The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
March 1, 2021
The Saga of FINRA Versus Kimberly Springsteen-Abbott (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/5725/springsteen-abbott-finra-sec-9cir/
FINRA placed Kimberly Springsteen-Abbott squarely in its regulatory crosshairs. After a hearing, FINRA's OHO imposed a Bar, a $208,953.75 disgorgement, and a $100,000 fine. On appeal, FINRA's NAC affirmed. The SEC tossed the case back into FINRA's lap with an order to say what you mean and mean what you say. On remand, the NAC whittled away at the sanctions; and, thereafter, the SEC did more whittling. By the time the federal circuit court received the appeal, the once mighty oak of a case was more like a toothpick.
https://www.sec.gov/news/press-release/2021-35
The SEC issued an Order of Suspension of Trading https://www.sec.gov/litigation/suspensions/2021/34-91213-o.pdf in the following securities:
- Bebida Beverage Co. (OTC: BBDA) (CIK No. 0001143451)
- Blue Sphere Corporation (OTC: BLSP) (CIK No. 0001419582)
- Ehouse Global, Inc. (OTC: EHOS) (CIK No. 0001452580)
- Eventure Interactive, Inc. (OTC: EVTI) (CIK No. 0001509351)
- Eyes on the Go, Inc. (OTC: AXCG) (CIK No. 0001498522)
- Green Energy Enterprises, Inc. (OTC: GYOG) (CIK No. 0001464685)
- Helix Wind Corp. (OTC: HLXW) (CIK No. 0001364560)
- International Power Group Ltd. (OTC: IPWG) (CIK No. 0001332702)
- Marani Brands, Inc. (OTC: MRIB) (CIK No. 0001312623)
- MediaTechnics Corp. (OTC: MEDT) (CIK No. 0001032405)
- Net Talk.com, Inc. (OTC: NTLK) (CIK No. 0001383825)
- Patten Energy Solutions Group, Inc. (OTC: PTTN) (CIK No. 0001448763)
- PTA Holdings, Inc. (OTC: PTAH) (CIK No. 0001394327)
- Universal Apparel & Textile Company (OTC: DKGR) (CIK No. 0001560462)
- Wisdom Homes of America, Inc. (OTC: WOFA) (CIK No. 0001281198)
As alleged in part in the SEC Release:
Today's order states that trading is being suspended because of questions about recent increased activity and volatility in the trading of these issuers, as well as the influence of certain social media accounts on that trading activity. The order also states that none of the issuers has filed any information with the SEC or OTC Markets, where the companies' securities are quoted, for over a year. . . .
https://www.sec.gov/litigation/litreleases/2021/lr25038.htm
The United States District Court for the Eastern District of New York entered a Final Consent Judgment against Christopher Fulco and Fulco's company JM Capital Holdings LLC enjoining them from violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder, and the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act, and finds them liable, on a joint and several basis, for disgorgement of $1,604,574, which is deemed satisfied by the restitution ordered against Fulco in the parallel criminal action brought by the U.S. Attorney's Office for the District of Montana. In the criminal action, Fulco pled guilty to one count of mail fraud, one count of money laundering, and one count of securities fraud. Fulco was sentenced to 36 months in prison and ordered to pay $1,643,074 in restitution. As alleged in part in the SEC Release:
According to the SEC's complaint, filed September 18, 2019, Fulco, through JM Capital, cold-called investors, including many elderly retirees, and solicited investments in multiple private companies. As alleged, the defendants never invested the money in the manner represented. Instead, according to the complaint, Fulco used the money to gamble at casinos, take vacations, and purchase luxury goods, among other personal uses. The complaint also alleged that Fulco used a series of aliases to conceal his true identity from investors and created fictitious documents to induce investors to transfer money to JM Capital.
SEC Obtains Final Judgment Against Investment Adviser Charged with Failing to Disclose Conflicts (SEC Release)
https://www.sec.gov/litigation/litreleases/2021/lr25037.htm
Without admitting or denying the allegations in an SEC Complaint, Bolton Securities Corporation d/b/a Bolton Global Asset Management consented to the entry of the final judgment enjoining it from violating Sections 206(2), 206(3), and 206(4) of the Investment Advisers Act and Rule 206(4)-7 thereunder, and ordering it to pay disgorgement and prejudgment interest of $224,994 and a civil penalty of $225,000. As alleged in part in the SEC Release:
On November 4, 2019, the SEC charged Bolton Securities with failing to adequately disclose conflicts of interest arising from the receipt of 12b-1 fees associated with mutual fund share classes held by Bolton Securities clients, including when less expensive share classes of the same mutual funds that did not charge 12b-1 fees were available. The SEC alleged in its complaint that those 12b-1 fees were paid to an affiliated broker-dealer that was under common ownership and control with Bolton Securities, which in turn paid some of the fees to Bolton Securities' investment adviser representatives. In addition, the SEC's complaint alleged that Bolton Securities used the principal trading account of its affiliated broker-dealer to engage in self-dealing transactions with its advisory clients, which generated principal trading compensation for the broker-dealer. As alleged, Bolton Securities engaged in these transactions without obtaining client consent and without providing disclosure sufficient for clients to provide informed consent for such transactions.