June 2014 SEC Whistleblower Complaint on Kinder Morgan and PG&E

The SEC Whistleblower Complaint 

Filing this complaint just after filing numerous public law claims with the City of Walnut Creek.  The timeline precedes the July 26, 2014 Letter to PG&E, San Bruno, City of Walnut Creek plus attempts by Bennett to run for Town Council. 

Tell us about your complaint

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Material misstatement or omission in a company's public filings or financial statements, or a failure to file

Provide additional details about your complaint:

I am the person who called about the SEC Employee and her Domestic Partner who have been targeted by persons unknown in a similar manner that I've been targeted. Targeting: The concept by name is obvious where parties are dissuaded from coming forward, testifying, providing statements and/or their statements are deliberately omitted from the public record. In March 2011 I was retained to develop software for a PG&E Sub Contractor to developing software for a slew of emergency projects stemming from the Sept 2010 Gas Pipeline Explosion. ► Gas Pipeline Hydrotesting Project, ► PG&E Construction Group, ► Gas Transmission Group (GTG) ► Reconciliation of Construction Expense covering billions in receipts ► Personal Profile Feb 2011 ◄ Homeless, no computers, systems, laptop, on Food Stamps, no car, criminal warrants, in insurance or license (Unfairly fined 16,000), back child support, fraud victim, attorney had been beaten in Walnut Creek CA to prevent case from going forward, ongoing litigation, defaults, evictions and far too many reasons not to hire me. ► Returning from Modesto Operations - car from rear attempting high speed maneuver known as Swoop and Squat - Bennett was watching and slammed on brakes from 80 to 30 - they missed. That was swoop number four since 2004 PG&E Engagement • Hired around March 2011 but first contact was January 2011. • Not attempting to get hired as my personal situation was pathetic but client kept calling, offering decent rate of $65 per hour, provided car, work and gave near carte blanche access to internal PG&E documents. • Vendor sold Bennett car on time in almost no questions asked scenario, did not know me, was not concern of my personal and crushing liabilities, didn't even validate normal employment requirements, used sub-contractor status to circumvent PG&E security hiring protocols. ► Homeless between Walnut Creek CA and San Francisco ► Criminal Charges and Warrant - Butte County Superior Court http://contracostawatch.blogspot.com/2013/06/butte-county-superior-court-all-charge.html Criminal Charges Dismissed • Using highly unusual motion on Modification of Support http://cnetscandal.blogspot.com/2014/04/on-file-with-butte-county-court-line-12.html ------------------------------------------------------------------------ Preceding Significant Event - Gas Transmission High Performance Engineer ------------------------------------------------------------------------ ► Sept 2010 Event - The Gas Transmission High Performance Engineer and unstable San Francisco Lt. forced from the force in June 2010. These two individuals tie back to a local scandal known as the CNET (see link) ------------------------------------------------------------------------ Timeline of CNET Contra Costa Narcotics Enforcement Taskforce (CCCnet but CNET) now disbanded http://cnetscandal.blogspot.com/2013/12/cnet-timeline-of-scandal.html ------------------------------------------------------------------------ Reaching Out To Public Officials Letter to Senator Feinstein Dear Senator Feinstein : I Am Forced to Beg for Help and Witness Protection From US Government http://cnetscandal.blogspot.com/2014/04/dear-senator-feinstein-i-am-forced-to.html Letter to California State Attorney General ------------------------------------------------------------------------ Contra Costa Bar Association Dead Attorney Syndrome - the name fits because they are killing persons near not just one case but many cases http://cnetscandal.blogspot.com/2014/06/contra-costa-bar-association-dead.html ------------------------------------------------------------------------ ------------------------------------------------------------------------

Are you having or have you had difficulty in getting access to your funds or securities?

Unknown

Did you suffer a loss?

No

Is the alleged conduct ongoing?

Yes

Has the individual or firm acknowledged the alleged conduct?

No

What is the source of your information? You may select more than one

Conversations; Publicly available information; SEC filings; Social media (e.g., Facebook, Twitter, blogs, chat rooms, and electronic communities of interest);

Have you taken any action regarding your complaint? You may select more than one

Complained to firm; Complained to other regulator; Complained to SEC; Complained to law enforcement; Complained to other; Legal action; Other;

Who did you contact and what action did you take?

For nearly ten years I've attempted to resolve an arson fire, several assault cases and other incidents criminal incidents. I have a long business history. When the CNET Arrests occurred my first insight to how my world had been continually disrupted and why I landed on the streets. In response to Action Taken when my I'm able to get a replacement laptop I can provided hundreds of letters in my attempts to solve accidents, arson, fires, murder/suicides and murders. I know judges, attorneys, police officers, victims, widows, CEO's, bankers, SVP to CEO. A few months back I identified persons near me were connected to my 2004 Arson fire, that preceded the deadly Kinder Morgan Fire but ten years later I I discovered a dead witnesses and all these findings were triggered by police officers who arrived via many reasons with either guns, false accusations or in some cases threats. Even with obvious repeated Civil Rights violations they kept coming. When attempting to get Kinder Morgan Documents I was practically met five police officers charging out from the WCPD offices that share a hallway with planning. My attempts to get police reports thwarted at every step - these police reports would provide access to Victims Compensation. My Attempts to resolve questions on the Kinder Morgan fire rebuked by CAL Fire Pipeline Safety Group, their attorneys and then moving back over the PG&E project they in turn refuse to resolve a simple $10,000 payment and have knowingly concealed events connected to the Software Engagement to me nearly being killed. Last week they nearly killed my music partner Don Watts whose car tires blew out in on I-5 OR Mile Post 129 - after reviewing crash concluded he had at least two bullet holes and one fist sized hole. His partner is SEC Investigator Christine Pulman residing on San Suici Court Walnut Creek CA. On the day of his accident he'd left Walnut Creek nearly in unison with another confrontation with Walnut Creek officers who I'm suspecting will match up with the the 2004 Bomb Squad Team. Leaving WC to arrive in Roseburg is close to six or seven hours - the WC City event was around 10AM his accident was 4:30 and they know we've been researching the accident and have likely eavesdropped our phones. Between these two domestic partners they've had seven or more accidents. I have been watching carefully since his car was hit last summer. That's almost one per month. Via Don I learned Christine's car crashed on Treasure Island but he's keenly aware that my accidents have allegations of laser induced blindness. The Lafayette Police Department has refused to investigate. The California Highway Patrol took up one of these accident in Sept 2011. Since then more than 10 persons connected to this story have been killed - some are perfect accidents others were plain old murders. Everything near me is attacked based with clear stonewalling. ------------------------------------------- http://cnetscandal.blogspot.com/2014/04/on-file-with-butte-county-court-line-12.html

Who are you complaining about?

Are you complaining about an individual or a firm?

Firm

Select the title that best describes the individual or firm that you are complaining about:

Publicly held company

If you are complaining about an entity or individual that has custody or control of your investments, have you had difficulty contacting that entity or individual?

Unknown

Firm Name:

Richard Kinder

Street Address:

UNK

Telephone:

Identifier Type:

Unknown

Are you or were you associated with the individual or firm when the alleged conduct occurred?

No

How are you or were you associated with the individual or firm you are complaining about?

As per my long story I started calling Kinder Morgan Public Relations. This began after CAL FIRE refusal to cooperate with public records. That call triggered local events which I've carefully learned to recognize. I make call about something suspect - I'll get a police response or another punch in the face or someone near me dies. It's that bad. I believe the Kinder Morgan and others to be named later know a great deal more about the following incidents. -------------------------------------------------------------------------- Dead Attorneys http://cnetscandal.blogspot.com/2014/06/contra-costa-bar-association-dead.html -------------------------------------------------------------------------- Alicia Driscoll Murder/Suicide (faked in my opinion) learned of Jan 2014 - matched to KM Fire contractor Mountain Cascade Worker in April. Mary Alicia Driscoll Murder Suicide? I don't think so http://cnetscandal.blogspot.com/2014/04/mary-alicia-driscoll-murder-suicide-i.html -------------------------------------------------------------------------- ELLEN SABADUQUIA (1950-2005) Witness to the 2004 Walnut Creek Pipeline Explosion http://cnetscandal.blogspot.com/2014/04/ellen-sabaduquia-1950-2005-witness-to.html -------------------------------------------------------------------------- I cannot provide extensive details without a new laptop- I've had all my servers, assets, computers, cars and cash taken. I am living homeless and even with numerous attempts on my life nothing moves. The suspects in my PGE, KM and other investigations will support a broader suite of allegations that a large insurance fraud operation runs in part from Contra Costa County. The losses are in the billions affecting publicly traded companies asset values. When upon learning connections between a long 30 year history of fires, accidents and worse near me as what has become clear to many in the area - we have too many major catastrophic losses. The attached graphics and presentations are works in progress since the mature versions are trapped on several dead systems. The closer I get who is behind these events the attacks escalate. There appears to be a connection and my information on how these individuals interact is derived from decades of personal setbacks, the CNET arrests, and Seeno Indictments who are connected to a hedge fund that I stated could be support from an underlying fraud with this indictment. http://cnetscandal.blogspot.com/2014/03/benny-chetcuti-jr-walnut-creek-real.html Walnut Creek Real Estate Investor Indicted For Fraud FOR IMMEDIATE RELEASE March 28, 2014 OAKLAND – A federal grand jury in Oakland yesterday returned a two-count indictment charging Benny Chetcuti, Jr. with wire fraud, stemming from Chetcuti’s Walnut Creek, Calif., based real estate investment business, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson. According to the Indictment, as early as Oct. 2002 and continuing through June 2010, Chetcuti allegedly defrauded private investors who loaned money to him and his business, Chetcuti & Associates. Chetcuti started Chetcuti & Associates in 1998 for the purpose of purchasing homes, renovating them, and selling them within a short time period. Chetcuti financed his business, in part, by obtaining loans from private investors in exchange for promissory notes that were supposed to be secured by interests in real properties. The Indictment alleges that Chetcuti defrauded investors by misrepresenting how much debt was already secured by the properties, falsely promising to record deeds of trust that would have secured the investors’ interests in the properties, directing others to impersonate lenders or title company officers in telephone calls, and forging letters purportedly written by lenders and title company officers. A summons was issued upon filing of the Indictment. Chetcuti is scheduled to make his initial appearance on April 2, 2014 at 9:30 a.m. before the Honorable Kandis A. Westmore, United States Magistrate Court Judge in Oakland. The maximum statutory penalty for each count of wire fraud in violation of 18 U.S.C. § 1343 is 20 years imprisonment and a fine of $250,000, or twice the gross loss or gain resulting from the offenses, plus restitution and forfeiture, if appropriate. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. Andrew S. Huang is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Vanessa Quant. The prosecution is the result of an investigation by the Federal Bureau of Investigation. Please note, an Indictment contains only allegations against a defendant and, as with all defendants, Benny Chetcuti, Jr. must be presumed innocent unless and until proven guilty. (Chetcuti indictment ) http://www.justice.gov/usao/can/news/2014/2014_03_28_chetcuti.indicted.press.html There is pattern to how cases are vetted in the District Attorney offices - I've followed Juries, cases and companies for decades. Seeno should have been brought down decades ago. From the 1980s to present I gave the SF FBI information to build a case on what I call the Golden Hand of Contra Costa County. Seene burns down buildings to make money, Chetcuti was running his scam since 1999, Another case is Walter Eng in Lafayette CA (750 Million BK) so between these two cases and dozen others the DA has looked the other way while billions have been lost. You have to wonder why they couldn't have gone after Chetcuti when the first Cease and Desist letter arrived. That's where EBMUD WARD Director Coleman fits - not positive but I think he's the DDA that prosecutes real estate fraud. I can tell no one wants to talk about the KM fire Dead Witnesses but it took me two years of research that kept leading to similar cases by the third year it was clear this county should be renamed Cold Case County operated by investor Swiss Cheese - when you fight you loose over the loop holes not because you're owned money

Products involved

Select the type of product involved in your complaint:

Real Estate

Please select the category that best describes your security product:

Real estate investment trusts

Enter the security/ticker symbol if known:

More later - it ties to previous post -

About you

*Are you submitting this tip, complaint or referral pursuant to the SEC's whistleblower program?

Yes

*Are you submitting this tip, complaint or referral anonymously? Being able to contact you for further information or clarification may be helpful.

No

**Are you represented by an attorney in connection with your submission?

No

Submitter Information

Title:

Mr.

**First Name:

Peter

Middle Name:

Carver

**Last Name:

Bennett

Street Address:

Homeless

City:

Walnut Creek

State / Province:

CA

Zip / Postal Code:

94596

Country:

USA

Home Telephone:

510-460-5641

What is the best way to contact you?

Phone

Select the profession that best represents you:

Other

Whistleblower Declarations

*1. Are you, or were you at the time you acquired the original information you are submitting to us, a member, officer, or employee of the Department of Justice, the Securities and Exchange Commission, the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, the Public Company Accounting Oversight Board, any law enforcement organization, or any national securities exchange, registered securities association, registered clearing agency, or the Municipal Securities Rulemaking Board?

No

*2. Are you, or were you at the time you acquired the original information you are submitting to us, a member, officer, or employee of a foreign government, any political subdivision, department, agency, or instrumentality of a foreign government, or any other foreign financial regulatory authority as that term is defined in Section 3(a)(52) of the Securities Exchange Act of 1934 (15 U.S.C. §78c(a)(52))?

No

*3. Did you acquire the information being submitted to us through the performance of an engagement required under the federal securities laws by an independent public accountant?

No

*4. Are you submitting this information pursuant to a cooperation agreement with the SEC or another agency or organization?

No

*5. Are you a spouse, parent, child, or sibling of a member or employee of the SEC, or do you reside in the same household as a member or employee of the SEC?

No

*7a. Are you submitting this information before you (or anyone representing you) received any investigative request, inquiry, or demand that relates to the subject matter of your submission from the SEC, Congress, or any other federal, state, or local authority, any self regulatory organization, or the Public Company Accounting Oversight Board?

Yes

7b. If the answer to question 7a is 'no,' please provide details.

I am the programmer whose collected information who has a target on his back - in 2004 and 05 my connection to the Debate the H-1b visa I was asked to testify in Congress but before I could get there I nearly died in the ER from suspected poisoning,my truck explodes and persons near the visas and outsourcing started getting killed. The US Programmer connected to Job Poaching Anti-Trust was in part started my from opposition on the visas. My concerns over 10 years was information systems would be used to extract and deplete companies. When Matthew Michael Lyon turned up dead last summer that lead to Accenture then to PIMCO who they developed software for then to Paul Clark UBS Bond Trader attends the same Alamo 1st WARD where the billion dollar could linked to the deaths and real estate acquisitions tied to events where homeless that are lviing near their RE Investments under development are being killed, run over and/or permanently maimed costing the State millions. Find Andrea Huseby and Chris Huseby - I believe she's the first dead banker working of IHE - I know the accident patterns well. Her death fits.

*8a. Are you currently a subject or target of a criminal investigation, or have you been convicted of a criminal violation, in connection with the information you are submitting to the SEC?

No

*9a. Did you acquire the information being provided to us from any person described in questions 1 through 8?

Yes

9b. If the answer to question 9a is 'yes,' please provide details about the person from whom you acquired the information.

my information is derived from personal knowledge, understanding how parties I've watched over nearly 40 years morph into billionaires while I've suffered setbacks - it's the Ying and Yang. My information is connected to software projects and several project revealed winning attorneys were winning too often. The CNET case provided litigation to be revealed, the dead witnesses formed the framework for finding more cases and online resources allowed what I already knew to weave together that the club has been getting high level cover and litigants like myself - well we just get beaten up and those incidents added up to that PG&E, Kinder Morgan and others are able to use information systems e.g. large scale long term software changes to defeat the SEC detection systems that in many cases are now operated by outsourcing entities. TI know the H-1b visa is a tool to penetrate companies like Kaiser where the former CTO was in my cub scout den in 2004- like me he was experiencing disruption - shortly after IBM was in control of Kaiser IT and my friends all lost their jobs but I've correlated deaths to those being with Kaiser Patients. The perfect storm is knowing a patients weakness - I survived poison, infections and suspect medical including suspected heart attacks which is how they killed mr. Lyon of Accenture. He's probably a Kaiser patient but Tim Hogan Walnut Creek died of near identical causes in 2010. Lyons knew my attorney, who knew Nate Greenan who knew me who knew others connected to Fremont Capital Partners who know Nearon Properties where David Nearon attempted to pass a forged power attorney on the same street where the only other Limo Fire in the country occurred in front of Alice Roberts (96) - they are probably running an LA Grandma's operation - these operators are simply positioned perfectly in the middle of the perfect storm where they can pretty much cover up suicides like Patricia Noel whose husband was a key person at FoxBoro COntrols who would have deep intimate knowledge of SCADA systems at PG&E. So many are leaving for Tahiti

10. Identify with particularity any documents or other information in your submission that you believe could reasonably be expected to reveal your identity, and explain the basis for your belief that your identity would be revealed if the documents were disclosed to a third party.

I've already been revealed when my trailer was lost to Mormons now connected to the Seeno Indictments and when Walnut Creek Police officers and others stole but returned my laptop. Every letter sent to the US Attorney and FBI has been revealed. They want me dead plain and simple.

*I declare under penalty of perjury under the laws of the United States that the information contained in this submission is true, correct, and complete to the best of my knowledge, information, and belief. I fully understand that I may be subject to prosecution and ineligible for a whistleblower award if, in my submission of information, my other dealings with the SEC, or my dealings with another authority in connection with a related action, I knowingly and willfully make any false, fictitious, or fraudulent statements or representations, or use any false writing or document knowing that the writing or document contains any false, fictitious, or fraudulent statement or entry.

Agree

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SEC Charges Cognizant and Two Former Executives With FCPA Violations

Pete Bennett former activist on jobs and Outsourcing I seen his friend Slaughter enduring it countless beatings Walnut Creek Oroville Danville San francisco-oakland and watched his friends get picked off one by one.

When Pete Bennett approach the H-1B visa and managed to convince members of Congress to lower the cat he stepped on the toes of trillions of dollars in income of a people involved at in processing other companies.

By the way these are the same people Lobby Congress for energy the wife of Dan turton former liaison to the house for President Obama perish by fire on the day she was supposed to be part of the Duke Energy merger the car burst into a ball of fire like mine in 2004.

SEC Charges Cognizant and Two Former Executives With FCPA Violations

FOR IMMEDIATE RELEASE
2019-12

Washington D.C., Feb. 15, 2019 —

Cognizant Technology Solutions Corporation has agreed to pay $25 million to settle charges that it violated the Foreign Corrupt Practices Act (FCPA), and two of the company’s former executives were charged for their roles in facilitating the payment of millions of dollars in a bribe to an Indian government official. 

The Securities and Exchange Commission’s complaint alleges that in 2014, a senior government official of the Indian state of Tamil Nadu demanded a $2 million bribe from the construction firm responsible for building Cognizant’s 2.7 million square foot campus in Chennai, India.  As alleged in the complaint, Cognizant’s President Gordon Coburn and Chief Legal Officer Steven E. Schwartz authorized the contractor to pay the bribe, and directed their subordinates to conceal the bribe by doctoring the contractor’s change orders.  The SEC also alleges that Cognizant authorized the construction firm to make two additional bribes totaling more than $1.6 million.  Cognizant allegedly used sham change order requests to conceal the payments it made to reimburse the firm.

“Bribery to further corporate goals is an illusory path to long-term success.  While always the wrong choice, it is particularly egregious when senior executives chart that course for those they lead, as our complaint alleges here.  We are committed to holding them accountable for their actions,” said Charles E. Cain, Chief of the SEC Enforcement Division’s FCPA Unit.

The SEC charged Coburn and Schwartz with violating anti-bribery, books and records, and internal accounting controls provisions of the federal securities laws.  The SEC is seeking permanent injunctions, monetary penalties, and officer-and-director bars against Coburn and Schwartz.

The SEC’s order as to Cognizant found that the company violated Sections 30A, 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934, which are anti-bribery, books and records, and internal accounting controls provisions of the federal securities laws.  Without admitting or denying the allegations, the company agreed to pay disgorgement and prejudgment interest of approximately $19 million and a penalty of $6 million.

The Department of Justice and the U.S. Attorney’s Office for the District of New Jersey today announced the indictment of Coburn and Schwartz on criminal charges of violating and conspiring to violate the FCPA’s anti-bribery and accounting provisions.

The SEC’s investigation was conducted by Michael K. Catoe, Paul W. Sharratt, and M. Shahriar Masud of the FCPA Unit under the supervision of Robert I. Dodge.  The litigation will be led by John Bowers.  The SEC appreciates the assistance of the Justice Department’s Fraud Section, the U.S. Attorney’s Office for the District of New Jersey, and the Federal Bureau of Investigation.

###

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The FBI Fraud Case connected to the Walnut Creek Downtown Business Association, Regional Parking, Former Mayor Gary Skrel, and the Diablo Magazine Article "The Setup"

The FBI Fraud Case connected Walnut Creek Downtown Business Association 

Former Walnut Creek Investor Sentenced to Over Four Years’ Imprisonment in Real Estate Fraud Scheme

OAKLAND, CA—Benny Chetcuti, Jr. was sentenced yesterday to 51 months in prison, and ordered to pay $21,823,526.10 in restitution, as well as forfeit $3,968,995 in proceeds obtained from a multi-year real estate investment fraud scheme, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.

Mr. Chetcuti, 60, of Walnut Creek, California, pleaded guilty on October 21, 2014, to two counts of wire fraud. According to the plea agreement, Mr. Chetcuti admitted that between 2007 and 2010, he defrauded private investors who loaned him money under the belief that their loans were backed by equity in real property. In fact, Mr. Chetcuti misrepresented aspects of many of the loans including how much equity was available to secure the loans, the amounts and seniority of loans already tied to the properties, and how the loans were used. He also misled investors about whether their loans were recorded through deeds of trust.

Mr. Chetcuti, was indicted by a federal grand jury on March 27, 2014. According to the indictment, Mr. Chetcuti operated a real estate investment firm, Chetcuti & Associates, since 1998. Chetcuti & Associates was in the business of purchasing and flipping homes for resale after renovation and was funded in large part by loans from private individuals. To carry out his scheme, Mr. Chetcuti used a variety of tactics to misrepresent the equity that supposedly backed his loans. Among the tactics he used were forging deed recordings, forging letters supposedly written by institutional lenders and title company officers, and directing others to impersonate escrow officers. The indictment charged Mr. Chetcuti with two counts of wire fraud in violation of 18 U.S.C. § 1343.

The sentence was handed down by the Honorable Jeffrey S. White, U.S. District Judge. The Court found that Mr. Chetcuti’s fraudulent scheme caused more than $3.9 million in losses, attributable to 21 victims. In addition, the Court ordered Mr. Chetcuti to pay more than $21.8 million in restitution for the losses his real estate investment business caused. The Court also sentenced the defendant to a three-year period of supervised release and explicitly barred him from participating in any real estate, banking, or lending-related activities. The defendant was ordered to self-surrender to federal authorities on June 4, 2015, at which time he will begin serving the sentence.

Assistant U.S. Attorney Andrew S. Huang is prosecuting the case with the assistance of Vanessa Quant and Yvette Baird. The prosecution is the result of a multi-year investigation by the Federal Bureau of Investigation. The U.S. Department of Labor, Employee Benefits Security Administration also assisted with the investigation.

This content has been reproduced from its original source.

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PLI White Collar Crime 2018: Prosecutors and Regulators Speak I. Introduction

Connecting Success Factors to Bennett

New York, NY

Oct. 3, 2018

PLI White Collar Crime 2018: Prosecutors and Regulators Speak

I. Introduction

Thank you for that kind introduction, and thank you for inviting me to speak here this morning.  Before I begin, I am required to give a standard disclaimer that the views I express here today are my own, and do not necessarily represent the views of the Commission or its staff.[1] 

My remarks today come a little over a year after Stephanie Avakian and I were appointed Co-Directors of the SEC’s Division of Enforcement and just a few days after the close of the first full fiscal year in which we have held our positions.  So this is a fitting time to look back on the work of the Division of Enforcement over the past year and to discuss the Division’s priorities over the next year. 

Many of those who closely follow the work of the Enforcement Division tend to evaluate its effectiveness based on metrics such as the number of enforcement actions the Commission brings each year and the total amount of penalties and disgorgement ordered by the Commission or federal district courts.  These quantitative metrics are of some value in assessing the work of the Division; they certainly provide a rough measure of our overall activity level.  But statistics such as these do not provide a full and meaningful picture of the quality, nature, and effectiveness of our efforts.  Indeed, in my view, when numbers are the primary lens through which our work is viewed, that perspective can be counterproductive. 

So to assess whether the Division’s work is effective in accomplishing the Commission’s mission, Stephanie and I have been moving the conversation to a different set of questions, namely the following:

• Are our efforts protecting retail investors?
• To what extent is the Commission holding individuals accountable for violations of the law?
• Are we keeping pace with technological change?
• Do the remedies we recommend effectively further enforcement goals?
• And, are we efficiently allocating the Division’s resources?

This morning, I’d like to focus my remarks on how we think about one of these questions – that is, how particular remedies and relief that the Division of Enforcement recommends to the Commission advance our goals.  In thinking about the effectiveness of the remedies and relief available to the Commission, it is tempting to focus solely on the Commission’s ability to obtain significant financial penalties in enforcement actions.  Large dollar figures attract headlines and some view them as a proxy for how tough we are, and, relatedly, the effectiveness of our enforcement efforts. 

Penalties are important to an effective enforcement regime because they punish wrongdoers and send a message of general deterrence – ensuring that others know that violating the federal securities laws is a losing proposition.  And our activity over just this past year reflects our view that in many instances, to be effective, such penalties need to be substantial.  In fact, just last week, the Commission assessed eight-figure penalties against Walgreens and Tesla, which I’ll address in more detail later this morning.    

While we do seek and obtain some form of monetary relief – whether disgorgement, penalties or both – in most of our actions, non-monetary relief can be highly important to achieving the Commission’s overall goals as well.  For that reason, a case-specific approach to remedies and relief is important, and is exemplified by a number of Commission actions that I will describe during my remarks today.  

II. Non-Monetary Relief

When we think about what overall relief makes the most sense in a given case, we’re guided by these questions:  Does the relief punish bad actors and restore money to harmed investors?  Does it advance the goals of specific and general deterrence?  And does it put into place meaningful protections for investors going forward?  If we have secured a good set of remedies, we can answer each of those questions affirmatively, and to do so often requires looking not just to penalties and disgorgement, but to forms of equitable or remedial relief that are available to us.

First off, what do I mean by non-monetary, equitable relief?  To me, that term includes the full range of remedies the Commission has at its disposal, beyond the ability to seek penalties and disgorgement.  When thoughtfully deployed, non-monetary remedies give the Commission latitude to craft an outcome that best matches the facts and circumstances of a given case.

So what are the non-monetary remedies that are critical to our enforcement efforts?  Today, I’ll highlight a few forms of non-monetary relief that are of particular significance – undertakings and conduct-based injunctions, and bars and suspensions.

Undertakings and Conduct-Based Injunctions

In civil injunctive actions, the federal securities laws permit the Commission to seek – and federal courts to grant – any equitable relief that may be appropriate or necessary for the benefit of investors.[2]  In practice, two of the most effective forms of equitable relief in Commission enforcement actions are undertakings, which require a defendant to take affirmative steps – either in conjunction with entry of the order or in the future – in order to come into and remain in compliance with the specific terms of the court’s order, and conduct-based injunctions, which prohibit a defendant from engaging in conduct that, while otherwise legal, poses risk of harm to investors in the future.  The Commission also has authority to impose similar obligations in administrative and cease-and-desist proceedings.[3]

For example, the Commission recently secured a conduct-based injunction in its settlement with Billy McFarland, who, according to the SEC’s complaint, fraudulently induced more than 100 investors to put over $27 million into his companies, including Fyre Festival LLC.  In addition to ordering that McFarland and his companies were liable for full disgorgement, the final judgment in the SEC’s matter against McFarland included a conduct-based injunction, enjoining McFarland from directly or indirectly participating in the issuance, purchase, offer, or sale of any security, except for his own personal account.[4]

With respect to undertakings, many require the settling party to retain a compliance consultant or monitor to make recommendations to the issuer and report to the Commission on terms specifically defined in the settlement papers.[5]  Such undertakings make it possible for an SEC action to seed change in a corporation’s processes in a way that serves the long-term interests of investors.  Undertakings are a forward-looking remedy; they are specifically designed with an eye toward what happens after the settlement.  So when they are well-crafted, they unquestionably provide unique benefits to investors in the long term. 

In addition to undertakings requiring the retention of compliance consultants or monitors, we have also tailored other types of undertakings to accomplish remedial objectives that were specific to the wrongful conduct at issue. 

In March, the Commission charged Theranos, Inc., a private company, and its founder and CEO Elizabeth Holmes with raising more than $700 million from investors in an elaborate, years-long scheme involving exaggerated claims about the company’s technology, business, and financial performance.[6] 

Aspects of the Theranos matter have been covered extensively in other forums.  But for today’s purposes, one of the most important elements of the Commission’s settlement with Holmes were undertakings that (1) required her to relinquish her voting control over Theranos by converting her supermajority shares to common shares, and (2) guaranteed that in a liquidation event, Holmes would not profit from her ownership stake in the company until $750 million had been returned to other Theranos investors.  In Theranos, the Commission confronted a situation where, because of the capital structure of the company, Holmes had nearly complete control of the company.  And given what we alleged had occurred, it was appropriate to seek relief that protected investors from potential misuse of that controlling position going forward.  The undertakings were designed to do exactly that.

In another example, late last week, the Commission charged Elon Musk, the Chairman and CEO of Tesla, with fraud for Tweeting a series of false and misleading statements about his plan to take Tesla private.[7]  The Commission also charged Tesla with failing to maintain disclosure controls and procedures with respect to Musk’s communications.  To settle the SEC actions, Musk and Tesla agreed not only to pay significant penalties, but also to a set of comprehensive undertakings.  If approved by the court, the undertakings will require, among other things, (1) Musk to resign as Chairman and be replaced by an independent Chairman, (2) Tesla to add two independent directors to its board, (3) Tesla to establish a committee of independent directors and adopt mandatory controls and procedures to oversee and Musk’s public communications about the company, and (4) Tesla to employ within its legal department an experienced securities counsel.[8]

 These undertakings specifically target and attempt to address specific risks – in this case, the potential harm to investors caused by Musk’s communication practices and a lack of sufficient oversight and control of those communications.  The undertakings were specifically targeted to put in place stronger corporate governance by increasing the independence of the Tesla board and imposing closer oversight and control of Musk’s communications.  I believe these carefully tailored undertakings serve the Commission’s investor protection mission by specifically addressing the misconduct at issue.   

In these examples, the overall package of remedies also included monetary penalties aimed at punishing misconduct, and the benefit of such penalties for deterring misconduct should not be understated.  But the equitable relief the Commission obtained was both forward-looking and precisely tailored to the facts and circumstances of the case, and for that reason, it stands to benefit investors over the long run.

Bars and Suspensions

In addition to undertakings, the Commission can also seek or impose other forms of forward-looking or remedial relief, such as officer and director bars and associational bars and suspensions.  Like undertakings, bars and suspensions are not a punishment.  Rather, they serve a critical prophylactic function – preserving the integrity of our markets and protecting investors by limiting the activity of known bad actors by removing them from the industry or preventing them from serving as officers or directors at public companies.

In actions authorized this fiscal year alone, the Commission is seeking in litigation, or has obtained in settlements, multi-year officer and director bars or industry bars and suspensions against hundreds of individuals.  Some illustrations of the bars sought or obtained include:

• Bars we are seeking in ongoing litigation against the former CEO and CFO of one of the largest mining interests in the world, who allegedly misled investors about the rapid deterioration in the value of a business the company had recently acquired for $3.7 billion.[9] 
• Bars sought against CEO and COO who allegedly misrepresented their company as a first-of-its-kind decentralized bank offering its own cryptocurrency to be used for a broad range of customer products and services.[10]
• Bars secured in settlement with the former CEO of a NASDAQ-listed oil and gas company who received over $1 million of undisclosed perks and compensation in a variety of forms, including lavish social events, first class travel, and an office bar stocked with high-end liquor and cigars.[11]
• Bars secured against the former CEO of LendingClub Asset Management LLC, who was charged with using the fund’s money to benefit LendingClub Corporation.[12]
• And of course, we secured a ten-year officer and director bar against Elizabeth Holmes, and are seeking an officer and director bar in our ongoing litigation against Theranos’ former President, Sunni Balwani.[13]

It may not come as a surprise that many individuals as to whom we seek bars choose to litigate rather than settle with the Commission.  As such, bars can be a resource-intensive remedy for the agency.  But the flip side of the resources coin is a remedy that, like undertakings, can have direct, far-reaching, and positive effects for investors.  As such, obtaining bars and suspensions, when warranted by the facts and circumstances, are a high priority for the Division.

III. Civil Penalties and Disgorgement

Penalties

I’d like to turn now to monetary relief.  Since 1990, when the SEC’s current penalty regime came into effect, the Commission has often levied large penalties against regulated entities.[14]  That was true again this year, when multiple Wall Street banks,[15] asset managers,[16] and other market gatekeepers, including a regulated exchange,[17] were assessed large money penalties.

The rationale behind assessing money penalties in actions involving regulated entities is relatively straightforward.  To preserve the integrity of our markets and protect investors, the Commission is charged with promulgating and enforcing rules governing certain of the business practices of the entities we regulate – including broker-dealers, investment advisers, asset managers, credit rating agencies, and exchanges.  Penalties are one of the primary enforcement tools we have to incentivize regulated entities to remain in compliance with the rules that protect investors.  Stephanie and I embrace this rationale, and you can expect us to apply it throughout our tenure as Co-Directors.

But the analysis with respect to corporate issuers with a class of securities registered with the SEC often involves additional considerations that don’t uniformly apply in matters involving regulated entities.  Such issuers are required by statute and regulation to file public periodic and annual reports and financials, and to have policies, procedures, and controls in place to enable them to satisfy their obligations concerning the accuracy, completeness, and timeliness of such filings.  Using enforcement to promote the integrity of issuers’ public filings – which are central to the sound functioning of our capital markets – is a critical part of our mandate.  So in matters involving corporate issuer misconduct, decisions about whether to recommend the assessment of penalties require careful and thoughtful balancing of many factors including, of course, the nature of the misconduct.

We also consider whether application of the Seaboard factors is appropriate.  This includes evaluation of the nature of remedial steps taken by the company, its own self-reporting and self-policing efforts, and the extent of its cooperation with the Commission and other law enforcement agencies.[18]
 

Over the last year, the balance of factors has led the Division to recommend substantial penalties against a variety of corporate issuers.  I’ll touch briefly on four examples:

• In September, the Commission obtained a $20 million penalty from a publicly-traded biopharmaceutical company and two of its senior officers to settle charges that they misled investors about the company’s developmental lung cancer drug.  The Commission alleged that the company’s investor presentations, press releases, and SEC filings stated that the drug was effective 60 percent of the time, far higher than suggested by actual results available internally.[19]
• The Commission obtained a $34 million penalty against Walgreens Boots Alliance, Inc., in an action against the company and two former executives for allegedly misleading investors over multiple reporting periods about increased risk that the company would miss an important financial projection that it had announced simultaneously with the announcement of its merger with Boots.[20]
• Altaba, the company formerly known as Yahoo!, paid $35 million to settle charges that it misled investors by failing to disclose one of the world’s largest data breaches, in which hackers stole personal data relating to hundreds of millions of user accounts.   The Commission alleged that Yahoo!’s senior management was aware of the cyber intrusion, but failed adequately to investigate the breach or disclose it for a period of almost two years.[21]
• And of course, the Commission secured a $20 million penalty against Tesla, whose governance failures allegedly enabled Musk’s fraudulent tweets.  As we alleged in our complaint, for years, Tesla had relied on Musk’s Twitter feed – with its 22 million followers – to market the company and disseminate corporate news and information.  But the company had no controls in place to ensure that his Tesla-related tweets were accurate and otherwise complied with the federal securities laws.

The penalties in these cases served a strong deterrent purpose.

That said, not every case warrants a penalty.  As a counterpoint, last December the Commission issued an order finding that the CEO and CFO of an exchange-listed biopharmaceutical company received millions of dollars in undisclosed perks.[22]   The company undertook to fully remediate material weaknesses in its accounting controls – and undertook to retain an independent compliance consultant should its remediation efforts fail.  The SEC’s order expressly acknowledged the extensive remediation efforts taken by the company, which included the institution of legal proceedings the collect repayments from its former CEO and CFO and replacing the firms that had provided or assisted with bookkeeping.  In light of these extensive remedial efforts, combined with the undertaking agreed to by the company, we determined that it was appropriate not to recommend a penalty to the Commission.

We made a similar judgment call with our recommendation in a case announced last week, which involved conduct by a publicly-traded pharmaceutical company that otherwise weighed in favor of a penalty recommendation.  We credited new management’s significant cooperation – including its self-reporting of the misconduct – with the Commission’s investigation and its proactive remediation efforts in deciding against recommending a corporate penalty.[23] 

Disgorgement

While there is a careful weighing of factors with respect to penalties, the other primary form of monetary relief – disgorgement – is handled quite differently.  Even where a defendant or respondent cooperates and agrees to meaningful undertakings, it should not be entitled to keep its ill-gotten gains, which we are often in a position to restore to harmed investors. 

The Commission has obtained disgorgement in a wide variety of matters, including offering frauds, and most all FCPA resolutions.[24]  The Commission also obtained significant disgorgement in settlements with regulated entities that profited by their failures to adhere to the Commission’s rules and regulations. Earlier this year, for example, Deutsche Bank was required to disgorge more than $44 million of ill-gotten gains associated with its improper handling of pre-release American Depositary Receipts.  The Commission secured similar relief in matters against a number of large broker-dealers this year. 

And of course, in offering frauds, where individuals obtain money directly from investors through fraudulent representations, disgorgement is a central component of meaningful relief and often the surest way to restore at least a portion of investors’ losses.[25] 

As you probably know, the Supreme Court ruled last term in Kokesh v. SEC that disgorgement was to be considered a penalty for statute of limitations periods, and therefore the proceeds of misconduct obtained by a wrongdoer outside the statute of limitations were insulated from disgorgement.  The impact of the ruling has been very significant and will continue to be.  Take Kokesh, itself.  That case involved an investment adviser who misappropriated from investors $34.9 million through a long running scheme that spanned 14 years.  Of that amount, $29.9 million was misappropriated as a result of violations that occurred more than five years before the Commission brought its action.  In the end, Kokesh kept the vast majority of his ill-gotten gains, at the expense of innocent investors.[26] 

The impact of Kokesh has been felt across our enforcement program.  A few months ago, we calculated that Kokesh led us to forego seeking approximately $800 million in potential disgorgement in filed and settled cases.  That number continues to rise. 

IV. Conclusion

So what is the takeaway of all of this?  I think as you can see the Commission has at its disposal a wide variety of remedies and relief.  And in the Division of Enforcement we think carefully about what of those tools to recommend to the Commission in every case.  What we do not do is assess large penalties simply for the sake of counting them up at the end of the year   For that reason, the effectiveness of our program cannot be measured with resort to any one quantitative measure, but instead requires a nuanced and qualitative evaluation of our overall impact on achieving our investor and market integrity protection mission.

Thank you for your time today.

 

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[1] The Securities and Exchange Commission, as a matter of policy, disclaims responsibility for any private publication or statement by any of its employees.  The views expressed herein are those of the author and do not necessarily reflect the views of the Commission or of the author’s colleagues on the staff of the Commission.

[2] See Section 21(d)(5) of the Securities Exchange Act of 1934, 15 U.S.C. §78u(d)(5).

[3]  See Sections 15(b)(4), 15(b)(6), and  21C(a) of the Securities Exchange Act of 1934, 15 U.S.C. §§ 78o(b)(4), (6), and 78u-3(a).

[4] See Final Judgment as to Defendants William Z. (“Billy”) McFarland, Fyre Media, Inc., and Magnises, Inc., SEC v. William Z. (“Billy”) McFarland, No. 1:18-CV-6634-JGK (S.D.N.Y. Aug. 1, 2018).

[5] See Press Release 2018-184, SEC Obtains Relief to Fully Reimburse Retail Investors Sold Unsuitable Product (Sept. 11 2018), available at https://www.sec.gov/news/press-release/2018-184; Press Release 2018-222, SEC Charges Stryker A Second Time for FCPA Violations (Sept. 28, 2018), available at https://www.sec.gov/news/press-release/2018-222.

[6] See Press Release 2018-41, Theranos, CEO Holmes, and Former President Balwani Charged With Massive Fraud (March 14, 2018), available at https://www.sec.gov/news/press-release/2018-41.

[7] See Press Release 2018-219, Elon Musk Charged With Securities Fraud for Misleading Tweets (Sept. 27, 2018), available at https://www.sec.gov/news/press-release/2018-219.

[8] See Press Release 2018-226, Elon Musk Settles SEC Fraud Charges; Tesla Charged With and Resolves Securities Law Charge (Sept. 29, 2018), available at https://www.sec.gov/news/press-release/2018-226.

[9] See Press Release 2017-196, Rio Tinto, Former Top Executives Charged With Fraud (Oct. 17, 2017), available at https://www.sec.gov/news/press-release/2017-196.

[10] See Press Release 2018-8, SEC Halts Alleged Initial Coin Offering Scam (Jan. 30, 2018), available at https://www.sec.gov/news/press-release/2018-8.

[11] See Press Release 2018-13, SEC Charges Oil Company CEO, Board Member With Hiding Personal Loans (July 16, 2018), available at https://www.sec.gov/news/press-release/2018-133.

[12] See Press Release 2018-223, SEC Charges LendingClub Asset Management and Former Executives With Misleading Investors and Breaching Fiduciary Duty (Sept. 28, 2018), available at https://www.sec.gov/news/press-release/2018-223.

[13] See Press Release 2018-41.

[14] See Press Release 2010-123, Goldman Sachs to Pay Record $550 Million to Settle SEC Charges Related to Subprime Mortgage CDO (July 15, 2010), available at https://www.sec.gov/news/press/2010/2010-123.htm; Press Release 2016-128, Merrill Lynch to Pay $415 Million for Misusing Customer Cash and Putting Customer Securities at Risk (June 23, 2016), available at https://www.sec.gov/news/pressrelease/2016-128.html.

[15] See Press Release 2018-155, Citigroup to Pay More Than $10 Million for Books and Records Violations and Inadequate Controls (Aug. 16, 2018), available at https://www.sec.gov/news/press-release/2018-155-0; Press Release 2018-108, Merrill Lynch Admits to Misleading Customers about Trading Venues (June 19, 2018), available at https://www.sec.gov/news/press-release/2018-108; Press Release 2018-138, Deutsche Bank to Pay Nearly $75 Million for Improper Handling of ADRs (July 20, 2018), available at https://www.sec.gov/news/press-release/2018-138.

[16] See Press Release 2018-167, Transamerica Entities to Pay $97 Million to Investors Relating to Errors in Quantitative Investment Models (Aug. 27, 2018), available at https://www.sec.gov/news/press-release/2018-167.

[17] See Press Release 2018-31, NYSE to Pay $14 Million Penalty for Multiple Violations (March 6, 2018), available at https://www.sec.gov/news/press-release/2018-31; Press Release 2018-169, SEC Charges Moody’s With Internal Controls Failures and Ratings Symbols Deficiencies (Aug. 28, 2018), available at https://www.sec.gov/news/press-release/2018-169.

[18] Report of Investigation Pursuant to Section 21(a) of the Securities Exchange Act of 1934 and Commission Statement on the Relationship of Cooperation to Agency Enforcement Decisions, Securities Exchange Act Release No. 44969 (Oct. 23, 2001) (available at: http://www.sec.gov/litigation/investreport/34-44969.htm).

[19] See Press Release 2018-199, Biopharmaceutical Company, Executives Charged With Misleading Investors About Cancer Drug (Sept. 18, 2018), available at https://www.sec.gov/news/press-release/2018-199.

[20] See Press Release 2018-220, SEC Charges Walgreens and Two Former Executives With Misleading Investors About Forecasted Earnings Goal (Sept. 28, 2018), available at https://www.sec.gov/news/press-release/2018-220.

[21] See Press 2018-71, Altaba, Formerly Known as Yahoo!, Charged With Failing to Disclose Massive Cybersecurity Breach; Agrees To Pay $35 Million(April 24, 2018), available at https://www.sec.gov/news/press-release/2018-71.

[22] See Press Release 2017-229, SEC Charges Biopharmaceutical Company With Failing to Properly Disclose Perks for Executives (Dec. 12, 2017), available at https://www.sec.gov/news/press-release/2017-229

[23] See Press Release 2018-221, SEC Charges Salix Pharmaceuticals and Former CFO With Lying About Distribution Channel (Sept. 28, 2018), available at https://www.sec.gov/news/press-release/2018-221.

[24] See Press Release 2018-215, Petrobras Reaches Settlement With SEC for Misleading Investors (Sept. 27, 2018), available at https://www.sec.gov/news/press-release/2018-215; See Press Release 2018-188, United Technologies Charged With Violating FCPA (Sept. 12, 2018), available at https://www.sec.gov/news/press-release/2018-188; Press Release 2018-174, Sanofi Charged With FCPA Violations (Sept. 4, 2018), available at https://www.sec.gov/news/press-release/2018-174

[25] See Press Release 2018-141, SEC Charges Failed Fyre Festival Founder and Others With $27.4 Million Offering Fraud (July 24, 2018), available at https://www.sec.gov/news/press-release/2018-141; Litigation Release No. 24076, SEC Charges Operators of Private Real Estate Fund with Scheme to Defraud Retail Investors (March 22, 2018), available at https://www.sec.gov/litigation/litreleases/2018/lr24076.htm; Litigation Release No. 24241, SEC Charges Nevada Microcap Issuer and Individuals with Unregistered, Fraudulent Offering (Aug. 21, 2018), available at https://www.sec.gov/litigation/litreleases/2018/lr24241.htm.

[26] Kokesh v. SEC, 137 S. Ct. 1635 (2017) (Sotomayor, J.).

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