This Week In Securities Litigation (Week of July 21, 2025)
Last week insider trading was by far the largest group of cases filed by the Commission. The agency also filed two cases based on offering frauds and dismissed two more without explanation.
Have a good week. Be careful, be safe.
SEC Enforcement – Filed and Settled Actions
Statistics: Last week the Commission filed 8 new civil enforcement actions and continued to settle others.
Offering fraud: SEC v. Hunsicker, Civil Action No. 1:25-cv-05897 (S.D.N.Y. Filed July 1, 2025) is an action which names a defendant Christine M. Hunsicker, the co-founder and CEO of Gwynnnie Bee, Inc. later called CaaStle, Inc. Over a period of about six years, beginning in 2019, Ms. Hunsicker created and disseminated to investors fake financial statements for the offer and sale of stock in the firm. The company was a startup that used the slogan “Clothing-as-Service” to sell product. To effectuate the scheme, Ms. Hunsicker took financial statements prepared by the firm and falsified them. Beginning in 2022 Defendant also provided investors capitalization tables and undercounted the number of shares issued. In late 2024 the scheme began to unravel when multiple investors reviewed the firm’s falsified 2023 Audit Report in Ms. Hunsicker’s office and noticed a missing page. Defendant was forced to resign following this incident. The complaint alleges violations of Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5. See Lit. Rel. No. 25-cv-5887 (S.D.N.Y. Filed July 18, 2025).
Dismissed: SEC v. Coburn, Civil Action No. 26351 (D.N.J.) is a previously filed action that names as defendants Steven E. Schwartz, Gordon J. Coburn and Steven E. Schwartz. As with other, similar dismissals, no explanation for the action was presented.
Insider trading — service: SEC v. Watson, Civil Action No. 1:21cv-05923 (S.D.N.Y. Decision filed June 30, 2025). Named as defendants in the action are: Eric J. Watson, Oliver-Barret Lindsay and Gannon Giguiere. Mr. Watson is alleged to have violated the securities laws in connection with his role as the controlling shareholder of Long Island Iced Tea Corp. Specifically, he is alleged to have participated in an insider trading scheme by tipping a business associate regarding the then forth coming announce that the firm was about to pivot its business. Prior to being served with process, the Commission made repeated efforts to serve Mr. Watson with its complaint. Mr. Watson, a citizen of New Zealand, had been residing in London. While Mr. Watson was apparently told in July, 2021 about the filing of a complaint against him by the Commission, he was not served despite repeated efforts by the Commission. Those included two made through the Hague Convention at his purported address in Ibiza, Spain. Ultimately, the agency requested that a court permit service by publication. The request was granted. Following the completion of the process, Defendant was served. He defaulted – the Commission obtained a default judgment in early February 2023. In mid-June, 2024 Mr. Watson emailed the staff, advising that he would appear in court pro se. On July 1, 2024, after having a default judgment previously granted against him set aside and his motion to dismiss rejected, Defendant appeared and filed a counterclaim against the agency. The court rejected Defendant’s claims in an opinion issued on June 30, 2025. See Lit. Rel. No. 26350 (July 15, 2025). Now the saga continues.
Insider trading: SEC v. Gomez, Civil Action No. 5:25-cv-805 (W.D. Tx. Filed July 14, 2025). Named as defendants in the action are: Imer Gomez, d/b/a K&GF Investment Solutions, LLC and Helios Venture Fund, LLC. Mr. Gomez is a citizen of Mexico as well as a U.S. resident and the President and CFO of Helios. That firm is a limited liability company based in San Antonio. Over a two-year period, beginning in August 2021, Mr. Gomez used K&G and Helios, entities he controlled, to solicit clients to open investment advisory accounts he would manage. During the solicitations Helios was referred to as a “fund.” In fact, neither Helios nor K&G were funds. Potential investors were told that Mr. Gomez was an experienced trader who would monthly generate double-digit returns from investing in funds such as Helios. Mr. Gomez also claimed that K&G and Helios were insured for up to 75% of the value of each client’s account. The solicitations were primarily focused on investments from Hispanic clients. Over the period about $9 million was entrusted to Mr. Gomez. The funds obtained from investors were never used to trade securities or to create accounts. Rather, the investor funds were used for unrelated business matters. Defendant also loaned about $666,000 to his ex-girlfriend’s father, Eric Claxton and his family. The funds were used to purchase real estate. In an effort to conceal the fraud, Defendants sent clients fake account statements. The papers reflected fictitious gains. When Mr. Gomez ran short of assets, he claimed there was a “sudden liquidation that destroyed the business and prevented him from returning the investments. He also claimed that Helios was finalizing a guaranteed bailout loan so he could repay clients. The claim was false. The complaint alleges violations of Securities Act Section 17(a), Exchange Act Section 10(b) and Rule 10b-5 and Advisers Act Sections 206(1) and (2). The complaint names as relief defendants Eric and Heather Claxton. See Lit. Rel. No. 26349 (July 14, 2025).
Insider trading: SEC v. Vakil, Civil Action No. 7:25-cv-05697 (S.D.N.Y. Filed July 10, 2025) is an action which names as defendants Trizya Vakil and Neera J. Visen, respectively the Senior Director, Product Innovation at Elanco Animal Health, Inc. and the Senior Licensing Manager at a university in Florida. Defendant Vakil obtained inside information about Elanc’s upcoming acquisition of Kindred Biosciences, Inc. through her employment at Elanco while conducting due diligence related to the acquisition deal for her employer. On May 12, 2021, she purchased shares of the firm’s stock. After the deal announcement she had trading profits of $2,447.50. Prior to that announcement she also tipped here friend Vakil about the deal. Defendant Vakil then purchased shares prior to the announcement. Following that announcement the shares were sold, netting profits of $109,437. The complaint alleges violations of Exchange Act Section 10(b) and Rule 10b-5. See Lit. Rel. No. 26348 (July 11, 2025).
Dismissal: SEC v. Pinnacle Advisors, LLC, Civil Action No. 5:23-cv-00547 (N.D.N.Y.) is a previously filed action. It was dismissed pursuant to a stipulation among the parties. As with earlier dismissals no explanation for the action is provided.
Offering fraud: SEC v. Fermamdez, Civil Action No. 5:23-cv-00372 (N.D. W. Va.) is a previously filed action resolved by the parties. The action took place over a two-year period beginning in 2018. During the period about $364,000 was raised from investors by touting the false narrative that Ms. Diana Mae Fernandez, defendant, was a successful businesswoman and that the investment had no risk — a false claim. Defendant used the investor funds for her personal benefit. In a parallel criminal action filed by the U.S. Attorney’s Office for the Norther District of West Virginia based on the same conduct as in the Commission’s action, Defendant pleaded guilty to one count of wire fraud. She was sentenced to serve 33 months in prison to be followed by three years of supervised release. She was also directed to pay disgorgement of $330,144. In the settlement with the Commission Defendant consented to the entry of a permanent injunction based on Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5. She was also ordered to pay disgorgement in the amount of $296,021. See Lit. Rel. No. 26346 (July 11, 2025).
Offering fraud: SEC v. Jackson, Civil Action No. 4:25-cv-00733 (E.D. Tex. Filed July 8, 2025) is an action which names a defendant Joshua Thomas Jackson, a 50% owner of Passive Wealth Builders LLC. Over a two-year period, beginning in August 2019, Defendant raised about $2.65 million from the sale of promissory notes to 13 investors. The funds were supposed to be used to renovate properties specific to each investor, to a fund or go to a large real estate development. Investors were supposed to receive periodic interest payments. Nevertheless, a large portion of the money went to Defendant’s personal benefit. The complaint alleges violations of each subdivision of Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5 thereunder. See Lit. Rel. No. 26345 (July 11, 2025).
ESMA
Review: During 2024 the European regulator focused on strengthening the EU capital markets and putting citizens and businesses at the heart of it. The impact is demonstrated by considering a series of points depicted in a table the regulator published recently.
BaFin
Remarks: President Mark Branson delivered remarks examining the reasons the regulator has set itself ten strategic objectives for the period 2026 – 2029, according to his remarks last week.
Hong Kong
Remarks: The regulator’s AMU grew 13% with an 81% increase in fund inflow, according to an analysis completed on July 16, 2025.
Singapore
Remarks: Gan Kim Yong, Deputy Prime Minister and Minister for Trade and Industry delivered remarks on June 25, 2025, discussing the recent growth of the regulator.