Securities Industry Commentator by Bill Singer Esq

SEC Obtains Emergency Asset Freeze, Charges California Trader with Posting False Stock Tweets (SEC Release)

Apex Serial Fraudster Sent Back to Federal Prison for Investment Scam Involving Impersonation of Mayor, Professor, and Government Agency (DOJ Release)

Arizona Man Sentenced for Multimillion-Dollar Nationwide Investment Fraud Scheme (DOJ Release)

Commissioner Issues Two Orders Stopping Three Online Investment Scams (TSSB Release)

A Climate for Change: Meeting Investor Demand for Climate and ESG Information at the SEC (Speech by Acting SEC Chair Allison Herren Lee)

Public Input Welcomed on Climate Change Disclosures (Statement by Acting SEC Chair Allison Herren Lee)

FINRA Fines and Suspends Rep for Reg S-P Violations

In the Michael Keith Napier, Respondent (FINRA AWC)

FINRA Fines and Suspends Rep for OBA

In the Matter of Robert Riviere, Respondent (FINRA AWC)

FINRA Fines and Suspends Rep for OBA and PST

In the Matter of Jeffrey D. Stanga, Respondent (FINRA AWC)

Law Firm Seeks Litigation Associate (Warren Law Group)

[O]n Dec. 9, 2020, Fassari began purchasing over 41 million shares of ARCS stock shortly before tweeting false information about ARCS to his thousands of Twitter followers, including falsely claiming that ARCS was reviving its operations, expanding its business, and being backed by "huge" investors. The complaint further alleges that, between Dec. 9 and 21, 2020, Fassari made approximately 120 tweets that referenced "$ARCS," dozens of which were false and misleading. For example, he tweeted, "$ARCS 380,000 indoor cultivation 1 Million+ sq ft processing. WEEEEEEEEE This CEO has big plans for us" and "a ton of news coming and backed by huge investors for its #cannabis operation[.]" In seeking an injunction, the SEC alleges that Fassari continued to tweet about other stocks as recently as January and February 2021.

The complaint further alleges that, over the next several days, ARCS's share price skyrocketed, ultimately increasing over 4,000%. The complaint also alleges that Fassari made false statements about his own trading in ARCS. Between Dec. 10 and 16, 2020, Fassari allegedly sold all his shares in ARCS for profits of over $929,000, all while continuing to publish false and misleading information about ARCS and his trading in ARCS.

[M]urphy was subject to collection efforts by the United States Government arising from a prior federal conviction for Wire Fraud in June of 1999 in this same district.  To avoid his payment obligations Murphy used his family members to open bank accounts for him in the name of various companies he controlled, referred to in the Indictment as the "Murphy Entities."  These entities were Toxic Solutions LLC ("Toxic Solutions"), Biological Marine Remediation LLC ("Bio-Remediation"), Bio Marine Remediation LLC ("Bio-Marine"), Bio Separation Systems, LLC ("Bio-Separation"), On-Site Solutions LLC ("On-Site Solutions"), and On-Site Technologies LLC ("On-Site Technologies").

Murphy used the Murphy Entities to obtain money from individuals and entities under false and fraudulent pretenses.  Murphy represented that the Murphy Entities performed environmental cleanup activities, such as water remediation.  Murphy purported to offer to various entrepreneurial victims the opportunity to purchase exclusive rights to perform environmental cleanup services in a given geographic area.  Murphy also purported to sell the equipment necessary to perform the cleanup services.  In furtherance of the scheme, Murphy frequently presented false documents to the entrepreneurs to make it appear that funds had been allocated for services to be performed in the geographic area where the victims had purchased the exclusive rights.  In reality, the documents justifying the exclusive rights purchase were falsified, and Murphy took the money without providing all of the equipment purchased.

In furtherance of the scheme, Murphy utilized the identities of others to make it appear that his companies were good investments by creating false documents and correspondence in the names of the victims.  Among others, Murphy impersonated a professor, a mayor, and a representative of the Environmental Protection Agency.

Murphy defrauded dozens of victims in this case.  Many of the victims lost down payments they paid to Murphy, trusting that he would deliver on his promises.  Unfortunately, others lost their life savings.  At sentencing the Government sought and obtained an order of restitution on behalf of these victims, totaling $909,763.28.

[M]aerki and his conspirators controlled numerous entities that sold purported "franchises" and "private equity" opportunities through salesmen across the country. Through these salesmen, the defendants targeted individuals at or near retirement and made numerous material misrepresentations and omissions to sell them illiquid, highly speculative investment vehicles. Maerki, who had been barred by a federal court in 1984 from selling securities, continued to sell the investments without disclosing that the U.S. Securities and Exchange Commission, the Virginia State Corporation Commission, and the Arizona State Corporation Commission were investigating the conspirators for fraud.

Many of the victims targeted in this scheme were elderly. Unsuspecting investors cashed out 401(k) retirement plans and other retirement accounts to invest in companies founded by Maerki, without knowledge that significant portions of their money were being transferred to other companies controlled by members of the conspiracy. As a result, some individual investors-including investors who were blind, disabled, or otherwise unable to return to work-lost hundreds of thousands of dollars from their retirement savings. The total amount of victim losses from this scheme exceeded $23 million, and over $4 million of those fraudulently obtained funds went to Maerki.

Human capital, human rights, climate change - these issues are fundamental to our markets, and investors want to and can help drive sustainable solutions on these issues. We see that unmistakably in shifts in capital toward ESG investing, we see it in investor demands for disclosure on these issues, we see it increasingly reflected on corporate proxy ballots, and we see it in corporate recognition that consumers and investors alike are watching corporate responses to these issues more closely than ever.

That's why climate and ESG are front and center for the SEC. We understand these issues are key to investors - and therefore key to our core mission. And just as we recognize that these issues do not observe artificial distinctions between society and financial markets, we recognize that climate and ESG transcend other boundaries as well. Geographical boundaries for one. These are global challenges for global markets that demand global solutions. Regulatory boundaries for another. Climate, for instance, is not just an EPA, Treasury, or SEC issue - it's a challenge for our entire financial system and economy.

And boundaries within the SEC. At the agency, we are taking a holistic look at all of the ways climate and ESG intersect with our regulatory framework, and moving ahead with efforts across our offices and divisions to account for that. In the last couple of months, we've taken important steps forward. And we are actively laying the groundwork for more progress to come. I want to take this opportunity to review both where we've been and where I hope we are going.

In September 2019, after accepting an offer to join Securities America, Napier improperly removed from the member firm through which he was then registered nonpublic personal information concerning 285 customers and 728 accounts, without his firm's or the customers' knowledge or consent. Specifically, Napier shared his customers' nonpublic personal information, including, among other items, dates of birth and social security numbers with a third-party vendor, which the vendor used to populate forms to assist him with transitioning customers to Securities America.  

Also READ: "FINRA Censures And Fines Securities America Over Outsourced Onboarding" (BrokeAndBroker.com Blog /  March 2, 2021)

http://www.brokeandbroker.com/5714/finra-securities-america/

On March 30, 1987, FINRA issued AWC No. TEX-467-AWC finding that Riviere, his member firm, and three other registered representatives failed to prepare the trial balance and general ledger and securities receipt and delivery blotter in accordance with MSRB Rule G-8; failed to post accurate and current customer and broker ledgers; failed to prepare a cash receipts and disbursements blotter as required by Exchange Act Rule 15c3-3, effected transactions while failing to maintain the required minimum net capital; held customer securities longer than permitted; held customer securities in a clearing account in a way that might have permitted commingling with securities carried for the accounts of other customers; and filed inaccurate focus reports. Riviere and the other respondents were censured and fined $10,000, jointly and severally.

Between September 2019 and December 2019, Riviere was the managing director of a corporation he formed. On November 20, 2019. Riviere signed a letter of engagement between his corporation and a third party to provide investment services outside of the scope of his relationship with Heritage Financial Systems. In November and December 2019, Riviere conducted financial modeling and analysis related to the acquisition of cargo ships for the third party and received $5,000. Riviere did not provide prior written notice of his outside business activity to the firm. 

From February through June 2014, prior to his association with FMN Capital, Stanga sold a private placement offering of membership units in connection with Company A, a residential real estate flipping business. Stanga provided written notice of Company A to FMN Capital on his Form U4, describing his involvement as an "investor, gives advice/opinions on buying/fixing/selling residential homes," but failed to fully disclose his role as "manager," and that Company A was an investment-related business, as required by FINRA Rule 3270.

. . .

Prior to his association with FMN Capital, Stanga sold promissory notes to investors in connection with a real estate brokerage firm, Company B. After registering with FMN Capital, and between March 2015 to March 2017, Stanga participated in eight private securities transactions totaling $1,160,000 by facilitating the renewals of the Company B promissory notes he sold to investors prior to his association with FMN Capital. Stanga facilitated the promissory note renewals for four investors (one of whom was a firm customer) by acting as an intermediary between the investors and Company B. Stanga notified the investors of the opportunity to renew their promissory notes, reviewed draft documents, negotiated interest rates, and sent signed promissory notes to Company B on behalf of the investors. Stanga received $28,359 in referral fees in connection with these private securities transactions. Stanga did not provide a detailed written notice to FMN Capital prior to participating in these private securities transactions and did not obtain written permission from FMN Capital to participate in the transactions, as required by NASD Rule 3040 and FINRA Rule 3280. 

• Securities Industry Commentator
• Bill Singer