SEC v. Peter Siris, et al.; SEC v. Alan Sheinwald, et al.; In the Matter of Peter Dong Zhou; In the Matter of Stephen Mazuchowski (A/K/A Steve Mazur); In the Matter of James Fuld, Jr. On July 30, 2012, the SEC announced fraud and other charges against investment manager Peter Siris and two of his firms related to activities with a Chinese reverse merger company, China Yingxia International, Inc. Siris misled investors in his hedge funds through which he invested $1.5 million in China Yingxia. He understated his involvement with the company and made illegal trades based on nonpublic information. In an effort to avoid the registration provisions of the securities laws, Siris received shares from the China Yingxia CEO’s father and improperly sold them without any registration statement in effect.
The SEC’s complaint against Siris and his entities alleges violations of Sections 5(a), 5(c), and 17(a) of the Securities Act, Sections 10(b) and 15(a) of the Exchange Act, Rule 10b-5 thereunder, Rule 105 of Regulation M, and Section 206(4) of the Investment Advisers Act, and Rule 206(4)-8 thereunder. Without admitting or denying the allegations, Siris and his firms agreed to pay $592,942.39 in disgorgement and $70,488.83 prejudgment interest. Siris agreed to pay a civil monetary penalty of $464,011.93. They also consented to the entry of a judgment enjoining them from violations of the respective provisions of the Securities Act, Exchange Act, and Advisers Act.
The SEC also charged:
Ren Hu – the former CFO of China Yingxia for making fraudulent representations in Sarbanes-Oxley (SOX) certifications and lying to auditors, among other things.
Peter Dong Zhou – engaged in insider trading and unregistered sales of securities, among other tings. Without admitting or denying the charges, Zhou agreed to pay $20,900 in disgorgement, $2,463.39 in prejudgment interest, and a penalty $50,000. He agreed to a three-year collateral bar, penny stock bar, and investment company bar.
Alan Sheinwald and his investor relations firm Alliance Advisors LLC – were retained as “consultants” to China Yingxia and acted as unregistered securities brokers while raising money for China Yingxia and at least one other issuer.
Steve Mazur – acted as an unregistered securities broker while selling away from his firm the securities of China Yingxia and one other issuer. Without admitting or denying the charges, Mazur agreed to pay $126,800 in disgorgement, $25,550.01 in prejudgment interest, and a penalty of $25,000. He agreed to a two-year collateral bar, penny stock bar, and investment company bar.
James Fuld, Jr. – involved in the unregistered sales of securities. Without admitting or denying the charges, he agreed to pay $178,594.85 in disgorgement and $38,096.70 in prejudgment interest.