Two former executives behind an allegedly fraudulent initial coin offering 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.
In January, the SEC halted the initial coin offering via Dallas-based AriseBank, which was endorsed by former professional boxer Evander Holyfield.
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.
"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," Shamoil Shipchandler, director of the SEC's Fort Worth Regional Office, said in a statement. "The officer-and-director bar and digital securities offering bar will prevent Rice and Ford from engaging in another crypto-asset-based fraud."
To settle the SEC's charges, Rice and Ford agreed to be held jointly and severally liable for more than $2.2 million 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.
Rice and Ford agreed to the settlements without admitting or denying the allegations in the SEC's complaint.
On Nov. 28, the U.S. Attorney's Office for the Northern District of Texas announced parallel criminal charges against Rice.
SEC Charges Former Advisor, Daughter With Running Ponzi Scheme
The SEC charged a former Rockland County, New York-based investment advisor and his daughter with conducting a multimillion-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 advisor 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.
The SEC's complaint 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.
SEC Halts Alleged Insider Trading Ring Spanning 3 Countries
The SEC 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, which 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.
The SEC's complaint charges all three defendants with violating certain parts of the Securities and Exchange Act of 1934. The complaint also seeks disgorgement of all illicit trading profits or other ill-gotten gains.
