rfrankowski

The SEC alleges a venture capital fund manager stole funds from one account to cover lost profits in another account in a Ponzi-like act.  The capital fund manager, Gregory Gray, Jr., and his firms, Archipel Capital LLC and BIM Management LP, are charged with stealing money from three investment funds to pay fabricated returns to investors in a separate fund. Gray created the separate fund to purchase pre-IPO shares of Twitter that would be sold after the company went public.  The profits would then be delivered to investors.  Gray’s solicitation raised almost $5.3 million from initial investments, which was enough money to buy 230,000 pre-IPO shares of Twitter at the time Gray received the funds, according to the terms of the offering documents Gray signed.  However, Gray purchased only 80,000 pre-IPO shares before November 2013, when Twitter went public.  When investors requested their promised shares and profits from Gray, he delayed in response and stole funds from unrelated accounts to [...]

Two friends were charged by the SEC for wrongly profiting from inside trading after hearing unpublished news of a proposed acquisition of Cooper Tire and Rubber Company by Apollo Tyres Ltd. The SEC filed a complaint in a U.S. District Court, charging fraudulent insider trading against Amit Kanodia, an equity investor and Iftikar Ahmed, a general partner at a venture capital firm.  Both traders are charged with parallel criminal charges in the U.S. Attorney’s Office for the District of Massachusetts. The SEC alleges that Apollo Tyres, an India-based company, was engaged in absolute negotiations to acquire Cooper Tire.  When the acquisition was announced in June 2013, Cooper Tire’s stock price skyrocketed 41 percent, although the acquisition was never completed.  The SEC alleged that Kanodia tipped Ahmed and another friend of the future acquisition after learning of the deal from his wife, who was the general counsel at Apollo at the time the company was in the works of acquiring Cooper [...]

Officers, directors, trustees, or partners who hear about a fraud through another employee are not eligible for a whistleblower award until 120 days after the employee has failed to notify the SEC.  This case is the first time an officer earned a whistleblower award under these conditions. Andrew Ceresney, the SEC’s Division of Enforcement Director, stated, “Corporate officers have front-row seats overseeing the activities of their companies, and this particular officer should be commended for stepping up to report a securities law violation when it became apparent that the company’s internal compliance system was not functioning well enough to address it.” Since March 2015, the SEC has awarded almost $50 million to whistleblowers out of an investor protection fund established by Congress.  Whistleblower awards can range from 10 percent to 30 percent of the money collected in a successful case.  The money paid to whistleblowers is from an investor protection fund established by Congress and funded by fees paid by [...]

KBR Inc., a global technology and engineering firm with its headquarters in Houston, TX, was charged with violating whistleblower protection Rule 21F-17, which forbids companies from taking any actions to obstruct employees from reporting to the SEC any potential securities violations. KBR produced a confidentiality statement that was to be signed by employees in certain internal investigations before moving forward in the investigation.  The confidentiality statement included language threatening termination if employees discussed internal matters with any outside party without prior approval of KBR’s legal department.  The SEC determined that the confidentiality agreement violated Rule 21F-17 because the internal investigations involved allegations of potential SEC violations. KBR voluntarily amended its confidentiality statement to include language ensuring that employees are free to notify the SEC and other appropriate federal agencies of possible violations without approval of KBR’s legal team or fear of termination. Andrew Ceresney, SEC’s Division of Enforcement Director, warns other companies that the SEC “will vigorously enforce this provision.” [...]