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You are here: SEC & Securities Law SEC Press Releases
  • Citigroup Business Unit Charged With Failing to Protect Confidential Subscriber Data While Operating Alternative Trading System

    The Securities and Exchange Commission today charged a Citigroup business unit operating an alternative trading system (ATS) with failing to protect the confidential trading data of its subscribers.

    New York-based LavaFlow Inc. has agreed to pay $5 million to settle the SEC’s charges, including a $2.85 million penalty that is the agency’s largest to date against an ATS.

    An ATS is a venue that executes stock trades on behalf of broker-dealers and other traders.  LavaFlow operates a type of ATS known as an electronic communications network (ECN), which unlike a dark pool displays some information about pending orders in its system, such as best bid or best offer.  Under federal rules, an ATS must have safeguards to protect the confidential trading information of its subscribers.

    According to the SEC’s order instituting a settled administrative proceeding, LavaFlow allowed an affiliate operating a technology application known as a smart order router to access and use...

  • SEC Charges Florida-Based Transfer Agent and Owner with Defrauding Investors

    The Securities and Exchange Commission today announced it has charged a Florida-based transfer agent and its owner with defrauding investors by using aggressive boiler room tactics to peddle worthless securities with promises of high returns or discounted prices. 

    Transfer agents are typically used by publicly-traded companies to keep track of the individuals and entities that own their stocks and bonds.  The SEC alleges that Cecil Franklin Speight, whose firm International Stock Transfer Inc. (IST) was a registered transfer agent, abused the transfer agent function by creating and issuing fake securities certificates to both U.S. and international investors.  While investors collectively sent in millions of dollars thinking they were purchasing high-yield investments and discounted stock, they ended up receiving counterfeit certificates that Speight and IST fooled them into thinking were legitimate. 

    In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York today announced criminal charges against Speight.

    “Speight brazenly...

  • SEC Announces Additional Charges in Football-Related Boiler Room Scheme

    The Securities and Exchange Commission today announced a second round of charges against individuals behind a boiler room scheme that hyped a company whose new technology was purportedly Super Bowl-bound.

    The SEC previously charged the operators of the scheme based in the South Florida and Los Angeles areas.  Seniors and other investors were pressured into purchasing stock in Thought Development Inc. (TDI), an unaffiliated Miami Beach-based company that stated its signature invention is a laser-line system that generates a green line on a football field for a first-down marker visible not only on television but also to players, officials, and fans in the stadium. 

    The SEC today is additionally charging four executives who helped make the scheme possible and three companies they operate – DDBO Consulting, DBBG Consulting, and CalPacific Equity Group.  Approximately $1.7 million was raised through these companies from more than 110 investors who were told that an initial...

  • Morgan Stanley to Pay $275 Million for Misleading Investors in Subprime RMBS Offerings

    The Securities and Exchange Commission today charged three Morgan Stanley entities with misleading investors in a pair of residential mortgage-backed securities (RMBS) securitizations that the firms underwrote, sponsored, and issued.

    Morgan Stanley agreed to settle the charges by paying $275 million to be returned to harmed investors.

    In an asset-backed securities offering, federal regulations under the securities laws require the disclosure of delinquency information for the mortgage loans serving as collateral.  An SEC investigation found that Morgan Stanley misrepresented the current or historical delinquency status of mortgage loans underlying two subprime RMBS securitizations that came against a backdrop of rising borrower delinquencies and unprecedented distress in the subprime market.

    “The delinquency status of mortgage loans in an RMBS securitization is vital information to investors because those loans are the primary source of funds by which they potentially can recover and profit from their investments,” said Michael Osnato, chief of the SEC Enforcement Division’s...

  • SEC Adopts Money Market Fund Reform Rules

    The Securities and Exchange Commission today adopted amendments to the rules that govern money market mutual funds.  The amendments make structural and operational reforms to address risks of investor runs in money market funds, while preserving the benefits of the funds.

    Today’s rules build upon the reforms adopted by the Commission in March 2010 that were designed to reduce the interest rate, credit and liquidity risks of money market fund portfolios.  When the Commission adopted the 2010 amendments, it recognized that the 2008 financial crisis raised questions of whether more fundamental changes to money market funds might be warranted. 

    The new rules require a floating net asset value (NAV) for institutional prime money market funds, which allows the daily share prices of these funds to fluctuate along with changes in the market-based value of fund assets and provide non-government money market fund boards new tools – liquidity fees and redemption gates –...

SEC Press Releases