Library - Law Offices of Robert Wayne Pearce

Who Said Only The Good Stock Brokers Die Young?

At 99 years, Ms. Irene Bergman, a good stockbroker, shares some advice for those who would like to enjoy a long career on Wall Street. A direct quote from Ms. Bergman herself: “Don’t do anything stupid.” Ms. Bergman happens to be one of the oldest working professionals in an industry run by men half her age. Ms. Bergman offers a rare perspective of the changes in the securities industry. She recalls the small private firms founded by German Jews in the early twentieth century. Her father was a private banker in those days. In 1942, Ms. Bergman began working as a secretary at a bank, and then fifteen years later, Ms. Bergman joined Hallgarten and Co., a member of New York stock exchange.

Jun 14, 2015

SEC Announces Insider Trading Charges Against Ardea Executive and San Diego California Stockbrokers

The Securities and Exchange Commission (SEC) filed suit against Michael J. Fefferman, a Senior Director of Information Technology for Ardea Biosciences, Inc. (Ardea). The SEC alleged that Mr. Fefferman leaked non-public information regarding pharmaceutical trials to his brother-in-law, Chad Wiegand, who passed the inside tip to another stockbroker. Between April 2009 and April 2012, Mr. Fefferman allegedly tipped Mr. Wiegand about four separate announcements beforehand that were likely to have a positive impact on Ardea stock prices. The SEC alleged that the Defendants received $550,000 in illegal profits from this insider trading scheme. The first announcement concerned a global agreement with Bayer Healthcare, LLC related to the licensing of an Ardea developmental cancer treatment. The second announcement related to the initial testing of a promising drug for the treatment of gout. The third announcement provided positive news about the second phase of testing for the experimental gout treatment. Finally, the fourth announcement published news of the sale of Ardea to AstraZeneca. The price of Ardea stock increased with each announcement and the Defendants allegedly profited illegally from trading of Ardea stock with the non-public information.

Jun 13, 2015

Former Carlsbad California Broker Pleads Guilty To Fraud Charges

Former Merrill Lynch and Raymond James stock broker, Sunil Sharma, plead guilty to wire fraud charges in Federal court last week. According to the U.S. Attorney Office (“USAO”), Mr. Sharma admitted that he stole $6 million from investors by misrepresenting that he was making conservative investments when he actually was pursuing a risky day trading strategy. Apparently, Mr. Sharma was not a successful day trader and eventually his so called conservative investment venture turned into a massive Ponzi scheme. A “Ponzi scheme,” is an unsustainable fraud pyramid that inevitably ends in ruin. Schemers use money raised from latter investors to pay an earlier investor’s returns. Ponzi schemes invariably fall apart when markets deteriorate or when the schemer is unable to raise more cash.

Jun 12, 2015

SEC Charges Former Bancorp Board Member with Insider Trading

The Securities and Exchange Commission (SEC) filed suit against Anthony Andrade of Rehoboth, Massachusetts alleging that he illegally tipped inside information to three friends and business associates about Bancorp Rhode Island’s (Bancorp RI) potential acquisition. The SEC alleged that the three friends traded based upon the information Mr. Andrade provided for them and profited when Bancorp RI’s stock price increased. The SEC alleged that Mr. Andrade breached his fiduciary duty by providing material that was not public information to his friends and business associates. All of the people he provided this information to knew that he was a member of Bancorp RI’s board of directors and that Mr. Andrade had no business purpose for providing them with this information.

Jun 11, 2015

SEC Obtains Judgments Against Mark Spangler and the Spangler Group

The Securities and Exchange Commission (SEC) has filed suit and obtained Final Judgement against The Spangler Group, Inc. (“Spangler Group”) and Mark Spangler, a Seattle, Washington investment adviser who allegedly defrauded clients by secretly investing them in Mr. Spangler’s risky start-up companies. Mr. Spangler also allegedly used client money for his own benefit even though the investments were inconsistent with the investment strategies he had promised his clients and contrary to his clients’ stated investment objectives. According to the SEC Mr. Spangler and the Spangler Group raised over $56 million for several private funds that Mr. Spangler created and owned. The SEC claims Mr. Spangler advised that the funds would invest in publicly traded securities, but instead he liquidated the private funds positions, and funneled the proceeds primarily to two private companies for which Mr. Spangler served as Chairman and, at times, Chief Executive Officer.

Jun 10, 2015

SEC Charges ClearPath Wealth Management and Owner With Fraud

The Securities and Exchange Commission (SEC) has filed a suit against Patrick Churchville, and his firm ClearPath Wealth Management (“ClearPath Wealth”) misappropriated and misused his investors’ cash and assets through a fraudulent scheme involving theft that was covered up by false accounting entries, shadow accounts, and misrepresentations to his investors, financial institutions, to third-party administrators, and to ClearPath Wealth’s auditors and accountants. According to the SEC, Mr. Churchville and his firm, ClearPath Wealth, caused over $11 million in losses to investors of the funds they advised and controlled. The SEC alleged that the defendants misallocated and misappropriated investor assets as part of a Ponzi-like scheme. According to the SEC, the defendants took monies that were due to be distributed to particular investors to pay for new investments to fund distributions to unrelated investors and themselves. The SEC alleged that Mr. Churchville’s home overlooking Narragansett Bay was bought with approximately $2.5 million stolen from investors.

Jun 9, 2015

CEO of Green Planet Group Charged by SEC for Stock Market Manipulation

The Securities and Exchange Commission (SEC) recently filed a complaint alleging that during the period of March 2012 through February 2013, Edmond L. Lonergan and the Green Planet Group, Inc. (Green Planet) engaged in a fraudulent market manipulation scheme. According to the SEC, this scheme involved illegal bribes to a corrupt promoter and his buying group to purchase shares of Green Planet in the open market. However, the corrupt promoter working for Mr. Lonergan was actually an informant cooperating with the Federal Bureau of Investigation (FBI). The SEC alleged that Mr. Lonergan engaged in this scheme in an effort to generate the appearance of market interest, induce public purchases of the company’s stock, artificially increase volume in Green Planet stock and increase the stock’s trading price to sell his own Green Planet stock. The SEC alleged that Mr. Lonergan and the FBI informant first agreed to engage in a fraudulent Green Planet stock market manipulation on March 30, 2012. Mr. Lonergan allegedly told the informant that he wanted him to cause two to three million shares of buying and increase the stock price from a half a cent to maybe two or three cents. Mr. Lonergan allegedly promised the FBI informant 1 share of stock for every 3 to 5 shares of purchases his group generated in the market place. The SEC further alleged that Mr. Lonergan agreed to arrange for Green Planet to issue timed press releases and provide advance copies to the witness of “front run news” before Green Planet actually issued the releases to the public. Mr. Lonergan then removed the restrictive legend on two stock certificates totaling 1 million restricted shares of Green Planet to allow the shares to be sold in the market place as payment for the informant’s role in the scheme. As part of the sting, the FBI purchased a total of 125,600 shares of Green Planet stock.

Jun 8, 2015

Complaint Filed by the SEC for Fraudulent Life Settlement Investments

According to the U.S. Securities and Exchange Commission (SEC), from February 2012 through January 2014, Christopher A. Novinger and Brady J. Speers, and their company NFS Group, LLC d/b/a Novers Financial (collectively the “Defendants”) fraudulently offered and sold life settlement interests. In so doing, the SEC claims that Mr. Novinger and Mr. Speers made false and misleading representations to prospective investors about their purported business experience and financial expertise and that the Defendants misrepresented the investments. The SEC alleged that Mr. Novinger and Mr. Speers also constructed fake, meaningless titles for themselves to make investors believe that they were experienced and sophisticated financial advisers. The SEC alleged that Mr. Novinger and Mr. Speers used terms such as “licensed financial consultant,” “licensed consultant,” and “licensed financial strategist” toward that end. In truth, they had no training relating to securities and non-insurance related financial products, including life settlements. The SEC also alleged that the Defendants told investors that the life settlement investments were “safe,” “risk free,” “safe as CDs,” “the most secure, safe method for growing funds,” “federally insured,” and finally comprised of “polices insured with large, A-rated companies and backed by Federal Reserves.”

Jun 7, 2015

SEC Files Prime Bank Fraud Lawsuit

According to a recent suit filed by the U.S. Securities and Exchange Commission (SEC), Thomas G. Ellis and Yasuo Oda, through their company, North Star Finance LLC, Thomas H. Vetter, and Michael K. Martin and Sharon L. Salinas, through their companies, Capital Source Lending LLC and Capital Source Funding LLC (collectively the “Defendants”) allegedly engaged in a “prime bank” fraud scheme. These schemes generally involve the purported trading and or use of financial instruments affiliated with international banking institutions or other sources. In this case, the Defendants allegedly lured investors into complicated transactions involving bank guarantees and other financial instruments that would supposedly generate millions of dollars in profits for them. The SEC alleged that North Star and Capital Source collected approximately $5 million from defrauded investors and that the Defendants used the investors’ money for their own personal benefit. The SEC claims the investment programs were fictitious and the Defendants never obtained or “monetized” international bank investments to secure funding as guaranteed.

Jun 6, 2015

SEC Obtains Two Final Judgments Against Massachusetts Investment Advisor

On May 29, 2015, the Securities and Exchange Commission (SEC) announced that Judge George A. O’ Toole Jr. of the United States District Court for the District of Massachusetts entered Final Judgments against the former registered investment adviser Sage Advisory Group, LLC (Sage) and its principal Benjamin Lee grant, both of Boston MA, in two fraud cases. In the first case, the Commission alleged that Benjamin Lee Grant (Lee Grant) fraudulently had his customers transfer their assets to Sage, his new advisory firm. According to the SEC, Mr. Grant made false and misleading statements to his previous member firm’s customers. He also allegedly misled customers by telling them that any changes in their accounts were being done at the suggestion of First Wilshire. The SEC alleged that in order to get his customers to sign up as advisory clients with Sage, Mr. Grant would falsely suggest that they might suffer disruption in First Wilshire’s management of their assets unless they signed and returned the new advisory and custodial account documents as soon as possible. In August 2014, a Federal District Court jury found Sage and Lee Grant liable for fraud under the Investment Advisers Act of 1940 along with other charges.

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