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SEC-FINRA Defense Blog

In its continuing efforts to investigate, detect and prosecute investment adviser fraud, the US Securities and Exchange Commission filed civil charges agains Investment Adviser Amrit J.S. Chahal alleging that since February 2015 he utilized his company, Kane Capital Investment Group, to fraudulently raise almost $1.5 million from approximately 50 individual investors. Chahal duped his investors by misrepresenting to be a successful securities trader capable of delivering superior market returns via a purported low-risk trading strategy, the SEC Complaint contends.  In truth, the SEC alleges, Chahal had no...
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The Securities and Exchange Commission last week filed fraud charges against Andrew J. Kandalepas, CEO of Wellness Center USA, Inc., a Chicago-based company.  In its complaint, the SEC alleged that Kandalepas manipulated the company’s stock and made false statements in the company’s SEC filings and press releases. Specifically, the SEC claims that Kandalepas misappropriated $450,000 in unauthorized withdrawals from the company and then covered his misconduct by causing the company to characterize the withdrawals as salary, prepayments, or loans in misleading Forms 10-K and 10-Q.  The SEC further claims that Kandalepas...
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The Securities and Exchange Commission (SEC) recently charged a former Equifax Chief Information Officer of a U.S business division with engaging in illegal insider trading ahead of Equifax’s September 2017 announcements of a massive data breach. The SEC’s complaint alleged that Jun Ying, who was next in line to become Equifax’s Global CIO, used confidential,nonpublic information entrusted to him by the company to discern that Equifax suffered a critical security breach. The SEC further contended...
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FINRA recently censured Huntleigh Securities Corporation and ordered it to pay $98,252.33, plus interest, in restitution to customers pursuant to an AWC (Acceptance, Waiver and Consent) settlement. The firm was also required to review and amend, as necessary, its written supervisory procedures (WSPs) and compliance policies. With neither admitting nor denying the findings, the firm agreed to findings that it failed to identify and apply sales-charge discounts to certain customers’ eligible purchases of unit investment...
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FINRA has censured and imposed a $250,000 fine upon City National Securities, Inc., a registered broker-dealer located in Beverly Hills, California. With neither admitting nor denying the findings contained in the FINRA AWC (Acceptance, Waiver and Consent), the firm consented to findings that it failed to supervise certain registered representatives to ensure their compliance with FINRA rules involving outside business activities, private securities transactions and outside accounts. FINRA found the firm’s written supervisory procedures (WSPs) did not include procedures as to how and to...
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The Securities and Exchange Commission recently filed civil charges against a former employee of International Rectifier Corporation (IRC) and his friend for trading on material, nonpublic information in advance of the company’s acquisition. ​The SEC alleges that Lanny Brown knew that Infineon Technologies AG intended to acquire his then-employer, IRC, before the deal was publicly released.  Brown then tipped his friend, Sean Fox, about the acquisition and each then proceeded to purchase IRC call options, according to the SEC Complaint. In a...
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More SEC Adviser Exams Projected for 2017 and 2018 An article published in InvestmentNews on November 4, 2017, reported that the Chairman of the Securities and Exchange Commission (SEC), Jay Clayton, intends to increase the number of financial adviser examinations conducted by the SEC each year, thus enabling the securities law enforcement agency’s examination division to maintain a more proactive approach toward enforcement and regulation of the investment advisory industry.  A Financial Adviser Defense Lawyer...
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