Financial Enforcement Actions | Week of September 09 to 14

Penalties: TBD
Respondent: Future Income Payments, LLC
Violation: Defendants violated the Consumer Financial Protection Act of 2010, 12 U.S.C. § 5536(a)(1), by representing to consumers that their pension-advance products were not loans, were not subject to interest rates, and were comparable in cost to, or cheaper than, credit-card debt when, in actuality, the pension-advance products were loans, and were subject to interest rates that were substantially higher than credit-card interest rates… Read More

Penalties: $41,484.00
Respondent: Underground Sports Inc.
Violation: According to the complaint, Patriot Puck’s claims in its advertising, packaging, and promotional materials include “Made in America,” “Proudly Made in the USA,” “100% American Made!” and “The only American Made Hockey Puck!”… Read More

Penalties: $5,000.00
Respondent: Brokerbank Securities, Inc.
Violation: Between March 30, 2015 and December 29, 2015, Brokerbank failed to conduct and document reasonable due diligence of a private placement sold by a registered representative of the firm, and did not have a supervisory system reasonably designed to ensure the firm complied with its due diligence obligations, in violation of FINRA Rules 3110 and 2010… Read More

Penalties: $800,000.00
Respondent: Cadaret Grant & Co., Inc.
Violation: From August 2012 through May 2017 (the “Relevant Period”), Cadaret Grant failed to establish such a reasonably-designed supervisory system with respect to numerous areas of its business… Read More

Penalties: N/A
Respondent: William Ruan
Violation: Ruan failed to appear for on-the-record testimony requested pursuant to FINRA Rule 8210 in violation of FINRA Rules 8210 and 2010… Read More

Penalties: $139,250.00
Respondent: George L. McCaffrey III
Violation: From January 2016 through August 2017, while registered with NTB, without first providing notice to his Firm, McCaffrey participated in 22 undisclosed private securities transactions in which nine investors, including one firm customer, purchased $1,775,000 in debt and equity securities. By virtue of his conduct, McCaffrey violated FINRA Rules 3280 and 2010… Read More

Penalties: TBD
Respondent: Timothy Tilton Ayre
Violation: From January 2013 through March 18, 2016, and June 2, 2016 through October 2016 (collectively, the “Relevant Period”), Respondent Timothy Ayre attempted to attract public investment in his worthless public company, Rocky Mountain Ayre, Inc. (“RMTN”), by making material misstatements in RMTN’s public filings and by creating, offering, and selling unregistered cryptocurrency securities to the public that he touted as “the first minable coin backed by marketable securities.”… Read More

Penalties: $5,000.00
Respondent: Luke A. Eddy
Violation: On April 10, 2017, Eddy impersonated an elderly customer during a call with the Firm to transfer funds from the customer’s Firm IRA to her bank account. One week later, after the Firm had rejected the initial transfer request, Eddy forged the customer’s signature on an IRA distribution form transferring the funds to the 2 customer’s bank account. By impersonating a customer and by forging the same customer’s signature, Eddy violated FINRA Rule 2010… Read More

Penalties: $10,000.00
Respondent: Robert Matthew Krieger
Violation: During the period of October 2015 through February 2016, Krieger engaged in an outside business activity without providing prior written notice to LPL, in violation of FINRA Rules 3270 and 2010… Read More

Penalties: TBD
Respondent: Timothy Tilton Ayre
Violation: From January 2013 through March 18, 2016, and June 2, 2016 through October 2016 (collectively, the “Relevant Period”), Respondent Timothy Ayre attempted to attract public investment in his worthless public company, Rocky Mountain Ayre, Inc. (“RMTN”), by making material misstatements in RMTN’s public filings and by creating, offering, and selling unregistered cryptocurrency securities to the public that he touted as “the first minable coin backed by marketable securities… Read More

Penalties: TBD
Respondent: Michael John Ahearn
Violation: Respondent Michael John Ahearn provided false information in a written response to a FINRA Rule 8210 request and false testimony during an on-the-record-interview, in violation of FINRA Rules 8210 and 2010… Read More

Penalties: N/A
Respondent: Jeffery Joseph Kelly
Violation: Respondent violated FINRA Rules 8210 and 2010 by failing to provide documents and information as requested pursuant to FINRA Rule 8210 in connection with an investigation into whether he had engaged in conversion and/or misappropriation. In response to a request for documents and information pursuant to FINRA Rule 8210, Respondent stated that he would not provide the materials requested, and would not cooperate in the future… Read More

Penalties: $5,000.00
Respondent: Ryan A. Logan
Violation: Between July 2014 and March 2016, Logan’s unregistered sales assistant, JB, solicited the sale of approximately ten variable annuities to Logan’s customers despite not being licensed to do so. Logan caused MML’s books and records to be inaccurate by signing his name as the broker of record on the variable annuity applications even though he did not substantially participate in the sales of those annuities, in violation of FINRA Rules 4511 and 2010… Read More

Penalties: $37,568.50
Respondent: Stifel, Nicolaus & Company, Inc.
Violation: The Department of Market Regulation staff (the “Staff’) conducted a trading-ahead review in OTC securities during the first and third quarters of 2016. Based on its review, the Staff determined that the firm violated FINRA Rules 5320, 7450, 3110 and 2010… Read More

Penalties: $75,000.00
Respondent: BMO Nesbitt Burns Securities Ltd
Violation: Between May 2015 and May 2016 (“the Relevant Period”), BMO Nesbitt Burns incorrectly calculated its net capital causing the Firm not to continuously maintain its required level of net capital. During the Relevant Period, the Firm also filed inaccurate FOCUS’ reports and maintained inaccurate books and records. Based on the foregoing, the Firm violated Sections 15(c) and 17(a) of the Securities Exchange Act of 1934 (“Exchange Act”), Exchange Act Rules 15c3-1, 17a-3, and 17a-5 promulgated thereunder, and FINRA Rules 4511 and 2010… Read More

Penalties: $5,000.00
Respondent: Jeffrey Sigman
Violation: From July 2013 through the end of his employment with the Firm in July 2016, Sigman failed to disclose an outside business activity to the Firm, thereby violating FINRA Rules 3270 and 2010… Read More

Penalties: $7,500.00
Respondent: Jeffrey S. Kidwell
Violation: Between January 2011 and November 2017, Kidwell willfully failed to timely amend his Uniform Application for Securities Industry Registration or Transfer (“Form U4”) to disclose two bankruptcies, one civil judgment, and six federal tax liens. As a result, Kidwell willfully violated Article V, Section 2(c) of FINRA’s By-Laws and FINRA Rules 1122 and 2010… Read More

Penalties: $20,000.00
Respondent: Torino Capital LLC
Violation: During the Review Period, Torino’s supervisory system and WSPs, particularly with respect to the firm’s supervision of prohibited activities and non-bona fide transactions, such as pre-arranged trading, and the publication or circulations of reports non-bona fide transactions in TRACE, were not reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable FINRA rules. As a result, Torino violated NASD Rule 3010 (for conduct on and prior to November 30, 2014), FINRA Rule 3110 (for conduct on and after December 1, 2014), and F1NRA Rule 2010… Read More

Penalties: $5,483.79
Respondent: James Randall Clay
Violation: Engaged in outside business activities without providing prior written notice to U.S. Bancorp, provided false information to U.S. Bancorp during its investigation, and provided false information to Enforcement in response to Rule 8210 requests for information and documents, in violation of FINRA Rules 2010, 3270, and 8210… Read More

Penalties: $20,000.00
Respondent: Mesirow Financial, Inc.
Violation: On twenty-five occasions between March 1, 2015 and April 30, 2016, Mesirow failed to timely submit certain offering documents to the Electronic Municipal Market Access (“EMMA”) system operated by the Municipal Securities Rulemaking Board (“MSRB”). Mesirow’s written supervisory procedures were not reasonably designed to ensure compliance with its obligation, as an underwriter in a primary offering of municipal securities, to make these required EMMA submissions within the specified time. As a result, Mesirow violated MSRB Rules G-27 and G-32… Read More

Penalties: N/A
Respondent: Thomas Joseph Logue, Jr.
Violation: In July 2018, during the course of an ongoing examination, Logue informed FINRA staff that he would not appear for on-the-record testimony requested pursuant to FINRA Rule 8210. Logue thereby violated FINRA Rules 8210 and 2010… Read More

Penalties: N/A
Respondent: Bitzio, Inc. and Enerpulse Technologies, Inc.
Violation: All of the Respondents are delinquent in their periodic filings with the Commission, have repeatedly failed to meet their obligations to file timely periodic reports, and failed to heed delinquency letters sent to them by the Division of Corporation Finance requesting compliance with their periodic filing obligations or, through their failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letters… Read More

Penalties: $12,937,475.06
Respondent: Citigroup Global Markets, Inc. and Citi Order Routing and Execution, LLC
Violation: This proceeding arises from the conduct of Respondents in connection with a “crossing network” or “dark pool” called Citi Match. A dark pool is a trading venue or marketplace that accepts, matches and executes orders to buy and sell securities without providing its best-priced orders for inclusion in the consolidated quotation data. From at least December 2011 through June 2014 (the “relevant period”), CGMI was responsible for the marketing and sales of Citi Match and CORE was responsible for its day-to-day operation… Read More

Penalties: TBD
Respondent: SEC Complaint – Contrarian Investments, LLC
Violation: In 2015, the Nevada legislature enacted Senate Bill 443 (“NVSB 3 443”), allowing entities that fulfilled requirements specified in the bill to collect 4 funds from individuals anywhere in the world, aggregate those funds, wager 5 those funds on sporting events, and share the wagering profits with the 6 individuals who contributed the funds… Read More

Penalties: TBD
Respondent: SEC Complaint – Nevada Sports Investment Group, LP
Violation: Nevada Sports did not file a registration statement complying with 2 Section 5 of the Securities Act in support of its sports betting fund, and did not 3 fulfill the requirements necessary to qualify for an exemption from registration… Read More

Penalties: N/A
Respondent: Nevada Sports Investment Group, LP
Violation: From 2015 through 2017, Nevada Sports raised over $1 million from more than 30 investors. Nevada Sports conducted a general solicitation by widely offering its investment opportunity on the internet and further failed to make a determination regarding whether all of its investors were accredited… Read More

Penalties: N/A
Respondent: EMAV Holdings, Inc., et al.
Violation: All of the Respondents are delinquent in their periodic filings with the Commission, have repeatedly failed to meet their obligations to file timely periodic reports, and failed to heed delinquency letters sent to them by the Division of Corporation Finance requesting compliance with their periodic filing obligations or, through their failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letters… Read More

Penalties: N/A
Respondent: Ralph M. Riccardi
Violation: From at least 2009 to the present, Riccardi directed the purchase of new issue municipal bonds in primary offerings from underwriters, which were then immediately sold, or “flipped” to broker-dealer customers for a profit… Read More

Penalties: $938,194.00
Respondent: Cadaret, Grant & Co., Inc., et al.
Violation: These proceedings arise out of the failure by Cadaret Grant, Grant and Johnson (the “Supervisory Respondents”) reasonably to supervise Cadaret Grant’s registered representatives with respect to their recommendations that customers buy and hold leveraged and inverse exchange-traded funds and exchange-traded notes (each individually and together, “non-traditional exchange-traded products” or “non-traditional ETPs”) between January 2015 and December 2016 (“relevant time period”)… Read More

Penalties: N/A
Respondent: Crailar Technologies, Inc., Midwest Oil & Gas, Inc. and Preston Corp.
Violation: All of the Respondents are delinquent in their periodic filings with the Commission, have repeatedly failed to meet their obligations to file timely periodic reports, and failed to heed delinquency letters sent to them by the Division of Corporation Finance requesting compliance with their periodic filing obligations or, through their failure to maintain a valid address on file with the Commission as required by Commission rules, did not receive such letters… Read More

Penalties: $200,000.00
Respondent: Crypto Asset Management, LP and Timothy Enneking
Violation: Respondents negligently misrepresented to actual and prospective investors in certain marketing materials that CAF was the “first regulated crypto asset fund in the United States” and had filed a registration statement with the Commission. Respondents failed to take reasonable steps to ensure the accuracy of these statements before disseminating them to actual and potential investors… Read More

Penalties: $568,929.00
Respondent: TokenLot, LLC, Lenny Kugel, and Eli L. Lewitt
Violation: Respondents solicited investors, took thousands of customer orders for digital tokens, processed investor funds, and handled more than 200 different digital tokens in connection with both initial coin offerings (“ICOs”) conducted by other entities and TokenLot’s secondary market activities. Respondents, through TokenLot, received more than 5,800 investor purchase orders for nine digital tokens connected with ICOs, of which approximately 2,100 were executed… Read More

Penalties: TBD
Respondent: Laura, et al.
Violation: The defendants defrauded investors and misappropriated investor funds between June 2013 and January 2017 through sales of securities in a company that claimed to have rights to a crude oil processing technology… Read More

Penalties: TBD
Respondent: SEC Complaint – Adam C. Wasserman
Violation: Beginning in December 2014, Wasserman began a practice of transferring Issuer A funds from China to the U.S. to pay Issuer A’s U.S. expenses using his personal joint checking account. Over a 20-month period, Wasserman transferred more than $400,000 in corporate funds through his personal bank account. Wasserman previously engaged in the same practice with at least two other China-based public companies… Read More

Penalties: TBD
Respondent: SEC Complaint – Laura, et al.
Violation: From at least June 2013 through January 2017, Defendants raised more than $3.7 million from at least 80 investors through the fraudulent offer and sale of securities of Pristec America, Inc. (“PAI”), a U.S. company incorporated by Laura, and Pristec AG (“PAG”), an Austrian company that had rights to a crude oil processing technology. Many of these investors were social and business acquaintances of the Defendants who were led to believe they were being offered a special opportunity available only to “friends and family… Read More

Penalties: $20,000.00
Respondent: Adam C. Wasserman
Violation: Over a 20-month period, Adam C. Wasserman used a personal account to transfer over $400,000 in corporate funds from China to the U.S. to pay the Chinese company’s U.S. expenses… Read More

Penalties: $13,986,534.00
Respondent: United Technologies Corporation
Violation: From approximately 2012 through 2014, UTC, through Otis Elevator Company, made unlawful payments to Azerbaijan officials to facilitate the sales of elevator equipment. Improper payments were also made in connection with a kickback scheme to sell elevators in China in 2012… Read More

Penalties: $241,479.00
Respondent: Harbour Investments, Inc.
Violation: From at least 2012 through 2016 (the “Pertinent Period”), Harbour failed to fully and fairly disclose to its advisory clients compensation it received under a marketing services agreement with a third-party broker-dealer (“Custodian A”) that provided custody and clearing services to Harbour and the conflicts of interest arising from that compensation. This arrangement created incentives for Harbour to favor Custodian A over other custodians when giving investment advice to its advisory clients about where to custody assets… Read More

Penalties: $2,750,000.00
Respondent: Convergex Execution Solutions, LLC and Now Known as Cowen Execution Services LLC
Violation: These proceedings arise out of Convergex’s failure to submit to the Commission true and complete data in response to Commission staff electronic blue sheets (“EBS”) requests, resulting in the reporting of EBS that was incomplete or deficient… Read More

Penalties: TBD
Respondent: SEC Complaint – Gregory Lemelson, Lemelson Capital Management, LLC, and The Amvona Fund
Violation: Between May and October of 2014, Lemelson devised and carried out a fraudulent scheme in which he purchased “short positions” in the stock of Ligand Pharmaceuticals, Inc. (“Ligand”) and then sought to manipulate the stock price to make a profit. A short position is an investment technique whereby an investor seeks to profit when the price of a stock falls. Lemelson publicly disseminated a series of false statements about Ligand to drive down the price of the stock, while engaging in a series of purchases and sales of Ligand stock that enabled him to profit from the lowered stock price… Read More

Penalties: TBD
Respondent: Gregory Lemelson, Lemelson Capital Management, LLC, and The Amvona Fund
Violation: Illegally profiting from a scheme to drive down the price of San Diego-based Ligand Pharmaceuticals Inc., reaping more than $1.3 million of gains for the adviser and the hedge fund… Read More

Penalties: $300,000.00
Respondent: Holthouse Carlin & Van Trigt LLP
Violation: HCVT caused its investment advisers clients’ violations of Section 206(4) of the Advisers Act and Rule 206(4)-2, caused its broker-dealer clients’ violations of Section 17(a) of the Exchange Act and Rule 17a-5, violated Rule 17a-5(i) of the Exchange Act, and engaged in improper professional conduct under Rule 102(e)(1)(ii) of the Commission’s Rules of Practice… Read More

Penalties: TBD
Respondent: SEC Complaint – Rong Chen, et al.
Violation: Over a two year period, Defendant Rong Chen engaged in multiple acts of insider trading by making timely and highly profitable securities purchases based on material nonpublic information about the impending acquisitions of two China-based companies whose securities traded on exchanges in the United States… Read More

Penalties: $25,000.00
Respondent: Cecil Gregory Earls and Thomas R. Caggiano
Violation: This matter concerns false and misleading statements by Cecil Gregory Earls about the management of Kandax Capital Management, LLC, an unregistered hedge fund adviser that Earls formed, and its affiliated hedge fund, The Fincastle Fund, L.P… Read More

Penalties: $987,326.00
Respondent: Arista Power, Inc., et al.
Violation: Engaging in schemes to manipulate the stock price of Arista Power, Inc. (“Arista”) and in connection with material misrepresentations and omissions in certain Arista public filings. The SEC also charged Michael T. Hughes, formerly Arista’s General Counsel, with the false disclosures scheme. The remaining defendants – relatives of Peter Kolokouris – were charged with violations of Rule 102 of Regulation M… Read More

Penalties: $100,000.00
Respondent: Cushing Asset Management, LP
Violation: Cushing Asset Management, L.P. caused its client’s violations of the affiliated transaction provisions of the Investment Company Act of 1940 (“Investment Company Act.”) in connection with two undisclosed cross trades of approximately $33.5 million… Read More

Penalties: TBD
Respondent: Rong Chen, et al.
Violation: Rong Chen obtained this inside information in the course of his work advising the acquiring companies on these transactions and used an account bearing his wife’s name in order to conceal the illicit trades. The SEC also charged Chen’s wife, Yuehong Wang, as a relief defendant… Read More

Penalties: $3,170,222.00
Respondent: Capital Analysts, LLC
Violation: From April 2013 through March 2017, CA failed to adequately disclose to its clients’ compensation that Lincoln received through an agreement with a third-party clearing broker (“Clearing Broker”) and conflicts arising from that compensation… Read More

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