On April 5, 2022, the Commission issued a Statement Relating to Certain Administrative Adjudications (the “April 5 Statement”) describing a control deficiency related to the separation of enforcement and adjudicatory functions within the agency’s system for administrative adjudication.  As the April 5 Statement explained, for a period of time, certain databases maintained by our Office of the Secretary (“OS”) were not configured to restrict access by staff from our Division of Enforcement (“Enforcement”) to memoranda drafted by staff from the Adjudication Group (“Adjudication”) in our Office of the General Counsel (“OGC”).  As a result, in a number of adjudicatory matters, administrative support staff from Enforcement responsible for maintaining Enforcement’s case files accessed Adjudication memoranda via OS’s databases.  In many instances, those administrative staff also emailed Adjudication memoranda to other administrative staff for potential upload to Enforcement databases; once uploaded, the memoranda became accessible more broadly to Enforcement staff.

When it was discovered that Enforcement staff had access to Adjudication memoranda, the Commissioners were notified, as was the Commission’s Office of Inspector General.  As the April 5 Statement explained, the Chair immediately directed the implementation of remedial measures, including enhanced access controls, to ensure that Enforcement staff would no longer be able to access these memoranda in the OS databases or through the Enforcement databases to which they may have been uploaded.  The Chair also initiated a comprehensive internal review to assess the scope and potential impact of the control deficiency.  This review has been conducted by experienced investigative staff from the Division of Examinations under the supervision of the Commission’s General Counsel (the “review team”).  As noted in the April 5 Statement, the review team has been supported by Berkeley Research Group, LLC, a consulting firm retained by OGC that includes a team of experienced investigators and forensic analysts.

The April 5 Statement disclosed the review team’s findings regarding two matters arising from administrative adjudicatory proceedings as to which challenges were pending in the federal courts.  In the April 5 Statement, the Commission also committed to releasing information about additional affected matters.  We are now releasing the below statement from the review team, which provides additional information about the two matters discussed in the April 5 Statement, as well as findings regarding additional adjudicatory matters that are currently pending before us.  Those matters include 28 matters as to which one or more Adjudication memoranda specific to a particular matter were accessed by Enforcement administrative staff, as well as 61 additional matters in which one or more Adjudication memoranda broadly applicable to numerous pending matters were accessed by Enforcement administrative staff.

We deeply regret that the agency’s internal systems lacked sufficient safeguards surrounding access to Adjudication memoranda, and we are continuing our work to ensure that, going forward, work product from the Adjudication staff is appropriately safeguarded.  We take this lapse in controls very seriously and are committed to both informing the public about the scope of this issue and preventing any similar lapses in the future. 

The information presented below is based on the work of the review team.  We will release additional findings from the review team as appropriate.

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Review Team Findings

Summary of Review and Findings

The review team has interviewed more than 250 current and former staff members, including individuals from Enforcement, OS, and OGC.  The review team has collected and considered documents from Enforcement, OS, and OGC, including over 500,000 pages of emails and attachments.  The team has also reviewed hundreds of case files in Enforcement’s case management database (the “Enforcement Centralized Database”), including the electronic case files of each of the matters discussed below.  Working with Berkeley Research Group, the review team has analyzed over 25 million rows of data from access logs for various systems.

Part A and Exhibit 1 provide additional information regarding Cochran[1] and Jarkesy,[2] the two matters addressed in the Commission’s April 5 Statement. 

In addition to those two matters, the review team identified additional matters that are currently pending before the Commission in which Enforcement administrative staff accessed one or more Adjudication memoranda that either: (1) pertained specifically to that matter (or in some instances to another matter but were maintained in the same Enforcement case file); or (2) were not specific to any individual adjudicatory matter but rather described procedural actions that Adjudication staff recommended that the Commission take in many (or all) pending adjudicatory proceedings.  For ease of reference, the first set of memoranda is referred to as “case-specific memoranda,” and the matters they address are referred to as the “Affected Matters.”  As discussed below, the review team identified 28 Affected Matters.  The second set of memoranda—those addressing more generally applicable procedural actions—is referred to as “Omnibus Memoranda.”  The review team determined that Enforcement administrative staff accessed eight Omnibus Memoranda and that there are 61 additional currently pending matters encompassed by one or more of those memoranda.

Part B and Exhibit 2 provide the review team’s findings about the 28 Affected Matters, identifying the case-specific memoranda accessed by Enforcement staff that relate to each of those matters.  Part B also notes the instances in which an Omnibus Memorandum was uploaded to one of the Enforcement case files for the Affected Matters. 

Part C and Exhibit 3 provide additional information about the eight Omnibus Memoranda that were accessed, including the scope of the adjudicatory matters encompassed by each.  Exhibit 4 identifies—as to Cochran, Jarkesy, and all of the Affected Matters—the Omnibus Memoranda that encompass each matter.  Exhibit 5, in turn, identifies the 61 additional pending adjudicatory matters in which only an Omnibus Memorandum encompassing that matter was accessed by Enforcement staff—that is, those currently pending matters encompassed by an Omnibus Memorandum as to which the review team found no evidence that a case-specific Adjudication memorandum was also accessed by Enforcement staff.

In all instances, the review team found that the Enforcement administrative staff accessed the Adjudication memoranda as part of an effort to track and upload to the Enforcement Centralized Database all Enforcement memoranda recommending Commission action in enforcement proceedings.  Consistent with this effort, the overwhelming majority of the memoranda accessed by the Enforcement administrative staff were memoranda to the Commission submitted by Enforcement staff.  But because the OS databases were not configured to prevent Enforcement staff from accessing Adjudication memoranda—and the Enforcement administrative staff did not distinguish between Enforcement and Adjudication memoranda—those administrative staff included some Adjudication memoranda in their effort to continually upload relevant materials into the Enforcement Centralized Database.

As indicated in Part B and Exhibit 2, in each of the 28 Affected Matters, an Enforcement administrative staff member accessed one or more case-specific Adjudication memoranda and emailed many of those memoranda to other Enforcement administrative staff.  The administrative staff member who initially accessed the memoranda generally did not distribute the documents to other administrative staff members until after the Commission had voted on the action recommended by the memoranda.  The administrative staff members who received these memoranda via email then typically uploaded the memoranda into the Enforcement Centralized Database.[3]  As a result, some case-specific Adjudication memoranda became accessible in the Enforcement Centralized Database to all Enforcement staff, including individuals investigating and prosecuting the matters referenced in those memoranda.[4]  None of the administrative staff members had a practice of contacting Enforcement staff directly responsible for investigating and prosecuting the relevant matters.  And the review team found no evidence that any Enforcement staff assigned to investigate and prosecute any of the Affected Matters accessed any case-specific Adjudication memoranda before the Commission approved the action recommended in those memoranda.[5]

As indicated in Part C and Exhibit 3, one of the eight Omnibus Memoranda accessed by Enforcement administrative staff was uploaded to the Enforcement Centralized Database in the Enforcement case files for Cochran and four of the Affected Matters and thus became accessible to all Enforcement staff.  The remaining Omnibus Memoranda were accessed by Enforcement administrative staff via the OS databases but were not uploaded to the Enforcement Centralized Database, emailed to, or otherwise accessed by, any other Enforcement staff.

Access to Adjudication Memoranda by Enforcement Staff in the New York Regional Office

Enforcement administrative staff in the Commission’s New York Regional Office (“NYRO”) maintained a practice of uploading Enforcement memoranda relating to matters handled by NYRO staff to a separate database created and maintained by NYRO Enforcement staff (the “NYRO database”).  The NYRO database was intended to serve as a supplemental reference resource for Enforcement memoranda and ultimately contained over 250 Enforcement memoranda.[6]  When the NYRO Enforcement administrative staff received Adjudication memoranda via the process described above, they too did not distinguish between memoranda drafted by Enforcement staff and those drafted by Adjudication staff. 

Between February 2019 and August 2020, NYRO administrative staff emailed several Adjudication memoranda to an Enforcement supervisor in NYRO (“Enforcement Supervisor”), an attorney responsible for overseeing the work of other Enforcement attorneys in NYRO.  The administrative staff’s emails sought instruction whether the Adjudication memoranda should be uploaded to the NYRO database.  This occurred with respect to Jarkesy, as well as three of the Affected Matters; where it occurred with respect to those matters, it is noted below and in Exhibit 1 or 2, as appropriate.  In two such instances, the NYRO Enforcement staff uploaded the memoranda to the NYRO database at the direction of the Enforcement Supervisor. 

The review team found no evidence that either NYRO administrative staff or the Enforcement Supervisor circulated any Adjudication memoranda to anyone else, including anyone directly involved in investigating and prosecuting the relevant matters.  The review team also determined that, for each of the Adjudication memoranda sent to the Enforcement Supervisor, transmission occurred after the Commission had already approved the action recommended in the Adjudication memorandum.  For the Adjudication memoranda uploaded to the NYRO database, the review team determined that no one other than administrative staff accessed those memoranda in the NYRO database. 

Outstanding Seriatim Reports

From at least 2015 through 2021, OS generally sent a weekly report to senior staff in Enforcement (including, at times, the Director, Deputy Director, and Chief Counsel) that provided the status of certain outstanding recommendations from Enforcement to the Commission.[7]  Referred to as the “Outstanding Seriatim Report,” this report listed all outstanding recommendations from Enforcement as to which the Commissioners intended to vote sequentially (in seriatim) without convening a meeting.  The report briefly described the Enforcement staff’s recommendation and the status of the Commissioners’ votes on each recommendation.  OS staff members generated the reports from one of the OS databases that did not adequately segregate Adjudication memoranda.  While OS staff typically excluded information about Adjudication matters from the Outstanding Seriatim Reports, in some instances, limited information briefly describing Adjudication staff’s recommendations was inadvertently included in the reports. 

Thirteen weekly Outstanding Seriatim Reports—one sent in February 2016 and twelve sent between June 2019 and July 2020—included Adjudication-specific information regarding one of the matters discussed below.  Where this occurred, it is noted below and in Exhibit 1 or 2, as appropriate.  The review team found that none of these Outstanding Seriatim Reports attached an Adjudication memorandum, nor did the review team find any evidence that the Outstanding Seriatim Reports were forwarded to any staff assigned to investigate and prosecute any of the matters.

A.        Cochran and Jarkesy

As explained in the April 5 Statement, in both Cochran and Jarkesy, Enforcement administrative staff accessed one or more Adjudication memoranda and emailed those documents to other administrative staff who, in a number of instances, uploaded the memoranda to the Enforcement Centralized Database.  As a result, certain Adjudication memoranda were accessible to all Enforcement staff, including attorneys investigating and prosecuting Cochran and Jarkesy. 

1.         David S. Hall, P.C. d/b/a The Hall Group CPAs, David S. Hall, CPA, Michelle L. Helterbran Cochran, CPA, and Susan A. Cisneros, Admin. Proc. 3-17228

The Commission issued an Order Instituting Proceedings (“OIP”) in this matter on April 26, 2016.[8]  In March 2017, an administrative law judge (“ALJ”) issued an initial decision finding that respondents, auditors Michelle Helterbran Cochran and Susan Cisneros, had engaged in improper professional conduct in connection with their audits of publicly traded companies.[9]  In June 2017, the Commission issued an order providing that the ALJ’s decision had become the final decision of the Commission.[10]  Cochran sought Commission review of that decision, but while that review was pending, the matter was remanded and assigned to a new ALJ in light of the Supreme Court’s decision in Lucia v. SEC.[11]  While the proceeding was pending before the new ALJ, Cochran filed a lawsuit in federal district court, seeking to enjoin the administrative proceeding.[12]  The district court dismissed her complaint for lack of jurisdiction, and a panel of the U.S. Court of Appeals for the Fifth Circuit affirmed.[13]  In December 2021, the en banc Fifth Circuit reversed the district court’s decision and remanded the case to the district court.[14]  The Supreme Court subsequently granted the government’s petition for certiorari and, on April 14, 2023, affirmed the en banc court’s decision, holding that the district court has jurisdiction to hear Cochran’s complaint.[15]  All deadlines in the administrative proceeding are postponed pending resolution of the litigation in federal court.[16]

As described in the Commission’s April 5 Statement (and further detailed in Exhibit 3), administrative staff in Enforcement accessed—and uploaded to the Cochran case file in the Enforcement Centralized Database—one Omnibus Memorandum, dated November 29, 2017, encompassing the Cochran matter.  Enforcement administrative staff initially accessed the memorandum the day after the Commission issued its order on the issues presented in the Adjudication memorandum (hereinafter referred to as a “corresponding order”).  The staff emailed the memorandum to other Enforcement administrative staff, who uploaded the document to the Cochran case file (as well as to several other case files, as indicated in Exhibit 3).

As described in the Commission’s April 5 Statement—and in submissions to the U.S. District Court for the Northern District of Texas[17] and the U.S. Supreme Court[18] by the Department of Justice (“DOJ”)—the review team found no evidence that Enforcement staff accessed any case-specific Adjudication memoranda relating to the Cochran matter, that any of the individuals assigned to investigate and prosecute the Cochran matter ever accessed or took any action influenced by the November 29, 2017 (or any other) Omnibus Memorandum, or that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.[19] 

2.         John Thomas Capital Mgmt. Grp. LLC d/b/a Patriot28 LLC, and George R. Jarkesy Jr., Admin. Proc. 3-15255

The Commission issued an OIP in this matter on March 22, 2013.[20]  In October 2014, an ALJ issued an initial decision finding that respondents George R. Jarkesy Jr. and John Thomas Capital Management Group LLC, d/b/a Patriot28 LLC (“JTMG”), had violated the antifraud provisions of the federal securities laws.[21]  Respondents appealed that decision to the Commission, and Enforcement cross-appealed the ALJ’s determination on sanctions.  While the appeal was pending, the proceeding was remanded and reassigned to a different ALJ in light of Lucia, though respondents moved to vacate the remand order and proceed with their previously filed appeal on the existing record.[22]  The Commission granted that request and, in September 2020, issued an opinion finding that respondents had violated the antifraud provisions and an order imposing a penalty, disgorgement on JTMG, and an industry and penny stock bar on Jarkesy.[23]  Jarkesy filed a petition for review with the Fifth Circuit, which, in May 2022 vacated the Commission’s decision.[24]  The Fifth Circuit denied the government’s petition for rehearing en banc.  On March 8, 2023, the government filed a petition for a writ of certiorari, seeking the Supreme Court’s review of the Fifth Circuit’s decision.[25] 

As described in the Commission’s April 5 Statement—and as DOJ notified the Fifth Circuit[26]—and as further detailed in Exhibit 1, an administrative staff member in Enforcement accessed nine case-specific Adjudication memoranda relating to the Jarkesy matter and emailed them to other administrative staff in Enforcement, who uploaded seven of them to the Jarkesy case file in the Enforcement Centralized Database.  The review team found that administrative staff also emailed one of these Jarkesy-specific memoranda to the NYRO Enforcement Supervisor but that the memorandum was never uploaded to the NYRO database.  In addition, in one instance, an Outstanding Seriatim Report circulated to senior Enforcement staff included a reference to one of the case-specific Adjudication memoranda relating to the Jarkesy matter. 

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Jarkesy matter ever accessed these Adjudication memoranda.  The review team found no evidence that either the NYRO Enforcement Supervisor or any of the individuals assigned to investigate and prosecute the Jarkesy matter ever took any action influenced by these memoranda.[27]  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.[28]

B.        Affected Matters

As noted above, there are 28 Affected Matters.  In 20 of those matters, Enforcement administrative staff uploaded one or more case-specific Adjudication memoranda to a case file in the Enforcement Centralized Database. 

As to all of the Affected Matters, the review team found no evidence—including through interviews with Enforcement staff—that access to Adjudication memoranda impacted any Enforcement filings or decision-making in those matters.  In 23 of the Affected Matters, Enforcement made no filings between the date an Adjudication memorandum was initially accessed by a member of Enforcement’s administrative staff and the date the Commission voted to take action on the recommendation presented in the memorandum.  In all of the remaining five Affected Matters—those in which an Enforcement filing was made during the time period between initial access and Commission approval—the Enforcement filing was unrelated to the subject matter of the recommendation in the Adjudication memorandum.[29]

The review team’s findings as to each Affected Matter are set forth below in chronological order, based on the date the proceeding was instituted.

1.         Dominic O’Dierno, Admin. Proc. 3-15123

The Commission issued an OIP in this matter on December 6, 2012, accepting an offer of settlement from respondent Dominic O’Dierno and finding that O’Dierno had violated a registration provision of the federal securities laws.[30]  The Commission entered a cease-and-desist order and imposed disgorgement and industry and penny stock bars.[31]  In October 2018, and again in March 2020, O’Dierno requested that the Commission vacate the industry bars.[32] On April 13, 2020, the Commission issued an order vacating the industry bars but otherwise leaving the December 6, 2012 order unmodified.[33]  On April 16, 2020, O’Dierno requested the return of disgorgement he had paid; that request remains pending before the Commission. 

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed one case-specific Adjudication memorandum relating to the O’Dierno matter.  That individual emailed the memorandum to other administrative staff, who uploaded it to the O’Dierno case file in the Enforcement Centralized Database.[34]  The administrative staff member also uploaded another Adjudication memorandum to the Enforcement case file containing the O’Dierno matter, though that memorandum was not related to the O’Dierno matter.[35]

The review team found no evidence that any of the individuals assigned to investigate and prosecute the O’Dierno matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

2.         Mark Feathers, Admin. Proc. 3-15755

The Commission issued an OIP in this matter on February 18, 2014.[36]  In May 2014, an ALJ issued an initial decision finding that respondent Mark Feathers had been permanently enjoined by a federal district court from violating various antifraud and broker-dealer registration provisions of the federal securities laws and, on the basis of that district court judgment, imposing industry and penny stock bars.[37]  The Commission affirmed the ALJ’s decision in November 2014,[38] and Feathers filed a petition for review with the U.S. Court of Appeals for the Ninth Circuit.  In light of Lucia, and with the Commission’s consent, in May 2019, the court vacated and remanded the Commission’s order for reconsideration by a new ALJ.[39]  The new ALJ issued an initial decision in September 2020, finding that Feathers had been enjoined for violations of federal securities laws and re-imposing industry and penny stock bars.[40]  Feathers appealed that decision to the Commission, where the matter remains pending.

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed three case-specific Adjudication memoranda relating to the Feathers matter.  That individual emailed two of the Feathers-specific memoranda to other administrative staff, who uploaded those memoranda to the Feathers case file in the Enforcement Centralized Database.  The other administrative staff also emailed one of those two Feathers-specific memoranda to the individuals assigned to investigate and prosecute the Feathers matter and to those individuals’ supervisors.  At least one of those individuals assigned to investigate and prosecute the matter read the memorandum.  The email attaching the memorandum was sent, however, after the Commission had issued the order corresponding to the Adjudication recommendation.  The review team found no evidence that any of the individuals assigned to investigate and prosecute the Feathers matter ever accessed the other Feathers-specific memorandum uploaded to the Enforcement Centralized Database.  The third Feathers-specific memorandum was never emailed after it was initially accessed by the administrative staff; it was also subsequently withdrawn by Adjudication staff and never acted upon by the Commission.

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Feathers matter ever took any action influenced by any of the memoranda pertaining to the Feathers matter.  The review team also found no evidence that any individuals assigned to investigate and prosecute the Feathers matter contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.  

3.         The Robare Group, Ltd., Mark L. Robare, and Jack L. Jones, Jr., Admin. Proc. 3-16047

The Commission issued an OIP in this matter on September 2, 2014.[41]  In November 2016, the Commission issued an opinion finding that the respondents either violated, or caused violations of, antifraud provisions of the federal securities laws and imposing a cease-and-desist order and penalty on each respondent.[42]  The respondents filed a petition for review, and in April 2019, the U.S. Court of Appeals for the D.C. Circuit affirmed certain findings and reversed others, vacated the Commission’s order imposing sanctions, and remanded for the Commission to determine the appropriate sanctions for remaining violations.[43]  The matter remains pending before the Commission.

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed 15 case-specific Adjudication memoranda relating to the Robare matter.  That individual emailed those memoranda to other administrative staff, who uploaded 10 of the 15 memoranda to the Robare case file in the Enforcement Centralized Database.  In addition, in one instance, an Outstanding Seriatim Report circulated to senior Enforcement staff included a reference to one of the 15 memoranda. 

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Robare matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

4.         Laurie Bebo and John Buono, CPA, Admin. Proc. 3-16293

The Commission issued an OIP in this matter on December 3, 2014.[44]  The Commission entered a settlement against respondent John Buono in January 2015.[45]  In October 2015, an ALJ issued an initial decision finding that respondent Laurie Bebo violated various antifraud provisions, and violated or caused violations of various other provisions of the federal securities laws.[46]  Bebo sought Commission review of that decision, but while that review was pending, the matter was remanded and reassigned to a different ALJ in light of Lucia.  The new ALJ issued an initial decision in August 2020, finding that Bebo violated or caused violations of various federal securities laws, including antifraud provisions.[47]  Bebo appealed the ALJ’s decision to the Commission, where the matter remains pending. 

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed one case-specific Adjudication memorandum relating to the Bebo matter.  That individual emailed the memorandum to other administrative staff, who uploaded it to the Bebo case file in the Enforcement Centralized Database.  As detailed in Exhibit 3, Enforcement administrative staff also uploaded the November 29, 2017 Omnibus Memorandum to the Bebo case file in the Enforcement Centralized Database.  

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Bebo matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

5.         Michael W. Crow, Alexander S. Clug, Aurum Mining, LLC, PanAm Terra, Inc., and The Corsair Group, Inc., Admin. Proc. 3-16318

The Commission issued an OIP in this matter on December 16, 2014.[48]  In February 2016, an ALJ issued an initial decision finding: that respondents Michael Crow, Alexandre Clug, and Aurum Mining violated or caused to be violated antifraud, reporting, and registration provisions of the federal securities laws; that respondent PanAm Terra violated an antifraud provision of the federal securities laws; and that respondent Corsair Group violated a registration provision of the federal securities laws.[49]  The ALJ sanctioned Clug and Crow, imposing disgorgement and bars on each of them, and, as to Crow, imposed a penalty.  The ALJ did not sanction the corporate respondents.  Clug appealed the ALJ’s initial decision to the Commission, and Enforcement cross-appealed, challenging the ALJ’s decision as to every respondent.

In November 2017, the Commission ratified the appointment of its ALJs and remanded all appeals from an ALJ’s initial decision for further proceedings.[50]  Clug and Enforcement submitted new evidence and briefing, and the ALJ ultimately issued a decision increasing the disgorgement ordered against Clug.[51]  Clug and Enforcement continued to seek review of the ALJ’s initial decision, as modified.  In November 2020, the Commission issued an opinion finding that Clug had violated antifraud, reporting, and registration provisions of the federal securities laws; that Aurum Mining and PanAm Terra violated antifraud provisions of the federal securities laws; and that Corsair Group violated a registration provision of the federal securities laws.  The Commission imposed disgorgement, a penalty, and industry and penny stock bars on Clug and disgorgement on Aurum Mining, PanAm Terra, and Corsair Group.[52]  Clug moved for reconsideration of the monetary sanctions imposed on him;[53] that motion remains pending before the Commission.[54]

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed 14 case-specific Adjudication memoranda relating to the Clug matter.  That individual emailed those memoranda to other administrative staff, who uploaded five of the 14 memoranda to the Clug case file in the Enforcement Centralized Database.  The administrative staff also emailed two of these Clug-specific memoranda to the NYRO Enforcement Supervisor, but those memoranda were never uploaded to the NYRO database.  In addition, in one instance, an Outstanding Seriatim Report circulated to senior Enforcement staff included a reference to one of the case-specific Adjudication memoranda relating to the Clug matter. 

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Clug matter ever accessed these Adjudication memoranda.  The review team found no evidence that either the NYRO Enforcement Supervisor or any of the individuals assigned to investigate and prosecute the Clug matter ever took any action influenced by these memoranda.[55]  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

6.         Traci J. Anderson, CPA, Timothy W. Carnahan and CYIOS Corporation, Admin. Proc. 3-16386.

The Commission issued an OIP in this matter on February 13, 2015.[56]  In December 2015, an ALJ issued an initial decision finding that respondents Timothy Carnahan and CYIOS Corporation violated or caused to be violated various reporting and antifraud provisions of the federal securities laws, and dismissing the proceeding against respondent Traci Anderson.[57]  Respondents Carnahan and CYIOS appealed the ALJ’s initial decision to the Commission.  While that appeal was pending, the matter was remanded and reassigned to a different ALJ in light of Lucia; that ALJ issued an initial decision in January 2020, finding that Carnahan and CYIOS violated or caused to be violated various reporting and antifraud provisions of the federal securities laws.[58]  Carnahan and CYIOS appealed the ALJ’s decision to the Commission, where the matter remains pending.

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed one case-specific Adjudication memorandum relating to the Carnahan matter.  That individual emailed the memorandum to other administrative staff, who uploaded it to the Carnahan case file in the Enforcement Centralized Database.  As indicated in Exhibit 3, Enforcement administrative staff also uploaded the November 29, 2017 Omnibus Memorandum to the Carnahan case file in the Enforcement Centralized Database.

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Carnahan matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

7.         Edward M. Daspin, a/k/a “Edward (ED) Michael,” Luigi Agostini, and Lawrence R. Lux, Admin. Proc. 3-16509

The Commission issued an OIP in this matter on April 23, 2015.[59]  The Commission entered settlements with respondents Lawrence Lux and Luigi Agostini in October 2015 and November 2016, respectively.[60]  After the remaining respondent, Edward Daspin, failed to appear at two scheduled hearings, an ALJ issued an initial decision in August 2016, finding Daspin in default and that Daspin had committed various violations of the federal securities laws based on the allegations in the OIP.[61]  Daspin appealed the initial decision to the Commission.  While that appeal was pending, in November 2017, the Commission ratified the appointment of its ALJs and remanded all appeals from an ALJ’s initial decision.  Daspin sought Commission reconsideration of that order as applied to his case; the Commission denied that motion in March 2018.  Later, the matter was assigned to a new ALJ in light of Lucia.  Daspin submitted numerous filings in 2018 directed to both the ALJ and the Commission.  In June 2019, the Commission issued an order treating those filings as interlocutory motions and denying them.[62]  The newly assigned ALJ issued an initial decision in October 2019, finding that Daspin violated various provisions of the federal securities laws.[63]  Daspin appealed the ALJ’s decision to the Commission, where the matter remains pending.

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed five case-specific Adjudication memoranda relating to the Daspin matter.  That individual emailed those memoranda to other administrative staff, who uploaded two of the five memoranda to the Daspin case file in the Enforcement Centralized Database.  In addition, the administrative staff emailed two other of the five Daspin-specific memoranda to the NYRO Enforcement Supervisor and uploaded one of those two memoranda to the NYRO database.

As relates to two of the case-specific memoranda (one of which was uploaded to the Enforcement Centralized Database and the other of which was uploaded to the NYRO database), Enforcement made filings in the Daspin matter between the date Adjudication staff submitted the memorandum to the Commission and the date the Commission approved the staff’s recommendation and issued the corresponding order.  Those Enforcement filings were unrelated to the subject matter of either memoranda.[64]

In addition, two of the case-specific Adjudication memoranda relating to the Daspin matter were referenced in Outstanding Seriatim Reports circulated to senior Enforcement staff.  As detailed in Exhibit 2, Outstanding Seriatim Reports in two consecutive weeks included a reference to one of the case-specific Adjudication memoranda relating to the Daspin matter.  Outstanding Seriatim Reports in two consecutive weeks also included a reference to the other Daspin-specific Adjudication memorandum.  As indicated in Exhibit 2, one of the memoranda referenced by the Outstanding Seriatim Reports was accessed by Enforcement staff,[65] but the other was not.

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Daspin matter ever accessed these memoranda.  The review team found no evidence that either the NYRO Enforcement Supervisor or any of the individuals assigned to investigate and prosecute the Daspin matter ever took any action influenced by these memoranda.[66]  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

8.         Charles R. Kokesh, Admin. Proc. 3-16517

The Commission issued an OIP in this matter on April 28, 2015.[67]  In September 2015, an ALJ issued an initial decision, finding respondent Charles Kokesh in default and imposing various associational bars.[68]  In May 2021, the Commission issued an order stating that it would review the ALJ’s initial decision and authorizing the parties to submit briefing and evidence as to whether remedial action against Kokesh is in the public interest.[69]  The matter remains pending before the Commission.

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed three case-specific Adjudication memoranda relating to the Kokesh matter.  That individual emailed two of those memoranda to other administrative staff, who uploaded them to the Kokesh case file in the Enforcement Centralized Database.  One of those two memoranda was subsequently withdrawn by Adjudication staff and never acted upon by the Commission.  The administrative staff member did not email the third Kokesh-specific memorandum, which was also withdrawn by Adjudication staff and never acted upon by the Commission.  

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Kokesh matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

9.         Christopher M. Gibson, Admin. Proc. 3-17184

The Commission issued an OIP in this matter on March 29, 2016.[70]  In January 2017, an ALJ issued an initial decision finding that respondent Christopher Gibson had violated or caused to be violated various antifraud provisions of the federal securities laws.[71]  Gibson sought Commission review of that decision, but while that review was pending, the matter was remanded and reassigned to a different ALJ in light of Lucia.  The new ALJ issued an initial decision in March 2020, finding that Gibson had violated or caused to be violated various antifraud provisions of the federal securities laws.[72]  Gibson appealed the ALJ’s decision to the Commission, where the matter remains pending.[73]

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed four case-specific Adjudication memoranda relating to the Gibson matter.  That individual emailed two of those memoranda to other administrative staff, who uploaded them to the Gibson case file in the Enforcement Centralized Database. 

In one instance, Enforcement made a filing in the Gibson matter between the date Adjudication staff submitted a memorandum to the Commission and the date the Commission approved the staff’s recommendation and issued the corresponding order.  As indicated in Exhibit 2, that Enforcement filing occurred before the date the Adjudication memorandum was accessed by Enforcement administrative staff.  The Adjudication memorandum at issue also was not uploaded to the Enforcement Centralized Database.  The Enforcement filing was unrelated to the subject matter of the memorandum.[74]

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Gibson matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

10.       James A. Winkelmann, Sr., and Blue Ocean Portfolios LLC, Admin. Proc. 3-17253

The Commission issued an OIP in this matter on May 19, 2016.[75]  In March 2017, an ALJ issued an initial decision finding that respondents James Winkelmann and Blue Ocean Portfolios LLC violated or caused to be violated various antifraud provisions of the federal securities laws.[76]  Respondents appealed to the Commission, Enforcement cross-appealed, and while that appeal was pending, the matter was remanded in light of Lucia but assigned to the same ALJ by agreement of the parties.  The ALJ issued a revised initial decision in October 2018, finding that Winkelmann and Blue Ocean Portfolios violated or caused to be violated various antifraud provisions of the federal securities laws.[77]  Respondents and Enforcement both appealed the ALJ’s decision to the Commission, where the matter remains pending.

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed 10 case-specific Adjudication memoranda relating to the Winkelmann matter.  That individual emailed eight of those memoranda to other administrative staff, who uploaded seven of them to the Winkelmann case file in the Enforcement Centralized Database.  As indicated in Exhibit 3, Enforcement administrative staff also uploaded the November 29, 2017 Omnibus Memorandum to the Winkelmann case file in the Enforcement Centralized Database.

In one instance, Enforcement made a filing in the Winkelmann matter between the date Adjudication staff submitted a memorandum to the Commission and the date the Commission approved the staff’s recommendation and issued the corresponding order.  As indicated in Exhibit 2, that Enforcement filing occurred before the date the Adjudication memorandum was accessed by Enforcement administrative staff.  The Enforcement filing was unrelated to the subject matter of the memorandum.[78]  In addition, Outstanding Seriatim Reports circulated to senior Enforcement staff in two consecutive weeks included a reference to one of the Winkelmann-specific Adjudication memoranda. 

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Winkelmann matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

11.       Saving2Retire, LLC, and Marian P. Young, Admin. Proc. 3-17352

The Commission issued an OIP in this matter on July 19, 2016.[79]  In October 2017, an ALJ issued an initial decision finding that respondents Marian Young and Saving2Retire, LLC, violated or caused to be violated various recordkeeping and registration provisions of the federal securities laws.[80]  Respondents sought Commission review of that decision, but while that review was pending, the matter was remanded and reassigned to a different ALJ in light of Lucia.  The new ALJ issued an initial decision in August 2019, finding that Young and Saving2Retire violated or caused to be violated various recordkeeping and registration provisions of the federal securities laws.[81]  Respondents appealed the ALJ’s decision to the Commission, where the matter remains pending.[82]

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed four case-specific Adjudication memoranda relating to the Saving2Retire matter.  That individual emailed those memoranda to other administrative staff, who uploaded all of them to the Saving2Retire case file in the Enforcement Centralized Database.  As indicated in Exhibit 3, Enforcement administrative staff also uploaded the November 29, 2017 Omnibus Memorandum to the Saving2Retire case file in the Enforcement Centralized Database.

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Saving2Retire matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

12.       Digital Brand Media & Marketing Group, Inc. and Intellicell Biosciences, Inc., Admin. Proc. 3-17990

The Commission issued an OIP in this matter on May 16, 2017.[83]  In June 2017, an ALJ issued an initial decision, finding respondent Intellicell in default, determining that it had violated the Exchange Act by failing to file required periodic reports, and directing that the registration of all classes of its securities should be revoked.  In October 2017, the Commission issued an order providing that the ALJ’s decision regarding Intellicell had become the final decision of the Commission.[84]  In November 2017, the ALJ issued an initial decision finding that respondent Digital Brand Media had violated the Exchange Act by failing to file required periodic reports and directing that the registration of all classes of its securities should be revoked.[85]  Days later, the Commission issued an order remanding for additional proceedings all pending adjudicatory matters; that order encompassed proceedings like this one in which final Commission opinions had issued as to at least one respondent but the time to seek further review of those decisions had not yet expired.[86] 

In February 2018, the ALJ ratified the initial decision as to Intellicell.[87]  Before the ALJ had completed reconsideration of the initial decision as to Digital Brand Media, the Commission assigned the entire matter (encompassing both respondents) to a new ALJ for further reconsideration in light of Lucia.  The new ALJ issued initial decisions as to each respondent in November 2019, finding (1) that Intellicell remained in default, and (2) that although Digital Brand Media had failed to timely file its required periodic reports, the company had become and remained current in its reporting requirements and therefore that no sanctions should be imposed.[88]  Enforcement appealed the decision regarding Digital Brand Media to the Commission, where the matter remains pending as to both respondents.

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed one case-specific Adjudication memorandum relating to the Digital Brand Media matter.  That individual emailed the memorandum to other administrative staff, who uploaded it to the Digital Brand Media case file in the Enforcement Centralized Database.  The administrative staff member also uploaded another Adjudication memorandum to the same case file, though that memorandum was not related to the Digital Brand Media matter.[89]   

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Digital Brand Media matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

13.       American Locker Group, Inc., Intreorg Systems, Inc., and Pegasi Energy Resources Corp., Admin. Proc. 3-18733

The Commission issued an OIP in this matter on September 7, 2018.[90]  In November 2018, Enforcement filed a motion for summary disposition as to respondent Intreorg Systems, which Intreorg Systems opposed.  That motion remains pending before the Commission.  In July 2019, the Commission found the remaining respondents, American Locker Group and Pegasi Energy Resources, in default, determined that each had violated the Exchange Act by failing to file required periodic reports, and revoked the registration of all classes of their securities.[91]

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed one case-specific Adjudication memorandum relating to the American Locker matter.  That individual emailed the memorandum to other administrative staff, who uploaded it to the American Locker case file in the Enforcement Centralized Database.  In addition, Outstanding Seriatim Reports circulated to senior Enforcement staff in two consecutive weeks included a reference to that same American Locker-specific Adjudication memorandum. 

The review team found no evidence that any of the individuals assigned to investigate and prosecute the American Locker matter ever accessed or took any action influenced by this memorandum.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

14.       Royal B.Y. Investment Mgmt. LLC, Inc., Toda International Holdings Inc., Westpoint Energy, Inc., and 360 Global Investments (f/k/a 360 Global Wine Co.), Admin. Proc. 3-18746

The Commission issued an OIP in this matter on September 12, 2018.[92]  In June 2019, the Commission found respondents Westpoint Energy and 360 Global Investments (f/k/a 360 Global Wine Co.) in default, determined that each had violated the Exchange Act by failing to file required periodic reports, and revoked the registration of all classes of their securities.[93]  In September 2019, the Commission similarly found respondent Royal B.Y. in default, determined that it had violated the Exchange Act by failing to file required periodic reports, and revoked the registration of all classes of its securities.[94]  The matter remains pending as to the remaining respondent, Toda International Holdings.

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed two case-specific Adjudication memoranda relating to the Royal B.Y. matter.  That individual emailed the memoranda to other administrative staff, who uploaded them to the Royal B.Y. case file in the Enforcement Centralized Database.

In one instance, Enforcement made a filing in the Royal B.Y. matter between the date Adjudication staff submitted a memorandum to the Commission and the date the Commission approved the staff’s recommendation and issued the corresponding order.  As indicated in Exhibit 2, that Enforcement filing occurred before the Adjudication memorandum was emailed to administrative staff for upload to the case file.  The Enforcement filing was unrelated to the subject matter of the memorandum.[95]  In addition, Outstanding Seriatim Reports circulated to senior Enforcement staff in two consecutive weeks included a reference to one of the Royal B.Y.-specific Adjudication memoranda. 

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Royal B.Y. matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

15.       Joseph S. Amundsen, Michael T. Remus, and Michael Remus CPA, Admin. Proc. 3-18994

The Commission issued an OIP in this matter on February 8, 2019.[96]  In December 2019, an ALJ issued an initial decision finding that respondents Joseph Amundsen, Michael T. Remus, and Michael Remus CPA had violated auditor independence requirements and imposing sanctions.[97]  Respondents appealed to the Commission, where the matter remains pending.

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed four case-specific Adjudication memoranda relating to the Amundsen matter.  That individual emailed three of those memoranda to other administrative staff, who uploaded one of them to the Amundsen case file in the Enforcement Centralized Database.  In addition, the administrative staff emailed another one of the four case-specific memoranda to the NYRO Enforcement Supervisor and uploaded it to the NYRO database.

In two instances, Enforcement made filings in the Amundsen matter between the date the Adjudication staff submitted a memorandum to the Commission and the date the Commission approved the staff’s recommendation and issued the corresponding order.  As indicated in Exhibit 2, those Enforcement filings occurred before the Adjudication memorandum was emailed to administrative staff for upload to the case file.  Those filings were unrelated to the subject matter of either memorandum.[98]

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Amundsen matter ever accessed these memoranda.  The review team found no evidence that either the NYRO Enforcement Supervisor or any of the individuals assigned to investigate and prosecute the Amundsen matter ever took any action influenced by these memoranda.[99]  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

16.       Matthew R. Rossi and SJL Capital, LLC, Admin. Proc. 3-19145

The Commission issued an OIP in this matter on April 17, 2019.[100]  In December 2019, an ALJ issued an initial decision finding that respondents Matthew Rossi and SJL Capital, LLC had violated the antifraud provisions of the federal securities laws and imposing sanctions.[101]  Rossi and SJL Capital appealed to the Commission, where the matter remains pending.

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed four case-specific Adjudication memoranda relating to the Rossi matter.  That individual emailed the memoranda to other administrative staff, who uploaded them to the Rossi case file in the Enforcement Centralized Database. 

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Rossi matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

17.       ERHC Energy, Inc. and IDdriven, Inc., Admin. Proc. 3-19419

The Commission issued an OIP in this matter on September 5, 2019.[102]  In January 2021, the Commission found respondent IDdriven in default, determined that it had violated the Exchange Act by failing to file required periodic reports, and revoked the registration of all classes of its securities.[103]  In April 2021, Enforcement filed a motion for summary disposition as to the remaining respondent, ERHC Energy; that motion remains pending before the Commission.

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed two case-specific Adjudication memoranda relating to the ERHC matter.  That individual emailed the memoranda to other administrative staff, who uploaded them to the ERHC case file in the Enforcement Centralized Database. 

The review team found no evidence that any of the individuals assigned to investigate and prosecute the ERHC matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

18.       Genoil, Inc. and SAMEX Mining Corp., Admin. Proc. 3-19661

The Commission issued an OIP in this matter on January 15, 2020.[104]  In August 2021, Enforcement filed a motion for summary disposition as to respondent Genoil; that motion remains pending before the Commission.  In September 2021, the Commission found respondent SAMEX Mining in default, determined that it had violated the Exchange Act by failing to file required periodic reports, and revoked the registration of all classes of its securities.[105]

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed one case-specific Adjudication memorandum relating to the Genoil matter.  That individual emailed the memorandum to other administrative staff, who uploaded it to the Genoil case file in the Enforcement Centralized Database. 

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Genoil matter ever accessed or took any action influenced by this memorandum.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

19.       Barton W. Stuck, Admin. Proc. 3-19685

The Commission issued an OIP in this matter on January 31, 2020.[106]  Respondent Barton Stuck failed to answer the OIP, and, in October 2020, the Commission issued an order to show cause why Stuck should not be found in default.[107]  In February 2021, Enforcement filed a motion for summary disposition.  On September 28, 2021, the Commission considered and voted on the Adjudication staff’s recommendation as to the disposition of that motion.  Following that vote, the Commission identified the control deficiency and matters potentially impacted by it; as a result, an order implementing the September 2021 vote has not issued.

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed one case-specific Adjudication memorandum relating to the Stuck matter.  That individual did not email the memorandum to other administrative staff, nor was it uploaded to the Stuck case file in the Enforcement Centralized Database. 

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Stuck matter ever accessed or took any action influenced by this memorandum.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

20.       EliteSoft Global Inc. and Capital Access Point 1, Inc., Admin. Proc. 3-19868

The Commission issued an OIP in this matter on July 9, 2020.[108]  In June 2021, the Commission found respondent Capital Access Point 1 in default, determined that it had violated the Exchange Act by failing to file required periodic reports, and revoked the registration of all classes of its securities.[109]  Respondent EliteSoft Global also failed to answer the OIP, and, in September 2021, the Commission issued an order to show cause why it should not be found in default, to which EliteSoft Global has not responded.[110]  That matter remains pending before the Commission.

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed one case-specific Adjudication memorandum relating to the EliteSoft matter.  That individual emailed the memorandum to other administrative staff, who uploaded it to the EliteSoft case file in the Enforcement Centralized Database. 

The review team found no evidence that any of the individuals assigned to investigate and prosecute the EliteSoft matter ever accessed or took any action influenced by this memorandum.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

21.       MJ Biotech, Inc. (f/k/a Michael James Enterprises, Inc.), Admin. Proc. 3-20297

The Commission issued an OIP in this matter on May 11, 2021.[111]  In September 2021, the Commission found respondent MJ Biotech in default, determined that it had violated the Exchange Act by failing to file required periodic reports, and revoked the registration of all classes of its securities.[112]  In January 2022, MJ Biotech moved to set aside the default; that matter remains pending before the Commission.

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed one case-specific Adjudication memorandum relating to the MJ Biotech matter.  That individual emailed the memorandum to other administrative staff, who uploaded it to the MJ Biotech case file in the Enforcement Centralized Database. 

The review team found no evidence that any of the individuals assigned to investigate and prosecute the MJ Biotech matter ever accessed or took any action influenced by this memorandum.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

22.       Spectrascience, Inc., Admin. Proc. 3-20308

The Commission issued an OIP in this matter on May 17, 2021.[113]  In July 2021, the Commission issued an order to show cause why the respondent’s securities should not be revoked by default for failure to answer the OIP or otherwise defend the proceeding.[114]  Respondent did not subsequently answer the OIP or respond to the show cause order.  On September 28, 2021, the Commission considered and voted on the Adjudication staff’s recommendation as to the disposition of that motion.  Following that vote, the Commission identified the control deficiency and matters potentially impacted by it; as a result, an order implementing the September 2021 vote has not issued.

As detailed in Exhibit 2, an administrative staff member in Enforcement accessed an Adjudication memorandum dated September 14, 2021 (the “September 14 Memorandum”) that contained recommendations for multiple matters, including eight of the Affected Matters.  Among the matters encompassed by the September 14 Memorandum was Spectrascience.  The staff member did not email the September 14 Memorandum to other administrative staff, nor was the memorandum uploaded to the Enforcement Centralized Database’s case file for any of the eight Affected Matters. 

Although the September 14 Memorandum was not emailed or uploaded to the Spectrascience case file, Enforcement administrative staff accessed and uploaded another Adjudication memorandum to the Enforcement case file containing the Spectrascience matter.[115]  That memorandum was not, however, related to the Spectrascience matter.[116]

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Spectrascience matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

23.       UBI Blockchain Internet Ltd., Admin. Proc. 3-20309

The Commission issued an OIP in this matter on May 17, 2021.[117]  In July 2021, the Commission issued an order to show cause why the respondent’s securities should not be revoked by default for failure to answer the OIP or otherwise defend the proceeding.[118]  Respondent did not subsequently answer the OIP or respond to the show cause order.  On September 28, 2021, the Commission considered and voted on the Adjudication staff’s recommendation as to the disposition of that motion.  Following that vote, the Commission identified the control deficiency and matters potentially impacted by it; as a result, an order implementing the September 2021 vote has not issued.

As described above and in Exhibit 2, an administrative staff member in Enforcement accessed the September 14 Memorandum; one of the matters for which it contained a recommendation was UBI Blockchain.  The administrative staff member did not email the September 14 Memorandum to other administrative staff, nor was the memorandum uploaded to the Enforcement Centralized Database’s case file for any of the eight Affected Matters.  As previously noted, the administrative staff member uploaded another Adjudication memorandum to the Enforcement case file containing the UBI Blockchain matter, though that memorandum was not related to the UBI Blockchain matter.[119]

The review team found no evidence that any of the individuals assigned to investigate and prosecute the UBI Blockchain matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

24.       Traqer Corp., Admin. Proc. 3-20312

The Commission issued an OIP in this matter on May 17, 2021.[120]  In July 2021, the Commission issued an order to show cause why the respondent’s securities should not be revoked by default for failure to answer the OIP or otherwise defend the proceeding.[121]  Respondent did not subsequently answer the OIP or respond to the show cause order.  On September 28, 2021, the Commission considered and voted on the Adjudication staff’s recommendation as to the disposition of that motion.  Following that vote, the Commission identified the control deficiency and matters potentially impacted by it; as a result, an order implementing the September 2021 vote has not issued.

As described above and in Exhibit 2, an administrative staff member in Enforcement accessed the September 14 Memorandum; one of the matters for which it contained a recommendation was Traqer.  The administrative staff member did not email the September 14 Memorandum to other administrative staff, nor was the memorandum uploaded to the Enforcement Centralized Database’s case file for any of the eight Affected Matters.  As previously noted, the administrative staff member uploaded another Adjudication memorandum to the Enforcement case file containing the Traqer matter, though that memorandum was not related to the Traqer matter.[122]

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Traqer matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

25.       Rystar Communications Ltd., Admin. Proc. 3-20344

The Commission issued an OIP in this matter on May 27, 2021.[123]  In July 2021, the Commission issued an order to show cause why the respondent’s securities should not be revoked by default for failure to answer the OIP or otherwise defend the proceeding.[124] Respondent did not subsequently answer the OIP or respond to the show cause order.  On September 28, 2021, the Commission considered and voted on the Adjudication staff’s recommendation as to the disposition of that motion.  Following that vote, the Commission identified the control deficiency and matters potentially impacted by it; as a result, an order implementing the September 2021 vote has not issued.

As described above and in Exhibit 2, an administrative staff member in Enforcement accessed the September 14 Memorandum; one of the matters for which it contained a recommendation was Rystar Communications.  The administrative staff member did not email the September 14 Memorandum to other administrative staff, nor was the memorandum uploaded to the Enforcement Centralized Database’s case file for any of the eight Affected Matters.  As previously noted, the administrative staff member uploaded another Adjudication memorandum to the Enforcement case file containing the Rystar Communications matter, though that memorandum was not related to the Rystar Communications matter.[125]

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Rystar Communications matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

26.       Spongetech Delivery Systems, Inc., Admin. Proc. 3-20345

The Commission issued an OIP in this matter on May 27, 2021.[126]  In July 2021, the Commission issued an order to show cause why the respondent’s securities should not be revoked by default for failure to answer the OIP or otherwise defend the proceeding.[127] Respondent did not subsequently answer the OIP or respond to the show cause order.  On September 28, 2021, the Commission considered and voted on the Adjudication staff’s recommendation as to the disposition of that motion.  Following that vote, the Commission identified the control deficiency and matters potentially impacted by it; as a result, an order implementing the September 2021 vote has not issued.

As described above and in Exhibit 2, an administrative staff member in Enforcement accessed the September 14 Memorandum; one of the matters for which it contained a recommendation was Spongetech Delivery Systems.  The administrative staff member did not email the September 14 Memorandum to other administrative staff, nor was the memorandum uploaded to the Enforcement Centralized Database’s case file for any of the eight Affected Matters.  As previously noted, the administrative staff member uploaded another Adjudication memorandum to the Enforcement case file containing the Spongetech Delivery Systems matter, though that memorandum was not related to the Spongetech Delivery Systems matter.[128]

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Spongetech Delivery Systems matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

27.       Globesat Holding Corp., Admin. Proc. 3-20355

The Commission issued an OIP in this matter on June 1, 2021.[129]  In July 2021, the Commission issued an order to show cause why the respondent’s securities should not be revoked by default for failure to answer the OIP or otherwise defend the proceeding.[130]  Respondent did not subsequently answer the OIP or respond to the show cause order.  On September 28, 2021, the Commission considered and voted on the Adjudication staff’s recommendation as to the disposition of that motion.  Following that vote, the Commission identified the control deficiency and matters potentially impacted by it; as a result, an order implementing the September 2021 vote has not issued.

As described above and in Exhibit 2, an administrative staff member in Enforcement accessed the September 14 Memorandum; one of the matters for which it contained a recommendation was Globesat Holding.  The administrative staff member did not email the September 14 Memorandum to other administrative staff, nor was the memorandum uploaded to the Enforcement Centralized Database’s case file for any of the eight Affected Matters.  As previously noted, the administrative staff member uploaded another Adjudication memorandum to the Enforcement case file containing the Globesat Holding matter, though that memorandum was not related to the Globesat Holding matter.[131]

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Globesat Holding matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

28.       Golden Goliath Resources Ltd., Admin. Proc. 3-20356

The Commission issued an OIP in this matter on June 1, 2021.[132]  In July 2021, the Commission issued an order to show cause why the respondent’s securities should not be revoked by default for failure to answer the OIP or otherwise defend the proceeding.[133]  Respondent did not subsequently answer the OIP or respond to the show cause order.  On September 28, 2021, the Commission considered and voted on the Adjudication staff’s recommendation as to the disposition of that motion.  Following that vote, the Commission identified the control deficiency and matters potentially impacted by it; as a result, an order implementing the September 2021 vote has not issued.

As described above and in Exhibit 2, an administrative staff member in Enforcement accessed the September 14 Memorandum; one of the matters for which it contained a recommendation was Golden Goliath.  The administrative staff member did not email the September 14 Memorandum to other administrative staff, nor was the memorandum uploaded to the Enforcement Centralized Database’s case file for any of the eight Affected Matters.  As previously noted, the administrative staff member uploaded another Adjudication memorandum to the Enforcement case file containing the Golden Goliath matter, though that memorandum was not related to the Golden Goliath matter.[134]

The review team found no evidence that any of the individuals assigned to investigate and prosecute the Golden Goliath matter ever accessed or took any action influenced by these memoranda.  The review team also found no evidence that any of these individuals contacted or communicated with the Adjudication staff advising the Commission in its decision-making in this matter.

C.        Omnibus Memoranda

As noted above, and described in greater detail in Exhibit 3, Enforcement administrative staff accessed a total of eight Omnibus Memoranda recommending that the Commission take certain procedural actions in then-pending administrative adjudicatory proceedings.[135]  Six of the memoranda involved recommendations following legal developments in litigation challenging the constitutionality of the Commission’s ALJs.[136]  The remaining two involved recommendations by Adjudication staff related to the 2018-2019 federal government shutdown.

As indicated in Exhibit 3, one of the eight Omnibus Memoranda—the November 29, 2017 memorandum—was uploaded to the Enforcement Centralized Database.  It was not uploaded to the NYRO database.  The remaining seven were never emailed to, or otherwise accessed by, other Enforcement administrative staff; nor were they uploaded to either the Enforcement Centralized Database or the NYRO database.  The review team found no evidence that the administrative staff member who accessed the Omnibus Memoranda contacted any Enforcement staff responsible for investigating and prosecuting the relevant matters about any of these memoranda. 

Exhibit 4 identifies the particular Omnibus Memoranda that encompassed each matter described in Parts A and B (and listed in Exhibits 1 and 2).  Exhibit 5 lists the additional currently pending adjudicatory matters in which the review team found that only an Omnibus Memorandum encompassing that matter was accessed (i.e., the review team found no evidence that a case-specific Adjudication memorandum was accessed relating to those matters).  For each such matter, Exhibit 5 also indicates the particular Omnibus Memoranda that encompassed that matter.