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On April 9, 2019, the SEC (Securities and Exchange Commission) charged one of the former attorneys of SeaWorld Entertainment Inc. with insider trading. The “inside knowledge” was that the company’s revenue would be better than anticipated for the second quarter of 2018.

The allegations were than Paul B. Powers had revenue information as the company’s associate general counsel and assistant secretary. Based on the info, Powers purchased 18,000 shares of SeaWorld stock right after he received a confidential draft of the 2018 second quarter earnings, detailing strong  performance by Sea World.   Powers then sold his SeaWorld shares for approximately $65,000 in illicit profits.

“… Powers blatantly exploited his access to nonpublic information by misusing SeaWorld’s confidential revenue data to enrich himself,” said an SEC spokesman who continued.  “Investors should feel confident in the integrity of corporate officers, particularly attorneys…”

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The SEC (Securities and Exchange Commission) on April 2, 2019 charged the founder a Silicon Valley startup with defrauding investors in Jumio Inc. a private mobile payments company.

Former CEO, Daniel Mattes, agreed to pay more than $17 million to settle the charges.

The SEC’s complaint which was filed in federal court in California alleged that Mattes overstated Jumio’s 2013 and 2014 revenues,. then sold shares he owned to unrelated investors.

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$50 MILLION IN WHISTLEBLOWER AWARDS BY SEC

On March 26, 2019, the SEC (Securities and Exchange Commission) awarded $50 million to two whistleblowers. The information provided the basis for an enforcement action.

One Whistleblower received an award of $37 million; the other $13 million.

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BROKER NAILED FOR $250K. BROKER TIMARY DELORME FINED IN  PUMP AND DUMP.

The SEC  (Securities and Exchange Commission) (SEC) announced that Wedbush Securities Inc. will pay a $250,000 penalty and has agreed to be censured to settle its failure to supervise charge concerning a “pump and dump” scheme by its broker, Timary Delorme.

The SEC stated: “Wedbush ignored numerous red flags indicating that one of its registered representatives was involved in a long-running pump-and-dump scheme targeting retail investors. Wedbush conducted two flawed and insufficient investigations into the registered representative’s conduct, and failed to take appropriate action.”

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Two FINRA claims were filed involving Michael Fasciglione’s and National Securities Corporation. The claims allege suitability, breach of contract, breach of fiduciary duty, negligence, and/or churning.

The claims were settled for $525,000 and $80,000. FINRA reports of 6 other settled claims involving with prior brokerages.

Michael Fasciglione has been licensed with Aegis Capital Corp since September 2017; previously Fasciglione was licensed with National Securities Corporation. In December 2014, Fasciglione was suspended from the securities industry for 1 month and fined $5,000 by FINRA.

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On March 15, 2019, Talimco LLC, a registered investment adviser, and its former COO, Rodgers, were charged with manipulating the auction of a commercial real estate asset. One client’s asset was raided in a bid rigging scheme to sell the asset to a private affiliated client.

The asset was a commercial real estate asset sold in an alleged bidding process.

Talimco and Rogers owed its selling client a fiduciary duty to take steps to use its best efforts to maximize the price obtained for the asset. Rather than searching for competitive arms length offers, Rogers purportedly used the firm’s successful affiliated fund client for one bid, then convinced two other bidders to participate in the auction (who were actually shills who would underbid).

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On February 25, 2019, the SEC took action against against the operators of a South Florida investment fund and its principals. One principal had a felony record. The charges were filed  against Castleberry Financial Services Group LLC and its  president, T. Jonathon Turner and another officer, Norman M. Strell.

The SEC alleged that investors were defrauded  of $3.6 million.

The SEC alleged that Castleberry mis-represented to investors it had hundreds of millions invested in local  properties and businesses. High yields were offered, claiming that a large insurer, CNA and Chubb “bonded” the investments.  CNA and Chubb had no connection with Castleberry. CNA’s and Chubb’s logos were also misappropriated.

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FINRA Broker Check reports that a complaint, dated 26 February 2019, was filed against James Bradley Schwartz (“Schwartz”) (Disciplinary Proceeding. 201605170430), while associated with Aegis Capital Corp. (“Aegis” or the “Firm”). The Complaint by FINRA’s Division of Enforcement alleges that Schwartz and Aegis (a FINRA-regulated broker-dealer), churned and excessively traded the accounts of four customers from August 2014 through May 2016.

During that period, Schwartz purportedly executed approximately 535 trades in the customer accounts – resulting in annualized turnover rates ranging from 19.9 to 54.7, and annualized cost-to-equity ratios (or break-even points) ranging from 87% to 120%.

The FINRA Complaint further alleges that Schwartz’s churning and excessive trading was unsuitable, unauthorized and caused combined losses of more than $660,000 in these four customers’ accounts. At the same time, Schwartz’s trading generated gross sales credits and commissions of approximately $277,705, of which Schwartz received more than $194,000.

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A biotech company employee was charged today with insider trading by the SEC. The SEC alleged that the employee had foreknowledge of the withdrawal of certain products from consideration by the US Food and Drug Administration. Securities and Exchange Commission v. Joseph Frank Vacante, No. 19-civ-1616 (S.D.N.Y. filed Feb. 21, 2019)

Joseph Frank Vacante, formerly employed at Trinity Biotech, PLC agreed to pay more than $140,000 to settle the SEC’s charges.

The SEC alleged that, on September 29, 2016, Vacante learned that the FDA had recommended that Trinity withdraw two biotech drugs which Vacante identified as vital to the company. The SEC Complaint was dated September 2019.  The complaint alleged Vacante twice communicated with his broker on the same day in efforts to sell Trinity American Depository Receipts (ADRs).

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On February 14, 2019 and February 22, 2019, respectively, A federal district court in Securities and Exchange Commission v. Walter C. Little and Andrew M. Berke, Civil Action No. 1:17-CV-03536 (S.D.N.Y., filed May 11, 2017), entered judgments against two inside traders, a former law firm partner and his neighbor.

Profits of about $1 million were made with the stolen inside info.

The SEC alleged that Walter C. Little, an attorney, viewed confidential material on his law firm’s  computer network related to about 11 deals involving law firm clients. Little then purportedly  traded and tipped his neighbor, Andrew M. Berke. The Complaint stated that the reading occurred from February 2015 to February 2016.