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

Washington, D.C.–(Newsfile Corp. – December 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.

“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.


Jeffrey Minton, Office of the Chief Accountant Chief Counsel, to Retire from the SEC After 20 Years of Service

Washington, D.C.–(Newsfile Corp. – December 13, 2018) – The Securities and Exchange Commission today announced that Jeffrey Minton, Office of the Chief Accountant (OCA)’s Chief Counsel, will be retiring from the agency next month after more than 20 years of service at the SEC, with over half of that time spent in his role in OCA. 

The Office of the Chief Accountant is responsible for accounting and auditing matters arising in the Commission’s administration of the federal securities laws, such as oversight activities of standard setting organizations and the PCAOB. 

Mr. Minton provided critical counsel and assistance on oversight activities, numerous rulemakings, and technical assistance to Congress on legislation. He also has directed OCA’s enforcement liaison program, providing insightful analytical guidance and assistance to the Division of Enforcement on many enforcement actions and Commission on accountant suspension and reinstatement orders. Mr. Minton also devoted significant efforts to enhancing the Office’s polices and process.

Earlier in his career, he worked in the Office of the Chairman under Chairman William H. Donaldson, as well as in the Division of Corporation Finance as an attorney in the division’s rule-writing office during implementation of the Sarbanes-Oxley Act of 2002. Among the many honors he has earned, he is a recipient of the SEC’s Manuel H. Cohen Award, which recognizes outstanding legal ability and performance.

“Jeff has provided valuable leadership on a number of important rulemaking and policy initiatives and his dedication to promoting strong capital markets has served investors well,” said Chairman Jay Clayton.

“Jeff has been a dedicated public servant whose distinguished counsel, skill, intelligence, and wit has left an indelible mark on the SEC and OCA,” said SEC Chief Accountant Wes Bricker. “He demonstrated his steadfast commitment to protecting investors through his support for strong policies for financial reporting, audit, and independence. Jeff retires with a legacy of accomplishments, including the mentorship of a talented and dedicated group of professionals over the years, and we will miss him greatly.”

Mr. Minton said “It has been an honor and a privilege to have served America’s investors along with so many dedicated professionals at the SEC. Especially rewarding has been my service in OCA promoting high quality financial reporting, which is at the heart of this country’s disclosure-based approach to securities regulation.” 

Mr. Minton graduated magna cum laude from the Harvard Law School in 1996 and received his BA in economics from The Ohio State University in 1992.

Executives Settle ICO Scam Charges

Washington, D.C.–(Newsfile Corp. – December 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.

“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 Depository 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.

Three Developers Settle Charges of Fraudulent EB-5 Offering

Washington, D.C.–(Newsfile Corp. – December 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.

“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.

Eric Sprott Announces Holdings in Redstar Gold Corp.

Toronto, Ontario–(Newsfile Corp. – December 12, 2018) – Eric Sprott announces that he holds 15 million common shares (shares) of Redstar Gold Corp. representing approximately 5.0% of the outstanding shares. This press release is being issued pursuant to Canadian early warning requirements because the sale of shares, as described below, has resulted in Mr. Sprott’s beneficial holdings of shares to decrease to less than 10% of the outstanding shares.

On December 6, 2018, Eric Sprott sold 15 million shares at a price of $0.03 per share ($450,000), representing approximately 5.0% of the outstanding shares in a private transaction. Prior to this disposition, Mr. Sprott held, 30 million shares, representing approximately 9.99% of the outstanding shares.

The shares are held for investment purposes. Mr. Sprott has a long-term view of the investment and may acquire additional securities either on the open market or through private acquisitions or sell the securities either on the open market or through private dispositions in the future depending on market conditions, reformulation of plans and/or other relevant factors.

Redstar Gold is located at 409 Granville Street, Suite 1500, Vancouver, British Columbia, V6C 1T2. A copy of Mr. Sprott’s early warning report will appear on Redstar Gold’s profile on SEDAR at and may also be obtained by contacting Mr. Sprott at (416) 362-7171.

Mr. Eric Sprott
200 Bay Street, Suite 2600
Royal Bank Plaza, South Tower
Toronto, Ontario M5J 2J1

SEC Names Danae M. Serrano Acting Ethics Counsel and Designated Agency Ethics Official

Washington, D.C.–(Newsfile Corp. – December 11, 2018) – The Securities and Exchange Commission today announced that Danae M. Serrano has been named Acting Ethics Counsel and Designated Agency Ethics Official.

Ms. Serrano joined the SEC in 2010 as an Assistant Ethics Counsel, and has served as the Deputy Ethics Counsel and Alternate Designated Agency Ethics Official since 2013.  Ms. Serrano also served as the Agency’s Acting Chief Compliance Officer until August 2018. 

“Danae is widely respected by her colleagues throughout the Commission for her steady and thoughtful ethics counsel,” said Chairman Jay Clayton.  “I know that Danae and her team are committed to maintaining the highest ethical standards at the SEC, and I want to thank her for taking on this important role in support of the Commission and our dedicated staff.”

“I am grateful for this opportunity to lead the talented and dedicated staff in the Office of the Ethics Counsel, and for the Chairman’s support of the SEC’s robust ethics and compliance programs,” said Ms. Serrano.   

Before joining the SEC, Ms. Serrano served as an attorney in the General Counsel’s Office of the Pension Benefit Guaranty Corporation (PBGC), where she advised on government ethics and administrative law matters.  Prior to PBGC, Ms. Serrano served as an attorney and ethics official in the United States Air Force, Office of the General Counsel.  Ms. Serrano received her law degree from the University of Connecticut School of Law, where she was an Executive Editor of the Connecticut Insurance Law Journal. She received her B.A. in History from Yale University.   

SEC Charges The Hain Celestial Group with Internal Controls Failures

Washington, D.C.–(Newsfile Corp. – December 11, 2018) – The Securities and Exchange Commission today announced settled charges against a natural and organic food company stemming from weaknesses in the company’s internal controls related to end-of-quarter sales practices that were designed to help the company meet its internal sales targets. Based upon its extensive cooperation with the SEC’s investigation, which included self-reporting and remediation efforts, the SEC did not impose a monetary penalty on the company.

According to the SEC’s order, between 2014 and 2016, sales personnel for The Hain Celestial Group, Inc. offered the company’s two largest distributors incentives at the end of fiscal quarters to encourage the purchase of sufficient inventory for Hain to meet quarterly internal sales targets. The incentives offered by Hain included rights of return for products that spoiled or expired before they were sold to retailers, as well as cash incentives of up to $500,000, substantial discounts, and extended payment terms. According to the SEC’s order, some of the incentives were agreed to orally and not documented, and others were documented only in email exchanges with the distributors. The SEC’s order found that the company lacked sufficient policies and procedures to ensure the incentives were properly documented and accounted for and that Hain’s finance department was not aware of the quarterly incentive practices until May 2016.  

After its finance department discovered the existence of the sales incentive practices, Hain undertook an internal investigation, and in August 2016, the company self-reported to the SEC its discovery of the sales incentives and announced it was delaying its financial reporting for 2016. Ten months later, Hain reported that financial restatements were not required and simultaneously disclosed material weaknesses in its internal control of financial reporting. As reflected the SEC’s order, Hain has since made organizational changes, including the retention of staff in compliance positions, and has implemented changes to its revenue recognition practices.  

“Hain’s internal control failures and poor documentation of the sales incentives contributed to the delay in its financial reporting,” said Carolyn Welshhans, Associate Director of the SEC’s Division of Enforcement. “But the terms of our final settlement take into account Hain’s timely self-reporting, its cooperation during our investigation, and the significant changes it voluntarily made to its organization and to its revenue recognition practices.”  

The SEC’s order finds that Hain violated books and records and accounting controls provisions of the federal securities laws, and orders Hain to cease and desist from further violations. Hain consented to the SEC’s order without admitting or denying the findings.  

The investigation was conducted by Kathleen McDermott, David Miller, and Eugene Bull, and was supervised by Assistant Director Laura Josephs and Associate Director Carolyn Welshhans.