SEC v. Hazem Khalid Al-Braikan, et al.
Case No. 1:09-cv-06533-NRB (S.D.N.Y.)
On July 23, 2009, the SEC filed a complaint against Hazem Khalid Al-Braikan a/k/a Hazem Khalid Albraikan ("Al-Braikan"), United Gulf Bank (B.S.C.) E.C. ("United Gulf Bank"), KIPCO Asset Management Company ("KAMCO"), and Al-Raya Investment Company ("Al-Raya"). See the Complaint.
On August 4, 2010, the SEC amended its complaint which provided additional details of the allegations; removed United Gulf Bank as a defendant; due to the passing of Al-Braikan, named Waleed Khalid Al-Braikan as representative of the heirs of Hazem Khalid Al-Braikan ("Estate of Al-Braikan"); and, changed KAMCO to a relief defendant opposed to a defendant. The amended complaint alleged that in April and July 2009, Al-Braikan profited from amassing large positions in the securities of Harman International Industries, Inc. and Textron shortly before the dissemination of the false information concerning imminent acquisition offers and then selling those positions at prices inflated by the false information. Furthermore, the company which Al-Braikan directed, Al-Raya, profited as a result of trading in Harman International which Al-Braikan did on its behalf. Other people, for whom Al-Braikan traded in Harman International and Textron and/or traded in those securities at Al-Braikan's suggestion and encouragement, profited as well. Al-Braikan directed much of the aforementioned trading in individual client brokerage accounts held at KAMCO over which Al-Braikan had trading authority. As a result of Al-Braikan's activities, he realized profits of approximately $1.7 million. Al-Raya's profits were approximately $1.1 million and the profits of others were approximately $3.4 million. See Amended Complaint. See also Stipulation and Order of Voluntary Dismissal of United Gulf Bank.
On August 9, 2010, pursuant to its consent and without admitting or denying the allegations against it, the Court entered a final judgment as to Al-Raya. The final judgment permanently enjoined Al-Raya from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and required it to pay a total of $1,509,707.59, comprised of $1,209,707.59 in disgorgement and a $300,000.00 civil penalty. See Al-Raya's Final Judgment.
On August 9, 2010, pursuant to its consent and without admitting or denying the allegations against it, the Court entered a final judgment as to KAMCO. The final judgment ordered KAMCO to pay disgorgement of $2,439,199.87. See KAMCO's Final Judgment.
On August 9, 2010, pursuant to its consent without admitting or denying the allegations against Al-Braikan, the Court entered a final judgment as to the Estate of Al-Braikan, which was later amended on August 31, 2010. The amended final judgment ordered the Estate of Al-Braikan to pay disgorgement of $1,685,727.93, which represents profits gained by Al-Braikan; and, an additional $894,093.22, which represents the profits gained by others due to Al-Braikan's misconduct described in the amended complaint. See the Estate of Al-Braikan's Final Judgment and Amended Judgment.
Collectively, the defendants and relief defendant have paid a total of $6,528,728.61 of disgorgement and civil penalties ("Distribution Fund").
On October 11, 2012, the Court appointed Damasco & Associates LLP as the Tax Administrator to fulfill the tax obligations of the Distribution Fund.
On May 7, 2013, the Court created a Fair Fund pursuant to Section 308(a) of the Sarbanes-Oxley Act of 2002, as amended, for all of the funds received pursuant to the final judgments, plus interest and income earned thereon, minus appropriate expenses incurred in establishing and maintaining the Fair Fund or ordered by the Court to be paid to satisfy the Fair Fund's tax-related obligations, and appointed BMC Group as the Distribution Agent to oversee the distribution of the Fair Fund to injured investors. Analytics Consulting, LLC replaced BMC Group as Distribution Agent by Court order on December 3, 2013. See Order to Establish a Fair Fund and Appoint a Distribution Agent. See also Amended Order Appointing Distribution Agent.
On December 13, 2013, the SEC filed a motion to approve a plan of distribution, together with the plan of distribution ("Plan"). See Motion to Approve a Plan of Distribution and Plan of Distribution. On December 16, 2013, the Court approved the Plan. See Order to Approve Plan of Distribution.
On February 9, 2015, the Court approved the Amended Plan. See Order Amending the Plan of Distribution.
The Amended Plan provides that the distribution of the Fair Fund shall be made to Eligible Claimants as provided under the terms of the Amended Plan. An Eligible Claimant's Eligible Loss Amount, as determined in accordance with the Plan of Allocation in the Amended Plan, will be used to determine the amount of their Distribution Payment. Each Eligible Claimant's Distribution Payment will reflect their pro rata share of the Net Available Fund.
On July 28, 2015, the SEC filed a motion to distribute approximately $6,505,321.92, minus court registry fees, of the Fair Fund to Eligible Claimants pursuant to the Plan. See Motion for Distribution of Fair Fund. On July 30, 2015, the Court granted the SEC's motion and entered an order to distribute $6,505,321.92, minus court registry fees, of the Fair Fund to Eligible Claimants in accordance with the Plan. See Order for Distribution of Fair Fund.
For more information, please contact the Distribution Agent.