Cross-trading at the SEC, two cherry-picking cases, and the FTC's price-transparency push — October 6–12, 2026

The week of October 6–12, 2026 produced twenty-nine items across the three agencies: twelve SEC developments, ten FDA actions, and seven FTC developments.

The SEC proposed one rule, on cross trading between a registered fund and its affiliates, and set the date for its annual compliance outreach seminar. Its enforcement output turned on two questions it has pressed all year: how access to private companies was sold to retail investors, and how a manager allocated trades between its own account and its clients'. The FDA approved three drugs, issued a final guidance on biosimilar manufacturing changes, and opened two food-traceability windows. The FTC settled a deceptive-pricing case against a car dealership group, sent letters to twenty-four hospital companies, and paid out redress in two older matters.

Four items carry October 5 dates: the SEC's World Investor Week bulletin, the FDA's request for information on ibogaine trials, and the FTC's hospital pricing letters and Premier Martial Arts settlement. Last Monday's edition closed at 08:11 UTC, before those landed. Their original dates are kept below and each is marked as carried in. This edition's window opens October 6.

On October 9 the Commission proposed amendments to Rule 17a-7 under the Investment Company Act of 1940, the cross-trading rule, which lets a registered fund trade securities with certain affiliates. Cross trading lets a fund avoid the costs of an open-market trade, and the proposal would widen where that is allowed. 1

The proposal would restore cross trading in most fixed-income securities. Adoption of the fund valuation rule in 2020 had effectively restricted it there, and the Commission said at the time that revisions to the cross-trading rule were under consideration. The amendments would also modernise the rule's conditions on pricing and oversight, and require funds that cross trade to report their trading and cross-trading activity in aggregate. 1

The comment period runs 60 days after the proposing release is published in the Federal Register, and that had not happened as of October 12. Funds and advisers that rely on affiliated transactions should watch for the publication date, because it is what starts the clock. 1

The Commission also fixed a date for its annual outreach event. The Compliance Outreach Program, run jointly by the Divisions of Examinations and Investment Management and the Asset Management Unit of Enforcement, will hold a virtual national seminar for investment companies and investment advisers on November 19, 2026. 3

Panels will cover information security and operational resiliency, registered investment adviser and private fund adviser topics, registered investment company topics, the effectiveness of compliance programs, and briefings on current issues. Advance registration is not required, and a link to the webcast will be posted on the morning of the event. 3

On October 9 the SEC charged William Sarris and Joseph Endoso, both former executives of the San Jose platform Linqto, Inc., with defrauding retail investors who used Linqto to buy into pre-IPO companies. The complaint, filed in the Northern District of California, alleges that a Linqto subsidiary sold more than $430 million of special purpose vehicles holding interests in private companies between 2021 and 2024. 4

Four specific allegations frame the case. The two men allegedly presented Linqto's prices as reflecting current or below-market conditions when nearly all its offerings were priced above fair value; described securities as sold out while shares remained available; claimed an algorithm set prices dynamically when staff still set them by hand; and told investors Linqto complied with federal securities laws after counsel had said its business violated them. 4

The complaint also alleges that the two unlawfully operated unregistered investment companies and sold securities in unregistered transactions to unaccredited investors. The SEC seeks injunctions, disgorgement with interest, civil penalties and officer-and-director bars. This is the second pre-IPO access case in two weeks: on September 30 the Commission charged Meyer Global Management and its chief executive over funds holding SpaceX and other pre-IPO securities. 4

Also on October 9, the SEC charged SQN Capital Management LLC and its principal Jeremiah Silkowski with breaching fiduciary duties to four funds they managed from at least 2019 through 2025. The complaint, filed in the Southern District of New York, alleges the two failed to obtain audits or even to prepare unaudited annual financial statements that conformed to Generally Accepted Accounting Principles, as the funds' governing documents required. 5

The complaint alleges the only valuations prepared for the funds came from Silkowski himself, while he told investors an independent valuation expert had prepared them. It alleges he left net asset values unchanged for years, regardless of projected cash flows, market conditions, the assets' actual performance or whether a given asset was still held, and that he repeatedly said liquidation would finish soon without disclosing that market conditions and the firm's resources had stalled it. 5

Both defendants consented to a receiver being appointed to liquidate the funds and distribute the proceeds. Silkowski also consented to a $200,000 civil penalty and a bar from acting as or associating with an investment adviser, broker or dealer, except as the receiver needs his help. The complaint notes that the Commission had already charged SQN Capital twice, in 2020 and 2023, over the same failure to deliver audited financial statements. 5

A day earlier, the SEC charged Darren J. Caris and his firm Caris Investment Partners, Inc., of Encinitas, California, with a cherry-picking scheme. From December 2023 to April 2024, the complaint alleges, Caris used the firm's block trading account to place trades and later in the day allocated the profitable ones to his personal account and the unprofitable ones to some client accounts. 8

The complaint alleges the firm also made false and misleading statements to clients and prospects about how it allocated trades, how it managed the conflict created by Caris's own trading, and its move to a different broker-dealer custodian. The case is filed in the Southern District of California. The SEC seeks injunctions, disgorgement with interest and civil penalties. 8

On October 6 the Commission moved for entry of a final judgment by consent against Stephen Kenneth Leech II, the former co-chief investment officer of Western Asset Management Company LLC, whom it had charged in November 2024. The complaint alleged that from January 2021 through October 2023 Leech placed trades and then delayed allocations until near or after futures markets set their daily settlement prices, so that he could see the price moves first. 2

The complaint alleges he then directed hundreds of millions of dollars in first-day gains to favoured portfolios and a similar amount of first-day losses to disfavoured ones. Leech consented, without admitting the allegations, to a judgment that would order a $3 million penalty, impose an officer-and-director bar and permanently enjoin him from violating the antifraud provisions; he also agreed to a forthcoming associational bar. 2

Combined with the settled administrative order against Western Asset in June 2026, which carried a $100 million civil penalty and a Fair Fund for the disfavoured portfolios, the resolutions would return $103 million to harmed investors. Leech separately pleaded guilty in the Southern District of New York in June 2026 to obstruction of justice over testimony he gave to the SEC during the investigation, and is awaiting sentencing. 2

Jefferies LLC agreed on October 9 to pay a $650,000 civil penalty over its blue sheet reporting. The order finds that from at least July 2018 to July 2024 the broker-dealer made at least 7,700 submissions of securities trading information that contained inaccurate or missing data, misreporting information for at least 1.2 million transactions, through nine types of error, seven of which Jefferies self-reported. Jefferies admitted the findings and agreed to a cease-and-desist order and a censure. 6

Final judgments landed on October 8 in a microcap case the SEC filed in 2022. The complaint alleged that five men operated a call centre that used high-pressure tactics to sell the stocks of at least 18 small US public companies, generating more than $58 million in trading proceeds. Judgments entered earlier against four of them ordered disgorgement and interest ranging from $131,347 to $8,392,982; a default judgment entered September 30 as to Raymond Dove ordered $2,923,446 in disgorgement and interest plus a $1,655,157 penalty and a penny-stock bar. The litigation is now concluded. 7

On October 7, final judgments were entered in the Eastern District of Texas against Robert D. Welsh and Caedrynn E. Conner in a Ponzi scheme that raised at least $91 million from more than 200 investors through vehicles called the Vanguard JV Cash Program and the Benchmark JV Cash Program. Welsh must pay $1,062,069 in disgorgement, $168,077 in prejudgment interest and a $450,000 penalty; Conner must pay $8,575,250, $1,357,072 and $500,000 respectively. Both are permanently enjoined from participating in the issuance, purchase, offer or sale of any security except for their own accounts. 9

Two enforcement items turn on documents that misrepresented who produced them. On October 7 the SEC charged Kalder Inc. and its founder and chief executive Gökçe Güven over a capital raise that took in nearly $6,705,000 between April and December 2024. The complaint alleges Kalder kept two sets of books, one accurate and one inflated, and that customers described as holding revenue-generating contracts had in fact signed up for free demo accounts or discounted pilots. Güven consented to a bifurcated settlement, subject to court approval, that includes a six-year officer-and-director bar, and has pleaded guilty to securities fraud in a parallel criminal case. 10

The second concerns the audit itself. The SEC charged Himanshu Jindal, a citizen of India living in Jaipur, with holding himself out as a US certified public accountant associated with a PCAOB-registered firm and supplying a publicly traded issuer with an engagement letter and audit report purporting to come from a New York accounting firm, complete with a forged signature, for inclusion in the issuer's annual report on Form 10-K. The complaint alleges he was paid through a company he controls, Helponic Global Private Limited, and has continued to seek US audit work. It was filed in the District of Columbia. 11

The World Investor Week item is carried in from October 5. The SEC, working with the CFTC, FINRA, the Securities Investor Protection Corporation, the National Futures Association and the North American Securities Administrators Association, issued a joint investor bulletin urging vigilance against relationship investment and impersonation scams during the tenth World Investor Week. 12

On October 9 the FDA approved Hovilpri (pritelivir) tablets for adults with weakened immune systems whose mucocutaneous lesions from herpes simplex virus infection have not responded to acyclovir, valacyclovir or famciclovir. In the PRIOH-1 Phase 3 trial, lesions had healed by day 28 in 63% of patients on Hovilpri against 34% on the investigator's choice of other treatments, across 101 immunocompromised adults. The most common adverse reaction was headache, and the drug received priority review. 13

On October 8 the FDA approved atezolizumab (Tecentriq, Genentech) with a fluoropyrimidine and oxaliplatin as adjuvant treatment for Stage III mismatch repair deficient colon cancer in patients aged two and older, and approved the subcutaneous atezolizumab and hyaluronidase-tqjs (Tecentriq Hybreza) for patients aged twelve and older weighing at least 40 kg. In the 711-patient ATOMIC trial the disease-free survival hazard ratio was 0.50. The review ran under Project Orbis with the Australian, Canadian, Israeli and Swiss regulators. 14

On October 7 the FDA approved tucatinib (Tukysa, Seagen, a Pfizer subsidiary) with trastuzumab and pertuzumab for maintenance treatment of adults with unresectable locally advanced or metastatic HER2-positive breast cancer after induction treatment. Median progression-free survival in the 654-patient HER2CLIMB-05 trial was 24.9 months against 16.3 months for placebo. The label carries a boxed warning for hepatotoxicity. 15

The FDA issued a final guidance on October 9 covering postapproval manufacturing changes to biosimilar and interchangeable biosimilar products. It sets out how sponsors should report changes made after licensure. 16

Two food items reached the Federal Register the same day. One is a draft guidance proposing a limited enforcement policy for the additional traceability records rule as it applies to certain retail food establishments and restaurants, with comments due November 23, 2026. The other announces a public meeting on challenges and solutions in lot-level food traceability, with comments due December 6, 2026. 1718

The ibogaine request for information is carried in from October 5. Filed under Docket FDA-2026-N-10429, it asks for comments, data and information on early-phase trial design for ibogaine drug products, including dose selection and escalation, care settings, safety monitoring, eligibility criteria and stopping rules. The FDA describes a proposed starting dose justified by available data and not exceeding 10 mg/kg, and asks for monitoring of cardiac and neurologic adverse events. Comments close November 20, 2026. 19

Ten warning letters were posted on October 6, with issue dates running from August 7 to October 1, 2026. Most are unapproved-new-drug findings from the Center for Drug Evaluation and Research, including letters to Walmart, Aidance Scientific and Graceful Touch, alongside a compounding pharmacy letter to Pine Pharmaceuticals, a CGMP letter to TCI Co.'s BioCosme branch, device findings for Unilam Lam and O.N. Diagnostics, an internet pharmacy letter to Online Generic Medicine, and a human-foods letter to Tipical Latin Food. As with every batch, the posted date and each letter's own issue date differ, so check both against your own supplier and marketplace records. 20

The week's remaining FDA output is routine but touches product listings. The agency issued several Class II device classifications, including a home-collected specimen system for detecting non-viral sexually transmitted infections, an over-the-counter infant pulse rate and oxygen saturation monitor, a hematopoietic cell enrichment kit and a high-throughput DNA sequencing test system for hereditary cancer predisposition. It also withdrew approvals for 37 abbreviated new drug applications held through Par Health USA, 15 Teva applications, 16 Elite Laboratories applications and an Amneal celecoxib capsule application, and issued rare pediatric disease priority review vouchers for ZANVASTRO (zilganersen) and FAYUVI (rebisufligene etisparvovec-hopf). 2123

On October 8 the FTC announced a stipulated order with Greenway Auto Group requiring that its advertised prices prominently include the actual price a consumer must pay, excluding only charges the government requires. The complaint alleged Greenway charged consumers more than $3,350 over the advertised price on average in over 92% of transactions, through administrative, dealer, delivery and processing fees, and that it advertised prices built on conditional rebates available only to some buyers. 24

The complaint also alleged that Greenway drew customers in with mailers telling recipients they had won thousands of dollars in cash prizes that did not exist. The FTC's Bureau of Consumer Protection had written to the company in March 2026 about the same advertising, and the complaint alleges Greenway responded by adding assurances of price transparency to its websites while keeping prices thousands below what it actually charged. The order prohibits the specific misrepresentations at issue and enjoin misrepresentations about whether charges, fees, taxes, products or services are optional or required. 24

The hospital letters are carried in from October 5. Chairman Andrew N. Ferguson sent letters to 24 of the largest healthcare services companies, telling them they owe patients timely, accurate and complete pricing information for healthcare services and that failing to provide it can be an unfair or deceptive practice. The letters state that satisfying the Centers for Medicare & Medicaid Services price-transparency rules leaves a facility's obligations under Section 5 of the FTC Act untouched, and that an incomplete disclosure — one that omits physician or facility fees, or covers only part of an expected course of care — can still deceive. 30

The third price item closed without a case. The FTC said on October 8 that it had closed its investigation into Gildan Activewear SRL and S&S Holdings LLC after the two amended a contract that restricted Gildan's ability to offer S&S's competitors the same pricing and discounts. The Commission had been examining Gildan under Section 2(a) of the Robinson-Patman Act, which prohibits certain price discrimination by sellers, and S&S under Section 2(f), which prohibits knowingly inducing or receiving it. The amended agreement now provides that nothing in it restrains Gildan's discretion to set prices or offer partnership support to any other North American wholesale distributor, and the FTC posted a public letter from Gildan confirming the change. 25

The FTC is sending more than $15.8 million to 2,124,796 customers of the cash advance app Cleo AI, resolving allegations first brought in March 2025 that the company advertised access to "hundreds of dollars" in advances when almost nobody received close to that, charged hidden fees for same-day or instant advances that often did not arrive the next day, and made subscriptions hard to cancel. Eligible consumers will be emailed between now and October 26, and PayPal payments begin October 27, 2026. 26

On October 6 the FTC said it is sending more than $100,000 to 6,205 customers of the online marketplace GOAT, the final phase of a settlement over its shipping and refund policies. GOAT had directly refunded more than $736,000 in 2025 as part of the same settlement. Check recipients have 90 days to cash their checks and PayPal recipients 30 days to redeem their payments. 28

The Premier Martial Arts settlement is carried in from October 5. Premier Franchising Group LLC and its former franchise sales organization, Franchise Fastlane LLC, will pay $1,850,000 to settle allegations that they told prospective franchisees that people with no martial arts background could profitably run one or more studios semi-absently on fewer than 15 hours a week, and that they made earnings claims in their 2020–2022 Franchise Disclosure Documents without a reasonable basis for believing those numbers applied to the studios they were actually selling. More than 200 buyers paid initial franchise fees of $49,500 or more. Under the proposed order, certain franchisees can cancel their agreements without penalty. 29

The FTC and the US Department of Agriculture opened a joint public inquiry on October 7 into agricultural equipment manufacturing and distribution, including potential anticompetitive conduct. The request for information asks about business models, policies, agreements and contract terms; first-hand accounts of restrictions, penalties or retaliation; and the competitive effects on pricing, market entry, innovation and farmer welfare. The FTC's recent agricultural work includes the Corteva pesticides settlement with twelve states and a settlement with Deere & Company over repair restrictions. Comments are due December 7, 2026. 27

Most of this week's SEC items are complaints that begin enforcement and carry the relief the Commission is asking for rather than a sum already ordered: Linqto, Caris, SQN Capital, Kalder and Jindal all sit at that stage. Leech is the one that has moved, and it moved through consent — a judgment sought with a $3 million penalty, on top of the $100 million Western Asset order, which is where the $103 million figure comes from. Jefferies is already final at the agency level, with the penalty and the censure on the record. The microcap and Ponzi judgments are judgments entered, meaning the money is ordered and collection is the live question.

Two threads run through the week. The first is what a manager may do with the difference between two accounts. Leech is the largest version of it, Caris a smaller and more recent one, and both allege that the same block of trades was split after the outcome was known. The second is what a seller may claim about an asset it cannot fully price: Linqto's pre-IPO vehicles, SQN's stuck net asset values and Kalder's two sets of books are three different attempts to put a confident number on something the seller controlled.

For the FTC, the week's shape is price transparency rather than conduct. The Greenway order, the hospital letters and the closed Gildan matter all concern what a buyer is told before committing, and the two redress items are the tail end of cases already decided. The practical items for a compliance team are the December 4 SEC comment deadline, the November 20 and November 23 FDA windows, the December 7 FTC and USDA deadline, and the internal checks each SEC case points to: capital-call and valuation controls at funds, the independence of any outside valuation, and the allocation policy that governs block trades.