SEC FILES COMPLAINT AND SETTLEMENT WITH KOSS CORPORATION

The following is an excerpt from the SEC website:
The Securities and Exchange Commission (“Commission”) on October 24, 2011, filed a Complaint against, and proposed settlement with, Koss Corporation (“Koss”), located in Milwaukee, Wisconsin, and Michael J. Koss, its CEO and former CFO, based on Koss Corporation’s preparation of materially inaccurate financial statements, book and records, and lack of adequate internal controls from fiscal years 2005 through 2009. During this period, Sujata Sachdeva (“Sachdeva”), Koss’s former Principal Accounting Officer, Secretary, and Vice-President of Finance, and Julie Mulvaney (“Mulvaney”), Koss’s former Senior Accountant, engaged in a wide-ranging accounting fraud to cover up Sachdeva’s embezzlement of over $30 million from Koss. The Commission’s Complaint alleges that:
The yearly amounts stolen were significant relative to Koss’s sales and shareholders’ equity. For example, during fiscal year 2009, Sachdeva stole approximately $8.5 million, while Koss reported total sales of approximately $41.7 million and retained earnings of approximately $17.1 million at year-end.
Sachdeva and Mulvaney were able to hide the substantial embezzlements in Koss’s financial records in part because Koss and Michael J. Koss did not adequately maintain internal controls to reasonably assure the accuracy and reliability of financial reporting.
While Koss’s internal controls policy required Michael J. Koss to approve invoices of $5,000 or more for payment, its controls did not prevent Sachdeva and Mulvaney from processing large wire transfers and cashier’s checks outside of the accounts payable system to pay for Sachdeva’s personal purchases without seeking or obtaining Michael J. Koss’s approval.
As a result, Sachdeva, with Mulvaney’s assistance, was able both to initiate and authorize wire transfers of Koss’s funds to her personal creditors totaling approximately $16.3 million, and to order cashier’s checks payable to credit card companies and her designated payees totaling approximately $15.5 million.
Koss’s computerized accounting systems were almost 30 years old and access to the accounting systems could not be locked at the end of the month and there was no audit trail. Sachdeva and Mulvaney were thus able to make undetected post-closing changes to the books and bypass an internal control requiring Michael J. Koss to authorize those changes.
Many account reconciliations were either not prepared or were not maintained as part of Koss’s accounting records. To the extent that reconciliations were conducted, they were improperly performed by the same persons who initiated or recorded the transactions (i.e. Sachdeva or Mulvaney), enabling those persons to make modifications to the reconciliations to cover up fraudulent entries.
While Sachedeva provided Michael J. Koss with reporting certifications for his review, he did not conduct an adequate review of Koss’s accounting in connection with these certifications.
Based on the fraudulent accounting books and records prepared by Sachdeva and Mulvaney, Koss prepared, and Michael J. Koss certified, materially inaccurate audited financial statements and materially inaccurate current, quarterly and annual reports.After discovering the embezzlement, Koss reported the occurrence to its shareholders and enforcement authorities, and amended and restated its financial statements for fiscal years 2008 and 2009 and the first three quarters of fiscal year 2010.
Koss and Michael J. Koss have consented to the entry of an injunctive order without admitting or denying the allegations in the Commission’s complaint. The proposed order would:
Enjoin Koss from violating and Michael J. Koss from aiding and abetting violations of the reporting, books and records and internal controls provisions (Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act of 1934 and Rules 12b-20, 13a-1, 13a-11 and 13a-13) of the federal securities laws and Michael J. Koss from violating the certification provision (Section 13a-14 of the Exchange Act) and
Order Michael J. Koss to reimburse Koss $242,419 in cash and 160,000 of options pursuant to Section 304 of the Sarbanes-Oxley Act. This bonus reimbursement, together with his previous voluntary reimbursement of $208,895 in bonuses to Koss Corporation represents his entire fiscal year 2008, 2009 and 2010 incentive bonuses.In a related criminal matter in the U.S. District Court for the Eastern District of Wisconsin, on November 17, 2010, Sachdeva pleaded guilty to six counts of wire fraud and was ordered to pay $34 million in restitution and was sentenced to 11 years in prison.
The Commission acknowledges the assistance of the U.S. Attorney’s Office for the Eastern District of Wisconsin, the Federal Bureau of Investigation and the Public Company Accounting Oversight Board. The Commission considered the cooperation of Koss Corporation and Michael J. Koss in determining to accept their settlement.”

FORMER GENERAL COUNSEL WITH TECH COMPANIES SETTLES CLAIMS WITH SEC OF BACKDATED STOCK OPTIONS

The following excerpt is from the SEC website:


OCTOBER 19, 2011
“The Securities and Exchange Commission resolved its claims with Lisa C. Berry, the former General Counsel of KLA-Tencor Corp. and Juniper Networks, Inc. The Commission alleged that from 1997 through 2003 Berry caused KLA-Tencor and Juniper to report false financial information to the investing public through her preparation of corporate records that concealed that employee stock option grants were priced with the benefit of hindsight at both companies.
Without admitting or denying the Commission's allegations, Berry consented to pay a $350,000 civil penalty, and also to pay disgorgement totaling $77,120, including interest. In addition, Berry consented to the entry of a final judgment that will enjoin her permanently from violating Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933, Section 13(b)(5) of the Securities Exchange Act of 1934, and Rule 13b2-1 under the Exchange Act, as well as aiding and abetting violations of Sections 13(a), 13(b)(2)(A), 13(b)(2)(B), and 14(a) of the Exchange Act, and Rules 12b-20, 13a-1, 13a-11, 13a-13 and 14a-9 thereunder. The United States District Court for the Northern District of California approved the settlement on October 7, 2011.
In a separate administrative proceeding, Berry also agreed to be suspended from appearing or practicing as an attorney before the Commission. Under the terms of the agreement, Berry may apply for reinstatement in five years. Berry agreed to the suspension without admitting or denying the Commission's allegations.
The Commission previously resolved stock option backdating claims against Juniper, KLA-Tencor, and KLA-Tencor's former Chief Executive Officer, Kenneth L. Schroeder. All consented to resolve the Commission's claims without admitting or denying the Commission's allegations.”

MARINER ENERGY INSIDE TRADING CASE EXPANDS

The following is from the SEC website:
“On October 21, 2011, the Securities and Exchange Commission filed an amended complaint in the case of SEC v. Clayton Peterson et al. (SDNY) adding charges against hedge fund manager Drew K. Brownstein and his hedge fund Big 5 Asset Management LLC for trading on confidential information in the securities of Mariner Energy Inc. ahead of the oil and gas company’s $3.9 billion takeover by Apache Corporation in April 2010.
In its initial complaint filed on Aug. 5, 2011, the SEC alleged that Mariner Energy board member H. Clayton Peterson tipped his son with confidential details about Mariner Energy’s upcoming acquisition. Drew Clayton Peterson, who was a managing director at a Denver-based investment adviser, then used the inside information to purchase Mariner Energy stock for himself and others.
The SEC now alleges that hedge fund manager Drew K. Brownstein who is a longtime friend of Drew Peterson, and the hedge fund advisory firm Brownstein controls, Big 5 Asset Management LLC traded Mariner Energy securities on the basis of inside information Brownstein received from Drew Peterson. Brownstein reaped illicit profits of more than $5 million combined in his own account, the accounts of his relatives, and the accounts of two hedge funds managed by Big 5.
According to the SEC’s amended complaint, Drew Peterson repeatedly tipped Brownstein about the impending acquisition of Mariner Energy as he learned the information from his father. Brownstein caused two Big 5 hedge funds – the Lion Global Fund LLLP and the Lion Global Master Fund Ltd. – to purchase large quantities of Mariner Energy stock and call option contracts on the basis of the inside information. This was the first time that the Big 5 hedge funds had ever traded Mariner Energy stock or options. Brownstein also purchased thousands of shares of Mariner Energy stock and call option contracts for the accounts of his relatives and for his personal brokerage account. In the days following the announcement of the deal, Brownstein liquidated the positions he had accumulated in Mariner Energy securities.
The SEC’s amended complaint charges each of the defendants with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The complaint seeks a final judgment permanently enjoining them from future violations of the above provisions of the federal securities laws, ordering them to disgorge their ill-gotten gains plus prejudgment interest, and ordering them to pay financial penalties. The SEC also seeks to permanently prohibit Clayton Peterson from acting as an officer or director of any publicly registered company.”

DOJ SETTLES WITH BREAD MAKERS IN ANTI-TRUST CASE INVOLVING SARA LEE AND GRUPO BIMBO S.A.B.

The following excerpt is from the Department of Justice website:
“WASHINGTON — The Department of Justice announced today that it has reached a settlement with Grupo Bimbo S.A.B. de C.V., BBU Inc. and the Sara Lee Corporation that requires them to divest brands of sliced fresh bread and associated assets, in order to proceed with Grupo Bimbo and BBU’s acquisition of Sara Lee’s North American Fresh Bakery business. The department said that the acquisition, as originally proposed, would substantially lessen competition in the sale of bagged, sliced fresh bread sold in retail stores in the metropolitan and surrounding areas of San Diego, Los Angeles, San Francisco and Sacramento, Calif.; Kansas City, Kan.; Oklahoma City; Omaha, Neb.; and Harrisburg/Scranton, Penn.
BBU and Sara Lee are respectively the largest and third largest bakers and sellers of sliced fresh bread in the United States. BBU sells sliced bread and baked products under a variety of trade names, including Arnold, Oroweat, Brownberry, Thomas’, Entenmann’s, Boboli, Freihofer’s and Stroehmann’s. Sara Lee sells sliced bread under trade names that include the Sara Lee brand family (including Sara Lee, Sara Lee Classic, Sara Lee Soft & Smooth, Sara Lee Hearty & Delicious and Sara Lee Delightful) and EarthGrains.
The Antitrust Division filed a civil lawsuit today in U.S. District Court in Washington, D.C., to prevent Grupo Bimbo and BBU from acquiring Sara Lee’s North American Fresh Bakery business. At the same time, the department filed a proposed settlement that, if approved by the court, would resolve the competitive concerns alleged in the lawsuit.
“BBU and Sara Lee’s North American Fresh Bakery business aggressively compete head-to-head for sliced fresh bread sold in retail stores,” said Sharis A. Pozen, Acting Assistant Attorney General in charge of the Department of Justice’s Antitrust Division. “Without the divestitures required by the department in eight geographic markets, the combination of BBU and Sara Lee’s North American Fresh Bakery business would likely lead to millions of Americans paying higher prices for sliced fresh bread.”
According to the complaint, Grupo Bimbo and BBU’s acquisition of Sara Lee’s North American Fresh Bakery business would substantially increase concentration in various geographic markets for the sale of fresh bread and eliminate substantial head-to-head competition between BBU and Sara Lee for sliced fresh bread sold in retail stores. BBU and Sara Lee compete for shelf and display space in retailers’ stores by, among other things, offering lower wholesale prices and larger promotional discounts, which lower the prices paid by consumers of sliced bread.
According to the complaint, in the San Diego, Los Angeles, Sacramento and Harrisburg/Scranton areas, BBU and Sara Lee are the two largest sellers of sliced bread. In the San Francisco area, BBU is the largest seller of sliced bread and Sara Lee is the third largest. In the Kansas City and Omaha areas, Sara Lee and BBU are respectively the first and third largest sellers of sliced bread; in the Oklahoma City area, Sara Lee and BBU are respectively the first and fourth largest. In the eight relevant geographic areas, BBU’s post-merger share would range from approximately 52 to 63 percent, with the combination resulting in highly concentrated markets. The department said that the loss of competition likely would have resulted in higher bread prices.
Under the proposed settlement, the companies must divest the rights to sell Sara Lee’s EarthGrains brand and brands in the Sara Lee family (Sara Lee, Sara Lee Classic, Sara Lee Soft & Smooth, Sara Lee Hearty & Delicious and Sara Lee Delightful) in the state of California; Sara Lee’s EarthGrains brand and BBU’s Mrs Baird’s brand in the Kansas City area; Sara Lee’s EarthGrains brand in the Oklahoma City area; Sara Lee’s EarthGrains and Healthy Choice brands in the Omaha area; and Sara Lee’s Holsum and Milano brands in the Harrisburg/Scranton area, as well as the associated manufacturing, distribution and marketing assets required to compete effectively in the sale of those brands in those areas.
Grupo Bimbo is a corporation organized under the laws of Mexico, with headquarters in Mexico City. It controls BBU, a Delaware corporation headquartered in Horsham, Penn., through which Grupo Bimbo carries out its baking business, including but not limited to sliced bread, in the United States. Grupo Bimbo had more than $8 billion in worldwide sales in 2009. In the same year, BBU’s sales in the United States totaled approximately $3.9 billion.
Sara Lee is a corporation organized under the laws of Maryland, with headquarters in Downers Grove, Ill. Sara Lee had more than $10 billion in worldwide revenues in fiscal 2010. In the same year, Sara Lee’s North American Fresh Bakery division had approximately $2.1 billion in sales.
The proposed settlement, along with the department’s competitive impact statement, will be published in the Federal Register, as required by the Antitrust Procedures and Penalties Act. Any person may submit written comments concerning the proposed settlement within 60 days of its publication to Joshua H. Soven, Chief, Litigation I Section, Antitrust Division, U.S. Department of Justice, 450 Fifth St., N.W., Suite 4100, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the settlement upon a finding that it is in the public interest.”

SEC FILES COMPLAINT ALLEGING FRAUD BY INVESTMENT ADVISORY COMPANY, REAL ESTATE CORPORATION AND OWNER

The following excerpt is from the SEC website:

“On October 18, 2011, the Securities and Exchange Commission (“Commission”) filed a complaint in United States District Court in Riverside, California against Copeland Wealth Management, A Financial Advisory Corporation (“CWM”), Copeland Wealth Management, A Real Estate Corporation (“Copeland Realty”), and Charles P. Copeland (“Charles Copeland”) for fraud and breach of fiduciary duty. As an investment adviser registered with the Commission, CWM manages approximately $125 million in assets under management. The assets under management are primarily mutual funds and real estate funds. Copeland Realty, an unregistered investment adviser, is the general partner for 21 limited partnerships primarily invested in real estate. Charles Copeland, a certified public accountant, is the founder, co-owner and officer of both CWM and Copeland Realty.
The Commission alleges that from 2003 through May 31, 2011, Charles Copeland, CWM, and Copeland Realty raised over $62 million from over 100 investors, including many of Charles Copeland’s accounting clients, by selling interests in limited partnerships operated by CWM and Copeland Realty. According to the Commission’s complaint, throughout the offer and sale of the limited partnerships, Charles Copeland, CWM, and Copeland Realty made material misrepresentations and omissions regarding: (1) the use of investor funds, (2) conflicts of interest, (3) guaranteed returns, (4) the unauthorized trading of put options, and (5) the payment of undisclosed real estate commissions and other related compensation.
Without admitting or denying the Commission’s allegations, Charles Copeland, CWM, and Copeland Realty agreed to the entry of an order permanently enjoining them from future violations of Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The defendants also agreed to an order appointing a receiver over CWM and Copeland Realty and prohibiting the destruction of documents. Disgorgement plus prejudgment interest and civil penalties are to be determined at a later date.”

PRESIDENT OF MIAMI HALFWAY HOUSE COMPANY PLEADS GUILTY TO KICKBACK SCHEME WITH FRAUDULENT HEALTH CARE PROVIDER COMPANIES

Wednesday, October 19, 2011
The following excerpt is from the Department of Justice website:
“Miami-Area Halfway House Owner Pleads Guilty to Fraud and Kickback Scheme
WASHINGTON – The owner and president of a Miami-area halfway house company pleaded guilty today for her role in a kickback scheme that funneled patients to a fraudulent mental health provider, American Therapeutic Corporation (ATC), and its related company, the American Sleep Institute (ASI), announced the Department of Justice, FBI and Department of Health and Human Services (HHS).
Natalie Evans, 50, pleaded guilty before U.S. District Judge Jose E. Martinez in Miami to one count of conspiracy to commit health care fraud. Evans was the president of Vision of Hope Recovery Inc., which operated five halfway houses in Fort Lauderdale, Fla.
According to court documents, most of the residents at Evans’s halfway houses were recovering from drug and/or alcohol addictions, and some had recently been released from prison. ATC purported to operate partial hospitalization programs (PHPs) in seven different locations throughout south Florida and Orlando. A PHP is a form of intensive treatment for severe mental illness.
According to court documents, Evans agreed to provide Medicare beneficiaries from Vision of Hope halfway houses to ATC for PHP services. Evans admitted that she knew the beneficiaries at her halfway houses needed day treatment for addiction and not PHP services. Evans also knew that ATC fraudulently billed the Medicare program for the PHP services provided to the beneficiaries she referred to ATC. According to court documents, Evans gave patient information, such as Medicare numbers, to a co-conspirator and the patients were then transported to and from ATC by ATC employees.
According to court filings, ATC’s owners and operators paid kickbacks to owners and operators of assisted living facilities and halfway houses and to patient brokers in exchange for delivering ineligible patients to ATC and ASI. In some cases, the patients received a portion of those kickbacks. Throughout the course of the ATC and ASI conspiracy, millions of dollars in kickbacks were paid in exchange for Medicare beneficiaries who did not qualify for PHP services. The ineligible beneficiaries attended treatment programs that were not legitimate so that ATC and ASI could bill Medicare for more than $200 million in medically unnecessary services.
According to the plea agreement, Evans’s participation in the fraud resulted in more than $645,975 in fraudulent billing to the Medicare program. At sentencing, scheduled for Jan. 19, 2012, Evans faces a maximum of 10 years in prison and a $250,000 fine.
ATC, its management company Medlink Professional Management Group Inc., and various owners, managers, doctors, therapists, patient brokers and marketers of ATC, Medlink and ASI, were charged with various health care fraud, kickback, money laundering and other offenses in two indictments unsealed on Feb. 15, 2011. ATC, Medlink and nine of the individual defendants have pleaded guilty or have been convicted at trial. Other defendants are scheduled for trial April 9, 2012, before U.S. District Judge Patricia A. Seitz.
Today’s guilty plea was announced by Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; John V. Gillies, Special Agent-in-Charge of the FBI’s Miami field office; and Special Agent-in-Charge Christopher B. Dennis of the HHS Office of Inspector General (HHS-OIG), Office of Investigations Miami office.
The case is being prosecuted by Trial Attorneys Steven Kim and Jennifer L. Saulino of the Criminal Division’s Fraud Section. The case was investigated by the FBI and HHS-OIG and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida.
Since its inception in March 2007, the Medicare Fraud Strike Force operations in nine locations have charged more than 1,140 defendants that collectively have billed the Medicare program for more than $2.9 billion. In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers“.

$228 MILLION TO BE PAID BY CITIGROUP TO SETTLE SEC CHARGES OF MISLEADING INVESTORS

Citigroup To Pay $285 Million to Settle SEC Charges For Misleading Investors About CDO Company Profited From Proprietary Short Position Former Citigroup Employee Sued For His Role In Transaction

The following is an excerpt from the SEC website:

"The Securities and Exchange Commission (SEC) today charged Citigroup Global Markets Inc. (Citigroup), the principal U.S. broker-dealer subsidiary of Citigroup Inc., with misleading investors about a $1 billion collateralized debt obligation (CDO) called Class V Funding III (Class V III). At a time when the U.S. housing market was showing signs of distress, Citigroup structured and marketed Class V III and exercised significant influence over the selection of $500 million of the assets included in the CDO. Citigroup then took a proprietary short position with respect to those $500 million of assets. That short position would provide profits to Citigroup in the event of a downturn in the United States housing market and gave Citigroup economic interests in the Class V III transaction that were adverse to the interests of investors. Citigroup did not disclose to investors the role that it played in the asset selection process or the short position that it took with respect to the assets that it helped select. Without admitting or denying the SEC’s allegations, Citigroup has consented to settle the Commission’s action.
The SEC today also brought a litigated civil action against Brian Stoker (Stoker) and instituted settled administrative proceedings against Credit Suisse Asset Alternative Capital, LLC (formerly known as Credit Suisse Alternative Capital, Inc.) (CSAC), Credit Suisse Asset Management, LLC (CSAM), and Samir H. Bhatt (Bhatt), based on their conduct in the Class V III transaction. Stoker was the Citigroup employee primarily responsible for structuring the Class V III transaction. CSAM is the successor in interest to CSAC, which was the collateral manager for the Class V III transaction, and Bhatt was the portfolio manager at CSAC primarily responsible for the Class V III transaction. Without admitting or denying the Commission’s findings, CSAM, CSAC, and Bhatt have agreed to settle the Commission’s proceedings.

According to the SEC's complaints, filed in the U.S. District Court for the Southern District of New York (SDNY), in or around October 2006, personnel from Citigroup’s CDO trading and structuring desks had discussions about possibly having the trading desk establish a short position in a specific group of assets by using credit default swaps (CDS) to buy protection on those assets from a CDO that Citigroup would structure and market. Following the institution of discussions with CSAC about having CSAC act as the collateral manager for a proposed CDO transaction, Stoker sent an e-mail to his supervisor in which he stated that he hoped that the transaction would go forward and described the transaction as the Citigroup trading desk head’s “prop trade (don’t tell CSAC). CSAC agreed to terms even though they don’t get to pick the assets.”
As further set forth in the complaints, Citigroup and CSAC agreed to proceed with the Class V III transaction. During the time when the transaction was being structured, CSAC allowed Citigroup to exercise significant influence over the selection of assets included in the Class V III portfolio. The Class V III transaction marketed primarily through a pitch book and an offering circular. Stoker was primarily responsible for these documents. Both the pitch book and the offering circular included disclosures that CSAC, the collateral manager, had selected the collateral for the Class V III portfolio and that Citigroup would act as the initial CDS counterparty. The disclosures, however, did not provide any information about the extent of Citigroup’s interest in the negative performance of the Class V III collateral or that, by the times when the pitch book and the offering circular were prepared, Citigroup already had short positions in $500 million of the collateral. The pitch book and the offering circular were materially misleading because they failed to disclose that Citigroup had played a substantial role in selecting the assets for Class V III, Citigroup had taken a $500 million short position in the Class V III collateral for its own account, and Citigroup’s short position was comprised of names it had been allowed to select, while Citigroup did not short names that it had no role in selecting. Nothing in the disclosures put investors on notice Citigroup had interests that were adverse to the interests of investors.
According to the complaints, the Class V III transaction closed on February 28, 2007. One experienced CDO trader characterized the Class V III portfolio as “dogsh!t” and “possibly the best short EVER!” and an experienced collateral manager commented that “the portfolio is horrible.” On November 7, 2007, a credit rating agency downgraded every tranche of Class V III, and on November 19, 2007, Class V III was declared to be in an Event of Default. The approximately 15 investors in the Class V III transaction lost their entire investments in Class V III. Citigroup received fees of approximately $34 million for structuring and marketing the transaction and realized net profits of at least $160 million from its short position on $500 million of the collateral.
As a result of their conduct, the Commission has alleged that Citigroup and Stoker each violated Sections 17(a)(2) and (3) of the Securities Act of 1933. Without admitting or denying the allegations in the Commission’s complaint, Citigroup has agreed to settle by consenting to the entry of a final judgment that (i) enjoins it from violating these provisions, (ii) requires it to pay $160 million in disgorgement, plus $30 million in prejudgment interest, and $95 million as a penalty, for a total of $285 million, which will be returned to investors through a Fair Fund distribution, and (iii) requires remedial action by Citigroup in its review and approval of offerings of certain mortgage-related securities. The settlement is subject to Court approval. With respect to Stoker, the SEC is seeking an injunction, disgorgement with prejudgment interest, and a civil money penalty.

In the related administrative proceedings instituted against CSAM, CSAC, and Bhatt, the SEC found that, as a result of the roles that they played in the asset selection process and the preparation of the pitch book and the offering circular for the Class V III transaction, CSAM and CSAC violated Section 206(2) of the Investment Advisers Act of 1940 (Advisers Act) and Section 17(a)(2) of the Securities Act and that Bhatt violated Section 17(a)(2) of the Securities Act and caused the violations of Section 206(2) of the Advisers Act by CSAC. Without admitting or denying the SEC’s findings, CSAM and CSAC consented to the issuance of an order directing each of them to cease and desist from committing or causing any violations, or future violations, of Section 206(2) of the Advisers Act and Section 17(a)(2) of the Securities Act and requiring them to pay disgorgement of $1 million in fees that it received from the Class V III transaction plus $250,000 in prejudgment interest, and requiring them to pay a penalty of $1,250,000. Without admitting or denying the SEC’s findings, Bhatt consented to the issuance of an order directing him to cease and desist from committing or causing any violations, or future violations, of Section 206(2) of the Advisers Act and Section 17(a)(2) of the Securities Act and suspending him from association with any investment adviser for a period of 6 months.