SEC Archives - The Industry Spread

SEC Charges Former New York Investment Advisor and Daughter With Conducting a Ponzi Scheme

December 18, 2018 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: bonds, ECP, financial penalties, investment advisor, Investor Alert, Ponzi scheme, retail investors, SEC, SEC’s investigation

Washington D.C., Dec. 13, 2018 — The Securities and Exchange Commission today charged a former Rockland County, New York-based Investment Advisor and his daughter with conducting a multi-million dollar Ponzi scheme that defrauded local community members as well as members of their family and close friends.

The SEC alleges that Hector May, an investment adviser representative and the president and chief compliance officer of the now-defunct Executive Compensation Planners Inc. (ECP), and his daughter Vania Bell, who served as ECP’s controller and senior compliance administrator, misappropriated more than $7.9 million in a Ponzi scheme involving bonds.

According to the SEC’s complaint, with Bell’s help, May lied to investors by promising to invest their money in bonds when they actually used the money to pay for personal and business expenses, as well as extravagant items, such as jewelry, furs, vacations, and a limousine driver. To conceal the fraudulent scheme, they sent bogus account statements to clients referencing the bonds that had never been purchased.

In a parallel action, the U.S. Attorney’s Office for the Southern District of New York today announced criminal charges against May, and he has pleaded guilty to those charges.

“As alleged, this father-daughter team betrayed the very people who knew and trusted them – including family members, close friends, seniors, and local community members,” said Marc P. Berger, Director of the SEC’s New York Regional Office.

The SEC’s Office of Investor Education and Advocacy (OIEA) and the Retail Strategy Task Force issued an Investor Alert discussing the classic warning signs of a Ponzi scheme targeting retail investors, including seniors.

“The Enforcement Division protects retail investors by bringing impactful cases and partnering with OIEA to provide investors with tools to educate and empower themselves,” said Charu A. Chandrasekhar, Chief of the Division of Enforcement’s Retail Strategy Task Force.

The SEC’s complaint, filed in federal court in the Southern District of New York, charges May and Bell with violating the antifraud provisions of the securities laws. May has agreed to the entry of a partial judgment against him in which he consents to injunctive relief with monetary and other relief to be decided in the future. The SEC seeks the return of ill-gotten gains, with interest, as well as financial penalties.

The SEC’s investigation, which is continuing, is being conducted by Tracy E. Sivitz and Sandeep M. Satwalekar in the New York Regional Office, and Kimberly A. Yuhas and Charu A. Chandrasekhar of the Enforcement Division’s Retail Strategy Task Force. The case is being supervised by Lara Shalov Mehraban. The SEC appreciates the assistance of the U.S. Attorney’s Office for the Southern District of New York, the U.S. Postal Inspection Service, and the Federal Bureau of Investigation.

Jeffrey S. Mooney Named Associate Director in the Office of Clearance and Settlement

December 18, 2018 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: financial market, Jeffrey S. Mooney, Main Street investors, markets, Office of Clearance and Settlement, SEC, trading, Trading and Markets

Washington D.C., Dec. 14, 2018 — The Securities and Exchange Commission today announced that Jeffrey S. Mooney has been named Associate Director of the Office of Clearance and Settlement in the agency’s Division of Trading and Markets.

Mr. Mooney joined the SEC staff in 1996 and has served in a variety of roles, most recently as Assistant Director for the Office of Clearance and Settlement. He has been instrumental in regulatory and policy initiatives for clearing agencies and security-based swap data repositories, and has represented the agency in international working groups focused on standards for financial market infrastructure. Mr. Mooney served as a Senior Special Counsel in the division from 2000 to 2009, and participated in an interagency effort to develop provisions of Title VII of the Dodd-Frank Act. He also represented the agency in domestic and international working groups designed to improve the clearance and settlement process. In 1998, he served as counsel to SEC Chairman Arthur Levitt on matters related to market regulation, enforcement and compliance, and from 1996 to 2000 he was a Special Counsel in the division with responsibility for reviewing proposed rule changes submitted by registered clearing agencies. Before joining the SEC, Mr. Mooney served in the Office of General Counsel at the National Credit Union Administration and in the Office of Thrift Supervision at the U.S. Department of the Treasury.

The Office of Clearance and Settlement is responsible for developing and administering the Commission’s regulatory program for the national system of clearance and settlement of securities transactions. The office oversees systemically important financial market utilities and security-based swap clearing activity. The office also engages in oversight, rulemaking and other supervisory and policy matters for clearing agencies, transfer agents and security-based swap data repositories.

“I am thrilled that Jeff, a veteran of our agency, has been selected to lead the dedicated staff in the Office of Clearance and Settlement,” said Chairman Jay Clayton. “Our markets and investors will be well served by Jeff’s more than two decades of public service – including 22 years at the SEC – and his deep experience on a broad range of clearance and settlement matters.”
Brett Redfearn, Director of Trading & Markets
“Jeff’s extensive experience and knowledge makes him extremely well suited for his new position,” said Brett Redfearn, Director of the Division of Trading and Markets. “I am confident that he will be an important leader in our ongoing efforts to oversee our nation’s system of clearance and settlement and to serve the long-term interests of Main Street investors.”
“I am excited and honored to be provided with this opportunity and responsibility. Over the course of my career, I have worked alongside extremely talented individuals and fully appreciate the important work that is being done by the staff in the Office of Clearance and Settlement, the Division of Trading and Markets, and across the Commission,” said Mr. Mooney.

Mr. Mooney holds a bachelor’s degree in economics from Fisk University in Nashville, Tennessee, and a J.D. from the Georgetown University Law Center.

LabCFTC’s Purpose: Get Out of the Ivory Tower

December 17, 2018 by Michael Volpe Leave a Comment Filed Under: Feature Articles Tagged: artificial intelligence, Blockchain, CFTC, Daniel Gorfine, Distributed ledger technology, FINRA, Fintech, Initial Coin Offering, SEC, virtual currency

Though the head of the Commodities Futures Trading Commission’s (CFTC) Fintech office is working with cutting-edge technologies, he said one reason for the creation of the office was to fix an age-old problem.

Daniel Gorfine is CFTC’s Chief Innovation Officer and he was the latest guest on Andrew Busch’s podcast “CFTC Talks”; Busch is CFTC’s Chief of Market Intelligence.

It is Gorfine’s job to know what things like Blockchain, distributed ledger technology, artificial intelligence, the internet of things, and virtual reality, and how those technologies affect derivative markets, which CFTC regulates.

Gorfine said one reason for the creation of LabCFTC, the CFTC’s fintech initiative was to get the CFTC out of its proverbial ivory tower- regulators and go out into the country to meet with innovators.

Regulators being out of touch is one common complaint not only in the financial field but in all fields.

“There was an idea that we needed to be getting out of Washington- going around the country and meeting with innovators around the country to hear their thoughts, questions, learn about what they’re working on.” Gorfine said.

One thing Gorfine said was that innovators wanted an audience with the regulators.

“I think the answer has been a resounding yes. We’ve had, I believe, over two hundred fifty meetings with innovators over the last year.

LabCFTC Director Daniel Gorfine CTFC

Gorfine on 2018

Busch asked Gorfine for three things he’s observed from meeting with these innovators in the 2018 CFTC Fintech Conference and other times.

The first related to the previous point he made, which was the importance of engagement.

Gorfine also warned that a risk is the broad lack of technological literacy, especially among those in power.

He asked rhetorically, “Do senior leaders, whether it’s in government, business, do senior leaders understand the core technologies that are powering and driving new business models?” Gorfine said, “I worry about tech failure causing a problem and us across the board, not having the right leadership of that technology to help mitigate that.”

On the flipside, Gorfine noted that all US financial regulators have developed an office or initiative “around technology and innovation”.

LabCFTC was one such initiative, but the Securities and Exchange Commission (SEC), in October 2018, also launched the Strategic Hub for Innovation and Financial Technology.

FINRA, the Financial Industry Regulatory Authority, launched the Innovative Outreach Initiative in Summer 2017.

Gorfine on Crypto

“This time last year, it was all Bitcoin all the time,” Bush said.

Bitcoin was valued at $17,900 on December 15, 2017, and was beginning its bubble run which has still not subsided, it’s currently valued at approximately $3,150.

“If we reflect back on what we have seen, we certainly went through a period at the end of last year and the beginning of this year that looked like a bit of a hype cycle.”

While he said there was real innovation “underpinning the development of crypto-assets,” but there will come a time, “When they really need to demonstrate actual utility…Whether the application is payments- can you really scale a payment-based solution as many people believed that crypto could do in the early days. Can you actually use it for certain utility purposes?”

Gorfine believed that the technology would make an impact beyond crypto-currencies, including into areas of trading.

Gorfine on 2019

Engagement will continue being an emphasis in 2019, Gorfine said.

Topics to look out for in 2019: stable-coins, anonymity coins, and machine learning.

LabCFTC will hope to create an innovation competition in 2019 to help stimulate activity in that area.

“More primers,” Gorfine said, “I think these primers are a great way to engage in an ongoing dialogue with these innovators and the broader market.” The last primer done by LabCFTC was on smart contracts.

Executives Settle ICO Scam Charges

December 16, 2018 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: Bank, cryptoasset, digital securities, ICO, ICO Scam, retail investors, SEC

Washington D.C., Dec. 12, 2018 — Two former executives behind an allegedly fraudulent initial coin offering (ICO) that was stopped by the Securities and Exchange Commission earlier this year have been ordered in federal court to pay nearly $2.7 million and prohibited from serving as officers or directors of public companies or participating in future offerings of digital securities.

AriseBank’s then-CEO Jared Rice Sr. and then-COO Stanley Ford were accused of offering and selling unregistered investments in their purported “AriseCoin” cryptocurrency by depicting AriseBank as a first-of-its-kind decentralized bank offering a variety of services to retail investors.

Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office.

“Rice and Ford lied to AriseBank’s investors by pitching the company as a first-of-its kind decentralized bank offering its own cryptocurrency for customer products and services,” said Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office. “The officer-and-director bar and digital securities offering bar will prevent Rice and Ford from engaging in another cryptoasset-based fraud.”

To settle the SEC’s charges, Rice and Ford agreed to be held jointly and severally liable for $2,259,543 in disgorgement plus $68,423 in prejudgment interest, and each must pay a $184,767 penalty. They also agreed to lifetime bars from serving as officers and directors of public companies and participating in digital securities offerings, and permanent prohibitions against violating the antifraud and registration provisions of the federal securities laws. Chief Judge Barbara M.G. Lynn of the U.S. District Court for the Northern District of Texas ordered the sanctions on December 11. Rice and Ford agreed to the settlements without admitting or denying the allegations in the SEC’s complaint.

On Nov. 28, 2018, the U.S. Attorney’s Office for the Northern District of Texas announced parallel criminal charges against Rice.

The SEC’s investigation and litigation was conducted by David Hirsch and Chris Davis and supervised by B. David Fraser and Eric R. Werner of the Fort Worth Regional Office. Staff from the SEC’s Cyber Unit assisted with the investigation and litigation. The SEC appreciates the assistance of the Federal Bureau of Investigation, U.S. Attorney’s Office for the Northern District of Texas, Federal Deposit Insurance Corporation, and U.S. Patent and Trademark Office.

The SEC’s Office of Investor Education and Advocacy issued an Investor Alert in August 2017 warning investors about scams of companies claiming to be engaging in initial coin offerings.

SEC, MSRB, FINRA to Hold Compliance Outreach Program for Municipal Advisors

December 16, 2018 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: Compliance Outreach Program, FINRA, MSRB, Municipal Advisors, Municipal Securities, OCIE, Rebecca Olsen, SEC, securities exchange

Washington D.C., Dec. 13, 2018 — The Securities and Exchange Commission (SEC), Municipal Securities Rulemaking Board (MSRB), and Financial Industry Regulatory Authority (FINRA) today announced the opening of registration for the Compliance Outreach Program for Municipal Advisors.

There is no cost to attend the program, which provides an open forum for municipal advisory industry professionals to discuss regulatory and compliance issues with regulators. The event will be held at the Hyatt Regency in San Francisco on Feb. 7, from 8 a.m. to 4 p.m. PST. Additional information, including the agenda, is available on the SEC, MSRB, and FINRA websites.

The SEC’s Office of Compliance Inspections and Examinations (OCIE) and Office of Municipal Securities (OMS) are partnering with the MSRB and FINRA to sponsor the program. Topics of discussion include the duties and standards of conduct for solicitor and non-solicitor municipal advisors under MSRB Rule G-42 and the Securities Exchange Act of 1934, and municipal advisor compliance with new MSRB rules. The program will include a discussion of municipal advisor and underwriter roles in a public offering of municipal securities and in the investment of bond proceeds, and SEC and FINRA staff will discuss examination processes, common exam observations, and relevant enforcement actions.

Rebecca Olsen, Director of the SEC’s Office of Municipal Securities

“This program, now in its fourth year, highlights our continued commitment to promote compliance with municipal advisor regulations by providing the industry the opportunity to engage first-hand with all three regulators regarding regulatory obligations,” said Rebecca Olsen, Director of the SEC’s Office of Municipal Securities.

Pete Driscoll, Director of the SEC’s Office of Compliance, Inspections and Examinations added, “The Outreach Program for Municipal Advisors is one of the touchstones of OCIE’s efforts to be transparent and promote compliance by municipal advisors. I am happy to see that this forum provides municipal advisors an opportunity to stay abreast of developments in the regulatory regime, including a number of new rules, to better understand the examination process, and to hear some of the common compliance observations the SEC staff is identifying in its examinations.”

Mike Rufino, FINRA’s Head of Member Regulation-Sales Practice, said, “Any firm that wants to enhance its understanding of which activities fall within the definition of municipal advisory activity and how to apply the registration exemptions and exclusions will benefit from participating in the outreach program.”

MSRB President and CEO Lynnette Kelly said, “We are pleased to join forces with the SEC and FINRA to host a program that will help municipal advisors and other financial professionals gain a clearer understanding of MSRB rules for municipal advisors. Supporting compliance with our rules is one of the MSRB’s top priorities.”

Registration is being administered by FINRA and is open to all municipal advisor and securities industry professionals. In-person attendance is limited to a first-come, first-served basis. For those who cannot attend in person, the program will be available live via audio webcast on the SEC’s website.

Register to attend the program here. Information about the program and links to program materials will be posted on the SEC, MSRB, and the FINRA websites.

Three Developers Settle Charges of Fraudulent EB-5 Offering

December 16, 2018 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: Fraudulent EB-5 Offering, investor funds, investors, payments, real estate, SEC

Washington D.C., Dec. 12, 2018 — The Securities and Exchange Commission today announced that three Houston-area developers have agreed to settle charges that they misused investor funds raised from 90 Chinese investors under the EB-5 Immigrant Investor Program on unrelated projects.

The three developers – America Modern Green Senior (Houston) LLC, America Modern Green Community (Houston) LLC, and America Modern Green Residential (Houston) LLC – have repaid the $49.5 million that they raised from the Chinese investors.

According to the SEC’s order, the developers told investors that their funds would be used exclusively for a large mixed-use real estate development EB-5 project. Instead, the SEC found that the developers improperly transferred $20.5 million of investor funds for various undisclosed and improper purposes, including funding purchases with respect to two unrelated real estate projects. In addition, the SEC found that the developers’ offering materials improperly described the titles and roles of two real estate experts.

Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office.

“These developers obtained almost $50 million from investors in connection with an EB-5 offering that was based on misleading statements and involved a misuse of the funds raised,” said Shamoil T. Shipchandler, Director of the SEC’s Fort Worth Regional Office. “Today’s resolution provides full relief to all of the affected investors.”

The order finds that the developers violated the antifraud provisions of Section 17(a)(2) and Section 17(a)(3) of the Securities Act of 1933. Without admitting or denying the SEC’s findings, the developers collectively agreed to pay disgorgement of $49.5 million plus $1,144,135 in interest, and an $800,000 penalty. The order deems the disgorgement satisfied by payments to the Chinese investors made by the developers before the settlement, and also provides that the interest will be distributed to the investors. The order also imposes a cease-and-desist order on the developers.

The SEC’s investigation was conducted by Sarah S. Mallett and supervised by Eric R. Werner and James E. Etri of the Fort Worth Regional Office. The SEC appreciates the assistance of U.S. Citizenship and Immigration Services.

Intercontinental Exchange granted Clearing House status from Monetary Authority of Singapore

December 12, 2018 by Ricardo Esteves Leave a Comment Filed Under: Industry News Tagged: CCP, CFTC, Intercontinental Exchange - ICE, Monetary Authority of Singapore - MAS, SEC

Intercontinental Exchange, through its U.S.-based credit default swap (CDS) clearing house ICE Clear Credit, has been granted Recognised Clearing House status from the Monetary Authority of Singapore with effect from December 7, 2018.

ICE Clear Credit is the first global CDS clearinghouse to be recognised in Singapore. The firm now has the authority to on-board clearing members from Singapore for clearing of CDS contracts.

Stan Ivanov, President of ICE Clear Credit, commented:

“I would like to thank the Monetary Authority of Singapore for this recognition. ICE Clear Credit is now the first global clearinghouse for credit default swaps in Singapore meaning that it can now have clearing members from Singapore and further serve our customers in the region. Singapore is the hub for our Asian business and this recognition will help us to expand our offering to customers across Asia and Australia.”

The leading operator of global exchanges and clearing houses and provider of data and listings services launched ICE Clear Credit and ICE Clear Europe CDS in 2009. Both subsidiaries offer clearing for more than 500 single name and 160 index CDS instruments based on corporate and sovereign debt, and have reduced counterparty risk exposure by clearing approximately $110 trillion in gross notional amount, with open interest of approximately $1.6 trillion.

Recognized as a third-country CCP under the European Market Infrastructure Regulations by the European Securities and Markets Authority for products regulated by the Commodity Futures Trading Commission, ICE Clear Credit has 30 participants including big industry names such as Bank of America, Barclays, BNP Paribas, Citi, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Merrill Lynch, Nomura, Morgan Stanley, Societe Generale, UBS, and Wells Fargo.

ICE Clear Credit offers portfolio margining relief with respect to clearing member house/proprietary transactions. Pursuant to CFTC and SEC Orders, ICE Clear Credit provides similar relief for broker dealer/FCMs that maintain clearing accounts for customer-related transactions.

SEC Halts Alleged Insider Trading Ring Spanning Three Countries

December 11, 2018 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: Bank, Exchange Commission, financial industry, Financial Industry Regulatory Authority, investment, Investment Bank, markets, Monetary Authority, SEC

Washington D.C., Dec. 6, 2018 — The Securities and Exchange Commission has filed insider trading charges against an IT contractor and two others he illegally tipped with confidential client information he stole while working in the Singapore branch of an investment bank.

The SEC obtained a court-ordered freeze of assets in three U.S. brokerage accounts and one U.S. bank account connected to the alleged trading. The SEC’s complaint alleges that Rajeshwar Gannamaneni provided nonpublic information about impending mergers, acquisitions, and tender offers to his wife, Deepthi Gandra, and his father, Linga Rao Gannamaneni, who lives in India. Gannamaneni also allegedly traded in an account that he controlled that was opened in the name of a family member, who was living in the U.S. at the time. According to the allegations in the SEC’s complaint, the three collectively reaped approximately $600,000 in profits by trading while in possession of inside information in advance of at least 40 corporate events.

“As alleged in our complaint, Gannamaneni abused his work-related access to sensitive, market-moving nonpublic information to enrich himself and those he tipped,” said Kelly L. Gibson, Associate Director of Enforcement in the SEC’s Philadelphia Regional Office. “Our continued use of innovative analytical tools to find suspicious trading patterns and expose misconduct demonstrates our resolve to catch insider traders who seek to take illegal advantage of the U.S. markets for personal gain.”

The SEC’s complaint charges the defendants with fraud and seeks disgorgement of allegedly ill-gotten gains, pre-judgment interest, penalties, and injunctive relief.

The SEC’s continuing investigation was conducted by Polly Hayes and Assunta Vivolo of the Philadelphia Office, with assistance from John Rymas and Pat McCluskey of the Market Abuse Unit’s Analysis and Detection Center. The case was supervised by Ms. Gibson. Julia C. Green, Karen Klotz, and Jennifer C. Barry will lead the SEC’s litigation. The SEC appreciates the assistance of the Financial Industry Regulatory Authority and the Monetary Authority of Singapore.

Three Broker-Dealers to Pay More Than $6 Million in Penalties for Providing Deficient Blue Sheet Data

December 11, 2018 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: Blue Sheet Data, Citadel, financial industry, Kelly Gibson, MUFG, Natixis, Philadelphia, Regulatory Authorit, remedial efforts, SEC

Washington D.C., Dec. 10, 2018 — The Securities and Exchange Commission today announced that three broker-dealers have agreed to pay more than $6 million to settle charges for providing the SEC with incomplete and inaccurate securities trading information in required SEC productions known as “blue sheet data,” which the SEC uses to carry out its enforcement and regulatory obligations, including the investigation of insider trading and other fraudulent activity.

According to the SEC’s orders, over a period of several years, Citadel Securities LLC, Natixis Securities Americas LLC, and MUFG Securities Americas Inc. each made numerous deficient blue sheet submissions containing inaccurate or missing data; incorrect order execution times that failed to adjust for time zone changes; and incorrect or missing exchange codes, transaction type identifiers, opposing broker number and contra-party identifiers. Citadel, the largest provider of blue sheet data of the firms charged today, submitted incorrect data for nearly 80 million trades while Natixis and MUFG submitted incorrect data for approximately 150,000 trades and 650,000 trades, respectively. These deficiencies largely stemmed from undetected coding errors. None of the firms had adequate processes designed to validate the accuracy of its submissions.

“We routinely use blue sheet data to detect wrongdoing and protect Main Street investors through our enforcement efforts,” said Kelly Gibson, Associate Regional Director of the SEC’s Philadelphia Regional Office. “Firms must be diligent and take seriously their obligations to provide accurate and complete data in response to our requests.”

The orders further found that each of the firms has engaged in remedial efforts to address the causes for its deficient submissions, including the retention of an outside consultant and the adoption of new policies and procedures for processing blue sheet requests.

The SEC’s orders also found that Citadel, Natixis, and MUFG willfully violated the broker-dealer books and records and reporting provisions. The firms admitted the findings in the SEC’s cease and desist orders and agreed to be censured and to pay penalties of $3.5 million for Citadel, $1.25 million for Natixis, and $1.4 million for MUFG.

The SEC’s investigations of Citadel and Natixis were conducted by Lawrence D. Parrish, Paulina L. Jerez, and Kingdon Kase of the Philadelphia Regional Office and Daniel L. Koster of the Complex Financial Instruments Unit. The SEC’s investigation of MUFG was conducted by Han Nguyen, Rachael Clarke, and Scott A. Thompson of the Market Abuse Unit. The investigations were supervised by Kelly L. Gibson and Joseph G. Sansone. The SEC appreciates the assistance of the Financial Industry Regulatory Authority.

SEC Charges Agria Corporation and Executive Chairman With Fraud

December 11, 2018 by industryspread Leave a Comment Filed Under: Regulatory Annoucements Tagged: Agria Corporation, agricultural company, federal securities laws, financial industry, New York Stock Exchange, regulatory authority, SEC, securities

Washington D.C., Dec. 10, 2018 — A multinational agricultural company has agreed to pay $3 million to settle charges that it concealed substantial losses from investors through fraudulent accounting in connection with its divestiture of its primary operating entity. In a related action, the company’s executive chairman Lai Guanglin (aka Alan Lai) settled charges that he manipulated the company’s share price.

As described in the SEC’s order, Agria Corporation sold its Chinese operating company in return for stock and land use rights to 13,500 acres of undeveloped land in a remote, mountainous area of China’s Shanxi Province. The SEC order found that Agria overstated the value of the stock it received by $17 million and assigned a value of nearly $60 million to the effectively worthless land use rights. A separate SEC order found that in March 2013, Lai used nominee brokerage accounts to engage in manipulative trading in Agria’s American Depository Shares in order to inflate their price above $1 and prevent the securities from being delisted by the New York Stock Exchange.

“Agria’s fraudulent accounting hid from investors the significant loss it sustained when it divested its principal operation in China, and Mr. Lai artificially inflated the share price to maintain Agria’s NYSE listing,” said Charles E. Cain, Chief of the SEC Enforcement Division’s FCPA Unit. “Disclosure of accurate information is vital to the integrity of our markets, and both Agria and Mr. Lai have been appropriately held to account for their deceptive misconduct.”

The SEC’s order found that Agria violated antifraud, reporting, books and records and internal accounting control provisions of the federal securities laws. Without admitting or denying the findings, Agria agreed to pay a $3 million penalty and cooperate with the Commission’s staff in future investigations. The SEC’s order as to Lai found that he violated antifraud provisions of the federal securities laws. Without admitting or denying the findings, Lai agreed to pay a $400,000 penalty and be barred for a period of five years from acting as an officer or director of any public company.

The SEC’s investigation was conducted by David Kagan-Kans, Michael Catoe, M. Shahriar Masud, and Kristen Dieter, and supervised by Robert I. Dodge. The SEC appreciates the assistance of the New York Stock Exchange Regulation and the Financial Industry Regulatory Authority.