SEC Settles Fraud Case Related To Deepwater Horizon Oil Spill With BP for $525 Million

Posted on November 20, 2012 by BraunHagey & Borden

SEC v. BP p.l.c, Case No. 2:12-cv-02774 (E.D.  La.).  On November 15, 2012, the SEC announced a settlement with BP in connection with claims the company mislead investors while the Deepwater Horizon oil rig was leaking oil into the Gulf of Mexico.  The SEC’s complaint alleges that BP made false public statements in SEC filings indicating a flow rate estimate of 5,000 barrels of oil per day when its own information showed possible flow rates as high as 146,000 barrels of oil per day.  Additionally, BP executives made public statements criticizing higher estimates by third parties.  Continue reading →

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The Securities and Exchange Commission Releases Its Annual Results

Posted on November 15, 2012 by BraunHagey & Borden

On November 14, 2012, the SEC announced the results of its enforcement program for fiscal year 2012 (“FY12”), and the agency came just one case short of matching its 2011 record-breaking numbers.  The SEC filed 734 enforcement cases, bringing the agency’s two-year total to 2,203 cases.  The SEC secured orders imposing more than $3 billion in penalties and disgorgement, an 11% increase over the prior year.  This is double the agency’s budget of $1.5 million for FY12.  The SEC’s two-year total for penalties and disgorgement is $5.9 billion.  The SEC’s trial attorneys also fared well, winning 21 of 22 cases that went to trial. Continue reading →

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CFTC Charges Matthew Marshall Taylor With Fraud For Faking And Concealing Trades

Posted on November 14, 2012 by BraunHagey & Borden

CFTC v. Matthew Marshall Taylor, Case No. 12-civ-8170 (S.D.N.Y.).  On November 8, 2012, the CFTC announced fraud charges against Matthew Marshall Taylor.  According to the CFTC’s complaint, Taylor was a Vice President and trader for a large Futures Commission Merchant (“FCM”).  The CFTC alleges that Taylor deliberately hid from his employer the size of the position in S&P 500 e-mini futures contracts, and the profits and losses in a FCM firm account that he traded.  Taylor hid his position by circumventing the FCM’s system for entering trades and by fabricating e-mini futures trades.  Taylor also obstructed discovery of his fake trades, his position, and his profits and losses by timing the entry of the fake trades with the running of internal reports at the FCM and by giving false information to the FCM’s employees.  Taylor’s conduct resulted in about $188,440,000 in losses to the FCM.  The CFTC is seeking civil monetary penalties, trading and registration bans, and injunctive relief.

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SEC Charges Anand Sekaran With Defrauding Clients

Posted on November 12, 2012 by BraunHagey & Borden

SEC v. Anand Sekaran and Wasson Capital Advisors, Ltd., Case No. 12-cv-8199 JMP (S.D. N.Y.).  On November 9, 2012, the SEC announced charges against Anand Sekaran and his firm Wasson Capital Advisors.  The SEC alleges that Wasson’s strategy was to create income by selling out-of -the-money exchange-traded options that were near expiration.  As the strategy became unprofitable, Sekaran and Wasson started losing money and tried to hide the losses by providing clients with fake account statements.  The SEC also alleges that they misappropriated client funds. Continue reading →

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SEC Charges James Ellis With Brining Victims Into Ponzi Scheme

Posted on November 12, 2012 by BraunHagey & Borden

SEC v. James Ellis, Case No. 12-cv-62211 (S.D. Florida.).  On November 9, 2012, the SEC announced charges against James Ellis.  The SEC alleges that Ellis was involved in a Ponzi scheme with George Elia.  Ellis found investors and introduced them to Elia.  Ellis claimed he was receiving strong returns on his own multi-million dollar investments with Elia.  In reality, Ellis had not made an investment.  Rather, Elia paid Ellis $2 million for finding new investors in the Ponzi scheme.  After the introduction, Elia would tell investors that he had a successful track record that generated returns of up to 26 percent.  Continue reading →

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SEC Settles With Aamer Abdullah Considering His Cooperation Under The SEC’s Enforcement Cooperation Initiative

Posted on November 12, 2012 by BraunHagey & Borden

SEC v. Aamer Abdullah, Case No. 10-cv-4957 (S.D.N.Y.).  On November 9, 2012, the SEC announced a settlement with Aamer Abdullah in a case brought in June 2010.  Abdullah was a portfolio manager with ICP Asset Management, LLC.  According to the SEC, Abdulla mismanaged several collateralized debt obligations (CDOs), including causing CDOs under ICP’s management to purchase securities at above-market rates.  At the time the complaint was filed, Abdullah consented to entry of a partial judgment that enjoined him from future violations of the anti-fraud provisions of the federal securities laws and agreed to be barred from association with any broker, dealer, or investment adviser.  Continue reading →

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SEC Charges Electronic Game Company Executives And Their Outside Auditor With Fraud

Posted on November 9, 2012 by BraunHagey & Borden

SEC v. Lee Cole, Linden Boyne, Kevin Donovan, and Timothy Quintanilla (S.D.N.Y).  On November 8, 2012, the SEC announced it charged Lee Cole, Linden Boyne, Kevin Donovan, and Timothy Quintanilla with fraud.  Cole was the CEO of Electronic Game Card, Inc. (“EMGI”) and Boyne was the company’s CFO.  EMGI was a public company purporting to sell credit-card sized electronic games. According to the SEC, Cole and Boyne caused EGMI to claim it had a bank account worth more than $10 million, held millions of dollars in investments, and had millions of dollars in revenue.  Continue reading →

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Former Deloitte Partner Thomas Flanagan Sentenced to 21 Months For Insider Trading

Posted on November 5, 2012 by BraunHagey & Borden

SEC v. Thomas P. Flanagan, et al.,Case No. 10-cv-04885 (N.D. Ill.).  On October 31, 2012, the SEC announced that Thomas P. Flanagan was sentenced to 21 months of incarceration followed by supervised release of 12 months.  Flanagan must also pay a $100,000 penalty.  Flanagan, a former Deloitte and Touche LLP partner, pleaded guilty to one count of criminal securities fraud for engaging in insider trading after he obtained material, nonpublic information about several Deloitte clients. Continue reading →

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CFTC Obtains $3 Million Judgment Against Brad Demuzio

Posted on November 1, 2012 by BraunHagey & Borden

CFTC v. Brad L. Demuzio, et al., Case No. 4:12-cv-00183-MHW.  On November 1, 2012, the CFTC announced it obtained a $3 million dollar judgment against Brad Demuzio and his company.  The company defaulted and Demuzio settled.  Without admitting or denying the CFTC’s allegations, Demuzio consented to an order that finds that Demuzio, through his company, solicited investors to trade forex through a pooled investment fund.  Demuzio misappropriated investor funds for personal expenses and falsely told investors that their investments were profitable.  In a related criminal proceeding, Demuzio pleaded guilty.  The judgment enjoins Demuzio from future violations of the Commodity Exchange Act, imposes permanent trading and registration bans against Demuzio and his company, and orders them to jointly pay restitution of $805,273.  In addition, under terms of the final orders, Demuzio is required to jointly pay a $1 million civil monetary penalty, and his company is ordered to jointly pay a civil monetary penalty of $2,415,819.

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SEC Charges Michael Van Guilder With Insider Trading

Posted on November 1, 2012 by BraunHagey & Borden

SEC v. Michael Van Guilder, Case No. 12-cv2839 (D. Colo.).  On October 26, 2012, the SEC announced it charged Michael Van Gilder, the CEO of the Van Gilder Insurance Company, with insider trading.  Van Gilder learned from an insider that Tracinda, which has owned large stakes in companies like Ford and GM, was planning to purchase a stake in Delta Petroleum Corporation.  Van Gilder bought Delta stock and option contracts.  He also tipped some relatives.  After the announcement of the Tracinda purchase, Delta’s stock price increased nearly 20%.   The SEC charged Van Gilder with violating Section 10(b) of the Exchange Act and Rule 10b-5.  The SEC is seeking injunctive relief, disgorgement and a civil monetary penalty.  The United States Attorney for the District of Colorado announced a parallel criminal action against Van Gilder. 

 

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