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Selected Division of Enforcement Accomplishments: December 2016 – December 2020

Dec. 30, 2020

INTRODUCTION

This list of selected accomplishments, which is only a limited collection, is a testament to everyone in the Division of Enforcement.

DIVISION OF ENFORCEMENT METRICS

From December 2016 to December 2020, on the recommendation of the Division of Enforcement, the Commission:

  • brought over 3,000 enforcement actions
  • obtained judgments and orders totaling over $17 billion
  • returned approximately $3.6 billion to harmed investors
  • awarded approximately $600 million to whistleblowers
  • instituted more than 450 proceedings to deregister companies that were delinquent in their Commission filings
  • suspended trading in the securities of more than 1,000 issuers

IMPACTFUL CASES TO PROTECT MARKET INTEGRITY AND HOLD BAD ACTORS ACCOUNTABLE

From December 2016 to December 2020, the Commission, on the Division’s recommendation, brought many impactful enforcement actions to protect investors and hold bad actors accountable. This includes actions against Wall Street firms, publicly-traded corporations, private companies, corporate executives, investment professionals, and others. The following cases and initiatives are examples.

FINANCIAL FRAUD AND ISSUER DISCLOSURE CASES

The Commission brought nearly 400 actions that spanned a wide array of misconduct relating to financial statements and issuer disclosure and included follow-on actions for bars and suspensions against individuals and firms. In aggregate, parties to these types of actions were ordered to pay more than $1.8 billion in penalties and disgorgement. Below are some highlights in this space.

False and Misleading Disclosure Cases

Actions against companies and individuals for making misleading disclosures regarding issues such as financial performance, risk factors, and failing to disclose known industry trends. Examples include actions against:

  • Mylan N.V. for failing to timely accrue for and disclose its potential liability arising from a Department of Justice investigation relating to the classification of EpiPen, as well as making misleading risk disclosures regarding the risk that government authorities might disagree with that classification.[1]
  • Facebook Inc. for risk factor disclosures presenting the misuse of user data as hypothetical when Facebook knew that user data had in fact been misused.
  • The Chairman and CEO of Tesla, Inc. for tweeting a series of false and misleading statements about a potential plan to take Tesla private.
  • Nissan, its former CEO, and a former director for false financial disclosures that omitted more than $140 million to be paid to the CEO in retirement.
  • BMW AG for disclosing inaccurate and misleading information about BMW’s retail sales volume in the U.S. while raising approximately $18 billion from investors in several corporate bond offerings.
  • General Electric Co. for disclosure failures in its power and insurance businesses that caused its stock price to fall almost 75% as challenges in its power and insurance businesses were disclosed to the public. 
  • Theranos Inc., its founder, and its former President for raising more than $700 million from investors through an elaborate, years-long fraud in which they exaggerated or made false statements about the company’s technology, business, and financial performance.
  • SCANA Corp., two of its former top executives, and South Carolina Electric & Gas Co. for defrauding investors by making false and misleading statements about a nuclear power plant expansion that was ultimately abandoned.

Misleading Non-GAAP Metrics & Key Performance Cases

Actions against issuers that misrepresented non-GAAP metrics, key performance indicators, and related disclosures. Examples include actions against:

  • Wells Fargo & Co. for misleading investors about the success of its core business strategy at a time when it was opening unauthorized or fraudulent accounts for unknowing customers and selling unnecessary products that went unused.
  • Walgreens Boots Alliance Inc. and its former CEO and CFO for misleading investors about the increased risk that the company would miss a key financial goal.
  • Fiat Chrysler Automobiles N.V. and FCA US LLC for inflating monthly sales results by paying automobile dealers to report fake vehicle sales.
  • Bausch Health, formerly Valeant Pharmaceuticals, and executives for improperly recognizing revenue and making misleading disclosures in SEC filings and earnings presentations.  

Financial Accounting Fraud Cases

Actions against companies and individuals for issuing false and misleading financial statements.  Examples include actions against:

  • Mining company Rio Tinto and two former top executives for inflating the value of coal assets acquired for $3.7 billion and sold a few years later for $50 million.
  • PPG Industries, Inc. for failing to properly record various expense accruals and misclassifying certain income, which resulted in PPG providing inflated income in its published financial results for two years.
  • Iconix Brand Group Inc. and its former CEO and COO for devising a fraudulent scheme to create fictitious revenue, allowing Iconix to meet or beat Wall Street analysts’ consensus estimates in the second and third quarters of 2014.
  • MiMedx Group Inc. its former CEO, CFO and COO for defrauding investors by misstating the company’s revenue and attempting to cover up their misconduct by misleading the company’s auditor, audit committee and outside lawyers.
  • SAExploration Holdings Inc. and four former executives for a multi-year accounting fraud that falsely inflated the company’s revenue by approximately $100 million and concealed the theft of millions of dollars by the executives.

Auditor Misconduct

Actions against more than 100 audit firms and individuals for failing to uphold their professional responsibilities as gatekeepers. Those failures included violations of auditing standards in conducting audits, failures to appropriately maintain independence, and situations where auditor conduct violated ethical standards. Examples include actions against:

  • KMPG and six certified public accountants—including former staffers at the Public Company Accounting Oversight Board and former senior officials at KPMG LLP—arising from their participation in a scheme to misappropriate and use confidential information relating to the PCAOB’s planned inspections of KPMG, as well as against KPMG and three audit partners for improperly sharing answers to internal training exams and subsequent misconduct during an investigation of the exam sharing.
  • PricewaterhouseCoopers LLP and its partner for violating auditor independence rules by performing prohibited non-audit services during an audit engagement.
  • Crowe LLP and two of its partners, as well as two partners of a now-defunct audit firm, for their audit failures in connection with a company that went bankrupt after discovery of approximately $100 million in unpaid federal payroll tax liabilities.

Accelerated Pace of Investigations and Sharpened Focus

  • Made strategic changes to accelerate the pace of investigation. 
  • Between 2019 and 2020, reduced the average amount of time it took to complete financial fraud investigations by three months on average. 
  • Cases that illustrate these efforts include Commission actions filed against:
    • China-based Luckin Coffee Inc. for defrauding investors by materially misstating the company’s revenue, expenses, and net operating loss, filed less than nine months after the conduct was revealed. 
    • The Chairman and CEO of Tesla just seven weeks after he sent a materially misleading tweet about Tesla’s ability to go private. 
    • BMW for disclosing inaccurate and misleading retail sales information to bond investors, filed within 12 months of opening the investigation.
    • Nissan, its former CEO, and a former director for making false financial disclosures, filed within ten months of opening the investigation.
  • Invested in our efforts to identify potential misconduct.
    • One example is the Division’s EPS Initiative, which used risk-based data analytics to uncover accounting and disclosure violations caused by, among other things, earnings management practices to mask unexpectedly weak performance.
    • Resulted in settled actions against Interface Inc. and two of its former executives for improper accounting practices, and against Fulton Financial Corp. for disclosure violations that resulted in reporting of quarterly EPS that met or exceeded analyst consensus estimates.

CASES AGAINST REGISTRANTS

The Commission brought cases against registered broker-dealers, investment advisers, and other financial firms that engaged in violations of the securities laws. Examples of these actions include:

MARKET STRUCTURE

The Commission brought several cases against brokers-dealers and trading firms for making misleading statements about payments they received and how they routed or priced trade orders, as well as with facilitating manipulative trading by others.  The wide range of actions also included claims against exchanges and other trading venues such as dark pools for misstatements about the trading environment they provided, failure to protect subscribers’ confidential trading information, and failure to establish policies and procedures to protect against disruptive market events.   Examples of actions include:

  • Citadel Securities LLC for misleading broker dealer clients about the way it priced trades when it internalized the clients’ retail orders. 

  • Merrill Lynch, Pierce, Fenner & Smith for misleading customers about how it handled their trade orders.

  • The New York Stock Exchange and two affiliated exchanges with regulatory failures in connection with multiple episodes, including disruptive market trading events.  The actions included the first-ever charges for violating Reg SCI.

  • The Options Clearing Corporation for failing to establish and enforce policies and procedures involving financial risk management, operational requirements, and information-systems security.

  • ITG Inc. and its affiliate Alternet Securities for misstatements and omissions about the operation of the firm’s dark pool and ITG’s failure to protect subscribers’ confidential trading information.

  • Citigroup Global Markets for misleading users of a dark pool operated by one of its affiliates about trading by high-frequency traders in the dark pool and order routing. 

  • Bloomberg Tradebook for making material misrepresentations and omitting material facts about how the firm handled certain customer trade orders. 

  • Robinhood Financial for misleading customers through misstatements that failed to disclose the firm’s receipt of payments from trading firms for routing customer orders to them and for failing to satisfy its duty of best execution. 

  • Obtained judgments against broker-dealer Lek Securities and its CEO for helping to facilitate a manipulative trading scheme by a Ukraine-based trading firm.

  • 18 traders for a scheme to manipulate more than 3,000 U.S.-listed securities for over $31 million in illicit profits.

ACTIONS AGAINST INVESTMENT ADVISERS

The Commission has brought numerous actions to address investment advisers’ breaches of fiduciary duty and have returned hundreds of millions of dollars to harmed clients of every kind, including retail investors as well as registered and private funds. These cases have involved a wide range of conduct from misappropriation to undisclosed fees and conflicts to the sale of unsuitable products to failure to invest client assets as promised. Examples of these actions include:

Share Class Selection Disclosure Initiative

  • The Share Class Selection Disclosure Initiative addressed the failure of investment advisers to fully disclose to investors conflicts of interest created by obtaining fees for placing clients in higher-cost mutual funds share classes, where lower-cost share classes were available.
  • As result of the initiative, 97 firms have returned more than $139 million to investors, and the settling firms will align their share class selection practices and disclosures going forward, enabled clients to make informed choices. 
  • Subsequent cases against advisers that were eligible but did not participate in the Initiative are scheduled to return over $24 million more to investors. 

Misleading Disclosures About Compensation

  • Two BMO advisory entities based their undisclosed practice of choosing more expensive proprietary investments from which BMO advisers profited. 
  • SCF Investment Advisors, Inc. for selecting mutual funds and cash sweep money market funds for clients that provided undisclosed revenue to the firm’s affiliated broker-dealer and were expensive that other available options for the same funds. 
  • Morgan Stanley Smith Barney LLC for providing misleading information to clients in its retail wrap fee programs regarding trade execution services and transaction costs. 

Insufficient Disclosures Regarding Adviser Strategies

  • Aegon USA Investment Management for using faulty quantitative models and undisclosed abandonment of those models when errors in the models were identified. 
  • BlueCrest Capital Management Limited for failing to disclose movement of top traders to a proprietary fund and the replacement of those traders with an underperforming algorithm. 

INSIDER TRADING

Between December 2016 and December 2020, the Commission brought over 150 insider trading actions against more than 250 parties, including, among others, investment bankers, corporate insiders, a U.S. Congressman, a professional football player, a husband and wife, and an index manager. During the same period, parties in insider trading actions were ordered to pay more than $125 million in disgorgement and penalties. Many of the insider trading actions over the past few years were detected by the Division’s Analysis and Detection Center, which uses data and risk-based analytical reviews and homegrown data analysis tools to uncover anomalous trading patterns. 

Examples of actions include:

  • A partner at a Hong Kong-based private equity firm who amassed more than $29 million in illegal profits by insider trading in advance of the April 2016 acquisition of DreamWorks Animation SKG Inc. by Comcast Corp.
  • A former government employee turned political intelligence consultant and three others for engaging in an insider trading scheme involving tips of nonpublic information about government plans to cut Medicare reimbursement rates, which affected the stock prices of certain publicly traded medical providers or suppliers.
  • A former corporate board member and U.S. Congressman whose tip allowed his son and his son’s tippees to avoid losses by trading in advance of news of negative clinical trial results.
  • A former chief information officer of a U.S. business unit of Equifax Inc. and a former manager, both of whom traded in advance of the company’s September 2017 announcement of a massive data breach that exposed Social Security numbers and other personal information of approximately 148 million U.S. customers.
  • A former senior lawyer at SeaWorld Entertainment Inc. for insider trading based on nonpublic information that the company’s revenue would be better than anticipated for the second quarter of 2018.
  • A former senior attorney at Apple, whose duties included executing the company’s insider trading compliance efforts, for trading Apple securities ahead of three quarterly earnings  announcements in 2015 and 2016 after receiving confidential draft earnings materials.

ACTIONS TO PROTECT RETAIL INVESTORS

Over the past four years, the Commission took substantial action to protect retail investors, including through initiatives aimed at educating investors and bringing actions against bad actors.  Examples include:

  • Creation of the Retail Strategy Task Force to focus on proactive, targeted initiatives to identify misconduct impacting retail investors and to educate investors about predatory and abusive practices.
    • The Commission recently brought a high-profile action, on the task force’s recommendation, against a Swedish national living in Thailand who conducted a multi-million dollar online offering fraud that victimized thousands of retail investors world-wide. According to the complaint, at least 847 of the investors were members of a community for the Deaf that invested more than $2 million in the scheme since 2015 as their retirement investment.
    • The Retail Strategy Task Force also helped create a video designed to teach investors in the Deaf, Hard of Hearing, and Hearing Loss communities about how to spot frauds in their communities.
  • The Chairman’s Teachers’ Initiative to focus enforcement and investor education resources on informing and protecting America’s teachers.
    • As part of the Teacher’s initiative, the Commission charged VALIC Financial Advisors Inc. for failing to disclose that its parent company paid a for-profit company owned by the Florida K-12 teachers’ unions to promote VALIC’s products and services to those teachers and for failing to disclose conflicts of interest regarding its receipt of millions of dollars of financial benefits that directly resulted from advisory client mutual fund investments that were generally more expensive for clients other than mutual fund investment options avaialable to clients.
  • The Chairman’s Military Service Members’ Initiative to combat fraud and educate members of the military about investing. This past year, as part of that initiative, the Commission brought a case against a Colorado man for defrauding investors through a Ponzi scheme that included cadets at the U.S. Air Force Academy. 
  • Actions against scams targeting affinity groups. Examples include actions against:
    • An investment adviser for running a Ponzi scheme that targeted members of the Haitian community.
    • A Pennsylvania man for defrauding Amish and Mennonite community members by making false claims about the use of their funds and guaranteed returns
    • A New Jersey man and his company in connection with a $5 million Ponzi scheme that defrauded at least 90 investors, many of whom were members of the Hispanic community.
  • Actions against large-scale offering frauds.  Examples include actions against:
    • A group of unregistered funds and their owner who defrauded thousands of retail investors, many of them seniors, in a $1.2 billion Ponzi scheme, and five individuals and four companies for unlawfully selling securities related to the scheme.
    • A former chief financial officer of 1 Global Capital LLC with defrauding retail investors when the now bankrupt Florida-based cash advance company fraudulently raised more than $322 million from 3,600 investors.
  • The Division’s Exchange-traded products initiative, which used trading data analytics to uncover unsuitable trades of complex exchange-traded products in retail investor accounts.
  • Instituted more than 450 proceedings to deregister companies – typically microcap – that were delinquent in their Commission filings.
  • Suspended trading in the securities of more than 1,000 issuers.  

Foreign Corrupt Practices Act

The Commission's FCPA cases addressed misconduct in over 50 different countries and coordinated on several of them with foreign authorities, including from the Netherlands, Sweden, and Brazil. We also issued, alongside DOJ’s criminal division, the first update to the Resource Guide to the FCPA and successfully completed the United States’ phase four peer review by the Organization for Economic Cooperation and Development Working Group on Bribery.

The Commission brought over 50 FCPA cases between December 2016 and December 2020 and obtained orders for over $5 billion in penalties and disgorgement.   Examples of actions include:

  • Telia Company AB for violating the FCPA to win business in Uzbekistan.
  • Fresenius Medical Care AG & Co. for violating the FCPA’s anti-bribery, internal accounting controls, and recordkeeping provisions in multiple countries over the course of nearly a decade.
  • Mobile TeleSystems PJSC for violating the FCPA’s anti-bribery, internal accounting controls, and recordkeeping provisions to win business in Uzbekistan.
  • Novartis AG for engaging in bribery schemes in South Korea, Vietnam, and Greece in violation of the books and records and internal accounting controls provisions of the Foreign Corrupt Practices Act.
  • Telefonaktiebolaget LM Ericsson for engaging in a large-scale bribery scheme involving the use of sham consultants to secretly funnel money to government officials in multiple countries.
  • The Goldman Sachs Group Inc. for violations of the FCPA in connection with the 1Malaysia Development Berhad (1MDB) bribery scheme.

ICO and OTHER CYBER-RELATED VIOLATIONS

Over the past several years, we focused significant efforts on the explosion in the ICO market and other cyber-related violations. Examples of actions in this space include:

  • Establishment of the Cyber Unit to aggregate the Division’s expertise in the area and to ensure a consistent, well-informed approach to cases in the space.
  • Actions related to hacking and false EDGAR filings:
    • Three Chinese traders for trading on hacked, nonpublic, market-moving information stolen from two prominent law firms, making almost $3 million in illegal profits.
    • SEC v. Ieremenko filed in January 2019, against nine defendants—many of them overseas—for their roles in a scheme to hack into the SEC’s EDGAR system and extract nonpublic information for use in illegal trading. 
    • A Virginia-based mechanical engineer for scheming to manipulate the price of Fitbit stock by making a phony regulatory filing, which demonstrated our focus on actors disseminating false information following cyber-based intrusions.
  • An action against Voya Financial for inadequate policies and procedures concerning cybersecurity, in the Commission’s first action for violations of Reg S-ID.
  • An action against the entity formerly known as Yahoo! Inc. for misleading investors by failing to disclose one of the world’s largest data breaches in which hackers stole personal data relating to hundreds of millions of user accounts. 
  • The Commission’s Report on Business Email Compromises, which grew out of enforcement investigations of nine public companies, cautioned issuers and other market participants that they should consider cyber-related threats such as spoofed or manipulated electronic communications exist when devising and maintaining a system of internal accounting controls.
  • Actions to confront legal issues that arose from the proliferation of initial coin offerings.
    • The Commission’s report of investigation in the DAO matter, which discussed the application of the federal securities laws to an offering of virtual tokens. 
    • More than 50 cases involving ICOs, blockchain or distributed ledger technology, and/or digital assets, including enforcement actions related to issuers’ failure to comply with the registration provisions of the Securities Act.
    • Litigated actions against Telegram Group Inc. and Kik Interactive Inc. for engaging in unregistered digital token offerings.
  • Actions concerning unregistered exchange and broker-dealer activity.
  • Actions charging celebrities for touting ICOs without disclosing that they were compensated to do so.
  • A statement urging caution around celebrity-backed ICOs and recommending that investors research potential investments rather than relying on endorsements from artists, sports figures, or other icons.
  • Emergency actions that halted 18 suspected frauds involving blockchain or distributed ledger technology and/or digital assets. 
  • Cases alleging fraud in ICO and distributed ledger technology matters, including actions against:
    • The co-founders of purported financial services start-up Centra Tech. Inc. with orchestrating a fraudulent ICO that raised more than $32 million from thousands of investors.
    • Titanium Blockchain Infrastructure Services Inc. and its president, a self-described “blockchain evangelist,” for an ICO fraud that raised as much as $21 million from investors in and outside the U.S.
    • A digital-asset entrepreneur and his company, UnitedData, Inc. d/b/a Shopin, for defrauding investors in an ICO that raised more than $42 million from hundreds of investors.
    • NAC Foundation, NAC’s CEO, and a political lobbyist for defrauding investors in an ICO by misrepresenting to investors that they were purchasing tokens that could be converted to a digital asset security that was superior to the original bitcoin.

INDIVIDUAL ACCOUNTABILITY

The Commission filed charges against individuals in more than two-thirds of the standalone cases it brought since December 2016. Enforcement actions also resulted in over 2,000 bars and suspensions of wrongdoers. Examples of actions against individuals include: 

  • Wells Fargo & Co.’s former CEO and Chairman and former head of its Community Bank for their roles in misleading investors about the success of the Community Bank, Wells Fargo’s core business.
  • Brixmor Property Group Inc.'s former CEO, CFO, CAO, and Senior VP for fraudulently manipulating a key non-GAAP metric relied on by analysts and investor.
  • The Chairman and CEO of Tesla, Inc. for tweeting a series of false and misleading statements about a potential transaction to take Tesla private.
  • The former CEO and CFO of Walgreens Boots Alliance Inc. for their roles in misleading investors about the increased risk that the company would miss a key financial goal.
  • A former Goldman Sachs executive for engaging in a corruption scheme and paying unlawful bribes as part of the 1Malayasia Development Berhard scandal.
  • The former CEO, CFO, and COO of Iconix, Inc. for their roles in a scheme to create fictitious revenue for the company.
  • The former CEO and President of Theranos Inc. for their roles in making exaggerated and false statements about the company’s performance.

ACHIEVEMENTS IN LITIGATION

  • Pursued complex litigation in district courts and administrative proceedings to protect investors, including emergency actions to halt misconduct and freeze assets, subpoena enforcement actions, cases litigated to verdict, and suits to collect ill-gotten gains for return to victims.
  • Examples of notable litigation wins include:
    • SEC v. Lek and Avalon.  2019 jury trial win against a foreign trading firm and its principals for engaging in market manipulation schemes known as layering and cross-market manipulation.  Shortly before trial, obtained an admissions settlement with co-defendant Lek Securities, a U.S.-based brokerage firm, and its principal who facilitated the manipulative trading. 
    • SEC v. Chen.  2020 jury trial win in an insider-trading case in which the defendant traded on inside information about upcoming financial results that he learned about from a friend who was a company insider.  
    • SEC v. Present.  2017 jury trial win against an investment adviser who misled clients about the firm’s investment strategy. The court ordered the defendant to pay over $13 million.
    • SEC v. Fowler.  2019 jury trial win against a broker who engaged in unauthorized trading in unsuitable securities that generated substantial commissions for the broker but significant losses for customers.
    • SEC v. Telegram Group Inc.  2019 emergency action seeking a temporary restraining order against two offshore entities conducting an unregistered, ongoing digital token offering in the U.S.  A settlement was reached after the court issued a preliminary injunction.

A STRONGER DIVISION

We made several efforts over the past few years to strengthen the Division, make it a great place to work, make its processes more efficient, and monitor the markets to uncover potential misconduct.

PROMOTING DIVERSITY, INCLUSION, AND OPPORTUNITY

  • We worked closely over the last few years—with an even greater focus in the last year—with our partners in the Office of Minority and Women Inclusion and the Chairman’s Office to find ways to promote diversity and inclusion and to educate ourselves and each other about the issues and challenges we face. 
  • Formed large and small group discussions among leadership and staff, providing the opportunity to share experiences and voice concerns. 
  • Saw an increase in the advancement of women and minorities into leadership positions.
    • Between December 2016 and December 2020, the number of female senior officers in the Division climbed from approximately 33% to 51%, a roughly 18% increase. 
    • During the same period, the number of minority senior officers in the Division rose from approximately 9% to 17%, a roughly 8% increase. 

STRENGTHENING THE WHISTLEBLOWER PROGRAM

Efforts to strengthen the Office of the Whistleblower, including by implementing efficiencies and adding resources, expedited the review of whistleblower claims.

  • In fiscal 2020, the Division issued 315 preliminary determinations, a more than 95% increase over the next highest year, and the Commission issued 197 final orders, an approximately 19% increase over the next highest year.
  • Since December 2016, the the Commission awarded approximately $600 million to eligible whistleblowers, including a record $175 million to 39 whistleblowers in fiscal year 2020, which is both the highest dollar amount and the highest number of individuals awarded in any fiscal year.  
  • In October 2020, the Commission issued the largest single award to date under the history of the program – $114 million to a single whistleblower.

CREATING THE OFFICE OF BANKRUPTCY, COLLECTIONS, DISTRIBUTIONS, AND RECEIVERSHIPS

  • To further build upon improvements we implemented over the prior four years, we recently created the new Office of Bankruptcy, Collections, Distributions, and Receiverships in the Enforcement Division, designed to streamline current processes and maximize distributions to and results for investors.  By centralizing existing processes for the various components of the office, we expect to achieve additional efficiencies and maximize results for investors.

  • Between December 2016 and December 2020, the Commission distributed more than $3.6 billion to harmed investors.

EVALUATING MARKET INFORMATION

  • From December 2016 to December 2020, the Enforcement Division’s Office of Market Intelligence received over 79,000 tips, complaints, and referrals (TCRs) from whistleblowers, the general public, industry professionals, self-regulatory organizations, and domestic and foreign agencies, and reviewed more than 140,000 suspicious activity reports (SARs), along with other information, to identify bad actors and protect investors.

INVESTOR PROTECTION DURING THE COVID-19 PANDEMIC

At the onset of the pandemic, the Division took several proactive measures to identify areas vulnerable to manipulation, alleviate investor fears, and warn market participants about risks created by the pandemic.  Examples of actions include:

  • Establishment of the Coronavirus Steering Committee to centralize and coordinate our efforts.
  • The Steering Committee worked to proactively identify and monitor areas of potential misconduct associated with COVID-19, and to detect and address potential misconduct in areas such as insider trading, financial fraud and issuer disclosure, and misconduct by regulated entities and individuals.
  • The Commission suspended trading in the securities of 36 issuers in connection with inadequate or inaccurate information in the marketplace in connection with the virus followed by seven fraud cases involving false and misleading claims relating to COVID-19.
  • Issuance of investor alerts outlining the types of frauds investors should be especially wary of during COVID-19.
  • Issuance of a statement emphasizing to corporate issuers and other market participants the importance of maintaining market integrity and following corporate controls and procedures, particularly with respect to non-public information.
  • Enforcement actions, including:
    • An emergency action and asset freeze in a fraudulent scheme that generated more than $25 million from sales of multiple microcap companies’ stock, including four companies that were the subject of recent SEC trading suspension orders.
    • An action against a California-based penny stock trader for conducting a fraudulent pump-and-dump scheme by making hundreds of misleading statements in an online investment forum, including that a company had developed an approved blood test for COVID-19.
    • An action against Applied Biosciences Corp. for making false or misleading claims regarding its distribution of supposed rapid result finger-prick COVID-19 tests to the general public.
    • An action against Turbo Global Partners, Inc. and its CEO for issuing false and misleading press releases regarding the company’s purported partnership to sell thermal scanning equipment that would detect individuals with fevers.
    • An action against Praxsyn Corp. and its CEO for issuing false and misleading press releases claiming that Praxsyn was able to acquire and supply large quantities of N95 or similar masks to protect wears from the COVID-19 virus.
    • The President and Chief Science Officer of Arrayit Corporation for making false and misleading statements concerning Arrayit’s development of a COVID-19 blood test.
    • An action against The Cheesecake Factory for making misleading disclosures about the impact of the COVID-19 pandemic on its business operations and financial condition.
    • An action against Decision Diagnostics Corp. and its CEO for making false and misleading claims in press releases that the company had developed a working, break-through technology that could accurately detect the COVID-19 virus through a quick blood test.

[1] Each case description represents what the Commission alleged in a district court complaint, contested order instituting proceedings, or settled order.

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