assistance in this matter. The SEC’s investigation is continuing.
# # #
For more information about this enforcement action, contact:
Daniel M. Hawke
Chief, Market Abuse Unit, SEC Division of Enforcement
(215) 597-3191
Sanjay Wadhwa
Deputy Chief, Market Abuse Unit, SEC Division of Enforcement
(212) 336-0181
Deborah A. Tarasevich
Assistant Director, Market Abuse Unit, SEC Division of Enforcement
(202) 551-4726
http://www.sec.gov/news/press/2011/2011-76.htm
SEC Blocks Attempt by Connecticut Fund Manager to Divert Funds From Petters Ponzi Scheme Victims
FOR IMMEDIATE RELEASE
2011-75
Washington, D.C., March 28, 2011 – The Securities and Exchange Commission today announced it has obtained an emergency court order to halt an attempt by a Connecticut-based fund manager to divert to himself and others settlement funds intended for U.S. victims of a Ponzi scheme operated by Minnesota businessman Thomas Petters.
The SEC has charged Marlon M. Quan with facilitating the Petters fraud and funneling several hundred million dollars of investor money into the scheme. The SEC alleges that Quan and his firms (Stewardship Investment Advisors LLC and Acorn Capital Group LLC) invested hedge fund assets with Petters while pocketing more than $90 million in fees. They falsely assured investors that their money would be safeguarded by “lock box accounts” to protect them against defaults. When Petters was unable to make payments on investments held by the funds that Quan managed, Quan and his firms concealed Petters’s defaults from investors by concocting sham round trip transactions with Petters.
Additional Materials
* SEC Complaint
* Litigation Release No. 21906
In its emergency court action, the SEC alleges that Quan, despite a glaring conflict of interest, more recently negotiated an agreement to divert a settlement payment of approximately $14 million relating to a receivership and a bankruptcy of Petters’s entities. Although he purportedly negotiated on behalf of his U.S. fund investors, Quan’s U.S. victims would receive no money under this agreement.
At the SEC’s request, the Honorable Ann D. Montgomery of the U.S. District Court for the District of Minnesota ordered that the money – paid into a firm affiliated with Quan’s Acorn Capital Group LLC – be placed into a segregated account and frozen until further order of the court. A hearing will be held on April 14 to determine the SEC’s request for additional emergency relief for investors.
“Quan falsely assured his fund investors about safeguards that did not exist and made up phony transactions to hide Petters’s defaults, all while he pocketed millions of dollars in fees,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Our action shows that we will relentlessly pursue illegal profits stolen from innocent investors through Ponzi schemes.”
In the attempt blocked by the SEC, Quan had arranged for nearly $6 million of the settlement amount to be paid to a German bank, more than $7 million to be paid to a liquidator appointed by a Bermuda court for certain overseas fund investors, and approximately $862,500 to be directed to pay Quan’s lawyers and other expenses.
The SEC previously charged Petters and Illinois-based fund manager Gregory M. Bell with fraud, and filed additional charges against Florida-based hedge fund managers Bruce F. Prévost and David W. Harrold for facilitating the Petters Ponzi scheme.
According to the SEC’s complaint, Petters sold promissory notes to feeder funds like those controlled by Quan and his firms. Petters used some of the note proceeds to pay returns to earlier investors, diverting the rest of the cash to his own purposes. Petters had promised investors that their money would be used to finance the purchase of vast amounts of consumer electronics by vendors who then re-sold the merchandise to such retailers as Wal-Mart and Costco. In reality, this “purchase order inventory financing” business was merely a Ponzi scheme. There were no inventory transactions.
The SEC alleges that Quan and his firms funneled money into the Petters Ponzi scheme beginning as early as 2001 and continuing through 2008. Quan, who lives in Greenwich, Conn., sold interests in his Stewardship Funds to individuals, charities, companies and other hedge funds. He falsely assured investors of several procedures that Acorn Capital Group purportedly undertook to protect the investors in his hedge funds. However, Quan and his firms implemented none of these safeguards.
The SEC further alleges that Quan falsely assured existing and new investors that the Quan Hedge Funds were doing well when in reality Petters began defaulting on the investments they held. Instead of disclosing these defaults to his fund’s investors, Quan embarked on a series of convoluted transactions in which he exchanged $187 million with Petters Co. in “round trips” that created the false appearance that Petters was making his payments.
The SEC’s complaint charges Quan and his firms with violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 206(4) of the Investment Advisers Act of 1940 and Rule 206-4(8) thereunder. The SEC seeks entry of a court order of permanent injunction against Quan and his firms as well as an order of disgorgement, prejudgment interest and financial penalties. The SEC also seeks equitable relief against relief defendants Florene Quan, wife of Defendant Quan, and Asset Based Resource Group LLC, an affiliate of Acorn Capital Group LLC.
Sally J. Hewitt, Donald A. Ryba, Charles J. Kerstetter and Peter K.M. Chan of the SEC's Chicago Regional Office conducted the SEC’s investigation. Frank Hooper and Marie Hagelstein of the SEC’s Boston Regional Office’s examination staff also assisted in the SEC’s investigation. The SEC’s litigation is led by John E. Birkenheier of the SEC’s Chicago Regional Office. The SEC acknowledges the assistance of the Bermuda Monetary Authority.
The SEC's investigation is continuing.
# # #
For more information about this enforcement action, contact:
Merri Jo Gillette
Director, SEC’s Chicago Regional Office
(312) 353-9338
Peter K.M. Chan
Assistant Regional Director, SEC’s Chicago Regional Office
(312) 353-7410
Charles J. Kerstetter
Assistant Regional Director, SEC’s Chicago Regional Office
(312) 353-7435
http://www.sec.gov/news/press/2011/2011-75.htm
SEC Halts $47 Million Investment Fraud at Utah-Based Payday Loan Companies
FOR IMMEDIATE RELEASE
2011-73
Washington, D.C., March 28, 2011 – The Securities and Exchange Commission today announced that it has obtained a court order freezing the assets of two online payday loan companies and their owner charged with perpetrating a $47 million offering fraud and Ponzi scheme.
The SEC alleges that John Scott Clark of Hyde Park, Utah, promised investors astronomical annual returns of 80 percent on their investments in his companies – Impact Cash LLC and Impact Payment Systems LLC. Investors were told their money would be kept in separate bank accounts and used to fund payday loans and other aspects of the companies’ operations. However, Clark instead commingled investor funds into a single pool and used them to make unauthorized investments, pay fictitious profits to earlier investors, and finance his own lavish lifestyle.
Additional Materials
* SEC Complaint
* Litigation Release No. 21903
“Investors were promised extraordinary returns while Clark was actually diverting their money to make such extraordinary personal purchases as a fully restored classic 1963 Corvette Stingray,” said Ken Israel, Director of the SEC’s Salt Lake Regional Office. “Clark recruited new investors through referrals from earlier investors who thought the Ponzi payments they received were actual returns on their investments and sought to share the lucrative opportunity with family and business associates.”
The SEC alleges that in addition to buying multiple expensive cars and snowmobiles, Clark stole investor funds to purchase a home theater, bronze statues and other art for himself.
According to the SEC’s complaint filed in U.S. District Court for the District of Utah, Clark lured at least 120 investors into his scheme. Besides word-of-mouth referrals from earlier investors, Clark also recruited investors by attending trade shows in various states, attending payday loan conferences, and paying salespeople to locate potential investors to meet with Clark. He paid one salesperson more than a half-million dollars over a multi-year period to locate potential investors and attend payday loan conferences and trade shows.
The SEC alleges that from at least March 2006 to September 2010, Clark and the Impact companies raised funds from investors for the stated purposes of funding payday loans, purchasing lists of leads for payday loan customers, and paying Impact’s operating expenses. Impact did not distribute a private placement memorandum or any other document disclosing the nature of the investment or the risks involved to investors. The SEC’s complaint charges Impact and Clark with fraudulently selling unregistered securities.
According to the SEC’s complaint, Clark routinely altered investor account statements provided to him by Impact’s accounting department to create artificially high annual rates of return. The altered account statements with purported profits were then sent to investors. Account statements to customers showed annualized returns varying from 30 percent to more than 200 percent.
In addition to the asset freeze approved late Friday, the court has appointed a receiver to preserve and marshal assets for the benefit of investors. The SEC’s complaint seeks a preliminary and permanent injunction as well as disgorgement, prejudgment interest and financial penalties from Impact and Clark.
This matter was investigated by Jennifer Moore, Justin Sutherland and Marie Elliott of the SEC’s Salt Lake Regional Office, and the litigation will be led by Tom Melton. The SEC appreciates the assistance of the Utah Division of Securities in this matter.
# # #
For more information about this enforcement action, contact:
Kenneth D. Israel, Regional Director
Karen Martinez, Assistant Director
SEC’s Salt Lake Regional Office
(801) 524-5796
http://www.sec.gov/news/press/2011/2011-73.htm
SEC Charges Houston-Area Businessman and Talk Radio "MoneyMan" for Fraudulent Conduct at Advisory Firm
FOR IMMEDIATE RELEASE
2011-72
Washington, D.C., March 25, 2011 — The Securities and Exchange Commission today charged Houston-area businessman Daniel Frishberg with fraudulent conduct in connection with promissory note offerings made to clients of his investment advisory firm.
The SEC alleges that Frishberg's firm Daniel Frishberg Financial Services (DFFS) advised clients to invest in notes issued by Business Radio Networks (BizRadio), a media company founded by Frishberg where he hosts his own show under the nickname "The MoneyMan." Frishberg failed to tell his clients about BizRadio's poor financial condition or his significant conflicts of interest with the note offerings that helped fund his salary at BizRadio.
Additional Materials
* SEC Complaint
* Litigation Release No. 21901
Frishberg agreed to settle the SEC's charges by paying a $65,000 penalty that will be distributed to harmed investors. He will be barred from future association with any investment adviser.
"Contrary to his obligations as an investment adviser, Frishberg approved risky investment recommendations to his clients without ensuring that the risks and conflicts were properly disclosed," said Rose Romero, Director of the SEC's Fort Worth Regional Office. "Frishberg personally benefitted from the questionable investments that were recommended to his clients."
According to the SEC's complaint filed in federal district court in Houston, at least $11 million in promissory notes were issued by BizRadio and Kaleta Capital Management (KCM), which is owned by Frishberg's associate Albert Fase Kaleta. Frishberg and Kaleta jointly controlled BizRadio.
The SEC charged Kaleta and his firm with fraud in 2009, and the court appointed a receiver to marshal the assets of KCM and relief defendants BizRadio and DFFS.
The SEC alleges that Frishberg authorized Kaleta to recommend the notes to DFFS clients, and clients were not provided with critical disclosures. Investors were not told of BizRadio's poor financial condition and the likely inability of KCM and BizRadio to repay the notes. Nor were investors informed about Frishberg's significant conflicts of interest in the note offerings because the proceeds funded his salary as a BizRadio talk show host.
The SEC alleges that Frishberg chose Kaleta to recommend the BizRadio notes even though he was aware of complaints about Kaleta's lack of truthfulness in sales presentations regarding other investments.
The SEC's complaint alleges that Frishberg violated Section 206(2) of the Investment Advisers Act of 1940 and aided and abetted violations of Sections 206(1) and 206(2) of the Advisers Act.
Without admitting or denying the SEC's allegations, Frishberg consented to the entry of a permanent injunction against these violations and to pay a $65,000 penalty. Frishberg consented to the establishment of a fair fund for the distribution of his penalty to harmed investors, and agreed to be barred from association with any investment adviser or certain other registered entities.
# # #
For more information about this enforcement action, contact:
Rose Romero
Regional Director, SEC's Fort Worth Regional Office
(817) 978-3821
Stephen J. Korotash
Associate Regional Director, SEC's Fort Worth Regional Office
(817) 978-6490
http://www.sec.gov/news/press/2011/2011-72.htm
SEC Charges Three Firms and Four Individuals in Los Angeles-Based Boiler Room Operation
FOR IMMEDIATE RELEASE
2011-70
Washington, D.C., March 21, 2011 – The Securities and Exchange Commission today charged three firms and four individuals involved in a boiler room scheme operating out of Los Angeles that defrauded investors who they persuaded to buy purportedly profitable trading systems.
The SEC alleges that representatives of Spyglass Equity Systems Inc. cold-called investors and made false and misleading statements to help raise more than $2.15 million from nearly 200 investors nationwide for two related investment companies – Flatiron Capital Partners LLC (FCP) and Flatiron Systems LLC (FS). However, only a little more than half of that money was actually used for the advertised trading purposes, and much of the trading that did occur failed to use the purported trading systems. FCP and FS wound up losing about $1 million in investor funds. The managing member of the two firms – David E. Howard II – misused almost $500,000 of investor money for unauthorized business expenses as well as personal expenses including travel, entertainment, and gifts for his girlfriend.
Additional Materials
* SEC Complaint
Along with Howard, FCP and FS, Spyglass and its owners – Richard L. Carter, Preston L. Sjoblom and Tyson D. Elliott – also are charged with fraud in connection with the unregistered securities offerings.
“This operation pressured elderly and unsophisticated investors to entrust their money to purportedly can’t-miss trading systems that were not only unsuccessful, but in many instances unused,” said Donald M. Hoerl, Director of the SEC’s Denver Regional Office. “They kept delivering false claim after false claim until the money dissipated.”
According to the SEC’s complaint filed in federal court in the Central District of California, Howard conspired with Spyglass to sell the securities, and Spyglass earned an estimated $1 million in the deal. The trading systems pitched to investors by Spyglass representatives could only be used if the investor also funded a brokerage account at FCP. However, FCP was not a broker-dealer and thus could not offer brokerage services to customers.
The SEC alleges that Spyglass representatives falsely touted a successful performance history and level of automation of the trading systems, and misled investors to believe that FCP had a positive reputation and solid affiliations in the brokerage industry. To seal the deal, Spyglass offered investors a money-back guarantee if the system did not generate a profit within the first 180 days of trading. However it was only after an investor paid Spyglass a license fee of about $6,000 that Spyglass put the investor in contact with Flatiron, ostensibly to open a brokerage account.
The SEC’s complaint alleges that Howard and FCP provided each investor with instructions on how to fund their “account” with FCP, but included in the instruction packet a copy of the FCP Operating Agreement that indicated the investor was actually purchasing a membership interest in FCP. Many of the investors recruited by Spyglass were elderly and unsophisticated investors who did not understand that they were purchasing a security interest in FCP.
According to the SEC’s complaint, FCP pooled investor funds so Howard and others could trade the funds using various trading techniques. When the trading was not successful and it became clear that Spyglass would have to pay refunds to its clients, Howard provided Spyglass with another trading system and organized FS to purportedly operate the new system. Using false and misleading claims of prior success of this new trading system and Spyglass’s relationship with FS and Howard, FCP investors were persuaded to transfer their investments from FCP to FS. Under the direction of Sjoblom and Carter, Spyglass then began selling the FS trading system to new investors using a sales pitch similar to the one it used to sell the FCP. Investors were again misled to believe they would be opening brokerage accounts, this time with FS. They were later provided with an FS Operating Agreement indicating they were actually purchasing a membership interest in FS. Howard used FS investor funds to trade in equities, futures and off-market securities.
When FS ran out of funds in December 2008, the SEC alleges that Howard took steps to conceal the fraudulent scheme by telling members that he had ceased all trading in order to conduct an audit of the trading accounts. However, Flatiron never hired an auditor and no audit was ever performed.
The SEC's complaint charges Spyglass, Sjoblom, Carter, Elliott, FS, FCP and Howard with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; FS, FCP and Howard with violations of Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933; Spyglass, Sjoblom, Carter and Elliott with violation of Section 15(a) of the Exchange Act; FS and FCP of violations of Section 7(a) of the Investment Company Act of 1940; Howard with violations of Section 206(1), (2) and (4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder; and Spyglass, Carter, Sjoblom and Elliott with aiding abetting Howard’s violations of Section 206(4) of the Advisers Act and Rule 206(4)-8 thereunder. The SEC seeks permanent injunctions, disgorgement plus prejudgment and post-judgment interest, and financial penalties.
This case was investigated by Kerry Matticks, Tracy Tirey and Jay Scoggins of the SEC’s Denver Regional Office.
The SEC acknowledges the assistance of the Commodity Futures Trading Commission (CFTC), which charged Carter and his company The Trade Tech Institute Inc. in a related enforcement action filed in federal court in the Central District of California.
# # #
For more information about this enforcement action, contact:
Donald M. Hoerl
Director, SEC’s Denver Regional Office
(303) 844-1060
Julie K. Lutz
Associate Director, SEC’s Denver Regional Office
(303) 844-1056
http://www.sec.gov/news/press/2011/2011-70.htm
SEC Charges Former Supervisor at Colonial Bank for Role in Securities Fraud Scheme
FOR IMMEDIATE RELEASE
2011-68
Washington, D.C., March 16, 2011 – The Securities and Exchange Commission today charged the former operations supervisor of Colonial Bank’s mortgage warehouse lending division (MWLD) with participating in a $1.5 billion securities fraud scheme.
The SEC alleges that Teresa A. Kelly enabled the sale of fictitious and impaired mortgage loans and securities from the MWLD’s largest customer – Taylor, Bean & Whitaker Mortgage Corp. (TBW) – to Colonial Bank. She caused these securities to be falsely reported to the investing public as high-quality, liquid assets.
Additional Materials
* SEC Complaint
The SEC previously charged former TBW chairman and majority owner Lee B. Farkas in June 2010, charged TBW’s former treasurer Desiree E. Brown in February 2011, and charged the head of Colonial Bank’s MWLD Catherine L. Kissick earlier this month.
“For nearly seven years, Kelly abused her access to Colonial Bank’s accounting systems, allowing Farkas and TBW to defraud the bank and its investors out of more than $1.5 billion,” said William P. Hicks, Associate Regional Director of the SEC’s Atlanta Regional Office.
According to the SEC’s complaint filed in U.S. District Court for the Eastern District of Virginia, Kelly along with Farkas, Kissick and Brown perpetrated the fraudulent scheme from March 2002 to August 2009, when Colonial Bank was seized by regulators and Colonial BancGroup and TBW each filed for bankruptcy. Because TBW generally did not have sufficient capital to internally fund the mortgage loans it originated, it relied on financing arrangements primarily through Colonial Bank’s mortgage warehouse lending division to fund such mortgage loans.
The SEC alleges that TBW began to experience liquidity problems and overdrew its then-limited warehouse line of credit with Colonial Bank by approximately $15 million each day. Kelly, Farkas, Kissick and Brown concealed the overdraws through a pattern of “kiting” in which certain debits were not entered until after credits due for the following day were entered. In order to conceal this initial fraudulent conduct, Kelly, Farkas, Kissick and Brown created and submitted fictitious loan information to Colonial Bank and created fictitious mortgage-backed securities assembled from the fraudulent loans. By the end of 2007, the scheme consisted of approximately $500 million in fake residential mortgage loans and approximately $1 billion in severely impaired residential mortgage loans and securities. These fictitious and impaired loans were misrepresented as high-quality assets on Colonial BancGroup’s financial statements.
The SEC’s complaint charges Kelly with violations of the antifraud, reporting, books and records and internal controls provisions of the federal securities laws, including Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934 and Rules 10b-5 and 13b2-1 thereunder, and from aiding and abetting violations of Sections 10(b), 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, 13a-1, 13a-11 and 13a-13 thereunder.
The SEC’s case was investigated by Aaron W. Lipson, Yolanda L. Ross and Barry R. Lakas of the Atlanta Regional Office. The SEC acknowledges the assistance of the Fraud Section of the U.S. Department of Justice’s Criminal Division, Federal Bureau of Investigation, Office of the Special Inspector General for the TARP, Federal Deposit Insurance Corporation’s Office of the Inspector General, U.S. Department of Housing and Urban Development’s Office of the Inspector General, and Civil Division of the U.S. Attorney’s Office for the Eastern District of Virginia. The SEC brought its enforcement action in coordination with these other members of the Financial Fraud Enforcement Task Force.
The SEC’s investigation is continuing.
# # #
For more information concerning this enforcement action, contact:
Rhea Kemble Dignam,
Regional Director, SEC’s Atlanta Regional Office
(404) 842-7610
William P. Hicks
Associate Regional Director, SEC’s Atlanta Regional Office
(404) 842-7675
http://www.sec.gov/news/press/2011/2011-68.htm
SEC Charges Three Executives With Conducting $230 Million Investment Scheme at Ohio-Based Company
FOR IMMEDIATE RELEASE
2011-67
Washington, D.C., March 16, 2011 – The Securities and Exchange Commission today charged three senior executives at Akron, Ohio-based Fair Finance Company with orchestrating a $230 million fraudulent scheme involving at least 5,200 investors – many of them elderly.
The SEC alleges that after purchasing Fair Finance Company, chief executive officer Timothy S. Durham, chairman James F. Cochran, and chief financial officer Rick D. Snow deceived investors while selling them interest-bearing certificates. Fair Finance had previously operated for decades as a privately-held consumer finance company. But under the guise of loans, Durham and Cochran schemed to divert investor proceeds to themselves and others as well as struggling and unprofitable entities that they controlled. Durham and Cochran further misused investor funds to buy classic cars and other luxury items to enhance their own lavish lifestyles.
Additional Materials
* SEC Complaint
* Litigation Release No. 21888
In a parallel criminal proceeding, the U.S. Department of Justice today unsealed criminal charges against Durham, Cochran and Snow for the same alleged misconduct.
“These executives looted Fair Finance and exploited unsuspecting investors who trusted the company to prudently invest their funds as it had done for decades,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “To add insult to injury, they squandered the stolen funds on such extravagances as multiple homes, a private jet, a yacht and more than 40 classic and exotic cars.”
According to the SEC’s complaint filed in U.S. District Court for the Southern District of Indiana, Fair Finance historically raised funds by selling interest-bearing certificates to investors and using the proceeds to purchase and service discounted consumer finance contracts. Following the 2002 purchase, Durham and Cochran funneled millions of dollars to themselves and their related companies. By November 2009, Durham, Cochran and their related businesses owed Fair Finance more than $200 million, which accounted for approximately 90 percent of Fair Finance’s total loan portfolio.
The SEC alleges that Durham and Cochran knew that neither they nor their related companies had the earnings, collateral or other resources to ensure repayment on the purported loans. As CFO, Snow knew or was reckless in not knowing that neither Durham and Cochran nor their entities could repay the funds they took from Fair Finance. Nonetheless, they continued to raise hundreds of millions of dollars from investors by using false and misleading financial statements and other information contained in the offering circulars to deceive investors about Fair Finance’s true financial condition. Ultimately, Durham, Cochran and their related companies never repaid these loans, and they used new investor proceeds to repay earlier investors in the nature of a Ponzi scheme.
Durham and Cochran also distributed large amounts of money to family members and friends, and misused investor funds to afford mortgages for multiple homes, a $3 million private jet, a $6 million yacht, and classic and exotic cars worth more than $7 million. They also diverted investor money to cover hundreds of thousands of dollars in gambling and travel expenses, credit card bills, and country club dues, and to pay for elaborate parties and other forms of entertainment.
According to the SEC’s complaint, Durham has residences in Los Angeles and Fortville, Ind.; Cochran resides in McCordsville, Ind.; and Snow lives in Fishers, Ind. Durham currently is the CEO at National Lampoon, and Snow currently is the CFO.
The SEC’s complaint charges Durham, Cochran and Snow with violating Section 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 seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, penalties and officer and director bars against each of the defendants.
The SEC’s investigation was conducted by Philadelphia Regional Office enforcement staff Kelly L. Gibson, Brendan P. McGlynn, John J. Heffernan, Daniel L. Koster and Paul Rihn. The SEC’s litigation will be led by Scott A. Thompson and G. Jeffrey Boujoukos.
The SEC acknowledges and appreciates the assistance of the U.S. Attorney’s Office for the Southern District of Indiana, the U.S. Department of Justice, Fraud Section, the Federal Bureau of Investigation and the Ohio Division of Securities.
# # #
For more information about this enforcement action, contact:
Daniel M. Hawke, Regional Director
Elaine C. Greenberg, Associate Regional Director
Brendan P. McGlynn, Assistant Regional Director
SEC Philadelphia Regional Office
(215) 597-3100
http://www.sec.gov/news/press/2011/2011-67.htm
SEC Charges Hedge Fund Managers With Fraud
FOR IMMEDIATE RELEASE
2011-66
Washington, D.C., March 15, 2011 – The Securities and Exchange Commission today charged a hedge fund investment advisory firm and its two founders with orchestrating a multi-faceted scheme to defraud clients and failing to comply with fiduciary obligations.
The SEC alleges that Eugenio Verzili and Arturo Rodriguez through their firm Juno Mother Earth Asset Management LLC misappropriated client assets, inflated assets under management, and filed false information with the SEC. Juno, Verzili and Rodriguez looted approximately $1.8 million of assets from a hedge fund they manage, misusing it to pay Juno’s operating costs related to payroll, rent, travel, meals, and entertainment. They issued promissory notes to conceal a substantial portion of their misappropriation. Juno, Verzili and Rodriguez also misrepresented the amount of capital that some Juno partners had invested in one of its funds, claiming they had invested millions of dollars when they actually had invested nothing in the funds.
Additional Materials
* SEC Complaint
“Verzili, Rodriguez and their firm violated the most fundamental duties of an investment adviser by lying to their clients and misappropriating the money entrusted to their care,” said George S. Canellos, Director of the SEC’s New York Regional Office. “They compounded their wrongdoing by providing false information in filings with the SEC that are designed to ensure that registered investment advisers make full disclosure to investors.”
Bruce Karpati, Co-Chief of the Asset Management Unit in the SEC’s Division of Enforcement, said, “Hedge fund investors derive comfort from knowing the fund’s adviser has so-called ‘skin in the game’ by investing its own money side-by-side with investors and sharing the same risks and rewards. These managers deliberately distorted their skin in the game.”
According to the SEC’s complaint filed in the U.S. District Court for the Southern District of New York, Juno sold securities in client brokerage and commodity accounts and directed 41 separate transfers of cash to Juno’s bank account, claiming falsely that the transfers were reimbursements for expenses Juno had incurred on behalf of the client fund. Verzili and Rodriguez later fabricated and issued nine promissory notes to make it appear that the client fund had invested the money in Juno. But they concealed the so-called investment from the independent directors of the client fund.
The SEC’s complaint further alleges that Juno, Verzili and Rodriguez marketed investments in the Juno-advised fund and failed to disclose Juno’s precarious financial condition to investors. They also failed to disclose that Juno owed a client fund a minimum of $1.2 million, which represented the proceeds of the promissory notes. While offering and selling securities in the client fund, Juno repeatedly inflated and misrepresented the amount of assets that Juno managed and claimed at one point that Juno had as much as $200 million under management. Verzili also represented falsely to investors that Juno’s partners had up to $3 million of their own capital invested in a client fund. Juno’s partners had never actually invested any of their own money.
The SEC alleges that Juno filed false Forms ADV with the SEC in order to avoid deregistration with the Commission, claiming in those filings that Juno managed $40 million more than it actually did. Verzili and Rodriguez also caused Juno to provide a number of false filings to the SEC that failed to disclose that Juno had engaged in principal transactions with its client and had custody of client assets.
The SEC’s complaint charges Juno, Verzili and Rodriguez with violations of the antifraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940, as well as additional regulatory-based violations of the Advisers Act. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains plus prejudgment interest, and monetary penalties.
The SEC’s case was investigated by New York Regional Office staff including Ken C. Joseph and Mark D. Salzberg of the Asset Management Unit and Elzbieta Wraga, with assistance from examiners Eugenio Cantiello, Majid Mahmood, Raymond Slezak and Joseph DiMaria. Jack Kaufman will lead the SEC’s litigation.
The SEC acknowledges the assistance of the Cayman Islands Monetary Authority and the Financial Market Authority Liechtenstein.
# # #
For more information about this enforcement action contact:
George S. Canellos
Director, SEC’s New York Regional Office
212-336-1020
Bruce Karpati (212-336-0104) and Robert Kaplan (202-551-4969)
Co-Chiefs of the SEC Asset Management Unit
Ken C. Joseph
Assistant Director of New York Office and member of SEC Asset Management Unit
212-336-0097
http://www.sec.gov/news/press/2011/2011-66.htm
SEC Charges Hedge Fund Managers and Traders in $30 Million Expert Network Insider Trading Scheme
FOR IMMEDIATE RELEASE
2011-40
Washington, D.C., Feb. 8, 2011 — The Securities and Exchange Commission today charged a New York-based hedge fund and four hedge fund portfolio managers and analysts who illegally traded on confidential information obtained from technology company employees moonlighting as expert network consultants. The scheme netted more than $30 million from trades based on material, nonpublic information about such companies as AMD, Seagate Technology, Western Digital, Fairchild Semiconductor, and Marvell.
Additional Materials
* SEC Complaint
* News Conference Remarks by Enforcement Director Robert Khuzami
The charges are the first against traders in the SEC’s ongoing investigation of insider trading involving expert networks. The SEC filed its initial charges in the case last week against technology company employees who illegally tipped hedge funds and other investors with material nonpublic information about their companies in return for hundreds of thousands of dollars in sham consulting fees.
In its amended complaint filed today in federal court in Manhattan, the SEC alleges that four hedge fund portfolio managers and analysts received illegal tips from the expert network consultants and then caused their hedge funds to trade on the inside information.
“It is illegal for company insiders who moonlight as consultants to sell confidential information about their companies to traders, and it is equally illegal to buy that corruptly obtained information and trade on it,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “Instead of competing on a level playing field with other investors, these hedge fund managers sought to illegally trade today on what others would not learn until tomorrow.”
The SEC’s ongoing investigation is focusing on the activities of expert networks that purportedly provide professional investment research to their clients. While it is legal to obtain expert advice and analysis through expert networking arrangements, it is illegal to trade on material nonpublic information obtained in violation of a duty to keep that information confidential.
The technology company insiders who tipped the confidential information were expert network consultants to the firm Primary Global Research LLC (PGR).
The SEC’s amended complaint alleges:
* Samir Barai of New York, N.Y., the founder and portfolio manager of Barai Capital Management, obtained inside information about several technology firms from company insiders, and then traded on the inside information on behalf of Barai Capital.
* Jason Pflaum of New York, N.Y., a former technology analyst at Barai Capital Management, obtained inside information about technology companies and shared it with Barai. After Pflaum shared the confidential information with him, Barai used it to illegally trade on behalf of Barai Capital.
* Noah Freeman of Boston, Mass., a former managing director at a Boston-based hedge fund, obtained inside information regarding Marvell and shared it with Donald Longueuil of New York, N.Y., a former managing director at a Connecticut-based hedge fund. Longueuil caused his hedge fund to trade on the inside information. Freeman also obtained inside information about another technology company and caused his hedge fund to trade on the nonpublic information.
The SEC’s amended complaint charges each of the defendants with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and additionally charges Barai, Pflaum, Freeman and Longueuil with aiding and abetting others’ violations of Section 10(b) and Rule 10b-5 thereunder. The complaint also charges Barai, Pflaum and Barai Capital with violations of Section 17(a) of the Securities Act of 1933. The complaint seeks a final judgment permanently enjoining the defendants from future violations of the above provisions of the federal securities laws, ordering them to disgorge their ill-gotten gains plus prejudgment interest, and ordering them to pay financial penalties.
Sanjay Wadhwa, Jason Friedman, Joseph Sansone, Daniel Marcus — members of the SEC’s Market Abuse Unit in New York — have conducted the SEC’s investigation with Matthew Watkins, Neil Hendelman, Diego Brucculeri and James D’Avino of the New York Regional Office. The SEC’s litigation effort will be led by Valerie Szczepanik and Kevin McGrath. The SEC thanks the U.S. Attorney’s Office for the Southern District of New York and the Federal Bureau of Investigation for their assistance in the matter.
# # #
For more information about this enforcement action, contact:
George Canellos
Director, SEC’s New York Regional Office
(212) 336-1020
David Rosenfeld
Associate Director, SEC’s New York Regional Office
(212) 336-0153
Sanjay Wadhwa
Deputy Chief, Market Abuse Unit, Division of Enforcement
(212) 336-0181
http://www.sec.gov/news/press/2011/2011-40.htm
SEC Brings Expert Network Insider Trading Charges
Moonlighting Employees Passed Company Secrets to Hedge Funds and Others
FOR IMMEDIATE RELEASE
2011-38
Washington, D.C., Feb. 3, 2011 — The Securities and Exchange Commission today charged six expert network consultants and employees with insider trading for illegally tipping hedge funds and other investors to generate nearly $6 million in illicit gains. The charges stem from the SEC's ongoing investigation into the activities of expert networks that purport to provide professional investment research to their clients.
While it's legal to obtain expert advice and analysis through expert networking arrangements, it's illegal to trade on material nonpublic information obtained in violation of a duty to keep that information confidential.
Additional Materials
* SEC Complaint
The SEC alleges that four technology company employees, while moonlighting as consultants or "experts" to Primary Global Research LLC (PGR) without the knowledge of their employers, abused their access to inside information about such technology companies as AMD, Apple, Dell, Flextronics, and Marvell. The consultants received hundreds of thousands of dollars in purported consulting fees from PGR for sharing the inside information with PGR employees and clients. The SEC charges two PGR employees for facilitating the transfer of inside information from PGR consultants to PGR clients.
"Company executives and other insiders moonlighting as consultants to hedge funds cannot blatantly peddle their company's confidential information for personal gain," said Robert Khuzami, Director of the SEC's Division of Enforcement. "These PGR consultants and employees schemed to facilitate widespread and repeated insider trading by several hedge funds and other investment professionals."
The SEC's complaint filed in federal court in Manhattan alleges that PGR consultants Mark Anthony Longoria, Daniel L. DeVore, Winifred Jiau and Walter Shimoon obtained material, non-public confidential information about quarterly earnings and performance data and shared that information with hedge funds and other clients of PGR who traded on the inside information. PGR employees Bob Nguyen and James Fleishman acted as conduits by receiving inside information from PGR consultants and passing that information directly to PGR clients.
The SEC alleges that:
*
Longoria, a manager in AMD's desktop global operations group, had access to sales figures for AMD's various operational units. He also obtained from a colleague AMD's financial results, including "top line" quarterly revenue and profit margin information prior to their public announcement. Longoria shared this inside information with multiple PGR clients who, in turn, traded in AMD securities. From January 2008 to March 2010, Longoria received more than $130,000 for talking to PGR and its clients.
*
DeVore, a Global Supply Manager at Dell, was privy to confidential information about Dell's internal sales forecasts as well as information about the pricing and volume of Dell's purchases from its suppliers. DeVore regularly provided PGR and PGR clients with this inside information so it could be used to trade securities. From 2008 to 2010, DeVore received approximately $145,000 for talking to PGR and its clients.
*
Shimoon, a Vice President of Business Development for Components in the Americas at Flextronics, was privy to confidential information concerning Flextronics and its customers including Apple, Omnivision, and Research in Motion. Shimoon provided this inside information to PGR and PGR clients so it could be used to trade securities. From September 2008 to June 2010, Shimoon received approximately $13,600 for talking to PGR and its clients.
*
Jiau was a "private" PGR expert, meaning that PGR made her available only to a small number of PGR clients. Jiau, who had contacts at Marvell and other technology companies, regularly provided certain PGR clients with inside information regarding Marvell and other technology companies. Jiau provided company-specific financial results that companies had not yet announced publicly. From September 2006 to December 2008, Jiau received more than $200,000 for her consultations with select PGR clients.
*
Nguyen and Fleishman received, directly or indirectly, specific inside information from PGR consultants and passed this inside information on, directly or indirectly, to PGR clients.
The SEC's complaint charges each of the defendants with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and, additionally, charges Fleishman, Nguyen and Jiau with aiding and abetting others' violations of Section 10(b) of the Exchange Act and SEC Rule 10b-5. The complaint also charges Longoria and DeVore with violations of Section 17(a) of the Securities Act of 1933. The complaint seeks a final judgment permanently enjoining the defendants from future violations of the above provisions of the federal securities laws, ordering them to disgorge their ill-gotten gains plus prejudgment interest, and ordering them to pay financial penalties. The complaint also seeks to permanently prohibit Longoria, Shimoon and DeVore from acting as an officer or director of any registered public company.
Sanjay Wadhwa, Jason Friedman, Joseph Sansone, Daniel Marcus — members of the SEC's Market Abuse Unit in New York — together with Matthew Watkins, Neil Hendelman, Diego Brucculeri and James D'Avino of the New York Regional Office conducted the agency's investigation, which is continuing. The SEC's litigation effort will be led by Kevin McGrath and Valerie Szczepanik. The SEC thanks the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation for their assistance in the matter.
# # #
For more information about this enforcement action, contact:
George Canellos
Director, SEC's New York Regional Office
(212) 336-1020
David Rosenfeld
Associate Director, SEC's New York Regional Office
(212) 336-0153
Sanjay Wadhwa
Deputy Chief, Market Abuse Unit, Division of Enforcement
(212) 336-0181
http://www.sec.gov/news/press/2011/2011-38.htm
SEC Charges Maxwell Technologies for Long-Running Bribery Scheme in China
FOR IMMEDIATE RELEASE
2011-31
Washington, D.C., Jan. 31, 2011 — The Securities and Exchange Commission today charged energy-related products manufacturer Maxwell Technologies Inc. with violating the Foreign Corrupt Practices Act (FCPA) by repeatedly paying bribes to government officials in China to obtain business from several Chinese state-owned entities.
Additional Materials
* SEC Complaint
* Litigation Release No. 21832
The SEC alleges that a Maxwell subsidiary paid more than $2.5 million in bribes to Chinese officials through a third-party sales agent from 2002 to May 2009. As a result, the subsidiary was awarded contracts that generated more than $15 million in revenues and $5.6 million in profits for Maxwell. These sales and profits helped Maxwell offset losses that it incurred to develop new products now expected to become Maxwell's future source of revenue growth.
Maxwell — a Delaware corporation headquartered in San Diego — has agreed to pay more than $6.3 million to settle the SEC's charges. In a related criminal proceeding, Maxwell has reached a settlement with the U.S. Department of Justice and agreed to pay an $8 million penalty.
"Maxwell's bribery allowed the company to obtain revenue and better financially position itself until new products were commercially developed and sold," said Cheryl J. Scarboro, Chief of the SEC's Foreign Corrupt Practices Act Unit. "This enforcement action shows that corruption can constitute disclosure violations as well as violations of other securities laws."
According to the SEC's complaint filed in U.S. District Court for the District of Columbia, Maxwell's wholly-owned Swiss subsidiary Maxwell Technologies SA paid the bribes to officials at several Chinese state-owned entities. The bribes were classified in invoices as either "Extra Amount" or "Special Arrangement" fees, and were made to improperly influence decisions by foreign officials to assist Maxwell in obtaining and retaining sales contracts for high voltage capacitors produced by Maxwell SA.
The SEC's complaint alleges that the illicit payments were made with the knowledge and tacit approval of certain former Maxwell officials. For example, former management at Maxwell knew of the bribery scheme in late 2002 when an employee indicated in an e-mail that a payment made in connection with a sale in China appeared to be "a kick-back, pay-off, bribe, whatever you want to call it, . . . . in violation of US trade laws." A U.S.-based Maxwell executive replied that "this is a well know[n] issue" and he warned "[n]o more e-mails please."
The SEC alleges that Maxwell failed to devise and maintain an effective system of internal controls and improperly recorded the bribes on its books. The illicit sales and profits from the bribery scheme helped Maxwell offset losses that it incurred to develop its new products. Maxwell made corrections in its Form 10-Q filing for the quarter ended March 31, 2009.
Without admitting or denying the allegations in the SEC's complaint, Maxwell consented to the entry of a final judgment that permanently enjoins the company from future violations of Sections 30A, 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934, orders the company to pay $5,654,576 in disgorgement and $696,314 in prejudgment interest under a payment plan. The company also is required to comply with certain undertakings regarding its FCPA compliance program. Maxwell cooperated in the investigation.
Tracy L. Price and James Valentino of the SEC Enforcement Division's FCPA Unit conducted the investigation. The Commission acknowledges the assistance of the Department of Justice's Criminal Division-Fraud Section in its investigation, which is continuing.
# # #
For more information about this enforcement action, contact:
Cheryl J. Scarboro,
Chief, Foreign Corrupt Practices Act Unit, SEC Division of Enforcement
202-551-4403
http://www.sec.gov/news/press/2011/2011-31.htm
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Here is a Board where you can Pass Information on MM Manipulation on your Stocks. The Goal will be to gather enough Factual information to Present to the SEC, Congress and whoever else may listen. We need to protect GOOD American Business.
This board is a Place to fight SHARE PRINTERS !!
EVERYTHING SAID IS OF PURE OPINION ON THIS BOARD>> FOLLOW AT YOUR OWN RISK!!!!!
We also want to warn others about "CEO's" or "IR Firms" who do nothing but DILUTE Stocks for there own Gain !
Members: Officers / CEO's / Presidents / CFO's / Directors / Consultants / Treasurer
Anthony Welch | Milton.Ault | Joe Overcash | W.Smart | Edward.Vasker |
Carlton Wingett | M.Zoyes | A.Parsinia | Christopher Davies | JC Barbeck |
Paul Crawford | Khoo.Hua | K Yeung | Don Paradiso | F.Neukomm |
Stanley Larson | Merlin Larson | Troy Lyndon | K.Eade | Daniel McCormick |
Dennis Atkins | Richard Knox |
Robert Thayer | Dale Geck | Chris Glover | Ricardo Caicedo | K.A. Anderson |
IR FIRMS (BEWARE when you see these IR Firms listed on a stock)
Mani Mor Poo | VUFinancial (Vinci's) | Yorkville Advisors |
Big Apple Consulting more on them HERE | Boost Marketing | |
TRANSFER AGENCIES (Carefull when you see these "Transfer Agents" listed on a stock)
Transfer Online ( L.Livingston) | ||
Information about TOXIC Financing is needed also !!
Definitions
PRE 14C All preliminary information statements, excluding, mergers, contested solicitations and special meetings.
DEF 14C All types of definitive statements, excluding: mergers or acquisitions, contested solicitations and special meetings.
Reg D Companies selling securities in reliance on a Regulation D exemption or a Section 4(6) exemption from the registration provisions of the '33 Act must file a Form D as notice of such a sale. The form must be filed no later than 15 days after the first sale. The exact form type is usually REGDEX, but may be a REG D-1 or similar.
SB-2 This form may be used by "small business issuers" to register securities to be sold for cash.
S-8 This form is used for the registration of securities to be offered to an issuer's employees pursuant to certain plans.
S-1 This is the basic registration form. It can be used to register securities for which no other form is authorized or prescribed, except securities of foreign governments or political sub-divisions thereof.
1-E / 2-E Business development companies (BDC) can avail themselves of a more esoteric provision of the Securities Act - Regulation E, which provides an exemption from registration for securities issued by BDCs. In short, under Regulation E, a BDC may issue up to $5 million worth of securities a year without registration. Also under Regulation E, an individual may offer to sell up to $100,000 of securities in a BDC each year.
424B1, 2, 3, and 4 filings are final registration statements to register stock under previously filed SB-2 S-1 and S-2 filings, and they serve other purposes.
EFFECT filings are notice's of effectiveness of POS AM's and some S filings ie: S-1, SB-2. The EFFECT filing comes prior to the 424B3 filing we see when the shares enter the market.
ALL the posts here are OPINIONS and in no way are given as Investment Advice
GOOD DD BOARDS
DD Support Board and Fraud Research Team
Reverse Split Repeat Offenders (RS/RO)
http://investorshub.advfn.com/boards/board.asp?board_id=3017
Breaking Stock-Related News
http://investorshub.advfn.com/boards/Board.asp?Board_ID=1508
Here's a link that alerts name changes/RS's: http://www.otcbb.com/dailylist/
Here's a link to search SOS(secretary of state) filings(this will help you locate how many shares a company is authorized to issue-find out where the company is incorporated and search under "business entity name": http://www.coordinatedlegal.com/SecretaryOfState.html
Here's a board that has most of the TRANSFER AGENTS contact info-some are cooperative, and some are "gagged"(they won't release share info): http://investorshub.advfn.com/boards/board.aspx?board_id=10067
Investing Scams: 10 Tell-All Questions
Wednesday December 31, 8:54 am ET
By Motley Fool Staff
With Bernie Madoff's Ponzi scheme foremost in many investors' minds, how can you tell whether an investment pitch is a scam? Here are 10 tell-all questions to consider:
1. Does it promise "low risk and high gain?"
Click your heels three times and repeat to yourself, "There is no such thing as a free lunch." It's a fundamental fact of investing that the higher the potential return, the greater the risk that you may never see that return.
2. Will it be "too late" if you don't act now?
Why will it be too late? Any legitimate investment will be there tomorrow, and next week, and next year. Never be pressured into investing in something because tomorrow might be too late. Even if it turns out that the stock doubles tomorrow, you should feel better knowing that you were cautious and responsible with your money. Besides, if someone's giving you a "hot inside tip," you've got a lot more to worry about than whether or not you should act quickly. (See question 10.)
3. Does it claim to predict the future?
"It will double in three months." Oh, yeah? And where did your broker buy his or her crystal ball? Not only is this a ridiculous promise for a broker to make, it's illegal. Report this infraction to his or her sales manager (the next caller might not be as smart as you). And if the matter doesn't get satisfactory attention from a supervisor, contact the Financial Industry Regulatory Agency (FINRA) at www.finra.org.
4. What is the background of the salesperson and his/her employer?
Any individual selling securities to the public must pass a background check, a series of examinations, and be registered with FINRA. Likewise, their employers must also be known to FINRA and the SEC. If you would like to check up on the background of your broker or brokerage firm, use FINRA's BrokerCheck page. But remember, even if they don't have any complaints against them, it doesn't necessarily mean they can be trusted. You could be "Scamee No. 1."
5. Does it "guarantee" anything?
It is not only impossible to guarantee any rate of performance, but doing so will also get your broker tossed out of the industry.
6. Has the salesperson offered to reimburse you for any losses you might incur?
One more no-no that your broker isn't supposed to promise you. This one can get him or her booted, too.
7. Are you one of the "lucky few who have been chosen" to invest in XYZ company?
While this may make you feel special, don't fall for it. You just happen to be one of the lucky few who answered the phone.
8. Does the salesperson claim to have personally invested in the company, too?
What difference does it make whether he or she made a bad investment too? Do you trust the salesperson to call you if and when the investment goes sour? And will he or she get out first?
9. Is the salesperson unwilling to supply a prospectus or financial statements?
If a new company is just going public (an IPO, which stands for initial public offering), you must be given a prospectus. It is long and written in legalese and printed on very thin paper that you can barely read. Read it anyway. Especially the part called "Risks to Investors." If the company in question has been around awhile, ask to see the financial statements for the past two years.
10. Is the salesperson's information "a hot inside tip?"
This is especially important to pay attention to -- not because it could make you rich, but because it could land you in jail. It is illegal to pass on or act on material that is inside information. Anyone telling you otherwise is a liar.
http://biz.yahoo.com/fool/081231/rx12041.html?.v=2&printer=1
****************************************************************
some links that will help in DD
http://investor.gov/ponzi-schemes/
http://investor.gov/avoid-fraud/
http://www.otcmarkets.com/index.jsp
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