Enforcement Actions: Week in Review - August 10th, 2015
(Aug 2015)
SEC ENFORCEMENT ACTIONS
SEC Charges Houston-Area Businessman in Ponzi Scheme
August 3, 2015 (Litigation Release No. 158)
Frederick Alan Voight, owner of F.A. Voight & Associates LP and DayStar Funding LP, has been charged with defrauding investors while operating a $114 million Ponzi scheme. As Ponzi scheme's tend to go, Voight's scheme was caught after he could not find enough new money to pay previous investors his promised 42% annual return rate. Recently, Voight raised $13.8 million...
Enforcement Actions: Week in Review - July 17th, 2015
(Jul 2015)
SEC ENFORCEMENT ACTIONS
SEC Announces Settlement With Cooperator in Grand Central Post-It Notes Insider Trading Case
July 13, 2015 (Litigation Release No. 143)
The SEC announced a settlement with Frank Tamayo for cooperating in a continuing insider trading investigation where illegal information was passed via Post-It notes at Grand Central Terminal. Tamayo was alleged to distributing received tips from a law firm clerk to a stockbroker that he would meet up with at Grand Central Terminal,...
Enforcement Actions: Week in Review - July 10th, 2015
(Jul 2015)
SEC ENFORCEMENT ACTIONS
SEC Charges Oil Company and CEO in Scheme Targeting Chinese-Americans and EB-5 Investors
July 6, 2015 (Litigation Release No. 141)
The SEC has charged CEO Bingqing Yang and her company Luca International Group for fraud. The SEC alleges that Yang gave presentations with falsely depicting a large, successful company. Yang allegedly used new investors' funds, in a Ponzi-scheme fashion, to make payments to older investors. The SEC also claims that over $2.4 million of...
Enforcement Actions: Week in Review - July 2nd, 2015
(Jul 2015)
SEC ENFORCEMENT ACTIONS
SEC Charges KKR With Misallocating Broken Deal Expenses
June 29, 2015 (Litigation Release No. 131)
Kohlberg Kravis Roberts & Co. (KKR) has agreed to pay nearly $30 million to settle the SEC's charges of misallocating more than $17 million in broken deal expenses. The SEC also found that KKR incurred $338 million in broken deal or diligence expenses during a six-year period ending in 2011. KKR failed to expressly disclose how fund expenses would be allocated; KKR did...
Enforcement Actions: Week in Review - June 26th, 2015
(Jun 2015)
SEC ENFORCEMENT ACTIONS
SEC Charges Unregistered Brokers in EB-5 Immigrant Investor Program
June 23, 2015 (Litigation Release No. 127)
Ireeco LLC and its successor Ireeco Limited were charged with being unregistered brokers after the firms handled more than $79 million of investments. Ireeco brokered investments for more than 150 foreign investors through the governments EB-5 program. The EB-5 program allows foreigners who invest directly in a U.S. business or private "regional centers"...
The Worst Investment in the World! Behringer Harvard's Priority Income Fund
(Jun 2015)
I. Introduction
What could be worse than a non-traded REIT? Well, REIT-sponsor Behringer Harvard has managed to create something even worse than a non-traded REIT: The Priority Income Fund. On May 9, 2013, Behringer Harvard and the manager of publicly traded BDCs, Prospect Capital Management, announced the initial public offering for their new joint-effort Priority Senior Secured Income Fund (PSSI) now renamed Priority Income Fund.i
The best thing that can be said of the Priority Income Fund...
A Non-traded REIT Investor Fights Back
(Jun 2015)
On June 5, 2015, I wrote that American Realty Capital's latest listing of a non-traded REIT was further evidence of the harm caused by sponsors of non-traded REITs. I also pointed out that, contrary to the common pattern in non-traded REIT listings, Schorsch and ARC used their control of the non-traded REIT version of GNL to tie the hands of shareholders and management in the subsequent GNL traded REIT and to opportunistically transfer wealth to themselves. I pointed out that similar...
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...
Nicolas Schorsch and American Realty Capital Lay Another Egg
(Jun 2015)
GNL: American Realty Capital Lays Another Egg
On Tuesday, non-traded REIT American Realty Capital Global Trust Inc. - rechristened Global Net Lease, Inc. - began trading on the NYSE under the ticker GNL. GNL is at least the 42nd non-traded REIT to have listed, or merged into or been acquired by another REIT since 1997 and adds to the mounting wealth toll non-traded REITs have extracted from unsophisticated investors.
My co-authors and I have determined that the non-traded REIT industry has...
