SEC Halts Alleged Fraud by Unregistered Firm: Enforcement

For the first time, the FTC obtained a court order requiring the sale of a defendant’s home to pay a fraud judgment. Goldman has surrendered his home to a court-appointed receiver who will sell it and pay the Commission $428,600, which the FTC traced directly from the fraud.

The order follows court settlements reached in 2012, in which Goldman and other defendants in the American Precious Metals scheme agreed to pay more than $24.3 million to resolve FTC charges that they lured investors without disclosing significant costs and risks, including the likelihood that they would have to pay more money or lose their investment.

SEC Charges Former Head Traders at Nomura With Fraud

The Securities and Exchange Commission charged a pair of former head traders who ran the commercial mortgage-backed securities (CMBS) desk at Nomura Securities International Inc. with deliberately lying to customers in order to inflate the profits of the CMBS desk and line their own pockets as a result.

The SEC alleges that James Im and Kee Chan each misrepresented price information while acting as intermediaries on trades with Nomura’s customers who sought to buy and sell CMBS on the secondary market. In certain instances, Im and Chan allegedly pretended they were still negotiating bond purchases with a third-party seller at higher prices when Nomura had already acquired the bonds at a lower price.

The SEC alleges that in one instance, Im bragged about his purposeful deception of a customer, and Chan once altered an email to a customer to prop up his lie about the bid price for a bond. According to the SEC’s complaints, Chan and Im fraudulently generated more than $750,000 in extra trading profits for the CMBS desk, and they received substantial bonuses based largely on the desk’s performance.

Chan agreed to settle the charges by paying $52,000 in disgorgement plus $11,700 in interest and a $150,000 penalty. Without admitting or denying the allegations, Chan also agreed to be barred from the securities industry with the right to reapply after three years. The settlement is subject to court approval. The case continues against Im.