SEC Charges a Former Biopharmaceutical Company Executive and Two Others with Insider Trading
The Securities and Exchange Commission today charged a former biopharmaceutical company executive and two others with insider trading on confidential information about the company’s key developmental drug. The company’s stock price fell sharply when it announced clinical trial results for the drug.
Dr. Loretta Itri, president of pharmaceutical development and chief medical officer of Genta, Inc., her longtime friend, Dr. Neil Moskowitz, an emergency room physician, and one of his patients, were named in the insider-trading action. In a complaint filed in U.S. District Court in New Jersey, the SEC alleged that Itri obtained material nonpublic information about Genta’s clinical trial results for an experimental drug designed to treat advanced melanoma. In a telephone conversation just one day before the public announcement of the drug trial results, Itri provided Moskowitz with material nonpublic information. Minutes after that, Moskowitz sold his Genta securities and tipped a friend and patient, Mathew Cashin, concerning...
SEC Halts Pyramid Scheme Targeting Dominican and Brazilian Immigrants
The Securities and Exchange Commission today announced that on Tuesday it filed charges against the Massachusetts-based operators of a large pyramid scheme that mainly targeted Dominican and Brazilian immigrants in the U.S. The charges were filed under seal, in connection with the Commission’s request for an immediate asset freeze. That asset freeze, which the U.S. District Court in Boston ordered on Wednesday, secured millions of dollars of funds and prevented the potential dissipation of investor assets. After the SEC staff implemented the asset freeze, at the SEC’s request the court lifted the seal today, permitting public announcement of the SEC’s charges.
The SEC alleges that TelexFree, Inc. and TelexFree, LLC claim to run a multilevel marketing company that sells telephone service based on “voice over Internet” (VoIP) technology but actually are operating an elaborate pyramid scheme. In addition to charging the company, the SEC charged several TelexFree officers and promoters, and...
SEC Proposes Rules for Security-Based Swap Dealers and Major Security-Based Swap Participants
The Securities and Exchange Commission voted yesterday to propose new rules for security-based swap dealers and major security-based swap market participants. The proposed rules cover recordkeeping, reporting, and notification requirements for security-based swap dealers and major security-based swap participants and would establish additional recordkeeping requirements for broker-dealers to account for their security-based swap activities.
The rulemaking is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, which authorizes the SEC and other regulators to put in place a comprehensive framework to regulate the over-the-counter swaps and security-based swaps markets.
The SEC will seek public comment on the proposed rules for 60 days following their publication in the Federal Register.
SEC Charges Former BP Employee with Insider Trading During the Deepwater Horizon Oil Spill
The Securities and Exchange Commission today charged a former 20-year employee of BP p.l.c. and a senior responder during the 2010 Deepwater Horizon oil spill with insider trading in BP securities based on confidential information about the magnitude of the disaster. The price of BP securities fell significantly after the April 20, 2010 explosion on the Deepwater Horizon rig, and the subsequent oil spill in the Gulf of Mexico, resulted in an extensive clean-up effort.
According to the SEC’s complaint, filed in U.S. District Court for the Eastern District of Louisiana, BP tasked Keith A. Seilhan with coordinating BP’s oil collection and clean-up operations in the Gulf of Mexico and along the coast. Seilhan, an experienced crisis manager, directed BP’s oil skimming operations and its efforts to contain the expansion of the oil spill. The complaint alleges that within days, Seilhan received nonpublic information on the extent of the evolving disaster,...
SEC Charges San Diego-Based Investment Adviser
The Securities and Exchange Commission today announced charges against a San Diego-based investment advisory firm, its chief executive officer, chief compliance officer, and another employee for misleading investors and breaching their fiduciary duties to clients.
The SEC’s Enforcement Division alleges that Total Wealth Management and its owner and CEO Jacob Cooper entered into undisclosed revenue sharing agreements through which they paid themselves kickbacks or so-called “revenue sharing fees.” They failed to disclose to clients the conflicts of interest created by these agreements as they recommended the underlying investments to clients and investors in the Altus family of funds. Total Wealth and Cooper also materially misrepresented the extent of the due diligence conducted on the investments they recommended. Total Wealth’s CCO Nathan McNamee and investment adviser representative Douglas Shoemaker also breached their fiduciary duties and defrauded clients by failing to disclose conflicts of interest and concealing the kickbacks they received from the...