The Wall Street Legal & Regulatory Feed

Securities Industry Commentator by Bill Singer Esq

November 5, 2018

https://www.fbi.gov/news/stories/morris-worm-30-years-since-first-major-attack-on-internet-110218
An intriguing tale about the Morris Worm. the first Internet attack.Robert Tappan Morris was a talented computer scientist who had graduated from Harvard in June 1988. He had grown up immersed in computers thanks to his father, who was an early innovator at Bell Labs. At Harvard, Morris was known for his technological prowess, especially in Unix; he was also known as a prankster. After being accepted into Cornell that August, he began developing a program that could spread slowly and secretly across the Internet. To cover his tracks, he released it by hacking into an MIT computer from his Cornell terminal in Ithaca, New York.

https://www.sec.gov/news/press-release/2018-253
The SEC voted to adopt amendments that will require broker-dealers to disclose to investors new and enhanced information about the way they handle investors' orders. As set forth in the "Summary" portion of the Final Rule (Disclosure of Order Handling Information; Rel. No. 34-84528; File No. S7-14-16; RIN 3235-AL67) https://www.sec.gov/rules/final/2018/34-84528.pdf :

The Securities and Exchange Commission ("Commission" or "SEC") is adopting amendments to Regulation National Market System ("Regulation NMS") under the Securities Exchange Act of 1934 ("Exchange Act") to require additional disclosures by broker-dealers to customers regarding the handling of their orders. The Commission is adding a new disclosure requirement which requires a broker-dealer, upon request of its customer, to provide specific disclosures related to the routing and execution of the customer's NMS stock orders submitted on a not held basis for the prior six months, subject to two de minimis exceptions. The Commission also is amending the current order routing disclosures that broker-dealers must make publicly available on a quarterly basis to pertain to NMS stock orders submitted on a held basis, and the Commission is making targeted enhancements to these public disclosures. In connection with these new requirements, the Commission is amending Regulation NMS to include certain newly defined and redefined terms that are used in the amendments. The Commission also is amending Regulation NMS to require that the public order execution report be kept publicly available for a period of three years. . .

Sole Beneficary Grandnephew Sues Morgan Stanley Questioning Mom's Capabilities (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/4257/finra-arbitration-estate/ 
In today's BrokeAndBroker.com Blog we summon up the ghost of the once venerable brokerage firm of Dean Witter. Next, we deal with the spirit of a 1996 estate and a beneficiary's apparent unhappiness with how his inheritance was invested. Finally, we deal with the zombie-like customer service that was sort of there but not really. In the end, tt's a long, long story replete with a pro se public customer Claimant and questions about whether his mother was capable of handling the subject brokerage account.

https://www.sec.gov/litigation/litreleases/2018/lr24333.htm
In three Complaints filed in federal courts, the SEC The SEC's complaints charged Timothy J. Atkinson, Ronald "Ronnie" Montano, Jay Passerino, Michael Wright, and All In Publishing LLC.  Justin Blake Barrett, William E. Berry and his company Berry Mediaworks, Grayson Brookshire, Antonio Giacca, Shmuel Pollen, and Travis Stephenson; and they have agreed to settle without admitting or denying the charges pursuant to an agreement to pay a total of $4.1 million in disgorgement and prejudgment interest and Pollen agreed to pay a $42,500 penalty
The Complaints alleged that investors were conned out of tens of millions of dollars through online marketing campaigns touting binary options accounts and a free or secret software systems to trade in them. The marketers were allegedly paid for each new brokerage account that investors opened and funded. The marketers' internet video advertisements were disseminated through spam emails and used actors to portray ordinary people who became millionaires by trading binary options. Moreover the videos staged fake demonstrations of supposed software users watching their account balances grow in real time. The Complaint alleged that Timothy Atkinson, All In Publishing, LLC, Ronald Montano, Antonio Giacca, Travis Stephenson, Grayson Brookshire, and Justin Blake Barrett violated Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder and Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933 ("Securities Act"). The SEC also alleged that Jay Passerino violated Section 10(b) of the Exchange Act and Rule 10b-5(a) and (c) thereunder and Sections 5(a), 5(c) and 17(a) of the Securities Act. The SEC further alleged that all of these defendants aided and abetted each other's violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Section 17(a) of the Securities Act. In addition, the SEC alleged that Atkinson and Montano each violated Section 10(b) of the Exchange Act and Rule 10b-5(b) thereunder through or by the means of the other defendants, in violation of Section 20(b) of the Exchange Act, and that Atkinson is liable under Section 20(a) of the Exchange Act as a control person for the violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder by All In Publishing, LLC. Finally, the SEC alleged that William Berry, Berry Mediaworks,LLC, Shmuel Pollen, and Michael Wright aided and abetted violations of Section 10(b) of the Exchange Act and Rule 10b-5 thereunder and Section 17(a) of the Securities Act by Atkinson, Passerino, All In Publishing, LLC, Giacca, Montano and Stephenson.
READ the SEC Complaints:
Atkinson https://www.sec.gov/litigation/complaints/2018/com24333-atkinson.pdf
Montano https://www.sec.gov/litigation/complaints/2018/com24333-montano.pdf
Barrett and Brookshire https://www.sec.gov/litigation/complaints/2018/com24333-barrett-brookshire.pdf

SEC Charges Investment Adviser with Running $3.9 Million Fraud (SEC Litigation Release No. 24334) https://www.sec.gov/litigation/litreleases/2018/lr24334.htm 
In a Complaint filed in the United States District Court for the Western District of Pennsylvania, the SEC charged former registered representative and investment adviser Douglas P. Simanski with violating the antifraud provisions of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. Simanski has agreed to settle the charges against him. Also, the settlement orders injunctive relief and disgorgement of ill-gotten gains plus interest; and Simanski agreed to the entry of an SEC order that, when entered, will bar him from the securities industry for the rest of his life. The Complaint alleged that Simanski raised over $3.9 million from about 27 brokerage customers and investment advisory clients, many of them retired or elderly, via purported investments in either a "tax free" fixed rate investment, a rental car company, or one of two coal mining companies in which Simanski claimed to have an ownership interest. He allegedly told the investors to write checks payable to personal bank and brokerage accounts he opened in his wife's name. Simanski engaged in a Ponzi-like scheme whereby he used newer investors' funds to repay other investors and for his personal use. In a parallel action, Simanski pled guilty to criminal charges. READ the SEC Complaint https://www.sec.gov/litigation/complaints/2018/comp24334.pdf

Investment Adviser Settles SEC Fraud Charges (SEC Litigation Release No. 24331)
https://www.sec.gov/litigation/litreleases/2018/lr24331.htm
Securities and Exchange Commission v. Charles A. Banks, IV, Civil Action No. 16-cv-3399-TWT (N.D. Ga.)
In a Complaint filed in the United States District Court for the Northern District of Georgia, the SEC alleged that former investment advisor Charles A. Banks, IV fraudulently induced a former professional basketball player to invest $7.5 million in a sports team apparel and merchandise company based on a series of misrepresentations about the investment and allegedly misappropriated funds from his client. In a parallel criminal case, Banks pled guilty to defrauding the athlete and was sentenced to 48-months of imprisonment and ordered him to pay $7.5 million in restitution. As a result of the criminal sentence, the SEC agreed to forgo a civil penalty against Banks, who consented to a final judgment that orders him to pay a total of $6,328,155 in disgorgement and prejudgment interest, with those amounts deemed satisfied by Banks's payment of restitution in a parallel criminal case. On consent in the SEC's case, the Court entered a judgment against Banks that enjoined him from violating the antifraud provisions of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, Section 17(a) of the Securities Act of 1933, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940; and further imposed a permanent officer and director bar against Banks and deferred resolving the issues relating to monetary relief until a later date. The SEC had previously entered an order barring Banks from the securities industry.

https://www.sec.gov/news/press-release/2018-251
In a Complaint filed in the United States District Court for the Eastern District of Pennsylvania, the SEC charged IT professional Hamed Ettu with participating in an insider trading scheme perpetrated by former Wall Street investment banking analyst and family friend Damilare Sonoiki. The Complaint alleged that Ettu received illegal tips about nonpublic impending mergers as he and Sonoiki communicated in text messages using a Nigerian dialect. Allegedly, Ettu and Sonoiki made about $93,000 in illegal profits by using Ettu's brokerage account to purchase the call options of companies that were about to be acquired. Sonoiki and professional football player Mychal Kendricks were previously charged; and pled guilty to criminal charges. Parallel criminal charges were filed against Ettu.
READ the Kendricks and Sonoiki SEC Complaint  https://www.sec.gov/litigation/complaints/2018/comp-pr2018-170.pdf
READ the Ettu Complaint https://www.sec.gov/litigation/complaints/2018/comp-pr2018-251.pdf

https://www.justice.gov/usao-edva/pr/businessman-pleads-guilty-investment-fraud-scheme
Amrit Jaswant Singh Chaha; pled guilty in the United States District Court for the Eastern District of Virginia to one count of wire fraud and one count of securities and commodities fraud. The plea was in connection with allegations that Chaha; operated an investment fraud scheme through The Kane Capital Investment Group, LLC, a company he established and operated; and that he had falsely represented that the company had earned returns of roughly 28% to 34% annually, when in fact, Chahal had suffered substantial losses in managing investors' funds. Chahal concealed losses, siphoned funds for his personal use, and enaged in a Ponzi-like scheme to pay older investors from newer funds. 

Securities and Exchange Commission v. Brian Pappas, et al., No. 3:17-cv-00954 (M.D. Fl. filed Aug. 21, 2017)
In a Complaint filed in the United States District Court for the Middle District of Florida, the SEC
charged
  • Brian Pappas, the former CEO of Creative Learning Corp., iwith fraud for making numerous false statements concerning payments to his family members, his business experience, his personal financial history, and his evaluation of the company's disclosure and financial reporting controls; and
  • Daniel O'Donnell, Creative Learning's former COO, and Michelle Cote, the company's founder, with engaging in manipulative trading to inflate the stock price in an attempt to improve the company's chances of becoming a NASDAQ-listed company.
READ the COMPLAINT https://www.sec.gov/litigation/complaints/2017/comp23914.pdf
Without admitting or denying the SEC's allegations, Creative Learning, O'Donnell, and Cote agreed to the entry of final judgments that permanently enjoin them from violating the charged sections of the federal securities laws, impose ten-year officer-and-director and penny stock bars on O'Donnell and Cote, and require O'Donnell and Cote to pay approximately $71,000 in disgorgement, interest, and penalties. The Court entered a final judgment that Pappas consented to without admitting or denying the allegations in the Complaint. The judgment permanently bars Pappas from serving as an officer or director of a public company and from participating in penny stock offerings for ten years; and further ordered Pappas to pay disgorgement of $3,000 and a civil penalty of $47,000. Additionally, Pappas is permanently prohibiting him from violating, or aiding and abetting violations of, the:
  • antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder
  • anti-manipulation provisions of Section 9(a)(2) of the Exchange Act
  • prohibition against making personal loans provisions of Section 13(k) of the Exchange Act
  • reporting provisions of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 thereunder
  • selective disclosure prohibition of Regulation FD
  • books and records and internal control provisions of Sections 13(b)(2)(A) and (B) of the Exchange Act and Rule 13a-15 thereunder
  • certification provisions of Rule 13a-14 under the Exchange Act
  • beneficial ownership reporting provisions of Sections 13(d) and 16(a) of the Exchange Act and Rules 13d-1, 16a-2 and 16a-3 thereunder
  • prohibition against falsifying books and records provisions of Rule 13b2-1 under the Exchange Act; and
  • proxy contest solicitation provisions of Section 14(a) of the Exchange Act and Rule 14a-6(b) thereunder.

Permalink

Search RRBDLaw

Related Topics

Previous Entries

No Headlines Found

Tag Cloud

Securities Industry Commentator Bill Singer BrokeAndBroker RRBDLaw Securities Industry Commentator by Bill Singer Esq Bill Singer Esq securities industry commentator Bill Singer RRBDLAW