Securities and Exchange Commission v. Lek Securities Corporation et al

Filing 580

FINAL JUDGMENT AGAINST DEFENDANTS AVALON FA LTD, NATHAN FAYYER, AND SERGEY PUSTELNIK: IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendants Avalon, Fayyer, and Pustelnik are jointly and severally liable for disgorgement of $4,495,564 , together with prejudgment interest thereon in the amount of $131,750, for a total of $4,627,314. Defendants shall satisfy this obligation by paying the amount remaining due for disgorgement as set forth in accordance with the terms of section VIII, below. Defendants may transmit payment electronically to the Commission, which will provide detailed ACH transfer/Fedwire instructions upon request. Payment may also be made directly from a bank account via Pay.gov through the SEC website at http://www.sec.gov/about/offices/ofm.htm. Defendants may also pay by certified check, bank cashier's check, or United States postal money order payable to the Securities and Exchange Commission. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Clerk of Court is ordered to turn over to the SEC all funds held in the Registry of the Court with regard to Avalon pursuant to the Order entered by this Court in this case on July 31, 2017 (ECF No. 95), together with any interes t remaining after deducting any applicable fee not exceeding the fee authorized by the Judicial Conference of the United States and set by the Director of the Administrative Office. The Clerk of Court may transmit payment electronically to the Com mission, which will provide detailed ACH transfer/Fedwire instructions upon request. Payment may also be made directly from a bank account via Pay.gov through the SEC website at http://www.sec.gov/about/offices/ofm.htm. The Clerk of Court may also pay by certified check, bank cashier's check, or United States postal money order payable to the Securities and Exchange Commission. The Clerk of Court shall simultaneously transmit photocopies of evidence of payment and case identifying inf ormation to the Commission's counsel in this action. The Commission shall send the funds paid pursuant to this Final Judgment to the United States Treasury. IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the amounts remitted to the SEC by Lek Securities and by the Clerk of Court pursuant to sections VI and VII above shall be applied first to the prejudgment interest, then disgorgement owed by Avalon pursuant to this Final Judgment, and if any amounts are left over, they shall be a pplied towards the penalty owed by Avalon pursuant to this Final Judgment. The Court shall retain jurisdiction of this matter for purposes of enforcing this judgment. (And as further set forth herein.) Vali Management Partners, Nathan Fayyer and Sergey Pustelnik terminated. (Signed by Judge Denise L. Cote on 4/14/2020) (jca) Transmission to Finance Unit (Cashiers) for processing.

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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SECURITIES AND EXCHANGE
COMMISSION,

:
:
:
:
:
Plaintiff,
: Case No. 17-CV-1789(DLC)
v.
:
:
LEK SECURITIES CORPORATION,
:
SAMUEL LEK, VALI MANAGEMENT
:
PARTNERS dba AVALON FA LTD,
:
NATHAN FAYYER, and SERGEY
:
PUSTELNIK, a/k/a
:
SERGE PUSTELNIK,
:
:
Defendants.
:
________________________________________________:

FINAL JUDGMENT AGAINST DEFENDANTS
AVALON FA LTD, NATHAN FAYYER, AND SERGEY PUSTELNIK
This matter having come before the Court following trial by jury, and the jury
unanimously having found in favor of Plaintiff Securities and Exchange Commission (“SEC” or
the “Commission”) and against Defendants Vali Management Partners dba Avalon FA Ltd
(“Avalon”), Nathan Fayyer (“Fayyer”), and Sergey Pustelnik a/k/a Serge Pustelnik (“Pustelnik”)
on liability; and the Court having considered the evidence and the parties’ submissions regarding
remedies, and the record herein; the Court hereby enters final judgment in favor of the SEC and
against each of the said Defendants.
I.
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Defendants Avalon,
Fayyer, and Pustelnik each are permanently restrained and enjoined from violating Section 10(b)

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of the Securities Exchange Act of 1934 (the “Exchange Act”) [15 U.S.C. § 78j(b)] and Rule 10b5 promulgated thereunder [17 C.F.R. § 240.10b-5], directly or indirectly, by using any means or
instrumentality of interstate commerce, or of the mails, or of any facility of any national
securities exchange, in connection with the purchase or sale of any security:
(a)

to employ any device, scheme, or artifice to defraud;

(b)

to make any untrue statement of a material fact or to omit to state a material fact
necessary in order to make the statements made, in the light of the circumstances
under which they were made, not misleading; or

(c)

to engage in any act, practice, or course of business which operates or would
operate as a fraud or deceit upon any person.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
receive actual notice of this Final Judgment by personal service or otherwise: (a) Each of said
Defendant’s officers, agents, servants, employees, and attorneys; and (b) other persons in active
concert or participation with any Defendant or with anyone described in (a).
II.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that
Defendants Avalon, Fayyer, and Pustelnik each are permanently restrained and enjoined from
violating Section 17(a) of the Securities Act of 1933 (the “Securities Act”) [15 U.S.C. § 77q(a)]
in the offer or sale of any security by the use of any means or instruments of transportation or
communication in interstate commerce or by use of the mails, directly or indirectly:
(a)

to employ any device, scheme, or artifice to defraud;

2

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(b)

to obtain money or property by means of any untrue statement of a material fact
or any omission of a material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not misleading;
or

(c)

to engage in any transaction, practice, or course of business which operates or
would operate as a fraud or deceit upon the purchaser.

IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
receive actual notice of this Final Judgment by personal service or otherwise: (a) Each of said
Defendant’s officers, agents, servants, employees, and attorneys; and (b) other persons in active
concert or participation with any Defendant or with anyone described in (a).

3

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III.
IT IS HEREBY FURTHER ORDERED, ADJUDGED, AND DECREED that
Defendants Avalon, Fayyer, and Pustelnik each are permanently restrained and enjoined from
violating Section 9(a)(2) of the Exchange Act [15 U.S.C. § 78i(a)(2)], directly or indirectly, by
the use of the mails or any means or instrumentality of interstate commerce, or of any facility of
any national securities exchange, or for any member of a national securities exchange to:
effect, alone or with one (1) or more other persons, a series of transactions in any security
registered on a national securities exchange, any security not so registered, or in
connection with any security-based swap or security-based swap agreement with respect
to such security creating actual or apparent active trading in such security, or raising or
depressing the price of such security, for the purpose of inducing the purchase or sale of
such security by others.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that, as provided in
Federal Rule of Civil Procedure 65(d)(2), the foregoing paragraph also binds the following who
receive actual notice of this Final Judgment by personal service or otherwise: (a) Each of said
Defendant’s officers, agents, servants, employees, and attorneys; and (b) other persons in active
concert or participation with any Defendant or with anyone described in (a).
IV.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendants Avalon,
Fayyer, and Pustelnik are jointly and severally liable for disgorgement of $4,495,564, together
with prejudgment interest thereon in the amount of $131,750, for a total of $4,627,314.
Defendants shall satisfy this obligation by paying the amount remaining due for
disgorgement as set forth in accordance with the terms of section VIII, below.

4

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Defendants may transmit payment electronically to the Commission, which will provide
detailed ACH transfer/Fedwire instructions upon request. Payment may also be made directly
from a bank account via Pay.gov through the SEC website at
http://www.sec.gov/about/offices/ofm.htm. Defendants may also pay by certified check, bank
cashier’s check, or United States postal money order payable to the Securities and Exchange
Commission, which shall be delivered or mailed to
Enterprise Services Center
Accounts Receivable Branch
6500 South MacArthur Boulevard
Oklahoma City, OK 73169
and shall be accompanied by a letter identifying the case title, civil action number, and name of
this Court; identifying by name the Defendant as a defendant in this action; and specifying that
payment is made pursuant to this Final Judgment.
The Defendant making such payment shall simultaneously transmit photocopies of
evidence of payment and case identifying information to the Commission’s counsel in this
action. By making this payment, Defendant relinquishes all legal and equitable right, title, and
interest in such funds and no part of the funds shall be returned to Defendant. The Commission
shall send the funds paid pursuant to this Final Judgment to the United States Treasury.
The Commission may enforce the Court’s judgment for disgorgement and prejudgment
interest by moving for civil contempt (and/or through other collection procedures authorized by
law) at any time after 30 days following entry of this Final Judgment. Defendants Avalon,
Fayyer, and Pustelnik shall pay post-judgment interest on any delinquent amounts pursuant to 28
U.S.C. § 1961.
V.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that Defendants Avalon,
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Fayyer, and Pustelnik are each individually liable for a civil penalty in the amount of $5,000,000,
pursuant to Section 20(d) of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the
Exchange Act [15 U.S.C. § 78u(d)(3)].
Defendant Avalon shall satisfy its obligation under this section by paying the remaining
amount due for its penalty in accordance with the terms of section VIII, below. Defendants
Fayyer and Pustelnik shall each individually satisfy this obligation by paying $5,000,000 each to
the Securities and Exchange Commission within 30 days after entry of this Final Judgment.
Defendants Avalon, Fayyer, and Pustelnik may transmit payment electronically to the
Commission, which will provide detailed ACH transfer/Fedwire instructions upon request.
Payment may also be made directly from a bank account via Pay.gov through the SEC website at
http://www.sec.gov/about/offices/ofm.htm. Defendants Avalon, Fayyer, and Pustelnik may also
pay by certified check, bank cashier’s check, or United States postal money order payable to the
Securities and Exchange Commission, which shall be delivered or mailed to
Enterprise Services Center
Accounts Receivable Branch
6500 South MacArthur Boulevard
Oklahoma City, OK 73169
and shall be accompanied by a letter identifying the case title, civil action number, and name of
this Court; identifying by name the Defendant as a defendant in this action; and specifying that
payment is made pursuant to this Final Judgment.
The Defendant making such payment shall simultaneously transmit photocopies of
evidence of payment and case identifying information to the Commission’s counsel in this
action. By making this payment, Defendant relinquishes all legal and equitable right, title, and
interest in such funds and no part of the funds shall be returned to Defendant. The Commission
shall send the funds paid pursuant to this Final Judgment to the United States Treasury.
6

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Each Defendant shall pay post-judgment interest on any delinquent amounts pursuant to
28 U.S.C. § 1961.
VI.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that within 14 days after
being served with a copy of this Final Judgment, Lek Securities Corporation (“Lek Securities”)
shall take the following action with regard to any and all money and assets that it holds pursuant
to this Court’s order entered on July 31, 2017 (ECF No. 95) in the name of or for the benefit of
Defendant Avalon, together with any interest that has accrued thereon:
(A)

To the extent any assets so held are securities or other non-cash assets, Lek
Securities shall liquidate them at market prices and convert them to cash; and

(B)

Lek Securities shall transfer to the SEC the entire balance of the funds held by
Lek Securities pursuant to said order of the Court.

Lek Securities may transmit payment electronically to the Commission, which will
provide detailed ACH transfer/Fedwire instructions upon request. Payment may also be made
directly from a bank account via Pay.gov through the SEC website at
http://www.sec.gov/about/offices/ofm.htm. Lek Securities may also pay by certified check, bank
cashier’s check, or United States postal money order payable to the Securities and Exchange
Commission, which shall be delivered or mailed to
Enterprise Services Center
Accounts Receivable Branch
6500 South MacArthur Boulevard
Oklahoma City, OK 73169
and shall be accompanied by a letter identifying the case title, civil action number, and name of
this Court; stating that the payment is being made by Lek Securities; and specifying that payment
is made pursuant to this Final Judgment.
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Lek Securities shall simultaneously transmit photocopies of evidence of payment and
case identifying information to the Commission’s counsel in this action. By making this
payment, Lek Securities relinquishes all legal and equitable right, title, and interest in such funds
and no part of the funds shall be returned to Lek Securities or to any Defendant. The
Commission shall send the funds paid pursuant to this Final Judgment to the United States
Treasury.
VII.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the Clerk of Court is
ordered to turn over to the SEC all funds held in the Registry of the Court with regard to Avalon
pursuant to the Order entered by this Court in this case on July 31, 2017 (ECF No. 95), together
with any interest remaining after deducting any applicable fee not exceeding the fee authorized
by the Judicial Conference of the United States and set by the Director of the Administrative
Office. The Clerk of Court may transmit payment electronically to the Commission, which will
provide detailed ACH transfer/Fedwire instructions upon request. Payment may also be made
directly from a bank account via Pay.gov through the SEC website at
http://www.sec.gov/about/offices/ofm.htm. The Clerk of Court may also pay by certified check,
bank cashier’s check, or United States postal money order payable to the Securities and
Exchange Commission, which shall be delivered or mailed to
Enterprise Services Center
Accounts Receivable Branch
6500 South MacArthur Boulevard
Oklahoma City, OK 73169
and shall be accompanied by a letter identifying the case title, civil action number, and name of
this Court; stating that the payment is being made by the Clerk of Court; and specifying that
payment is made pursuant to this Final Judgment.
8

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The Clerk of Court shall simultaneously transmit photocopies of evidence of payment
and case identifying information to the Commission’s counsel in this action. The Commission
shall send the funds paid pursuant to this Final Judgment to the United States Treasury.
VIII.
IT IS FURTHER ORDERED, ADJUDGED, AND DECREED that the amounts remitted
to the SEC by Lek Securities and by the Clerk of Court pursuant to sections VI and VII above
shall be applied first to the prejudgment interest, then disgorgement owed by Avalon pursuant to
this Final Judgment, and if any amounts are left over, they shall be applied towards the penalty
owed by Avalon pursuant to this Final Judgment. Within 14 days of receiving the funds from
both Lek Securities and the Clerk of Court pursuant to sections VI and VII, above, the SEC shall
file a notice indicating the amounts received from Lek Securities and the Clerk of Court, and
indicating the remaining amount of disgorgement, if any, that is due from Defendants Avalon,
Fayyer and Pustelnik in accordance with section IV above, and the amount of penalties due from
Avalon, after application of the funds received. Within 14 days after the SEC files such notice:
(A) Defendants Avalon, Fayyer and Pustelnik shall pay to the SEC any remaining
disgorgement amounts owed as set forth in section IV, above; and
(B) Defendant Avalon shall pay to the SEC any remaining penalty amount that it owes as
set forth in section V, above.
IX.
The Court shall retain jurisdiction of this matter for purposes of enforcing this judgment.

April 14, 2020
Dated: ________________

DENISE L. COTE
UNITED STATES DISTRICT JUDGE

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