Enforcement Actions: Week in Review - June 12th, 2015
(Jun 2015)
SEC ENFORCEMENT ACTIONS
SEC Names Richard R. Best as Regional Director of Salt Lake Office
June 8, 2015 (Litigation Release No. 113)
Richard R. Best will be succeeding Karen Martinez as Regional Director of the SEC's Salt Lake office. Mr. Best's qualifications include: serving as senior director and chief counsel in the Department of Enforcement for FINRA in New York, holding other supervisory and investigative positions within FINRA's Enforcement function, and having 10 years of...
Enforcement Actions: Week in Review - June 5th, 2015
(Jun 2015)
SEC ENFORCEMENT ACTIONS
Merrill Lynch Admits Using Inaccurate Data for Short Sale Orders, Agrees to $11 Million Settlement
June 1, 2015 (Litigation Release No. 105)
An SEC investigation found some of Merrill Lynch's programs to execute short sale trades were using inaccurate and old data. Merrill Lynch and other broker-dealers are required to maintain an up to date easy-to-borrow (ETB) list composed of stocks that are readily accessible to borrow for short sale orders. Merrill Lynch...
Enforcement Actions: Week in Review - April 10th, 2015
(Apr 2015)
SEC ENFORCEMENT ACTIONS
SEC Charges Firms and Individuals for Defrauding Investors in Cellular Licensing Scheme
April 6, 2015 (Litigation Release No. 57)
Twelve companies and six individuals have been charged with defrauding investors in a scheme involving falsely advertised securities based on licenses for cellular spectrum bands. The alleged orchestrators of the scheme are David Alcorn and Kent Maerki, cofounders of Janus Spectrum LLC. The SEC alleges that third-party fundraisers sold...
Oil and Gas DPPs From Just Two Sponsors Have Caused $3.7 Billion in Losses
(Feb 2015)
We have written extensively about direct participation programs, or DPPs. See our blog posts on non-traded REITs and our discussion about equipment leasing DPPs. Oil and gas DPPs are another strain of the DPP epidemic: illiquid exposure to an existing underlying asset, loaded with confiscatory fees, conflicts of interest and unnecessary risk.
Oil and gas DPPs use some of investors' money to drill and operate oil and gas wells. Oil and gas DPPs are sponsored and managed either by investment...
UBS Puerto Rico's Bond Fund Debacle: What We Know so Far
(Feb 2015)
Over the past year, we've posted a dozen short commentaries to our blog post here. We thought it would be helpful to summarize what we know so far. This summary and our prior UBS Puerto Rico blog posts are available in Spanish. You can find all the Spanish-language blog posts by clicking here.
We discussed the national exposure of the UBS Puerto Rico losses in October 2013 in Trouble in Paradise: UBS Puerto Rico Bond Fund Investors Hit Hard. The losses only got worse thereafter. In calendar...
Enforcement Actions: Week in Review - December 12th, 2014
(Dec 2014)
SEC ENFORCEMENT ACTIONS
SEC Sanctions Eight Audit Firms for Violating Auditor Independence Rules
December 8, 2014 (Litigation Release No. 272)
The SEC sanctioned the following firms for violating auditor's independence criteria: BKD LLP, Boros & Farrington Accountancy Corporation, Brace & Associates PLLC, Robert Cooper & Company CPA PC, Lally & Co LLC, Lerner & Sipkin CPAs LLP, OUM & Co LLP, and Joseph Yafeh CPA Inc. While performing audits for their broker-dealer clients, these firms...
United Development Funding IV Left Investors $34.8 Million Worse Off
(Jun 2014)
On Wednesday last week, another non-traded REIT listed on a public exchange. United Development Funding IV (ticker: UDF), which sold as a non-traded REIT for $20 per share, closed its first day of trading on the NASDAQ at $19.60. As we have argued extensively in the past, we think that non-traded REITs are a very bad deal for investors, and UDF IV was no exception.
We have gone through all of UDF IV's SEC filings and applied the gross proceeds, distributions, and other cash flows to a liquid,...
FINRA Enforcement Actions: Month in Review
(Jun 2014)
MAY 2014 SELECTED FINRA ENFORCEMENT ACTIONS
FIRMS FINED
ABN AMRO Clearing Chicago LLC (CRD #14020, Chicago, Illinois)
ABN AMRO Clearing Chicago LLC consented to a censure and $95,000 fine for allegedly failing "to report short interest positions to the New York Stock Exchange and FINRA on certain settlement dates, and submitt[ing] to FINRA an inaccurate short-interest position report." FINRA found that the firm's supervisory system did not provide for supervision reasonably designed to achieve...
FINRA Enforcement Actions: Month in Review
(May 2014)
APRIL 2014 SELECTED FINRA ENFORCEMENT ACTIONS
FIRMS FINED
The Huntington Investment Company (CRD #16986, Columbus, Ohio)
The Huntington Investment Company consented to a $25,000 fine and censure. The firm consented to an entry of "findings that it failed to provide notice to the MSRB via the Electronic Municipal Market Access System (EMMA) that no preliminary official statements or official statements were to be prepared for bond anticipation note offerings in which the firm participated."...
Enforcement Actions: Week in Review - May 9th, 2014
(May 2014)
SEC ENFORCEMENT ACTIONS
SEC Charges Three Friends and Business Associates of Former Chairman of Home Diagnostics, Inc., in Insider Trading Scheme
May 7, 2014, (Litigation Release No. 22987)
John Campani, John Mullin, and Alan Posner have all been charged with trading on insider information concerning Nipro Corporation's acquisition of Home Diagnostics, Inc for combined profits of "more than $105,000." The defendants were allegedly tipped this information by former Chairman of the Board at...
