This Week In Securities Litigation (Week of June 16, 2025)
The focus of civil enforcement appears to be finishing up older cases that have yet to be resolved. Last week, as in many others, the cases presented are largely previously filed actions that have been in litigation for a period of time without resolution. The two new cases filed last week were based on either false statements or insider trading.
Be careful, be safe this week.
SEC
SEC Enforcement – Filed and Settled Actions
Statistics: Last week the Commission filed 2 new civil enforcement actions.
False statements: SEC v. Vanderbilt, Civil Acton No. 25 Civ. 4994 (S.D.N.Y. June 13, 2025) is an action which names as defendant Roderick Vanderbilt, an individual who has a decades-long personal relationship with Theodore J. Farnsworth, a romantic partner. During the period here he held the title of Chairman of the Vinco Ventures, Inc. board of directors, a public company, and assumed the title of Chairman of that company. He also nominally was a co-founder of another Farnsworth firm, Zash Global Media & Entertainment Corporation. Over a three-year period, beginning in late 2021, Defendant Farnsworth participated in a scheme which permitted him to made false statements in the firm’s filings with the Commission. He secretly received significant monetary benefits from the firm by participating in a scheme that concealed his actual role in the company. During the period of this action the share price of the company dropped from over $6 per share to just a few cents. The complaint alleges violations of Securities Act Sections 17(a)(1) and (3) and Exchange Act Sections 10(b) and 14(a) and Rules 10b-5 and 14(a)(9). Defendant consented to the entry of a bifurcated settlement. Under that arrangement a judgment was imposed based on the provisions cited in the complaint. The judgment also imposed an officer/director bar. A parallel criminal action was also filed by the U.S. Attorney’s Office for S.D.N.Y. See Lit. Rel. No. 26326 (June 13, 2025).
False statements: SEC v. Lopez, Civil Action No. 2:25-cv-04795 (C.D. Cal.) is a previously filed action which named Sergio Damian Lopez defendant. He is an officer and director of multiple Canadian public entities and was an executive of a U.S. public firm. William Mikula, an associate of Mr. Lopez, authored multiple articles during the period promoting Hightimes Holding Corp. and Cloudastructure, Inc. The articles falsely represented that the authors of the articles were not being paid when in fact they were compensated. For example, Hightimes Holding Corp., one of the firms involved, paid the authors $150,000 in cash under a consulting agreement. Overall Mr. Lopez retained about $200,000 in fees for himself. The complaint alleges violations of Securities Act Sections 17(a)(1) & (3) and Exchange Act Section 10(b) and Rule 10b-5. Mr. Lopez resolved the action, consenting to the entry of permanent injunctions based on the provisions cited in the complaint. He also agreed to pay disgorgement of $8,124.59 and a penalty of $115,231. In addition, he agreed to the entry of an officer/director bar for three years. See Lit. Rel. No. 26325 (June 13, 2025).
Offering fraud: SEC v. Speers, Civil Action No. 4:23-cv-0095 (N.D. Tx.) is an action filed about two years ago but not resolved until June 2, 2025. Named as defendants in this action are: Brady Jack Speers; Chatree Thirason; and Ghap, LLC d/b/a Blue Star Texas. Mr. Speers was previously enjoined in a Commission action by the court involved here. See SEC v. Novinger, Case No. 415-cv-00358-O (N.D.Tex.); subsequently Mr. Speers filed for bankruptcy. Defendant Chatree “Ben” Thirason is the co-manager of defendant GHAP, LLC or Blue Star, also a defendant. He co-manages the firm along with Mr. Speers. Over a five-year period, beginning in April 2017, according to the complaint, Defendants raised about $8 million from 40 investors. The investment was residential real estate. Defendants ensured investors that that their funds would be used to purchase, renovate and market residential properties. Profits were to be earned through promissory notes that carried high monthly or annual interest rates. Investors were also promised a quick return of their principal. In spinning their sales pitch/story, investors were assured of certain key points. Those included a claim that investor funds would be used for the acquisitions of properties; and that those funds would be put into certain specific properties. Unfortunately, Defendants’ representations were false. For example, less than half of the investor funds were used to acquire the properties. In fact, Defendants frequently rolled over investments from one property to another without authorization. In several cases Defendants never held title to the properties. And, Defendants failed to disclose that Mr. Speers had violated the federal securities laws in the past and suffered through multiple personal bankruptcies. The Commission’s complaint alleges violations of Securities Act Sections 5(a), 5(c) and 17(a) and Exchange Act Section 10(b) and Rule 10b-5. Defendants resolved the action. Defendants Speers and Blue Star agreed to pay, jointly and severally, disgorgement of $2,506,301 plus prejudgment interest of $240,320.82. Defendant Thiranon agreed to pay disgorgement of $415,723 and a penalty of $230,464. Blue Star will pay a penalty of $1,152,314. In addition, Defendants each agreed to be enjoined from future violations of the Exchange Act provisions and Securities Act Sections cited in the complaint. The court reiterated injunctive relief entered earlier in the proceedings that permanently enjoined Speers, Thiranon and Blue Star from future violations of the Exchange Act and Securities Act Sections cited in the complaint. In addition, the court entered an order that precludes Defendants Speers and Thiranon from purchasing or selling any security in the future except for their own account. See Lit. Rel. No. 26324 (June 12, 2024).
Offering fraud: SEC v. NDB, Inc., Civil Action No. 3:23-cv-04724 (N.D. Cal.) is a previously filed action which names as defendants NDB, Inc. and Nima Golsharifi. Ms. Golsharifi is the CEO of NDB, a private start-up company. The firm claimed that it was developing a nuclear based battery. Supposedly, the firm had raised over $1.2 million from investors for that purpose and had successfully created such a product. The claims were false. The complaint alleges violations of Securities Act Sections 17(a) and Exchange Act Section 10(b) and Rule 10b-5. To resolve the action NDB consented to the entry of a permanent injunction based on the provisions cited in the complaint and the payment of a $200,000 civil penalty. Mr. Golsharifi also consented to the entry of the injunctions. The judgment as to him also contained a two-year officer/director bar, prohibited him from being involved with the offering or purchasing of a security for two years other than for his personal accounts. It also directed him to pay a penalty of $100,000. See Lit. Rel. No. 26323 (June 11, 2025).
Insider trading: SEC v. Brewer, Civil Action No. 1:20-cv-06175 (S.D.N.Y.) is an action which names as defendant Jack Brewer, the CEO and portfolio manager of a registered investment adviser, Brewer Capital Management. Mr. Brewer, according to the complaint, traded based on inside information about the plans of COPsync Inc., a microcap company that operated a communications network for law enforcement officials. COPsync planned to do a stock offering. Mr. Brewer participated in the offering as a consultant. The offering documents contained a clause that precluded Mr. Brewer from trading in the offering or using the information about the transaction for his business. Nevertheless, Mr. Brewer sold over $100,000 of COPsync stock in advance of an announcement that caused its share price to fall. As a result, he had a profit of more than $35,000 than he would have otherwise had on the sale of the shares. The Commission prevailed on a motion for summary judgment against Mr. Brewer for trading on inside information. The case is still being litigated. See Lit. Rel. No. 26322 (June 10, 2025).
FinCEN
Release: The Financial Crimes Enforcement Network issued a press release date June 6, 2025, discussing Iranian Oil Smuggling and shadow banking weapons procurement typologies.
ESMA
Release: The European regulator published a release discussing the principles for third party risk supervision on June 12, 2025.
Hong Kong
Remarks: Julia Leung delivered the key note address at the Caixin Summer Summit 2025, June 13, 2025, copy of which is posted on the Hong Kong Securities and Futures Commission website. Her remarks focused on a multi-pronged strategy to harness epochal opportunities.
Singapore
Committee: The Monetary Authority of Singapore announced on May 29, 2025, the formation of a committee to review the code of corporate governance .