SEC Charges the City of Harrisburg with Securities Fraud

Posted on May 7, 2013 by BraunHagey & Borden

In the Matter of the City of Harrisburg, Pennsylvania, Admin. Proc. File No. 3-15316.  On May 6, 2013, the SEC announced it filed a settled administrative proceeding against the City of Harrisburg.  The SEC’s Order finds that Harrisburg is virtually insolvent and currently under receivership.  The city has about $260 million in debt related to upgrades and repairs to a municipal resource recovery facility.  By March 2013, Harrisburg was delinquent in about $13.9 million in debt service payments.  Continue reading →

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Level Global Settles SEC Insider Trading Case for $21.5 Million

Posted on May 1, 2013 by BraunHagey & Borden

SEC v. Adondakis et al., Case No. 12 Civ. 0409 HB (S.D.N.Y).  On April 30, 2013, the SEC announced it settled insider trading charges against Level Global Investors LP.  In January 2012, the SEC filed insider trading charges against Level Global, the firm’s co-founder Anthony Chiasson, analyst Spyridon “Sam” Adondakis, and six other defendants, including five investment professionals and the hedge fund advisory firm Diamondback Capital Management.  The SEC alleged that Adondakis was part of a group of hedge fund analysts who obtained confidential information about Dell and Nvidia before this information was made public.  Adondakis tipped Chiasson, who then traded for hedge funds managed by Level Global and made millions of dollars.  Level Global ceased operations and began returning money to investors after the insider trading investigation was announced.  Without admitting or denying the SEC’s allegations, Level Global consented to entry of a final judgment ordering it to disgorge $10,082,725 in fees received as a result of the insider trading, to pay prejudgment interest of $1,348,824, and to pay a civil monetary penalty of $10,082,725.  Level Global has also agreed to a permanent injunction against future violations of Section 10(b) of the Exchange Act, Exchange Act Rule 10b-5, and Section 17(a) of the Securities Act.  Adondakis previously pleaded guilty to criminal charges and agreed to a settlement with the SEC in which he admitted liability for insider trading.  The SEC’s case against Chiasson continues.  Chiasson was convicted of securities fraud in a parallel criminal proceeding.

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CFTC Imposes $400,000 in Sanctions and a 140-Day Trading Ban on Kevin McLaren and Edward Gorman for Unlawful Wash Sales

Posted on April 30, 2013 by BraunHagey & Borden

In the Matter of Kevin McLaren and Edward Gorman, CFTC Docket No. 13-22.  On April 29, 2013, the CFTC announced the filing of a settled Order finding that Kevin McLaren and Edward Gorman engaged in illegal wash sales.  According to the CFTC Order, McLaren and Gorman made prearranged trades in corn futures for the same quantity, price, and contract month.  In each instance, McLaren and Gorman were on the opposite side of the trade.  According to the CFTC, the trades were not legitimate market transactions and were therefore noncompetitive “wash sales.”  Without admitting or denying the CFTC’s allegations, McLaren and Gorman consented to entry of the CFTC Order which imposes a $200,000 civil monetary penalty each on McLaren and Gorman.  The Order also requires them to cease and desist from future violations of Section 4c(a) of the Commodity Exchange Act and CFTC Regulation 1.38(a).  McLaren and Gorman were also ordered to submit to 140-day trading bans.

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SEC Sues the City of Victorville, California and Others for Defrauding Municipal Bond Investors

Posted on April 29, 2013 by BraunHagey & Borden

SEC v. City of Victorville et al., Case No. EDCV13-0776 JAK (DIBx).  On April 29, 2013, the SEC announced charges against the City of Victorville, Calif., the Southern California Logistics Airport Authority, Kinsell, Newcomb & DeDios (“KND”), Jeffrey Kinsell, Janees Williams and Keith Metzler.  According to the SEC, the Airport Authority undertook certain redevelopment projects, including the construction of airplane hangars.  The projects were financed by issuing bonds.  In 2008, the Airport Authority had to refinance part of the debt incurred to construct the hangars by issuing more bonds.  Continue reading →

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SEC Announces Non-Prosecution Agreement with Ralph Lauren Corporation Related to FCPA Misconduct

Posted on April 22, 2013 by BraunHagey & Borden

On April 22, 2013, the SEC announced it entered into a non-prosecution agreement (“NPA”) with Ralph Lauren Corporation.  The SEC decided not to charge the company with FCPA violations because of the company’s extensive cooperation.  This is the SEC’s first NPA involving FCPA violations.  According to the NPA, Ralph Lauren Corporation will disgorge $700,000 in profits and interest.  In parallel criminal proceedings, the Justice Department entered into an NPA with Ralph Lauren Corporation in which the company will pay an $882,000 penalty.  Continue reading →

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SEC Charges Mark Begelman with Insider Trading

Posted on April 22, 2013 by BraunHagey & Borden

SEC v. Mark D. Begelman, Case No. 9:13-cv-80396 (S.D. Fl.).  On April 22, 2013, the SEC announced it filed a settled insider trading case against Mark Begelman for trading based on confidential information obtained through his membership in the World Presidents’ Organization (“WPO”), a global group of business leaders and executives with a written policy to keep information learned from other WPO members confidential.  The SEC alleges that Begelman joined the WPO when he was president and chief operating officer at Office Depot.  Begelman was part of a close-knit group of WPO members called Forum 91.  Continue reading →

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SEC Charges Investment Adviser Umesh Tandon with Defrauding CalPERS

Posted on April 18, 2013 by BraunHagey & Borden

In the Matter of Umesh Tandon, SEC Admin. Proc. No. 3-15282.  On April 18, 2013, the SEC announced it filed a settled administrative proceeding against Umesh Tandon.  According to the SEC Order, Tandon told CalPERS that his advisery firm Simran Capital Management met explicit assets under management (“AUM”) requirements and managed at least $200 million.  In reality, however, Simran managed about $80 million at the time.  The SEC alleges that Tandon knew that Simran did not meet CalPERS’s AUM requirements.  Continue reading →

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SEC Files Insider Trading Charges against Trader Joseph Mancuso

Posted on April 18, 2013 by BraunHagey & Borden

SEC v. Joseph Mancuso, Case No. 13-cv-2555 (S.D.N.Y.).  On April 17, 2013, the SEC announced it filed insider trading charges against Joseph Mancuso who used to be a trader at registered broker-dealer Schottenfeld Group.  The SEC alleges that Mancuso obtained inside information from his friend and colleague, Zvi Goffer, to trade ahead of the announced acquisitions of several companies.  The information that Goffer tipped to Mancuso was originally misappropriated by two attorneys at the law firm Ropes & Gray, Arthur Cutillo and Brien Santarlas.  They had access to inside information about deals involving firm clients, and Goffer paid them kickbacks in exchange for that information.  The SEC’s complaint charges Mancuso with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and seeks a final judgment permanently enjoining Mancuso from future violations of these provisions and ordering disgorgement of ill-gotten gains plus prejudgment interest.

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SEC Charges Brokers Jeffrey Stebbins and Corbin Jones with Stealing Investments

Posted on April 17, 2013 by BraunHagey & Borden

SEC v. Jeffrey Stebbins and Corbin Jones, Case No. 2:13-cv-00755 SRB (D. Az.).  On April 16, 2013, the SEC announced it filed fraud charges against Jeffrey Stebbins and Corbin Jones.  The SEC alleges that Stebbins and Jones solicited investors for a tankless water heater project through various companies. They stole $1.8 million of investor money for themselves.  In addition, the SEC alleges that they tricked shareholders in one company to trade their private shares for publicly-traded shares in another company.  This stock swap allowed Stebbins and Jones to obtain more than $6 million worth of stock at the expense of shareholders who were left with worthless stock.  The SEC charged Stebbins and Jones are with violating Section 17(a) of the Securities Act, Sections 10(b), 13(a), 15(a) and 16(a) of the Exchange Act and Rules 10b-5, 13d-1, 13d-2 and 16a-1 thereunder.  The SEC’s seeks an injunction, disgorgement, civil monetary penalties and a penny stock bar.

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SEC Files Settled Insider Trading Charges Against Investment Banker Richard Bruce Moore

Posted on April 17, 2013 by BraunHagey & Borden

SEC v. Richard Bruce Moore, Case No. 13-cv-2514 HB (S.D.N.Y.).  On April 16, 2013, the SEC announced it filed settled insider trading charges against Richard Bruce Moore.  According to the SEC, Moore purchased American Depositary Receipts (“ADRs”) of  Tomkins plc, a British company, before the announcement that the Canada Pension Plan Investment Board (CPPIB) and a Canadian private equity firm had approached Tomkins with a takeover offer.  The SEC alleges that in connection with his at job CIBC, which entailed pitches to the CPPIB, Moore obtained information from which he determined that the CPPIB was working on an offer to acquire Tomkins.  Continue reading →

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