SEC Charges Firm, Owner with Acting as Unregistered Investment Adviser to Russian Billionaire

SEC Charges New York Firm Concord Management and Owner with Acting as Unregistered Investment Advisers to Billionaire Former Russian Official

The Securities and Exchange Commission today announced charges against Concord Management LLC of Tarrytown, New York, and its owner and principal, Michael Matlin, for operating as unregistered investment advisers to their only client—a wealthy former Russian official widely regarded as having political connections to the Russian Federation.

According to the SEC’s complaint, Matlin founded Concord in 1999 to provide investment advice for compensation and to supervise and manage the client’s investments in United States-based private funds. The SEC’s complaint alleges that, from at least 2012 through March 2022, Concord and Matlin sourced, arranged, and monitored hundreds of investments, worth billions of dollars, in private equity funds and hedge funds on behalf of the client. According to the SEC’s complaint, both Concord and Matlin were required to register as investment advisers with the Commission based on their activities, but neither did. By failing to register, Matlin and Concord avoided certain legal obligations for investment advisers that protect the investing public, such as various reporting requirements and examination by the SEC. As of January 2022, Concord and Matlin allegedly managed investments for their sole client with an estimated total value of $7.2 billion in 112 different private funds.

Lawyers who sued Tesla board for excess pay want $10,000 an hour

A legal team that forced Tesla’s directors to agree in July to return more than $700 million in compensation to the automaker for allegedly overpaying themselves are now seeking a huge payday of their own.

The lawyers want a judge to approve $229 million in fees, or $10,690 an hour, according to a Sept. 8 filing in Delaware’s Court of Chancery.

The proposed fee award, if approved, would be among the largest ever to result from a shareholder lawsuit filed against a board. The sum would be distributed among lawyers from four firms that spent several years building a case against the compensation paid to Tesla’s directors from 2017 to 2020.

SEC Charges California Resident with Multimillion Dollar Ponzi Scheme Targeting Tongan American Community

The Securities and Exchange Commission today charged Richmond, California resident Tilila Walker Sumchai with raising approximately $11.8 million from more than 1,000 investors through a fraudulent securities offering targeting members of the Tongan American community across the United States.

According to the SEC’s complaint, from approximately January 2021 through October 2021, Sumchai convinced retail investors to acquire shares of an investment she created called “Tongi Tupe” by falsely claiming that she would use a secret algorithm to generate guaranteed high returns. The complaint alleges that Sumchai first targeted respected Tongan American leaders, who were paid substantial returns on their investments, which convinced many of the leaders to believe that Tongi Tupe was legitimate. Sumchai then organized meetings hosted by these leaders at which Sumchai promoted Tongi Tupe to other members of the Tongan American community. As alleged, Sumchai promised exceedingly high returns, including a $146,000 return in 16 weeks on a $3,000 investment. In reality, the complaint alleges, Tongi Tupe did not generate any returns; instead, Sumchai operated a Ponzi scheme that relied on new investor money to pay earlier investors. Additionally, as alleged in the complaint, Sumchai used investor money for unauthorized and undisclosed purposes, including to pay for casino trips, travel, and shopping.

U.S. SEC’s Crypto Enforcement Chief Warns Charges Won’t End at Coinbase, Binance

The U.S. Securities and Exchange Commission (SEC) isn’t done chasing down crypto exchanges and decentralized finance (DeFi) projects it sees as violating securities laws in the same vein as Coinbase Inc. (COIN) and Binance, said David Hirsch, head of the agency’s Crypto Assets and Cyber Unit.

His enforcement office, which has been litigating at a very unusual pace for the SEC, is aware of and investigating other firms involved in much the same activity seen at those two major platforms and that the industry’s compliance breeches “hold true well beyond any two entities,” Hirsch said Tuesday at the Securities Enforcement Forum Central in Chicago.

“We’re going to continue to bring those charges,” said Hirsch, who said the regulator has a number of other businesses on its radar that are operating in similar ways to Coinbase and Binance. His agency is already embroiled in a number of complex crypto cases in federal courts, and – as seen in its effort to appeal a recent Ripple ruling – not always with complete success.

SEC Charges Lyft with Failure to Disclose Board Member’s Financial Interest in Private Shareholder’s Pre-IPO Stock Transaction

The Securities and Exchange Commission today charged Lyft Inc. for failing to disclose a company board director’s role in a shareholder’s sale of approximately $424 million worth of private shares of Lyft’s stock prior to the company’s initial public offering (IPO).

According to the SEC’s order, prior to Lyft’s IPO in March 2019, a Lyft board director arranged for a shareholder to sell its shares to a special purpose vehicle (“SPV”) set up by an investment adviser affiliated with the same director. The director then contacted an investor interested in purchasing the shares through the SPV. According to the SEC’s order, Lyft, which approved the sale and secured a number of terms in the contract, was a participant in the transaction, and the director was a related person by virtue of his position and because he received millions of dollars in compensation from the investment adviser for his role in structuring and negotiating the deal. Lyft failed to disclose this information regarding the sale in its Form 10-K for 2019. The SEC’s order finds that the director left the Board at the time of the transaction.

The Lawyers Sam Bankman-Fried Once Trusted Are Drawing Criticism

The dispute over Sullivan & Cromwell’s relationship with FTX shows the range of powerful institutions that were eager to help Mr. Bankman-Fried during his rapid rise, even as he resisted basic due diligence and eschewed traditional corporate governance. And it offers a preview of a conflict that may unfold at Mr. Bankman-Fried’s trial in Manhattan, where he is expected to shift some of the blame for FTX’s bankruptcy to Sullivan & Cromwell and a second law firm that advised him, Fenwick & West.

Ex-US congressman sentenced to 22 months for insider trading

Former U.S. Congressman Stephen Buyer was sentenced to 22 months in prison on Tuesday for trading on inside information he learned in 2018 as a consultant to T-Mobile US Inc ahead of its $23 billion merger with Sprint.

U.S. District Judge Richard Berman in New York sentenced Buyer, who was found guilty on four counts of securities fraud at a trial in March. Buyer was a Republican from Indiana in the U.S. House of Representatives between 1993 and 2011 before working as a corporate consultant.

Covington Will Share Some Client Names With SEC After Hack

Covington & Burling has agreed to disclose to the SEC the names of six clients whose information may have been exposed in a cyberattack on the law firm, ending a broader legal battle with the agency over its client list.

The US Securities and Exchange Commission had originally asked the court to intervene in a subpoena seeking the names of nearly 300 clients it said may have been affected by a 2020 hack of the firm. Neither party will appeal a July district court ruling ordering the firm to give the agency the names of seven public-company clients whose nonpublic information may have been compromised, according to a joint court filing late Sept. 15.

US Government Shutdown Would Limit SEC Oversight, Chair Gary Gensler Says

The Securities and Exchange Commission’s ability to police markets would be hobbled by a US government shutdown, according to the head of the regulator.

SEC Chair Gary Gensler said the watchdog would be severely limited by a possible federal work halt at the end of this month. Wall Street’s main regulator might not be able to fulfill some basic functions, he said in an interview with Bloomberg Television.

“The public should understand, we’ll largely be a skeletal staff,” he added. “The normal oversight we have on markets will not be possible.”