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November 1, 2026 | Legal Update

The Nutter Securities Enforcement Update is a periodic update of noteworthy recent securities enforcement activity, settlements, decisions, and charges. We provide brief summaries that highlight recent enforcement action filings and developments to help identify enforcement trends, changes in the law, new theories, and new areas of enforcement focus. For more information on these cases or about how they may impact you, contact your Nutter attorney.

Policy

Report of Investigation: Climate Action 100+, Rel. 34-106611 (Oct. 7, 2026) – Following an enforcement staff investigation, the Commission determined not to pursue an enforcement action against members of CA 100+ and issued a Report of Investigation pursuant to Exchange Act Section 21(a). The Commission issued the Report “to inform those asset managers and investors who would join, or would consider joining, an organization such as CA 100 to take appropriate steps to ensure compliance” with the beneficial ownership reporting framework under Exchange Act Section 13. The Report states that an agreement, arrangement, understanding, or concerted action underlying formation of a shareholder voting “group” may be implied, even if taken through an intermediary, and therefore require reporting on Schedule 13D. Irrespective of group formation, beneficial owners which report on Schedule 13G “need to be mindful of whether their actions may be viewed as having been undertaken with the purpose or effect of changing or influencing control of a specific issuer by promoting the election of dissident directors or otherwise” and thus require reporting on Schedule 13D.

Remedies

SEC v. Kumar, No. 26-CV-0184 (ND Ok., Oct. 1, 2026) – Following a bifurcated settlement that reserved monetary relief for the court, the court ruled for the SEC on penalties and against the SEC on disgorgement. The SEC had charged that an individual, as a college student, had raised approximately $7.8 million through two investment funds based on misrepresentations concerning the funds’ investment strategies, and that he incurred trading losses of 98% and 80% in the funds. Based on these allegations, accepted as true in the bifurcated settlement, the court found against the individual on most of the penalty factors, including egregiousness, and assessed two third-tier penalties totaling over $470,000. But the court rejected the SEC’s request for disgorgement of $6.3 million because the individual received no net profits from the funds’ losses, except for a $20,000 payment for a personal purpose, and ordered disgorgement of $20,000 plus interest.

SEC v. Reven Holdings, Inc., et al., No. 24-1235 (10th Cir., Oct. 14, 2026) – In a litigated matter, the appeals court affirmed the district court’s grant of a preliminary injunction that included an asset freeze. The SEC charged a private biotech startup and its principals with making written misrepresentations to investors about executive compensation, the existence of audited financials the firm would need to go public, and the absence of shareholder litigation. On appeal from the preliminary injunction order, the appeals court held that the SEC had to meet a heightened standard regarding its likelihood of success on the merits because the “obey-the-law” portion of the injunction did not merely preserve the status quo. The appeals court also found that the district court did not abuse its discretion in making findings supporting the preliminary injunction. 

In the Matter of Rajarengan (a/k/a Rengan) Rajaratnam, Rel. IA-7029 (Oct. 27, 2026) – On an individual’s motion to vacate an associational bar, the SEC found that the individual had failed to demonstrate “compelling” or “extraordinary” circumstances as needed to warrant revision of the settled order. In the underlying matter, the individual was charged with insider trading in violation of Exchange Act Section 10(b) and Rule 10b-5, and the settlement included a bar on the individual’s association with, among others, any investment adviser. The Commission rejected the individual’s arguments that his personal and financial situation, including the inability to find employment in the financial industry and the possibility of confusion with his brother (who was separately convicted of criminal securities fraud), were foreseeable at the time of the settlement and not circumstances warranting revision. The Commission’s order also noted that the individual had not applied for reentry under SEC Rule of Practice 193 after five years as provided in the settled order.

Investment Advisers/Investment Companies

In the Matter of CityVest Capital Inc., et al., Rel. IA-7021 (Oct. 2, 2026) – In a settled matter, two registered investment advisers and a principal were charged with breaching their fiduciary duty by failing to disclose conflicts of interest resulting from undisclosed loans to the firms by funds they advised. The SEC alleges that the firms borrowed $425,000 from three access funds to cover the firms’ operating expenses and that, although the loans were later repaid with interest, the loans were not fully and fairly disclosed to or consented to by the three access funds and their investors. Charges under Investment Advisers Act section 206(2). Remedies included cease-and-desist, censures, and civil penalties of $10k each for the parent firm and the individual principal.

SEC v. Caris, et al., Lit. Rel. 26669 (Oct. 8, 2026) – In a litigated matter, the SEC charged an investment adviser and its principal with conducting a cherry-picking scheme. The principal allegedly used the firm’s block trading account to place trades and later disproportionately allocated profitable trades to his personal account and unprofitable trades to client accounts. Charges under Securities Act Section 17(a), Exchange Act Section 10(b) and Rule 10b-5, and Advisers Act Sections 206(1) and 206(2). The SEC seeks remedies including injunctive relief, disgorgement, and civil penalties.

SEC v. Silkowski, et al., Lit. Rel. 26671 (Oct. 9, 2026) – In a settled matter, an investment adviser and its CEO were charged with breaching fiduciary duties to private funds they managed by failing to comply with governing documents and by inflating the funds’ net asset values. The firm and CEO allegedly failed to obtain audited financial statements and to engage an independent valuation expert as represented to investors, and misrepresented the status of efforts to liquidate the funds. Charges against both parties under Advisers Act Sections 206(1) and 206(2) and against the firm under Advisers Act Section 206(4) and Rules 206(4)-2 and 206(4)-7. The firm and CEO consented to a judgment including appointment of a receiver for the funds, injunctive relief, and, for the CEO, a securities industry bar and a $200k penalty.

In the Matter of Tag Associates LLC, Rel. IA-7028 (Oct. 23, 2026) – In a settled matter, an investment adviser was charged with violations of custody and identity theft prevention rules. As alleged, the firm had custody over certain client accounts because certain employees had signature authority, powers of attorney, or trustee roles enabling them to transfer client funds or securities, and the firm failed to obtain independent audits as required by the Custody Rule. In addition, the firm allegedly failed to implement its identity theft prevention program by, among other things, failing to evaluate newly identified risks or to assess whether updates should be made. Charges under Advisers Act Section 206(4) and Rule 206(4)-2, and under Rule 201 of Reg S-ID. Remedies included censure, cease-and-desist, and a $175k penalty.

In the Matter of Snowden Capital Advisors LLC, Rel. IA-7031 (Oct. 30, 2026) – In a settled matter, an investment adviser was charged with failing to fully and fairly disclose its conflicts of interest involving its affiliated broker-dealer’s receipt of revenue sharing compensation for margin on client accounts and cash sweep money market funds. The firm was also charged with including misleading liability disclaimer language in retail advisory agreements regarding the scope of its unwaivable fiduciary duty. Charges under Advisers Act Sections 206(2) and 206(4) and Rule 206(4)-7. Remedies included censure, cease-and-desist, disgorgement of approximately $225k plus interest, and a $100k penalty.

In the Matter of United Planners’ Financial Services of America A Limited Partner, Rel. IA-7033 (Oct. 30, 2026) and SEC v. Urich, Lit. Rel. 26681 (Oct. 30, 2026) – In settled matters, a dually registered investment adviser and broker-dealer firm and an individual investment adviser representative were charged in connection with the IAR’s recommendations of unsuitable investments in leveraged and inverse ETFs and with the IAR’s failure to disclose that the ETFs would be used in a manner inconsistent with their recommended short-term holding periods. The firm was also charged with failure to implement its policies and procedures with respect to suitability of IAR recommendations and ongoing review. Charges against the firm under Advisers Act Sections 206(2) and 206(4) and Rule 206(4)-7, with remedies including censure, cease-and-desist, and a $600k penalty. The IAR was charged under Advisers Act Sections 206(1) and (2), and consented to judgment with remedies including injunctive relief, a two-year bar on association with an investment adviser, and a $100k penalty.

Broker-Dealers

In the Matter of J.P. Morgan Securities LLC and JPMorgan Chase Bank, N.A., Rel. 34-106569 (Oct. 2, 2026) – In a settled matter, two related security-based swap dealers were charged with permitting a registered representative, who was disqualified from acting as such due to a prior disciplinary event in the United Kingdom, to effect or be involved in effecting at least 800 security-based swap transactions on behalf of the firm or for U.S. counterparties. The SEC alleged that the firms did not have a reasonably designed supervisory system in effect to detect and prevent prohibited security-based swap activity by disqualified persons. The order noted that the Commission considered that the firms self-reported the violation and undertook remedial actions. Charges under Exchange Act Sections 15F(b)(6) and 15F(h), and Rule 15Fh-3(h)(1). Remedies included censure and a cease-and-desist order.

In the Matter of Jeffries LLC, Rel. 34-106641 (Oct. 9, 2026) – In a settled matter, a registered broker-dealer was charged with making at least 7,700 electronic blue sheet (EBS) trade information submissions in response to SEC staff requests that contained inaccurate information or omissions. These inaccuracies were allegedly caused by manual errors, coding errors, or programming issues, and included reporting with respect to large trader IDs, customers’ broker-dealer status, reporting in foreign currency, and incorrect use of an average price indicator. Charges under Exchange Act Section 17(a)(1) and Rules 17a-4(j) and 17a-25. Remedies included censure, cease-and-desist, and a $650k penalty.

Securities Offerings

SEC v. Sarris, et al., Lit. Rel. 26672 (Oct. 9, 2026) – In a litigated matter, two executives of Linqto, Inc. were charged with misleading investors in Linqto special purpose vehicles (SPVs). The executives allegedly made misrepresentations concerning the pricing and share availability of the SPVs, operated unregistered investment companies, and sold securities to unaccredited investors. Charges under Securities Act Sections 5(a), 5(c) and 17(a), Exchange Act Section 10(b) and Rule 10b-5, and Investment Company Act Section 7(a). Remedies sought include injunctive relief, officer-and-director bars, disgorgement, and civil penalties.

SEC v. Berland, et al., Lit. Rel. 26675 (Oct. 20, 2026) – In a settled matter, the SEC charged the former CEO and a former director and majority owner of a photonics company with making misrepresentations to investors in connection with an approximately $13 million securities offering. The SEC alleged that the CEO and director negligently misrepresented that the company was on track to generate over $15 million in annual revenue and that only 10% of offering proceeds would be used for marketing, while failing to disclose deteriorating sales and royalty revenue and that more than 40% of investor funds had been committed to a NASCAR sponsorship. Charges under Securities Act Section 17(a)(2). The two individuals consented to judgment with remedies, including permanent injunctions and $100k civil penalties for each.

SEC v. Anderson, et al., Lit. Rel. 26678 (Oct. 29, 2026) – In a partial settlement of a litigated matter, two joint venture companies and three principals operating as DEBT Box were charged with making misrepresentations in connection with the offering to retail investors of license agreements to crypto assets held by DEBT Box. Investors were allegedly told that the crypto assets were associated with royalty generating businesses and that DEBT Box would use royalty payments to buy and remove (“buy and burn”) DEBT Box’s crypto assets, thereby increasing the value of the investors’ crypto assets, when in reality DEBT Box never received royalties and used investor funds to buy and burn crypto assets. Charges under Securities Act Section 17(a) and Exchange Act Section 10(b) and Rule 10b-5. One of the joint venture companies and its two principals consented to judgment with remedies, including injunctive relief, securities industry bars, disgorgement totaling $185k plus interest, and penalties totaling over $800k. 

Issuer Reporting/Accounting

In the Matter of Latch, Inc., Rel. 33-11450, 34-106568, AAEC-4604 (Oct. 1, 2026) – In a settled matter, a tech hardware and software manufacturer that had gone public in a de-SPAC transaction was charged with failing to devise and maintain appropriate internal accounting controls. The company’s controls allegedly failed to detect and report sales that were based on the use of side agreements and/or pulled forward into earlier periods, to assess the collectability of contracts with distributors or to collect information necessary to reflect discounts. Charges under Securities Act Sections 17(a)(2) and 17(a)(3) and Exchange Act Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) and Rules 13a-1, 13a-11, 13a-13, and 14a-9. Remedies included cease-and-desist and a $1m penalty.

SEC v. Reichman, et al., Lit. Rel. 26664 (Oct. 2, 2026) – In a litigated matter, the SEC charged the former Chairman and CEO of Global Tech Industries Group with orchestrating a scheme to issue tens of millions of company shares to family members, friends, and associates without receiving the disclosed consideration. The SEC alleged that the former CEO signed annual reports falsely stating that the shares were issued “for services,” concealed that his daughter was a significant shareholder, and failed to timely report his own sales of the company’s stock. Charges under Securities Act Section 17(a), Exchange Act Section 10(b) and Rule 10b-5, and Exchange Act Section 16(a) and Rule 16a-3, as well as aiding and abetting violations of Exchange Act Section 13(a) and Rule 13a-1. The SEC seeks permanent injunctions, disgorgement, civil penalties, and an officer-and-director bar against the former CEO, as well as disgorgement from the relief defendants.

SEC v. Gökçe Güven and Kalder Inc., Lit. Rel. 26667 (Oct. 7, 2026) – In a partial settlement of a litigated matter, a New York fintech startup and its CEO were charged with raising nearly $6.7 million from investors through false and misleading statements concerning the financial performance of the startup. The SEC alleges that the CEO misled investors by providing inflated revenue streams and overstating the number of customers engaged in revenue-generating contracts. The SEC additionally alleges that the CEO kept two sets of books, one accurate and one inaccurate. The inaccurate books allegedly contained inflated numbers that were created and communicated to investors at the CEO’s direction. Charges under Securities Act Section 17(a)(2) and Exchange Act Section 10(b) and Rule 10b-5(b). The CEO consented to entry of a judgment with remedies, including permanent injunction and a six-year officer-and-director bar. Disgorgement and civil penalties will be determined later by the court.

Market Manipulation/Investor Trading

SEC v. Golusin, et al., No. 25-CV-02379 (EDNY, Sept. 30, 2026) – In ongoing litigation, the district court denied a motion to dismiss by an individual charged with conducting a pump-and-dump scheme involving shares of a company, called American Green that he and others controlled. The SEC alleges that three individuals gained control of American Green by making convertible loans for which they received millions of shares at a discount to market price, and that they exercised substantial control over American Green’s finances, investor relations, corporate actions, and hiring. In rejecting dismissal, the court found (1) the SEC sufficiently alleged his affiliate status, (2) the scheme allegations did not rely solely on misrepresentations or omissions because the individual allegedly violated trading restrictions also, (3) the individual’s control over American Green was sufficient to support claims that he was the “maker” of misleading statements in the company’s stock promotion campaign, and (4) the SEC adequately pled scienter. Charges under Securities Act Section 17(a) and Exchange Act Section 10(b) and Rules 10b-5.

SEC v. Conde, et al., Lit. Rel. 26677 (Oct. 21, 2026) – In a settlement of a litigated matter, the SEC charged a trader with orchestrating a penny stock manipulation scheme involving Renewable Energy and Power, Inc. The trader allegedly acquired millions of shares, funded and coordinated a boiler-room promotional campaign, and engaged in matched and wash trading to create the false appearance of active trading and to artificially inflate the company’s stock price before selling shares into the manipulated market. Charges under Securities Act Sections 17(a)(1) and 17(a)(3), and Exchange Act Sections 9(a)(1) and 10(b) and Rules 10b-5(a) and (c). Subject to court approval, remedies include permanent injunction, a penny stock bar, and disgorgement of approximately $1.1m plus prejudgment interest, deemed satisfied by restitution and forfeiture ordered in the parallel criminal case.

(NSEU 26-05)

This update is for information purposes only and should not be construed as legal advice on any specific facts or circumstances. Under the Rules of the Supreme Judicial Court of Massachusetts, this material may be considered as advertising