SEC Enforcement Proceedings

By: Jeffrey M. Haber Financial exploitation of seniors and vulnerable adults is a significant problem.¹ It is considered by many to be an insidious non-violent form of elder abuse in the United States. While a landmark MetLife study initially estimated that older Americans lose roughly $2.6 to $2.9 billion each year to financial exploitation, more recent research suggests that the cost may be materially higher, potentially exceeding $36 billion annually . These numbers, whet

By: Jeffrey M. Haber As readers of this Blog know, affinity fraud and Ponzi schemes often intersect because each reinforces the weaknesses of the other, creating a powerful and deceptive form of financial exploitation.¹ Affinity fraud is a form of financial deception that exploits the trust and social cohesion within a close‑knit group. These groups may be defined by shared religious beliefs, cultural or ethnic identity, professional affiliations, or community networks. The f

By:  Jeffrey M. Haber Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b‑5 promulgated thereunder prohibit trading securities on the basis of material nonpublic information through any deceptive device, scheme, or act. Insider trading liability arises under either the classical theory, where corporate insiders owe duties to shareholders, or the misappropriation theory, where those entrusted with confidential information owe duties to the in

By:  Jeffrey M. Haber This Blog has written about Ponzi schemes on numerous occasions. A Ponzi scheme is a type of investment fraud where returns to earlier investors are paid using investment capital from new or existing investors, rather than from legitimate profits earned through the enterprise’s business activities. Ponzi schemes persist by exploiting trust, promising high returns with little risk, and using money from new or existing investors to pay “profits” to earlie

By:  Jeffrey M. Haber On November 18, 2025, the Securities and Exchange Commission (“SEC” or “Commission”) announced that, on October 16, 2025, it charged Joshua Wander (“Defendant A”), Steven Pasko (“Defendant B”), and two companies that they founded, co-managed, and controlled—777 Partners LLC and 600 Partners LLC—with defrauding investors while raising approximately $237 million. The Commission also charged Damien Alfalla (“Defendant C”), the companies’ former Chief Finan

By:   Jeffrey M. Haber On September 25, 2025, the Securities and Exchange Commission (“SEC”) announced ( here ) that it charged the co-founders of Retail Ecommerce Ventures LLC (“REV”), and REV’s Chief Operating Officer (collectively, “Defendants”), with conducting a series of fraudulent securities offerings, misusing investor funds, and making Ponzi-like payments to investors. According to the SEC’s  complaint , REV’s primary business was purchasing distressed retail compani

By:  Jeffrey M. Haber On August 1, 2025, the Securities and Exchange Commission (“SEC”) announced ( here ) that it charged a Wisconsin resident and three limited liability companies that he owns and controls – Investors Capital LLC, Global Investors Capital LLC, and High Income Performance Partners LLC (collectively, the “Entity Defendants”) – with perpetrating a real estate-related offering fraud. According to the SEC’s complaint ( here ), from approximately May 2020 through

By: Jeffrey M. Haber The Custody Rule provides that “it is a fraudulent, deceptive, or manipulative act, practice or course of business within the meaning of section 206(4) of the Act … for to have custody of client funds or securities unless” the adviser implements an enumerated set of requirements to prevent loss, misuse, or misappropriation of those funds and securities. The purpose of the Custody Rule is to protect investment advisory clients from, among other things,

By: Jeffrey M. Haber This Blog has written about Ponzi schemes on numerous occasions. A Ponzi scheme is a type of investment fraud where returns to earlier investors are paid using investment capital from new or existing investors, rather than from legitimate profits earned through the enterprise’s business activities. Ponzi schemes persist by exploiting trust, promising high returns with little risk, and using money from new or existing investors to pay “profits” to earlier

By:  Jeffrey M. Haber A Ponzi scheme is an investment scam that induces people to invest money in a business or investment vehicle with promises of high returns and minimal risk. Rather than earning profits through actual investments or legitimate business operations, the scheme functions by paying early investors with money contributed by new or repeat participants. The name of the fraud comes from Charles Ponzi, who infamously ran such a scheme in the early 1900s. A Ponzi

By:   Jeffrey M. Haber On June 26, 2025, the Securities and Exchange Commission (SEC”) announced ( here ) that it charged a Manchester, New Hampshire resident, Robynne Alexander, a real estate investment coach and real estate investment coach, with defrauding investors through real estate investment schemes resulting in losses of at least $3 million. According to the complaint filed by the SEC ( here ), from 2018 through 2024, defendant solicited investors to buy securities i

By:  Jeffrey M. Haber The allure of guaranteed profits from sophisticated crypto asset and foreign exchange trading served as the underlying predicate for the claims asserted by the Securities and Exchange Commission (“SEC”) against Ramil Palafox (“Defendant”), the founder of Praetorian Group International Corporation (“PGI Global”), a now-defunct entity he controlled, in S.E.C. v. Palafox , Case 1:25-cv-00681 (E.D. Va. 2025). The case marks the first crypto enforcement actio

By: Jeffrey M. Haber This Blog has often noted that “securities fraud comes in all shapes and sizes.” ( E.g. ,  here .) Though the alleged fraudulent scheme may differ, the types of schemes implemented tend to fall into one of the following (non-exclusive) categories: financial statement/accounting fraud; pyramid schemes; Ponzi schemes; pump-and-dump schemes; affinity fraud; promissory note fraud; Internet fraud; “microcap” stock fraud; and fraud concerning information about

By: Jeffrey M. Haber An investment adviser is a fiduciary, and as such is held to the highest standard of conduct and must act in the best interest of his/her client. This means, among other things, that an investment adviser has an affirmative duty of utmost good faith and full and fair disclosure of all material facts. In broad terms, an investment adviser owes its client the duty of care, loyalty, and candor. The duty of care includes, among other things, the duty to pro

By: Jeffrey M. Haber Pre-IPO investing involves buying a stake in a company before the company makes its initial public offering of securities. Many stock promoters invite potential investors to invest in a pre-IPO offering by providing an opportunity to make high returns in a start-up enterprise on the ground floor. While investing at the pre-IPO stage can be rewarding, it involves risk for investors, including the risk of complete loss – i.e. , that the investor can lose h

By:  Jeffrey M. Haber Two weeks ago, this Blog wrote about an enforcement action involving an investment adviser's former co-chief investment officer who had been charged with running a more than $600 million cherry-picking scheme ( here ). Today, this Blog examines another enforcement action involving a former investment adviser representative, charged with engaging in a fraudulent trade allocation scheme – i.e. , cherry-picking scheme – wherein he benefitted himself in the

By: Jeffrey M. Haber It has been some time since we have examined cherry-picking – a practice that can be an effective way to generate returns as well as a practice that is fraudulent and violative of the federal securities laws. Therefore, today, we examine SEC v. Leech , Case 1:24-cv-09017 (S.D.N.Y. Nov. 25, 2024), a case involving the former co-chief investment officer of an investment adviser, who has been charged with running a more than $600 million cherry-picking schem

By: Jeffrey M. Haber On November 8, 2024, the Securities and Exchange Commission (“SEC” or “Commission”) announced ( here ) that it settled charges against Invesco Advisers, Inc., which operates Invesco mutual funds and has approximately $746 billion in assets under management, for making misleading statements about the percentage of company-wide assets under management (“AUM”) that integrated environmental, social, and governance (“ESG”) factors in investment decisions. Acco

By: Jeffrey M. Haber Artificial intelligence (“AI”) is everywhere. A person cannot watch television, listen to a podcast or read a newspaper without hearing about AI. As a new and emerging technology, AI is exciting. Its applications and capabilities are endless. But, in the wrong hands, AI can be dangerous. Recently, the Securities and Exchange Commission (“SEC”) issued an Investor Alert about AI and the risk of fraud (the “Alert”) ( here ). The SEC, along with the North Am

By: Jeffrey M. Haber “Spoofing is a type of scam in which criminals attempt to obtain someone’s personal information by pretending to be a legitimate business, a neighbor, or some other innocent party.”  Spoofing can occur in any form of online communication, including emails, text messages, telephone calls, and websites.  Id . Although spoofing comes in many forms, the goal of spoofing is the same: to deceive people into divulging personal and/or financial information that t