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March 17, 2017 at 05:02 AM
Gregory E. Webb, a defendant in an ongoing enforcement action filed by the Securities and Exchange Commission, was sentenced to nine years imprisonment in a parallel criminal action on March 1.
In addition, the court ordered Webb to pay $9 million in restitution.
Webb, 71, of Arlington Heights, Illinois, was the chairman, CEO and President of InfrAegis Inc., a now-defunct company.
On Feb. 28, 2014, a federal grand jury returned an 11-count indictment against Webb and, on July 11, 2016, a federal jury in Chicago found Webb guilty on nine of the 11 counts and found him not guilty on two of the 11 counts.
Webb and InfrAegis are defendants in a SEC civil enforcement action based, in part, on the same conduct alleged in the criminal indictment. The SEC’s complaint, filed on Oct. 11, 2011, alleges that, from January 2005 through June 2010, Webb and InfrAegis orchestrated a fraudulent, unregistered offering of stock that raised at least $20 million from at least 395 investors.
According to the SEC’s complaint, Webb and InfrAegis made false and misleading claims about the company’s commercial success and the existence of contracts for the installation of InfrAegis’ products, including certain contracts that were alleged in the criminal indictment. The SEC’s litigation, which has been stayed pending the outcome of the criminal case, is ongoing.
Auditor Charged With Insider Trading on Client’s Nonpublic Information
The SEC announced that an auditor based in Silicon Valley has agreed to settle charges that he traded on inside information about a client on the verge of a merger.
The SEC’s order finds that through his work at an independent audit firm, Nima Hedayati learned that Fremont, California-based Lam Research Corp. was making preparations to acquire Milpitas, California-based KLA-Tencor Corp. The two companies manufacture equipment used in the creation of semiconductors.
According to the SEC’s order, Hedayati proceeded to purchase out-of-the money call options in KLA common stock in his brokerage account as well as his fiancée’s brokerage account, and he also encouraged his mother to purchase KLA common stock. After merger plans were publicly announced, KLA’s stock price increased nearly 20%, and Hedayati and his mother collectively profited by more than $43,000 from the illegal trades. Hedayati’s employer fired him when it discovered his misconduct.
Without admitting or denying the SEC’s findings, Hedayati agreed to pay disgorgement of $43,000 plus $1,200 in interest and a $43,000 penalty for a total of more than $87,000.
Hedayati agreed to be suspended from appearing and practicing before the SEC as an accountant, which includes not participating in the financial reporting or audits of public companies. The SEC’s order permits him to apply for reinstatement after five years.
Former Investment Advisor Pleads Guilty in Cherry-Picking Scheme
