Each year, the Securities and Exchange Commission (SEC) publishes a list of its “most significant” enforcement actions targeting various forms of investment fraud. The SEC recently released its list for fiscal year 2016:
1. Hedge Fund Manager Charged With Insider Trading
In September, the SEC charged Leon G. Cooperman and Omega Advisors with generating “substantial illicit profits” by purchasing securities in Atlas Pipeline Partners (APL) in advance of APL’s sale of a natural gas processing facility. According to the SEC, Cooper made the purchase relying on inside information he obtained as one of APL’s largest shareholders, allowing him to “t[ake] advantage of other investors who did not have this information.”
2. Insider Trades Information to Satisfy Gambling Debt
In another insider trading case from earlier in the year, the SEC alleged that professional sports gambler William Walters made $40 million using inside information about Dean Foods Company that he obtained from a board member who owed him money. According to the SEC, the illegal activity took place over a five-year period, and included Walters reaping substantial profits by trading in advance of a spinoff of Dean Foods Company subsidiary WhiteWave.
3. Merrill Lynch Agrees to Pay $415 Million for Trading Violations
In June, the SEC announced that Merrill Lynch had agreed to pay $415 million following an alleged illegal scheme in which it used clients’ funds to finance billions of dollars’ worth of trading activity on its own account. The SEC’s complaint alleged numerous violations of securities laws, including:
- Misusing clients’ funds that should have been deposited in a reserve account and executing complex options trades that artificially reduced its required client cash deposit in the account.
- Exposing clients to “a massive shortfall” had Merrill Lynch failed while the reserve account was inadequately funded.
- Improperly holding up to $58 billion in client funds in accounts that were subject to liens, resulting in the possibility of these clients losing their investments in the event Merrill Lynch failed.
4. J.P. Morgan Admits Failings and Agrees to Pay $267 Million
Two J.P. Morgan wealth management subsidiaries agreed to pay $267 million to settle charges that they failed to disclose conflicts of interest to their clients. The subsidiaries also admitted to wrongdoing. According to the SEC, J.P. Morgan Securities LLC and JPMorgan Chase Bank N.A., “preferred to invest clients in the firm’s own proprietary investment products without properly disclosing this preference,” which resulted in clients being “deprived . . . of information they needed to make fully informed investment decisions.”
5. International Enforcement Action Nets Nearly $1 Billion
In two separate enforcement actions, the SEC, the Department of Justice and international authorities secured settlements totaling approximately $1 billion arising out of allegations involving bribes paid to government officials overseas. The companies involved, Och-Ziff Capital Management Group and VimpelCom, reportedly secured substantial business and investment opportunities as a result of the bribes – the profits of which will now need to be disgorged.
Zamansky LLC | Investment Fraud Attorneys With Decades of Experience
Zamansky LLC is an investment fraud law firm that vigorously pursues compensation for individual investors who have been harmed by broker, advisory and corporate fraud. If you have suffered sudden and unexpected investment losses and would like to speak with an attorney about your rights, call (212) 742-1414 or send us a message to schedule a free consultation today.