The SEC site noted that the SEC alleges that George Levin and Frank Preve from Fort Lauderdale area raised more than $157 million from 173 investors in less than two years.  Today’s allegations are that they issued promissory notes from Levin’s company and interests in a private investment fund they operated.

The SEC noted that they used the investor funds to purchase discounted legal settlements from former Florida attorney Scott Rothstein through his law firm Rothstein Rosenfeldt and Adler PA. Another charge is that the settlements Rothstein sold were not real and the supposed plaintiffs and defendants did not exist.

Rothstein reportedly used the funds in classic Ponzi scheme fashion to make payments due other investors and support his lavish lifestyle.

Apparently some bad guys do get caught.  The SEC report says that Rothstein’s Ponzi scheme collapsed in October 2009 and that he is currently serving a 50-year prison sentence.

FULL COMPLAINT

JON C. OGG

Johnson & Johnson (NYSE: JNJ) release positive data on its Zytiga medicine showing that the treatment helped high-risk patients.  Zytiga was approved in 2011 and the drug helped patients’ tumors when prostate cancer had not yet metastasized beyond the prostate gland.

What is happening is that Dendreon keeps having lower Provenge sales despite the hope that more reimbursement and more doctor recommendations are supposed to be helping.  This is the second big drop this month after a disappointing revenue figure was shown over a week ago. Analysts have a Thomson Reuters consensus target of just over $367 million in sales in 2012 and just over $513 million in sales in 2013.

Wednesday brought up more questions because the SEC probe may be tied to the company’s dropped sales projections for Provenge in earlier periods when shares were far higher. The reality is that this had been disclosed with earnings over a week ago, but investors are shooting first and asking questions later.

The only good news here for investors is that Dendreon’s stock chart may offer some support not too much lower than the current 10.6% drop to $7.70. Dendreon has four different presentations at ASCO this June and here is a Seeking Alpha transcript of the CFO presentation at a Bank of America Merrill Lynch health conference this week.

At $7.70, Dendreon’s 52-week range is $6.46 to $42.87.  Those old hopes of a Dendreon buyout now feel very dated.

The company’s market cap is now only $1.14 billion and Dendreon has over $500 million in cash and liquidity on hand.  The presentation at a conference this week currently shows no need to raise more capital until the company can reach a breakeven level.

JON C. OGG

Chesapeake did go on to note that this SEC inquiry “should not be construed as an indication that any violation of the federal securities laws has occurred. The company and Mr. McClendon intend to cooperate with the SEC in responding to its inquiry.”

This morning we saw three analyst calls on Chesapeake if you count a Canaccord Genuity drop of the price target down to $26 per share for its target.  The stock closed up 2.7% at $17.19 today and the shares are fluctuating between being up and down in the after-hours.

Today’s news should have been expected, and it is safe to assume that more headline risk remains here.  Chesapeake did hit a new 52-week low of $16.70 today and the 52-week range was previously $16.72 to $35.75.

JON C. OGG

The Securities and Exchange Commission has announced on its website that it has charged a “Social Capitalist” with running a Ponzi scheme targeting socially-conscious investors in church congregations. Today’s SEC charge alleges that Ephren W. Taylor II “made numerous false statements to lure investors into two investment programs being offered through City Capital Corporation, where he was the CEO.”

The SEC charged that investor money going did not go to charitable causes and economically disadvantaged businesses as promised, but that Mr. Taylor secretly diverted hundreds of thousands of dollars to publishing and promoting his books, hiring consultants to refine his public image, and funding his wife’s singing career.

Today’s charge noted that the SEC has also charged the firm City Capital and its former chief operating officer Wendy Connor, who lives in North Carolina and along with Taylor received hundreds of thousands of dollars from investors in salary and commissions.

Apparently Mr. Taylor and City offered two primary investments via promissory notes supposedly funding various small businesses and also interests in “sweepstakes” machines where a portion of the profits were expected to go into charities.

The size is nowhere near the billions of dollars which Madoff stole.  Still, the SEC said that more than $11 million was raised by Taylor and City Capital from hundreds of investors nationwide from 2008 to 2010 which was ultimately used to operate the Ponzi scheme.

Nice… Real nice.  And people wonder why the trust factor is so low.

FULL SEC COMPLAINT

JON C. OGG

Huddles were a practice where the firm’s equity research analysts met to provide their best trading ideas to firm traders and later passed them on to a select group of top clients.  The SEC noted that many of the clients and traders engaged in frequent, high-volume trading. The SEC charge also indicated that its analysts could share material and non-public information about upcoming research changes.

Another part of the settlement shows that the firm also agreed to be censured, to be subject to a cease-and-desist order, and to review and revise its written policies and procedures to correct the deficiencies identified by the SEC.

As far as what $22 million really boils down to, it is not that much.  Goldman Sachs had $28.8 billion in revenues and net income from operations was $4.44 billion in 2011, but that was down from $39.1 billion in 2010 revenues and 2010 net income from operations of more than $8.3 billion.

FINRA has also announced today a settlement with Goldman Sachs for supervisory and other failures related to the huddles.

FULL ORDER IS HERE

JON C. OGG

The SEC’s complaint was filed in the U.S. District Court for the District of Massachusetts and charges that an AutoChina senior executive and director Hui Kai Yan (a former AutoChina manager) and others fraudulently traded AutoChina’s stock to boost its daily trading volume.  This almost sounds like the “liquidity trader” strategy used by some day trading firms to boost their value in share volume back during and after the tech bubble a decade ago.

Today’s complaint goes back to October 2010 and the SEC has charged the defendants and others to have deposited more than $60 million into U.S.-based brokerage accounts which then engaged in hundreds of fraudulent trades over the next three months with a Hong Kong-based broker-dealer.

The fraudulent trades are said to have included matched orders selling from one account to another account at the same time and for the same price.  In short, they are wash trades which created no change of beneficial ownership of the shares. The SEC noted, “AutoChina and the other defendants engaged in the scheme after lenders offered AutoChina unfavorable terms for a stock-backed loan due to low trading volume in its stock.”

This is just one more instance where it sounds like the largest form of free speech in China comes from corporate officers talking up their companies to foreign investors who are willing to pay anything to get into the long-term Chinese growth story.

JON C. OGG

Target Date funds offer a great product in theory.  If you know you have a 25-year or 40-year timeline before retirement, you can just let the money manager in charge of the fund have a predetermined mix of stocks and bonds for your portfolio.  Still, many advisors call this a cookie-cutter model and many have highlighted that investors really do not understand what they are buying when you look at the true mix of assets under stocks and bonds.

Now the SEC is seeking comment on the results of investor testing regarding target date retirement funds. The SEC said that it plans to consider the comments before acting on a proposal it issued back in 2010 intended to enhance the information provided to individuals investing in such funds. That proposed rule would generally require target date retirement funds to more prominently disclose the fund’s asset allocation at the target date.

FULL DETAILS

JON C. OGG

These two agencies discussed a variety of issues: respective approaches to examinations; investor education initiatives; and the status of regulatory reforms in each jurisdiction.

The SEC and OSC staffs also reportedly talked about coordinating the oversight of dually regulated entities and they also reportedly agreed “to meet regularly to discuss issues of mutual significance regarding supervisory coordination and emerging risks in the cross-border market.”

Keep in mind that cross-border efforts for regulation and cooperation are not exactly new.  Don’t look for the regulators in America and Canada to consolidate.  Today’s news is a part of the combined efforts going back to a June 2010 memorandum of understanding that discussed consultation, cooperation, and the information flow as they pertain to supervising entities which are dually regulated in the U.S. and Canada.

FULL DETAILS

determined that a material weakness existed in its controls over the completeness, accuracy and presentation of its accounting for income taxes, including the tax provision and related tax assets and liabilities.

The company is scheduled to file its Form 10-K on April 9th, and the CFO said:

We have reviewed our significant agreements and believe we can complete the filing within the time periods allotted. The generally non-cash nature of the items which require adjustment, primarily goodwill and tax reserves, does not impact our debt covenants or our liquidity.

That’s the bad news. The good news is that the company will begin work this month on a portion of the Red River Gathering Pipeline being built by Energy Transfer Partners LP (NYSE: ETP). Willbros, which will construct a 97-mile long segment of the system, did not indicate the value of the contract.

Investors like the good news much better than the bad, boosting Willbros’ share price by more than 25% this morning, to $4.06 in a 52-week range of $3.13-$11.87.

Paul Ausick

The company outlined the delays and it is not really just a fluke.  The reasons cited for the delay are as follows:

• an ongoing internal review by Swisher Hygiene’s Audit Committee primarily relating to possible adjustments to (1) the accounting for business acquisitions and (2) the calculation of the allowance of doubtful accounts receivable.

The delay notice also noted that on March 21, 2012 its board of directors concluded that the previously issued interim financial statements for the quarterly periods ended June 30, 2011 and September 30, 2011 (and the other financial information) should no longer be relied upon.

Subsequently, on March 27, 2012, the Audit Committee concluded that the Company’s previously issued interim financial statements for the quarterly period ended March 31, 2011 should no longer be relied upon.

The Audit Committee’s review is not complete but it believes that material adjustments to the prior financial information may be required.  It also believes that it needs to file restatements of the first, second and third quarter financial statements.

Swisher shares are down 9.5% at $2.76 and the 52-week trading range before today was $2.83 to $11.43.  Shares hit a new low of $2.60 today.

Sometimes there is just no good news to be found. That is the case here.

JON C. OGG