SEC Cases: Biotech Company Accused of Misleading Investors & Accounting Fraud, Millennium Management Resolves Illegal Short Selling Charges, Day Trader Alleged Engaged in Unauthorized Trades in Over 100 Brokerage Accounts, and Multiple Traders Allegedly Insider Traded Based on One Tip

Day Trader is Accused of Unauthorized Trades to Inflate Stock Prices and Make Illegal Profits
The US Securities and Exchange Commission has filed civil charges against Joseph P. Willner accusing him of accessing over 100 brokerage accounts and making unauthorized trades. Meantime, prosecutors in NY, as well as the US Justice Department, have filed criminal charges against him.

The SEC contends that Willner used the allegedly unauthorized trades to inflate a number of companies’ stock prices. He then traded in these same securities in his accounts and made at least $700K in illicit profits.

Willner is accused of fraud and market rigging. The Commission wants back ill-gotten gains in addition to interest, penalties, and a permanent injunction.

Investment Advisory Firm to Pay Over $630K to Settle Illegal Short Selling Allegations
Millennium Management LLC will pay more than $630K—over $286K of disgorgement, more than $51,800 of interest, as well as a $300K penalty— to resolve SEC charges. The investment advisory firm is accused of shorting stocks in US companies that intended to have follow-on offerings and then illegally purchasing shares in these next offerings.

The regulator said that this violated Rule 105, which is the “anti-manipulation provision of the federal securities laws.” Millennium is accused of making nearly $287K in illicit profits by violating said rule when it illegally bought the follow-on offering shares. The firm settled without denying or admitting to the SEC’s order.

Osiris Therapeutics and Ex-Executives are Accused of Accounting Fraud
A Maryland-based biotech company will pay a $1.5M fine to settle SEC charges alleging illegal accounting practices and misleading investors. According to the Commission, Osiris Therapeutics put out fraudulent financial statements and regularly “overstated company performance” for almost two years.

This allegedly included the use of artificially inflated prices, backdating documents to acknowledge revenue from previous periods, and recognizing certain revenue prematurely. The company and its executives are accused of utilizing false pricing information.

While the company has settled the SEC charges, the SECs cases against ex-CEO Lode B. Debrabandere, CFOs Gregory I. Law and Philip R. Jacoby Jr., and Chief Business Officer Bobby Swayne Montgomery remain ongoing. The SEC wants disgorgement of ill-gotten gains, interest, penalties, and director and officer bars.

Insider Trading Charges Involving Life Time Fitness Inc. Stock Are Brought Against Multiple Traders
The SEC has filed insider trading charges against ex-Life Time Fitness VP Shane P. Fleming, his friend Bret J. Beshey, and several traders. The regulator contends that after Fleming found out that Life Time Fitness was going to be bought and would then go private, he notified Beshey along with the caveat that the latter would share profits made off the information.

Beshey then allegedly notified two traders, who were, in turn, to give him part of their trading profits. One of the traders, Peter Kourtis, allegedly told four of his friends, also in exchange for part of their profits.

According to the SEC, the traders bought about 2,000 out-of-the money call options involving the company’s shares and sold them to make more than $866K in profits after the media reported that Life Time Fitness was in merger talks.

Prosecutors in Illinois have filed criminal charges against all eight individuals.

The SSEK Partners Group is a securities fraud law firm. Contact one of our broker fraud lawyers today to request your free case consultation.

The SEC Complaint in the Willner Case (PDF)

The SEC Order in the Millennium Management Case (PDF)

SEC Charges Biotech Company, Executives With Accounting Fraud, SEC, November 3, 2017

Read the Complaint in the SEC’s Insider Trading Case (PDF)

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Ex- Investment Adviser is Accused of Defrauding Retirees of Over $1.85M, Stockbroker Fraud Blog, November 13, 2017
Texas Securities Fraud: Houston Investment Advisor Gets Five Years for Defrauding Investors and Prison Sentences are Rendered in $6.4M Diamond Investor Fraud Case, Stockbroker Fraud Blog, November 10, 2017

UBS to Pay $3.5M Penalty To Settle Allegations that It Disadvantaged Retirement and Charity Accounts During Mutual Fund Transactions, Institutional Investor Securities Blog, November 6, 2017