This Week In Securities Litigation (Week of July 18, 2022)
It may be the summer doldrums that slowed the pace of activity this week, particularly Washington DC where many have not returned to the office full time and for at least for some agencies, the union is still negotiating the return schedule.
The Commission did file a series of unregistered broker action tied to a pay-day – lender. And an offering fraud case, the usual staple.
Be careful, be safe this week
Whistleblowers: Two whistleblowers were paid over $6 million for information that was critical critical to the Commission’s Enforcement Program, according to a July 15, 2022 announcement.
SEC Enforcement – Filed and settled actions
Last week the Commission filed 5 civil injunctive actions and no administrative actions, exclusive of 12j, default, tag-a-long and other similar proceedings.
Recidivist: SEC v. Eden, Civil Action No. 2:22-cv-04833 (C.D.Ca. Filed July 14, 2022) is an action which names as defendant Richard Eden. Defendant is subject to a 2019 injunction imposed in a Commission enforcement action which bars Mr. Eden from future violations of Exchange Act Section 15(a)(1) and precludes association with any broker. Following the entry of the injunction Mr. Eden operated as a broker in connection with securities offerings of multiple companies. The conduct violates the earlier injunction. The complaint alleges violation of Exchange Act Sections 15(a)(1) and 15(b)(6)(B)(i). The case is pending. See Lit. Rel. No. 2:22-cv-04833 (C.D. Ca. Filed July 14, 2022).
Unregistered broker: SEC v. Alvis, Civil Action No. 1:22-cv-22140 (S.D.Fla. Filed July 13, 2022) is one of four cases filed simultaneously alleging violations of the securities laws in connection with the sale of interests in a Pay-Day-Loan firm. Specifically, over a three year period, beginning in early 2016, Defendant sold unregistered securities from the Pay-Day-Loan firm, promising high returns. What investors did not known was that the securities were actually from a Ponzi scheme operated by the store and its founder. The complaint alleges violations of Securities Act Sections 5(a), 5(c) and Exchange Act Section 15(a)(1). The case is pending. See also SEC v. Boulos, Civil Action No. 1:22-cv-22142 (S.D. Fla. Filed July 13, 2024)(same); SEC v. Pingarron, Civil Action No. 1:22-cv-22143 (S.D. Fla. Filed July 13, 2022)(same); SEC v. Pingarron, Civil Action No. 1:22-cv-22143 (S.D. Fla. Filed July 13, 2022)(same); SEC v. Sorando, Civil Action No. 1:22-cv-22144 (S.D. Fla. Filed July 13, 2022)(same). See Lit. Rel. No. 25443 (July 13, 2024).
Offering fraud: SEC v. Rosenfeld, Civil Action No. 21-civ-3902 (E.D.N.Y.) is a previously filed action naming as defendant attorney Shimon Rosenfeld. Over a four-year period, beginning in May 2014, Defendant solicited investors to put their money into a pooled fund that was supposed to invest in real estate. In fact, Defendant misappropriated the funds. The complaint alleges violations of Securities Act Section 17(a) and Exchange Act Section 10(b). To resolve the matter Defendant consented to the entry of a permanent injunction based on the Sections cited in the complaint. In addition, he was ordered to pay disgorgement of $5,997, 525 and prejudgment interest of $1,104,353.84 which will be deemed satisfied by the payment of restitution and forfeiture ordered in the parallel criminal case. There Mr. Rosenfeld was sentenced to a prison term of 6 months followed by 3 years of supervised release and ordered to make restitution in the amount of $6,787,525 and $4 million in forfeiture. U.S. v. Rosenfeld, No. 21-CR-236 (E.D.N.Y.). See Lit. Rel. No. 25441 (July 11, 2022).
Swap agreement: The Monetary Authority of Singapore and the People’s Bank of China announced the renewal of a Bilateral Currency Swap Arrangement. The agreement will continue until 2027 (here).