Securities and Exchange Commission Suspends Trading in the Securities of Twelve Issuers for Failure to Make Required Periodic Filings
The U.S. Securities and Exchange Commission announced the temporary suspension of trading in the securities of the following issuers, commencing at 9:30 a.m. EDT on Oct. 16, 2009, through 11:59 p.m. EDT on Oct. 29, 2009:
The Commission temporarily suspended trading in the securities of these twelve issuers due to a lack of current and accurate information about the companies because they have not filed periodic reports with the Commission in over two years. This order was entered pursuant to Section 12(k) of the Securities Exchange Act of 1934 (Exchange Act).
The Commission cautions brokers, dealers, shareholders and prospective purchasers that they should carefully consider the foregoing information along with all other currently available information and any information subsequently issued by these companies.
Brokers and dealers should be alert to the fact that, pursuant to Exchange Act Rule 15c2-11, at the termination of the trading suspensions, no quotation may be entered relating to the securities of the subject companies unless and until the broker or dealer has strictly complied with all of the provisions of the rule. If any broker or dealer is uncertain as to what is required by the rule, it should refrain from entering quotations relating to the securities of these companies that have been subject to a trading suspension until such time as it has familiarized itself with the rule and is certain that all of its provisions have been met. Any broker or dealer with questions regarding the rule should contact the staff of the Securities and Exchange Commission in Washington, DC at (202) 551-5720. If any broker or dealer enters any quotation which is in violation of the rule, the Commission will consider the need for prompt enforcement action.
If any broker, dealer or other person has any information which may relate to this matter, they should immediately communicate it to the Delinquent Filings Branch of the Division of Enforcement at (202) 551-5466, or by e-mail at DelinquentFilings@sec.gov. (Rel. 34-60831)
SEC and CFTC Issue Joint Report on Regulatory Harmonization
The Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) today issued a joint report identifying areas where the agencies' regulatory schemes differ and recommending actions to address those differences, where appropriate.
In June, the White House released a White Paper on Financial Regulatory Reform calling on the SEC and CFTC to "make recommendations to Congress for changes to statutes and regulations that would harmonize regulation of futures and securities."
Today's report includes 20 recommendations to enhance enforcement powers, strengthen market and intermediary oversight and improve operational coordination (See pages 11-14 of the report for a list of recommendations).
"This report is another step forward in our effort to reform the regulatory landscape and ensure greater harmonization between our agencies," said SEC Chairman Mary Schapiro. "I believe these recommendations will help to fill regulatory gaps, eliminate inconsistent oversight, and promote greater collaboration."
"In this report, our agencies rose above the usual challenges and came together to offer meaningful recommendations to improve our oversight of the financial markets," CFTC Chairman Gary Gensler said. "This is just one important step. Now we must continue to work together to implement these recommendations and work with Congress to secure necessary changes in statute to best protect the American public."
Over the past several months, the SEC and the CFTC have engaged in extensive discussions, including their first ever joint public meetings last month. The meetings solicited views from members of the investor community, academics, industry experts and market participants on the current regulatory scheme, harmonization of the agencies' rules and recommendations for changes to statutes and regulations. The agencies also solicited written comments to further assist their deliberations. (Press Rel. 2009-218)
Adam Storch Named Managing Executive of SEC's Enforcement Division
The Securities and Exchange Commission today announced that Adam Storch has been named to the newly-created position of Managing Executive of the SEC's Division of Enforcement.
In his role, Mr. Storch will act as the Enforcement Division's first-ever chief operating officer. He will report to Robert Khuzami, the Director of the Division, who created the position as part of a restructuring he announced earlier this year.
Mr. Storch will be responsible for project management and workflow for various infrastructure and operational aspects of the Division, including budget, information technology, and administrative services. In addition, he will oversee the workflow and process associated with the collection and distribution of Fair Funds to harmed investors. Along with Lorin Reisner, the Deputy Director of the Division of Enforcement, Mr. Storch will supervise the Office of Market Intelligence, improving the collection, analysis, risk-weighing, triage, referral, and monitoring of the hundreds of thousands of tips, complaints and referrals that the agency receives each year.
Mr. Storch joins the SEC from Goldman Sachs & Co., where he was Vice President in the Business Intelligence Group.
"Adam's skill in technology systems, workflow process, and project management will greatly benefit the Division, including in the critical areas of the distribution of Fair Funds to harmed investors and the processing and analysis of complaints, tips, and referrals," said Khuzami. "He will help to make us more efficient and nimble and permit us to put more of our investigators on the front lines to detect and stop fraud."
Mr. Storch said, "I am honored to join the SEC at this crucial time. I look forward to working with the talented and dedicated staff of the SEC."
Before joining Goldman Sachs, Mr. Storch was a Senior Consultant focusing on enterprise risk services at Deloitte & Touche, LLP. Mr. Storch is a Certified Public Accountant in New York State, a Certified Internal Auditor, and a Certified Fraud Examiner. He received his MBA from New York University's Leonard N. Stern School of Business, and his B.S. in Business Administration summa cum laude from the SUNY Buffalo School of Management.
The restructuring seeks to reduce bureaucracy and expedite the enforcement process by eliminating unnecessary process, streamlining procedures, and rebalancing the Division's investigative staff by reducing management levels and reassigning those experienced personnel to full-time investigative work. In addition, the newly-structured Division will include specialized units that will enable staff in those units to develop expertise in priority areas and utilize that expertise to help detect earlier and more often the patterns, links, trends, and motives connected to fraud and wrongdoing. (Press Rel. 2009-220)
SEC Charges Billionaire Hedge Fund Manager Raj Rajaratnam with Insider Trading
High-Ranking Corporate Executives Also Charged in Scheme That Generated More Than $25 Million in Illicit Gains
The Securities and Exchange Commission today charged billionaire Raj Rajaratnam and his New York-based hedge fund advisory firm Galleon Management LP with engaging in a massive insider trading scheme that generated more than $25 million in illicit gains. The SEC also charged six others involved in the scheme, including senior executives at major companies IBM, Intel and McKinsey & Company.
The SEC's complaint, filed in federal court in Manhattan, alleges that Rajaratnam tapped into his network of friends and close business associates to obtain insider tips and confidential information about corporate earnings or takeover activity at several companies, including Google, Hilton and Sun Microsystems. He then used the non-public information to illegally trade on behalf of Galleon.
"This complaint describes a web of fraud that has been unraveled," said SEC Chairman Mary L. Schapiro.
"What we have uncovered in the trading activities of Raj Rajaratnam is that the secret of his success is not genius trading strategies. He is not the astute study of company fundamentals or marketplace trends that he is widely thought to be. Raj Rajaratnam is not a master of the universe, but rather a master of the rolodex," said Robert Khuzami, Director of the SEC's Division of Enforcement. "He cultivated a network of high-ranking corporate executives and insiders, and then tapped into this ring to obtain confidential details about quarterly earnings and takeover activity."
In addition to Rajaratnam and Galleon, the SEC's complaint charges:
According to the SEC's complaint, Rajaratnam and Galleon traded on inside information about the following events or transactions:
The SEC also alleges that Moffat provided inside information to Chiesi about Sun Microsystems. Moffat obtained the information when IBM was contemplating acquiring Sun. Chiesi then allegedly traded on the basis of this information on behalf of New Castle, making approximately $1 million in profits.
The SEC's complaint charges each of the defendants with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and, except for Kumar and Moffat, violations of Section 17(a) of the Securities Act of 1933 and. 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 complaint also seeks to permanently prohibit Goel and Moffat from acting as an officer or director of any registered public company.
The SEC acknowledges the assistance and cooperation of the U.S. Attorney's Office for the Southern District of New York and the Federal Bureau of Investigation.
The SEC's investigation is continuing.
[SEC v. Galleon Management, LP, Raj Rajaratnam, Rajiv Goel, Anil Kumar, Danielle Chiesi, Mark Kurland, Robert Moffat and New Castle LLC, Civil Action No. 09-CV-8811 (SDNY) (JSR)] (LR-21255; Press Rel. 2009-221)
Securities and Exchange Commission Orders Hearing on Registration Revocation Against Six Public Companies for Failure to Make Required Periodic Filings
Today the Commission instituted public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registrations of each class of the securities of six companies for failure to make required periodic filings with the Commission:
In this Order, the Division of Enforcement (Division) alleges that the six issuers are delinquent in their required periodic filings with the Commission.
In this proceeding, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the Administrative Law Judge will hear evidence from the Division and the Respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 or 13a-16 thereunder, are true. The Administrative Law Judge in the proceeding will then determine whether the registrations pursuant to Exchange Act Section 12 of each class of the securities of these Respondents should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in this proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-60829; File No. 3-13650)
Commission Orders Hearings on Registration Suspension or Revocation Against Twelve Companies for Failure to Make Required Periodic Filings
In conjunction with today's trading suspension, the Commission also instituted public administrative proceedings to determine whether to revoke or suspend for a period not exceeding twelve months the registration of each class of the securities of twelve companies for failure to make required periodic filings with the Commission:
In this Order, the Division of Enforcement (Division) alleges that the twelve issuers are delinquent in their required periodic filings with the Commission.
In this proceeding, instituted pursuant to Exchange Act Section 12(j), a hearing will be scheduled before an Administrative Law Judge. At the hearing, the judge will hear evidence from the Division and the respondents to determine whether the allegations of the Division contained in the Order, which the Division alleges constitute failures to comply with Exchange Act Section 13(a) and Rules 13a-1 and 13a-13 thereunder, are true. The judge in the proceeding will then determine whether the registrations pursuant to Exchange Act Section 12 of each class of the securities of these respondents should be revoked or suspended for a period not exceeding twelve months. The Commission ordered that the Administrative Law Judge in this proceeding issue an initial decision not later than 120 days from the date of service of the order instituting proceedings. (Rel. 34-60830; File No. 3-13651)
In the Matter of Michael C. Regan
On Oct. 16, 2009, the Commission issued an Order Instituting Administrative Proceedings Pursuant to Section 203(f) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions (Order) against Michael C. Regan (Regan).
The Order finds that Regan acted as an unregistered investment adviser to the River Stream Fund, an unregistered fund that Regan founded in 1998. On June 24, 2009, the Commission filed suit against Regan based in part on admissions Regan made directly to the Commission's staff. The Commission's complaint alleged, among other things, that after raising at least $15.9 million from investors from at least 2001 to 2008, Regan misappropriated investor funds for his personal use, made misrepresentations to investors concerning their investment performance and the risks associated with their investments, and prepared and issued phony account statements to investors that purportedly showed lofty, but false, investment returns. On Oct. 6, 2009, the District Court for the Eastern District of New York entered an order approving the Consent Judgment of Regan. The Court's Order permanently enjoins Regan from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder and orders Regan to pay $8,700,933.04 in disgorgement and prejudgment interest, which will be deemed satisfied by entry of the restitution order that is anticipated in the parallel criminal case.
Based on the above, the Order bars Regan from association with any investment adviser. Regan consented to the issuance of the Order without admitting or denying any of the findings contained in the Order. (Rel. IA-2935; File No. 3-13652)
In the Matter of Tobias Bros. Inc.
On Oct. 16, 2009, the Commission issued an Order Instituting Administrative and Cease-and-Desist Proceedings, Pursuant to Sections 203(e) and 203(k) of the Investment Advisers Act of 1940, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (Order) as to Tobias Bros. Inc. (Tobias Bros.). The Order finds that between February and May 2005, Ethan Kass (Kass), in connection with at least 24 unauthorized trades, caused and concealed at least $8.4 million in losses to investors in five investment advisory accounts managed by Tobias Bros. Kass was employed at Tobias Bros. as an order processing clerk until June 2005. In July 2005, Seth Tobias, the former principal of Tobias Bros., fully reimbursed all injured investors for these losses. Despite Kass's attempts to conceal his unauthorized conduct, Tobias Bros. failed to perform its supervisory functions and missed a number of red flags that should have alerted it to Kass's unauthorized trading. For example, each day Tobias Bros. generated internal risk reports which were provided to Tobias Bros.'s supervisors, including Seth Tobias. However, these supervisors, at times, failed to even review these reports and therefore missed an opportunity to detect Kass's unauthorized trading and protect Circle T from the resulting losses. In addition, Tobias Bros.'s books and records, including trade blotters and portfolio management system, did not accurately reflect Kass's unauthorized trades and subsequent alteration of the trading records. Finally, Tobias Bros. failed to preserve instant messages as it was required to do by the Advisers Act and its own compliance procedures. These instant messages, at times, contained documentation of Kass's unauthorized trading. The Commission's Order censures Tobias Bros., and orders it to cease and desist from committing or causing any violations and any future violations of Section 204 of the Advisers Act and Rules 204-2(a)(3) and 204-2(a)(7) promulgated thereunder. Tobias Bros. consented to the issuance of the Order without admitting or denying any of the findings in the Order. (Rel. IA-2936; File No. 3-13653)
SEC Charges Five Individuals With Insider Trading Relating to the Acquisition of Jamdat Mobile, Inc.; Four Individuals to Pay $338,000 in Settlement
On Oct. 15, 2009, the Securities and Exchange Commission filed civil injunctive actions against a former company insider at Jamdat Mobile Inc., a software company that designed games for cell phones, and four individuals for tipping and trading in Jamdat stock prior to an announcement that Jamdat would be acquired by Electronic Arts, Inc. (EA).
The Commission's complaints allege that throughout the fall of 2005, Benjamin Jones (Ben Jones), a former vice president of sales at Jamdat, was apprised of the status of Jamdat's merger discussions, and that he tipped several friends and his brother, William Jones, III (Bill Jones), who in turn bought Jamdat stock. According to the complaints, Bill Jones also tipped the information to his friend, William Dailey, III, a former securities trader, and Dailey bought Jamdat stock for his own account based on that tip. The Commission's complaints also allege that, in addition to the series of tips and trades in the fall of 2005, on Dec. 7, 2005, Ben Jones informed Bill Jones that the merger discussions had concluded, that Jamdat was being acquired by EA for $27 per share, and that the transaction would be announced the following day. Within minutes of learning about the impending announcement, Bill Jones tipped his brother-in-law, Jeremiah Carroll, who bought Jamdat stock before the announcement, and told Dailey key information regarding the impending merger.
The Commission further alleges that Dailey conveyed the information that he received from Bill Jones to Alissa Joelle Kueng, a sales specialist at J.P. Morgan Securities Inc., and, based on that information, Kueng then recommended purchasing the stock to a trader in her firm, who bought Jamdat stock prior to the announcement, as well as to several institutional clients, two of whom bought Jamdat stock prior to the merger announcement. The resulting trading profits from Kueng's recommendations were approximately $353,000.
Without admitting or denying the allegations against them in the complaint, Ben Jones, Bill Jones, Dailey, and Carroll, have consented to the entry of final judgments that permanently enjoin them from violating Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder, and require each to disgorge their trading profits and pay a civil penalty. Ben Jones, who did not trade on the information, has consented to disgorge approximately $20,000, plus pre-judgment interest, of profits made by some of his downstream tippees, and pay a civil penalty of approximately $80,000; Bill Jones has consented to disgorge approximately $34,000, plus pre-judgment interest, and pay a civil penalty of approximately $60,000; Dailey has consented to disgorge approximately $20,000, plus-prejudgment interest, and pay a civil penalty of approximately $81,000; and Carroll has consented to disgorge approximately $5,100, plus pre-judgment interest, and pay a civil penalty of approximately $5,100. In addition, Dailey has also agreed to the issuance of an administrative order, based on the anticipated entry of an injunction, that bars him from association with any broker or dealer and investment adviser, with the right to reapply after five years.
In a separate complaint filed against Kueng in federal district court in Manhattan, the Commission charges Kueng with violations of Section 10 (b) of the Exchange Act and Rule 10b-5 thereunder, and seeks a permanent injunction, disgorgement of the trading profits of her tippees, and civil monetary penalties.
The proposed relief in the injunctive actions against Ben Jones, Bill Jones, Dailey, and Carroll is subject to court approval. [SEC v. Benjamin P. Jones, William F. Jones, III, William T. Dailey, III, and Jeremiah E. Carroll, Civil Action No. CV-09-4895 (JCS), N.D.Cal.; SEC v. Alissa Joelle Kueng, Civil Action No. 09-CV-8763 (BSJ), S.D.N.Y.] (LR-21249)
SEC Charges a Former Order Processing Clerk at a New York-Based Investment Adviser With Unauthorized Trading
The Securities and Exchange Commission charged Ethan Kass (Kass) with executing and concealing at least 24 unauthorized trades between February and May 2005 resulting in at least $8,474,325 in losses to investors in five hedge funds managed by Tobias Bros. Inc. (Tobias), a New York-based registered investment adviser. Tobias also was a registered broker-dealer from 1998 until Feb. 2, 2008.
According to the SEC's complaint, filed in U.S. District Court for the Southern District of New York, Kass, 28, who resides in New York, New York, did not have any authority or discretion to independently make any trades on behalf of Tobias or any funds or accounts it managed. Rather, Kass was responsible for providing back office support, including order entry, internal and external trade reporting, and trade reconciliation, under the general supervision of portfolio managers who were associated with Tobias. On at least 24 occasions, Kass traded without any authorization or direction from his supervisors. Kass routinely concealed his unauthorized trading from his supervisors by intentionally omitting such trades from Tobias's internal records, including its handwritten trade blotter, and by deleting, altering or manipulating information in Tobias's internal portfolio management system so that his unauthorized trades would not appear on that system's daily real-time profit and loss statements.
The SEC's complaint charges Kass with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and aiding and abetting Tobias's violations of Sections 206(2) and 204 of the Investment Advisers Act of 1940 and Rule 204-2 thereunder. The complaint seeks a permanent injunction and civil monetary penalties.
Kass agreed to settle the SEC's claims and, without admitting or denying the allegations, consented to the entry of a judgment that will grant the SEC the full relief that it seeks, including a civil penalty of $50,000 to be paid within 360 days together with post-judgment interest in accordance with a payment plan. The agreement to resolve the SEC's action is subject to approval by the court. [SEC v. Ethan Kass, United States District Court for the Southern District of New York, Civil Action No. 09 CV 8764 (WHP) (S.D.N.Y.)] (LR-21250)
SEC Charges Three South Florida Residents With Operating a Multi-Million Dollar Ponzi Scheme and Affinity Fraud Targeting Haitian-Americans
The Securities and Exchange Commission filed a civil injunctive action on October 16 against HomePals Investment Club, LLC and HomePals, LLC (together, HomePals), and their principals, Ronnie Eugene Bass, Jr., Abner Alabre and Brian J. Taglieri, alleging that they ran a Ponzi scheme and affinity fraud that targeted hundreds of Haitian-American investors residing primarily in South Florida.
The SEC's complaint alleges that from April 2008 through December 2008, the defendants raised at least $14.3 million through the sale of unsecured notes that promised guaranteed returns of 100% every 90 days. The defendants claimed they were able to generate such spectacular returns through Bass' purported successful trading of stock options and commodities; however, in truth, Bass did very little trading and the majority of investor funds were used to repay HomePals' initial investors.
The SEC's complaint, filed in the United States District Court for the Southern District of Florida, charges each of the defendants with violating Sections 5(a), 5(c) and 17(a) of the Securities Act of 1933, Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934 and, with respect to Bass, Sections 206(1), (2) and (4) and Rule 206(4)-8 of the Investment Advisers Act. The Commission seeks permanent injunctions, disgorgement of ill-gotten gains and financial penalties against all defendants.
Separately, on October 16, the U.S. Attorney's Office for the Southern District of Florida unsealed indictments charging Bass, Alabre and Taglieri with securities fraud, conspiracy to commit securities fraud, wire fraud and money laundering. [SEC v. HomePals Investment Club, LLC, HomePals, LLC, Ronnie Eugene Bass, Jr., Abner Alabre and Brian J. Taglieri, Civil Action No. 09- 81524 (S.D. Fla.)] (LR-21251)
Court Permanently Enjoins Attorney William J. Reilly in Fraudulent Sale of Securities
The Securities and Exchange Commission announced that on Oct. 15, 2009 the United States District Court for the Southern District of New York entered a judgment on consent against defendant William J. Reilly, of Boca Raton, Florida, an attorney admitted to practice in New York. Without admitting or denying the allegations of the Commission's complaint, Reilly consented to the entry of judgment, entered by Hon. Jed S. Rakoff, that permanently enjoins him from further violations of Sections 5(a) and 5(c) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder. The judgment permanently bars Reilly from serving as an officer or director of any public company, and from participating in an offering of any penny stock. Finally, the judgment provides that Reilly will disgorge his ill-gotten gains and prejudgment interest and pay a civil penalty in amounts to be determined by the Court.
The Commission's complaint alleges that Reilly and others made material misrepresentations concerning Forest Resources Management Corp. to Forest's transfer agent in order to obtain millions of restricted shares without the required restricted legend. A registration statement was never in effect for the shares issued to Reilly and his nominees. Reilly and his nominees then sold these unlegended shares on the open market, falsely holding them out to the investing public as free-trading shares, when in fact they were restricted stock. Reilly received more than $84,000 from the improper sale of these shares. In addition, Reilly filed a Form 8-K with the Commission on behalf of Forest which Form 8-K falsely represented that Forest had acquired substantial timber rights in Central America.
The litigation is continuing to determine the amount of disgorgement, prejudgment interest, and civil penalties against Reilly and the other defendants, Chaim Justman and Pinchus Gold.
For further information, see Litigation Release No. 20878 (Feb. 2, 2009), Litigation Release No. 20980 (Mar. 31, 2009), and Litigation Release No. 21080 (June 11, 2009).
Securities and Exchange Commission v. Forest Resources Management Corp., et al., Civil Action 09 Civ. 903 (JSR) (SDNY) (LR-21252)
Court Enters Permanent Injunctions Against Lion Gate Capital, Inc. And Principal Kenneth Rickel
The Securities and Exchange Commission announced that on Sept. 24, 2009, United States District Judge Dale S. Fischer entered a Final Judgment by consent against defendants Lion Gate Capital, Inc. and its principal, Kenneth Rickel. The Final Judgment enjoins Lion Gate and Rickel from future violations of Rule 105 of Regulation M under the Securities Exchange Act of 1934, 17 C.F.R. S 242.105. The Final Judgment also orders Lion Gate and Rickel to pay $100,000 in disgorgement and prejudgment interest and a $50,000 civil penalty. Lion Gate and Rickel consented to the entry of the Final Judgment without admitting or denying any of the allegations in the Commission's complaint. [SEC v. Lion Gate Capital, Inc., et al., Case No. CV 08-06574 (DSF) (MANx) (C.D. Cal.)] (LR-21253, LR-20775, Press Rel. 2008-244)
SEC Obtains Judgments Against Operator of Fraudulent Websites Impersonating Investment Adviser
On October 15, the District Court for the District of Massachusetts entered a Final Judgment by default against Marvel Partners and two websites it operated, marvelpartners.us and marvelpartners.net (collectively, Marvel Partners). The Final Judgment enjoined Marvel Partners from further securities violations, ordered them on a joint-and-several basis to pay $44,139.08 in disgorgement and prejudgment interest, and ordered them each to pay a civil penalty of $100,000.
On Dec. 4, 2008, the Commission had filed an enforcement action concerning an alleged ongoing investment fraud by Marvel Partners, which had promised guaranteed investment returns of up to 138% over a three day period and falsely claimed partnership with an actual registered investment adviser based in Boston.
The Commission's Complaint alleged that the Marvel Partners, along with unidentified individuals operating the websites referred to as John Does 1-5, conducted a fraudulent offering of unregistered securities via the Internet. The Complaint also alleged that, in soliciting investors, Marvel Partners made material misrepresentations and omissions in that, among other things, they claimed partnership with J.P. Marvel Investment Advisors, Inc. (J.P. Marvel), an actual registered investment adviser; and claimed that Marvel Partners has managed the funds of J.P. Marvel's clients for two years. In fact, according to the Complaint, J.P. Marvel was not, nor had it ever been, affiliated with Marvel Partners.
On July 24, 2009, the Commission voluntarily dismissed without prejudice the claims against John Does 1-5, the unknown individuals. [SEC v. Marvel Partners, marvelpartners.us, marvelpartners.net, and John Does, Nos. 1-5 (United States District Court for the District of Massachusetts), Civil Action No. 1:08-cv-12008] (LR-21254)
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