1. UK-Based RIA Settles Reg. M Violation Charges.
2. BroCo Investments, President, Turned $2K Into $628K in 6 Short Months.
3. NY-Based RIA Settles Reg. M Violation Charges.

    1.  UK-Based RIA Settles Reg. M Violation Charges.   Gartmore Investment Ltd, a registered advisor since 2006, and subject to the U.K.'s FSA regulation, agreed to pay $1,347,000 in disgorgement ($928K), prejudgment interest and fines to settle SEC charges it violated Rule 105 of Regulation M, which prohibits short selling of equity securities during a restricted period prior to a public offering and then purchasing the same securities in the public offering.  The alleged violation occurred in May 2009 in connection with certain short sales it effected within the Rule 105 restricted period preceding its participation in a public offering by BB&T Corp.  

• From 5/6 - 5/12/09, Gartmore sold short a total of 172,405 shares of common stock of BB&T on behalf of one of its investment funds, at prices ranging between $25.22 and $27.38 per share.
• On 5/11, after the market closed, the public secondary offering of common stock was announced.
• On 5/12, when the offering was priced, Gartmore covered most of the short position at $20.00 with shares bought in the Offering.
• At the time of the violation, Gartmore had no policies, procedures or controls in place designed to detect or prevent Rule 105 violations.   [SEC '34 Act Release 63460, 12/8] 

    2.  BroCo Investments, President Turned $2K into $628K in 6 Short Months.   BroCo Investments, Inc. and its president Valery Maltsev, agreed to pay $1,255,000 in disgorgement, prejudgment interest and fines, and $50,000 in fines, respectively, to settle SEC charges they had manipulated the shares of over 100 public companies through account intrusions.  BroCo and Maltsev controlled an omnibus account that was used to turn $2,080 into $627,633 in a 6-month period by repeatedly buying and selling securities contemporaneously with unauthorized trades that had been placed in compromised accounts at various U.S. broker-dealers. FINRA and the NYSE assisted the SEC in the investigation.  The SEC also noted the following supervisory deficiencies. [C-I:  Got to be kidding.]

• "BroCo and Maltsev ignored several red flags that should have alerted them to the fraudulent activity including the massive short term trading gains being realized in the account, internal memoranda that identified the suspicious trading, and the constant repatriation of funds."  [SEC Litigation Rel. 21760, 12/2]

    3.  NY-Based RIA Settles Reg. M Violation Charges.   New Castle Funds LLC agreed to pay $293,000 in disgorgement, prejudgment interest and fines, to settle SEC charges it violated Rule 105 of Regulation M while effecting trades in Anadarko and Wells Fargo on behalf of several advisory clients.

• On 5/7, New Castle sold 20,000 shares of Anadarko and purchased 100,000 shares during the private offering of public shares. 
• On 5/7, New Castle sold 40,000 shares of Wells Fargo, and on 5/8 participating in the follow-on offering, partially covered its short position by purchasing 20,000 shares in the public secondary offering.   [SEC '34 Act Release 63358, 11/22]