Archive

June 25, 2021

Three Credit Suisse entities—Credit Suisse International, Credit Suisse Securities Europe Limited, and Credit Suisse Capital LLC—have been ordered to pay a $1.5 million civil monetary penalty to resolve charges of failing to comply with swap data reporting obligations between 2013 and 2018. Specifically, the entities reported the mark-to market notational value of underlying equity rather than the daily mark of certain equity swap transactions. The failure resulted in errors in the majority of the reportable equity swap transactions submitted to the swap dealer repository. CFTC

Tagged in: Financial Institution Fraud, Fraud in CFTC-Regulated Markets, Regulatory Violations,

June 22, 2021

Loci Inc., whose InnVenn platform provides intellectual property search services for inventors and others users, will pay $7.6 million to resolve SEC charges arising from its unregistered initial coin offering of "LOCIcoins." In the course of the ICO, Loci and its CEO John Wise allegedly misrepresented the company’s revenues, number of employees, and InnVenn’s user base. SEC

Tagged in: Cryptocurrency, Financial and Investment Fraud, Misrepresentations, Regulatory Violations, Securities Fraud,

May 17, 2021

Index provider S&P Dow Jones Indices LLC, which publishes the S&P 500 VIX Short Term Futures Index ER, will pay a $9 million penalty to resolve claims that inadequate quality control procedures, including an undisclosed “auto-hold” feature triggered by a VIX spike, caused it publish and disseminate stale index values during a period of unprecedented volatility. As a result of the stale information, issuers who used the index to offer securities reported incorrect values. SEC

Tagged in: Financial and Investment Fraud, Financial Institution Fraud, Regulatory Violations,

May 13, 2021

Financial services company State Street Corporation will pay a $115 million criminal penalty and enter into a deferred prosecution agreement following its voluntary disclosure to authorities that, over the course of 17 years, the bank defrauded its clients out of $290 million. State Street admitted that it secretly marked up “out-of-pocket” (OOP) expenses charged to clients, despite telling clients that OOP expenses were passed through without markups. State Street executives took steps to conceal the mark-ups from clients, including by misleading clients when they inquired about what they were being charged for OOP expenses. As part of the settlement, defendant agreed to cooperate with ongoing investigations, to enhance its compliance program, and to retain an independent corporate compliance monitor for a period of two years. DOJ

Tagged in: Criminal Proceedings, Financial and Investment Fraud, Financial Institution Fraud, Misrepresentations,

May 12, 2021

Registered broker-dealer GWFS Equities Inc. will pay a penalty of $1.5 million to settle allegations that it failed to respond appropriately when it detected external bad actors gaining, or attempting to gain, access to the retirement accounts of participants in the employer-sponsored retirement plans it serviced, including through the use of improperly obtained electronic login information, user names, email addresses, and passwords. There was no allegation that this personal identifying information was disclosed in a breach of GWFS systems. However, the bad actors used this information to request distributions from plan participant accounts. While GWFS detected and blocked many of these attempts, the SEC charged that GWFS failed to file suspicious activity reports, or filed incomplete SARs, with respect to the account takeovers. SEC

Tagged in: Cybersecurity and Data Breaches, Financial and Investment Fraud, Financial Institution Fraud, Money Laundering, Regulatory Violations,

April 29, 2021

Following a self-disclosure, software company SAP SE will pay penalties totaling over $8 million and disgorge over $5 million to resolve claims that it violated Export Administration Regulations and the Iranian Transactions and Sanctions Regulations. Between 2010 and 2017, SAP and its partners and subsidiaries released U.S-origin software to users located in Iran and permitted Iranian users to access U.S.-based cloud services from Iran. In both cases, SAP executives were aware of the issues but did not take steps to remedy or stop them. SAP also entered into a non-prosecution agreement setting forth specific compliance procedures. DOJ; USAO Mass; OFAC; Commerce

Tagged in: Financial and Investment Fraud, Regulatory Violations,

April 9, 2021

The Alista Group, LLC, and Luis M. Pineda Palacios, a/k/a Luis Pineda, have been ordered to pay civil monetary penalties and restitution in an action initiated by the CFTC alleging that they engaged in precious metals fraud and illegal, off-exchange precious metals sales to retail customers. In addition, the government alleged that defendants misappropriated customer funds to trade on their own account, pay business expenses, and make payments to customers to sought to cash out. Alista was ordered to pay a total of $2.2 million, and Pineda was ordered to pay $448,000. CFTC

Tagged in: Financial and Investment Fraud, Fraud in CFTC-Regulated Markets, Ponzi Schemes, Regulatory Violations,

April 7, 2021

A default judgment was ordered against Negus Capital Inc. and its principal Aaron Butler, based on charges of commodity pool fraud in connection with binary options trading. The order finds that defendants unlawfully solicited the public to trade binary options contracts on the North American Derivatives Exchange, defrauded 70 customers who sent in nearly $300,000, misappropriated customer funds, and operated as an unregistered commodity pool operator. In addition to restitution, defendants were ordered to pay civil penalties of nearly $900,000. CFTC

Tagged in: Financial and Investment Fraud, Fraud in CFTC-Regulated Markets, Misrepresentations, Ponzi Schemes, Regulatory Violations,

March 4, 2021

Sohrab Sharma, a co-founder of Centra Tech, which claimed to offer products including a debit card that would allow users to make retail purchases using cryptocurrency, has been sentenced to eight years in prison following his guilty plea to charges arising from Centra’s fraudulent representations to participants in its unregistered initial coin offering of “Centra Tokens” or “CTR tokens,” which raised more than $25 million from victims. Sharma and his co-defendants falsely claimed that Centra Tech had an experienced executive team, agreements with card issuers, and licenses to operate in 38 states when, in fact, Centra Tech had none of these things. USAO SDNY

Tagged in: Criminal Proceedings, Cryptocurrency, Financial and Investment Fraud, Regulatory Violations, Securities Fraud,

February 23, 2021

Cryptocurrency trading platform Bitfinex, operated by iFinex, and Tether were ordered to end all trading activity for NY customers and agreed to pay $18.5 million in penalties following an investigation into their handling of customer deposits and withdrawals that resulted in the loss of hundreds of millions of customer assets. Tether was found to have falsely represented that each of its stablecoins was backed one-to-one by U.S. dollars in reserve when, in fact, they were not. NY

Tagged in: Cryptocurrency, Financial and Investment Fraud, Financial Institution Fraud,

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