Blog Archives

This Week In Securities Litigation (Week ending December 16, 2016)

The Commission filed four actions last week. One action centered on a cherry picking scheme; a second focused on an adviser that failed to follow its own procedures regarding conflicts; a third involved an investment adviser who made repeated misrepresentations

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SEC Claims 2,000 Exchange Listed Stocks Manipulated 23,000 Times

Stock manipulations often take place in the over-the-counter markets which are less regulated than major exchanges such as the New York Stock Exchange and NASDAQ. Frequently the manipulations are raw pump-and-dumps where the promoters hold a large or even a

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This Week In Securities Litigation (Week ending August 19, 2016)

An investment banker who repeatedly tipped his father on about pending mergers was found guilty of insider trading by a jury this week. The Commission brought another action based on the whistleblower protections where the firm’s severance agreements impinged on

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Stock Manipulation – A Family Affair

Sometimes it is all in the family. In this case it certainly appears to be all in the family – or at least largely. Jason, John, Jared and Derek Galanis teamed with Gary Hirst, Ymer Shahini and Gavin Hamels to

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This Week In Securities Litigation (Week ending July 22, 2016)

Investment advisers were at the center of a number of actions brought by the Commission this week . Two proceedings involved a registered adviser and its COO that were involved in an unregistered and fraudulent offering; two other actions centered

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Career Securities Law Violator Pleads Guilty To Manipulation

The Manhattan U.S. Attorney’s Office secured a guilty plea in a stock manipulation case from a career securities law violator. The guilty plea is the fourth conviction for defendant John Galanis. U.S. v. Galanis, No. 1:15-cr-00643 (S.D.N.Y.). The case centers

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This Week In Securities Litigation (Week ending May 26, 2016)

In a holiday shortened week the Commission brought actions centered on: a transfer agent and one of its owners who conducted a fraudulent offering for another company and then sold unregistered shares into the market; a market manipulation that employed

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SEC – A Computer and Twenty-Seven Minutes To Profit

The SEC’s latest stock manipulation case might be titled “How to make (almost) over $400,000 in just 27 minutes.” The key is to use Williams Act filings not to alert the market and issuer to a potential take-over but to

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After Manipulating 40 Stocks, Caught On A Wire Tap

Gregg Mulholland pleaded guilty to charges based the manipulation of the securities of 40 different firms over a four year period, beginning in 2010. The manipulations yielded over $250 million in trading profits which were laundered through attorney accounts. Mr.

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This Week In Securities Litigation (Week ending April 29, 2016)

The SEC requested comment on the development of a consolidated audit trail this week, a concept long discussed. The audit trail would enable regulators to track trading activity in the U.S. markets. Enforcement initiated proceedings which included two centered on

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This Week In Securities Litigation (Week ending April 22, 2016)

The Commission prevailed at trial in a market manipulation case. The trial followed a series of settlements and a grant of summary judgment in the Commission’s favor as to one defendant. The remaining defendant, a former NFL football player, was

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SEC Prevails At Trial Over Former Professional Athlete

Sometimes is does not pay to be the last man standing – particularly in a Commission enforcement action. Such was the fate of former NFL player and Olympic athlete Willie Gault. SEC v. Heart Tronics, Inc., Case No. 11-cv-01962 (C.D.

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This Week In Securities Litigation (Week ending April 9, 2016)

The Foreign Corrupt Practices Act was a key focus this week. The DOJ announced a new one year Pilot Program which holds the promise of a significant reduction in penalties if the firm self-reports and takes a series of steps.

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This Week In Securities Litigation (Week ending March 25, 2016)

The Commission prevailed on a summary judgment motion this week in a case based on an offering fraud. It also filed another settled FCPA action centered on gifts, travel and entertainment provided to healthcare professionals in return for business. Another

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SEC Partially Settles Pump-and-Dump Manipulation Case

Pump- and-dump schemes keyed to microcap stocks seem to be the flavor of the week. On Friday the mastermind of an international market manipulation scheme was sentenced to serve 18 years in prison. U.S. v. Gallison, 1:15-cr-00178 (E.D. Va.). The

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The CFTC, SEC and Market Manipulation

Open market manipulation cases present difficult issues regarding what constitutes market manipulation. Regulators, such as the SEC, CFTC and FERC, tend to focus on the element of intent. Defendants frequently argue that the transactions claimed to be manipulative are lawful

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This Week In Securities Litigation (Week ending Dec. 18, 2015)

The Commission closed out the week before the holidays with a joint press conference with the Manhattan U.S. Attorney. The U.S. Attorney and the Director of Enforcement announced actions against former hedge fund manager and pharmaceutical company founder Martin Shkreli.

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This Week In Securities Litigation (Week ending November 20, 2015)

The DOJ reiterated its Yates policy this week under which cooperation credit is conditioned on furnishing the Department with the identity of individuals involved in corporate wrongdoing. Officials also noted that part of cooperation involves furnishing the facts from witness

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This Week In Securities Litigation (Week ending October 30, 2015)

The SEC’s apparent preference for administrative proceedings as a venue for its enforcement actions continues to draw criticism. H.R. 3798 is now pending in the House of Representatives. The bill is tilted the “Due Process Restoration Act of 2015.” It

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SEC Wins Summary Judgment In Two Fraud Actions

The SEC prevailed on summary judgment motions in two fraud actions. One is a pump-and-dump manipulation scheme. The other is a prime bank fraud. First, SEC v. Farmer, Civil Action No. 4:14-cv-02345 (S.D. Tx. Filed August 14, 2014) is an

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This Week In Securities Litigation (Week ending September 25, 2015)

The Commission responded to critics of its administrative proceedings this week, proposing changes to the Rules of Practice which govern them. If adopted the new rules would modify the time period within which the actions must be completed, permit depositions

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This Week In Securities Litigation (Week ending September 18, 2015)

The Yates Memo, refocusing DOJ criminal and civil corporate investigations, continues to be the critical topic of discussion this week. The Memo, discussed here, directs that individuals be the focus of the inquiry from the beginning. Perhaps more importantly, the

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This Week In Securities Litigation (Week ending July 24, 2015)

The SEC filed three actions following-up on its settled proceeding against Oppenheimer for selling millions of shares of unregistered penny stocks. Each individual settled with the agency. In addition, the Commission brought a manipulation action against three individuals centered on

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SEC Files Microcap Fraud Action Charging Thirty-Four Defendants

Microcap fraud has been a priority for SEC Enforcement at least since the creation of the Microcap Fraud Task Force two years ago. The cases typically focus on market manipulation claims of shell companies and pump-and–dump type schemes. The SEC’s

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This Week In Securities Litigation (May 15 – June 5 , 2015)

This week Senator Elizabeth Warren forwarded a 13 page letter to SEC Chair White regarding her performance in office. The letter highlighted what it calls a “significant gap” between the promises of Ms. White at the time she was confirmed

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Deutsche Bank Settles LIBOR Charges With FCA, DOJ, CFTC, NY State

Deutsche Bank paid $2.519 billion in fines and disgorgement, a subsidiary pleaded guilty to criminal charges and the parent entered into a three year deferred prosecution agreement which requires a monitor to resolve charges stemming from its years long manipulation

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This Week In Securities Litigation (Week ending April 24, 2015)

The Department of Justice unsealed criminal charges against a U.K. trader who is alleged to have contributed to the flash crash almost five years ago. The trader is alleged to have manipulated the market for certain instruments on the CME

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DOJ Charges A Futures Trader With Contributing To The Flash Crash

Almost five years ago the Dow Jones Industrial Average dropped about 600 points in five minutes, creating chaos in the markets and huge losses for many. The market debacle became known as the flash crash. The causes were investigated and

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This Week In Securities Litigation (Week ending March 20, 2015)

The broken windows approach to enforcement continued this week. The Commission bundled together eight settled administrative proceedings centered on going private transactions in which the Respondents failed to update their Schedule 13D filings. The agency also brought another Rule 105

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SEC Obtains Freeze Order In Microcap Manipulation Action

Microcap fraud is an on-going enforcement priority of the Commission. In SEC v. Craven, Civil Action No. 15-cv-1820 (S.D.N.Y. Filed March 11, 2015), the Commission brought a manipulation action against a father and son team, David Craven and Alex Craven.

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This Week In Securities Litigation (Week ending March 6, 2015)

The SEC continued Operation Shell-Expel this week, suspending trading in the shares of 128 OTC issuers bringing its total for the program to about 8% of the shares traded in that market. The Commission also announced another whistleblower award, this

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