SEC Philly Office Head, Sharon Binger, on Priorities and Cases
The Securities and Exchange Commission has a relatively new cop on the beat here: Sharon Binger, director of the Philadelphia Regional Office.
The Philly office oversees enforcement and examinations for the mid-Atlantic region. Binger joined it from the SEC’s New York office in 2014, where she was assistant regional director.
Sharon Binger became director of the Philadelphia regional office in 2014, after working in New York.
In an interview, Binger outlined some recent cases and priorities, first highlighting the one filed last week against Paul-Ellis Investment Associates, which the SEC examined at the firm’s offices at 1818 Market St.
In a suit filed against Joseph Andrew Paul and John Dee Ellis Jr., both of Philadelphia, the SEC alleges that the men orchestrated a fraud of a dozen retirees that totaled $3.9 million.
From 2010 through December 2012, the SEC’s suit says, Paul and Ellis raised the money through free-dinner seminars at which they promised double- and triple-digit returns annually. One Paul-Ellis employee claimed the investment strategy was “performing as expected in the 2 percent-4 percent weekly range.”
“These kinds of cases are our bread and butter, which is investor protection,” Binger said.
“It’s important to understand who you’re investing with, and we have resources to consult before you invest your money,” she said.
The fact that an investment firm is registered with the SEC “provides investors with more transparency,” she added.
Paul and Ellis marketed themselves as experienced money managers with a phone track record, a prospectus, and some glossy marketing materials to supplement the free meal.
Yet just a few minutes on the FINRA (Financial Industry Regulatory Authority) and SEC databases reveal that Paul had multiple disciplinary incidents and fines years before the recent case.
Ellis also was a registered representative with a disciplinary record.
By July 12, 2012, Paul-Ellis investors’ funds were gone, the SEC suit says, and it notes that an investigation showed the two spent the money.
I tried reaching their office in Center City, and the number no longer works.
“When we are promised returns that are too good to be true, we may have a tendency to suspend common sense,” Binger said.
The SEC exam team went to Paul-Ellis “to make sure they were following the rules. They identified areas of concern and referred it to enforcement,” she said.
To track insider trading, Binger’s team uses technology.
In January, it won a verdict in a U.S. District Court trial in Philadelphia against Nan Huang, charged with insider trading on information obtained from his employer, Capital One Financial.
Huang and another defendant searched Capital One’s credit-card activity for millions of customers at corporations. He then traded in advance of the public release of those companies’ quarterly sales.
Binger is proud of her office’s ability to freeze assets quickly, including in cases where defendants may flee the country, as Huang did, flying to China.
“We’ve gotten asset freezes in a number of cases, including the Huang case and in the hacking case” by accused insider trader Vitaly Korchevsky and 41 others, she said.
Last year, Korchevsky was indicted on charges that he helped orchestrate an insider-trading scheme regulators said netted $100 million. He was arrested by the FBI at his Glen Mills home as part of a group that tapped corporate press releases before they became public.
“There’s the concern the money will go quickly,” Binger said. “In the Huang case, one defendant fled the country shortly before we filed our lawsuit, and the other fled the day after. We were fortunate to freeze more than $1.6 million before it left the country.”
If you have questions or concerns about your broker or money manager, you can contact the local SEC office by email at firstname.lastname@example.org.
Or you can call the SEC’s Office of Investor Education and Advocacy at 1-800-732-0330. Additional contact information can be found at http://www.investor.gov/contact-us.
Ken Springer, a former FBI agent, runs a firm called Corporate Resolutions that educates high-net-worth clients, including professional athletes and doctors.
“It’s like wearing a seat belt. You need to vet your investment manager,” Springer says. “Look at what these people did in the past, at the track record, and ask other investors if they’ve done background checks and gotten referrals.”
He uses resources such as World-Check, an international criminal database; LexisNexis, for news and court records, and PACER for civil, criminal and bankruptcy court filings. All are available to the public for a fee.
Read more at http://www.philly.com/philly/business/20160411_SEC_s_local_chief_outlines_her_priorities.html#RiCGRGmyqLujdQJl.99