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  • SEC Enforcement Division Modifies Municipalities Disclosure Initiative

    The Securities and Exchange Commission today announced modifications to its Enforcement Division’s Municipalities Continuing Disclosure Cooperation (MCDC) Initiative that will provide greater opportunity for smaller municipal securities underwriter firms and municipal issuers to take advantage of the initiative. 

    To allow issuers and obligors more time to complete their reporting requirements, the division has extended the deadline to self-report potential violations from September 10, 2014 to December 1, 2014.  The deadline for underwriters remains unchanged at September 10, 2014.  With respect to underwriters, the division has determined that to implement a tiered approach to civil penalties based on the size of the firm would encourage smaller underwriters to participate in the initiative.

    “It is clear that many underwriters and issuers are working diligently to take advantage of the initiative within its time period,” said Andrew Ceresney, director of the Enforcement Division. “These adjustments to the program are designed to encourage as much participation...

  • SEC Charges Virginia-Based Broker With Stealing Funds From Elderly Customers

    The Securities and Exchange Commission today charged a broker based in Roanoke, Va., with defrauding elderly customers, including some who are legally blind, by stealing their funds for her personal use and falsifying their account statements to cover up her fraud.

    According to the SEC’s complaint filed in U.S. District Court for the Western District of Virginia, Donna Jessee Tucker siphoned $730,289 from elderly customers and used the money to pay for such personal expenses as vacations, vehicles, clothes, and a country club membership.  Tucker ensured that the customers received their monthly account statements electronically, knowing that they were unable or unwilling to access their statements in that format.  The SEC further alleges that Tucker engaged in unauthorized trading and other financial transactions while making misrepresentations to customers about their investment accounts and forging brokerage, banking, and other documents. 

    The SEC’s investigation resulted from a broker-dealer examination of the firm where Tucker...

  • SEC Announces Award for Whistleblower Who Reported Fraud to SEC After Company Failed to Address Issue Internally

    The Securities and Exchange Commission today announced an award of more than $400,000 for a whistleblower who reported a fraud to the SEC after the company failed to address the issue internally.

    The SEC’s whistleblower program rewards high-quality, original information that results in an SEC enforcement action with sanctions exceeding $1 million.  Whistleblower awards can range from 10 percent to 30 percent of the money collected in a case.  By law, the SEC must protect the confidentiality of whistleblowers and cannot disclose any information that might directly or indirectly reveal a whistleblower’s identity.

    This whistleblower provided the agency with specific, timely, and credible information that allowed for a more rapid investigation than otherwise would have been possible.  The whistleblower had tried on several occasions and through several mechanisms to have the matter addressed internally at the company.

    “The whistleblower did everything feasible to correct the issue internally.  When it became apparent that the...

  • Architect of Variable Annuities Scheme Agrees to Pay $850,000, Admit Wrongdoing, and Be Barred From Securities Industry

    The Securities and Exchange Commission today announced that the architect of a variable annuities scheme designed to profit from the imminent deaths of the terminally ill has agreed to settle charges brought against him earlier this year by paying more than $850,000, admitting wrongdoing, and being barred from the securities industry.

    The SEC’s Enforcement Division previously charged Michael A. Horowitz and several others he recruited into his scheme to identify terminally ill patients in nursing homes and hospice care in southern California and Chicago.  Horowitz, a broker who lives in Los Angeles, sold variable annuities contracts with death benefit and bonus credit features to wealthy investors, and designated the terminally ill patients as annuitants whose death would trigger a benefit payout.  Anticipating the patients would soon die, Horowitz marketed these annuities as opportunities for investors to reap short-term investment gains.

    The SEC’s Enforcement Division alleged that Horowitz enlisted another broker, Moshe...

  • SEC Charges Company CEO and Former CFO With Hiding Internal Controls Deficiencies and Violating Sarbanes-Oxley Requirements

    The Securities and Exchange Commission today announced charges against the CEO and former CFO of a Florida-based computer equipment company for misrepresenting to external auditors and the investing public the state of its internal controls over financial reporting.

    The Sarbanes-Oxley Act of 2002 requires a management’s report on internal controls over financial reporting to be included in a company’s annual report.  The CEO and CFO must sign certifications confirming they’ve disclosed all significant deficiencies to the outside auditors, reviewed the annual report, and attest to its accuracy.

    The SEC’s Enforcement Division alleges that CEO Marc Sherman and former CFO Edward L. Cummings represented in a management’s report accompanying the fiscal year 2008 annual report for QSGI Inc. that Sherman participated in management’s assessment of the internal controls.  However, Sherman did not actually participate.  The Enforcement Division further alleges that Sherman and Cummings each certified that they had disclosed all significant deficiencies in...

SEC Press Releases