Financial Enforcement Actions | Week of July 31 to August 06

Penalties: N/A
Respondent: Jeannette Simmons
Violation: In the Bexar County Judicial District Court, Jeannette Simmons, former bookkeeper for the Sheet Metal, Air, Rail, and Transportation Union (SMART) Southwest Gulf Coast Regional Council (SWGCRC), located in San Antonio, Tex., was charged with one count of theft, one count of misapplication of fiduciary property, and one count of forgery in the aggregate amount greater than $30,000 and less than $150,000, in violation of Texas Codes 31.03, 32.45, and 32.21, respectively… Read More

Penalties: $0.00
Respondent: K+S Aktiengesellschaft & Stone Canyon Industries Holdings LLC., Scih Salt Holdings Inc.; Morton Salt Inc.
Violation: On April 19, 2021, the United States filed a civil antitrust Complaint seeking to enjoin the proposed acquisition of assets, including Morton Salt, Inc. (“Morton”), from K+S Aktiengesellschaft (“K+S AG”) by Stone Canyon Industries Holdings LLC (“Stone Canyon”) and SCIH Salt Holdings Inc. (“SCIH”)… Read More

Penalties: $0.00
Respondent: Intuit Inc. et al.
Violation: Intuit Inc. (“Intuit”) and Credit Karma, Inc. (“Credit Karma”), have consented to entry of this Final Judgment without the taking of testimony, without trial or adjudication of any issue of fact or law, and without this Final Judgment constituting any evidence against or admission by any party regarding any issue of fact or law… Read More

Penalties: $250,000.00
Respondent: Dealerweb Inc
Violation: This matter arises out Dealerweb’s failure to comply with Regulation Systems Compliance and Integrity (Reg SCI) under the Securities Exchange Act of 1934 (Exchange Act) with respect to its ATS. Under Reg SCI, an ATS that exceeds certain trading volume thresholds is defined as an SCI ATS and, thus, is required to comply with the substantive provisions of Reg SCI… Read More

Penalties: $5,000.00
Respondent: Cesar Hurtado
Violation: Between January 2013 and August 2019, Hurtado recommended and effected an unsuitable options strategy in the accounts of two customers. He repeatedly recommended that the customers take assignment, hold the subject securities, and later sell them at a loss, rather than mitigate losses through a spread options strategy as intended. Hurtado therefore violated FINRA Rules 2111(a), 2360(b)(18)(A), 2360(b)(19), and 2010… Read More

Penalties: $10,000.00
Respondent: Dough LLC
Violation: From July 2019 through June 7, 2021, Dough allowed an individual to operate as a principal despite the firm knowing that the individual was not registered as a principal. As a result, the firm violated FINRA Rules 1220 and 2010… Read More

Penalties: N/A
Respondent: Casey J. Kemerly
Violation: Beginning in June 2021, Kemerly refused to respond to requests for documents and information issued pursuant to FINRA Rule 8210, thereby violating FINRA Rules 8210 and 2010… Read More

Penalties: N/A
Respondent: David Allen Maute
Violation: Maute refused to respond to requests for information and documents sent by FINRA pursuant to FINRA Rule 8210. Maute thereby violated FINRA Rules 8210 and 2010… Read More

Penalties: $85,000.00
Respondent: Piper Sandler & Co. (f/k/a Sandler O’Neill & Partners, L.P)
Violation: During the periods April 1, 2017 through June 30, 2018 and October 1, 2019 through December 31, 2019 (collectively, the review period3), Piper participated in 34 distributions of securities in which it was late in filing, or failed to file, the notifications required under FINRA Rule 5190, which is in place to monitor compliance with the provisions of Regulation M of the Securities Exchange Act of 1934… Read More

Penalties: N/A
Respondent: Walter Morrow Allen
Violation: Respondent refused to provide information and documents requested pursuant to FINRA Rule 8210, in violation of FINRA Rules 8210 and 2010… Read More

Penalties: N/A
Respondent: Eugene A. McAdams
Violation: McAdams declined to provide on-the-record testimony as requested pursuant to FINRA Rule 8210, in violation of FINRA Rules 8210 and 2010… Read More

Penalties: N/A
Respondent: Yonara Valerio
Violation: Valerio refused to appear for on-the-record testimony and failed to provide information and documents that were requested pursuant to FINRA Rule 8210, in violation of FINRA Rules 8210 and 2010… Read More

Penalties: $5,000.00
Respondent: Giordan Marc Zaro
Violation: In October 2019, Zaro improperly removed, from Merrill Lynch’s office, files containing nonpublic personal information of Merrill Lynch customers and retained the files, without the consent of Merrill Lynch or the customers’ knowledge or consent, after the firm terminated his employment. Zaro then gave the files to a nonaffiliated third party of the firm, who returned the files in a sealed box to the firm on Zaro’s behalf three days after Zaro’s termination… Read More

Penalties: N/A
Respondent: James F. O’Reilly
Violation: In May 2021, FINRA sent O’Reilly a notice to appear for on-the-record testimony pursuant to FINRA Rule 8210. O’Reilly refused to appear for this testimony, in violation of FINRA Rules 8210 and 2010… Read More

Penalties: N/A
Respondent: Jeffrey Scott Anderson
Violation: From October through December 2019, Anderson converted $26,579.72 from his elderly NYLife customer by convincing the customer to write checks to him personally to purchase investments or insurance for the customer. Rather than using the funds to purchase investments or insurance, Anderson used the customer’s funds to pay his personal expenses. By converting and misusing the customer’s funds, Anderson violated FINRA Rules 2150(a) and 2010… Read More

Penalties: $275,000.00
Respondent: Kimberly D. Butler & Prosperity Economics Partners LLC.; Partners For Prosperity LLC.
Violation: From May 2015 through December 2020, Butler solicited investors to purchase securities issued by Woodbridge Mortgage Investment Fund 4, LLC (“Woodbridge”) and four other private companies, identified herein as Company A, Company B, Company C, and Company D. Butler solicited investors through two entities she controlled, Prosperity and Partners… Read More

Penalties: $408,693.42
Respondent: Jeffrey C. Sica & Sica Wealth Wealth Management LLC.
Violation: The Commission found that from October 2013 to March 2015, based on Sica’s recommendation, approximately 45 SWM advisory clients invested a total of more than $30 million in securities issued by Aequitas Commercial Finance, LLC (“ACF”), one of numerous entities affiliated with the Aequitas enterprise, the ultimate parent of which is Aequitas Management, LLC (collectively referred to herein as “Aequitas”)… Read More

Penalties: $65,000,000.00
Respondent: Robinhood Financial, LLC
Violation: The Commission found material misrepresentations and omissions by Robinhood relating to its revenue sources, specifically its receipt of payments from certain principal trading firms, for routing Robinhood customer orders to them… Read More

Penalties: $13,357,406.00
Respondent: Gregory Keough; Derek Acree & Blockchain Credit Partners d/b/a DeFi Money Market
Violation: From February 2020 to February 2021 (the “Relevant Time Period”), Gregory Keough and Derek Acree and their company, Blockchain Credit Partners, operated DeFi Money Market (“DMM”). Through DMM, Respondents offered and sold more than $30 million of securities in unregistered offerings by using smart contracts and “decentralized finance” (or “DeFi”) technology to sell digital tokens. In marketing on a website, social media, and other means, Respondents made materially false and misleading statements concerning the operations and profitability of DMM… Read More

Penalties: $15,688,350.00
Respondent: Oleksandr Ieremenko; Sungjin Cho; David Kwon; Igor Sabodakha; Victoria Vorochek; Ivan Olefir; Andrey Sarafanov & Capyield Systems Ltd; Spirit Trade Ltd
Violation: The SEC’s complaint alleged that Ieremenko, a Ukrainian hacker, gained access to EDGAR in 2016 and extracted EDGAR filings containing nonpublic earnings results. The information in the filings was allegedly passed to individuals, including Sarafanov, who used it to trade in the narrow window between when the files were extracted from SEC systems and when the companies released the information to the public… Read More

Penalties: $481,920.00
Respondent: National Beverage Corp
Violation: From fiscal years 2016 through 2020, NBC did not adequately evaluate and disclose certain executive perquisites in its annual proxy statements related to the authorized but undisclosed use of an aircraft (the “Aircraft”) by the Chief Executive Officer (“CEO”) that was not integrally and directly related to his job duties. The Aircraft is jointly owned by NBC and NBC’s management company (the “Management Company”), which is wholly owned by NBC’s CEO. In connection with this conduct, NBC violated Sections 13(a) and 14(a) of the Exchange Act and Rules 12b-20, 13a-1, 13a-15(a), 14a-3, and 14a-9 thereunder… Read More

Penalties: $339,012.40
Respondent: Wendan Bao; Shuo Gu & Lendingcar Corp; H7 Credit LLC.
Violation: This matter involves the misappropriation of assets by Wendan Bao and Shuo Gu, Chinese nationals resident in the United States,in connection with a private securities offering. Starting in May 2018, Bao and Gu, who were domestic partners at that time and later married, sought to raise investor monies through the DeYao Fund, LP (“DeYao Fund” or the “Fund”), a pooled investment vehicle set up tofund dealer floor plan loans to automobile dealerships in order to finance the purchase of used car inventory… Read More

Penalties: $542,768.00
Respondent: Uulala, Inc & Oscar Garcia; Matthew Loughran
Violation: The SEC’s complaint, filed in the United States District Court for the Central District of California, alleges that, from December 2017 through January 2019, Uulala sold UULA tokens, which were allegedly to be used to record transactions in a financial application (“app”) that Uulala was developing and promoting to those without access to traditional banking services… Read More

Penalties: N/A
Respondent: Carl E. Dilley; Micah J. Eldred & Spartan Securities Group, LTD; Capital Management LLC d/b/a Island Stock Transfer
Violation: Evidence at trial showed that Spartan Securities, Dilley, and Eldred made misrepresentations and omissions in the filing of 15c2-11 applications and submissions with Financial Industry Regulatory Authority (FINRA), which are required to publicly list the companies’ common stock and ultimately enable the shares to become free-trading and available to public investors… Read More

Penalties: N/A
Respondent: Douglas Michael Hodge
Violation: In his plea, Hodge acknowledged that, beginning in 2012 and continuing until March 2015, he agreed to pay and then paid a combined total of $525,000 to facilitate the admission of two of his children to a private research university located in California… Read More

Penalties: N/A
Respondent: John Isaac a/k/a Jon Isaac, Kingston Diversified Holdings LLC; Virland A. Johnson & Live Ventures Incorporated; JanOne Inc (f/k/a Appliance Recycling Centers of America, Inc.);
Violation: The SEC’s complaint alleges that Las Vegas-based Live Ventures Incorporated and its CEO, Jon Isaac, recorded income from a backdated contract to boost Live Ventures’ pre-tax income for fiscal year 2016 by 20%. Live Ventures and Isaac also allegedly overstated earnings per share by 40% by improperly understating Live Ventures’ outstanding share count. The complaint alleges that in addition to disclosing falsified financial results, Isaac hired a stock promoter to boost interest in Live Ventures. As alleged, the financial manipulation and stock promotion caused Live Ventures’ share price to spike… Read More

Penalties: $249,455.69
Respondent: USA Financial Securities Corporation
Violation: These proceedings arise out of breaches of fiduciary duty by USAFS, a dually registered investment adviser and broker-dealer, in connection with its receipt of third-party compensation from client investments without fully and fairly disclosing its conflicts of interest… Read More

Penalties: N/A
Respondent: Michael Shustek & Vestin Mortgage LLC
Violation: The complaint alleges that since at least 2012, Shustek fraudulently enriched himself and one of the REITs he controlled, The Parking REIT, at the expense of two publicly traded REITs that he earlier had founded, Vestin Realty Mortgage I (“VRTA”) and Vestin Realty Mortgage II (“VRTB”). According to the complaint, Shustek drained $29 million from VRTA and VRTB in order to funnel the money into The Parking REIT and later directed VRTA and VRTB to enter into a series of money-losing transactions in which the same six buildings were repeatedly re-sold, all to benefit himself and The Parking REIT… Read More

Penalties: $51,000.00
Respondent: William G. Stiehl
Violation: This matter arises from conduct by Stiehl, the then-CAO and controller of a United States publicly-traded company and SEC-Registrant (“Issuer”) from 2014 through 2015 in connection with Issuer’s selection process and appointment of an accounting firm to serve as the independent auditor of Issuer’s financial statements (“Audit Firm”)… Read More

Penalties: $10,090,000.00
Respondent: James G. Herring Jr., James A. Young; Curt W. Fochtmann & Ernst & Young LLP
Violation: This matter involves improper professional conduct by EY, a public accounting firm, from 2014 through 2015 and EY audit partners James “Jay” Herring (“Herring”) and James “Jay” Young (“Young”), and EY tax partner Curt Fochtmann (“Fochtmann”) (collectively, “EY Partners”) in connection with their pursuit to serve as the independent auditor for a United States publicly-traded company and SEC-Registrant (“Issuer”)… Read More

Penalties: $1,045,528.32
Respondent: First Heartland Consultants Inc.
Violation: First Heartland, a registered investment adviser, breached its fiduciary duty to advisory clients by failing to disclose three types of compensation paid to First Heartland’s affiliated broker. Since at least January 2014, First Heartland’s affiliated broker received revenue sharing payments from an unaffiliated clearing broker (“Clearing Broker”) as a result of First Heartland’s advisory clients’ investments in certain mutual funds, including certain cash sweep money market mutual funds… Read More

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