SEC Cases: Barclays Will Pay $97M for Overcharging Clients, Regulator Accuses Ex-Staffer of Securities Fraud, Whistleblower is Awarded Over $500K, and Two Chinese Citizens Face Penny Stock Scam Allegations
Barclays Must Pay Back Sales Charges, Advisory Fees
The US Securities and Exchange Commission announced that Barclays Capital (BARC) has settled securities charges accusing the firm of overbilling clients. As part of the resolution, which includes paying over $97M, Barclays must pay back advisory fees and mutual fund sales charges to clients that were affected. The firm is settling without denying or admitting to the SEC’s findings.
The SEC’s case involved three sets of violations resulting in almost $50M in client overcharges. According to the Commission, two of Barclays advisory programs charged over 2,000 clients for services that were not conducted as presented. Meantime, 63 broker-dealer clients paid too much in mutual fund sales charges or fees because Barclays recommended that they purchase more costly share classes even though there were less expensive ones available. Also, over 22K accounts paid Barclays excess fees because the firm made billing mistakes and miscalculations.
Ex-SEC Staffer Accused of Securities Fraud
The SEC has filed charges against David R. Humphrey, one of its ex-employees, for securities fraud related to trades that he made. Humphrey worked with the regulator from 1998 to 2014.
The Commission said that Humphrey tried to hide his personal trading from its ethics office and when questioned he misrepresented these activities. He also purportedly did not ask for pre-clearance for options trades that were prohibited and he submitted forms that falsely represented his holdings.
SEC employees have to abide by strict rules about securities transactions so that it doesn’t even look as if they are using their jobs for personal gain. They are not allowed to trade in derivatives and options and must notify the Commission’s ethics office about all of their securities transactions and holdings every year.
Humphrey pleaded guilty to criminal charges related to his bogus federal filings in a parallel case.
SEC Awards Another Whistleblower for Reporting Information
The Commission announced that a whistleblower award of over $500K has been issued to someone who is a company insider who reported misconduct by that company. The news of this award comes just days after the SEC announced that it had awarded almost $4M to another whistleblower.
With this latest whistleblower award, 44 individuals have now been collectively paid $154M for voluntarily giving the regulator “original and useful” information leading to successful actions that each rendered monetary sanctions of over $1M.
$1.2M in Assets Frozen Over Alleged Illegal Penny Stock Sales
Two Chinese citizens, Wensheng Lin and Sheng Li Chen, are facing SEC charges accusing them of illegally selling over 2.3M penny stock shares and profiting more than $1.8M in the process. Both of them acquired more than 8.4M Immage Biotherapeutics Corp. shares, which they sold at much higher prices. In the penny stock scam case, the SEC said that they did not file a registration statement regarding the sales.
Most of their profits purportedly came from sales that took place after websites started promoting Immage Biotherapeutics in a misleading manner. The regulator suspended trading in the company’s shares last month. Meantime, the Commission was able to get an emergency court order freezing the assets in Chen and Lin’s brokerage accounts, including about $1.2M.
Our securities fraud law firm works with investors in trying to recover their losses. Contact SSEK Partners Group today.
The SEC Order in the Barclays Case (PDF)
The SEC Complaint in the Humphrey Case (PDF)
The SEC Order Determining the Whistleblower Claim (PDF)
Court Orders Continuing Asset Freeze of $1.2 Million In Assets From Two Chinese Citizens For Illegally Selling Penny Stock Shares, SEC, May 11, 2017