1. On May 25, 2022, the SEC filed charges against Cornerstone Acquisition & Management Company LLC, Derren Lee Geiger and She Hwea Ngo for making false and misleading statements, committing other deceptive acts, and committing recordkeeping and compliance violations. Cornerstone, Geiger, and Ngo engaged in a scheme to deceive investors in Cornerstone’s private funds. Their deceptive conduct included misstatements concerning the ownership of Cornerstone, the existence of collateral, and other material issues. Cornerstone and Geiger also failed to adopt and implement written compliance policies and procedures reasonably designed to prevent violations of the Advisers Act. The matter is being litigated. https://www.sec.gov/litigation/litreleases/2022/lr25400.htm
2. On May 26, 2022, the SEC instituted administrative proceedings against Securities America Advisors, Inc. (“SAA”). SAA failed to implement policies and procedures for the review of automatically generated surveillance alerts after client disbursements had occurred. SAA also failed to implement reasonably designed policies and procedures for reviewing client disbursement requests for possible misappropriation before the disbursements occurred. Hector May, the owner of an independent state-registered investment adviser whose clients participated in certain of SAA’s advisory programs, misappropriated (without SAA’s detection) approximately $8 million from SAA’s advisory accounts of at least fifteen of SAA’s advisory clients. SAA was ordered to pay a whopping $1,750,000.00 civil money penalty for the bad acts of another advisory firm. https://www.sec.gov/litigation/admin/2022/34-94995.pdf
3. On May 25, 2022, the SEC filed charges against EIA All Weather Alpha Fund I Partners LLC and Andrew Middlebrooks for engaging in a multi-year scheme that included the misappropriation and misuse of investors’ funds. EIA and Middlebrooks deceived investors in their hedge fund including making repeated false statements about the fund’s performance and total assets, providing falsified investor account statements, misrepresenting that the fund had an auditor; and, creating and disseminating a fake audit opinion to investors. EIA and Middlebrooks misused new investor money to make Ponzi-like payments to other investors in the fund in order to continue to deceive investors into believing that the fund was profitable. Middlebrooks also misappropriated investor funds for personal use, including for jewelry and credit card payments. This matter is being litigated. https://www.sec.gov/litigation/litreleases/2022/lr25399.htm
4. On May 25, 2022, the SEC instituted administrative proceedings against RiverSource Distributors, Inc. (“RDI”). RDI offered and sold variable annuities to retail investors through Ameriprise Financial Services, LLC. RDI prohibited from making or causing to be made an offer to exchange a variable annuity issued by RiverSource Life for another variable annuity issued by RiverSource Life unless the offer had been approved by the Commission or fell within limited exceptions. RDI violated the Investment Company Act of 1940 by its wholesalers’ efforts developing lists of in-force annuities for the purpose of identifying potential variable annuity exchange opportunities among existing annuity holders and then using those lists in an attempt to encourage AFS registered representatives to offer variable annuity replacements to its retail customers. RDI wholesalers did so amidst downward pressures in its variable annuity business and variable annuity exchanges increased during the relevant period. RDI was ordered to pay a whopping civil money penalty in the amount of $5,000,000. https://www.sec.gov/litigation/admin/2022/34-94978.pdf
5. On May 23, 2022, the SEC instituted administrative proceedings against Virtua Capital Management, LLC (“VCM”), Quynh Palomino, Jack Rose and Derek Uldricks. All respondents failed to adequately disclose conflicts of interest relating to their management of seven private investment funds. Respondents managed numerous real estate projects and invested Fund assets primarily in those affiliated-real estate investments. The practice of investing nearly exclusively in affiliate projects presented conflicts of interest that were not adequately disclosed. Although the offering documents disclosed some fees paid to affiliates, other fees were not disclosed. Respondents’ disclosures were misleading and Respondents breached their fiduciary duty to the Funds. VCM agreed to pay a civil money penalty in the amount of $150,000, $100,000 for Palomino, $75,000 for Rose and $60,000 for Uldricks. https://www.sec.gov/litigation/admin/2022/34-94967.pdf
6. On May 20, 2022, the SEC instituted administrative proceedings against Wells Fargo Clearing Services, LLC. The proceedings arise out of Wells Fargo Advisors’ failure to timely file certain suspicious activity reports. Wells Fargo Advisors switched to a new version of its internal anti-money laundering transaction monitoring and alert system which failed to adequately monitor, detect and report certain transactions in its customers’ brokerage accounts involving wire transfers to or from certain foreign countries determined to be at a high risk or moderate risk for money laundering, terrorist financing or other illegal monetary movements. Due to the deficient implementation and failure to test and conduct sufficient monitoring of the new AML system, it did not generate timely alerts for approximately 1,708 brokerage transactions and Wells Fargo Advisors consequently failed to timely surveil or investigate certain suspicious activity related to foreign wire transfers in its customers’ accounts. Wells Fargo Advisors failed to timely file at least 25 SARs related to such activity as required by the Bank Secrecy Act and willfully violated Section 17(a) of the Exchange Act and Rule 17a-8 thereunder. Wells Fargo was ordered to pay a civil money penalty in the amount of $7,000,000. https://www.sec.gov/litigation/admin/2022/34-94955.pdf
7. On May 19, 2022, the SEC instituted administrative proceedings against Michael Staisil. Staisil worked to recruit investors for Global Credit Recovery offering investments in purported portfolios of charged-off consumer debt. Staisil regularly made false statements to prospective investors about his own wealth, his own purported investments in GCR, and about the investments of others, including large institutional investors. In exchange for his efforts to recruit investors for GCR, Staisil received approximately $400,000 from GCR and/or its principles. Staisil was barred. https://www.sec.gov/litigation/admin/2022/34-94943.pdf
8. On May 18, 2022, the SEC instituted administrative proceedings against Anthony Salandra. Salandra participated in a fraudulent scheme to manipulate the price of securities of publicly-traded companies and that Salandra generated $132,560 in illicit profits from trading while the prices of those securities were being manipulated. Salandra admitted that he participated in a market manipulation scheme involving trading securities around the dissemination of false rumors about publicly traded companies. Salandra was barred. https://www.sec.gov/litigation/admin/2022/34-94937.pdf
9. On May 17, 2022, the SEC entered a final judgment against Richard Diver. Diver stole approximately $6 million from his employer. Diver inflated his own pay by approximately $600,000 per year. Diver misused his position as COO to cause the company to overbill its clients to generate additional revenue so that he could continue financing his inflated salary. During the course of his fraudulent scheme, Diver caused the company to overbill its clients by approximately $750,000 from over 300 investment advisory client accounts. Diver was held liable for disgorgement of $734,558 plus prejudgment interest in the amount of $70,618 for a total of $805,176. https://www.sec.gov/litigation/litreleases/2022/lr25395.htm
10. On May 17, 2022, the SEC instituted administrative proceedings against Trevor Taylor. Taylor engaged in a scheme to defraud investors in the Structured Alpha funds by making false and misleading statements to current and prospective investors that substantially understated the risks being taken by the funds which he pled guilty. Taylor was barred. https://www.sec.gov/litigation/admin/2022/34-94925.pdf
11. On May 16, 2022, the SEC announced that it obtained asset freezes and other emergency relief against StraightPath Venture Partners LLC, StraightPath Management LLC, Brian K. Martinsen, Michael Castillero, Francine Lanaia and Eric Lachow to halt ongoing securities violations, including allegedly selling pre-Initial Public Offering shares they did not own, pocketing undisclosed fees, and commingling investor funds, resulting in Ponzi scheme-like payments. The relief arose from fraud and registration charges filed by the SEC. https://www.sec.gov/litigation/litreleases/2022/lr25393.htm
12. On May 12, 2022, the SEC instituted administrative proceedings against Peter Baker. Baker engaged in a prime bank scheme defrauding investors of at least $2.2 million. Baker offered prime bank instruments to investors, made false representations about the existence and legitimacy of the instruments and related transactions, and lulled investors. Baker acted as an unregistered broker or dealer. Baker was ordered to pay disgorgement of $194,262 with prejudgment interest of $30,308 and a civil penalty of $585,141. https://www.sec.gov/litigation/admin/2022/34-94904.pdf
13. On May 11, 2022, the SEC instituted administrative proceedings against Steven Muntin. Muntin misappropriated over $305,000 from one of his elderly, investment advisory clients and overcharged this client at least $9,000 in assets under management fees. Muntin worked as an investment adviser representative, he also managed certain investments for his advisory clients through Executive Asset Management. Muntin began soliciting to write checks to Executive Asset Management for purported investments in securities. Muntin his client that he would invest the money in securities, and the client wrote checks totaling $305,750 to Executive Asset Management. Muntin did not invest any of the money, and, shortly after receiving each of the checks, spent all of client’s money for his own benefit. Muntin also overcharged his client at least $9,000 in AUM fees that exceeded the amounts the clients owed him based on the advisory fee schedule set forth in client’s advisory agreement with Executive Asset Management. Muntin was barred. https://www.sec.gov/litigation/admin/2022/ia-6020.pdf
14. On May 9, 2022, the SEC instituted administrative proceedings against Foundations Asset Management, LLC, Michael Shamburger and Rob Wedel. FAM improperly received approximately $254,000 in compensation from private real estate fund Alaska Financial Company III LLC and AFC III’s manager, McKinley Mortgage Co. LLC, while acting as an unregistered broker. FAM, through Shamburger and Wedel, solicited clients and recommended that they invest approximately $12 million in AFC III promissory notes. FAM had two undisclosed compensation agreements with McKinley regarding its clients’ AFC III investment: compensation calculated as a percentage of an initial investment and trailing fees based on FAM client investments that remained with AFC III each quarter. The Commission found false statements and misleading statements in ADV forms that FAM, through Shamburger, filed with the Commission regarding the compensation it received for selling AFC III securities and advising FAM clients. FAM, Shmaburger and Wedel was ordered to pay $253,784.00 in disgorgement, $25,163.00 in prejudgment interest, and $160,000.00 in civil money penalties. https://www.sec.gov/litigation/admin/2022/34-94877.pdf
15. On May 6, 2022, the SEC instituted administrative proceedings against Perini Capital, LLC and Michael Perini. Perini Capital and Perini directed thirty-three principal trades between several advisory client accounts and accounts held by Perini without first providing written disclosure of the principal trades and obtaining consent from the clients for such trades. Perini Capital and Perini willfully violated Section 206(3) of the Advisers Act. Perini Capital and Perini was ordered to pay money penalties in the amounts of $115,000 and $35,000 respectively. https://www.sec.gov/litigation/admin/2022/ia-6015.pdf
16. On May 6, 2022, the SEC instituted administrative proceedings against Boveda Asset Management, Inc. Boveda and its CEO, George Witherspoon, failed to produce books and records to the Commission, improperly registered Boveda with the Commission as an Internet investment adviser, maintained custody of client assets but failed to comply with requirements to safeguard them, and made material misstatements and omissions in Boveda’s Forms ADV, including (1) falsely claiming Witherspoon was a Certified Financial Planner; (2) overstating Boveda’s regulatory assets under management ; (3) falsely claiming that a related private fund had been audited by a certified public accounting firm; (4) falsely claiming that Respondent Boveda did not have custody of client assets; and (5) failing to disclose an adverse Court Order resulting from the Commission’s subpoena enforcement action against Boveda. This matter is being litigated. https://www.sec.gov/litigation/admin/2022/ia-6016.pdf
17. On May 5, 2022, the SEC charged Mark Marchi with defrauding investors in his fund Precipio Capital, LLC. Marchi solicited over $2.8 million of investments in Precipio from at least 22 investors by falsely telling them he was profitably trading securities in Precipio’s accounts. Marchi falsified investment documentation, including entering thousands of fake trades into an electronic portal accessed by investors. Marchi misappropriated investor funds by secretly paying over $1.4 million in Ponzi-like disbursements to earlier-in-time investors and by diverting cash from Precipio’s bank accounts to his own bank accounts. Marchi was barred. https://www.sec.gov/litigation/litreleases/2022/lr25384.htm
18. On May 5, 2022, the SEC instituted administrative proceedings against Bobby Guess. Guess and others made materially false and misleading statements and omissions to investors, including that the investments were backed by hard real-estate assets. Guess and others also used shell companies with intentionally misleading names to confuse investors about the identity of the issuer(s) of the promissory notes, and they failed to disclose material regulatory actions and criminal investigations. Guess sold unregistered securities and engaged in the business of effecting securities transactions for the accounts of others without being registered as a broker or dealer. Guess was barred. https://www.sec.gov/litigation/admin/2022/34-94852.pdf
19. On May 5, 2022, the SEC instituted administrative proceedings against Laurence Balter. Balter committed multiple breaches of fiduciary duty and violations of the antifraud provisions of the federal securities laws. He fraudulently allocated profitable trades to his own accounts to the detriment of several client accounts; he falsely told his clients who invested in the Oracle Fund that they would not pay both advisory fees and management fees for the portions of their accounts invested in the Oracle Fund; and he made trades for the Oracle Fund that deviated from two of its fundamental investment limitations. Balter was ordered to pay $489,921 in disgorgement, $10,079 in prejudgment interest, and a $50,000 civil money penalty, for a total of $550,000. https://www.sec.gov/litigation/admin/2022/34-94857.pdf
20. On May 2, 2022 the SEC announced fraud charges against Synergy Settlement Services, Inc., Jason Lazarus and Anthony Prieto, Jr. for defrauding individuals with disabilities into believing that the individuals were placing their funds in a pooled trust managed by a non-profit association. According to the SEC’s charges, the defendants instead used a non-profit trustee as a shell company to profit from disabled personal injury victims. Lazarus and Prieto formed the Foundation for Those with Special Needs, Inc. as a non-profit company to “assist personal injury victims with special needs.” The defendants concealed from the beneficiaries, the Internal Revenue Service, and the Social Security Administration that they diverted at least $775,000 in trustee and joinder fees directly from the beneficiaries’ accounts to their for-profit business, Synergy. Lazarus and Prieto improperly used funds from deceased beneficiaries’ accounts to reimburse themselves, sponsor events and parties, and promote Synergy’s for-profit business. Synergy, Lazarus, and Prieto allegedly also did not tell beneficiaries they were investing beneficiaries’ money in a certain class of mutual fund that doubled the fees the beneficiaries were told they were paying. The matter is being litigated. https://www.sec.gov/litigation/litreleases/2022/lr25379.htm
21. On May 2, 2022, the SEC instituted administrative proceedings against Maplelane Capital LLC. Maplelane caused violations of Rules 200(g) and 203(b) of Regulation SHO. The violations resulted from at least 358 sell orders Maplelane submitted to three executing brokers in the common stock of at least 29 public companies. At various times during which its net aggregate position in the securities of each of these companies was not net long at the time that it submitted sell orders to its executing brokers for execution, Maplelane incorrectly identified short sale orders to its executing brokers as long sale orders. Maplelane’s incorrect identification of these sell orders as long sales, instead of short sales, caused Maplelane’s executing brokers to violate Regulation SHO Rules 200(g) and 203(b) (Regulation SHO’s marking and locate requirements). Maplelane also committed books and records violations under Section 204 of the Advisers Act and Rules 204-2(a)(3) and 204-2(a)(7)(iii) thereunder by creating inaccurate order tickets and retaining inaccurate trade confirmations. Further, Maplelane violated Advisers Act Section 206(4) and Rule 206-4(7) thereunder by failing to implement written policies and procedures reasonably designed to prevent violations of the Advisers Act and its rules. Maplelane was ordered to pay disgorgement of $554,721, prejudgment interest of $19,320, and a civil money penalty in the amount of $250,000. https://www.sec.gov/litigation/admin/2022/34-94830.pdf