SEC Charges Virtu for False and Misleading Disclosures Relating to Information Barriers

The Securities and Exchange Commission (SEC) announced that on September 5, 2023, the U.S. District Court for the District of Connecticut issued judgments against two entities, Ameritrust Corporation and Beespoke Capital, Inc., which, among other things, require the parties to pay over $20 million in the SEC’s ongoing fraud case, initially filed in February 2023.

The SEC’s action alleges that Ameritrust and its CEO, Seong Yeol Lee, engaged in misleading activities and misappropriated funds from investors in both the United States and the Republic of Korea between 2019 and 2023. The SEC’s complaint asserts that, under Lee’s direction, a network of recruiters solicited more than $20 million from primarily Republic of Korea-based investors. These investors sent their funds to corporate and personal bank accounts controlled by Lee in the United States, with the intention of purchasing shares of Ameritrust, a publicly traded U.S. company. Allegedly, Lee, either directly or through recruiters, informed investors that their funds would be used to buy shares in a U.S.-based company slated for listing on a national stock exchange, assuring profits for shareholders. In reality, the SEC’s complaint claims that Ameritrust lacked genuine operations and did not seek exchange listing. The complaint further alleges that Lee misappropriated investor funds by transferring money from corporate accounts to his personal accounts and those of three of his adult children. Lee also purportedly received or held investor funds in Beespoke Capital accounts, an entity affiliated with Lee and Ameritrust.

The judgments were entered against Ameritrust and Beespoke by default. The judgment against Ameritrust prohibits violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934, along with Rule 10(b)-5, and mandates disgorgement of $11,967,705, plus prejudgment interest of $1,602,391, and a civil penalty of $2,232,280. The judgment against Beespoke Capital, identified as a relief defendant in the SEC’s action, requires disgorgement of ill-gotten gains amounting to $4,871,097, along with prejudgment interest of $325,421. A temporary order freezing Lee’s assets, previously issued by the court, remains in effect.

The SEC’s case is ongoing against Lee and three of his adult children, who are listed as relief defendants in the SEC’s action.