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Tag: Daniel M. Hawke

BULLETIN: Bulgarian Responsible For Avon Stock Manipulation Last Month, SEC Charges

The SEC has gone to federal court in the Southern District of New York, alleging that a Bulgarian is responsible for the manipulation of Avon’s stock price last month though a false filing in the agency’s EDGAR database.

Avon, an American network-marketing company famous for cosmetics, was only one of the companies targeted, the SEC said.

Bulgaria is a former Soviet bloc country in Southeast Europe. Its capital is Sofia. The incident effectively turned the SEC’s website into a crime scene and led to questions about whether fraudsters were reaching across continents and oceans to carry out their criminal whims in the U.S. marketplace.

Named defendants in the SEC’s action are Nedko Nedev, who allegedly used an address in Sofia; Strategic Capital Partners Muster Ltd.; Strategic Wealth Investments Inc.; PTG Capital Partners LTD; and PST Capital Group LTD.

Each of the companies is described in the SEC complaint as highly dubious, with purported bases of operation in places such as London, the British Virgin Islands and Henderson, Nev.

PST “allegedly made a false EDGAR filing in a 2012 scheme involving the stock of Rocky Mountain Chocolate Factory,” the SEC said. “The defendants also are charged with a similar scheme in 2014 involving Tower Group International Ltd., which involved a false press release instead of an EDGAR filing.

“The schemes followed similar patterns where the accounts had substantial holdings in a company that had been losing value and the companies’ stock values substantially increased after a false filing or press release originating from Bulgaria,” the agency said.

From the SEC’s complaint against Nedev and several purported companies.

A federal judge has approved an asset freeze that will protect about $2 million in brokerage accounts, at least one of which has been linked to Nedev, the agency said.

“We used parallel trading analysis to connect the dots and track down these defendants,” said Daniel M. Hawke, chief of the SEC Enforcement Division’s Market Abuse Unit. “Even when traders attempt to hide behind proxy servers, false filings, and phony foreign entities, we are able to quickly identify patterns and relationships to focus our investigation and identify who is behind the manipulative trading.”

Read the SEC’s statement.

Read the complaint against Nedev and the purported companies.

Jun 4, 2015
URGENT >> BULLETIN >> MOVING: SEC Says Latvian Trader Hatched ‘Online Account Intrusion Scheme’ And Manipulated Prices Of More Than 100 NYSE And Nasdaq Securities

URGENT >> BULLETIN >> MOVING: In a case that raises grave security concerns, the SEC has gone to federal court in San Francisco, alleging that a 34-year-old Latvian trader who held positions in multiple stocks “hijacked” the online accounts of customers at large broker-dealers and made trades in the accounts to manipulate prices and pocket the profits.

Igors Nagaicevs “broke into” the accounts “on more than 150 occasions over the course of 14 months,” the SEC charged, saying the hacking scheme caused more than $2 million in damages and reaped more than $850,000 in illegal profits for the accused fraudster.

“Nagaicevs conducted those unauthorized trades to manipulate the prices of stocks in which he already held a position through one of at least eight unregistered trading firms where Nagaicevs was an authorized trader,” the SEC charged. “The scheme enabled Nagaicevs to consistently derive quick trading profits, even if he manipulated the price of the security by only a small amount.”

A top SEC official described the scheme as massive in terms of its destructive power.

“Nagaicevs engaged in a brazen and systematic securities fraud, repeatedly raiding brokerage accounts and causing massive damages to innocent investors and their brokerage firms,” said Marc J. Fagel, director of the SEC’s San Francisco Regional Office.

The SEC said it also brought administrative proceedings today against four electronic trading firms and eight executives amid allegations they enabled the fraud “by allowing [Nagaicevs] anonymous and unfiltered access to the U.S. markets.”

“These firms provided unfettered access to trade in the U.S. securities markets on an essentially anonymous basis,” said Daniel M. Hawke, chief of the SEC’s Market Abuse Unit. “By failing to register as brokers, the firms and principals in this case exposed U.S. markets to real harm by evading crucial safeguards of the federal securities laws. We will not allow firms like these to fly under the radar and become safe havens for market abuse.”

Read the SEC release.

Jan 26, 2012
URGENT >> BULLETIN >> MOVING: Former Major League Baseball All-Star Doug DeCinces Charged With Insider Trading; Attorney, Physical Therapist And Businessman Who Knew Longtime Third Baseman Charged In Same Case

URGENT >> BULLETIN >> MOVING: Former Major League Baseball star Doug DeCinces, who threw out the honorary first pitch last night at a game between the Los Angeles Angels of Anaheim and the Minnesota Twins, today was charged with insider trading by the SEC.

Also charged in the civil case were attorney Fred Scott Jackson, 65, of Newport Beach, Calif.; Joseph J. Donohue, 49, a physical therapist who resides in Trabuco Canyon, Calif.; and Roger A. Wittenbach, 69, a businessman in Lutherville- Timonium, Md.

DeCinces, a third baseman who retired from the big leagues in 1987, spent 15 seasons in the majors, mostly for the Baltimore Orioles. He was an American League All-Star in 1983, and hit 237 career homers. He also played for the Angels and the St. Louis Cardinals, driving home nearly 900 runs during the course of his long and successful baseball career.

But the SEC said today that DeCinces, 60, began to drive home illegal profits from insider trading when he came into possession of material, nonpublic information that Abbott Laboratories Inc. was acquiring Advanced Medical Optics Inc. through a tender offer in 2008.

DeCinces shared the information with the other charged defendants, putting each of them in position to profit illegally, the SEC charged. DeCinces bought 83,700 shares of Advanced Medical ahead of the acquisition news, and allegedly “sold all of his shares for $1.2 million in profits.”

“Time and again, we see reputable people engaging in insider trading and risking their good names in order to enrich themselves and those around them,” said Daniel M. Hawke, chief of the SEC Division of Enforcement’s Market Abuse Unit and director of the Philadelphia Regional Office. “People need to understand that we are watching for suspicious trading activity, and they will pay a heavy price when we catch them insider trading.”

Donohue made $75,570 on the illegal tip, while Jackson made $140,259, the SEC charged. Meanwhile, Wittenbach made $201,692. After Wittenbach told his sister to buy the stock, she made $13,214, the SEC said. The sister was not charged.

DeCinces agreed to settle the case for $2.5 million, without admitting or denying the allegations. The other defendants also settled without admitting or denying.

Donohue agreed to pay disgorgement of $75,570 and a penalty of $37,785, while Jackson agreed to pay disgorgement of $140,259, prejudgment interest of $12,508 and a penalty of $140,259.

At the same time, Wittenbach agreed to pay disgorgement of $201,692, prejudgment interest of $5,768, and a penalty of $214,906.

Jackson bought 8,500 shares of Advanced Medical with a handheld device while having breakfast with DeCinces, the SEC said.

Aug 4, 2011
FDA Chemist Cheng Yi Liang’s Very Bad Day: Busted By The Feds, Sued By The SEC For Trading On Information Lifted From Confidential Government Database

A chemist who works for the U.S. Food and Drug Administration has been charged criminally by federal prosecutors, arrested by federal agents in Maryland, sued by the SEC — and will go to bed tonight knowing his son has been arrested in the same case.

Cheng Yi Liang, 56, of Gaithersburg, was accused of abusing his position of trust at the FDA by mining the agency’s database for information on drug approvals or denials — and then trading on the information he gleaned to “generate more than $3.6 million in illicit profits and avoided losses,” the SEC said.

Liang’s son, Andrew Liang, 25, also of Gaithersburg, was arrested, too.

And high-ranking public officials minced no words when announcing the charges against the men, which included a stunning allegation that the senior Liang sought to conceal the scheme in part by trading in the account of his elderly mother in China.

“Cheng Yi Liang was entrusted with privileged information to perform his job of ensuring the health and safety of his fellow citizens,” said Assistant U.S. Attorney General Lanny Breuer. “According to the [criminal] complaint, he and his son repeatedly violated that trust to line their own pockets.”

Breuer is the head of the Justice Department’s Criminal Division.

“Liang victimized both the investors who were disadvantaged by his theft of inside information and the American citizens whose trust he violated by placing private gain above public good,” said Robert Khuzami.

Khuzami is director of the SEC’s Division of Enforcement.

Another high-ranking official summarized today’s events by saying Liang’s actions made government workers look bad.

“Profiting based on sensitive, insider information — as Liang is charged with today — is not only illegal, but taints the image of thousands of hard-working government employees,” sighed Elton Malone, special agent in charge of the office of special investigations for the U.S. Department of Health and Human Services, Office of the Inspector General.

Liang, an FDA employee since 1996, began snatching information as early as July 2006, the SEC charged.

He “illegally traded in advance of at least 27 public announcements about FDA drug approval decisions involving 19 publicly traded companies,” the agency charged.

In a bid to cover his tracks, Liang “traded in seven brokerage accounts, none of which were in his name. One belonged to his 84-year-old mother who lives in China,” the SEC charged.

“The insider trading laws apply to employees of the federal government just as they do to Wall Street traders, corporate insiders, or hedge fund executives,” said Daniel M. Hawke, chief of the SEC’s Market Abuse Unit.

Father and son were charged with conspiracy to commit securities fraud and wire fraud, securities fraud and wire fraud. Federal prosecutors said investigators caught Liang after special software was installed on the work computer he was using.

See this SEC exhibit that outlines the trades.

Mar 29, 2011