This week the SEC has resolved or partially settled three enforcement actions, two involving insider trading charges and a third centered on the misappropriation of client assets by an investment adviser. Those actions are:
Insider trading: SEC v. Salis, Civil Action No. 2:16-cv-00231 (N.D. Ind.) is an action which named as defendants Christopher Salis, a former SAP executive, and two of his friends, Douglas Miller and Edward Miller. The action centered on the acquisition by SAPof Concur Technologies. Prior to the deal announcement Mr. Salis, who had been entrusted with confidential information about the transaction by a close friend at Concur, tipped Douglas Miller who then tipped Edward Miller. Each man traded prior to the deal announcement along with other friends and family members. Collectively the group secured trading profits of over half a million dollars. This week the Court entered final judgments resolving all the issues as to each Defendant. The final judgment as to each Defendant, entered by consent, prohibits future violations of Exchange Act Sections 10(b) and 14(e). In addition, Mr. Salis will pay disgorgement of $90,000 along with prejudgment interest of $2,067; Douglas Miller will pay disgorgement of $119,003 along with prejudgment interest of $22,258; and Edward Miller will pay disgorgement of $149,117 along with prejudgment interest of $27,891. The monetary component of each judgment will be deemed satisfied by the forfeiture orders entered in the parallel criminal action brought by the Fraud Section of DOJ. In that case Mr. Salis pleaded guilty to conspiracy to commit securities and wire fraud and was sentenced to serve six months in prison. Douglas Miller pleaded guilty to conspiracy to commit securities and wire fraud and making false statements and was sentenced to serve twenty-four months in prison. Edward Miller pleaded guilty to one count of conspiracy to commit securities and wire fraud and to obstruction of justice and was sentenced to serve six months in prison. See Lit. Rel. No. 24499 (June 12, 2019).
Insider trading: SEC v. Fishoff, Civil Action No. 24498 (S.D.N.Y.) is a previously filed action against, among others, Winston Tang and Deshan Govender, two friends. Mr. Tang was the vice president clinical research for Sangamo BioSciences, Inc. This week the Court entered final judgments by consent against the two men, imposing permanent injunctions based on Exchange Act Section 10(b). The judgment as to Mr. Tang also imposed a penalty of $750,000. The judgment as to Mr. Govender provides that the Court will consider monetary penalties in the future. The underlying complaint alleges that prior to the announcement of a licensing agreement between Sangamo and another firm Mr. Tang tipped his friend who traded. Mr. Govender later tipped Steven Fishoff who was part of an insider trading ring. Ultimately the trading resulted in about $1.5 million in profits. See Lit. Rel. No. 24498 (June 11, 2019).
Misappropriation: SEC v. Kitts, Civil Action No. 1:18-cv-11507 (D. Mass.) is a previously filed action against investment adviser Kimberly Pine Kitts. The SEC’s complaint alleged that over a six year period Ms. Kitts misappropriated over $3 million from client investment and retirement accounts. The Court entered a final judgment imposing permanent injunctions based on Advisers Act Sections 206(1), 206(2) and Exchange Act Section 10(b). The judgment also requires her to pay $2,882,221 in disgorgement and prejudgment interest. Her payment obligation is deemed satisfied by the entry of a restitution order entered in the parallel criminal case. Defendant was, in addition, barred by the Commission from the securities business and from participating in any penny stock offering. See Lit. Rel. No. 24497 (June 11, 2019).
FCPA Institute: On June 20 and 21, 2019, Professor Mike Koehler will conduct the FCPA Institute at the Offices of Dorsey & Whitney LLP in Minneapolis, Minnesota. The Institute provides a unique learning experience for those seeking to elevate their knowledge of the Foreign Corrupt Practices Act. Professor Koehler is one of the foremost scholars on the FCPA and conducts an interesting and most informative program. The program is live in Minneapolis and also webcast. You can obtain more information about the program and register here.