Insider Trading

Insider Trading: Two Former Executives Accused of Making Illegal Profits from Emeritus Stock Trading Settle SEC Charges, More Final Judgments Reached Against Circle of Amateur Golfers, and Investment Adviser Gets Six Months in Prison

Published on: February 22, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Medical Products Executives Settle Insider Trading Charges

The US Securities and Exchange Commission announced that insider trading settlements have been reached with two ex-In Home Medical Solutions LLC officers, who are also board members. Todd M. Lavelle and Ara Chackerian are accused of illegally trading in Emeritus Corp. based on inside information.

The regulator contends that LaVelle and Chackerian purchased Emeritus securities after learning about the upcoming merger between the company and Brookdale Senior Living Inc. However, they did this before the deal was disclosed to the public. On the day of the announcement of the merger, they sold their Emeritus shares, allegedly making more than $25K and $157K, respectively, in illegal profits.

LaVelle, who is settling the case but without denying or admitting to the allegations, will pay over $25K in disgorgement, more than $2,600 in prejudgment interest, and an over $25K civil penalty. Chackerian, who is also settling without denying or admitting to the findings, will pay over $157K of disgorgement, the same amount as a civil penalty, and more than $18,600 of prejudgment interest.

SEC Cases: Biopharmaceutical Company Accused of Not Disclosing Executives’ Perks, Therapist Allegedly Insider Traded In Zulily Stock, and Immigration Lawyer Faces Claims of EB-5 Investment Fraud

Published on: December 14, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Provectus Accused of Disclosure and Accounting Controls Violations Related to Executive Perks
The US Securities and Exchange Commission has filed civil charges against the biopharmaceutical company Provectus. According to the regulator, the Tennessee-based company committed violations related to disclosures and accounting controls. Among the alleged failures was that Provectus did not properly report that its then-CFO and former CEO made millions of dollars in perks as compensation.

The SEC contends that Provectus did not have “sufficient controls” in place regarding the reporting and disclosure of entertainment and travel expenses of executives. Ex-CEO Dr. H. Craig Dees is accused of using fabricated, limited or “non-existent expense documentation” for millions of dollars of benefits of which investors were not informed. Then-CFO Peter R. Culpepper is accused of receiving more than $199K in undisclosed and unauthorized benefits and perks.

The Commission has filed a separate securities fraud case against Dees. Not only did he allegedly get $3.2M in reimbursements and cash for business travel that he didn’t go on, but also, he is accused of hiding these perks, which personal expenses, including restaurant tips and cosmetic surgery for women friends.

Securities Cases : Ex-Stock Trader Allegedly Made Over $1M from Insider Trading, Investment Advisers Accused of Conflicted Transactions & Misleading Investors, and Ex-Pro Football Player Gets 40 years Behind Bars over $10M Scam

Published on: December 11, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Ex-Philadelphia Eagles Player Who Bilked Former Coaches is Sentenced to 40 Years
Merrill Robertson Jr., a former Philadelphia Eagles football player, will serve 40 years in prison for a $10M fraud that bilked investors. Among his investor fraud victims were coaches he knew from when he played football at the University of Georgia and the Fork Union Military Academy.

The SEC also filed a case against him in a parallel civil case. According the regulator, Robertson, Sherman C. Vaughn Jr., and their Cavalier Union Investments diverted almost
$6M of investors’ money to pay for their own expenses and repay earlier investors.

Investment Advisers Accused of Mislead Investors About Conflicted Transactions
The US Securities and Exchange Commission has filed charges against Mohlman Asset Management, LLC, Mohlman Asset Management Fund, LLC, and Louis G. Mohlman, accusing them of misleading investors and engaging in conflicted transactions. Mohlman and the two investment advisers managed two private funds.

Ex-Nomura Holdings Manager Gets Prison Time for Insider Trading

Published on: November 25, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Avaneesh Krishnamoorthy, an ex-risk manager for Nomura Holdings Inc. in the USA, has been sentenced to three months in prison. Krishnamoorthy pleaded guilty earlier this year to securities fraud related to allegations that he traded on information about Golden Gate Capital LP’s plans to buy NeuStar Inc. He made $48K in the process.

The ex-Nomura risk manager, who was a firm vice president, purchased hundreds of NeuStar shares using an undisclosed brokerage account belonging to his wife. He did this after reading an internal confidential email about the planned purchase. Nomura helped finance the deal.

In September, the US Securities and Exchange Commission announced that a final judgment had been reached in its civil case against Krishnamoorthy. Under the terms of the judgment, the ex-Nomura holdings manager is permanently enjoined from violating sections of the Securities Exchange Act of 1934, rule 10b-5 thereunder, and the Securities Act of 1933. He also is liable for almost $79K of disgorgement that would be considered fulfilled either by submission of a forfeiture order in the criminal case against him or proof of payment. Additionally, the former Nomura VP was ordered to pay more than $1200K in interest and serve permanent bars from involvement in penny stock offerings and the securities industry.

SEC Cases: Biotech Company Accused of Misleading Investors & Accounting Fraud, Millennium Management Resolves Illegal Short Selling Charges, Day Trader Alleged Engaged in Unauthorized Trades in Over 100 Brokerage Accounts, and Multiple Traders Allegedly Insider Traded Based on One Tip

Published on: November 18, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Day Trader is Accused of Unauthorized Trades to Inflate Stock Prices and Make Illegal Profits
The US Securities and Exchange Commission has filed civil charges against Joseph P. Willner accusing him of accessing over 100 brokerage accounts and making unauthorized trades. Meantime, prosecutors in NY, as well as the US Justice Department, have filed criminal charges against him.

The SEC contends that Willner used the allegedly unauthorized trades to inflate a number of companies’ stock prices. He then traded in these same securities in his accounts and made at least $700K in illicit profits.

Willner is accused of fraud and market rigging. The Commission wants back ill-gotten gains in addition to interest, penalties, and a permanent injunction.

Insider Trading: Ex-Amazon Financial Analyst Allegedly Tipped Former Fraternity Brother, Man Accused of Giving Merger Info to Brother, Ex-Pricewaterhouse Coopers Auditor is Subject of Securities Case, and Deutsche Börse to Pay $12.5M in Fines

Published on: September 16, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Ex-Amazon Employee and Former College Schoolmate Accused of Insider Trading
The US Securities and Exchange Commission has brought civil insider trading charges against Brett Kennedy and Maziar Rezakhani. Kennedy, an ex- Amazon financial analyst, is accused of leaking confidential information to Rezakhani, who was a former fraternity brother, prior to a company earnings announcement for Amazon being disclosed to the public. Kennedy is also facing criminal charges.

According to the regulator, Kennedy shared the 2015 first quarter earnings information without authorization while employed at Amazon. Rezakhani then allegedly illegally traded on the information in advance of the information’s release to the public and he made over $116K in illicit profits.

Also, on two online communications platforms involving trading, Rezakhani accurately predicted Amazon’s first quarter performance. He is accused of paying Kennedy $10K for the tip and sharing the money with Sam Sadeghi, who gave him trading advice. Sadeghi also faces civil charges.

Ex-Morgan Stanley Broker Pleads Not Guilty to Insider Trading

Published on: September 5, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Michael Siva, a former Morgan Stanley broker (MS), has pleaded not guilty to criminal charges accusing him of insider trading. Siva is one of several people charged over their alleged participation in a group of “tipping chains” and trading on tips about upcoming acquisitions and mergers. The information was provided by Bank of America (BAC) consultant Daniel Rivas. Siva is said to have gotten the tips from the James Moodhe, who is the father of Rivas’ girlfriend.

Rivas and Moodhe have both pleaded guilty to the criminal charges accusing them of insider trading. They are cooperating with the government’s probe.

Moodhe is said to have shared Rivas’s tips with Siva from at least 2015 up through earlier this year. Siva allegedly used the information so he could make successful trades for clients as well as for himself. Moodhe and Siva allegedly met at eating places outside NYC during which time the former would read details about upcoming deals to Siva, including the value of the deals and when news about them was expected to go public. The two men allegedly made over $3M trading prior to and after the announcement of the deals.
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$5M Insider Trading Case Leads to Criminal Arrests

Published on: August 17, 2017 | by Shepherd Smith Edwards & Kantas, LLP

The US Securities and Exchange Commission has brought insider trading case charges against seven people who made millions of dollars while insider trading on dozens of upcoming acquisitions and mergers involving 30 corporate deals. The regulator’s complaint contends that Daniel Rivas, who used to be a bank IT employee, misused the access he had to a computer system by tipping four people with information that they then used to trade. Some of the those whom Rivas tipped allegedly also tipped other people, who tipped others, too.

InvestmentNews identified the bank that Rivas worked for at the time of the misconduct as Bank of America (BAC). (Bank of America Merrill Lynch later fired Rivas, who was then hired by RBC Capital Markets. In the wake of the insider trading allegations against him, Rivas was suspended by RBC.)

Rivas often tipped James Moodhe, who is the father of his girlfriend, using handwritten notes. Moodhe made approximately $2M from trading on the tips and shared the information with financial adviser Michael Siva, whom InvestmentNews identifies as a former Morgan Stanley (MS) broker.

Securities News: Citigroup Settles Libor Lawsuit for $130M, Apollo Global is Sued for Fraud, and Ex-MSD Capital Analyst is Sentenced After Insider Trading

Published on: August 10, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Citigroup to Pay Plaintiffs Suing Over Libor Rigging

Citigroup Inc. (C) will resolve a private US antitrust lawsuit alleging Libor manipulation by paying plaintiffs $130M. The litigation was brought by “over-the-counter” investors who engaged in direct transactions with banks that belonged to the panel that determines London Interbank Offered Rate.

As part of the proposed preliminary settlement, the bank will pay the money to a fund for future class members. It also will cooperate with the lawsuits brought against other banks also accused of involvement in Libor rigging. Despite settling the case, however, Citigroup is not admitting or denying any wrongdoing.

SEC Cases: NY Lawyer Accused of Shell Company Stock Fraud, Research Scientist is Charged with Insider Trading, Officer in Pyramid Scam That Targeted Latinos Must Pay Disgorgement, and Two Men Are Accused of Price Rigging

Published on: July 25, 2017 | by Shepherd Smith Edwards & Kantas, LLP

Lawyer Barred Over Fraud Allegations
The US Securities and Exchange Commission has barred David Lubin, a New York-based lawyer, from practicing or appearing before the regulator and acting as any company’s director or officer. The regulator is accusing him of making misleading and false statements in corporate filings and committing fraud while he was the attorney and director of Entertainment Art. He was also the public company’s biggest shareholder.

According to the SEC’s securities order, not only did Lubin draft and sign misleading public filings, but also, he concealed their “true ownership” as well as that the fact that a significant chunk of the shares were of a “restricted nature.”

As a result, after Entertainment Art’s name was changed to Biozoom, over 14 million shares were resold illegally in an unregistered distribution, rendering $34M of illicit profits. At the time, the shares had belonged to a shell investor.