SEC Announces Fraud Charges in Ticket Resale Investment Scam

On April 29,2019, the SEC charged James Siniscalchi, a New York City man with continuing a previously charged scheme, stealing millions of dollars from investors who were allegedly falsely promised their funds would be used for the purchase and resale of tickets to Broadway shows and a sporting event.On April 29,2019, the SEC charged James Siniscalchi, a New York City man with continuing a previously charged scheme, stealing millions of dollars from investors who were allegedly falsely promised their funds would be used for the purchase and resale of tickets to Broadway shows and a sporting event.

According to the SEC’s complaint, James Siniscalchi, Chief Compliance Officer of a company that claimed to have special access to profitable and highly sought-after event tickets, knowingly misused investor money to benefit himself and his extended family. The SEC alleges that James Siniscalchi and his business partners rebranded businesses formerly run by his cousin, Joseph Meli, who ultimately settled to SEC fraud charges and pled guilty to securities fraud in a parallel criminal action, and that this rebranding was done with Joseph Meli’s knowledge and help. Read More

SEC Obtains Asset Freeze in Connection with Alleged Insider Trading

The SEC announced on April 29,2019, the entry of an emergency court order freezing assets related to alleged insider trading that yielded approximately $2.5 million in profits in connection with the April 12, 2019 announcement that oil-and-gas conglomerate Chevron Corporation intended to acquire Anadarko Petroleum Corporation.The SEC announced on April 29,2019, the entry of an emergency court order freezing assets related to alleged insider trading that yielded approximately $2.5 million in profits in connection with the April 12, 2019 announcement that oil-and-gas conglomerate Chevron Corporation intended to acquire Anadarko Petroleum Corporation.

The SEC’s complaint, which was filed in U.S. District Court for the Southern District of New York, identifies a series of suspicious transactions prior to the announcement that Chevron intends to acquire all of Anadarko’s outstanding shares for $65 per share in cash and stock, representing a 38 percent premium over Anadarko’s pre-announcement closing price.  The traders, who are currently unknown, allegedly used foreign brokerage accounts in the United Kingdom and Cyprus to purchase out-of-the-money call options through U.S.-based brokerage firms and on U.S.-based exchanges in the days leading up to the announcement.  Following the acquisition announcement, Anadarko’s shares rose significantly and the brokerage account customers profited by either selling many of the option contracts at a profit or exercising the options to acquire large positions of Anadarko stock at steep discounts. The court’s order freezes the proceeds related to the foreign accounts’ trading. Read More

Regulation A+ Now Available For Public Reporting Companies

On December 19, 2018, the Securities and Exchange Commission (the “SEC”) adopted amendments to Regulation A informally referred to as Regulation A+. The amendment allows companies that are subject to SEC reporting requirements under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”), to conduct securities offerings using Regulation A+. The amendments to Regulation A were mandated by the Economic Growth, Regulatory Relief, and Consumer Protection Act, which became law in May 2018.Benefits of Regulation A+ Amendments

On December 19, 2018, the Securities and Exchange Commission (the “SEC”) adopted amendments to Regulation A informally referred to as Regulation A+. The amendment allows companies that are subject to SEC reporting requirements under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the “Securities Exchange Act”), to conduct securities offerings using Regulation A+. The amendments to Regulation A were mandated by the Economic Growth, Regulatory Relief, and Consumer Protection Act, which became law in May 2018.

As discussed in more detail below, the amendments offer benefits to smaller reporting companies not listed on the New York Stock Exchange (“NYSE”) or NASDAQ and companies subject to SEC reporting requirements that do not qualify to, use Form S-3 or F-3 shelf registration statements. Read More

SEC Charges Christopher Dougherty, an Investment Adviser with Running a Ponzi Scheme

On April 26, 2019, the Securities and Exchange Commission charged Christopher Dougherty and several entities he controlled, with operating a Ponzi scheme that defrauded his investment advisory clients out of $7 million. The San Diego District Attorney's Office separately announced criminal charges related to the same conduct.On April 26, 2019, the SEC charged Christopher Dougherty and several entities he controlled, with operating a Ponzi scheme that defrauded his investment advisory clients out of $7 million. The San Diego District Attorney’s Office separately announced criminal charges related to the same conduct.

The SEC alleges that Christopher Dougherty provided investment advice to school district employees, hospital employees, veterans, and neighbors, most of whom were unsophisticated investors and trusted Christopher Dougherty completely. Read More

Truckload Freight Company Charged with Accounting Fraud

The SEC charged on April 25,2019, an Indianapolis-based Celadon Group Inc. with an accounting fraud that allowed the truckload freight company to avoid disclosing substantial losses and misrepresent its financial condition.The SEC charged on April 25,2019, an Indianapolis-based Celadon Group Inc. with an accounting fraud that allowed the truckload freight company to avoid disclosing substantial losses and misrepresent its financial condition.

In a complaint filed in federal court in Indianapolis, the SEC charged that between mid-2016 and April 2017, Celadon avoided recognizing at least $20 million in impairment charges and losses – almost two-thirds of its 2016 pre-tax income – by selling and buying used trucks at inflated prices from third parties. According to the complaint, as a result of the alleged scheme, Celadon overstated its pre-tax and net income and earnings per share in its annual report for the period ending June 30, 2016, and in its subsequent public filings for the first two fiscal quarters of 2017. Read More

Former Broker Zachary Berkey Ordered to Pay Disgorgement and Penalties

On April 18, 2019, the United States District Court for the Southern District of New York, ordered a former broker, Zachary Berkey, to pay $106,000 in disgorgement, plus prejudgment interest, and $71,000 in civil penalties.On April 18, 2019, the United States District Court for the Southern District of New York, ordered a former broker, Zachary Berkey, to pay $106,000 in disgorgement, plus prejudgment interest, and $71,000 in civil penalties.

The SEC charged Zachary Berkey on December 6, 2017, alleging that, while a broker at Four Points Capital Partners LLC, Zachary Berkey conducted in-and-out trading that was almost certain to lose money for customers while yielding commissions for himself. Read More

SEC Halts Misappropriation and Fraudulent Securities Offering

On April 23, 2019, the SEC obtained an emergency asset freeze and temporary restraining order to halt an ongoing fraudulent securities offering by Eric D. Lyons, a Massachusetts resident, in an attempt to conceal his misappropriation from certain hedge funds Eric Lyons advised through his Massachusetts-based investment advisory businesses.On April 23, 2019, the SEC obtained an emergency asset freeze and temporary restraining order to halt an ongoing fraudulent securities offering by Eric Lyons, a Massachusetts resident, in an attempt to conceal his misappropriation from certain hedge funds Eric Lyons advised through his Massachusetts-based investment advisory businesses.

According to the SEC’s complaint, from mid-2017 to the present, Eric Lyons and various investment adviser entities with the name Synchrony that Eric Lyons controlled engaged in a scheme to misappropriate assets from hedge funds Eric Lyons and these Synchrony adviser entities managed. The SEC alleges that Eric Lyons transferred hundreds of thousands of dollars from the Synchrony hedge funds to Eric Lyons’ personal bank accounts to pay for personal expenses, including frequent vacation travel, entertainment, rent, automobile lease payments, and other personal expenses. Further, the SEC alleges that Eric Lyons replaced some of the misappropriated money by engaging in a securities offering fraud, in which he obtained approximately $300,000 from an investor based on false and misleading statements about other potential large investors and a fabricated $100 million business valuation. In total, the SEC’s complaint alleges that Eric Lyons and the Synchrony adviser entities raised approximately $700,000 from their misappropriation and securities offering fraud schemes. Read More

SEC Charges Microcap Fraudster with Running a Pump-and-Dump Scheme

The SEC charged David Loflin for his role in a pump-and-dump scheme in the stock of Greenway Design Group, Inc., a Phoenix, Arizona company that was secretly controlled by David Loflin's now-deceased business partner.The SEC charged David Loflin on April 22,2019, for his role in a pump-and-dump scheme in the stock of Greenway Design Group, Inc., a Phoenix, Arizona company that was secretly controlled by David Loflin’s now-deceased business partner.

According to the SEC’s complaint, in 2013, David Loflin helped his business partner gain control of Greenway, using a front company to hide his partner’s identity. David Loflin then created back-dated convertible promissory notes to document debts owed by Greenway that could be repaid with the company’s stock. David Loflin purchased portions of the notes, converted them into stock and prepared all of the paperwork. David Loflin secured false attorney opinion letters in order to obtain stock certificates and deposit them for sale with his brokerage firm. The letters and paperwork contained false and misleading information, meant to give the impression that David Loflin was permitted to sell the shares into the open market. Read More

SEC Charges Kimberly Sredich with Misappropriation Scheme

On April 18, 2019, the SEC charged Kimberly Sredich, a Michigan resident, with misappropriating funds from brokerage customers of a registered broker-dealer with which she was associated. The SEC's complaint alleges that between 2014 and 2018, Kimberly Sredich sold securities in at least 15 customer accounts and misappropriated the proceeds of the sales.

On April 18, 2019, the SEC charged Kimberly Sredich, a Michigan resident, with misappropriating funds from brokerage customers of a registered broker-dealer with which she was associated. The SEC’s complaint alleges that between 2014 and 2018, Kimberly Sredich sold securities in at least 15 customer accounts and misappropriated the proceeds of the sales.

According to the complaint, many of the customers were elderly. The complaint further alleges that Kimberly Sredich forged customers’ signatures and used blank letters of authorization previously signed by customers to transfer funds to a company she controlled. She then allegedly transferred most of the misappropriated funds to a personal bank account. Read More

SEC Charges Yuh-Yue Chen, a California Engineer with Insider Trading

The SEC announced  on April 18,2019, the filing of insider trading charges against Yuh-Yue Chen, a former engineer at Skyworks Solutions, Inc., a Massachusetts-based company with executive offices and a design center in Irvine, California that designs, manufactures and sells wireless analog semiconductors.The SEC announced  on April 18,2019, the filing of insider trading charges against Yuh-Yue Chen, a former engineer at Skyworks Solutions, Inc., a Massachusetts-based company with executive offices and a design center in Irvine, California that designs, manufactures and sells wireless analog semiconductors.

The SEC’s complaint alleges that Yuh-Yue Chen, while working as an engineer at Skyworks in Irvine, traded multiple times in advance of the company’s earnings announcements. The complaint further alleges that Yuh-Yue Chen improperly accessed the company’s accounting and finance area, reviewed non-public financial reports, and used that information to purchase Skyworks securities in advance of the company’s announcements of financial results for the second and third quarters in 2014. The SEC charges that after Skyworks announced positive quarterly financial results on April 22, 2014 and again on July 17, 2014, Yuh-Yue Chen sold Skyworks securities for a total profit of at least $739,959. The complaint further alleges that in September 2014, Chen fled the country after Skyworks’ security found him loitering in the office restricted area designated for the accounting and finance staff. He recently returned to the United States for a visit at the end of March, when he was interviewed and subsequently served with the SEC’s complaint prior to his planned departure. Read More