The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
February 3, 2021
SEC Charges Former Executives of San Francisco Bay Area Company With Accounting Violations (SEC Release)
Premier Holding Corp. and Its CEO Ordered to Pay More Than $10 Million for Securities Fraud (SEC Release)
https://www.sec.gov/litigation/litreleases/2021/lr25021.htm?utm_medium=email&utm_source=govdelivery
The United States District Court for the Central District of California entered final judgments against microcap issuer Premier Holding Corp. and its CEO, Randall Letcavage.The Judgments permanently enjoin Premier and Letcavage from violation cited sections of the Securities Act and the Securities Exchange Act; hold them jointly and severally liable for disgorgement and prejudgment interest totaling $8,691,500; order them to each pay a $1 million penalty; and enjoins Letcavage from violating Section 13(b)(5) of the Exchange Act and Rule 13b2-1 thereunder and imposes an officer and director bar and a penny stock bar. As alleged in part in the SEC Release:
SEC Charges Former Executives of San Francisco Bay Area Company With Accounting Violations (SEC Release)The SEC's complaint, filed on December 4, 2017, alleged that Premier, a California-based company that describes itself as a green energy services provider, and Letcavage, Premier's CEO, orchestrated a series of transactions with related parties intended to create the false appearance of an active company with a vibrant and promising business. On November 30, 2020, the court granted summary judgment to the Commission, finding that Premier and Letcavage materially misled investors about the value of Premier's assets, including a purportedly significant promissory note that was actually worthless. The court further found that Premier and Letcavage misled investors by failing to disclose over $92,000 of perks provided to Letcavage.
https://www.sec.gov/news/press-release/2021-23?utm_medium=email&utm_source=govdelivery
Without admitting or denying the findings in an SEC Order
https://www.sec.gov/litigation/admin/2021/33-10925.pdf, Joseph Jackson and Colm Callan, respectively the former Chief Executive Officer and Chief Financial Officer of WageWorks Inc
agreed to cease and desist from further violations of various charged provisions. Also, Jackson agreed to pay a $75,000 penalty and reimburse WageWorks for $1,929,740 representing incentive-based compensation and profits from the sale of WageWorks stock, and Callan agreed to pay a $100,000 penalty and reimburse WageWorks for $157,590 representing incentive-based compensation. The SEC Order found that Jackson and Callan:
https://www.sec.gov/litigation/admin/2021/33-10925.pdf, Joseph Jackson and Colm Callan, respectively the former Chief Executive Officer and Chief Financial Officer of WageWorks Inc
agreed to cease and desist from further violations of various charged provisions. Also, Jackson agreed to pay a $75,000 penalty and reimburse WageWorks for $1,929,740 representing incentive-based compensation and profits from the sale of WageWorks stock, and Callan agreed to pay a $100,000 penalty and reimburse WageWorks for $157,590 representing incentive-based compensation. The SEC Order found that Jackson and Callan:
- violated Sections 17(a)(2) and 17(a)(3) of the Securities Act,
- made false certifications and misled WageWorks's auditor in violation of the Securities Exchange Act,
- failed to reimburse WageWorks for certain incentive compensation and stock profits they received during the period when the company was committing accounting violations in violation of the Sarbanes-Oxley Act of 2002, and
- caused WageWorks to violate the reporting, books and records, and internal accounting controls provisions of the Exchange Act.
As alleged in part in the SEC Release:
[I]n March 2016, WageWorks, a provider of Flexible Spending Account services, signed a contract with a large client to process benefits claims for certain public-sector employees. The order finds that on multiple occasions after the contract was signed, the client's employees told WageWorks that it did not intend to pay for certain development and transition work associated with the contract. As stated in the order, despite these statements, both Callan and Jackson believed that WageWorks was entitled to be paid for this work, so Callan directed WageWorks to recognize $3.6 million in revenue related to the development and transition work. According to the order, despite repeated questioning by WageWorks's internal accounting staff and external auditor about the status of the $3.6 million that WageWorks had booked but not yet received, Callan and Jackson consistently failed to disclose that the client's employees had denied that it owed these amounts to WageWorks. In 2019, WageWorks restated its financial statements for the second quarter, third quarter, and fiscal year 2016, reversing the entire amount of revenue WageWorks had previously recognized in connection with the development and transition work.
FINRA Needs Some Fresh Air For A 20 Month Suspension (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/5676/finra-borrowing-awc/
Sometimes you read a FINRA AWC settlement and you shrug. They're barring the guy for this? Really?? Other times, you read an AWC and you're trying to figure out just what kind of adding machine FINRA used -- how the hell did all these violations add up to such a tepid sanction? In today's featured AWC, I'm wondering if FINRA has been social distancing too long and needs to take a bit of a break from its self-imposed quarantine. Open up some windows. Step outside. Clear your head. Get some fresh air.