Facebook’s Pre-IPO Interactions With The SEC

Posted on October 11, 2012 by BraunHagey & Borden

Yesterday, I had the opportunity to appear on Bloomberg West to discuss Facebook’s pre-IPO communication with the SEC.  Here is the video.

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CFTC Orders Farr Financial, Inc. to Pay $280,000 to Settle Supervision Failures and Other Violations

Posted on October 10, 2012 by BraunHagey & Borden

In the Matter of Farr Financial, Inc.., CFTC Docket No. 13-01.  On October 10, 2012, the CFTC announced it issued an order settling charges that  Farr Financial Inc. of San Jose, California, failed to properly invest customer segregated funds and failed to diligently supervise investment activities.  Farr is a futures commission merchant (“FCM”) registered with the CFTC.  Farr was required to segregate customer funds and should have only invested customer funds in certain permitted investments.  Instead, Farr invested funds several accounts did not comply with the relevant regulations, including an investment in a money market mutual fund from which funds could not be withdrawn by the next business day, investments in prohibited savings or money market deposit accounts, and an investment in a prohibited certificate of deposit where the issuer did have the appropriate credit rating.  Continue reading →

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SEC Charges Brokers Marek Leszczynski, Benjamin Chouchane, Gregory Reyftmann, and Henry Condron For Overcharging Customers $18.7 Million

Posted on October 5, 2012 by BraunHagey & Borden

SEC v. Marek Leszczynski, et al. (S.D.N.Y.).  On October 5, 2012, the SEC announced fraud charges against brokers Marek Leszczynski, Benjamin Chouchane, Gregory Reyftmann, and Henry Condron for taking $18.7 million from customers by overcharging them.   The Defendants were at an interdealer broker (“Interdealer Broker”).  They worked at Interdealer Broker’s “Cash Desk,” and executed buy and sell orders for customers.  They charged small commissions of a few cents or less per share.  After executing orders, however, Reyftmann, Chouchane, or Leszczynski would analyze the transaction and see whether they could make a secret profit above the commission rate to be charged to the customer.  Continue reading →

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Commodity Futures Trading Commission Releases Annual Enforcement Results

Posted on October 5, 2012 by BraunHagey & Borden

On October 5, 2012, the CFTC announced the results of its enforcement program for fiscal year 2012 (“FY12”), and they are revealing.  The most significant point is the numbers – the CFTC filed a record-breaking 102 enforcement cases, bringing the agency’s two-year total to more than 200 enforcement actions.  While the numbers are smaller than the 735 cases that the SEC brought in FY11, they suggest that the CFTC is working hard to bring more cases, particularly in light of new authority the agency gained through the Dodd-Frank Act. Continue reading →

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SEC Charges James and Jeffrey Quay With Defrauding Elderly Investors

Posted on October 4, 2012 by BraunHagey & Borden

SEC v. James S. Quay and Jeffrey A. Quay, Case No. 1:12-cv-03429-RWS (N.D. Ga.).  On October 4, 2012, the SEC announced fraud charges against James and Jeffrey Quay.  James Quay (“Quay”) and his brother stole $560,000 from two women who believed they were investing in a covered-call equities trading program.  They Quays created a fake partnership to operate the program.  However, the partnership was never formed as a valid legal entity.  The Quays deposited the investors’ money in a brokerage-firm account and spent at least $180,000 to pay mortgages, restaurant bills and other personal expenses.  Continue reading →

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SEC Continues To Publicize Its Vigorous Pursuit of Hedge Funds

Posted on October 4, 2012 by BraunHagey & Borden

For the past few years, the SEC has widely publicized its enforcement efforts against hedge funds.  The agency has filed more than 100 hedge fund cases since 2010.  On October 3, 2012, it issued an investor bulletin describing some of those cases and offering tips and guidance to investors considering hedge fund investments.  The SEC also announced a pair of hedge fund fraud cases. Continue reading →

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SEC Charges Dark Pool Operator eBX LLC With Failing To Protect Confidential Information

Posted on October 4, 2012 by BraunHagey & Borden

In the Matter of eBX, LLC, Admin. Proc. No. 3-15058.  On October 3, 2012, the SEC announced it issued a settled order instituting administrative proceedings and imposing remedial sanctions against eBX, LLC.  eBX is a registered broker-dealer.  It operates an alternative trading system (“ATS”) called LeveL.  LeveL is subject to Regulation ATS under the Exchange Act.  eBX marketed LeveL as a “dark pool” which means it does not display quotations to the public.  As a result, subscribers become aware of trading opportunities that are not available to the general public.  Continue reading →

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SEC Obtains Emergency Asset Freeze Against Repeat Offender Joseph Hilton in Oil Scam

Posted on October 3, 2012 by BraunHagey & Borden

SEC v. Joseph Hilton, et al..  On October 3, 2012, the SEC announced it obtained an emergency order freezing the assets of Joseph Hilton who has been charged with fraud.  In 2010, the SEC obtained a final judgment against Joseph Yurkin enjoining him from future violations of the anti-fraud and registration provisions of the federal securities laws.  Yurkin changed his name to Hilton so that future investors would not lean of his past fraud.  Hilton has been selling limited partnership interests in oil drilling projects by United States Energy Corporation.  Continue reading →

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CFTC Obtains $1.4 Million in Penalties in Ponzi Scheme

Posted on October 3, 2012 by BraunHagey & Borden

CFTC v. Midway Trading Company, LLC, et al., Case No. 11-23554-CIV-ROSENBAUN (S.D. Fl.).  On October 1, 2012, the CFTC announced that it obtained an order requiring Oscar Hernandez, Midway Trading Company, LLC and Conquest Investment Group, Inc. to pay a $1.4 million civil monetary penalty to settle CFTC charges that they operated a commodity pool Ponzi scheme and misappropriated customer funds for personal use.  The order also imposes permanent trading and registration bans against and permanently enjoins them from further violations of the Commodity Exchange Act. Continue reading →

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Former IndyMac CEO Michael Perry settles with the SEC for $80,000

Posted on October 2, 2012 by BraunHagey & Borden

SEC v. Michael W. Perry et al., Case No. CV 11-1309 R (JCx).  On October 1, 2012, the SEC announced it settled its ongoing litigation against Michael Perry, the former CEO and Chairman of the Board of IndyMac Bancorp, Inc.  IndyMac, through its main subsidiary, IndyMac Bank, made, purchased, and sold residential mortgage loans.  In 2008, IndyMac Bank was placed under Federal Deposit Insurance Corporation receivership and IndyMac filed for bankruptcy.  Continue reading →

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