Archive

September 17, 2021

RBC Capital Markets LLC will pay $800,000 to resolve charges that it improperly allocated bonds intended for institutional customers and dealers to “flippers,” who then resold the bonds to other broker-dealers at a profit, despite customer instructions to place retail customer orders first.  RBC employees Kenneth G. Friedrich, who was the head of Municipal Sales, Trading and Syndication, and Jaime L. Durando, the head of RBC's municipal syndicate desk, also settled charges and agreed to penalties of $30,000 and $25,000 respectively.  SEC

September 13, 2021

GTV Media Group Inc., Saraca Media Group Inc., and Voice of Guo Media Inc. will collectively pay more than $539 million to resolve SEC and New York State claims related to their alleged unregistered offering of GTV common stock and a digital asset security referred to as G-Coins or G-Dollars.  The SEC found that the respondents publicized the two offerings on their websites and social media platforms, raising approximately $487 million from more than 5,000 investors.  No registration statements were filed, and no registration exemption applied.  Without admitting or denying the SEC’s findings, respondents agreed to pay disgorgement of $486 million plus interest, and penalties totaling $35 million.  SEC; NY

August 30, 2021

KMS Financial Services Inc. will pay $200,000 to resolve SEC charges that the investment advisor and broker-dealer violated Regulation S-P regarding the safeguarding of customer records and information. The SEC alleged that between September 2018 and December 2019, email accounts of KMS personnel were taken over by unauthorized third parties, resulting in the exposure of personally identifying information of nearly 5,000 KMS customers and clients.  The SEC found that KMS failed to adopt written policies and procedures requiring additional firm-wide security measures until May 2020, and did not fully implement those additional security measures firm-wide until August 2020, placing additional customer and client records and information at risk.  SEC

August 30, 2021

Cambridge Investment Research Inc. and related entities will pay $250,000 to resolve SEC charges that the investment advisor and broker-dealer violated Regulation S-P regarding the safeguarding of customer records and information. The SEC alleged that between January 2018 and June 2021, email accounts of Cambridge personnel were taken over by unauthorized third parties, resulting in the exposure or potential exposure of personally identifying information of approximately 5,000 Cambridge customers and clients.  The SEC found that Cambridge discovered the first email account takeover in January 2018, but failed to adopt and implement firm-wide enhanced security measures for cloud-based email accounts until 2021, resulting in the exposure and potential exposure of additional customer and client records and information.  SEC

August 30, 2021

Cetera Advisor Networks LLC and related entities will pay $300,000 to resolve SEC charges that the investment advisor and broker-dealer violated Regulation S-P regarding the safeguarding of customer records and information and provision of breach notification to customers. The SEC alleged that between November 2017 and June 2020, email accounts of Cetera personnel were taken over by unauthorized third parties, resulting in the exposure of personally identifying information of more than 4,000 Cetera customers and clients.  The accounts were not protected with multi-factor authentication, even though Cetera’s policies required MFA.  SEC

August 25, 2021

Default judgment was entered against Silver Star FX, LLC d/b/a Silver Star Live, Silver Star Live Software LLC, and David Wayne Mayer based on findings that, acting as unregistered commodity trading advisors, they fraudulently solicited customers to open discretionary foreign exchange trading accounts that would purportedly use an automated trading software developed by Mayer.  Defendants misrepresented Mayer's qualifications and trading experience, as well as the trading system's performance history and expected profits.  Defendants were ordered to pay $3.9 million in restitution and $11.7 million in civil monetary penalties.  CFTC

August 17, 2021

Investment advisor Murchinson Ltd., together with associated individuals Marc Bistricer and Paul Zogala, will pay restitution, interest, and penalties totaling nearly $9 million to resolve allegations that they caused a hedge fund client to violate Regulation SHO regarding uncovered short sales and other problematic trading practices.  Respondents allegedly provided erroneous order-marking information, thereby causing the hedge fund brokers to mismark the hedge funds’ sales as “long,” and resulting in their failure to borrow or locate shares prior to executing the sales.  SEC

August 16, 2021

Education publishing company Pearson plc agreed to pay $1 million to resolve an SEC investigation into its disclosures regarding a 2018 data breach that resulted in the exposure of millions of student and school administrator records, including birthdates, e-mail addresses, user names, and hashed passwords.  The SEC found that Pearson understated the nature and scope of the incident, overstated the company’s data protections, and had inadequate controls and procedures regarding the assessment and reporting of cybersecurity incidents.  Pearson, which is publicly traded in the UK, is a foreign private issuer with ADRs trading on the NYSE. SEC

August 13, 2021

Tyson Foods, Inc. will pay $1.5 million to resolve allegations that on nearly 600 dates between 2016 and 2021 the company held positions in Chicago Board of Trade soybean meal futures in excess of then-applicable federal position limits, and filed incorrect Statements of Cash Positions in Grain (Form 204) with the CFTC.  CFTC

August 10, 2021

Five companies that operate the BitMEX cryptocurrency platform will pay a total of $100 million to resolve claims that the platform operated a facility to trade or process swaps without being approved as a Designated Contract Market (DCM) or a Swap Execution Facility (SEF), operated as an unregistered futures commission merchant (FCM), and failed to implement anti-money laundering procedures.  HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited, and HDR Global Services (Bermuda) Limited jointly operated BitMEX, which offered leveraged trading of cryptocurrency derivatives, including to customers in the U.S.  BitMEX acted as a counterparty in certain transactions, and accepted bitcoin to margin digital asset derivative transactions.  BitMEX allowed customers to access its platform and conduct derivative trading without verifying customer identity beyond the collection of an email address, and failed to report suspicious activity as required. As part of the settlement, BitMEX certified that it terminated its U.S. business operations, barred access to the platform by U.S. customers, and had undertaken verification procedures for existing customers.  $50 million of the $100 million penalty will be paid to the CFTC, with $30 million of the remainder paid immediately to FinCEN, and an additional $20 million to FinCEN suspended pending defendants’ undertaking of specific compliance procedures.  CFTC; FinCEN