Blackstone Charged With Disclosure Failures
The Securities and Exchange Commission today announced that three private equity fund advisers within The Blackstone Group have agreed to pay nearly $39 million to settle charges that they failed to fully inform investors about benefits that the advisers obtained from accelerated monitoring fees and discounts on legal fees. Nearly $29 million of the settlement will be distributed to affected fund investors.
An SEC investigation found that Blackstone Management Partners, Blackstone Management Partners III, and Blackstone Management Partners IV failed to adequately disclose the acceleration of monitoring fees paid by fund-owned portfolio companies prior to the companies’ sale or initial public offering. The payments to Blackstone essentially reduced the value of the portfolio companies prior to sale, to the detriment of the funds and their investors. The SEC investigation also found that fund investors were not informed about a separate fee arrangement that provided Blackstone with a much greater discount on...
SEC Charges Former Executives With Accounting Fraud and Other Accounting Failures
The Securities and Exchange Commission today charged two former top executives at OCZ Technology Group Inc. for accounting failures at the now-bankrupt seller of computer memory storage and power supply devices.
In a complaint filed in the Northern District of California, the SEC alleges that OCZ’s former CEO Ryan Petersen engaged in a scheme to materially inflate OCZ’s revenues and gross margins from 2010 to 2012. It separately charged OCZ’s former chief financial officer Arthur Knapp for certain accounting, disclosure, and internal accounting controls failures at OCZ. Knapp agreed to settle the SEC’s charges without admitting or denying the allegations against him. The SEC’s litigation continues against Petersen.
“CEOs and CFOs are responsible for reporting accurate financial information,” said Antonia Chion, Associate Director of the SEC’s Division of Enforcement. “When those high-level executives participate in accounting fraud and failures, as we allege Petersen and Knapp have done, they will be held accountable.”...
Michael Liftik Named SEC Deputy Chief of Staff
The Securities and Exchange Commission today announced that Michael Liftik will become a deputy chief of staff of the agency.
Mr. Liftik became Senior Advisor to Chair Mary Jo White in April 2013, serving as the Chair’s legal advisor on enforcement policy matters and cases. He also serves as the Chair’s representative on the Deputies Committee of the Financial Stability Oversight Council.
In his legal advisor role, Mr. Liftik has worked with SEC staff and with senior officials from the Department of Treasury, Federal Reserve Board, and other financial regulators on identifying and addressing developments in the financial sector involving the asset management industry, cybersecurity, and macroeconomic trends.
“I have relied on Michael’s securities law expertise and sound judgment and look forward to continuing to benefit from his advice and counsel in his new role as deputy chief of staff,” said SEC Chair Mary Jo White.
Mr. Liftik said, “It has been a tremendous...
SEC Deputy Chief of Staff Erica Williams to Leave Agency
The Securities and Exchange Commission today announced that Erica Williams will be leaving the SEC after serving as deputy chief of staff to three Chairs, Mary Jo White, Elisse B. Walter, and Mary L. Schapiro.
As Chair White’s deputy chief of staff, Ms. Williams served as a senior legal advisor to the Chair on all aspects of the SEC’s operations, including enforcement, regulatory policy, compliance exams, strategy, and management of the agency. She also served as the Chair’s representative to the Financial Stability Oversight Board, which oversees the operation of the troubled asset relief program (TARP).
Ms. Williams joined the Chair’s staff in February 2011as enforcement counsel and became deputy chief of staff in May 2012.
She began her career at the SEC in February 2004 in the Enforcement Division’s trial unit where she served as assistant chief litigation counsel. During that time, Ms. Williams led a number of successful prosecutions throughout the...
SEC Charges Florida Investment Adviser and His Company With Defrauding Investors
The Securities and Exchange Commission today announced fraud charges against Florida-based investment adviser Arthur F. Jacob and his company, Innovative Business Solutions LLC, for allegedly deceiving clients over a period of at least five years.
In an order instituting administrative proceedings the SEC Enforcement Division alleges that from at least mid-2009 through July 2014:
Jacob and IBS misrepresented the risks and profitability of investments he purchased for investment advisory clients. Jacob was informed of investment risks of certain exchange traded funds but failed to disclose these risks to clients and told them that the investment strategy he used was safe, carried low or no risk, and would produce predictable profits.
Jacob concealed from clients his disciplinary history, which included being disbarred as a lawyer for misappropriating client funds and other professional misconduct.
Jacob and IBS were not registered with the SEC or any state as investment advisers and Jacob falsely told clients that he...