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SEC Updates List of Firms Using Inaccurate Information to Solicit Investors

June 15, 2019 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: avoiding fraud, Federal government, federal securities laws, fraud, Impersonators, Investor Alert, investors, Investors Buy Stock, Money, PAUSE, SEC

Washington D.C., June 10, 2019 — The Securities and Exchange Commission today announced that it updated its list of unregistered entities that use Inaccurate information to solicit primarily non-U.S. investors, adding 11 soliciting entities, four impersonators of genuine firms, and nine bogus regulators.

The SEC’s list of soliciting entities that have been the subject of investor complaints, known as the Public Alert: Unregistered Soliciting Entities (PAUSE) list, enables investors to better inform themselves and avoid being a victim of fraud. The latest additions are firms that SEC staff found were providing inaccurate information about their affiliation, location, or registration. Under U.S. securities laws, firms that solicit investors generally are required to register with the SEC and meet minimum financial standards and disclosure, reporting, and recordkeeping requirements.

Jennifer Diamantis, Chief of the SEC’s Office of Market Intelligence
“By making this information readily available through the PAUSE list, investors are better able to evaluate solicitations to buy and sell securities and avoid being a victim of fraud,” said Jennifer Diamantis, Chief of the SEC’s Office of Market Intelligence.

In addition to alerting investors to firms falsely claiming to be registered, the PAUSE list flags those impersonating registered securities firms and bogus “regulators” who falsely claim to be government agencies or affiliates. Inclusion on the PAUSE list does not mean the SEC has found violations of U.S. federal securities laws or made a judgment about the merits of any securities being offered.

The PAUSE list is periodically updated by the SEC’s Office of Market Intelligence in coordination with the Office of Investor Education and Advocacy and the Office of International Affairs.

How to protect yourself:

Be aware that fraudsters may impersonate government agencies to lure investors into scams, including advance fee fraud schemes.

Impersonators may falsely claim to be affiliated with the SEC (or another federal government agency) in an attempt to steal your personal information or your money. Federal government agencies, including the SEC, do not endorse or sponsor any particular securities, issuers, products, services, professional credentials, firms, or individuals.

Investor Alert: SEC Impersonators Pretend to Help Investors Buy Stock.

Visit Investor.gov for tips on investing wisely and avoiding fraud.

Singapore FinTech Festival and SWITCH Come Together – to Bring the Global Innovation Community to Singapore

June 15, 2019 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: Fintech, Global Innovation, investors, MAS, Singapore, singapore fintech festival, sustainability, SWITCH, technological innovation

Singapore, 12 June 2019… The Monetary Authority of Singapore (MAS), Enterprise Singapore and the National Research Foundation (NRF) today announced that the Singapore FinTech Festival (SFF) and the Singapore Week of Innovation and TeCHnology (SWITCH) would come together as SFF x SWITCH to synergise across the themes of FinTech and Deep Tech. SFF x SWITCH will run from 11 to 15 November 2019.

SFF x SWITCH will bring insights from global thought leaders, showcase innovative solutions, and engage entrepreneurs, investors and innovators from around the world. It will also provide rich networking opportunities for participants to collaborate on technological innovation across five key sectors – FinTech, Urban Solutions and Sustainability, Health and Biomedical Sciences, Advanced Manufacturing and Engineering, and Digital Services. Participants can look forward to the following key events.

Singapore FinTech Festival and SWITCH come together – to bring the global innovation community to Singapore

Participants can gain access to the three-day Conference & Exhibition of both events, which will take place from 11 to 13 November 2019 at the Singapore Expo. The Conference will feature for the first time the theme of sustainability, and cover Financial Services; Industry 4.0 – Artificial Intelligence, Blockchain, Cloud and Cybersecurity; Financial Inclusion; Green Finance; and Technology Beyond Finance. The Exhibition will feature country pavilions, industry exhibitors, financial industry showcase booths, and a startup zone.

There will be three Competitions for the global innovation community:

Global FinTech Hackcelerator, which matches innovative startup solutions to address industry’s problem statements;
SLINGSHOT 2019, an international startup pitching competition; and
FinTech Awards, which recognises innovative financial technology solutions.
Finalists from the competitions will showcase their solutions at SFF x SWITCH.

Investors and companies can have access to two Deal-Making Platforms:

Deal Fridays, curated deal-making sessions for facilitating investment into startups, that will run every Friday from 21 June to 25 October 2019; and
TechInnovation, a technology-to-industry matching marketplace which facilitates business matching within the industry, seeds licensing opportunities and fosters open innovation collaborations.

On 14 and 15 November 2019, workshops and events designed for the tech industry and an expanded Innovation Lab Crawl will take place at various locations across the island.

Mr Sopnendu Mohanty, Chief FinTech Officer, MAS, said, “The Singapore FinTech Festival is the world’s largest FinTech gathering and a marquee event for the global FinTech community. Our partnership with SWITCH this year allows us to engage technology ecosystems beyond FinTech, and to present a comprehensive showcase of innovations that benefit all segments of society. We look forward to welcoming players from the FinTech and wider technology community from all over the world to Singapore, to connect, collaborate, and celebrate innovation.”
Mr Peter Ong, Chairman, Enterprise Singapore said, “SFF x SWITCH is the foremost platform to bring together tech communities and startups around the world to bridge the gap between technology and finance for deep tech and FinTech. Singapore hosts a vibrant community of innovation enablers, enterprises and startups to drive co-innovation of new solutions relevant to global needs and modern challenges. Our strong connectivity to the region will serve as a gateway for enterprises and market-driven solutions to reach Asia and beyond.”
Dr Cheong Wei Yang, Deputy Chief Executive Officer, NRF, said, “This collaboration between SWITCH and the Singapore FinTech Festival will consolidate our national efforts to create value from science and technology – starting from the capabilities built in our research base, through to innovation and commercialisation by our enterprises. We will focus on deep tech areas relevant to Singapore’s growth as a Global-Asia node of technology, innovation and enterprise. We are excited to see more researchers, entrepreneurs, investors and companies coming together from all around the world, to benefit society and economy through innovation in new business models and novel technologies.”

Singapore FinTech Festival is organised by MAS, in partnership with The Association of Banks in Singapore, and in collaboration with SingEx Holdings. SWITCH is organised by Enterprise Singapore, NRF, and Intellectual Property Intermediary (IPI). Last year, the two events together drew close to 57,000 delegates from almost 130 countries. For more information on SFF x SWITCH 2019, please see the attached factsheet or visit www.SFFxSWITCH.com.

About the Monetary Authority of Singapore

The Monetary Authority of Singapore (MAS) is Singapore’s central bank and integrated financial regulator. As central bank, MAS promotes sustained, non-inflationary economic growth through the conduct of monetary policy and close macroeconomic surveillance and analysis. It manages Singapore’s exchange rate, official foreign reserves, and liquidity in the banking sector. As an integrated financial supervisor, MAS fosters a sound financial services sector through its prudential oversight of all financial institutions in Singapore – banks, insurers, capital market intermediaries, financial advisors, and stock exchanges. It is also responsible for well-functioning financial markets, sound conduct, and investor education. MAS also works with the financial industry to promote Singapore as a dynamic international financial centre. It facilitates the development of infrastructure, adoption of technology, and upgrading of skills in the financial industry.

FCA Confirms New Rules for P2P Platforms

June 10, 2019 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: FCA, finance products, financial advice, home finance, Investments, investors, MCOB, P2P market

Following consultation, the Financial Conduct Authority (FCA) is introducing rules designed to prevent harm to investors, without stifling innovation in the (peer-to-peer) P2P Platforms. When the FCA set its first rules for P2P, it committed to keep these under review as the sector evolved. These new rules are designed to help better protect investors and allow firms and fundraisers to operate in a long-term, sustainable manner.

Christopher Woolard, Executive Director of Strategy and Competition at the FCA said:
‘These changes are about enhancing protection for investors while allowing them to take up innovative investment opportunities. For P2P to continue to evolve sustainably, it is vital that investors receive the right level of protection.’

The FCA has refined its proposals to ensure the new rules protect consumers and support the P2P market. In particular, additional guidance has been provided to make it clear that platforms will not be prevented from including information about specific investments in their marketing materials.

Christopher Woolard, FCA Executive Director of Strategy and Competition

As originally proposed, the FCA is placing a limit on investments in P2P agreements for retail customers new to the sector of 10 per cent of investable assets. This is an important means of ensuring that they do not over-expose themselves to risk. The investment restriction will not apply to new retail customers who have received regulated financial advice.

In addition to these restrictions, the new rules cover:

More explicit requirements to clarify what governance arrangements, systems and controls platforms need to have in place to support the outcomes they advertise, with a particular focus on credit risk assessment, risk management and fair valuation practices.
Strengthening rules on plans for the wind-down of P2P platforms if they fail.
Introducing a requirement that platforms assess investors’ knowledge and experience of P2P investments where no advice has been given to them.
Setting out the minimum information that P2P platforms need to provide to investors.
Applying the Mortgage and Home Finance Conduct of Business (MCOB) sourcebook and other Handbook requirements to P2P platforms that offer home finance products, where at least one of the investors is not an authorised home finance provider.

P2P platforms need to implement these changes by 9 December 2019, except for the application of MCOB, which applies with immediate effect.

The FCA will continue to closely monitor the P2P market as it develops further.

Notes to editors

PS19/14: Loan-based (‘peer-to-peer’) and investment-based crowdfunding platforms: Feedback to CP18/20 and final rules
CP18/20: full consultation paper
The interim feedback to the Call for Input to the post-implementation review of the FCA’s crowdfunding rules
On 1 April 2013, the FCA became responsible for the conduct supervision of all regulated financial firms and the prudential supervision of those not supervised by the PRA. On 1 April 2014, the FCA took over responsibility for consumer credit regulation and loan-based crowdfunding became a regulated activity.
The FCA has an overarching strategic objective of ensuring the relevant markets function well. To support this, it has three operational objectives: to secure an appropriate degree of protection for consumers; to protect and enhance the integrity of the UK financial system; and to promote effective competition in the interests of consumers.
Find out more information about the FCA.

B.C. Residents and Nevada-based Company Breached Cease Trade Order and Made Misrepresentations

June 10, 2019 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: BCSC, business, Capital Markets, Financial Officer, government agency, industry, industry news, investment, investment opportunities, investors, SEC, securities industry, trade

Vancouver – A British Columbia Securities Commission (BCSC) panel has found that three B.C. residents and a Nevada-based green energy company breached a cease trade order of the BCSC and failed to tell investors about the existence of the order.

ecoTECH (now known as Dong Fang Hui Le Inc.) and three of its top executives, Chief Executive Officer Colin V. Hall, Chief Financial Officer Rolf Eugster and Director Anne Sanders, sold $55,100 worth of securities in 2013 to 16 investors despite a cease trade order issued by the BCSC in 2012. In addition, they failed to tell investors about the order.

Hall, Sanders and ecoTECH – a reporting issuer in B.C. – also distributed $3.3 million worth of securities to 15 people as compensation for services rendered in breach of the order.

By neglecting to inform investors that the shares issued for cash were being issued in violation of a cease trade order, Hall, Eugster, Sanders and ecoTECH committed misrepresentation. The panel stated that “one of the acceptable risks associated with an investment (no matter how risky) cannot be the risk of misrepresentation.”

The panel will impose sanctions after considering submissions from BCSC staff and the respondents.

About the British Columbia Securities Commission (www.bcsc.bc.ca)

The British Columbia Securities Commission is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the Securities Act. Our mission is to protect and promote the public interest by fostering:

A securities market that is fair and warrants public confidence
A dynamic and competitive securities industry that provides investment opportunities and access to capital

SEC Charges Kik Interactive Inc. With Conducting $100 Million Unregistered ICO

June 10, 2019 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: business, industry, industry news, investment, investors, management, news, SEC, securities laws, transaction service

Washington D.C., June 4, 2019 — The Securities and Exchange Commission today sued Kik Interactive Inc. for conducting an illegal $100 million securities offering of digital tokens. The SEC charges that Kik sold the tokens to U.S. investors without registering their offer and sale as required by the U.S. securities laws.

As alleged in the SEC’s complaint, Kik had lost money for years on its sole product, an online messaging application, and the company’s management predicted internally that it would run out of money in 2017. In early 2017, the company sought to pivot to a new type of business, which it financed through the sale of one trillion digital tokens. Kik sold its “Kin” tokens to the public, and at a discounted price to wealthy purchasers, raising more than $55 million from U.S. investors. The complaint alleges that Kin tokens traded recently at about half of the value that public investors paid in the offering.

The complaint further alleges that Kik marketed the Kin tokens as an investment opportunity. Kik allegedly told investors that rising demand would drive up the value of Kin, and that Kik would undertake crucial work to spur that demand, including by incorporating the tokens into its messaging app, creating a new Kin transaction service, and building a system to reward other companies that adopt Kin. At the time Kik offered and sold the tokens, the SEC alleges these services and systems did not exist and there was nothing to purchase using Kin. Kik also allegedly claimed that it would keep three trillion Kin tokens, Kin tokens would immediately trade on secondary markets, and Kik would profit alongside investors from the increased demand that it would foster. The Kin offering involved securities transactions, and Kik was required to comply with the registration requirements of the U.S. securities laws.

Steven Peikin, Co-Director of the SEC’s Division of Enforcement
“By selling $100 million in securities without registering the offers or sales, we allege that Kik deprived investors of information to which they were legally entitled, and prevented investors from making informed investment decisions,” said Steven Peikin, Co-Director of the SEC’s Division of Enforcement. “Companies do not face a binary choice between innovation and compliance with the federal securities laws.”
“Kik told investors they could expect profits from its effort to create a digital ecosystem,” said Robert A. Cohen, Chief of the Enforcement Division’s Cyber Unit. “Future profits based on the efforts of others is a hallmark of a securities offering that must comply with the federal securities laws.”

The SEC’s complaint charges Kik Interactive Inc. with violating the registration requirements of Section 5 of the Securities Act of 1933. The SEC seeks a permanent injunction, disgorgement plus interest, and a penalty. The Commission has previously charged issuers in settled cases alleging violations of these requirements, including Munchee Inc., Gladius Network LLC, Paragon Coin Inc. and CarrierEQ Inc. d/b/a Airfox.

The SEC’s investigation was conducted by Brent Mitchell, Jeff Leasure, and James Murtha of the SEC’s Complex Financial Instruments Unit and supervised by Mr. Cohen and Reid Muoio, Deputy Chief of the unit. The litigation will be handled by David Mendel and Stephan Schlegelmilch. The SEC appreciates the assistance of the Ontario Securities Commission.

SEC Awards $3 Million to Joint Whistleblowers

June 7, 2019 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: Dodd-Frank Act, investors, law violation, monetary sanctions, SEC, Securities Law, violations, Whistleblowers

Washington D.C., June 3, 2019 — The Securities and Exchange Commission today announced an award of $3 million to whistleblowers whose tip launched the SEC’s investigation and subsequent successful enforcement action involving an alleged securities law violation that impacted retail investors. The whistleblowers submitted their tip jointly to the Commission and will share the award. In this case, the whistleblowers also undertook significant and timely steps to have their employer remediate the harm caused by the alleged violations.

“These whistleblowers showed great tenacity by repeatedly reporting internally and advocating for the firm to disclose the violative conduct and remedy the attendant investor harm,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower. “Their critical information and assistance helped the SEC bring an important enforcement action aimed at protecting retail investors.”

The SEC has now awarded more than $384 million to 64 individuals since issuing its first award in 2012. All payments are made out of an investor protection fund established by Congress that is financed entirely through monetary sanctions paid to the SEC by securities law violators. No money has been taken or withheld from harmed investors to pay whistleblower awards. Whistleblowers may be eligible for an award when they voluntarily provide the SEC with original, timely, and credible information that leads to a successful enforcement action. Whistleblower awards can range from 10 percent to 30 percent of the money collected when the monetary sanctions exceed $1 million.

As set forth in the Dodd-Frank Act, the SEC protects the confidentiality of whistleblowers and does not disclose information that could reveal a whistleblower’s identity.

For more information about the whistleblower program and how to report a tip, visit www.sec.gov/whistleblower.

CFTC’s Market Risk Advisory Committee to Meet June 12 to Discuss Climate-related Financial Risk

June 5, 2019 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: Advisory Committee, American businesses, CFTC, ESMA, Farmers, financial institutions, Financial Risk, investors, Market Risk

Washington, DC – The Commodity Futures Trading Commission’s (CFTC or Commission) Market Risk Advisory Committee (MRAC) will hold a public meeting on June 12 at CFTC’s Washington, DC headquarters. CFTC Commissioner Rostin Behnam is the sponsor of MRAC.

At this meeting, the MRAC will focus on climate-related financial risks. In a series of panels, MRAC members and guests will discuss (1) the impact of climate change on the future stability of the global financial system; (2) current domestic and international initiatives addressing financial risks related to climate change; (3) financial industry approaches to the management and mitigation of such risks, including key risk management, governance, and disclosure considerations; and (4) the challenges ahead for regulators and market participants in the derivatives industry.

“The impacts of climate change affect every aspect of the American economy – from agriculture to manufacturing. Assessing climate-related market risk that could impact the stability of our nation’s financial system must be a priority. It’s time for the United States to take a more active leadership role and join our international counterparts in addressing this issue,” said Rostin Behnam, CFTC Commissioner and MRAC sponsor. “This meeting will serve as an important first step towards a comprehensive review of what we can do now to prepare for and mitigate the market risks of climate change to American businesses, farmers, investors, financial institutions, and the broader economy. I look forward to hearing from our distinguished group of experts as well as our MRAC members, and thank them in advance for their efforts on this critically important issue.”

Additionally, the MRAC will receive a status report from the Interest Rate Benchmark Reform Subcommittee, and have a presentation on European Market Infrastructure Regulation (EMIR) 2.2, central counterparty stress testing, and Brexit from Steven Maijoor, Chair, European Securities and Markets Authority (ESMA).

A formal agenda for this meeting is forthcoming.

The meeting is open to the public with seating on a first-come, first-served basis. Members of the public may also listen to the meeting via conference call using a domestic toll-free telephone or international toll or toll-free number to connect to a live, listen-only audio feed. Persons requiring special accommodations to attend the meeting because of a disability should notify Alicia Lewis at (202) 418–5862.

What:	Market Risk Advisory Committee Meeting
Location:	CFTC Headquarters Lobby-level Conference Room 1155 21^st Street, NW, Washington, DC 20581
Date:	Wednesday, June 12, 2019
Time:	9:30 a.m. to 3:00 p.m.

Viewing/Listening Instructions: Watch the live webcast at www.cftc.gov. To listen to the live audio feed, call the toll or toll-free numbers under Related Links. Call-in participants should be prepared to provide their first name, last name and affiliation.

Conference call information:

Domestic Toll Free:	1-877-951-7311
International Toll Numbers:	International Numbers
Conference Passcode:	2665194

Members of the public who wish to submit written statements in connection with the meeting should submit them by June 19, 2019. Written statements should be identified by “Market Risk Advisory Committee,” and submitted by mail or hand delivery to: Christopher Kirkpatrick, Secretary of the Commission, Commodity Futures Trading Commission, Three Lafayette Center, 1155 21st Street NW, Washington, DC 20581, or via the CFTC’s website, https://comments.cftc.gov. Follow the instructions for submitting comments through the Comments Online process on the website. Any statements submitted in connection with the committee meeting will be made available to the public, including publication on the CFTC website, www.cftc.gov.

SEC Sues Alleged Perpetrator of Fraudulent Pyramid Scheme Promising Investors Cryptocurrency Riches

June 5, 2019 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: Cryptocurrency Riches, Fraudulent Pyramid Scheme, funds, instructional packages, investors, SEC

Washington D.C., May 23, 2019 — The Securities and Exchange Commission filed a civil injunctive action against Daniel Pacheco, a resident of San Clemente, California, and the alleged perpetrator of a multimillion-dollar pyramid scheme.

The SEC’s complaint, filed Wednesday, alleges that from January 2017 through March 2018, Pacheco conducted a fraudulent, unregistered offering of securities through two California-based companies he controls, IPro Solutions LLC and IPro Network LLC (collectively, “IPro”). IPro raised more than $26 million from investors by selling instructional packages that provided lessons on e-commerce. Investors also received “points” that could be converted into a digital asset known as PRO Currency. Investors who contributed additional funds could earn a mixture of cash commissions and additional convertible points by recruiting new investors into the IPro network. As alleged in the complaint, however, IPro was a fraudulent pyramid scheme. IPro’s inevitable collapse was hastened by Pacheco’s fraudulent use of investor funds, which included, among other things, the all-cash purchase of a $2.5 million home and a Rolls Royce. Pacheco’s misappropriation accelerated the rate at which IPro became unable to pay the commissions and bonuses due its investors.

The complaint further alleged that Pacheco’s offer and sale of IPro instructional packages constituted an unregistered sale of securities because the IPro instructional packages involve (i) an investment in a pyramid scheme; and/or (ii) an investment in the PRO Currency digital assets, and therefore must be registered with the SEC unless an exemption applies. No registration exemption applies to Pacheco’s offer and sale of IPro instructional packages.

“We allege that Pacheco hid an old fraud under the guise of cutting-edge technology,”said Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office. “He enticed investors by offering them the opportunity to speculate in cryptocurrency, when in fact he was simply operating a pyramid scheme.”

The SEC’s complaint, filed in U.S. District Court for the Central District of California, charges Pacheco with violating Sections 5(a), 5(c), 17(a)(1) and 17(a)(3) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rules 10b-5(a) and (c) thereunder. The complaint also names seven relief defendants for the purpose of recovering investor proceeds in their possession that must be returned. The SEC does not allege wrongdoing with respect to these relief defendants.

The SEC’s investigation was conducted by Peter Del Greco, Eric Shu and Maria Rodriguez, and supervised by Marc Blau, of the Los Angeles office, with the assistance of trial attorney Gary Leung, who will lead the litigation.

Sagar Teotia Named the SEC’s Acting Chief Accountant

June 2, 2019 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: Acting Chief Accountant, Financial Accounting, financial reporting, investors, Sagar Teotia, SEC

Washington D.C., May 30, 2019 — The Securities and Exchange Commission today named Sagar Teotia as the SEC’s Acting Chief Accountant following the departure of Wesley R. Bricker in June.

Since 2017, Mr. Teotia has served as Deputy Chief Accountant, leading the accounting group. As Acting Chief Accountant, Mr. Teotia will serve as the principal advisor to the Commission on accounting and auditing matters and will lead the Commission’s Office of the Chief Accountant. He also will be responsible for assisting the Commission with discharging its oversight of the Financial Accounting Standards Board and the Public Company Accounting Oversight Board.

“I am grateful that Sagar has agreed to take on this important role, and I have no doubt that he will pick up right where Wes left off leading the Commission’s talented group of accounting and audit professionals,” said Chairman Jay Clayton. “Sagar’s extensive experience and expertise in accounting and audit matters is well recognized by his colleagues both inside and outside the Commission, and I know that he comes to work every day dedicated to ensuring that our investors have the benefit of the highest quality reporting and audit standards.”

Mr. Teotia joined the SEC in 2017 from Deloitte LLP, where he was a Partner in Deloitte’s National Office and was responsible for providing consultation regarding accounting matters. Earlier, he served as a professional accounting fellow in the Office of the Chief Accountant. Mr. Teotia received a B.S. in accountancy from the University of Illinois at Urbana-Champaign.

SEC Seeks Emergency Relief to Halt Prominent New York Developer’s Ponzi-Like Real Estate Investment Scheme

June 1, 2019 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: Emergency Relief, federal securities, Halt Prominent, investor funds, investors, Real Estate Investment Scheme, SEC

Washington D.C., May 23, 2019 — The Securities and Exchange Commission filed an emergency action charging Robert C. Morgan, a New York residential and commercial real estate developer, and two of his entities, Morgan Mezzanine Fund Manager LLC and Morgan Acquisitions, LLC, with fraud for siphoning and misusing investor funds. In its action, filed Wednesday, the SEC seeks an asset freeze and other emergency relief.

The SEC’s complaint alleges Morgan financed his development projects in different ways, including through sales of securities directly to more than 200 retail investors, many of whom invested through their retirement accounts. Morgan represented to investors that their money would be used to improve multifamily properties, and based on these representations, raised more than $80 million. Instead, as alleged in the complaint, Morgan and his entities diverted investor funds to facilitate Ponzi scheme-like payments to earlier investors. In addition, the complaint alleges Morgan’s improper use of more than $11 million in investor funds to repay an inflated, fraudulently-obtained loan for an unrelated apartment complex.

“In seeking this emergency relief, the SEC is acting to protect current and potential future victims of this elaborate scheme by halting Morgan’s fraud, which we allege involves the improper use of more than $25 million dollars in investor funds,” said Daniel Michael, Chief of the SEC’s Division of Enforcement’s Complex Financial Instruments Unit.

The SEC’s complaint, filed in federal district court in Buffalo, NY, charges Morgan and his two entities with violating the antifraud provisions of the federal securities laws. The SEC is requesting an order freezing Morgan’s assets and appointing a temporary receiver over the relevant funds. The SEC’s complaint further seeks permanent injunctions, disgorgement of ill-gotten gains with prejudgment interest, civil penalties, and a permanent receiver over the entities.

The SEC’s continuing investigation is being conducted by Lee A. Greenwood, Joshua Brodsky, and Daniel Nigro of the Complex Financial Instruments Unit and Kerri L. Palen of the New York Regional Office. The investigation is being supervised by Osman Nawaz. The litigation is being handled by Mr. Greenwood, Neal Jacobson, and Alexander Vasilescu, with assistance from Alistaire Bambach. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Western District of New York and the Federal Housing Finance Agency Office of Inspector General.