by T. GormanPosted on Posted in SECActions

The Commission filed three new actions last week.  Those cases involved insider trading and two offering fraud actions. The agency also dismissed another group of cases then pending in the Southern District of New York and the Second Circuit.  Again, no explanation was offered for the dismissals.

Be careful, be safe.

SEC Enforcement – Filed and Settled Actions

Statistics:  Last week the Commission filed 3 new civil enforcement actions.

Dismissed:  SEC v. Ripple Labs, Inc.,  Case No. 1:20-cv-10832 (S.D.N.Y); Bradley Garlinghouse and Christian A. Larsen, Case No. 1:20-cv-10832 S.D.N.Y); Appeal No. 24-26-481; and Appeal Nos. 24-2648(L) and 24-2705 (2d Cir.).  Those actions were dismissed with prejudice.  As with other cases recently dismissed, no explanation was offered by the Commission or any other party.

Insider trading:  SEC v. Tavlin,  Civil Action No. 22-cv-01723 (D. Minn. Filed July 6, 2025). Named as defendants in the action are: Doron A. Tavlin, is a former. executive; Afshin Farahan, a friend of Mr. Tavlin; and David Gantman, a friend of Mr. Gantman. Defendant Tavlin is a former executive of Mazor Robotics Ltd. While working at the firm he was involved in discussions regarding the potential acquisition of Mazor by Medtronic PLC.  In August 2018 Mr. Tavlin told his friend, Defendant Farahan, about  discussions he participated in at his employer regarding a corporate transaction.  Mr. Farahan then purchased shares.  He in turn told his friend, Defendant Gantman, about the potential deal.  Mr. Gantman made multiple purchases of stock. Following the deal announcement, Mr. Gantman and Mr. Farahan had combined trading profits of about $500,00.  After the purchase transactions, and during the Commission’s pre-complaint filing period, Defendants took steps to conceal their actions.  Nevertheless, each was charged by the Commission with insider trading.  See also SEC v. Tavlin,  Civil Action No. 0:22-cv-01723 (D. Minn. Filed July 6, 2022).  Mr. Travlin, who did not trade, was  still changed in this action.  Since he did not trade he had no insider trading profits.  His friend did, however, give him a $25,000 kickback from the trading profits.  This action charged him with violations of Exchange Act Section 10(b) and Rule 10b-5. To resolve this matter Mr. Travlin consented to the entry of a permanent injunction based on the provisions cited in the complaint.  He also paid disgorgement of $25,000 – the amount he was paid—plus prejudgment interest of $7,875.  The case was uncovered and developed by the Commission’s enforcement division using data   analytic tools to detect the suspicious  trading patterns.  See  Lit. Rel. No. 26367 (August 6, 2025).

Offering fraud:  SEC v. Nantomah,  Civil Action No. 2:25-cv-01130 (E.D. Wis. Filed August 1, 2025). Named as defendants in the action are:  Dr. Joseph J. Nantomah, a resident of Milwaukee, Wisconsin;  and three entities he controlled — Investors Capital LLC, Global Investors Capital LLC,  and High Income Performance Partners. Beginning in May 2020, and continuing for the next four years, Defendant Nantomah solicited investors to purchase shares in his entities.  Over the period about 30 investors paid $1.9 million to acquire shares. Investors were told that their money was being invested by an “Incredibly Successful Entrepreneur” who had amassed a multi-million real estate portfolio after arriving in this country from Africa with just $4,700. Defendant’s story was repeated on various social media.  Defendant also added claims such as he emigrated to support himself and family. In addition, Defendant told investors that he did not need to work – he had obtained profits quickly. The representations were made either orally or in writing. In fact, most of the investor capital was held by Dr. Nantomah. His claims were largely false. Nevertheless, investors entrusted him with their money.  The complaint alleges violations of Securities Act Sections 5(a), 5(c) and 17(a) and Exchange Act Section 10(b) and Rule 10b-5 along with Section 20(a). See  Lit. Rel. No. 26368 (Aug. 6, 2025). 

Offering fraud:  SEC v. Feingold, Civil Action No. 1:25-cv-20436 (S.D. Fla. Filed under seal January 30, 2025).  Named as defendants are: David J. Feingold, CEO of BSI and control person over that entity and BSG Management; Joseph B. Baldassarra, managing member of BSG Management; Steven S. Baldassarra, also a managing member of BSG Management; Broad Street Global Management LLC; and Broad Street Inc., whose shares are owned equally by Baldassarra and Feingold and by three others. BSG Fund is divided into numerous Series. BSG Management is the investment adviser to the Fund. It offers Series in Real Estate Infrastructure among other things.  Each Series is supposed to present an investor with a unique opportunity. Defendants engaged in a multi-faceted fraud related to BSG Fund. First, Defendants fraudulently offered and paid inflated returns to investors tied to two Series. As a result, Defendants paid millions of dollars in returns to investors that were not supported by actual profits. Second, Defendants managed the Fund in a manner that is inconsistent with the representations made to investors and which increased risk. Investors were told that the Series would own investments made with investor funds and that each would be separate.  In fact, they were comingled. Third, a series of false statements were made to induce investors to put their money into the Fund.  For example, investors were promised that a series would generate tax-free returns.  In fact, it did not. Investors were also informed about the bookkeeping and record practices but those described were not used. Investors were also provided with false information about profitability. Defendants engaged in other deceptive conduct and, in addition, disregarded their fiduciary duties to the clients. Those included the duty of utmost good faith and the obligation to disclose all material facts. From the over $1 billion raised by Defendants, the Baldassarras have transferred about $880 million to BSG Management. From those funds Defendants Fiengold and the Baldassarras have transferred about $170 million to the Baldassarras and two entities under their control or that of Defendant Feingold. The complaint alleges violations of Securities Act Section 17(a), Exchange Act Section 10(b) and Rule 10b-5 and Section 20(a).  In addition, the four relief defendants have received substantial proceeds from the fraudulent conduct of Defendants. See  Lit. Rel. No. 26366 (August 4, 2025).

Other Regulatory Actions (Articles/papers cited available on website listed)

 Australia

 Released:   The Australian Securities and Futures Commission announced on July 28, 2025, that banks will be required to make refunds to those clients that were overcharged.

Hong Kong

 Remarks:   Dr. Kelvin Wong, Chairman, Securities & Futures Commission of Hong Kong, delivered the Keynote speech at the Hong Kong Chartered Governances Institutes 2025 Director Training Series on July 29, 2025. His remarks focused on the fact that the Commission had regained the top spot  as the leader of Hot Spots in the world.

 

 

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by T. GormanPosted on Posted in SECActions

Insider trading is a long-time key focus of the Commission’s Enforcement Program. Despite the fact that the Commission has repeatedly brought insider trading cases for both small amounts of ill-gotten gains and large amounts of trading profits  many still believe that it is most difficult to get caught.  Stated differently, many still believe that it is easy to get away with it and very profitable if you can. To be sure, it can be very profitable since it is essentially cheating the trading market and those participating in it.  At the same time, it is not nearly as difficult to get caught as many believe.  If you think so just take a look at the cases discussed below.  SEC v. Tavlin,  Civil Action No. 22-cv-01723 (D. Minn. Filed July 6, 2025).

Named as defendants in the action are: Doron A. Tavlin, is a former. executive; Afshin Farahan, a friend of Mr. Tavlin; and David Gantman, a friend of Mr. Gantman.

Defendant Tavlin is a former executive of Mazor Robotics Ltd. While working at the firm he was involved in discussions regarding the potential acquisition of Mazor by Medtronic PLC.  In August 2018 Mr. Tavlin told his friend, Defendant Farahan, about  discussions he participated in at his employer regarding a corporate transaction.  Mr. Farahan then purchased shares.  He in turn then told his friend, Defendant Gantman about the potential deal.  Mr. Gantman made multiple purchases of stock. Following the deal announcement, Mr. Gantman and Mr. Farahan had combined trading profits of about $500,00.

After the purchase transactions and during the Commission’s pre-complaint filing, Defendants took steps to conceal their actions.  Nevertheless, each was charged by the Commission with insider trading.  See also SEC v. Tavlin,  Civil Action No. 0:22-cv-01723 (D. Minn. Filed July 6, 2022).

Mr. Travlin, who did not trade was  still changed in this action.  Since he did not trade he had no insider trading profits.  His friend did, however, give him a $25,000 kickback from the trading profits.  This action charged him with violations of Exchange Act Section 10(b) and Rule 10b-5.

To resolve this matter Mr. Travlin consented to the entry of a permanent injunction based on the provisions cited in the complaint.  He also paid disgorgement of $25,000 – the amount he was paid—plus prejudgment interest of $7,875.  The case was uncovered and developed by the Commission’s enforcement division using data analytic tools to detect the suspicious  trading patterns.  See  Lit. Rel. No. 26367 (August 6, 2025).