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SEC-FINRA Defense Blog

The Securities and Exchange Commission announced its recent settlement of charges against securities broker-dealers Chardan Capital Markets LLC and Industrial and Commercial Bank of China Financial Services LLC (ICBCFS) for failure to report suspicious sales of billions of penny stock shares. Securities brokerage firms are required under law to timely file Suspicious Activity Reports (SARs) for suspected fraudulent transactions. Per the SEC’s allegations, from October 2013 to June 2014, Chardan, an introducing broker-dealer, liquidated more than 12.5 billion penny stock shares for seven of its customers...
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The Securities and Exchange Commission continued its efforts to crack-down on illegal insider trading this week as it announced charges against a foreign citizen who, in conjunction with his brother, is alleged to have profited by trading prior to the May 2013 public announcement of WH Group’s acquisition of Smithfield Foods. In its complaint, the SEC alleges that in early May 2013 trader Bovorn Rungruangnavarat coordinated with his brother, Badin, to purchase significant volumes of call options, futures and Smithfield shares after being...
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Earlier this month, a federal court in New Jersey entered a judgment against Scott Newsholme, an investment adviser and tax-preparer out of New Jersey, for defrauding his clients in excess of $1 million. The Complaint of the Securities and Exchange Commission alleged that Newsholme fabricated securities account statements, doctored stock certificates, and forged promissory notes — all in furtherance of his investment scheme to induce clients to invest.  Instead of investing, Newsholme pocketed the loot which he used to gamble and pay personal expenses, while assuring clients that their assets were safe and...
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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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