Securities Industry Commentator by Bill Singer Esq

SEC Staff Provides Guidance to Promote Continued Shareholder Engagement, Including at Virtual Annual Meetings, for Companies and Funds Affected by the Coronavirus Disease 2019 (COVID-19) (SEC Release)

CBOE Options Exchange Temporarily Shifts to Fully Electronic Trading -- SEC Enables Immediate Effectiveness of Proposed Rule Change to Facilitate Continued Operations in Light of Temporary Suspension of CBOE Physical Trading Floor (SEC Release)

SEC Takes Targeted Action to Assist Funds and Advisers, Permits Virtual Board Meetings and Provides Conditional Relief from Certain Filing Procedures (SEC Release)

Citizens Securities Wins TRO in Non-Solicitation Federal Court Action (BrokeAndBroker.com Blog)

SEC Charges Russian National for Defrauding Older Investors of Over $26 Million in Phony Certificates of Deposit Scam (SEC Release)

Dozens charged in Atlanta-based money laundering operation that funneled $30 million in proceeds from computer fraud schemes, romance scams, and retirement account fraud (DOJ Release)

List Broker Indicted for Facilitating Elder Fraud Schemes (DOJ Release)

SEC Charges Three Individuals for Falsifying Records in Connection with Investment Adviser Ponzi Scheme Investigation (SEC Release)

SEC Charges New York Financier with Fraud (SEC Release)

Under the guidance, the affected parties can announce in filings made with the SEC the changes in the meeting date or location or the use of "virtual" meetings without incurring the cost of additional physical mailing of proxy materials.  The guidance also encourages companies to provide shareholder proponents with alternative means, such as by telephone, to present their proposals at the annual meetings in light of the difficulties that shareholder proponents face due to COVID-19.

Cboe announced that it will temporarily close its options trading floor effective Monday, March 16, as a precautionary measure to prevent the potential spread of COVID-19. The Cboe rule filing modifies three trading rules with respect to Cboe's exclusively listed index options to more fully replicate in an electronic trading environment the trading that occurs on the Cboe's physical trading floor.

Subject to their conditions, the orders provide the following temporary exemptive relief:

Relief Related to the Investment Company Act of 1940

Relief Related to the Investment Advisers Act of 1940

Commission Statement of Delivery of Fund Prospectuses

The Commission also takes the position, as described in the orders, that it would not provide a basis for a Commission enforcement action if a registered fund does not deliver to investors the current prospectus of the registered fund where the prospectus is not able to be timely delivered because of circumstances related to coronavirus, subject to the conditions described in the orders.

For Investment Advisers Act

https://www.sec.gov/rules/other/2020/ia-5463.pdf

For Investment Company Act

https://www.sec.gov/rules/other/2020/ic-33817.pdf

[T]he scheme involved purchasing internet ads that targeted investors who were searching for CDs with high rates.  The ads allegedly included links to phony websites, which falsely claimed that the firms offering the CDs were members of FINRA and the FDIC, and that deposits were FDIC-insured.  When investors called the phone number on the websites, an "account executive" impersonating a real registered representative directed investors to wire funds to so-called "clearing" partners.  These alleged clearing partners were entities used by Sotnikov to launder and misappropriate investor funds.  Since November 2014, the alleged scheme involved spoofing the websites of at least 24 actual financial firms or using at least 8 fictitious entities, resulting in over $26 million in known investor losses - with many of those losses from older investors who used their retirement savings.

Federal agents have arrested twenty-four individuals for their involvement in a large-scale fraud and money laundering operation that targeted citizens, corporations, and financial institutions throughout the United States. Business email compromise schemes, romance fraud scams, and retirement account scams, among other frauds, duped numerous victims into losing more than $30 million.

. . .

[T]he defendants created multiple sham companies that did not have physical premises, earn legitimate income, or pay wages to employees. In turn, the defendants opened business bank accounts at multiple financial institutions to facilitate receipt of the fraudulent money. The defendants also opened personal bank accounts to receive fraudulent funds, often using false identities and victims' identities. After funds were deposited into the defendants' bank accounts, the money was quickly withdrawn from the accounts and circulated among the defendants.

helped conceal a fraudulent offering of more than $10 million in promissory notes by Stephen C. Peters, the owner and principle of VisionQuest Wealth Management, LLC, to Peters's advisory clients. The SEC previously charged Peters and his companies based on the fraudulent offering, and the U.S. Attorney's Office for the Eastern District of North Carolina filed criminal proceedings against Peters based on the same misconduct, as well as Peters' providing false information to Commission staff. On June 6, 2019, following a trial by jury, Peters was convicted in the criminal case of twenty counts, including counts alleging investment adviser fraud, fraudulent sale of unregistered securities, mail and wire fraud, and falsification of documents provided to the Commission.

Beane, Deckert, and Laska allegedly fabricated documents to suggest that Peters had disclosed potential conflicts of interest to VisionQuest's compliance officer, altered other documents to make certain clients appear to be accredited investors, and forged or backdated client signatures on various agreements, all of which Beane, Deckert, and Laska knew would eventually be provided to the SEC. In addition, in response to SEC staff requests for emails sent to and from Peters, the complaint alleges that Beane and Laska used keyword searches provided by Peters to identify certain responsive emails that should be withheld from the production to the SEC.

[R]eifler's fraudulent conduct began in November 2014, when he raised $6 million from an investor by representing that the money would be used to invest in a telecom receivables business. Instead, the SEC's complaint alleges, Reifler diverted the $6 million to support real-estate development projects in which he had an interest and to acquire a $34 million portfolio of reinsurance trust assets in North Carolina. Beginning in April 2015, Reifler, as the investment adviser to the trust, allegedly defrauded the trust by investing its funds in various struggling entities in which he had an interest.  The SEC's complaint alleges that in June 2015, to cover up his improper allocation of the trust assets, Reifler created fictitious documents and forged counter-party signatures to make it appear as if the assets had been reallocated into permissible investments.

• Securities Industry Commentator
• Bill Singer