Archive

March 9, 2016

Cyprus-based company Banc de Binary Ltd., its founder Oren Shabat Laurent, and three affiliates, will pay $11 million to settle charges of illegally selling binary options to U.S. investors.  The SEC’s 2013 complaint alleged that the defendants failed to register the offering before soliciting U.S. customers and failed to register as a broker-dealer before communicating directly with U.S. clients.  Binary options differ from more conventional options contracts because the payout typically depends entirely on whether the price of a particular asset underlying the option will rise above or fall below a specified amount.  The defendants will pay about $9 million to the SEC and $2 million to the CFTC which filed a parallel action.  A fair fund has been established to distribute money to the harmed investors.  SEC  

March 8, 2016

The SEC charged fund manager Steven Zoernack and his firm EquityStar Capital Management with operating without registration, providing false and misleading data to investors, and actively hiding Zoernack’s checkered past, including two felony fraud convictions and a bankruptcy filing.  SEC

March 7, 2016

The SEC charged the Rhode Island state agency now known as the Rhode Island Commerce Corporation and its bond underwriter Wells Fargo Securities with defrauding investors in connection with a municipal bond offering to finance a start-up video game company called 38 Studios.  The Rhode Island agency loaned $50 million in bond proceeds to 38 Studios.  However, the bond offering documents produced by the agency and Wells Fargo failed to disclose that 38 Studios had conveyed it needed at least $75 million in funding to produce a particular video game.  Therefore, investors were not fully informed that 38 Studios faced a funding shortfall even with the loan proceeds.  When 38 Studios was unable to obtain additional financing, the company defaulted on the loan.  The SEC also charged Wells Fargo’s lead banker on the deal and two Rhode Island agency executives with aiding and abetting the fraud.  The SEC’s complaint further alleges that Wells Fargo and the lead banker on the 38 Studios deal failed to disclose that Wells Fargo had a side deal with 38 Studios which enabled it to receive nearly double the amount of compensation disclosed in offering documents.  SEC

March 28, 2016

California announced a $8,500,000 settlement with Wells Fargo Bank over privacy violations that included recording consumers’ phone calls without timely telling consumers they were being recorded, as required by California law. As part of the settlement, which is in the form of a stipulated judgment, Wells Fargo will pay civil penalties totaling $7,616,000 and will reimburse the prosecutors’ investigative costs of $384,000. In addition, Wells Fargo will contribute $500,000 to two statewide organizations dedicated to advancing consumer protection and privacy rights. CA

March 28, 2016

A company that purchased income streams from veterans and other pensioners has agreed to provide more than $2 million in debt relief to resolve allegations that it made predatory and illegal loans to Massachusetts consumers. Under the terms of the assurance of discontinuance, Future Income Payments, LLC (FIP), which was formerly known as Pensions, Annuities and Settlements, LLC, has agreed to convert its current contracts with consumers into interest-free loans. Through this alleged scheme, the 85 affected Massachusetts consumers who entered into contracts with FIP received upfront payments ranging from $1,800 to more than $40,000. In exchange, FIP accessed the consumers’ bank accounts each month to deduct a portion of their pension payments. The AG’s investigation revealed that FIP was charging consumers interest rates that far exceeded the statutory limit, many exceeding 100 percent. Under the terms of the settlement, any consumer who has already paid in excess of the principal balance borrowed will receive a refund for any overpayments. MA

March 23, 2016

Gilbert G. Lundstrom, the former CEO of TierOne Bank -- a $3 billion publicly-traded commercial bank formerly headquartered in Lincoln, Nebraska -- was sentenced to 132 months in prison and to pay a $1.2 million fine for orchestrating a scheme to defraud TierOne’s shareholders and to mislead regulators by concealing more than $100 million in losses on loans and declining real estate.  DOJ

March 23, 2016

Abraham Jose Shiera Bastidas, the owner of multiple U.S.-based energy companies, pleaded guilty to violating the Foreign Corrupt Practices Act by paying bribes to secure energy contracts from Venezuela’s state-owned and state-controlled energy company, Petroleos de Venezuela S.A.  DOJ

March 25, 2016

The CFTC has filed charges against Virginia resident Tracy Lee Thomas and his firm based in the Cayman Islands Marbury Advisors Inc. with allegations of fraudulently soliciting more than $1.2 million in a commodity futures scheme.  CFTC

March 23, 2016

JPMorgan Ventures Energy Corp. and JPMorgan Chase Bank, N.A.  have agreed to pay a $225,000 penalty to resolve charges of failing to comply with their obligations to submit accurate large trader reports for physical commodity swap positions.  CFTC

March 22, 2016

A federal judge for the Southern District of Iowa ordered Alabama resident John David Stroud and his companies to pay over $4.7 million in restitution and penalties for committing commodity pool fraud and misappropriation of funds.  CFTC