Sep 29, 2020 | Shareholder & Investor Protection
Kehoe Law Firm, P.C. is making investors aware that on September 29, 2020, the Commodity Futures Trading Commission (“CFTC”) announced that it issued an order filing and settling charges against JPMorgan Chase & Company (“JPMC & Co.”) and its subsidiaries, JPMorgan Chase Bank, N.A., and J.P. Morgan Securities LLC (“JPMS”) (collectively, “JPM”), for manipulative and deceptive conduct and spoofing that spanned at least eight years and involved hundreds of thousands of spoof orders in precious metals and U.S. Treasury futures contracts on the Commodity Exchange, Inc., the New York Mercantile Exchange, and the Chicago Board of Trade. The case was brought in connection with the Division of Enforcement’s Spoofing Task Force.
The order finds that JPM’s illegal trading significantly benefited JPM and harmed other market participants. JPM is required to pay a total of $920.2 million—the largest amount of monetary relief ever imposed by the CFTC—including the highest restitution ($311,737,008), disgorgement ($172,034,790), and civil monetary penalty ($436,431,811) amounts in any spoofing case.
Related Criminal, Civil & CFTC Actions
In a parallel matter, according to the CFTC, the Department of Justice’s Fraud Section and the United States Attorney’s Office for the District of Connecticut announced entry of a Deferred Prosecution Agreement (“DPA”) with JPMC & Co., deferring criminal prosecution of JPMC & Co. on charges of wire fraud. Under the terms of the DPA, JPMC & Co. has agreed, among other things, to pay a criminal fine, disgorgement, and restitution.
In another parallel matter, the U.S. Securities and Exchange Commission (“SEC”) announced entry of an order filing and settling charges against JPMS imposing both disgorgement and a civil monetary penalty. The CFTC order will recognize and offset any restitution and disgorgement payments made to the DOJ and the SEC.
The CFTC previously issued orders in related matters filing and settling charges of spoofing against two traders, both of whom have entered into formal cooperation agreements with the CFTC: John Edmonds [See CFTC Press Release No. 7983-19] and Christian Trunz [See CFTC Press Release No. 8014-19]. In another related matter, the CFTC continues to pursue civil litigation against two other traders, Michael Nowak and Gregg Smith, for spoofing and attempted price manipulation [See CFTC Press Release No. 8013-19].
Background
The order, according to the CFTC, finds that, from at least 2008 through 2016, JPM, through numerous traders on its precious metals and Treasuries trading desks, including the heads of both desks, placed hundreds of thousands of orders to buy or sell certain gold, silver, platinum, palladium, Treasury note, and Treasury bond futures contracts with the intent to cancel those orders prior to execution. Through these spoof orders, the traders intentionally sent false signals of supply or demand designed to deceive market participants into executing against other orders they wanted filled. According to the order, in many instances, JPM traders acted with the intent to manipulate market prices and ultimately did cause artificial prices.
The order also finds that JPMS, a registered futures commission merchant, failed to identify, investigate, and stop the misconduct. The order states that despite numerous red flags, including internal surveillance alerts, inquiries from CME and the CFTC, and internal allegations of misconduct from a JPM trader, JPMS failed to provide supervision to its employees sufficient to enable JPMS to identify, adequately investigate, and put a stop to the misconduct.
The order notes that during the early stages of the Division of Enforcement’s investigation, JPM responded to certain information requests in a manner that resulted in the Division being misled. The order recognizes, however, JPM’s significant cooperation in the later stages of the investigation.
For additional informaiton, please click “J.P. Morgan Securities Admits to Manipulative Trading in U.S. Treasuries.“
Sources: Commodity Futures Trading Commission – CFTC.gov; U.S. Securities and Exchange Commission – SEC.gov
May 15, 2020 | Shareholder & Investor Protection
SEC Charges Applied BioSciences Corp. and Turbo Global Partners, Inc. Over Claims In Press Releases To Offer Products To Combat Coronavirus – COVID-19
Kehoe Law Firm, P.C. is making investors and consumers aware that on May 14, 2020, the Securities and Exchange Commission announced charges in two cases involving companies that claimed in press releases to offer products to combat the COVID-19 virus – one against Applied BioSciences Corp. (“Applied BioSciences”) and one against Turbo Global Partners, Inc. (“Turbo Global”) and its CEO, Robert W. Singerman (“Singerman”). The SEC previously suspended trading temporarily in the securities of Applied BioSciences and Turbo Global.
According to the SEC’s complaint against Applied BioSciences, the company issued a press release on March 31 stating that it had begun offering and shipping supposed finger-prick COVID-19 tests to the general public that could be used for “Homes, Schools, Hospitals, Law Enforcement, Military, Public Servants or anyone wanting immediate and private results.” The complaint alleges that contrary to these claims, the tests were not intended for home use by the general public and could be administered only in consultation with a medical professional. The complaint further alleges that Applied BioSciences had not shipped any COVID-19 tests as of March 31, and its press release failed to disclose that the tests were not authorized by the U.S. Food and Drug Administration.
The SEC’s complaint against Turbo Global and Singerman alleges that the company issued false and misleading press releases on March 30 and April 3 regarding a purported “multi-national public-private-partnership” to sell thermal scanning equipment to detect individuals with fevers. According to the complaint, the company claimed in its press releases that this technology could be instrumental in “breaking the chain of virus transmission through early identification of elevated fever, one of the key early signs of COVID-19.” The press releases also, allegedly, included statements, attributed to the CEO of Turbo Global’s supposed corporate partner in the partnership, that the technology “is 99.99% accurate” and was “designed to be deployed IMMEDIATELY in each State.” The complaint alleges that Turbo Global had no agreement to sell the product, there was no partnership involving any government entities, and the CEO of Turbo Global’s supposed corporate partner did not make or authorize the statements attributed to him. According to the complaint, Singerman drafted the releases, which he knew to be false. The SEC charged Singerman with fraud in 1999 based on his fraudulent sale of securities through a network of boiler rooms, and obtained a permanent injunction against him.
The SEC’s complaint against Applied BioSciences charges the company with violating antifraud provisions of the federal securities laws and seeks permanent injunctive relief and civil penalties. The SEC’s complaint against Turbo Global and Singerman charges them with violating antifraud provisions of the federal securities laws and seeks permanent injunctive relief and civil penalties, and an officer and director bar against Singerman.
Source: U.S. Securities and Exchange Commission – SEC.gov
Apr 13, 2020 | Shareholder & Investor Protection
SEC Alerts “Main Street” Investors About Investment Frauds, Including Scams Related to Coronavirus (COVID-19) Pandemic
Kehoe Law Firm, P.C. is making investors aware that on April 10, 2020, the SEC’s Office of Investor Education and Advocacy and Division of Enforcement’s Retail Strategy Task Force issued an alert warning investors that fraudsters often seek to use national crises and periods of uncertainty to lure investors into scams. As detailed below, the SEC cautions that fraudsters may play off investors’ hopes and fears, as well as their charity and kindness, and may try to exploit confusion or rumors in the marketplace.
Frauds Main Street Investors Should Watch For, Especially During The Coronavirus Health Crisis
As you navigate the COVID-19 pandemic, don’t overlook the importance of protecting yourself and others from investment scams. Many investment frauds involve unlicensed individuals or unregistered firms, so verify that the seller is currently registered or licensed using the free and simple search tools on Investor.gov. Also, watch for promises of guaranteed high investment returns and unsolicited investment offers. To learn more about these red flags and others, access the webpage How to Avoid Fraud.
Fraudulent Stock Promotions and Market Manipulation
If you are considering investing in a company, especially in a microcap or penny stock, be skeptical of claims that products or services can prevent, detect, or treat COVID-19, or help to solve issues resulting from the current pandemic.
The SEC has become aware of a number of stock promotions, including online and through unsolicited phone calls, claiming that products or services of publicly-traded companies can prevent, detect, or cure COVID-19, and that the stock of these companies will dramatically increase in value as a result. Individuals should contact the Food & Drug Administration (FDA) with questions about FDA involvement with, or approval of, specific products and services.
Wrongdoers may promote rumors on social media, as well as on online bulletin boards and in online chat rooms. Claims also might concern companies converting operations to COVID-19-related support, or legislative stimulus packages and related industries that supposedly benefit from the current crises. You may lose a lot of money if you invest in a company based on inaccurate or unreliable claims or rumors.
False claims about a company’s products and services are sometimes part of a “pump-and-dump” scheme where fraudsters profit at the expense of unsuspecting investors. Microcap stocks may be particularly vulnerable to pump-and-dump schemes because there is often limited publicly-available information about microcap companies’ management, products, services, and finances as well as limited institutional interest in those companies. This can make it easier for fraudsters to spread false information about the company and move the price of the stock to take advantage of the public.
SEC Trading Suspensions
Recent trading suspensions issued in connection with coronavirus/COVID-19 include:
Fraudulent Unregistered Offerings
Under the federal securities laws, a company may not offer or sell securities unless the transaction has been registered with the SEC or an exemption from registration applies. Many legitimate companies use unregistered offerings to raise funds from investors. Fraudsters, however, may also use unregistered offerings to conduct investment scams.
Be wary of promises of high investment returns with little or no risk, unregistered professionals, aggressive sales tactics, and other red flags. Be particularly vigilant of fraudsters taking advantage of the volatile markets to tout “safe” or “bottomed out” investments in companies that purportedly have interests in commodities such as gold, silver, or oil and gas, for example. Before you hand over your money, research the investment and ask questions. See also 10 Red Flags that an Unregistered Offering May be a Scam.
If you are considering an investment relating to the COVID-19 pandemic, check if it is registered with the SEC by using the SEC’s EDGAR database or contacting the SEC’s toll-free investor assistance line at (800) 732-0330.
Charitable Investment Scams
Many organizations currently offer opportunities to help those most affected by the COVID-19 pandemic. Fraudsters may try to exploit your desire to help others by using charitable causes as a hook for investment schemes. For example, they may pretend that your investment will provide financial support or medical treatment to people in need as a result of the COVID-19 pandemic and then steal your money instead.
If you are considering participating in an investment offered by a charity that claims to be a tax-exempt or “501(c)(3)” organization, check out the organization’s tax status on the Tax Exempt Organization Search on the Internal Revenue Service’s website. If a so-called charitable organization is not listed, and has misrepresented that it is tax-exempt, do not invest in the organization. Even if a charity has 501(c)(3) status, this does not mean the investment is a legitimate opportunity – it still could be part of a fraudulent scheme. Ask questions and independently research the organization to find out as much as you can.
Community-Based Financial Frauds
Community-based financial frauds, also called affinity frauds, target members of identifiable groups, including people with common ties based on ethnicity, nationality, religion, sexual orientation, military service, and age. These scams exploit the trust and friendship that exist within groups.
Fraudsters may be (or pretend to be) part of the very group they are trying to cheat. They may enlist group leaders to spread the word about the scheme. Those leaders may not realize the “investment” is actually a fraud, which means they too may be victims.
Know who you are dealing with and know what they are selling—even if you have something in common with the person. Type the person’s name into the search box on Investor.gov to do a background check on anyone offering or selling you an investment.
Bogus CDs Offering High Returns
During periods of market volatility, many investors may seek investments they feel are safer and less subject to risk and price fluctuation, such as financial products with fixed-rate returns. The SEC is aware of current fraudulent promotions of phony Certificates of Deposit (CDs) through internet advertising and “spoofed” websites – websites that mimic the actual sites of legitimate financial institutions. Spoofed websites may use URL addresses similar to those of legitimate firms’ websites, or use legitimate-sounding names and URLs.
Spoofed websites selling fake CDs may offer high interest rates with no penalties for early withdrawals, promote only CDs (and no other financial products), require high minimum deposits, direct investors to wire funds abroad or to an account with a different name than the listed financial institution, claim the deposits are FDIC-insured, and identify “clearing partners” purportedly registered with the SEC.
Investors should be extremely cautious when purchasing CDs from websites they find through internet searches. If you are considering an investment in CDs, consider these tips to help you avoid bogus CD scams.
Source: Securities and Exchange Commission – SEC.gov
Mar 5, 2020 | Shareholder & Investor Protection
Three California-Based, Internal Woodbridge Sales Agents That Sold and Assisted in Selling Approximately $444 Million in Woodbridge Securities to Retail Investors Charged For Illegally Selling Securities in Unregistered Transactions
On March 5, 2020, the SEC announced charges against Brook Church-Koegel (“Church-Koegel”), David H. Goldman (“Goldman”), and Nicole J. Walker (“Walker”), three California-based internal sales agents for Woodbridge Group of Companies LLC, for illegally selling Woodbridge securities in unregistered transactions to retail investors in numerous states while acting as unregistered brokers.
According to the SEC’s complaint, from approximately June 2014 to December 2017, Church-Koegel, Goldman, and Walker sold and assisted others in selling approximately $444 million in Woodbridge securities in unregistered transactions to thousands of predominantly elderly investors.
The SEC’s complaint alleges that Church-Koegel, Goldman, and Walker were among Woodbridge’s largest revenue-producing internal sales agents, and Church-Koegel and Goldman eventually became “team leaders,” who assisted sales agents throughout the United States. Allegedly, the defendants reaped significant transaction-based compensation from these unlawful sales, with Church-Koegel and Goldman receiving more than $1 million each, and Walker receiving more than $750,000.
The SEC’s complaint charges Church-Koegel, Goldman, and Walker with violating the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act of 1933 and the broker-dealer registration provisions of Section 15(a)(1) of the Securities Exchange Act of 1934 and seeks disgorgement of ill-gotten gains, prejudgment interest, and civil penalties against each of them.
SEC’s “Complaint For Injunctive And Other Relief” (SEC v. Brook Church-Koegel, David H. Goldman, and Nicole J. Walker)
According to the SEC’s complaint:
1. From at least June 2014 through December 2017, Brook Church-Koegel, David H. Goldman, and Nicole J. Walker (collectively, the “Defendants”) were among the top revenueproducing internal sales persons for Woodbridge Group of Companies, LLC, d/b/a Woodbridge Wealth (“Woodbridge”). Woodbridge and its then owner and President, Robert H. Shapiro, operated Woodbridge as a massive Ponzi scheme, which, from July 2012 through December 2017, raised at least $1.22 billion from more than 8,400 unsuspecting investors nationwide through fraudulent unregistered securities offerings.
2. In their internal sales agent positions, the Defendants personally solicited and sold Woodbridge securities in unregistered transactions to investors, many of whom were elderly retirees who invested their retirement savings as a result of the Defendants’ sales and marketing tactics. Church-Koegel and Goldman also served as “team leaders,” and in that role, were responsible for coordinating and assisting the wide-ranging sales efforts of many internal sales agents who sold Woodbridge securities. Additionally, each of the Defendants coordinated and assisted external sales agents in their efforts to sell Woodbridge’s securities, including regularly speaking with them over the telephone and sometimes joining them in calls with investors to answer questions about Woodbridge’s securities.
3. The Defendants pitched Woodbridge’s securities to the general public via email, telephone, at in-person meetings, and using other instruments of interstate commerce. The Defendants provided investors with Woodbridge’s sales and marketing materials, touting Woodbridge’s securities as “safer” and “conservative.” The Ponzi scheme collapsed on December 4, 2017, when Shapiro caused Woodbridge and its many related companies to file for bankruptcy. Once Woodbridge filed for bankruptcy, investors stopped receiving their monthly interest payments and have not received a return of their investment principal.
4. The Defendants, acting as unregistered brokers, together were responsible for raising through their own efforts and the efforts of external sales agents that they assisted, approximately $444 million between June 2014 and December 2017, from thousands of investors in more than 40 states, from the offer and sale of Woodbridge’s securities in unregistered transactions. For their efforts during this time period, together, Church-Koegel, Goldman, and Walker received at least $2.75 million in transaction-based compensation, in addition to their salaries. At all relevant times, the Defendants held no securities licenses, were not registered with the Commission, and were not associated with registered broker-dealers. Further, Woodbridge’s securities were not registered with the Commission, nor did they qualify for an exemption from registration. The Defendants thus were not permitted to sell Woodbridge’s securities.
Source: SEC.gov
Feb 28, 2020 | Shareholder & Investor Protection
SEC Charges SCANA Corp., Two Former SCANA Top Executives, and SCE&G With Defrauding Investors
Kehoe Law Firm, P.C. is making investors aware that on February 27, 2020, the SEC announced that it charged SCANA Corp., two of its former top executives, and South Carolina Electric & Gas Co. (SCE&G), now known as Dominion Energy South Carolina Inc., with defrauding investors by making false and misleading statements about a nuclear power plant expansion that was ultimately abandoned.
The SEC’s complaint alleges that SCANA, its former CEO Kevin Marsh (“Marsh”), former Executive Vice President Stephen Byrne (“Byrne”), and subsidiary SCE&G misled investors about a project to build two nuclear units that would qualify the company for more than $1 billion in tax credits. According to the complaint, the defendants claimed that the project was on track even though they knew it was far behind schedule, making it unlikely to qualify for the tax credits. The SEC’s complaint also alleges one SCANA executive said that officers of the company “flew around the country showing the same . . . construction pictures from different angles and played our fiddles” while the project itself “was going up in flames.” SCANA abandoned the project in mid-2017 with neither nuclear unit completed. The SEC’s complaint alleges that the false statements and omissions enabled SCANA to boost its stock price, sell more than $1 billion in bonds, and obtain regulatory approval to raise customers’ rates to finance the project.
The SEC’s complaint charges SCANA, SCE&G, Marsh, and Byrne with violations of the antifraud provisions of the federal securities laws, and charges SCANA, SCE&G, and Marsh with reporting violations. The complaint seeks a permanent injunction, return of allegedly ill-gotten gains along with prejudgment interest, and financial penalties from all defendants, and an officer and director bar against Marsh and Byrne.
Source: SEC.gov
Feb 24, 2020 | Shareholder & Investor Protection
SEC Enhances Its PAUSE Website Where SEC Provides a List of Entities That Falsely Claim to Be Registered, Licensed, and/or Located in the United States, As Well As Entities That Impersonate Genuine U.S. Registered Securities Firms and Fictitious Regulators, Governmental Agencies or International Organizations.
Kehoe Law Firm, P.C. is making investors aware that on February 24, 2020, the SEC announced that it updated its Public Alert: Unregistered Soliciting Entities (“PAUSE”) list by adding 25 soliciting entities and four fictitious regulators. The PAUSE Program lists entities that falsely claim to be registered, licensed, and/or located in the United States in their solicitation of investors. The PAUSE Program also lists entities that impersonate genuine U.S. registered securities firms as well as fictitious regulators, governmental agencies, or international organizations.
According to the SEC, the entities on the PAUSE list have been the subject of investor complaints. The latest additions are firms that SEC staff found were providing inaccurate information about their affiliation, location, or registration to solicit primarily non-U.S. investors. Under U.S. securities laws, firms that solicit investors, generally, are required to register with the SEC and meet minimum financial standards and disclosure, reporting, and record keeping requirements. Additionally, besides alerting investors to firms falsely claiming to be registered, the PAUSE list flags those impersonating registered securities firms and fictitious “regulators” who falsely claim to be government agencies or affiliates. The SEC stated that inclusion on the PAUSE list does not mean the SEC has found violations of U.S. federal securities laws or made a judgment about the merits of any securities being offered.
Unregistered Soliciting Entities
These are entities that falsely claim to be registered, licensed, and/or located in the United States in their solicitation of investors. In many cases, SEC investigation reveals that the soliciting entities are not registered in the United States as they claim or imply. For each of the entities listed, the SEC has determined that there is no U.S. registered securities firm with this name. The SEC stated that it will regularly update this list.
Fictitious Regulators
These are entities that falsely claim to be a regulator, governmental agency, or international organization that do not exist. In many cases, SEC investigation reveals that the so-called governmental agencies or international organizations claimed to have lent support to these solicitations do not exist. The SEC stated that it will regularly update this list.
Impersonators of Genuine Firms
These are legitimate entities/firms whose information was wrongfully appropriated. This information may include the legitimate entity’s name, address, registration number, and website likeness. According to the SEC, the information was wrongfully appropriated from publicly-available databases, such as EDGAR and FINRA’s BrokerCheck, and phony websites were set up to confuse and deceive investors. In other cases, these “spoofer” entities have appropriated the registration information of legitimate firms that recently terminated registration with the SEC and FINRA, or did so years ago. Similarly, representatives of the impersonating entities who cold-call investors often claim to be licensed employees of the legitimate firms being impersonated or of other legitimate firms. The SEC has determined that the impersonators have no connection with, and are not to be confused with, the genuine firms, whether active or defunct. The SEC stated that it will regularly update this list.
Source: SEC.gov
