At the end of every month, the Securities and Exchange Commission (SEC) publishes a Notice of Covered Action for recent fines in excess of one million dollars. There were seven notices issued in January for over $500 in fines, the headlines were:
- Honeywell pays over $161 million for bribery schemes in Algeria and Brazil
- ABB pays $460 million for bribery in South Africa
- SEC shuts down $110 million Ponzi scheme
- AT&T fined over $6 million for selectively disclosing information to analysts
Summaries of the fines from January are below, and remember, once a noticed is published, any whistleblower who provided information to the SEC on that case has 90 days to claim a whistleblower reward by filing a Form WB-APP. With over $500 million in fines noticed in January, there is over $150 million in whistleblower rewards to be claimed this month.
Honeywell Pays over $160 Million For Bribery In Algeria and Brazil
The SEC and the DOJ both settled charges against Honeywell for violating the Foreign Corrupt Practices Act (“FCPA”). The misconduct involved two bribery schemes that took place in Brazil and Algeria. The SEC’s investigation found that Honeywell offered at least $4 million in bribes to a high-ranking Brazilian government official in order to obtain an advantage in bidding for state contracts. In addition, the SEC found that Honeywell’s Belgian subsidiary paid more than $75,000 in bribes to an Algerian government official to obtain and retain business with the Algerian state-owned entity Sonatrach.
ABB pays $460 million for bribery in South Africa
The SEC and the DOJ both settled charges with ABB for violations of the FCPA in South Africa. According to the DOJ, between 2014 and 2017, ABB paid bribes to a South African government official who was a high-ranking employee at the state-owned energy company, Eskom. ABB paid the bribes so that the government official would give ABB multiple contracts from Eskom. ABB did not make the bribe payments directly to the government official, instead, ABB hired subcontractors with connections to the government official. ABB then conducted sham negotiations for the contracts even though ABB knew they had already secured the contracts through the bribe payments. As a result of the conduct ABB has been ordered to pay $460 million to U.S. authorities.
$110 million Ponzi Scheme operated by John Woods and Horizon Private Equity
In August last year the SEC filed an emergency action to stop a Ponzi scheme by John Woods and two entities he controls, Southport Capital and Horizon Private Equity. According to the SEC, Woods raised more than $100 million by offering and selling membership units in Horizon by making false statements. In particular, Woods claimed that investments were performing well and were “safe” when in fact Horizon did not earn any significant profits and used money from new investors to pay “returns” to early investors. Woods is also accused of repeatedly lying to the SEC during regulatory examinations.
AT&T fined for selectively disclosing material information to analysts
AT&T settled charges that the company violated Regulation FD, a rule which prohibits companies from selectively disclosing material nonpublic information. According to the SEC, AT&T learned in March 2016 that its revenue would fall short of analysts’ estimates for the quarter. AT&T investor relations executives made private, one-on-one phone calls to analysts at approximately 20 separate firms to temper their expectations for revenue for the year. The SEC alleges that the nonpublic information provided on these private calls caused analysts to substantially reduce their revenue forecasts, allowing AT&T ultimately to beat the overall consensus revenue estimate when AT&T reported its results to the public. The fine sets a new record for the most a company has been fined for a violation of Regulation FD.
Sky Group Securities
The SEC announced charges against four individuals for unlawfully selling securities of a payday loan company, Sky Group USA. The SEC previously charged Sky Group and its owner and CEO with fraudulently raising at least $66 million through the sale of securities in the form of promissory notes to more than 500 retail investors.
The SEC’s complaints allege that Manuel Alvis, Joseph Boulos, Carlos Pingarron, and Carlos Sorondo, four of Sky Group’s top-selling sales agents, collectively offered and sold more than $25 million in Sky Group’s unregistered promissory notes to at least 346 investors. The defendants collectively earned millions of dollars in commissions on their sales, even though they were not registered as broker-dealers or associated with registered broker-dealers.
Repeat Offender – Eric T. Landis
According to the SEC, Landis manipulated trading in at least 97 microcap stocks, which included placing thousands of manipulative trades over the course of three years using multiple accounts he controlled. Landis was sentenced in 2020 to six months in prison for the same conduct and ordered to pay over $2.5 million in disgorgement. Landis was previously found liable in 2003 in a lawsuit brought by the SEC and convicted of related criminal charges in a prior market manipulation scheme.
City Official – Anthony Michael Holland
The SEC charged former City of Johnson City, Texas chief administrative officer, Anthony Michael Holland, with securities fraud for creating falsified financial statements and a falsified audit report for the city’s 2016 fiscal year. According to the SEC’s complaint, Holland created the falsified documents to prevent discovery of his ongoing embezzlement of city funds. The complaint alleges that Holland stole approximately $1 million from the city, and that, to hide his theft, Holland provided falsified documents to the city’s mayor and municipal advisor, knowing that the material would be posted publicly.