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Aug 01, 2022

Who Are You? Auditor or Consultant, And Nonetheless Cheating on Exams

As reported by Bloomberg, at a PLI conference in October of 2021 the Acting Chief Accountant of the U.S. Securities and Exchange Commission (“SEC”), Paul Munter, issued a statement concerning the requirements found in SEC rules that, an auditor who is attesting to the accuracy of client financial statements, must be independent of the client. » Read More

Jul 25, 2022

Mony a Mickle Maks a Muckle: SEC Charges Foreign Nationals with Two Microcap Frauds

On Tuesday, April 18, 2022, the U.S. Securities and Exchange Commission (“SEC”), in three separate lawsuits brought in the U. S. District Court for the Southern District of New York, charged 16 defendants (one company and 15 individuals) located in the Bahamas, the British Virgin Islands, Bulgaria, Canada, the Cayman Islands, Monaco, Spain, Turkey, and the United Kingdom, for running multi-year fraudulent penny stock schemes that produced over $194 million of illegal receipts.» Read More

Jul 15, 2022

Fingers in the Till: SEC Charges Texas City Administrator with Falsified Financial Statements to Conceal Embezzlement

Johnson City, Texas, is a city in the very middle of the Texas Hill Country, with a 2020 population of 1627. Johnson City was incorporated in 1879 and named after its founder, Sam E. Johnson, a Texas rancher. It lies amid the so-called “Texas-German” Belt, which originated due to the many German immigrants arriving from 1830 on.» Read More

Jul 11, 2022

Stealing From the Weak: SEC Charges Fraudulent Operation of Special Needs Pooled Trusts

On Monday, May 2, 2022, the U.S. Securities and Exchange Commission (“SEC”) filed fraud charges in the U.S. District Court for the Middle District of Florida against Synergy Settlement Services, Inc. (“Synergy”); its CEO, who is also an attorney and principal of a law firm; and, in addition, Synergy’s President, for defrauding individuals with disabilities into believing that their funds were being placed in one of two pooled trusts managed by a non-profit association.» Read More

Jun 27, 2022

Serving the Public? SEC Charges Two Municipalities and Their Leaders with Bond Fraud

I have written previously about the recurring problem of fraudulent financial information used to market and sell municipal securities. See my Sept. 22, 2020, Blog “SEC Focus on Municipal Securities: Disclosure and Enforcement – the Peculiar Structure of the Municipal Securities Disclosure Regime”; my March 2, 2021, Blog “Being Held Accountable: The ‘Education’ of KPMG at the College of New Rochelle”; and by April 28, 2022, Blog “Failing Grades: School District and Auditor Earn SEC Discipline.” » Read More

Jun 20, 2022

Changing the Game: SEC Brings Enforcement Action for Exchanging Annuities

On Monday, May 25, 2022, the U.S. Securities and Exchange Commission issued an Order Instituting Administrative and Cease-And-Desist Proceedings (“Order”) against RiverSource Distributors, Inc. (“RDI”) with respect to exchanges it made with existing customers between January 2017 and May 2018 of variable annuities.» Read More

May 09, 2022

Penny Pest Control: Rollins Inc. Pays $8 Million for Managing Earnings

On Monday, April 18, 2022, the U.S. Securities and Exchange Commission (“SEC”) announced that Rollins Inc., an Atlanta-based provider of termite and pest control services (under such brands as Orkin and Critter Control) to both residential and customers, had settled charges that it “engaged in improper accounting practices in order to boost its quarterly earnings per share… to meet research analysts’ consensus estimates.” » Read More

Apr 21, 2022

A Triptych of Frauds: SEC Brings Enforcement Actions

“There is something perverse in the very nature of mankind,”  as Lucretius wrote in his great didactic poem “De rerum natura” [On the Nature of Things] in the first century B.C.

          And greed, again, and the blind lust of honours,

          Which force poor wretches past the bounds of law…

So, the following three tales capture the weakness of the human soul, which would rather celebrate financial gain at the expense of reputation, money, and position. » Read More

Feb 01, 2022

No Way Out? Real Estate Lending Becomes Riskier

Every lender who provides funds for commercial real estate development expects to be repaid. That expectation, a fundamental part of our capitalist system, is the basis for a continuing willingness to advance capital to others. The lender looks first to the borrower, assessing competence, experience, and honesty, as well as the details of any particular development.» Read More