Between November 2017 and November 2021, three individuals actively solicited investments in securities, including providing marketing materials and advising on the merits of the investment, and receiving commissions for their sales. In May 2022, the U.S. Securities and Exchange Commission (SEC) halted the activities of the individual defendants involved in May 2022, for operating a
DOJ Brings First Criminal Charges Stemming from Use of Rule 10b5-1 Trading Plan
On March 1, 2023, the U.S. Department of Justice (“DOJ”) unsealed an indictment against the CEO of a publicly traded health care company (the “Executive”) relating to charges of an insider trading scheme. The indictment represents the first time that DOJ has brought criminal insider trading charges stemming from an executive’s use of a Rule…
Enforcement Settlement With Shari’ah-Compliant Robo-Adviser Highlights SEC Priorities
On February 10, 2022, the U.S. Securities and Exchange Commission (SEC) issued a settlement order with a firm providing digital investment advice that claimed to operate in compliance with Islamic Shari’ah law (the Robo-Adviser). The SEC’s titling of its own press release, “SEC Charges Robo-Adviser with Misleading Clients,” highlights the SEC’s continued focus on both robo-advisers since the Division of Examination’s November 2021 Risk Alert and the accuracy of fund and adviser communications around investment services based on norms, such as Sharia’ah law, and other environmental, social, and governance (ESG) factors since the Division’s April 2021 Risk Alert.
SEC Alleges COVID-19 Related Fraud by a Company after Suspending Trading
On April 28, 2020, the U.S. Securities and Exchange Commission (“SEC”) filed a complaint against a company and its chief executive officer (“CEO”) for alleged fraud in connection with the company’s stated response to the COVID-19 pandemic. In its complaint, the SEC alleged that the company issued two press releases containing false or misleading statements in which the company purported to be negotiating the sale of N95 masks and then made claims that it was in possession of N95 masks. After regulators inquired about these claims, the SEC alleged that the company issued a third press release a month later that it did not have any N95 masks on hand. The complaint asserts that the company’s stock trading volume and stock price increased significantly as a result of the initial press releases.…