Mortgage Lender Charged With Illegal Securities Offering: Enforcement

DOL Ready to Enforce Fiduciary Rule: Acosta

House Passes GOP Tax Reform Bill

8 of the Worst Market Calls Since 1929

The SEC charged Singer Financial Corp. (SFC), a Philadelphia, Pennsylvania-based “hard money” lender, and Paul Singer, SFC’s sole officer, director and shareholder, with operating an illegal and unregistered offering of securities.

The SEC’s complaint alleges that Singer and SFC raised approximately $4.5 million from at least 70 investors between October 2012 and July 2015 through an illegal and unregistered offering of unsecured promissory notes.

According to the SEC’s complaint, Singer and SFC conducted the unregistered offering without a registration statement in effect and without qualifying for an applicable exemption from registration. The SEC’s complaint further alleges that Singer and SFC initially sought an exemption from registration for an offering of investment certificates, which were nearly identical to the promissory notes.

After the SEC staff questioned, among other things, the size and scope of significant non-interest bearing related party loans SFC made to Singer and other companies he owned, Singer abandoned his efforts to obtain an exemption and, instead, embarked on the illegal, unregistered offering of promissory notes.

According to the SEC’s complaint, by failing to register the offering of promissory notes with the SEC, or otherwise qualify the offering for an exemption from registration, Singer and SFC deprived investors of critical information regarding the risks of investing in SFC and in unsecured promissory notes.

The SEC seeks permanent injunctions, which includes enjoining Singer from participating in future unregistered offerings; disgorgement; prejudgment interest; and penalties.

Fake EDGAR Filer Pleads Guilty to Securities Fraud Charges

Robert Murray, a defendant in ongoing SEC litigation, pleaded guilty on Nov. 7 to parallel criminal securities fraud charges filed by the U.S. Attorney for the Southern District of New York in connection with a scheme to manipulate Fitbit securities through fake filings on the SEC’s EDGAR system.

The court accepted Murray’s plea, and his sentencing is currently scheduled for March 9.

The SEC charged Murray on May 19 with securities fraud arising out of the same scheme. According to the SEC’s complaint, Murray allegedly purchased Fitbit call options just minutes before a fake tender offer that he orchestrated was filed on the SEC’s EDGAR system purporting that a sham company named ABM Capital LTD sought to acquire Fitbit’s outstanding shares at a substantial premium.

Fitbit’s stock price temporarily spiked when the tender offer became publicly available on Nov. 10, 2016, and Murray sold all of his options for a profit of approximately $3,100. Murray took steps to conceal his identity and actual location in Virginia, including using an alias to create an email account and using an IP address registered to a company located in California.

The SEC’s litigation against Murray continues.

SEC Charges Marketing Consultant and Friend With Insider Trading

The SEC charged Susan Ellerin, a Boston-area marketing and management consultant, and her friend, Edward Blumstein, with insider trading.

According to the SEC, Ellerin exploited confidential information she obtained while performing consulting services for the subsidiary of a major private equity firm.

Ellerin and Blumstein have agreed to settle the SEC’s charges and will pay combined disgorgement and penalties of over $176,000.

The SEC alleges that in 2015 and 2016, Ellerin and Blumstein traded in the stock of Florida-based ADT Corp. in advance of an announcement that ADT would be acquired by New York-based private equity firm Apollo Global Management LLC.

On news of the acquisition, ADT’s stock price increased more than 50%.

According to the SEC’s complaint, Ellerin had been hired as a consultant by Protection One, a company owned by Apollo, and learned of Apollo’s potential acquisition of ADT from an employee of Protection One. The complaint alleges that between October 2015 and February 2016, Ellerin purchased ADT stock while in possession of this material, nonpublic information, and tipped Blumstein, who also purchased ADT stock based on the confidential information provided by Ellerin. Together, Ellerin and Blumstein realized over $86,000 in ill-gotten profits as a result of their illicit trades.

Without admitting or denying the SEC’s charges, Ellerin and Blumstein have agreed to settle the case against them, subject to approval by the District Court.

The settlement calls for Ellerin to pay disgorgement of $15,054, the amount of her ill-gotten gains, plus prejudgment interest of $770, and a civil penalty of $15,054. Blumstein would be required to pay disgorgement of $71,070, the amount of his ill-gotten gains, plus prejudgment interest of $3,400, and a civil penalty of $71,070.

— Related on ThinkAdvisor:

You are signed up!

ThinkAdvisor and the College for Financial Planning have partnered to bring you a series of helpful educational tools that you can use to take your career to the next level. padding: 0px 81px;width: inherit; Retirement Wire Retirement Wire

Your resource for news, research and analysis to help you deliver more effective outcomes to your clients. padding: 0px;width: inherit; ETF & Smart Beta Research ETF & Smart Beta Research

A survey of advisors nationwide reveals how the use of ETFs is expanding and what factors are likely to further support this trend. width:300px!important;max-height:36px; ThinkAdvisor TechCenter

ThinkAdvisor’s TechCenter is an educational resource designed to give you a competitive edge by keeping you abreast of new tech innovations and need-to-know information that can be applied to your business. Resources A Guide to Environmental, Social and Governance (ESG) Investing

ESG Investing is growing substantially as Millennial investors fuel demand for products. This guide outlines ESG history, portfolio opportunities and why ESG is positioned for…

Explore this kit of charitable giving tools, their benefits, and tips to diversify your clients charitable portfolios to help accomplish their philanthropic goals.

Variable annuities are simplifying, bringing new opportunities to grow your business. Take a quick dive into recent product evolutions and how to identify the best…

Join this webcast to see how Trisha Qualy, Director of Wealth Management at AdvisorNet Financial, took client assets from $100 million to $1.3 billion in…

Join this complimentary webcast to learn innovative strategies that have proven effective in containing rising health costs.

Join this conversation as a panel of experts provides tips and best practices to optimize your tech resources for business growth.

Leave a Reply

Your email address will not be published.