The Securities and Exchange Commission today obtained an emergency court order to halt an alleged ongoing $7.54 million Ponzi scheme that targeted members of the Persian-Jewish community in Los Angeles.

The Commission alleges that for the past two years, Shervin Neman raised money from investors by claiming to be a hedge fund manager. Neman told investors that his purported hedge fund, Neman Financial L.P., invested in foreclosed residential properties that would be quickly flipped for profit, in Facebook shares obtained in private transactions, and highly anticipated initial public offerings, including Groupon, Inc., and LinkedIn Corp., and Angie’s List, Inc. Although Neman promised investors exorbitant returns resulting from his investing acumen and access to pre-IPO shares of well-known companies, what they actually received was simply other investors’ monies, the hallmark of a Ponzi scheme.

The Honorable Jacqueline H. Nguyen for the U.S. District Court for the Central District of California granted the Commission’s request for a temporary restraining order and asset freeze against Neman and the entities he controlled.

According to the Commission’s complaint, Neman raised funds from at least 11 investors in the fraudulent securities offering. Most of these investors were members of the Los Angeles Persian-Jewish community, of which Neman is also a member.

The Commission alleges that more than 99% of the money Neman raised was used either to pay returns to existing investors, or to fund his lavish lifestyle. According to the Commission, Neman spent nearly $1.6 million of investor funds to buy jewelry, pay for his wedding and honeymoon, as well as high-end cars, VIP tickets to sporting events, and vacations.

The Securities and Exchange Commission today charged a Silicon Valley businessman raised millions for two Internet start-ups by falsely promising investors that his companies were on the verge of undergoing successful initial public offerings and were well on their way to becoming the “next Google.”

The SEC alleges that Benedict Van, of San Jose, Calif., lured investors into web-based start-ups hereUare, Inc. and eCity, Inc. by falsely telling them that the companies would go public within a matter of months and generate millions in quick returns. In truth, Van had no plans to take the companies public and relied solely on investor funds to stay in business. Ultimately, when investor funds ran out by the end of 2008, Van was forced to shut down operations.

According to the SEC’s complaint, filed in federal court in the Northern District of California, Van raised more than $6.2 million from investors for hereUare in 2007 and 2008, and raised $880,000 in investor funds for eCity in 2008. In presentations to prospective investors, chiefly in homes in Sacramento and Stockton, Van held himself out as a wealthy venture capitalist with prior IPO experience. Van told prospective investors that the companies had lucrative deals and patents, and that he had retained Goldman Sachs and an international law firm to help take the companies public within six months. According to the SEC, everything Van told prospective investors was false.

The complaint alleges that, by their conduct, Van, hereUare, and eCity violated Section 17(a)(2) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5(b) thereunder; Van and hereUare also violated Sections 5(a) and 5(c) of the Securities Act. The defendants’ signed consents — which are subject to approval by the court — provide that each defendant is permanently enjoined against future violations of the statutes and rules each is alleged to have violated. In addition, defendant Van’s signed consent provides that, without admitting or denying the Commission’s allegations, he is permanently barred from serving as the officer or director of a public company. The Commission waived disgorgement and declined to assess a penalty against Van based on his demonstrated inability to pay.

Steven Lippman, 49, of Plantation, was charged with conspiracy to violate the Federal Election Campaign Act, to defraud the U.S., and to defraud a financial institution.

Prosecutors said Lippman, a shareholder in Rothstein’s now defunct law firm, Rothstein, Rosenfeldt and Adler (RRA), was illegally reimbursed by RRA for certain political contributions he made including the presidential campaign of John McCain.  The indictment claims Rothstein enlisted Lippman and others to contribute tens of thousands of dollars to the McCain campaign and RRA would unlawfully reimburse them.

In one instance, prosecutors said, Lippman made a $67,800 contribution to McCain-Palin Victory 2008. Lippman, in turn, received a check from RRA in the amount of $77,500, which constituted reimbursement of the funds he used to make the contribution.

Lippman also allegedly took part in a bank fraud scheme with Rothstein that made it appear RRA was an affluent and successful law firm and to gain additional time to meet the financial obligations of RRA. Prosecutors claim he did this in a scheme called “check kiting,” which is floating checks between accounts to inflate posted balances.

Lippman was also charged with tax fraud for failing to report certain expense reimbursements and other income from RRA.

The move follows the sudden plunge in an exchange-traded note called VelocityShares Daily 2X VIX Short-Term ETN, or TVIX, which lost 60 percent of its value in a short span of March.

The warning would be similar to one that pops up when investors trade options related to volatility, which are more complex than stocks.  The note, which pops up at the final verification stage of a trade, will serve as a last warning to a customer.  Schwab’s review and consideration of a warning for investors is significant because it comes at a moment after federal and state regulators have zeroed in on volatile trading and other activity involving exchange-traded notes.

New rules that could require certain brokers to act in the best interests of clients should enhance laws already in place for some financial advisers, a coalition of investor advocacy and trade groups wrote late on Thursday.

The letter to Securities and Exchange Commission Chairman Mary Schapiro from groups that include the Consumer Federation of America and the AARP is the latest development in a debate about upgrading the standards of brokers who give personalized investment advice. Calls for the rules change gained traction during the 2008 financial crisis.

While the brokerage industry generally supports the change, it is concerned about how it might affect the way brokers are compensated, among other things. Brokers are paid through the commissions they receive when investors buy and sell securities. Many other types of financial advisers receive a flat annual fee for their services.

Brokers may earn more from some investments they propose to clients, something investor advocates say could motivate a broker to push a more lucrative product. The flat fees investment advisers charge, along with the different rules they follow, typically prevent such conflicts of interest, say investor advocates.

The coalition letter addressed points made in a July letter to the SEC from the Securities Industry and Financial Markets Association, or SIFMA, a trade group representing major retail brokerages.

SIFMA expressed support for a fiduciary standard for brokers, but said using established case law and legal interpretations of “fiduciary” in the context of the brokerage industry would be “commercially impractical” because of the differences in how brokerages and investment advisers run their businesses.

A former NBA player has been indicted in New Jersey on federal charges he ran a more than $2 million Ponzi scheme.

Prosecutors say C. Tate George used The George Group to run the investment fraud scam. The indictment on four counts of wire fraud was announced Friday.  Prosecutors say George persuaded people, including former professional athletes, to invest in what he promised would be high-return real estate projects.  The U.S. attorney’s office says George instead used some of the money to pay existing investors and personal expenses.

The 43-year-old George played for the New Jersey Nets and the Milwaukee Bucks. The former University of Connecticut player is perhaps best known for hitting a buzzer beater in the 1990 NCAA Tournament.

he Securities and Exchange Commission announced that a federal judge in Massachusetts entered a final judgment on March 14, 2012 ordering defendant James J. Konaxis, formerly a registered representative of Beverly-based broker-dealer Sentinel Securities, Inc., to disgorge more than $483,000 in commissions earned over a two-year period by defrauding a former customer who was left widowed by the September 11, 2001 terrorist attacks. Together with prejudgment interested and a civil penalty, Konaxis has been ordered to pay a total of $514,954. In granting the Commission’s motion for monetary remedies, Judge Denise L. Casper found that Konaxis was liable in the amount of all commissions earned from three of the victim’s accounts over a two-year period because he “misled the victim into thinking her investments were safe, while churning (e.g., excessively trading) her funds in a manner contrary to her interests[.]”

According to the Commission’s complaint, Konaxis violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder by excessively trading his customer’s funds while knowingly or recklessly disregarding her interests. During a two-year period, the Commission alleges that the value of his customer’s accounts (funded by payments made to the victim and her family by the September 11^th Victim Compensation Fund) decreased from approximately $3.7 million to approximately $1.6 million, much of which was due to Konaxis’s investments and the resulting commissions paid to Konaxis.

The SEC alleges that Argyll Investments LLC’s purported stock-collateralized loan business is merely a fraud perpetrated by James T. Miceli and Douglas A. McClain, Jr. to acquire publicly traded stock from corporate officers and directors at a discounted price from market value, separately sell the shares for full market value in order to fund the loan, and use the remaining proceeds from the sale of the collateral for their own personal benefit. Miceli, McClain, and Argyll typically lied to borrowers by explicitly telling them that their collateral would not be sold unless a default occurred. However, since Argyll had no independent source of funds other than the borrowers’ collateral, Argyll often sold the collateral prior to closing the loan and then used the proceeds to fund it.

Also charged in the SEC’s complaint filed in U.S. District Court for the Southern District of California is a broker through which Argyll attracted potential borrowers. The SEC alleges that AmeriFund Capital Finance LLC and its owner Jeffrey Spanier violated the federal securities laws by brokering numerous transactions for Argyll while not registered with the SEC.

Wall Street banks may not be exercising proper supervision of state and local government bond sales, the Securities and Exchange Commission said, warning investors about risks in the $3.7 trillion municipal market.

Reviews of underwriters showed that some may not be sufficiently examining bond documents for evidence of fraud, the agency’s Office of Compliance Inspections and Examinations said today. Banks are required to review bond documents to guard against false statements and can face sanctions if they don’t.  SEC has set up an enforcement unit to police the municipal market for fraud. In August 2010, it settled claims against New Jersey that the state had misled investors by masking inadequate pension funding in $26 billion of bond sales. Later that year, four San Diego city officials agreed to financial penalties to settle the agency’s claims that they failed to inform investors of “fiscal problems’ tied to municipal retirement plans.

The SEC also has stepped up oversight of the municipal market as states and cities continue to deal with the effects of the 18-month recession that ended in June 2009. Amid such strains, the number of U.S. municipal-bond defaults doubled in the past two years, compared with the average from 1970 to 2009, driven by bonds sold for health-care and housing projects, according to Moody’s Investors Service.