The SEC came out the winner when Houston hedge fund manager George Jarkesy Jr. tried to have the regulator's case against him dismissed.
Also among recent enforcement actions were an emergency freeze on assets of an investor accused of filing a fake gold bid who has fled to China and SEC charges against an attorney for a fraudulent real estate offering. In addition, FINRA fined and censured Goldman Sachs Execution & Clearing on written supervisory procedure (WSP) failures.
SEC Freezes Assets of Fugitive Investor in Fake Gold Bid
The SEC has won a temporary asset freeze against Luis Chang and Everbright Development Overseas Ltd., a company he controls, after Chang submitted a fake $750 million bid for Allied Nevada Gold Corp., reaped profits of more than $7 million, and then fled to China.
According to the agency, Chang "furtively" bought stock in the company beginning in May of 2013. Then, on Jan. 14, after Chang had amassed a large position in the stock — one that he failed to report, as he was legally required to do — a statement ostensibly from a company called China Gold Stone Mining Development Ltd. was released at 6 a.m., saying that the company was offering $7.50 per share for Allied Nevada. Before the market opened that day, Allied Nevada's shares were already on the rise.
Later in the morning, however, trading was halted in the stock and Allied Nevada challenged whether the offer was legitimate. It was later withdrawn. The SEC has said that China Gold's existence cannot be proven, nor can its financial condition be evaluated.
Judge Dismisses Hedge Fund Manager's Claims of SEC Prejudice in Belesis-Related Case
George Jarkesy Jr., who tried to have an SEC administrative action against him dismissed, has failed in the attempt.
Jarkesy, a hedge fund manager, was charged in March along with his investment fund management group, John Thomas Capital Management LLC (now renamed Patriot28), with defrauding investors in two hedge funds and steering bloated fees to Thomas Belesis, founder and CEO of brokerage firm John Thomas Financial Inc. Belesis was also charged.
Jarkesy had argued that neither he nor his firm can get a fair hearing before the SEC. He alleged that the agency has prejudged him because of findings in a settlement with Belesis. The SEC has said that Jarkesy had led investors to believe that he was solely responsible for investment decisions for the funds, when in fact Belesis had often stepped in to make decisions and channel money from the funds into a company in which he had an interest, and had also compelled Jarkesy to fork over unreasonable fees.
However, U.S. District Judge Beryl Howell wasn't buying it. She ruled that Jarkesy has to go through the process of hearings before an administrative court judge and SEC commissioners and, if still unsatisfied, the court of appeals.
In her judgment, Howell wrote, "To the extent that the plaintiffs believe their cause has been prejudged by the SEC commissioners, they may seek review, if necessary, before the court of appeals, but the statute leaves no room for this court to provide them the relief they seek."
SEC Charges Attorney on Real Estate Investment Offering Fraud
