Galvin Charges BD With Making Short-Term Trades to Boost Commissions: Enforcement

According to the SEC, Lewis, who helped train a network of sales agents that unlawfully solicited investments for Aegis and 7S, directly solicited at least one investor, who purchased investments in both Aegis and 7S. Lewis was paid transaction-based compensation in the form of a sales commission of 2% on all investor proceeds raised through the offerings. He also received commissions ranging from 20% to 31% from the proceeds of the investments he sold to one investor. In total, Lewis received about $374,000 in commission payments from the Aegis offerings and $250,700 from the 7S offerings.

Without admitting or denying the SEC’s allegations, Lewis consented to the entry of a judgment, ordering him to pay disgorgement plus prejudgment interest and a civil penalty, in amounts to be determined by the court at a later date upon motion by the SEC.

Meanwhile, according to the SEC’s complaint against White and Vandivier, White managed a marketing team that solicited investors for Aegis and 7S. White and his sales team made cold calls to potential investors using investor contact lists. In return, White was paid transaction-based compensation in the form of a 35% sales commission for each investor his team brought on in the Aegis offering and a 28% to 35% commission for each investor in the 7S offering. In total, White received commission payments of about $6.84 million from the Aegis offerings and $229,000 from the 7S offerings. White paid out a portion of those proceeds to his sales team.

The SEC’s complaint also alleges that Vandivier managed a sales team that solicited investors for the offerings through his now defunct company, Aegis Marketing, Inc. Vandivier received commission totaling about $870,000 from the Aegis offerings, a portion of which he paid out to his sales team, and $23,000 from the 7S offerings.

The SEC is seeking permanent injunctions, disgorgement plus prejudgment interest, and civil penalties against White and Vandivier.

Fixed Income Trader Tried to Avoid Brokerage Firm’s Inventory Limits

The SEC charged Salvadore Palermo, a trader formerly employed by J.P. Turner & Company, with entering fictitious sales of market-linked certificates of deposit (MLCDs) in order to avoid J.P. Turner’s inventory limitations for the fixed income products.

According to the complaint, Palermo paid above-market prices to acquire MLCDs from J.P. Turner brokerage customers, and then held the MLCDs in J.P. Turner’s inventory.

To avoid J.P. Turner’s inventory limitations, Palermo entered dozens of fictitious trades over a seven-month period, beginning in August 2014. Palermo entered the sham sales in order to give the impression that the MLCDs had been sold from J.P. Turner’s inventory , knowing the named counterparty never agreed to buy the MLCDs and that each trade would ultimately be cancelled.

As a result of these sham transactions, J.P. Turner kept inaccurate trade blotters, showed incorrect asset and revenue account balances, and filed inaccurate Financial and Operational Combined Uniform Single Reports for each month between August 2014 and February 2015.

The SEC’s complaint seeks a permanent injunction, civil penalties and other relief.

CFTC Charges Futures Broker With Fraud

The Commodity Futures Trading Commission issued an order filing and simultaneously settling charges against a commodities trader for engaging in a fraudulent trading scheme involving unauthorized trades in cattle, crude oil and wheat futures contracts.

Mayer was a commodities trader at a registered Commodity Trading Advisor and Introducing Broker

The CFTC order requires Christian Robert Mayer to pay a $100,000 civil monetary penalty and imposes permanent trading and registration bans on him. The order also requires Mayer to cease and desist from further violations of the Commodity Exchange Act, as charged.

According to the CFTC, Mayer, who was a commodities trader at a registered Commodity Trading Advisor and Introducing Broker, conducted unauthorized futures trading in customers’ accounts, and then transferred the profitable unauthorized trades from those accounts to his personal trading account while leaving losing trades in the customers’ accounts.

Mayer then logged on to the online portal of the Futures Commission Merchant which carried all the accounts, accessed the transfer section of the portal, and fraudulently indicated that the reason for the trade transfer request was that he had placed the trade in the wrong account.

When the broker Mayer worked for discovered these unauthorized trades and transfers, it promptly issued checks to the defrauded customers totaling $105,090 to reimburse them for Mayer’s fraudulent conduct.

These checks represented the amount of the losing trades that Mayer left in their trading accounts, plus the profitable trades that Mayer improperly transferred from the customers’ accounts to his personal trading account.  These amounts came from money paid by Mayer to the broker for purposes of reimbursing the defrauded customers.

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