Securities Industry Commentator by Bill Singer Esq

SEC Charges Additional Participants in Pump and Dump Scheme Targeting Retail Investors (SEC Release)

SEC Charges Co-Founder of Cannabis Companies with Fraud (SEC Release)

U.S. Attorney Announces Extradition Of United Kingdom Citizen For His Role In An International Carbon Credit Fraud Scheme (DOJ Release)

Alex Oh Named SEC Director of Enforcement (SEC Release)

Amendments to the Commission's Rules of Practice (SEC Final Rule)

FINRA Fines and Suspends Rep Over OBA

In the Matter of Ronald Patrick Cameron, Respondent (FINRA AWC)

Wall Street Compliance Professionals Need FINRA Like A Heart Attack (BrokeAndBroker.com Blog)

The Trust, The Beneficiary, The Annuity, The Elderly Customer, and The Stockbroker (BrokeAndBroker.com Blog)

FINRA Enters Into Fair Settlement Involving Customer Loans and Outside Business Activities (BrokeAndBroker.com Blog)

The Mother with an Edward Jones Account and Her Daughter the Edward Jones Branch Administrator (BrokeAndBroker.com Blog)

[B]etween 2016 and 2018, Ubong Uboh and Tyler Crockett cold-called investors and aggressively touted the prospects of several microcap issuers. Using fictitious names and backgrounds, Uboh and Crockett allegedly lied to investors about the issuers' relationships with well-known financial institutions and made baseless predictions about their businesses. In return, Uboh and Crockett were allegedly paid hundreds of thousands of dollars by Garrett O'Rourke and Michael Black, two individuals the SEC previously charged with engaging in a pump and dump scheme involving the same microcap issuers Uboh and Crockett touted. The complaint alleges that retail investors lost at least $1.2 million from purchasing shares of these issuers.

The SEC's complaint further alleges that Uboh and Crockett misappropriated $500,000 from an investor by convincing him to buy shares of a company in a fraudulent private offering, falsely claiming that the company had entered into a partnership with a well-known technology company and had significant growth potential. Instead of investing the money, Uboh and Crockett allegedly kept it for themselves.

[J]ones, the co-founder and chief executive officer of Strayne Holdings LLC and 1107 Property Management, LLC, raised more than $650,000 from five investors in two states from February 2019 through January 2020 and misrepresented the intended use of funds to investors. The complaint also alleges that Jones made oral misrepresentations to investors and provided written offering materials to the investors that claimed Strayne and 1107 Property Management would use investor funds for various operational expenses. Finally, the complaint alleges that Jones used at least $80,000 of investor funds for purely personal purposes.

From in or about 2009 up to and including in or about 2015, WRIGHT and other co-conspirators engaged in a scheme to defraud victims in the United Kingdom through the sale of false, fraudulent, and materially misleading investments, and to launder the proceeds of the fraud through bank accounts in the United States and foreign countries.  WRIGHT used the services of telemarketing call centers to identify and cold-call potential victims, who were primarily elderly or retired individuals residing in the United Kingdom.  Over a series of telephone calls, the telemarketers persuaded victims to invest money under various false and misleading pretenses, including the promise of short-term, high-yield, no-risk returns, when in fact the investments were high-risk, illiquid, and in some instances, entirely fictitious.  Many victims were persuaded to make additional investments under the false pretense that they would not be permitted to sell their holdings until they purchased more.  In reliance on the false representations and promises, the victims wired funds to various bank accounts in the United States, including in the Southern District of New York, in the names of corporate entities controlled by one of Wright's co-conspirators.  WRIGHT assisted in mailing and emailing of documents related to the fraudulent investments, including purchase contracts and investment certificates, to the victims.  Victims who tried to sell their investments found they were unable to do so.  The victims never received a refund on their principal or any return on their investments. 

In order to conceal the nature, location, source, ownership, and control of the proceeds of the fraudulent scheme, WRIGHT and his co-conspirators set up overseas bank accounts in Cyprus, Switzerland, and the United Kingdom, in the names of various shell companies, which were used to launder a substantial portion of the fraud proceeds.

The nature of the particular fraudulent investment vehicles being marketed to the victims changed over time.  From in or about 2009 until in or about 2011, WRIGHT and his co-conspirators sold the stock of Florida-based corporation DirectView Holdings, Inc. ("DirectView"), to the victims based on telemarketers' false representations and promises that the shares were a no-risk, short-term investment in a debt-free company, and that the shares were likely to increase over 100 percent in value in a short period of time.  In fact, DirectView's annual report filed with the United States Securities and Exchange Commission ("SEC") for the year ending December 31, 2010, contained dire warnings about the poor fiscal health of DirectView and the risk attendant in purchasing stock, including that the company "may be forced to cease operations" due to losses and cash flow problems, and purchasers "may find it extremely difficult or impossible to resell our shares."

From in or about 2011 until in or about 2015, WRIGHT and his co-conspirators engaged in the sale of fraudulent "carbon credits."  "Carbon credits," which are issued as part of governmental and voluntary regulatory regimes, are permits representing the right to emit a certain number of tons of carbon dioxide into the atmosphere.  "Carbon offsets," which are tied to particular carbon-dioxide emissions reducing projects, represent a reduction in carbon dioxide emissions, and can be purchased by individuals and companies to "offset" their or third parties' "carbon-footprints."  The victims were falsely promised that the carbon-related investments they purchased could be easily sold, carried no risk, and would yield a significant, short-term return.  In fact, the carbon credits and offsets that were sold to the victims were fake, and did not represent any actual carbon credits or offsets.

[O]h was most recently a partner at Paul, Weiss, Rifkind, Wharton & Garrison LLP and co-chair of the law firm's Anti-Corruption & FCPA Practice Group. She was previously an Assistant U.S. Attorney in the Criminal Division of the U.S. Attorney's Office for the Southern District of New York, where she was a member of the Securities & Commodities Fraud Task Force and the Major Crimes Unit.

. . .

Prior to private practice, Oh was the lead trial lawyer in numerous jury trials during her tenure as an Assistant U.S. Attorney. She is a member of the New York City Bar Association. She previously served as a Trustee for the Lawyers' Committee for Civil Rights Under Law and on the Board of Trustees of the Legal Aid Society of the District of Columbia. In addition, Oh served on the Criminal Justice Act Panel for the United States Court of Appeals for the District of Columbia Circuit and the United States District Court for the District of Columbia.

Oh has an extensive pro bono practice and has litigated voting rights cases and constitutional challenges to voter registration and identification laws. Oh earned a J.D. from Yale Law School and a B.A. from Williams College.

On September 24, 2015, the Commission proposed amendments to its Rules of Practice to automate and modernize aspects of the filing process in administrative proceedings through electronic filing and service in such proceedings.1 The proposed amendments sought to enhance the accessibility and transparency of administrative proceedings and to facilitate the prompt distribution of public information regarding these proceedings by enabling the Commission to more efficiently process filings and make them more readily available to the public. As discussed in the proposing release, the proposed amendments coincided with the Commission's development of an Internet-based electronic filing system for its administrative proceedings. 

The Electronic Filings in Administrative Proceedings ("eFAP") system will be accessible via the Commission's website beginning on the Compliance Date of these rules. A link on the website at www.sec.gov will route the user to login.gov (a General Services Administration service) for multifactor authentication; login.gov will then route the user back to the eFAP system. In addition, contemporaneously with the issuance of this release, the Commission's Office of the Secretary has posted on the Commission's website Instructions for Electronic Filing and Service of Documents in SEC Administrative Proceedings and Technical Specifications ("Instructions"), ² as well as an eFAP User Manual ("User Manual") for participants using the eFAP system.³ The Instructions describe in "question and answer" format the technical requirements for electronic filing, including the mechanics of uploading documents,  acceptable file formats, file size limitations, and naming conventions, among other things. They also address electronic service of documents by the Office of the Secretary of the Commission upon the parties to the proceeding, which will occur through the eFAP system, and electronic service by the parties upon other participants in the proceeding, which will be effectuated by email outside of the eFAP system. The User Manual addresses the technical requirements of registration and login and includes various screenshots that users will encounter in navigating the eFAP system. 

The proposal involved three primary components. First, persons involved in administrative proceedings who currently are required to file documents under Rules 151 and 152 of the Commission's Rules of Practice would be required to file such documents electronically. Second, persons filing documents in the new eFAP system would be required to redact or omit sensitive personal information and could seek a protective order for any unredacted sensitive personal information that the person believes is necessary to the proceeding. As a corollary to these electronic filing requirements, the proposal also would require electronic filing and redaction of records under Rule 420 and Rule 440 in administrative proceedings involving determinations by self-regulatory organizations ("SROs") and the Public Company Accounting Oversight Board ("PCAOB"), respectively, and electronic submission and redaction of records under Rule 351 in proceedings before hearing officers. Third, parties would be required to serve each other electronically in the form and manner that is prescribed in the materials posted on the Commission's website. 

After carefully considering the comments we received on the proposal, we are adopting the proposal with certain modifications. Under the final rules, pleadings and pleading attachments filed with the Commission under Final Rules 151 and 152 must redact sensitive personal information, but, as discussed below, the redaction requirements are modified from the proposal to eliminate the redaction of records submitted after a hearing before a hearing officer under Final Rule 351(c), records certified and filed by an SRO under Final Rule 420(e), and records certified and filed by the PCAOB under Final Rule 440(d). We have decided to modify the redaction requirements for records submitted or filed under Rules 351, 420 and 440 because, as discussed below, the records received by the Commission under these rules are not posted to the Commission's website. Persons seeking access to such records in administrative proceedings may, consistent with current practice, submit a request to the Commission under the Freedom of Information Act ("FOIA") or under any other applicable law and, if disclosure is required, then any documents would be redacted by Commission staff as appropriate.

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1 Amendments to the Commission's Rules of Practice, Exchange Act Release No. 75977 (Sept. 24, 2015), 80 FR 60082 (Oct. 5, 2015), available at http://www.govinfo.gov/content/pkg/FR-2015-10-05/pdf/2015-24705.pdf (last visited Nov. 17, 2020).

2 See Instructions for Electronic Filing and Service of Documents in SEC Administrative Proceedings and Technical Specifications, available at https://www.sec.gov/efapdocs/
instructions.pdf.

3 See eFAP User Manual - Registered User and eFAP User Manual - SEC Filer, available at https://www.sec.gov/efapdocs/registered-user-manual.pdf and https://www.sec.gov/efapdocs/sec-filer-manual.pdf.

In May 2018, while associated with RJFS Cameron filed articles of incorporation with the State of Arkansas for VRV Distribution, LLC, a company he formed to sell recreational vehicles. He was the company's sole owner and manager. In 2018 and 2019, the company had gross sales of $29,090 and $88,669. Cameron did not seek prior approval from RJFS and did not disclose his outside business activity in this company to RJFS until July 2018. In April 2019, Cameron became associated with International Assets but did not provide prior written notice to or receive approval from the firm for his participation in VRV Distribution, Inc. until December 2020. On his annual compliance questionnaire in December 2019, Cameron falsely stated that all of his outside business activities had been approved by International Assets.

• Securities Industry Commentator
• Bill Singer