This Week In Securities Litigation (Week of March 17, 2025)
The Commission announced the resolution of two enforcement actions last week. Each centered on free riding. Be careful, be safe this week.
SEC Enforcement – Filed and Settled Actions
Statistics: Last week the Commission filed no new civil injunctive actions and no new administrative proceedings. The agency did announce the resolution of two previously filed enforcement cases.
Free riding: SEC v. Acosta, Civil Action No. 3::25 – cv- 00323 (M.D. Penn.) is a previously filed action which named as defendant Rey Acosta. Mr. Acosta is a resident of Pennsylvania. In October 2023, he opened a brokerage account with Broker A. As of early January 2023, the account had a balance of $2.00. In early January he placed four ACH transfers totaling $1.5 million into his brokerage account from Bank A. The bank account, as he knew, did not have sufficient funds to cover the transactions. The transfers were reversed. Prior to that date, however, he purchased three stocks for a total of $122,311. Later the same day he sold all of the purchased stocks, obtaining profits of $93,565. Previously, Defendant had been warned by Broker B about free riding. The complaint alleges violations of Exchange Act Section 10(b) and Rule 10b-5. Defendant resolved the action, consenting to the entry of a permanent injunction based on the Section and Rule cited in the complaint. The injunction requires Defendant to pay a penalty of $15,000 and directs that prior to opening any brokerage account in the future he provide the firm with a copy of the complaint in this action. See Lit. Rel. No. 26261 (March 6, 2025).
Free riding: SEC v. Quartarano</em>, Civil Action No. 2:21-cv-02305 (E.D. N.Y.). The case is a previously filed action which named as a relief defendant Leonard Quartarano. Relief Defendant Quartararo consented to the entry of a final judgment that required him to pay disgorgement. He also had to pay prejudgment interest. Specifically, he was ordered to pay the Court $20,103.98 in disgorgement and prejudgment interest of $4,862.02. Relief Defendant Paul Casella was ordered to pay $33,128.88 which was deemed paid by an order in a parallel state case. Also in that case Lisa Eckert was directed to pay disgorgement of $46,600. See New York v. Quartararo, No. CR-0000238/2021 (Sup Ct. NY). The underlying case in each instance was based on situations in which investors had been defrauded of their money by those who had obtained it through wrongful conduct. Lit. Rel. 26260 (March 4, 2025). Please note: This entry corrects an earlier report on these cases concerning the related New York state case that was published last week.
ESMA
Markets:
The European Securities and Markets Authority issued one article of a planned series on market issues. The article is titled “Geopolitical and Macroeconomic Developments Driving Markert Uncertainty, dated February 2, 2025 (here).
Hong Kong
Report:
The Securities and Futures Commission of Hong Kong issued its latest quarterly report which wraps up 2024 for the agency. The report is dated March 6, 2025 (here).
Singapore
Deferred payments:
The Monetary Authority of Singapore announced the launch of an Electronic Deferred Payment Solutions initiative for Mid-2025 (here).