Chair Gary Gensler delivered remarks at the annual Financial Market Regulation conference as last week drew to a close. Mr. Gensler identified climate risk as one of the key agenda items for the agency in coming months. This should not come as a surprise to anyone who has followed the weeks of comments by various Commissioners on the topic.
Be careful, be safe this week
Whistleblowers: The Commission made three awards last week. One was for about $3.6 million; a second award was for $18 million; and the final award of the week was in the amount of about $4 million.
SEC Enforcement – Filed and Settled Actions
Last week the Commission filed 1 civil injunctive action and 2 administrative proceedings, exclusive of tag-along and other similar proceedings.
Misrepresentations: SEC v. Knight Nguyen Investments, Civil Action No. 4:21-cv-01586 (S.D. Tx. Filed May 13, 2021) is an action which names as defendants the firm, a registered investment adviser, its majority owner, Christopher Lopez, Forrest Jones and Jayson Lopez. The complaint alleges that over a two-year period, beginning in March 2016, the firm, Chris Lopez and Forrest Jones raised about $3.7 million from largely unsophisticated invertors through five offerings. Investors were told that the advisory would invest the capital conservatively, that good returns would result and that those at the advisory had expertise. Chris Lopez misapplied the funds received from investors and created false documents. Mr. Lopez assisted Defendant Lopez in those acts and also misused client funds. In addition, the firm assisted Mr. Lopez in an effort to register as an investment adviser. The complaint alleges violations of Advisers Act Sections 206(1), 206(2), 206(4), 204, 203A, Exchange Act Sections 10(b) and 15(a) and Securities Act Section 17(a). The case is pending. See Lit. Rel. No. 25089 (May 13, 2021).
AML: In the Matter of GWFS Equities, Inc., Adm. Proc. File No 3-20298 (May 12, 2021) is a proceeding which names as a respondent, the registered broker-dealer. The firm provides services to employee sponsored retirement plans. Over a three-year period, beginning in 2015, Respondent repeatedly detected efforts by bad actors to gain access to its processes through the use of improperly obtained personal identifying information. During the period the broker-dealer failed to file SARs in 130 instances where it had detected bad actors attempting to gain access. The firm also omitted information it had obtained about such efforts in 279 other instances where a SAR was filed but information was omitted. During the period the firm failed to consistently implement its AML program. The Order alleges violations of Exchange Act Section 17(a) and Rule 17a-8. To resolve the proceedings Respondent consented to the entry of a cease-and-desist order based on the Section and Rule cited in the Order. Respondent also agreed to pay a penalty in the amount of $1.5 million.
Manipulation: SEC v. Osegueda, Civil Action No. 2:19-cv-04348 (C.D. CA.) is a previously filed action which named as defendants four individuals in a complaint centered on a pump-and-dump market manipulation scheme. Two defendants – Jessica Snyder and Calvin Ross – settled and judgements were entered as to them by consent this week. The judgements permanently enjoin each of the settling defendants from future violations of Securities Act Sections 5 and 17(a) and Exchange Act Section 10(b). Defendants Ross and Snyder will pay, respectively, disgorgement and prejudgment interest in the amount of $781, 868 and $184,293. In addition, each will pay a civil penalty of, respectively, $400,000 and $100,000. The other defendants in the action settled previously. See Lit. Rel. No. 25087 (May 7, 2021).
Conflicts: In the Matter of Peter J. DeCaprio, Adm. Proc. File No. 3-20286 (May 10, 2021) is a proceeding which names as a respondent Mr. DeCaprio, the co-founder, president and CEO of Crow Point Partners, LLC a registered investment adviser until 2020. Over a period of about one year, beginning in April 2015, the advisory and Mr. DeCaprio invested client funds in a series of transactions into an unregistered fund through an investment adviser sponsored investment platform. Crow Point had several business arrangements with the fund and platform that constituted undisclosed conflicts of interest. The Order alleges violations of Advisers Act Section 206(2). To resolve the proceedings Respondent consented to the entry of a cease-and-desist order based on the Sections cited in the Order. In addition, he agreed to pay a penalty in the amount of $75,000.
Misrepresentations: U.S. v. Lisser, No. 21-cr-210 (E.D.N.Y. guilty plea May 12, 2021) is an action which named as a defendant Mark Lisser, formerly of Knightsbridge Private Partners, LLC. The firm operated several websites to solicit investors for pre-IPO shares. Defendant repeatedly told interested investors that the firm was selling pre-IPO shares, that it was on the capitalization table, that the firm actually owned the shares it was selling and that there were no commissions on the sales until after investors made money. The claims were false. About $700,000 in investor money was raised. Mr. Lisser pleaded guilty to securities fraud conspiracy. The date for sentencing has not been set.
Remarks: Ashley Alder, CEO of the Securities and Futures Commission of Hong Kong, delivered the Keynote address at the ISDA Annual General Meeting 2021 on May 10, 2021. His remarks focused on key issues in the derivative markets (here).
Remarks: Lim Tuang Lee, Assistant Managing Director (Capital Markets), Monetary Authority of Singapore, delivered the opening remarks at the ASEAN Corporate Governance Scorecard Briefing 2021 for SGX-Listed Companies (May 11, 2021(here). His remarks focused on evaluating corporate governance.
Business plan: The U.K. Serious Fraud Office published its Annual Business Plant 2021/22 on May 13, 2021(here). The plan details the manner in which the SFO expects to fight complex economic crime and protect the reputation of the country as a safe place for business.