The SEC alleges that Scott Newsholme of Farmingdale, New Jersey, fabricated account statements, doctored stock certificates, and forged promissory notes as part of a scheme in which he convinced clients seeking his financial planning advice to give him their money to invest in various securities. Instead of investing clients’ money, Newsholme allegedly cashed their investment checks at a check-cashing store and pocketed the funds while assuring clients that their assets were safe and flourishing. According to the SEC’s complaint, Newsholme used investor money for personal expenses, gambling in Atlantic City, and Ponzi-like payments to clients who sought a return of their funds.
On September 28, 2017, the Securities and Exchange Commission (“SEC”) obtained a final judgment against Robert Stewart, the former chief financial officer of a technology company and certified public accountant, who was charged, along with his son, with conducting a serial insider trading scheme involving tips of key nonpublic information in coded e-mail messages disguised as discussions about golf.
The final judgment, entered on September 27, 2017 by the Honorable Analisa Torres of the U.S. District Court for the Southern District of New York, permanently enjoins Robert Stewart from violating Sections 10(b) and 14(e) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, orders him liable for disgorgement of $153,675.65, which is the amount of illicit profits he earned as a result of the alleged illegal insider trading, plus $11,240.76 in interest, but provides that the disgorgement and interest obligation will be satisfied by the entry of a forfeiture order in the parallel criminal case. The final judgment also imposes a lifetime officer-and-director bar on Robert Stewart. Read More
On September 21, 2017, the Securities and Exchange Commission (“SEC”) charged Justin Cary, a California-based Certified Public Accountant, with insider trading ahead of an acquisition offer for an advertising technology company.
According to the SEC’s complaint, on January 28, 2016, Justin Cary, an accounting consultant for Adaptive Medias, Inc., received an email from the company’s controller quoting the headline of a yet-to-be-issued press release announcing that the company had received an acquisition offer of $1.50 per share, at a time when its stock was trading for only $0.16 per share. The SEC further alleges that, while composing a response to the controller, Justin Cary logged on to his personal online brokerage account just six minutes after receiving the email and purchased 18,500 shares of Adaptive Medias stock. The complaint alleges that, four days later, Adaptive Medias announced the acquisition offer and, following the announcement, Adaptive Media’s share price increased 428% over the prior day, closing at $0.74 per share. According to the SEC, Cary sold all of his shares and generated $8,140.25 in illicit profits. Read More
On September 22, 2017, the Securities and Exchange Commission (“SEC”) filed fraud charges against Aegerion Pharmaceuticals, a Massachusetts-based bio-pharmaceutical company, that exaggerated how many new patients actually filled prescriptions for an expensive drug that was its sole source of revenue.
Aegerion Pharmaceuticals, now a subsidiary of Novelion Therapeutics, has agreed to pay a $4.1 million penalty to settle the charges that it misled investors on multiple occasions in 2013. The SEC’s complaint alleges that Aegerion told investors that the number of unfilled prescriptions for Juxtapid was not material and the “vast majority” of patients receiving prescriptions went ahead and ultimately purchased the drug. The SEC alleges that Aegerion’s records reflect that it was actually around 50 percent of prescriptions that resulted in actual drug purchases. Read More
On September 21, 2017, the Securities and Exchange Commission (“SEC”) obtained an order requiring the Woodbridge Group of Companies LLC, of Sherman Oaks, California, to produce the corporate documents of several company executives and employees, including the President and CEO.
According to the SEC’s application and supporting papers filed in federal court in Miami on July 17, 2017, the agency is investigating whether Woodbridge and others have violated or are violating the antifraud, broker-dealer, and securities registration provisions of the federal securities laws in connection with Woodbridge’s receipt of more than $1 billion of investor funds from thousands of investors nationwide. As part of the SEC’s ongoing investigation, on January 31, 2017, agency staff in the Miami Regional Office served Woodbridge with a subpoena seeking, among other documents, the production of electronic communications that the company maintained relating to Woodbridge’s business operations. The SEC’s application alleges that although Woodbridge was required to produce these documents to the SEC, the company has failed to produce any relevant communications in response to the subpoena, including those of three high-level Woodbridge officials. Read More
On September 20, 2017, the Securities and Exchange Commission (“SEC”) charged Peter Chang, the former CEO of a Silicon Valley-based fiber optics company, with insider trading in company stock by using secret brokerage accounts held in the names of his wife and brother.
The SEC alleges that Peter Chang, who also was the founder and chairman of the board at Alliance Fiber Optic Products, generated more than $2 million in illicit profits and losses avoided by trading on nonpublic information and tipping his brother ahead of two negative earnings announcements and the company’s merger. Read More
On September 13, 2017, the Securities and Exchange Commission (“SEC”) announced that Mayank Gupta, a former auditor, has agreed to settle charges that he tipped his relative with inside information about a client on the verge of a merger.
The SEC’s complaint alleges that, through his audit work at PricewaterhouseCoopers LLP, Mayank Gupta learned that San Jose, Calif.-based Cavium was making imminent preparations to acquire Aliso Viejo, Calif.-based QLogic Corp. According to the SEC’s complaint, before the deal was announced to the public, Gupta called his cousin-in-law Pushpendra Agrawal, and told him that Cavium was going to acquire QLogic and that QLogic was a “sure thing.” Upon arriving at work, Agrawal bought 200 QLogic call options, based on Gupta’s tip. During his lunch break, Agrawal bought an additional 50 QLogic call options, again based on Gupta’s tip. After QLogic announced that it would be acquired by Cavium through a tender offer, QLogic’s stock rose by more than 9 percent, and Agrawal profited by more than $23,785 from the illegal trades. Read More
On September 6, 2017, the Securities and Exchange Commission (“SEC”) charged Scott Newsholme, a New Jersey-based tax preparer and investment adviser, with stealing more than $1 million from clients to support his gambling habit and other personal expenditures.
On August 31, 2017, the Securities and Exchange Commission (“SEC”) announced fraud charges against investment adviser Navellier & Associates, Inc. and its founder and chief investment officer, Louis Navellier. The SEC’s complaint, filed in federal court in Boston, Massachusetts, alleges that from 2010 to 2013, Mr. Navellier and his firm defrauded their clients and prospective clients, misleading them about the performance track record of the “Vireo AlphaSector” investment strategies that the firm offered under the “Vireo” brand name. First, Mr. Navellier and his firm allegedly breached their fiduciary duty to clients and prospective clients by ignoring and concealing red flags that should have alerted them that the investment strategies had not performed as advertised. Second, Navellier & Associates allegedly distributed materially false advertisements and client communications about the performance track record of the investment strategies. Third, as Mr. Navellier and his firm realized their misrepresentations could get them in legal trouble, they allegedly sold the Vireo line of business in August 2013 for $14 million, rather than correcting their prior misrepresentations to their clients or informing their clients about their conflicts of interest in selling the Vireo business.
Navellier & Associates’ advertisements claimed that client assets had been invested in the investment strategies from April 2001 to September 2008 and that the strategies had significantly outperformed the S&P 500 Index from April 2001 to September 2008. In fact, no client assets had tracked the strategy from April 2001 through September 2008, and even as a back-test the claimed performance was substantially overstated. Read More
On August 31, 2017, the Securities and Exchange Commission (“SEC”) charged Connecticut-based broker representative and investment adviser Leon Vaccarelli and his company with fraudulently persuading several elderly customers to invest with him and then spending their money on his own living and business expenses.
The SEC’s complaint alleges that instead of investing the customers’ money in such things as conventional brokerage accounts and so-called separately managed accounts as promised, Leon Vaccarelli deposited customer funds into his personal and business bank accounts. He allegedly commingled the funds with his own money and used them for his own purposes, and in some instances he used customer funds to pay returns to earlier investors. According to the SEC’s complaint, Leon Vaccarelli asked one customer to sign an agreement that she would not provide certain information to FINRA or the SEC. Leon Vaccarelli allegedly sold more than $450,000 in securities that were held in trust for the care and maintenance of a beneficiary and used some of the proceeds to pay business and personal expenses. Read More
On August 31, 2017, the Securities and Exchange Commission (“SEC”) charged an accountant and three others with insider trading on market-moving news about Celator Pharmaceuticals, the New Jersey-based pharmaceutical company where the accountant formerly worked.
The SEC’s complaint, filed in federal court in New Jersey, alleges that Evan Kita, a CPA and former accountant at Celator Pharmaceuticals Inc., tipped two of his friends with confidential information about the clinical trial results for Celator’s cancer drug and its acquisition by Dublin-based Jazz Pharmaceuticals Plc almost three months later. Celator’s stock rose more than 400 percent in March 2016 when it announced positive results for its drug to treat leukemia, and Jazz Pharmaceuticals offered to pay a hefty premium in May 2016 to acquire Celator.