Financial Enforcement Actions | Week of May 29 to June 04

Penalties: N/A
Respondent: Altria Group, Inc; JUUL Labs, Inc
Violation: The Federal Trade Commission has filed an administrative complaint alleging that Altria Group, Inc. and JUUL Labs, Inc. entered a series of agreements, including Altria’s acquisition of a 35% stake in JUUL, that eliminated competition in violation of federal antitrust laws… Read More

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

Penalties: N/A
Respondent: Grant C. Birkley
Violation: Birkley refused to provide information and documents requested by FINRA pursuant to FINRA Rule 8210, in violation of FINRA Rules 8210 and 2010… Read More

Penalties: N/A
Respondent: Mario E. Rivero, Jr
Violation: Rivero refused to provide information and documents requested by FINRA pursuant to FINRA Rule 8210, in violation of FINRA Rules 8210 and 2010… Read More

Penalties: $7,565.38
Respondent: Adam James Makkai
Violation: For paying commissions to an unregistered person, in violation of FINRA Rules 2040 and 2010, Respondent is fined $2,000 and suspended for ten business days from associating with any FINRA member firm in any capacity. Respondent is also ordered to pay cost… Read More

Penalties: N/A
Respondent: Louis P. Kreisberg
Violation: In May 2020, FINRA sent Kreisberg a request for documents and information pursuant to FINRA Rule 8210. After initially cooperating, Kreisberg refused to produce certain documents, in violation of FINRA Rules 8210 and 2010… Read More

Penalties: $7,500.00
Respondent: Ricardo Turlan
Violation: Between June 2017 and February 2019, while associated with UBS, Turlan effected approximately 130 trades in two customer accounts using discretion without the customers’ prior written authorization and without the firm accepting these accounts as discretionary in writing. In doing so, Turlan violated NASD Rule 2510(b) and FINRA Rule 2010… Read More

Penalties: N/A
Respondent: Nicholas R. Palumbo
Violation: Palumbo failed to provide documents and information requested by FINRA pursuant to FINRA Rule 8210. Palumbo thereby violated FINRA Rules 8210 and 2010… Read More

Penalties: $600,700.00
Respondent: Brad C. Brooks; Richard Wayne Demetriou & Titan Securities
Violation: Registered representative made material, false and misleading statements to customers, engaged in undisclosed, unapproved outside business activities, violated advertising and communications with the public rules, and used unapproved personal email accounts for securities business… Read More

Penalties: $5,000.00
Respondent: Woong Seong Hwang
Violation: In May 2009, Hwang opened an account at Merrill Lynch for Customer A. Hwang knew Customer A was a non-United States citizen currently residing in Korea, but falsely certified in Merrill Lynch’s electronic account opening system that Customer A was a United States citizen who resided in New Jersey. Hwang certified the accuracy of this information again in connection with the opening of subaccounts for Customer A in 2014 and 2016… Read More

Penalties: $5,000.00
Respondent: Alisha T. Johnson
Violation: From May 2019 to December 2019, Johnson improperly used firm funds by submitting $1,234.98 in personal travel and meal expenses to AEIS for reimbursement as business expenses in violation of FINRA Rule 2010… Read More

Penalties: $555,726.00
Respondent: James Frederick Walsh
Violation: Walsh misrepresented and/or omitted material facts by, among other things: (1) falsely describing his trading experience, trading skills, and trading results; (2) failing to advise existing and/or prospective clients that he had no U.S.-based forex trading accounts and was not listed on any U.S.-based forex trading account as holding discretionary trading authority on behalf of the account holder(s); (3) by failing to advise existing and/or prospective clients that he was not registered with the Commission to act as a commodity trading advisor (“CTA”), and therefore was operating an unlawful business venture; (4) by failing to advise existing and/or prospective clients of the inability of any CTA to minimize or control the risks associated with forex trading, or to “guarantee” a profit, let alone a specific positive rate of return; and (5) by failing to advise existing and/or prospective clients that the Texas SSB had issued him a cease and desist letter as a result of his fraudulent solicitations, which he was failing to obey… Read More

Penalties: $555,726.00
Respondent: James Frederick Walsh
Violation: Walsh, his officers, agents, servants, employees, successors, assigns, and/or attorneys, and all persons in active concert or participation with Walsh who receive actual notice of this Order by personal service or otherwise, is/are hereby permanently restrained, enjoined, and prohibited from engaging in conduct that violates Sections 4b(a)(2)(A) and (C), 4m(l), and 4o(1)(A) and (B) of the CEA, 7 U.S.C. §§ 6b(a)(2)(A), (C), 6m(l), 6o(1)(A), (B), and CFTC Regulations 5.2(b)(1) and (3), and 5.3(a)(3)(i), 17 C.F.R. §§ 5.2(b)(1), (3), 5.3(a)(3)(i)… Read More

Penalties: $20,000.00
Respondent: Michelle E. MacDonald
Violation: From late 2015 through 2017, Michelle E. MacDonald, the Chief Financial Officer of VII Peaks Co-Optivist Income BDC II, Inc. (the “BDC”), a business development company, and Vice President of Compliance at VII Peaks Capital, LLC (“VII Peaks”), the BDC’s investment adviser, caused VII Peaks to breach its fiduciary duty to the BDC… Read More

Penalties: $1,329,413.00
Respondent: Gurprit Chandhoke & VII Peaks Capital, LLC
Violation: From late 2015 through 2017, Respondents breached their fiduciary duty to the BDC by engaging in transactions that were not disclosed to or approved by the Board of Directors of the BDC… 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: $25,000.00
Respondent: Emperor Investments, Inc
Violation: From June 2018 until October 2019 (the “Relevant Period”), Emperor’s website, which was accessible to clients and prospective clients, was misleading in several respects. For example, Emperor stated that it had outperformed the market for the past 11 years when, in fact, the claim was based on modeled returns, and Emperor had been in operation for less than two years, during which time it underperformed the market. In addition, Emperor paid bloggers, which were a significant source of Emperor’s new clients, for referrals without complying with applicable requirements… Read More

Penalties: $5,000,000.00
Respondent: Morgan Stanley Smith Barney LLC
Violation: The Commission found that from at least October 2012 until June 2017, MSSB negligently provided incomplete and inaccurate information regarding the trade execution services provided by MSSB and the transaction-based execution costs incurred by clients in wrap fee program accounts, which was misleading to certain retail clients… Read More

Penalties: $170,000,000.00
Respondent: BlueCrest Capital Management Limited
Violation: The Commission found that, from October 2011 through December 2015, BlueCrest engaged in a course of conduct stemming from its management of BSMA that was detrimental to investors in BlueCrest’s flagship client hedge fund, BlueCrest Capital International (“BCI”)… Read More

Penalties: $1,281,396.00
Respondent: Centaurus Financial Inc.
Violation: These proceedings arise out of breaches of fiduciary duty by CFI, 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. In particular, since at least 2014 CFI invested clients in: (1) mutual fund share classes that paid CFI fees pursuant to Rule 12b-1 under the Investment Company Act of 1940 (“12b-1 fees”); (2) certain mutual funds that also generated no-transaction fee (“NTF”) revenue for the firm; and (3) cash sweep products that likewise resulted in CFI receiving revenue sharing. In spite of these financial arrangements, CFI provided no disclosure or inadequate disclosure of the multiple conflicts of interest arising from the firm’s receipt of this compensation… Read More

Penalties: N/A
Respondent: Kevin T. Carney; Jonathan D. Freeze; Robert J. Irey
Violation: The SEC’s complaint alleges that Carney, Freeze, and Irey sold more than $2 million in promissory notes and equity in their purported renewable energy company, Alternative Energy Holdings, LLC, to dozens of investors, some of whom were Freeze’s brokerage customers prior to his being barred from the securities industry… Read More

Penalties: $195,670.73
Respondent: Jeffrey C. Mack; Lawrence C. Blaney
Violation: Pursuant to Section 21(d)(2) of the Exchange Act, 15 U.S.C. § 78u(d)(2), and Section 20(e) of the Securities Act, 15 U.S.C. § 77t(e), Defendant Blaney is prohibited from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act, 15 U.S.C. § 78l, or that is required to file reports pursuant to Section 15(d) of the Exchange Act, 15 U.S.C. § 78o(d)… Read More

Penalties: $266,388.45
Respondent: Jeffrey C. Mack; Lawrence C. Blaney
Violation: Pursuant to Section 21(d)(2) of the Exchange Act, 15 U.S.C. § 78u(d)(2), and Section 20(e) of the Securities Act, 15 U.S.C. § 77t(e), Defendant Mack is prohibited from acting as an officer or director of any issuer that has a class of securities registered pursuant to Section 12 of the Exchange Act, 15 U.S.C. § 78l, or that is required to file reports pursuant to Section 15(d) of the Exchange Act, 15 U.S.C. § 78o(d);… Read More

Penalties: $462,059.18
Respondent: Jeffrey C. Mack; Lawrence C. Blaney
Violation: The SEC’s complaint, filed on April 3, 2019, alleged that, between September 2016 and July 2017, Jeffrey C. Mack, Digiliti’s then CEO, and Lawrence C. Blaney, Digiliti’s then VP of Sales, induced Digiliti’s largest customer into signing sales contracts worth more than $1.8 million by covertly entering into a series of undisclosed side letters with favorable terms for the customer… Read More

Penalties: N/A
Respondent: Globesat Holding Corp.
Violation: Respondent is delinquent in its periodic filings with the Commission, has repeatedly failed to meet its obligation to file timely periodic reports, and failed to heed a delinquency letter sent to it by the Division of Corporation Finance requesting compliance with its periodic filing obligations or, through its failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letter… Read More

Penalties: N/A
Respondent: Golden Goliath Resources Ltd.
Violation: Respondent is delinquent in its periodic filings with the Commission, has repeatedly failed to meet its obligation to file timely periodic reports, and failed to heed a delinquency letter sent to it by the Division of Corporation Finance requesting compliance with its periodic filing obligations or, through its failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letter… Read More

Penalties: N/A
Respondent: James K. Couture
Violation: The SEC’s complaint, filed in federal court in Massachusetts, alleges that from approximately 2009 to December 2019, James K. Couture, while operating an investment advisory and brokerage business, fraudulently prompted his advisory clients to sell portions of their securities holdings in order to fund large money transfers to an entity that, unbeknownst to his clients, Couture owned and controlled. According to the complaint, for each transaction, Couture obtained client authorization by falsely claiming that the proceeds would be reinvested for the clients’ financial benefit. In reality, Couture’s alleged purpose in arranging these transactions was to divert the sale proceeds for his own benefit… Read More

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