SEC Suspends Trading of 61 Companies

Posted on June 4, 2013 by BraunHagey & Borden

In the Matter of 3CI Complete Compliance Corp. et al.  On June 3, 2013, the SEC announced it had suspended trading in the securities of 61 empty shell companies that are delinquent in their public filings.  The list of companies whose securities have been suspended can be found here. Continue reading →

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SEC Charges Mark Morrow and His Firm with Offering Fraud

Posted on June 4, 2013 by BraunHagey & Borden

SEC v. Detroit Memorial Partners, LLC and Mark Morrow, Case No. 1:13-cv-01817 WSD (N.D. Ga.).  On June 3, 2013, the SEC announced it charged Detroit Memorial Partners, LLC (“DMP”) and its managing member, Mark Morrow in an offering fraud. The SEC alleges that DMP issued $19 million in promissory notes and sold $4.5 million in equity interests by making false statements and omitting material information.  DMP told investors that it owned various cemetery properties and that the notes would be secured by those properties.  In reality, however, DMP did not own any such properties and therefore the notes were not secured.  Continue reading →

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SEC Charges PACCAR Inc. With Hundreds of Accounting Deficiencies

Posted on June 3, 2013 by BraunHagey & Borden

SEC v. PACCAR INC. and PACCAR Financial Corp, Case No. 2:13-cv-00953 (W.D. Wa.).  On June 3, 2013, the SEC announced it charged commercial truck manufacturer PACCAR, Inc. and a subsidiary, PACCAR Financial Corp. with hundreds of accounting deficiencies that lead to misleading financial statements in the midst of the financial crisis.  According to the SEC, from 2008 through the third quarter of 2012, PACCAR failed to report the results for its parts business as a separate segment from its truck sales as required under Generally Accepted Accounting Principles (“GAAP”).  For example, PACCAR’s 2009 annual report showed $68 million in income before taxes for its truck segment.  Continue reading →

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SEC Charges Attorney Robert A. Gist with Stealing $5.4 Million from Investors

Posted on June 3, 2013 by BraunHagey & Borden

SEC v. Robert A. Gist et al., Case No. 1:13-cv-01833 AT.  On May 31, 2013, the SEC announced it charged attorney Robert A. Gist and Gist, Kennedy & Associates, Inc. (“Gist Kennedy”), a company that Gist controls, with defrauding investors out of at least $5.4 million.  The SEC alleges that Gist obtained the money from investors by falsely promising that he would invest their funds conservatively in corporate bonds and other securities.  According to the SEC, Gist did not invest money and instead used investor funds to pay for personal expenses, to pay purported dividends, and to fund the operation of a company that he controlled.  Continue reading →

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SEC Charges Total S.A. With FCPA Violations for Payments to Iranian Official

Posted on May 30, 2013 by BraunHagey & Borden

In the Matter of Total S.A., SEC Admin. Proc. No. 3-15338.  On May 29, 2013, the SEC announced it filed a settled administrative proceeding against Total S.A. for violating the FCPA by paying $60 million in bribes to associates of an Iranian government official who helped the company obtain contracts to develop oil and gas fields in Iran.  According to the SEC’s Order, Total made more than $150 million in profits from the bribery scheme.  Total was able to hide the bribes for a time by entering into a fake consulting agreement with associates of the Iranian official and by making the bribes appear as though they were legitimate expenses in the company’s books and records.  Continue reading →

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SEC Files Settled Charges Against NASDAQ Related to Facebook IPO

Posted on May 29, 2013 by BraunHagey & Borden

In the Matter of the NASDAQ Stock Market, LLC and NASDAQ Execution Services, LLC, SEC Admin. Proc. No. 3-15339.  On May 29, 2013, the SEC announced it filed a settled administrative proceeding against NASDAQ related to poor systems and decision-making during the Facebook IPO.  According to the SEC’s Order, there was a design limitation in NASDAQ’s system to match IPO buy and sell orders that caused problems with the the Facebook IPO.  Several members of NASDAQ’s leadership decided not to delay the start of secondary market trading in Facebook believing they had addressed the system limitation by making small changes to computer code.  Continue reading →

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SEC Charges Daniel Bergin with Front Running

Posted on May 28, 2013 by BraunHagey & Borden

SEC v. Daniel Bergin, et al., Case No. 3:13-cv-1940 (D. TX.).   On May 24, 2013, the SEC announced it filed an emergency action and obtained an asset freeze against Daniel Bergin, an equity trader at Cushing MLP Asset Management.  According to the SEC, Bergin was responsible for managing his clients’ exposure to market price risks by placing large client orders designed to minimize unfavorable price movements against client interests.  The SEC alleges that Bergin secretly executed hundreds of trades through his wife’s accounts in a practice known as front running.  He made about $520,000 by purchasing securities in his wife’s accounts earlier the same day he placed much larger orders for the same securities on behalf of firm clients.  Bergin hid the trades by failing to disclose his wife’s accounts to the firm thereby avoiding pre-clearance of his trades.  Bergin also attempted to hide his wife’s accounts from SEC examiners.  The SEC also named Bergin’s wife as a relief defendant for the purpose of recovering illegal profits in her accounts.  The SEC charged Bergin with violating Section 10(b) of the Exchange Act and Exchange Act Rule 10b-5 along with Section 17(j) of the Investment Company Act and Rule 17j-1 thereunder.  The SEC seeks injunctive relief, disgorgement, and a civil monetary penalty.

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SEC Charges China-based Executives Dejun “David” Zou and Jianping “Amy” Qiu with Stealing Money and Overstating Revenues

Posted on May 15, 2013 by BraunHagey & Borden

SEC v. RINO International Corporation, et al., Case No. 1:13-cv-00711 (D.D.C).  On May 15, 2013, the SEC announced it filed fraud charges against China-based RINO, Corp., its former CEO, Dejun “David” Zou, and its chairman of the board, Jianping “Amy” Qiu.
The SEC alleges that RINO’s public filings contained false statements about the company’s revenue.  According to the SEC, RINO kept two sets of books – one set for filings in China and another for filings in the U.S.  The Chinese books reflected sales of approximately $31 million from the first quarter of 2008 through the first three quarters of 2010, whereas the U.S. books had sales revenues of approximately $491 million during the same period.  Continue reading →

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SEC Charges China-based Sabuye, Inc. and former CFO James T. Crane with Fraud

Posted on May 9, 2013 by BraunHagey & Borden

SEC v. Subaye, Inc. and James T. Crane, Case No. 13-civ-3114 (S.D.N.Y).  On May 8, 2013, the SEC announced it filed fraud charges against China-based Subaye, Inc. and its former CFO, James T. Crane.  According to the SEC, Subaye purported to be a provider of cloud computing services to Chinese businesses.  The SEC alleges that the company claimed to have well over 1,000 sales and marketing employees in 2010.  The company also claimed to have revenues of $39 million for its 2010 fiscal year and was projecting revenues of more than $71 million for fiscal 2011.  In reality, Subaye did not have any revenues, few or no real customers, and did not have the capacity to support a cloud computing business.  Continue reading →

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SEC Charges Traders in Illegal Kickback Scheme

Posted on May 8, 2013 by BraunHagey & Borden

SEC v. Thomas Alberto Clarke Bethancourt et al, Case No. 13-cv-3074 (S.D.N.Y).  On May 6, 2013, the SEC announced it filed fraud charges against Tomas Alberto Clarke Bethancourt, Iuri Rodolfo Bethancourt, Jose Alejandro Hurtado, and Haydee Leticia Pabon.  The SEC alleges that brokers at Direct Access Partners (“DAP”) executed fixed income trades for customers in foreign sovereign debt.  Banco de Desarrollo Económico y Social de Venezuela (“BANDES”) was a new customer who came to DAP through connections to Hurtado.  Through kickbacks to BANDES’ VP of Finance, María de los Ángeles González de Hernandez, DAP was able to obtain BANDES’ trading business.  Continue reading →

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