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To: scion who wrote (114296)2/8/2012 11:58:58 AM
From: scion
   of 117958
 
SEC Tags Kenneth Dachman in Misappropriation Scheme, Fraud

Jack Humphrey, Regulatory journalist
February 08, 2012
inaudit.com 

The Securities and Exchange Commission charged Glencoe, Illinois resident Kenneth A. Dachman with misappropriating over $1.8 million in investor funds and making false and misleading statements to investors in offerings for three companies for which he was the Chairman – Central Sleep Diagnostics, LLC (Central Sleep), Central Sleep Diagnostics of Florida, LLC (Central Sleep Florida), and Advanced Sleep Devices, LLC (Advanced Sleep).

The SEC also charged Scott A. Wolf and his company, Stone Lion Management, Inc., the brokers for the three offerings, for their roles in selling unregistered securities to investors.

Filed in the U.S. District Court for the Northern District of Illinois, the SEC’s complaint alleges that between July 2008 and June 2010, Dachman raised at least $3,594,709 from investors located in 13 states and 12 foreign countries on behalf of Central Sleep, a purported provider of outpatient diagnostic sleep studies.

Between December 2008 and April 2010, Dachman raised an additional $567,399 on behalf of Central Sleep Florida, a purported expansion of Central Sleep into Florida, and Advanced Sleep, a purported provider of medical devices.

According to the complaint, Dachman made numerous misrepresentations to investors in each of the companies, including misrepresentations about how their funds would be used and his academic and business backgrounds. Dachman also failed to tell investors that he misappropriated at least $1,875,739 of their funds, over 45% of the total funds raised.

According to the SEC’s complaint, among other things, Dachman used investor funds to rent-to-own a 10,000 square foot home, to pay for family vacations to Alaska, Europe and elsewhere, to purchase a new Range Rover, books, collectibles and antiques, and for personal expenses and credit card bills. Dachman also diverted investor funds to a tattoo parlor that he co-owned with his son-in-law.

The SEC’s complaint further alleges that Wolf and Stone Lion acted as unregistered brokers in selling unregistered securities to investors without qualifying for an exemption from the SEC’s registration provisions. The complaint seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and penny stock bars.

Wolf and Stone Lion each have agreed to settle the SEC’s charges without admitting or denying the allegations against them. Wolf also has agreed to pay disgorgement of $335,216, prejudgment interest of $16,268, and a penalty of $20,000, and to be barred from participating in an offering of penny stock for one year. The proposed settlements are subject to the approval of the District Court.

The U.S. Attorney’s Office for the Northern District of Illinois and the Federal Bureau of Investigation assisted in the investigation.

inaudit.com 

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To: scion who wrote (114285)2/8/2012 1:34:45 PM
From: scion
   of 117958
 
Ban on Insider Trading Faces G.O.P. Revisions

February 7, 2012
By ROBERT PEAR
nytimes.com 

WASHINGTON — Lobbyists were in a tizzy on Tuesday over provisions of a Senate-passed ethics bill that tighten regulation of lobbying and require secretive “political intelligence” firms to register in the same way as lobbyists.

House Republicans and their floor leader, Representative Eric Cantor of Virginia, said they would amend the bill, going to the House floor this week, to strengthen it.

But Representative Louise M. Slaughter, Democrat of New York, said, “I think ‘strengthening’ here is a euphemism for ‘weakening.’ ”

And Representative Tim Walz, Democrat of Minnesota, said the bill, to ban insider trading by members of Congress, was being rewritten behind closed doors by House Republican leaders.

“How ironic,” Mr. Walz said. “Insiders now appear to be writing a bill meant to ban insider trading.”

The bill is intended to restore trust in Congress, but Mr. Walz said the revisions could “make the cynicism that’s rampant in America even greater.”

The thrust of the bill, passed in the Senate last week by a vote of 96 to 3, is to prohibit members of Congress from trading stocks and other securities on the basis of confidential information they receive as lawmakers.

An amendment offered by Senator Charles E. Grassley, Republican of Iowa, requires individuals or firms that collect intelligence from political insiders to register as lobbyists do.

At present, Mr. Grassley said, when lawmakers and their aides meet with “political intelligence consultants,” they have no way of knowing if the information they share will be sold to hedge funds, private equity firms or other investors who make a profit on it.

Ms. Slaughter, who introduced insider trading legislation in 2006, said the regulation of political intelligence-gathering was “the most important part of the bill.”

Howard Marlowe, president of the American League of Lobbyists, a professional group, said, “The legislation moved so quickly that we did not have an opportunity to discuss it with Senator Grassley or his staff.”

Under the bill, Mr. Marlowe said, “the definition of political intelligence is very fuzzy.” It includes information derived from contacts with Congress or federal agencies that is “intended for use in analyzing securities or commodities markets, or in informing investment decisions.”

J. Patrick Cave, managing partner of the Cypress Group, which does lobbying and policy research for investors, said: “People are freaking out about the Grassley amendment. For many, it’s new, and it remains rife with loopholes, but it’s a good start, clarifying the law and expanding disclosure requirements to include everyone.”

Mr. Cave and other experts on lobbying said the bill would require companies like Goldman Sachs and Morgan Stanley and law firms like Patton Boggs to register and disclose the clients for whom they did policy research analyzing developments in Washington.

Michael W. Mayhew, who has analyzed the demand for such services as chairman of Integrity Research Associates in New York, said the global market for political intelligence services exceeded $400 million a year. He estimated that close to 300 companies systematically collected such information.

Under the bill, Mr. Mayhew said, some of the political intelligence coming out of Washington would be classified as “material nonpublic information” and “people who invest on it could go to jail for insider trading.”

In a bulletin sent to clients this week, Covington & Burling, one of the largest law firms in Washington, said the bill could have an immense impact on “the business community.”

“Hedge funds, private equity funds and investment advisers — many of which are not currently registered under the Lobbying Disclosure Act — might now be required either to register or to alter their business practices to avoid the need for registration,” the bulletin said. “If, for example, a hedge fund calls a Congressional committee staffer to gather information about the status of a bill that relates to the fund’s investment decisions, the fund may need to register.”

Robert K. Kelner, chairman of the political law practice group at Covington & Burling, said: “We have been flooded with calls about this legislation. I suspect there is a lot of lobbying to change it.”

Indeed, said Representative Slaughter, critics are “flooding Congress to try to weaken this bill.”

House Republicans said they would add a provision to prohibit members of Congress, their aides and executive branch officials from receiving special access to initial public stock offerings because of their positions.

Republicans call this “the Pelosi provision” because, they say, it was inspired by an investment in 2008 by Representative Nancy Pelosi of California, who was then the speaker and is now the House Democratic leader. An aide to Ms. Pelosi said that neither she nor her husband, Paul F. Pelosi, had received “preferential treatment” when the company, Visa Inc., went public.

nytimes.com 

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From: scion2/9/2012 11:49:53 AM
   of 117958
 
SEC Charges Former Pharmaceutical Company Employee with Insider Trading on Biotech Deals

FOR IMMEDIATE RELEASE
2012-26

Washington, D.C., Feb. 9, 2012 — The Securities and Exchange Commission today charged that a former employee of Takeda Pharmaceuticals International, Inc. traded on inside information about the Japanese firm’s business alliances and corporate acquisitions.

Additional Materials
SEC Complaint
sec.gov 

Brent Bankosky, a former Senior Director in Takeda’s U.S.-based business development group, has agreed to pay more than $136,000 to settle the SEC’s charges. The proposed settlement is subject to the approval of Judge Harold Baer, Jr. of the U.S. District Court for the Southern District of New York. Under the proposed settlement, the Court, upon motion by the Commission, will determine whether to impose an officer-and-director bar against Bankosky.

The SEC’s complaint, filed in federal court in Manhattan, alleges that Bankosky reaped more than $63,000 of profits, achieving a 169% rate of return, by trading on non-public information about two business transactions in 2008. Takeda’s business development group worked on the transactions, a strategic alliance with Cell Genesys, Inc., and the acquisition of Millennium Pharmaceuticals, Inc., which were referred to internally by their code names, Project Ceres and Project Mercury. Bankosky’s trading violated U.S. securities laws and Takeda’s policies, which forbade employees from disclosing or trading based on inside information.

“Brent Bankosky was entrusted with highly confidential information of Takeda and betrayed that trust to line his own pocket,” said George S. Canellos, Director of the SEC’s New York Regional Office. “His is another cautionary tale of an employee who succumbed to greed and the delusion that he wouldn’t get caught.”

Sanjay Wadhwa, Associate Director of the SEC’s New York Regional Office and Deputy Chief of the Market Abuse Unit, added, “We are determined to rid the U.S. marketplace of illegal insider trading, and we will pursue it wherever we find it, irrespective of whether it’s a hedge fund reaping millions of dollars in illicit gains or an individual investor hoping to fly under the radar by making relatively small insider trading profits.”

According to the SEC’s complaint, almost immediately after Bankosky joined Takeda in January 2008 as a Director in its business development group, he began to misuse confidential corporate information for his personal benefit. In February 2008, Bankosky began placing trades in his personal brokerage account based on non-public information about Takeda’s proposed strategic alliance with Cell Genesys, which was announced in March. Starting in March 2008, Bankosky made additional trades for his own account based on non-public information about Takeda’s plan to acquire Millennium, which was announced in April. Bankosky also traded on other confidential information in 2009 and 2010, purchasing call options in the securities of Arena Pharmaceutical, Inc., and AMAG Pharmaceutical, Inc., respectively, when the firms were engaged in confidential discussions on business transactions with Takeda. Bankosky, who was promoted to Senior Director of Takeda’s business development group in September 2010, resigned from Takeda in May 2011.

The SEC’s complaint charges Bankosky with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, as well as Section 14(e) of the Exchange Act and Rule 14e-3. The complaint seeks a final judgment ordering Bankosky to pay a financial penalty and disgorge his ill-gotten gains plus prejudgment interest, preventing him from serving as an officer or director of a public company, and permanently enjoining him from future violations of those provisions of the federal securities laws.

The SEC’s investigation, which is continuing, has been conducted by Charles D. Riely and Amelia A. Cottrell – members of the SEC’s Market Abuse Unit in New York – and Layla Mayer of the SEC’s New York Regional Office.

# # #

For more information about this enforcement action, contact:

George S. Canellos
Director, SEC’s New York Regional Office
(212) 336-1020

Sanjay Wadhwa
Associate Director, SEC’s New York Regional Office and Deputy Chief, Market Abuse Unit
(212) 336-0181

Amelia A. Cottrell
Assistant Director, SEC’s New York Regional Office and Market Abuse Unit
(212) 336-1056



sec.gov 

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From: StockDung2/10/2012 8:21:50 AM
   of 117958
 
Alan Todd May -- Once a Fugitive, Always a Con Man -- Gets 20 Years For Ripping Off Investors

By Robert Wilonsky Thu., Feb. 9 2012 at 5:35 PM

Categories: Crime

?For the past three decades -- on and off, but mostly on -- there was no swindle too small-time for Alan Todd May. Credit card abuse, theft, check fraud -- however he could make an easy, sleazy buck, May did what he could wherever he could to whomever he met. One day, perhaps, someone will make a movie about his exploits -- a dark comedy seems about right, though those from whom he stole millions won't find much to laugh at. Still, such a format would allow for the scene described by the Houston Chronicle in 1995: "By using the pay phone at the jail and an answering service, May is suspected of setting up bogus trade shows in Houston, Austin, Dallas and Denver and getting people to mail him entry fees. ... May then typically cancels the event or has an excuse for moving it."

We first met May in June 2010 -- just as deputy U.S. Marshals were catching up with May in San Francisco. He wasn't supposed to be there. He was wanted by federal authorities here, in Dallas, where May ran something called Prosper Oil & Gas on N. St. Paul downtown. The U.S. Securities and Exchange Commission, along with a handful of other government law enforcement agencies, said May was running another scam -- this one involving oil wells that didn't exist and investors' money that did.

When all was said and done, May pocketed $7 million belonging to 174 people who believed his every pitch and promise. He bought fancy cars and several homes in Dallas, each, said the feds, worth more than $1.5 million. He gave money to his mother, brother, daughter, even the ex. He hightailed it to San Francisco and assumed a few phony names: Mark Mangum, Brian Peirce and Justin Gore among them. But he was done for in the summer of 2010; six months later, he pleaded guilty.

And now, says the U.S. Attorney's Office, he's going away for 20 years -- the maximum sentence allowed by law, thanks to U.S. District Judge Jane J. Boyle just this afternoon. Sometime within the next three months we'll know how much he owes -- probably a lot, it goes without saying.
DALLAS BUSINESSMAN SENTENCED TO 20 YEARS IN FEDERAL PRISON FOR RUNNING OIL AND GAS PONZI SCHEME

Alan Todd May Owned Prosper Oil & Gas Fraudulently Raised Approximately $7 Million from Investors


DALLAS -- Alan Todd May, 46, who pleaded guilty in December 2010 to one count of mail fraud, admitting that he raised approximately $7 million in investor funds under false pretenses, was sentenced this afternoon by U.S. District Judge Jane J. Boyle to the statutory maximum sentence of 20 years in federal prison. The Court stated that it will address the issue of restitution within 90 days. Today's announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

May has been in custody since his arrest in June 2010 in San Francisco on a related federal criminal complaint filed in the Northern District of Texas. A few weeks later, he was indicted on one count of wire fraud and two counts of mail fraud. Per the terms of his plea agreement with the government, the government dismissed the remaining mail and wire fraud counts.

May formed Prosper Oil & Gas, Inc. and was its president. Prosper purported to own and operate oil and gas leases in several states, including Texas, Oklahoma, Colorado and Arkansas. According to plea documents filed in the case, beginning in July 2008, and continuing through the beginning of March 2010, May ran a scheme to obtain, by false and fraudulent pretenses, obtained approximately $7 million from investors to purchase royalty interests in oil and gas leases.

To sell these royalty interests, May, along with others, made various false and misleading statements to investors. For example, May and others told investors that the royalty interests for sale had yielded, or would yield, annual returns greater than 25%. As a result of these representations, Prosper sold purported royalty interests to more than 170 investors.

In fact, in operating their massive Ponzi scheme, May and others were: selling mineral interests that Prosper didn't own; overselling mineral interests that Prosper did not own; wildly overstating the production revenue for Prosper's leases in order to sell mineral interests; and making Ponzi payments, disguised as "royalty" payments, to investors.

May admitted using investor funds for extravagant personal expenses and to make payments to his mother, daughter, brother and ex-wife.

The Securities and Exchange Commission (SEC) opened a separate investigation into May and Prosper Oil and Gas, and in March 2010 filed a civil complaint against them alleging that May and Prosper raised at least $6 million from at least 99 investors throughout the U.S. in fraudulent securities offerings, consisting of fractional, undivided royalty interests in oil and gas properties. U.S. District Judge Sam A. Lindsay ordered that Prosper Oil and Gas, and any assets of Alan May, be placed in receivership. The SEC identified six accounts that Prosper Oil & Gas used to receive investor funds, receive oil and gas revenues, and make payouts to Prosper's investors. Those accounts revealed approximately $6.7 million in total incoming investor funds; approximately $441,000 of total oil and gas revenue; and approximately $1.2 million of investor distributions.

This law enforcement action is part of President Barack Obama's Financial Fraud Enforcement Task Force. President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes.

The case was investigated by the U.S. Secret Service and the FBI. Assistant U.S. Attorney Stephen P. Fahey and Special Assistant U.S. Attorney Robert B. Long of the SEC prosecuted

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To: scion who wrote (114307)2/10/2012 8:55:28 AM
From: scion
   of 117958
 
Rep. Spencer Bachus faces insider-trading investigation

By Scott Higham and Dan Keating, Published: February 9
washingtonpost.com 

The Office of Congressional Ethics is investigating the chairman of the House Financial Services Committee over possible violations of insider-trading laws, according to individuals familiar with the case.

Rep. Spencer Bachus (R-Ala.), who holds one of the most influential positions in the House, has been a frequent trader on Capitol Hill, buying stock options while overseeing the nation’s banking and financial services industries.

The Office of Congressional Ethics, an independent investigative agency, opened its probe late last year after focusing on numerous suspicious trades on Bachus’s annual financial disclosure forms, the individuals said. OCE investigators have notified Bachus that he is under investigation and that they have found probable cause to believe insider-trading violations have occurred.

The case is the first of its kind involving a member of Congress. It comes at a time of intense public scrutiny of congressional ethics, with the House passing legislation Thursday to tighten rules against insider trading by lawmakers. The impetus for the legislation, a version of which passed in the Senate a week earlier, came from a “60 Minutes” report and a book mentioning Bachus’s trades, “Throw Them All Out,” by Peter Schweizer.

“The Office of Congressional Ethics has requested information and I welcome this opportunity to present the facts and set the record straight,” Bachus said in a statement issued Thursday by his spokesman, Tim Johnson.

Omar S. Ashmawy, OCE staff director and chief counsel, declined to comment. “The office does not confirm or deny whether an investigation is taking place.” Chief counsel for the House Ethics Committee, Dan Schwager, also declined to discuss the case. “The committee doesn’t comment on specific matters or allegations,” he said.

OCE investigators are examining whether Bachus violated Securities and Exchange Commission laws that prohibit individuals from trading stocks and options based on “material, non-public” inside information, said the individuals, who spoke on the condition of anonymity because of the sensitivity of the matter. The office also is investigating whether Bachus violated congressional rules that prohibit members of Congress from using their public positions for private gain.

In recent years, Bachus has made numerous trades, some of them coinciding with major policy announcements by the federal government and industries under his congressional oversight, according to a review of his financial disclosure forms by The Washington Post.

Most of his investments are for less than $10,000, and almost all involve options rather than stock purchases. The options allowed Bachus to buy or sell stocks at certain prices in the future — betting that the value of those stocks will rise or fall.

A Fidelity brokerage statement Bachus submitted for 2008 shows that he made $30,474 in short-term investments, many of them bought and sold in a matter of days, sometimes during the same day.

The former member of the House Transportation and Infrastructure Committee made several options bets on railroads. While President George W. Bush’s fiscal stimulus bill was being crafted in summer 2008, Bachus bet that the stock of Burlington Northern Railroad would rise, and he cashed out that July for a $16,588 profit. In August, he made the same bet but lost $2,900.

On Sept. 18, 2008, at the height of the economic meltdown, Bachus participated in a closed-door briefing with then-Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben S. Bernanke. At the time, he was the highest-ranking Republican member of the Financial Services Committee. According to a book Paulson would later write, the topic of the meeting was the high likelihood of decline across the entire economy if drastic steps were not taken.

The next day, Sept. 19, Bachus traded “short” options, betting on a broad decline in the nation’s financial markets, and collected a profit of $5,715. Also that day, he cashed out options in which he had bet that General Electric stock would rise, and collected a $12,713 profit, before GE’s stock price started to tumble, The Post found.

The short options betting on an economic downturn were reported in “Throw Them All Out,” which was the basis of the “60 Minutes” story, which aired Nov. 13. Bachus criticized the reports, calling allegations that he engaged in insider trading “absolutely false.”

But the book inaccurately said Bachus bet on GE’s price to fall rather than rise. Schweizer acknowledged his mistake but said it made no difference to his larger point.

In a letter to the publisher, Bachus attacked the book for the mistake about GE. “The book is absolutely false and factually inaccurate when it states that I ‘shorted General Electric options’ and did so ‘four times in a single day.’?”

He also said there was no inside information provided in the briefing by Paulson and Bernanke.

“The idea that I or anyone else needed this meeting to know our financial markets were in trouble is just laughable,” he wrote in the letter. “You would have to be living under a rock not to know by September 18, 2008 that the economy was in bad shape.”

He said a press conference held immediately after the briefing revealed what was discussed.

“This meeting was so ‘secretive’ that members of the press knew about it beforehand, were waiting outside the door, and a press conference was held immediately after the meeting to inform the public about what we discussed,” he wrote.

In October, Bachus bet on the market going up, but this time he lost $21,558.

Bachus said he gave up his “hobby” of trading when he became chairman of the Financial Services Committee after the Republican takeover of the House in November 2010. Although he has sometimes made money on trades, his financial disclosures indicate that his net worth has been cut in half during his time in Congress, declining from up to $2.3?million in 1995 to up to $1.1?million at the start of this year.

Bachus was elected in 1992. Before coming to Congress, he served in the Alabama Senate and worked as a lawyer. He is originally from Birmingham and lives south of the city in Vestavia Hills.

The Senate passed its version of the Stock Act last week. The legislation will make it easier for SEC officials to prosecute insider-trading cases against members of Congress, their staff and top officials in the executive branch. It will also require them to disclose all stock trades every 30 days.

Earlier stories in The Post and the Wall Street Journal described the lack of stringent rules governing Congress and the conflicts presented by assets owned and traded by lawmakers and their public roles. Post stories detailed the reporting weaknesses in the disclosure system, which cannot be electronically searched. The Stock Act requires electronic filing of disclosure forms.

Differences between the measures will be taken up in a conference committee.

The Office of Congressional Ethics was created in March 2009 in response to public criticism that the House Ethics Committee was failing to properly police its members.

The OCE conducts independent investigations into allegations of misconduct against members, officers and staff. However, its powers are limited. It cannot compel a member to cooperate with an investigation, and it does not have subpoena powers.

Once the office completes its investigations, the results are forwarded to the ethics committee. That committee has the final say on whether a violation has taken place and what sanctions, if any, should be imposed.

Staff writers David S. Fallis, Paul Kane and Kimberly Kindy and staff researcher Lucy Shackelford contributed to this report.

washingtonpost.com 

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To: StockDung who wrote (114309)2/10/2012 10:07:07 AM
From: Buckey
   of 117958
 
maybe we should do what they do in other cultures for con men.

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To: Buckey who wrote (114311)2/10/2012 12:02:44 PM
From: scion
   of 117958
 
SEC Charges California Hedge Fund Manager Connected to Galleon Insider Trading Case

FOR IMMEDIATE RELEASE
2012-27

Washington, D.C., Feb. 10, 2012 — The Securities and Exchange Commission today charged a hedge fund manager and his Menlo Park, Calif.-based firm for their involvement in the insider trading ring connected to Raj Rajaratnam and hedge fund advisory firm Galleon Management.

Additional Materials
SEC Complaint
sec.gov 

The SEC alleges that Douglas F. Whitman and Whitman Capital illegally traded based on material nonpublic information obtained from Rajaratnam associate Roomy Khan, who was Whitman's friend and neighbor. Khan tipped Whitman with confidential details about Polycom Inc.'s fourth quarter 2005 earnings and Google Inc.'s second quarter 2007 earnings prior to the public announcements of those financial results by the companies. Whitman Capital reaped nearly $1 million in ill-gotten gains by trading on Khan's illegal tips.

"Whitman engaged in what even he termed 'slimeball' activity and together with Khan brought new illicit meaning to the maxim 'help thy neighbor,'" said George S. Canellos, Director of the SEC's New York Regional Office.

Sanjay Wadhwa, Associate Director of the SEC's New York Regional Office and Deputy Chief of the Market Abuse Unit, added, "This action should send a strong signal that the SEC will continue to pursue every angle of the Galleon investigation to hold accountable those who have undermined the integrity of our markets by engaging in illegal insider trading."

According to the SEC's complaint, filed in federal court in Manhattan, the inside information about Polycom and Google used by Whitman is the same information that the SEC has previously alleged Khan provided to many of her hedge fund contacts, including Rajaratnam as well as Robert Feinblatt and Jeffrey Yokuty at Trivium Capital.

The SEC alleges that Khan illegally tipped Whitman in January 2006 with information about Polycom's quarterly financial results, and she noted that these details were nonpublic and acquired from a source at Polycom. Whitman Capital accumulated 132,263 shares of Polycom stock in the next two weeks. When the company announced its results on January 25, Whitman Capital liquidated its entire Polycom position for a profit of more than $360,000. On at least one later occasion, in September 2008, Whitman asked Khan to contact her Polycom source to obtain inside information about the company's upcoming earnings so the two could "short it." When Khan rebuffed Whitman citing a fear of getting caught, Whitman suggested that she use "Skype" to avoid detection. Whitman later stated that he would stop speaking to Khan if she wasn't going to be a "slimeball" anymore.

The SEC further alleges that Khan illegally tipped Whitman with inside information about Google's quarterly financial results shortly before the company's post market-close earnings announcement on July 19, 2007. At Whitman's insistence, Khan identified her Google source as an employee of an investor relations firm used by Google. Whitman Capital funds then purchased 2,761 Google put option contracts based on the tip from Khan. On July 20, Whitman Capital closed the put option positions and generated ill-gotten profits of more than $620,000. Afterwards, Whitman sent Khan a large floral arrangement to thank her for the tip.

The SEC's complaint charges Whitman and Whitman Capital with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Section 17(a) of the Securities Act of 1933. The complaint seeks a final judgment permanently enjoining the defendants from future violations of the above provisions of the federal securities laws, ordering them to disgorge their ill-gotten gains plus prejudgment interest, and ordering them to pay financial penalties.

The SEC has charged 30 defendants in its Galleon-related enforcement actions, which have exposed widespread and repeated insider trading at numerous hedge funds and by other traders, investment professionals, and corporate insiders located throughout the country. The insider trading occurred in the securities of more than 15 companies for illicit profits totaling more than $91 million.

The SEC's investigation, which is continuing, has been conducted by John Henderson and Joseph Sansone - members of the SEC's Market Abuse Unit in New York - and Diego Brucculeri and James D'Avino of the New York Regional Office. Kevin McGrath and Valerie Szczepanik will lead the SEC's litigation effort. The SEC thanks the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation for their ongoing assistance in the matter.

# # #

For more information about this enforcement action, contact:

George S. Canellos
Director, SEC's New York Regional Office
(212) 336-1020

Sanjay Wadhwa
Associate Director, SEC's New York Regional Office and Deputy Chief, Market Abuse Unit
(212) 336-0181

Joseph G. Sansone
Assistant Director, SEC's New York Regional Office and Market Abuse Unit
(212) 336-0517


sec.gov 

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From: scion2/10/2012 1:06:50 PM
   of 117958
 
Three Defendants Settle and Additional Defendant Charged in Stock Manipulation Ring

U.S. Securities and Exchange Commission

Litigation Release No. 22256/February 10, 2012

SEC v. Dynkowski, et al., Civil Action No. 1:09-361 (D. Del.)

Three Defendants Settle and Additional Defendant Charged in Stock Manipulation Ring

The Securities and Exchange Commission announced today that Chief Judge Gregory M. Sleet of the United States District Court for the District of Delaware entered final judgments against Defendants Nathan M. Michaud and Gerard J. D’Amaro on January 24, 2012, and Defendant Marc J. Riviello on February 3, 2012, in SEC v. Dynkowski, et al., Civil Action No. 1:09-361, a stock manipulation case the SEC filed on May 20, 2009, and amended on March 25, 2010 to charge additional individuals. The SEC’s complaint alleges that Michaud, D’Amaro, and Riviello each participated in market manipulation schemes with Defendant Pawel P. Dynkowski.

As alleged in the complaint, the schemes generally followed the same pattern: Dynkowski and his accomplices agreed to sell large blocks of shares for penny stock companies in exchange for a portion of the proceeds. The shares were put in nominee accounts that Dynkowski and his accomplices controlled. The defendants artificially inflated the market price of the stocks through manipulative trading, often timed to coincide with false or misleading press releases, and then sold shares obtained from the issuers and divided the illicit proceeds.

The complaint alleges that in 2006, Dynkowski, Riviello, Michaud and others participated in a manipulation scheme involving the stock of Asia Global Holdings, Inc., which generated over $4 million in illicit profits. As alleged in the complaint, Dynkowski and Michaud manipulated the price of Asia Global Holdings, Inc. stock using wash sales, matched orders, and other manipulative trading, while Riviello used his position as a registered representative at a broker-dealer to open a series of nominee accounts and execute sell orders for shares obtained from the issuer. The complaint further alleges that Riviello helped launder proceeds from a separate manipulation scheme involving the stock of GH3 International, Inc.

That same year, the complaint alleges, Dynkowski, D’Amaro and others participated in a manipulation scheme involving the stock of Playstar Corp., which generated over $1 million in illicit profits. As alleged in the complaint, D’Amaro arranged for the company to issue misleading press releases that coincided with Dynkowski’s manipulative trading. The complaint further alleges that D’Amaro provided the nominee accounts that were used to sell the shares received from the issuer.

To settle the SEC’s charges, D’Amaro consented to a final judgment that permanently enjoins him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act of 1933 (“Securities Act”), and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder, orders disgorgement of $177,044 and prejudgment interest of $40,859, and bars D’Amaro from participating in any offering of a penny stock. In a related criminal case, D’Amaro previously pled guilty to conspiracy to commit securities fraud and engage in money laundering and was sentenced to three years in prison and ordered to pay criminal forfeiture of $1.49 million. U.S. v. D’Amaro, Criminal Action No. 09-54-SLR (D. Del.).

Riviello consented to a final judgment that permanently enjoins him from violating Sections 5(a), 5(c), and 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and orders disgorgement of $248,190 and prejudgment interest of $35,078, which was waived based upon his inability to pay. In related administrative proceedings, Riviello consented to a Commission Order barring him from association with any broker or dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and barring him from participating in any offering of a penny stock. In a related criminal case, Riviello previously pled guilty to conspiracy to engage in money laundering and was sentenced to 8 months in prison and ordered to pay criminal forfeiture of $107,000. U.S. v. Riviello, Criminal Action No. 09-23-SLR (D. Del.).

Michaud consented to a final judgment that permanently enjoins him from violating Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and orders him to pay disgorgement of $40,600, prejudgment interest of $3,314, and a civil penalty of $50,000.

Additionally, on December 22, 2011, the SEC filed a second amended complaint charging James Meagher as an additional defendant in this case. The complaint alleges that, in 2007, Dynkowski and Meagher carried out a manipulation scheme involving the stock of Xtreme Motorsports of California, Inc. As alleged in the complaint, Dynkowski and Meagher manipulated the price of Xtreme Motorsports stock using wash sales, matched orders and other manipulative trading, in a scheme that generated over $250,000 in illicit profits. The complaint alleges that Meagher violated Sections 5(a), 5(c) and 17(a) of the Securities Act, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The complaint seeks against Meagher permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, civil monetary penalties, and an order barring him from participating in any penny stock offerings.

The SEC thanks the following agencies for their cooperation and assistance in connection with this matter: the U.S. Attorney’s Office for the District of Delaware; the Delaware State Police; United States Immigration and Customs Enforcement, Department of Homeland Security, Homeland Security Investigations; and the Department of the Treasury, Internal Revenue Service, Criminal Investigation.



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To: scion who wrote (114313)2/10/2012 1:07:50 PM
From: scion
1 Recommendation   of 117958
 
Administrative Proceedings: 34-66374 Feb. 10, 2012 Marc J. Riviello

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To: SEC-ond-chance who wrote (114304)2/10/2012 3:24:04 PM
From: StockDung
   of 117958
 
SEC bars spam broker Berger from industry

2012-02-10 14:13 ET - Street Wire

Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
Also Street Wire (U-GPPL) Global Peopleline Telecom Inc


by Mike Caswell

The U.S. Securities and Exchange Commission has secured a broker ban against Gregg Berger, the New York man who served several nominee accounts in a Vancouver-linked spam pump-and-dump scheme. The ban, contained in an administrative order handed down on Thursday, Feb. 9, stems from his role in helping clients dump $33-million worth of spam promoted stocks between 2004 and 2006. (All figures are in U.S. dollars.) The SEC says he fraudulently earned $684,542 in commissions.

Mr. Berger, 48, previously pleaded guilty to criminal charges for his role in the scheme and received a 24-month jail term, which he is serving at the Brooklyn Metropolitan Detention Center. He also agreed to forfeit $600,000. The case against him was part of a larger civil and criminal prosecution against a group of promoters. The SEC said the group, which included Vancouver's How Wai John Hui, used spam to pump eight thinly traded Chinese stocks on the OTC Bulletin Board and pink sheets.

Mr. Berger was the last to be criminally charged, as prosecutors did not indict him until others previously jailed agreed to testify for the government. Those potential witnesses included Mr. Hui and Detroit resident Alan Ralsky, the self-proclaimed "Godfather of Spam." Although neither man had to actually testify, their agreement to co-operate earned each of them a reduction of 1-1/2 years in their four-year sentences.

SEC's complaint

The charges against Mr. Berger are contained in a civil complaint filed on Feb. 1, 2011, in the Eastern District of Michigan. In it, the SEC claimed that he helped Mr. Hui and the others dump millions of shares through at least 30 nominee accounts, while sending the proceeds offshore. The SEC said it should have been clear to Mr. Berger that he was helping an illegal pump-and-dump scheme. Among other things, he routinely accepted instructions for the massive selling from people who were not named on the accounts, and he knew that at least one of those giving him the sell orders was an insider.

The spam, as described in the complaint, targeted eight companies that went public in mergers with private Chinese entities. As part of the transactions, the companies issued large blocks of shares to the nominee accounts that Mr. Berger served. The SEC said Mr. Hui, a dual citizen of Canada and China, controlled many of those nominees.

The stocks were then typically subject to massive e-mail spam campaigns that made unrealistic predictions. With one of the companies, Vancouver-based China Mobility Solutions Corp., the messages predicted it would hit $1.20 at a time when it had last traded at 10.5 cents. "With the ACQUISITION of TopBiz the company is getting the attention it deserves. Watch this one early as the price SOARS like a HAWK!!!" one of the messages stated.

The China Mobility e-mails went out from June, 2005, to November, 2006, during which time the stock went from eight cents to a 74-cent high, with its volume peaking at 3,048,830 shares. It later dropped to 6.8 cents, after the spam ended. The SEC said that another Vancouver defendant, China Mobility chief executive officer Angela Du, dumped $1.6-million worth of stock in that period. According to the complaint, Mr. Berger was either aware of the spam campaigns or was reckless in not knowing about them, as he received some of the spam in his own e-mail account.

The complaint also stated that he was a long-time friend of now-jailed California promoter Francis Tribble, who was an insider of some of the companies. During the spamming, Mr. Berger received several gifts from Mr. Tribble. These included a trip to Las Vegas, fully paid outings to night clubs, cash and a watch.

The scheme, as described in the complaint, ran from December, 2004, to November, 2006. The other stocks the men promoted were China World Trade Corp. (also a Vancouver company), Pingchuan Pharmaceuticals Inc., Worldwide Biotech and Pharmaceuticals Inc., China Digital Media Corp., m-Wise Inc. and Score One Inc. Those pump-and-dumps followed similar patterns to those of China Mobility.

The complaint sought disgorgement of ill-gotten gains, appropriate civil penalties and penny stock bans.

Mr. Berger settled the SEC case on Jan. 27, 2012, agreeing to a $684,434 disgorgement order and to a permanent penny stock ban. Most of the other defendants have also settled. Mr. Hui, who is scheduled for release from the Northeast Ohio Correctional Center on May 4, 2012, agreed to disgorge $843,834 in ill-gotten gains and to serve a permanent penny stock ban. The largest settlement was with Mr. Tribble, who agreed to disgorge $2.5-million and to pay $349,208. None of the men admitted to any wrongdoing (although they have either pleaded guilty or been convicted in separate criminal cases).

The only outstanding defendant is Ms. Du, who has ignored the case. The SEC is seeking $2-million (U.S.) in financial penalties for her as well as a penny stock ban. There were no criminal charges against her.

The SEC also secured $995,205 in administrative fines against Mr. Berger's former employer, Gilford Securities Inc., for supervision failures. The firm and three of its employees agreed to the fines without admitting to any wrongdoing.

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