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  • SEC and FINRA Warn Investors About Penny Stock Scams Hyping Dormant Shell Companies

    The Securities and Exchange Commission’s Office of Investor Education and Advocacy and the Financial Industry Regulatory Authority (FINRA) today issued an alert warning investors that some penny stocks being aggressively promoted as great investment opportunities may in fact be stocks of dormant shell companies with little to no business operations.

    The investor alert provides tips to avoid pump-and-dump schemes in which fraudsters deliberately buy shares of very low-priced, thinly traded stocks and then spread false or misleading information to pump up the price.  The fraudsters then dump their shares, causing the prices to drop and leaving investors with worthless or nearly worthless shares of stock.

    “Fraudsters continue to try to use dormant shell company scams to manipulate stock prices to the detriment of everyday investors,” said Lori J. Schock, Director of the SEC’s Office of Investor Education and Advocacy.  “Before investing in any company, investors should always remember to check out the...

  • SEC Announces Charges Against Investment Advisory Firm and Top Officials for Custody Rule Violations

    The Securities and Exchange Commission today announced charges against an investment advisory firm and three top officials for violating the “custody rule” that requires firms to follow certain procedures when they control or have access to client money or securities.

    Advisory firms with custody of private fund assets can comply with the custody rule by distributing audited financial statements to fund investors within 120 days of the end of the fiscal year.  This provides investors with regular independent verification of their assets as a safeguard against misuse or theft.  The SEC’s Enforcement Division alleges that Sands Brothers Asset Management LLC has been repeatedly late in providing investors with audited financial statements of its private funds, and the firm’s co-founders Steven Sands and Martin Sands along with chief compliance officer and chief operating officer Christopher Kelly were responsible for the firm’s failures to comply with the custody rule.  Sands Brothers has offices...

  • Steven Levine Named Associate Director for Investment Adviser/Investment Company Exam Program in Chicago

    The Securities and Exchange Commission today announced that it has named Steven J. Levine as the Associate Director for the Investment Adviser/Investment Company examination program in its Chicago office.  He will oversee the IA/IC examination program in nine Midwestern states, with a staff of approximately 65 examiners, accountants, and attorneys.

    Mr. Levine joined the investment adviser and investment company examination program in Chicago in 2010 and has served as one of its two acting Associate Directors since March 2013.  He started his SEC career in the Enforcement Division of the SEC’s Chicago office in 2000.  As a senior trial counsel, he played a significant role in the SEC’s fraud case against Lord Conrad Black for diverting assets from the public company parent of the Chicago Sun-Times, and its pay-to-play case charging three individuals, including former Chicago Treasurer Miriam Santos.

    “Steven brings outstanding energy and experience that will help us continue to strengthen...

  • SEC Charges Texas-Based Layne Christensen Company With FCPA Violations

    The Securities and Exchange Commission today charged a global water management, construction, and drilling company headquartered in Texas with violating the Foreign Corrupt Practices Act (FCPA) by making improper payments to foreign officials in several African countries in order to obtain beneficial treatment and reduce its tax liability.

    After Layne Christensen Company self-reported its misconduct, an SEC investigation determined that the company received approximately $3.9 million in unlawful benefits during a five-year period as a result of bribes typically paid through its subsidiaries in Africa and Australia.  Some payments were funded through cash transfers from Layne’s U.S. bank accounts.

    In addition to self-reporting the misconduct, Layne cooperated with the SEC’s investigation by providing real-time reports of its investigative findings, producing English language translations of documents, and making foreign witnesses available.  The company also undertook an extensive remediation effort.  Layne agreed to pay more than $5 million to settle the SEC’s charges.

    “Layne’s lack...

  • SEC Sanctions Florida-Based Auditor for Circumventing Rules

    The Securities and Exchange Commission today sanctioned a Florida-based auditor for violating federal laws and regulations requiring lead audit partners to periodically rotate off their audit engagements with a publicly traded company in order to preserve the integrity of the financial reporting process. 

    The lead partner primarily responsible for the audit of a public company is prohibited from performing lead audit partner services for the same issuer for more than five consecutive fiscal years.  The SEC finds that Elliot Berman attempted to circumvent this auditor rotation requirement.  For the audit of a company that he conducted for the previous five years, Berman installed as lead audit partner an employee at his firm who was not a certified public accountant nor otherwise qualified to lead such an audit.  Berman improperly continued to perform many of the lead audit partner functions for that audit. 

    Berman and his firm Berman & Company, located in Boca...

SEC Press Releases