Each month, we publish a roundup of the most important SEC enforcement developments for busy in-house lawyers and compliance professionals. This month, we examine the following matters:
- An SEC settlement with an ex-CEO accused of defrauding investors in a Ponzi-like scheme;
- An SEC settlement with a defunct hedge fund and its portfolio managers for allegedly misleading investors about options trading strategies and risk;
- An SEC settlement with a former CEO for allegedly making misrepresentations in SEC filings and diverting public company assets to his former romantic partner;
- A recent SEC jury victory in a suit alleging that elderly investors were defrauded out of almost $10 million; and
- The SEC’s voluntary dismissal of three lawsuits alleging the sale of unregistered securities.
1. Ex-CEO Accused of Defrauding Investors in a Ponzi-like Scheme
Robert Newell, the former CEO of Black Hawk Funding, Inc. (“Black Hawk”), has agreed to settle allegations that he engaged in a Ponzi-like scheme. In July 2024, the SEC alleged that Newell and Black Hawk raised approximately $37.7 million from more than 200 investors for the purpose of investing in the cannabis industry. The complaint alleged that Newell misappropriated at least $668,000 of those investor funds for his own personal benefit.
As part of the settlement agreement submitted for court approval in the Central District of California, Newell promised not to contest the SEC’s efforts to collect penalties or ill-gotten gains, though he can contest the amounts, which were left to be determined at a later date. The agreement also prohibits Newell from contesting the allegations in bankruptcy court, thereby permitting his personal assets to be used to pay restitution to former clients. Newell will also be permanently enjoined from future violations of the securities laws.
The settlement has not yet been approved by the court.
2. Defunct Hedge Fund and Its Portfolio Managers Settle Fraud Suit for $5.8 Million
On June 30, 2025, the SEC settled a lawsuit with a now-defunct Chicago investment firms LJM Funds Management, Ltd. and LJM Partners Ltd. (collectively, “LJM”), along with LJM’s former owner, Anthony Caine, and former portfolio manager, Anish Parvataneni. The complaint, filed in May 2021, alleged that defendants misled investors about risk management protocols and the “worst case” daily losses investors could expect from the firm’s short option trading strategy. According to the SEC, defendants’ alleged material misrepresentations and breaches of fiduciary duty as investment advisors caused several funds to lose more than $1 billion in February 2018.
Under the final judgments entered in the Northern District of Illinois, the investment firm and the individual defendants agreed to pay $5.8 million. Caine will be barred from acting as an investment advisor for three years and Parvataneni will be barred from acting as an investment advisor for one year.
3. CEO Settles Charges of Misleading Investors and Diverting Company Assets
On June 13, 2025, the SEC filed settled charges against Roderick Vanderbilt, alleging that he participated in a scheme to defraud investors in Vinco Ventures, Inc. (“Vinco”). Vinco was a publicly traded company that purported to provide digital media and content technology services. In a complaint filed in the U.S. District Court for the Southern District of New York, the SEC alleged that Vanderbilt signed numerous filings Vinco made with the SEC that contained misrepresentations. The SEC alleged that Vinco failed to disclose Vanderbilt’s business associate and former romantic partner, Theodore Farnsworth, was involved in the management of the company. The complaint further alleged that Vanderbilt diverted corporate funds to Farnsworth. The SEC further alleges that Vanderbilt materially misrepresented key components of Vinco’s operations and revenue potential.
As part of the settlement, Vanderbilt agreed to a permanent injunction and an officer and director bar. The SEC is also seeking disgorgement with prejudgment interest and civil penalties, which will be determined by the court at a later date. The SEC settlement has not yet been approved by the court. In April 2025, Vanderbilt entered a guilty plea related to the same conduct in a criminal action filed by the Department of Justice in the Southern District of Florida.
4. Jury Awards the SEC $10 Million in Plasma Center Fraud Suit
On June 24, 2025, after a five-day trial, a San Diego jury in the U.S. District Court for the Southern District of California ruled in favor of the SEC and against Thomas Casey. Casey was the majority owner and CEO of Golden Genesis, Inc., a plasmapheresis center operator which collected blood plasma and sold it to hospitals. The SEC alleged that Casey targeted investors’ retirement assets and told investors that the company would use their money to build and operate plasmapheresis centers, where the blood plasma of young, healthy individuals would be used in anti-aging treatments. The SEC alleged that the money was used to pay other investors instead.
Casey represented himself at trial. After deliberating for only two hours, the jury found Casey liable for violations of Section 10(b) of the Exchange Act and Section 17(a) of the Securities Act. Casey’s penalties or other punitive relief have not yet been assessed.
5. SEC Dismisses Three Lawsuits Alleging Sale of Unregistered Securities
The SEC has voluntarily dismissed three lawsuits accusing entities of operating as unregistered securities dealers: (i) a lawsuit against Auctus Fund Management LLC that alleged that Auctus acquired and sold more than 60 billion shares of stock and generated more than $100 million in gross stock sale profits between 2017 and 2021 without registering with the SEC; (ii) a lawsuit against John Fife that alleged that from 2015 through 2020 Fife operated as a penny stock trader and bought and sold billions of newly issued shares generating millions of dollars without registering with the SEC; and (iii) a lawsuit against Curt Kramer that alleging that, from January 2018 to March 2023, Kramer obtained more than $75 million in profits by funding approximately 325 microcap issuers, converting those securities into shares of newly issued common stock, and quickly selling those shares.
In a statement posted on its website, the SEC stated that these dismissals were an exercise of its discretion based on policy considerations, not on the merits of the claims. Commissioner Caroline Crenshaw issued a separate statement expressing disappointment with the dismissals, arguing that the Commission’s actions undermined the broker-dealer registration requirement thereby weakening investor protections.
