SEC News - Law Offices of Robert Wayne Pearce

Jun 3, 2015

Brokerage Firm Chief Compliance Officer Charged With Fraud and Money Laundering

According to the Securities and Exchange Commission (SEC), William Quigley, a former chief compliance officer at New York-based Trident Partners Ltd., was charged with fraud and money laundering for diverting money from overseas investors to family members in the Philippines. William Michael Quigley, of Seaford New York, faces both criminal and civil charges. The SEC claims that Mr. Quigley convinced foreign investors to invest in well-known U.S companies and start-ups which were on the brink of going public. Instead of investing the customers’ funds, however, Mr. Quigley diverted the funds for his and his brother’s personal use. This scheme was allegedly perpetrated by sending investors fake account statements using a fictitious firm name for more than 10 years.

May 13, 2015

JP Morgan under Investigation for Possible Breach of Fiduciary Duty in Mutual Fund Sales

JPMorgan Chase & Co (JPMorgan) is under investigation by the Securities and Exchange Commission (SEC) about a potential conflict of interest and breach of fiduciary duty with respect to its sales of mutual funds and other proprietary products. According to InvestmentNews, JPMorgan received subpoenas and inquiries from the SEC and other government authorities about the firm’s sale and recommendations of mutual funds and other proprietary investment products in its wealth management business. At question is the alleged breach of fiduciary duty, which requires that financial advisors put their customers’ best interests ahead of their own.

Jan 30, 2015

Girard Securities Subject of Massive SEC Audit Focusing on Branch Office Supervision

Girard Securities, Inc. (Girard Securities) is the subject of a massive audit by the U.S. Securities and Exchange Commission (SEC). The primary focus of the audit will be on the supervision of the registered representatives and financial advisors in its branch offices. With over 230 producing registered reps and financial advisors, the big question is, How will Girard Securities fare under the microscope of the SEC? Girard Securities has been acquired by RCS Capital Corp., an acquisition awaiting the approval of the Financial Industry Regulatory Authority (FINRA). Approval is expected at the end of February, according to a memo from Girard Securities’ Chairperson and Chief Executive, Susie Woltman Tietjen. RCS Capital Corp.’s purchase of Girard Securities, plus its August 2014 purchase of VSR Financial, with its 264 registered representatives and financial advisors, means that RCS Capital Corp. will have nearly 9,700 registered reps and advisors! It appears that the SEC is right on target with its audit priority of branch office supervision!

Nov 6, 2014

SEC Cracks Down on Improper Sales of Puerto Rico Junk Bonds

The Securities and Exchange Commission (SEC) has fined 13 brokerage firms, including Charles Schwab, J.P. Morgan, Oppenheimer, TD Ameritrade, and UBS Financial, for violating a rule that is meant to protect investors from improper sales of high-risk Puerto Rican municipal bonds. The fines range from $54,000 to $130,000. The SEC sanctions are the first under the Municipal Securities Rulemaking Board (MSRB) Rule G-15(f), which establishes the minimum denomination requirement for the sales of municipal bonds. The minimum denomination amounts are the least amount of a given municipal bond that a broker dealer is permitted to sell to an investor in one transaction. The more risky the bond, the higher the minimum. This is meant to ensure that the bond investments are suited to the appropriate investor.

Oct 6, 2014

The SEC Charges Positron Corp, Patrick Rooney, and John Rooney with Market Manipulation Scheme

The Securities and Exchange Commission (SEC) has brought charges against Westmont, Illinois-based Positron Corporation (Positron), then-CEO of Positron, Patrick G. Rooney of Westmont, Illinois, and John R. Rooney, of Jupiter Florida. The SEC has charged them with orchestrating a market manipulation scheme involving the company’s stock. The SEC’s complaint alleges that Positron, Patrick Rooney, and John Rooney made an inducement payment to a stock promoter who would purchase shares of Positron ahead of planned press releases in order to manipulate the stock by giving the appearance of market activity, thereby increasing the trading price and volume.

Sep 30, 2014

The SEC Charges Two Former Wells Fargo Employees With Insider Trading Scheme

The Securities and Exchange Commission (SEC) has brought charges against two former Wells Fargo employees, Gregory T. Bolan Jr. (Bolan) of Nashville, Tennessee and Joseph C. Ruggieri (Ruggieri) of Raleigh, North Carolina, for an alleged insider trading scheme involving buying or short selling stocks ahead of research analyst reports which contained ratings changes. According to the SEC order, Bolan was a research analyst at Wells Fargo Securities, LLC (Wells Fargo) and provided Ruggieri, a former trader at Wells Fargo, with advance notice of forthcoming rating changes. This advanced information allegedly led to Ruggieri trading ahead of the ratings changes; short selling stock ahead of a downgrade and buying stock ahead of upgrades. Ruggieri allegedly generated over $117,000 in gross profits for Wells Fargo and was terminated from Wells Fargo after compliance questioned him about communications involving Bolan. Bolan resigned from Wells Fargo after being questioned by compliance personnel. The SEC’s order, instituting a litigation proceeding, charged Bolan and Ruggieri with violating Sections 17(a) and 10(b) of the Securities Exchange Act of 1934 and Exchange Act Rule 10b-5. The administrative proceeding will determine what, if any, relief is in the public interest, including disgorgement of ill-gotten gains, prejudgment interest, monetary penalties and other remedial measures. Illegal insider trading is the act of buying or selling a security, in breach of a fiduciary duty or other relationship of trust and confidence, while in possession of material, nonpublic information about a company. Insider trading violations may also include “tipping” such information; trading by the person tipped – the “tippee,” and trading by those who misappropriate such information. Section 10(b) of the Securities and Exchange Act of 1934 makes it unlawful for any person to “use or employ, in connection with the purchase or sale of any security registered on a national securities exchange or any security not so registered, any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [SEC] may prescribe.” To implement Section 10(b), the SEC adopted Rule 10b-5, which makes it unlawful to engage in fraud or misrepresentation in connection with the purchase or sale of a security.

Mar 6, 2014

SEC Gets $7.2 Million Regulation M – Rule 105 Settlement

The SEC continues to crackdown on Regulation M – Rule 105 short selling violations throughout the country. Yesterday, the SEC announced its largest Regulation M settlement to date. Jeffrey W. Lynn and his company Worldwide Capital agreed to pay a total of $7.2 million to settle all charges. According to the SEC’s allegations in an Order Instituting Administrative Proceedings, Mr. Lynn and many traders working for him at Worldwide Capital engaged in an investment strategy to purchase new shares of public issuers in secondary offerings and follow-on public offerings. The Worldwide Capital traders had numerous accounts with many of the broker-dealers involved in the offering where they purchased much of the stock allocated to them. The stock was then delivered to a prime broker and then sold short through a Worldwide Capital account. The large number of traders that Mr. Lynn employed allowed him to obtain large allocations of shares of the soon to be publicly offered issuer. In anticipation of declines in the market price of the shares of the issuer on the effective date of the offering, Mr. Lynn and his traders would sell those shares short and reap huge profits when they delivered the stock allocated to them in the secondary and follow-on offerings. The SEC alleged that Mr. Lynn directly and indirectly participated in over 60 public stock offerings and sold stock short during a restricted period that resulted in Rule 105 violations.