The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
March 9, 2020
SEC Obtains Preliminary Injunction Against Businessman for Operating a Ponzi-Like Scheme (SEC Release)FINRA Imposes Fine and Suspension for Rep Gunsmithing Activities. In the Matter of Benjamin Kaz Fujihara, Respondent (FINRA AWC)FINRA Imposes Fine and Suspension for Rep's Acceptance of Referral Fees. In the Matter of Imran N. Razvi, Respondent (FINRA AWC)
It's The End of The World BrokeAndBroker.com Blog Edition (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/5109/end-of-the-world/
So . . . ummm . . . the stock market opened down about 5% and the oil markets are crashing and the world is looking like the coronavirus may be the beginning of a Zombie Apocalypse. And you were expecting an article today about Wall Street's legal, regulatory, and compliance scene? Really? Have you seen what happens when zombies enter the markets -- I mean, geez, they are really, really impatient day-traders who will pay an arm and a leg just to get into a position. As such -- no -- there isn't any BrokeAndBroker.com Blog running today. Enjoy the cheerful and uplifting tunes we posted to help y'all get through the day.
SEC Obtains Preliminary Injunction Against Businessman for Operating a Ponzi-Like Scheme (SEC Release)
https://www.sec.gov/litigation/litreleases/2020/lr24760.htm
In a Complaint filed in the United States District Court for the Northern District of Illnois
https://www.sec.gov/litigation/complaints/2020/comp-pr2020-10.pdf, the SEC alleged that from at least 2018 through December 2019, Todays Growth Consultant Inc. ("TGC") and the company's founder/Chairman, Kenneth D. Courtright, III operated a Ponzi-like scheme, which raised at least $75 million from over 500 investors pursuant to Consulting Performance Agreements (that are characterized as "investment contracts"). The SEC Release alleges that:
https://www.sec.gov/litigation/complaints/2020/comp-pr2020-10.pdf, the SEC alleged that from at least 2018 through December 2019, Todays Growth Consultant Inc. ("TGC") and the company's founder/Chairman, Kenneth D. Courtright, III operated a Ponzi-like scheme, which raised at least $75 million from over 500 investors pursuant to Consulting Performance Agreements (that are characterized as "investment contracts"). The SEC Release alleges that:
In exchange for an investor's "upfront fee," TGC claimed that it would either buy or build a website for the investor, and develop, market, and maintain the website. As alleged, TGC falsely promised that it would use investors' funds exclusively for expenses related to the investor's website. In reality, as alleged, the sales were conducted through unregistered securities offerings, and TGC used new investors' funds to pay investor returns and Courtright's personal expenses.
The Court entered preliminary injunction orders against Courtright and TGC whereby they are enjoined from violations of the antifraud and registration provisions of the federal securities laws. The orders It prohibit Courtright from offering or otherwise engaging in securities transactions; and extends an asset freeze and other emergency measures. The receiver for TGC will continue to marshall and preserve its assets.alleged Ponzi-like scheme that raised at least $75 million from more than 500 investors throughout the United States and abroad in connection with the offer and sale of investment contracts called Consulting Performance Agreements.
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Benjamin Kaz Fujihara submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC alleges that Benjamin Kaz Fujihara was first registered in 1996, and since June 2009, he was registered with FINRA member firm Morgan Stanley, where he remained until his August 2018 resignation. The AWC alleges that Fujihara "does not have any disciplinary history with the Securities and Exchange Commission, any state securities regulators, FINRA, or any other self-regulatory organization." In accordance with the terms of the AWC, FINRA found that Fujihara had violated FINRA Rules 3270 and 2010; and the self regulator imposed upon him a $5,000 fine and a 30-business-day suspension from association with any FINRA member firm in any capacity. As alleged in part in the AWC:
In November 2016, Fujihara requested in writing that Morgan Stanley approve his participation in an outside business that engaged in gunsmithing activities, such as restoring and performing woodworking services on firearms. In January 2017, Morgan Stanley approved Fujihara's participation in the proposed outside business, provided that he limit his role to gunsmithing activities and not use his Federal Firearms License as a dealer of firearms. Morgan Stanley also advised Fujihara that he would need to obtain written approval before making any changes to his outside business activity or seeking to participate in any additional outside business activities.Between February 2017 and July 2018, Fujihara purchased and resold a small number of firearms through his outside business without performing any woodworking or other gunsmithing services on the firearms before selling them. In so doing, Fujihara engaged in outside business activities without providing full and accurate prior written notice to Morgan Stanley of such activities.
https://www.finra.org/sites/default/files/fda_documents/2018058057401
%20Imran%20N.%20Razvi%20CRD%203042006%20AWC%20sl.pdf
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Imran N. Razvi submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC alleges that Imran N. Razvi was first registered in 1998, and From April 2017 through March 2018, he was registered with FINRA member firm Lincoln Financial Securities Corporation. The AWC alleges that Imran N. Razvi "does not have any disciplinary history with the Securities and Exchange Commission, any state securities regulators, FINRA, or any other self-regulatory organization." In accordance with the terms of the AWC, FINRA found that Imran N. Razvi had violated FINRA Rules 3270 and 2010; and the self regulator imposed upon him a $5,000 fine and a six-month suspension from association with any FINRA member firm in all capacities. As alleged in part in the AWC, during the relevant period between April 20187 and December 2017:
%20Imran%20N.%20Razvi%20CRD%203042006%20AWC%20sl.pdf
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Imran N. Razvi submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC alleges that Imran N. Razvi was first registered in 1998, and From April 2017 through March 2018, he was registered with FINRA member firm Lincoln Financial Securities Corporation. The AWC alleges that Imran N. Razvi "does not have any disciplinary history with the Securities and Exchange Commission, any state securities regulators, FINRA, or any other self-regulatory organization." In accordance with the terms of the AWC, FINRA found that Imran N. Razvi had violated FINRA Rules 3270 and 2010; and the self regulator imposed upon him a $5,000 fine and a six-month suspension from association with any FINRA member firm in all capacities. As alleged in part in the AWC, during the relevant period between April 20187 and December 2017:
In April 2014, Razvi formed Company A to offer insurance products to customers. During the Relevant Period, Razvi owned Company A and acted as Company A's president. In that capacity, Razvi supervised a number of insurance agents working for Company A.On December 15, 2016, as Lincoln Financial's procedures required, Razvi sought approval from the Firm to participate in an outside business activity involving Company A. In particular, Razvi sought approval to use Company A to refer investors to the Woodbridge Group of Companies LLC ("Woodbridge"), a purported real-estate investment fund. On February 7, 2017, Lincoln Financial denied Razvi's request and notified him that he could not accept compensation or consideration for referrals to Woodbridge.Notwithstanding that denial, during the Relevant Period, Company A's agents referred investors to Woodbridge and in exchange for these referrals, the agents received commissions. The commissions Company A's agents earned were paid to Company A. Razvi, through his ownership of Company A, received a portion of those commissions.In December 2017, Woodbridge filed a voluntary Chapter 11 bankruptcy petition. On December 27, 2018, the United States District Court for the Southern District of Florida issued final judgements against, among others, Woodbridge and its former owner, Robert H. Shapiro. SEC v. Shapiro, Case No. 17-24624 (S.D. Fla.). Those judgments required Woodbridge and Shapiro to, among other things, disgorge their ill-gotten gains and also required Shapiro to pay a civil penalty.