SEC Charges Former CEO With Fraud for False Statements Made on Social Media

SEC Charges Former Alfi CEO Paul Pereira with Fraud for Making False Statements on Social Media

The Securities and Exchange Commission today charged Paul A. Pereira, the former CEO and co-founder of Alfi, Inc., with making materially false and misleading statements on social media about the company’s financial and performance metrics in an attempt to boost the now defunct company’s stock price.

According to the SEC’s complaint, while serving as the CEO of Alfi, a Florida-based advertising technology company, and under the pseudonym “Uptix12,” Pereira allegedly posted shortly after Alfi’s May 2021 initial public offering that he “wouldn’t doubt” that Alfi “has $10 mm to $20 mm in revenues already in their back pocket,” when, in reality, the company was set to report only $17,450 in revenue. Soon thereafter, in another alleged attempt to boost Alfi’s stock price, Pereira stated in a YouTube interview that the company was entering into a contract with the founder of a successful restaurant chain to deploy Alfi technology in the founder’s restaurants. In fact, as alleged, the restaurant chain founder never discussed such a contract with Pereira or any other Alfi personnel. The complaint further alleges that, on August 17, 2021, with the company’s stock price opening at its lowest level in nearly two months, Pereira made false and misleading statements on social media and in a company-issued press release about the company’s advertising inventory, including that “available advertising inventory by the end of 2021 is expected to be in excess of $100 million.” Contrary to Pereira’s statements, according to the complaint, the company had less than $5 million in advertising inventory at the time, and Pereira did not have a reasonable basis to believe that Alfi would achieve $100 million in advertising inventory by the end of 2021. The company filed for bankruptcy in October 2022.

Sam Bankman-Fried Seeks Lenient Sentence and to Appeal Conviction

From a federal detention center in Brooklyn, Mr. Bankman-Fried, 31, has continued to fight his case behind the scenes, as he aims for a lenient sentence and prepares to appeal his conviction. On Tuesday, his lawyers filed a legal memo in U.S. District Court in Manhattan, arguing that he should receive a prison sentence of between five and a quarter and six and a half years.

Mr. Bankman-Fried is “deeply, deeply sorry” for “the pain he caused over the last two years,” the memo said. “His sole focus after the collapse of FTX was making customers whole.”

The SEC’s Latest Insider-Trading Theory

Disagreement over facts aside, the major problem with the SEC case is that it writes new insider-trading law by enforcement with no limiting principle. An executive could be charged with investing in the shares of any stock in his industry group. Yet everyone knows stocks in the same industry often move up or down based on the news of a single firm.

A Nvidia employee who knew his company had a strong earnings quarter and bought stock in tech companies, or even a tech-focused ETF, could be charged under this SEC theory. A 2021 academic study dubbed this practice “shadow trading” and “an undocumented and widespread mechanism that insiders use to avoid regulatory scrutiny.”

The SEC seems determined to prosecute Mr. Panuwat as a way to send a message across the market that such shadow trading is banned. But it’s an abuse of the law to punish someone after the fact for acts that he didn’t know at the time to be illegal.

Court Orders Katten Muchin to Represent AIA in $2 Billion Madoff Clawback Suit

Katten Muchin Rosenman LLP’s concerns regarding the assurance of payment for their services underscore the complexities of high-stakes legal battles. The law firm’s attempt to exit the case highlights the delicate balance between ethical legal representation and the financial realities of prolonged litigation. Despite these concerns, the court’s decision emphasizes the importance of continuity in legal representation, especially in cases with significant implications for financial fraud victims.

This ruling may set a precedent in bankruptcy and financial fraud litigation, signaling to law firms the importance of their roles in representing parties through complex legal battles. The decision also sheds light on the challenges faced by legal representatives in ensuring their services are compensated while upholding their duties to their clients and the court. As the case progresses, the legal community and victims of the Madoff Ponzi scheme will closely watch the implications of this decision.

Muddy Waters Research report saves shareholder case against China’s biggest real estate brokerage

In their motion to dismiss, the shareholder case, KE’s counsel urged Woods to disregard claims based on the Muddy Waters report because, among other things, Robbins Geller failed to conduct an independent investigation to corroborate the short seller’s accusations.

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In this case, he said, the Muddy Waters report on KE wasn’t based just on anonymous sources. The short-seller developed computer programs to crunch publicly available data from KE’s platform, then sent out investigators to verify its data-based suspicions about how many stores and brokers were actually using the platform. Muddy Waters also used Chinese government data to raise doubts about the number of KE employees in key real estate markets.

This report, in other words, did not merely recite unsubstantiated allegations from anonymous whistleblowers, Woods said. Muddy Waters included data analysis, photographs, screenshots and transcripts to back its assertions. The short-seller’s evidence, the judge said, amounted to “sufficiently reliable support” for shareholder’s claims.

Leader of Real Estate Investment Firm Admits Role in $658 Million Ponzi Scheme and Multimillion-Dollar Tax Evasion Conspiracy

The shadow chief executive officer of National Realty Investment Advisors LLC (NRIA) today admitted orchestrating a scheme to defraud more than 2,000 investors in a $658 million Ponzi scheme and conspiring to evade millions of dollars in tax liabilities, U.S. Attorney Philip R. Sellinger announced.

Thomas Nicholas Salzano, aka “Nicholas Salzano,” 65, of Secaucus, New Jersey, pleaded guilty before U.S. District Judge Evelyn Padin in Newark federal court to securities fraud, conspiracy to commit wire fraud, and conspiracy to defraud the United States. Salzano admitted he made numerous misrepresentations to investors while he secretly ran NRIA behind the scenes. He also admitted to misappropriating millions of dollars from investors to enrich himself and his family and friends.

Elizabeth Warren Says Crypto Needs to Follow the Same Rules as Rest of Financial System

U.S. Sen. Elizabeth Warren (D–Mass.) has called out the crypto industry yet again, saying they are reluctant to follow the rules.

“I wanna collaborate with the industry, what I don’t understand is why the industry seems to be saying that they only way that they can survive is if there’s plenty of space for the drug traffickers and the human traffickers, oh and the terrorist, and the ransomware scammer, and the consumer scammers..,” said Warren in an interview with Bloomberg Television.

Warren said that in the U.S. financial system, everybody follows the same rules and crypto needs to fall in line with those rules.