The new year brought a lot of attention to the markets — and with the attention came calls for the Securities and Exchange Commission (SEC) to act as an enforcer.
In January, Senator Elizabeth Warren told CNBC, “To have a healthy stock market, you’ve got to have a cop on the beat… That should be the SEC… They need to step up and do their job.”
As the first quarter of the year draws to a close, the SEC appears to be doing just that — but the process is often cumbersome and investigations can last years before formal charges are filed.
The SEC appears to be using many of the tools it has at its disposal.
February brought two rounds of mass trading suspension. One day, the SEC suspended 47 stocks. A few days later, it suspended 15 more. The suspensions last 14 days each, during which time investors cannot buy or sell shares of the companies.
In early March, the SEC announced whistleblower awards totaling $7 million paid to individuals in three separate cases. You can find those press releases here, here, and here.
The latest actions taken by the SEC involve charges against individuals after years of investigation.
In this SEC press release, it states that it “charged James Roland Jones of Redondo Beach, California, with perpetrating a fraudulent scheme to sell what he called “insider tips” on the dark web.” Jones also faces criminal charges in Florida for his alleged activity.
In another release, the SEC states that it “obtained an asset freeze… to stop an alleged offering fraud and misappropriation.” According to the SEC, “Colorado Springs resident Tra Jay Scarlett … raised at least $3.2 million from investors … [for] an environmentally-friendly drink bottling and manufacturing company.” But the SEC alleged that Scarlett “never manufactured or bottled any beverages, never opened a bank account, and never operated in any way at all.”
The alleged fraud reached eight figures in another case. In this release, the SEC states that it “charged Jessica Richman and Zachary Apte, co-founders of uBiome Inc., a San Francisco-based private medical testing company, with defrauding investors out of $60 million.” The pair also face criminal charges in California.
Sometimes particular groups can be targeted. In this release, the SEC states that members of New Jersey’s Orthodox Jewish community allegedly “invested millions based on false claims about investments in real estate.” The SEC alleged that Seth P. Levine “raised millions of dollars from more than 60 investors… used misleading and false representations… provided investors with… false and inaccurate information…and, at times, forged signatures.” Levine also faces criminal charges in New Jersey.
The charges outlined above are the results of investigations that started as far back as 2016. As we’ve noted several times before, the wheels of justice often grind slowly.
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