October 31, 2011
The SEC charged Andrey C. Hicks of Boston, Massachusetts, and Locust Offshore Management, LLC, his investment advisory firm, with committing fraud in connection with misleading prospective investors about their supposed quantitative hedge fund.
October 27, 2011
The SEC ordered the Financial Industry Regulatory Authority (FINRA) to hire an independent consultant and undertake other remedial measures to improve its policies, procedures, and training for producing documents during SEC inspections. According to the SEC’s order instituting settled administrative proceedings, certain documents requested by the SEC’s Chicago Regional Office during an inspection were altered just hours before FINRA’s Kansas City District Office provided them.
October 26, 2011
The SEC charged a pair of purported money managers with orchestrating an illegal “free-riding” scheme of selling stocks before they paid for them and netting $600,000 in illicit profits.
October 21, 2011
The SEC brought additional charges in its insider trading case against Denver-based traders who allegedly traded on confidential information in the securities of Mariner Energy Inc. ahead of the oil and gas company’s $3.9 billion takeover by Apache Corporation in April 2010.
October 18, 2011
The SEC charged Copeland Wealth Management, an SEC-registered adviser, a sister real estate company and Charles P. Copeland with fraud and breach of fiduciary duty. Copeland Wealth Management has approximately $125 million in assets under management.
October 18, 2011
The SEC charged David B. Welliver, who resides in Buffalo, Minnesota, and his investment advisory firm, Dblaine Capital, LLC, with fraud and numerous other violations of the federal securities laws in connection with their management of a mutual fund, the Dblaine Fund.
September 27, 2011
The SEC brought administrative charges against Shreyans Desai and ShreySiddh Capital, LLC (SSC) alleging fraudulent conduct by Desai in connection with the purchase and sale of securities for individuals who provided Desai with more than $245,000 to invest on their behalf. According to the SEC, from April 2009 to February 2011, Desai, acting through SSC, an unregistered investment adviser founded by Desai, made numerous materially false and misleading statements to potential investors, including that SSC was a securities broker registered with the SEC and that potential investors would receive returns of at least 50% if they invested their money with SSC. Desai also guaranteed to investors that he would not lose their money. On the basis of Desai’s misrepresentations, five individuals gave Desai money to invest on their behalf through SSC. Desai then misappropriated investor money, using it to, among other things, make donations to a local religious institution and pay the personal debts and expenses of Desai’s family members. Desai also lost investor money through bad trades. To hide the fact that Desai had misappropriated or lost investor money, the SEC stated that Desai provided SSC investors with account statements that overstated the value of the investors’ accounts by as much as 300%.
September 27, 2011
The SEC charged Kurt Hovan, a San Francisco-area investment adviser, with fraud for lying to clients about how brokerage commission rebates were being used and producing fictitious documents to cover up the fraud during an SEC examination. The SEC also charged his wife Lisa Hovan and his brother Edward Hovan for their roles in the fraudulent scheme at Hovan Capital Management (HCM).
September 22, 2011
The SEC charged Barr M. Rosenberg, the co-founder of institutional money manager AXA Rosenberg, with fraud. The SEC alleges that the Rosenberg created the quantitative investment model used by AXA Rosenberg’s affiliated investment advisers for use in managing client assets, oversaw research projects to improve and enhance that model, and exercised significant authority throughout the AXA Rosenberg organization. In June 2009, Rosenberg learned of a significant error in the computer code of the quantitative investment model that disabled one of the model’s key components for managing risk and affected the model’s ability to perform as expected. Clients raised concerns about this underperformance, and Rosenberg knew about and discussed these concerns with others at AXA Rosenberg. But instead of disclosing and correcting the error immediately, Rosenberg directed others to conceal the error and declined to fix the error. According to the SEC, Rosenberg’s efforts to contain knowledge of the error continued through early October 2009, when he denied the existence of any significant errors in the model during a board meeting discussion about the model’s performance. Knowledge of the error was kept from AXA Rosenberg’s Global CEO until November 2009 and was disclosed to clients in April 2010.
September 21, 2011
The SEC charged Spencer D. Mindlin and his father, Alfred C. Mindlin, with insider trading. The SEC’s Division of Enforcement alleges that Spencer Mindlin conveyed material nonpublic information that he obtained in the course of his duties as an employee of Goldman, Sachs & Co. to his father, Alfred Mindlin. Spencer and Alfred Mindlin then traded based on this information in a brokerage account in the name of a family member and in Alfred Mindlin’s brokerage account.