Friday Weekly Roundup
Taking it from the top:
Last Friday, the SEC sued two twin brothers from the U.K. with creating and promoting a fake “stock picking robot” that purportedly identified penny stocks set to double in price. "Instead, the brothers were merely touting stocks they were being paid separately to promote," the SEC said in a press release. Clusterstock probably had the funniest headline about the case. Actually, that honor may go to Dealbreaker.
On Monday, the SEC continued its growing line of pay-to-play cases involving public pension funds when it charged the former CEO of CalPERS and his close personal friend with scheming to defraud an investment firm into paying $20 million in fees to the friend's placement agent firms. Interestingly, the case was brought by the Los Angeles Regional Office, and does not appear to have involved the SEC's Municipal Securities and Public Pensions Unit.
Monday also brought a case against SinoTech Energy, a China-based oil field services company and two of its senior officers for a scheme mislead investors about the value of its assets and its use of $120 million in IPO proceeds. The SEC also charged the company’s chairman for a separate $40 million theft from the company.
Wednesday saw a significant FCPA and investment adviser fraud case against a former Morgan Stanley executive, who settled the matter. The executive, Garth Peterson, also pled guilty to criminal charges in the Eastern District of New York. It seems like we can hardly have an FCPA case these days without it being part of some sort of "sweep", and this one appears to be part of the government's sweep of the financial services industry. More cases like it may be coming down the pike.
In other FCPA news, the internet almost blew up this week after Saturday's publication of a New York Times story about Wal-Mart's FCPA issues in Mexico. This story will be evolving for a long time to come, and may derail efforts to amend the statute, at least in the near term.
Happy April 27th!