This Week In Securities Litigation (Week of August 25, 2025)
The Commission filed 7 new enforcement actions last week. Those focused on insider trading, offering frauds and false revenue.
Be careful this week, be safe.
SEC Enforcement – Filed and Settled Actions
Statistics: Last week the Commission published articles on 9 civil enforcement actions including the seven new cases cited above. Each new article is highlighted below.
Offering fraud: SEC v. Thompson, Civil Action No. 3:24-cv-05032 (W.D. Mo.) is a previously filed action in which the court entered judgement by default. The complaint centers on Defendant Robert M. Thompson and an entity he controls, The Financial Freedom Foundation d/b/a/ F3 Mastermind. Defendants marketed trading programs supposedly with risk free returns ranging from 20% per week to 4,000% per year. The complaint alleged prime bank type schemes. The district court entered final judgments as to each defendant by default based on Securities Act Section 17(a), Exchange Act Section 10(b) and Rule 10b-5 and Advisers Act Sections 206(1) and 206(2). The judgment also ordered that defendants pay disgorgement in the amount of $72,946 prejudgment interest of $180,005 and a $36,000 civil penalty to be paid on a joint and several basis. See Lit. Rel. No. 26384 (August 22, 2025)
Insider trading: SEC v. Haghighat, Civil Action No. 25-cv-14843 (D.N.J. Filed August 22, 2025) is an action which names as Defendants: Rouzbeh Haghighat, a former director of biopharmaceutical firm Chinook Therapeutics, Inc., two of his family members, Behrouz “Bruce” Haghighat and his stepdaughter Kirstyn Pearl; and two of his friends, James Roberge and Seyedfarbod “Fabio” Sabzevari. The complaint alleges that Defendant Ross Haghighat tipped each of the defendants prior to the June 12, 2023, announcement that Novartis AG would acquire Chinook. Each person traded. The illegal trading profits exceeded $500,000. The complaint also alleges that Ross Haghighat purchased Chinook stock in a custodial account for a minor stepchild four days prior to the deal announcement. The complaint alleges violations of Exchange Act Section 10(b) and Rule 10b-5. The complaint also seeks and officer/director bar be imposed. See Lit. Rel. No. 26383 (August 22, 2025).
Offering fraud: SEC v. Thom, Civil Action No. 1:25-cv-06909 (S.D.N.Y. Filed August 21, 2025) is an action which names as Defendant, Kenneth Thom. Defendant Thom at one time was registered to trade. In 2011, however, FINRA suspended his right to trade. In this case Defendant Thom raised about $600,000 from investors based on his claims that he had expertise in trading. In fact, he did not. He also misappropriated about $235,000 of the investor cash. The complaint alleges violations of Securities Act Section 17(a), Exchange Act Section 10(b) and Rule 10b-5, and Advisors Act Sections 206(1), (2) and (4). The U.S. Attorney’s Office for the Southern District of New York filed parallel criminal charges. See Lit. Rel. No. 26381 (August 21, 2025).
False revenue: SEC v. Sanberg, Civil Action No. 8:25-cv-01848 (C.D.Cal. Filed August 21, 2025) is an action which names as defendant Joseph Neal Sanberg, the co-founder and former board member of Aspiration Partners, Inc. The complaint alleges Defendant made false claims to raise funds from investors regarding revenues for environmental sustainability services. The complaint claims that beginning in January 2021, and continuing for a year while Aspiration was seeking to go public via a SPAC merger, Defendant Sanberg engaged in a scheme to create the appearance that there are large amounts of revenue being generated from customers for re-forestation services. In fact, the funds supposedly raised here were supplied by Defendant and his friends who used inflated revenue numbers to raise over $300 million from Aspiration investors and compensation from the firm. The complaint alleges violations of Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5.
Offering fraud: SEC v. Stock Purse Trading LLC, Civil Action No. 1:25-cv-81026 (D. Fla. Filed August 20, 2025). Named as defendants in the action are Stock Purse Trading, Liston Associates and Carole A. Liston, a resident of New York. Ms. Liston is also the owner of Stock Purse Trading and Liston Associates. Over a four-year period, beginning in August 2020, Defendants raised about $5.7 million from over 200 investors. Investors entrusted their funds to Ms. Liston and her entities, relying on her claimed expertise in trading and the seemingly complex investments of the stock market and stock trading business. The theory outlined by Ms. Liston seems obvious. The claim was that she would pool the investor capital and combine it with her expertise in trading and a proprietary formula for short selling to make more money for everyone. Ms. Liston only used a small portion of the investors funds to acquire stock and trade. She did use about $450,000 for herself (she misappropriated those funds) and took about $3.9 million of the investor funds to make “Ponzi-like” distributions to those who invested in Stock Purse Trading. The Commission’s complaint alleges violations of Section 17(a) of the Securities Act, Section 10(b) and Rule 10b-5 under the Exchange Act and Advisers Act Sections 206(1) and 206(2). Ms. Liston and her firm resolved the action. Each consented to the entry of permanent injunctions based on the provisions cited in the complaint. The monetary `remedies will be determined in the future. See Lit. Rel. No. 26379 (August 21, 2025).
Insider trading: SEC v. Chen, Civil Action No. 1:25-cv-04580 (E.D.N.Y. Filed August 18, 2025) is an action which name as defendants Justin Chen and Jun Zhen. Each Defendant was an employee of Edgar Agents. That firm assists investors with making filings on EDGAR that required “typeset” formatting. Those employed by the firm agreed not to use the information obtained to trade. Nevertheless, Defendants traded on multiple occasions over the period of their employment, netting over $2.2 million in illegal trading profits. The complaint alleges violations of Exchange Act Section 20(b) and 14e. The U.S. Attorney’s Office for the Eastern District of New York. See Lit. Rel. N. 26380 (August 21, 2025).
Insider trading: SEC v. Cranmer, Civil Action No. 25-cv-6816 (S.D.N.Y. August 18, 2025) is an action which names as Defendants: Brent Cranmer; Jonathan Whitesides; and Daniel McCormick. In December 2023, while working as the head of a Kaman Corporation, Defendant Cranmer learned that Kaman was in the process of selling itself under the code name Project Safeguard. After learning this fact, Defendant Cranmer transmitted it to close friend Whiteside and asked his friend to trade on his behalf. Mr. Whitesides purchased Kaman shares for himself, he did not purchase shares for Mr. Cranmer. Defendant Whitesides also traded and tipped a friend, Trader A. On the morning of January 19, 2024, the company announced that Arcline Investment Management, L.P. had offered to buy Kaman for $46 per share. Kaman shares closed up 101%. Mr. Whitesides realized profits of about $922,636; Defendant McCormick had profits of $115,598. The complaint alleges violations of Exchange Act Section 10(b) and Rule 10b-5. The U.S. Attorney’s Office for the Southern District of New York filed parallel criminal charges. See Lit. Rel. No. 26378 (August 18, 2025).
Judgment: SEC v. The Estate of Stephen Romney Swensen, Civil Action No. 22-cv-00135 (D. Utah) is an action filed against the Estate of Stephen Romney Swensen. The original complaint against Mr. Swensen alleged that he defrauded investors by promising certain returns based on investments he recommended. In fact, Mr. Swensen misappropriated much of the money he obtained. Mr. Swensen has passed away. Ms. Swensen, the wife of the deceased Defendant, has been named as a relief defendant. She consented to the entry of a final judgment ordering her to pay a total of $3,839,009. That amount is composed of $3,626,138 in disgorgement of investor funds, $41,279 in prejudgment interest and $171,592 in interest earned on investor funds during the case. See Lit. Rel. No. 26377 (August 18, 2025).
Insider trading: SEC v. Yedid, Civil Action 1:25-cv-06704 (S.D.N.Y. Filed August 14, 2025) is an action which names as defendants: Robert Alan Yedid and his long-time friends Andrew Kaufman and Mark Jacobs. Defendants are alleged to have profited by over $500,000. The complaint alleges that Defendants Kaufman and Jacobs traded in as many as six stocks over a five-year period beginning in 2019. The trades were based on information obtained from Robert Yedid through his position as managing director at a consulting firm that assists pharmaceutical and biotechnology firms with investor communications. The complaint alleges violations of Exchange Act Section 10(b) and Rule 10b-5. See Lit. Rel. No. LR-26367 (August 18, 2025).
Other Regulatory Actions (Articles/papers cited available on website of entity)
BaFin (Federal Financial Supervisory Authority)
Study: A recent study on how firms are addressing the physical risks presented by climate change concluded that although many companies in the financial sector are addressing the physical risks posed by climate change, much more needs to be done: “One of the clearest findings was that these risks are still far from being fully integrated into risk management systems.” The paper was published on August 15, 2025.
Hong Kong
Commentary: The Securities and Futures Commission of Hong Kong published an article elaborating on the need for “robust custody standards” for virtual asset trading platforms to safeguard client virtual assets on August 15, 2025.