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SEC Settles Additional Charges Against Middleman for Involvement in Scheme to Fraudulently Promote Securities Offerings
Feb. 20, 2024
ADMINISTRATIVE PROCEEDING
File No. 3-21858
February 20, 2024 - The Securities and Exchange Commission today announced settled charges in a cease-and-desist proceeding against Christian Fernandez for his involvement in a fraudulent scheme to promote securities offerings.
This is the Commission’s second action against Fernandez. In September 2022, the SEC filed a complaint in federal court in the Central District of California against William Mikula and Fernandez for their involvement in a scheme to promote the securities of four Regulation A issuers through Palm Beach Venture, a newsletter for which Mikula served as an author and chief analyst. The complaint alleged that Mikula presented the recommendations as unbiased and not paid for, while he was secretly compensated in the form of cash and lavish entertainment expenses. The complaint further alleged that Fernandez acted as a middleman for the promotional scheme, negotiating the undisclosed compensation and disguising the payments through fake invoices, and by funneling the monies through offshore accounts for Mikula’s benefit. The SEC has resolved the federal court action against Fernandez.
In its cease-and-desist order against Fernandez, the SEC found that he participated in the fraudulent promotion of the securities of two additional companies between 2020 and 2021. According to the SEC order, Fernandez engaged in a scheme to deceive investors by concealing undisclosed compensation paid by the two issuers in exchange for purportedly independent recommendations from Mikula in Palm Beach Venture.
The SEC’s order against Fernandez finds that he violated Section 10(b) of the Exchange Act of 1934 and Rule 10b-5 thereunder and caused violations of Section 17(b) of the Securities Act of 1933. Without admitting or denying the findings in the order, Fernandez agreed to a cease-and-desist order and to pay disgorgement of $331,782.11 and prejudgment interest of $30,094.34. The order did not impose a civil penalty against Fernandez in light of his extensive cooperation with the SEC staff.
The SEC’s investigation was conducted by Sarah Nilson and Yolanda Ochoa, with assistance from Charles Canter and Dora Zaldivar. The case was supervised by Finola Manvelian. The SEC’s investigation is ongoing.