Texas Businessman Used Investor Funds to Pay for Russian Bride Dating Site: Enforcement

The SEC also charged the two friends with trading on the illicit tips, which reaped them substantial profits.   According to the SEC’s complaint, Sebastian Pinto-Thomaz, an analyst in the credit ratings agency’s New York office, learned of the acquisition when Sherwin-Williams consulted the agency about the potential effect of the transaction on its credit rating.

The SEC alleges that soon after, Pinto-Thomaz tipped his friends, who bought Valspar securities before the merger was announced. Valspar’s shares rose 23% on the news and the friends – Abell Oujaddou, a co-owner and co-manager of an upscale New York hair salon, and Jeremy Millul, a New York jeweler – sold their holdings and respectively made approximately $192,000 and $107,000 in profits.   “As alleged in our complaint, Pinto-Thomaz’s tips violated his obligations to his employer and allowed his friends to reap nearly $300,000 in illicit trading profits,” said Joseph G. Sansone, Chief of the SEC Enforcement Division’s Market Abuse Unit.  “Employees of credit ratings agencies often receive confidential corporate information ahead of mergers, acquisitions, and other market-moving events, and, similar to investment bankers, attorneys, and other corporate advisors, must not abuse this access by trading on the information or by tipping others.”   The SEC’s complaint, filed in federal district court in Manhattan, charges Pinto Thomaz, Oujaddou, and Millul with fraud and seeks disgorgement of ill-gotten gains, prejudgment interest, penalties, and injunctive relief. In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against Pinto-Thomaz, Oujaddou, and Millul.

Washington-Based Investment Advisor Settles Charges of Multi-Million Dollar Scheme

A federal district court entered a final consent judgment against a Washington-based investment advisor who misappropriated investors’ funds.

According to the SEC’s complaint, Ronald Fossum, Jr. misappropriated hundreds of thousands of dollars of investor funds he raised through unregistered securities offerings of three investment funds he owned and controlled: Accelerated Asset Group, LLC; Smart Money Secured Income Fund, LLC; and Turnkey Investment Fund, LLC.

The complaint alleged, among other things, that Fossum used fraudulent statements and material omissions to induce more than 100 investors to invest in his funds, and that he repeatedly breached his fiduciary duties to the funds by indiscriminately commingling fund assets to satisfy the funds’ liquidity needs.

The final judgment against Fossum orders him to disgorge $840,729, plus prejudgment interest of $110,823, orders him to pay a civil penalty of $320,000, and imposes a conduct-based injunction that enjoins him from participating in the issuance, purchase, offer, or sale of any security other than for his own personal account.

Separately, the SEC instituted settled administrative proceedings against Fossum, based on the final judgment entered against him, pursuant to which Fossum, without admitting or denying the SEC’s findings, agreed to be barred from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization.

Fossum also agreed to be barred from participating in any offering of a penny stock, including: acting as a promoter, finder, consultant, agent or other person who engages in activities with a broker, dealer or issuer for purposes of the issuance or trading in any penny stock, or inducing or attempting to induce the purchase or sale of any penny stock.

SEC Obtains Final Judgment Against Attorney in Ticket Brokering Pump and Dump Scheme

A federal district court in Massachusetts entered a final judgment against Richard Weed, formerly a partner in a Newport Beach, California law practice, for his role in defrauding investors in a Massachusetts-based ticket brokering business.

The final judgment imposes a permanent injunction against future violations of the antifraud provisions of the federal securities laws, a penalty of $150,000, and permanently bars Weed from serving as an officer or director of a public company and from participating in penny stock offerings.

In its complaint filed in 2014, the SEC alleged that Weed helped structure the ticket brokering business CitySide Tickets Inc. into a publicly traded company through reverse mergers, created backdated promissory notes and authored false legal opinion letters that enabled two co-conspirators to obtain millions of purportedly unrestricted shares of stock in the company.

The co-conspirators later sold those shares to unsuspecting investors after touting the company with false hype as a budding national leader in the ticket selling industry, realizing illicit proceeds of approximately $3 million.

In parallel criminal proceedings, Weed was convicted of criminal charges in May 2016, sentenced to four years in prison and three years of supervised release and ordered to pay a fine of $100,000 and to forfeit $90,000. His conviction was upheld in October 2017 by the First Circuit Court of Appeals, and his petition for writ of certiorari was denied by the U.S. Supreme Court in May 2018.