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Page 17 of 32

October 29, 2018

Matthias Krull, a former executive of Swiss bank Julius Baer Group Ltd., was sentenced to ten years in prison following his guilty plea to charges arising from his involvement in an international scheme to launder more than a billion dollars embezzled from Venezuela’s national oil company, Petroleos de Venezuela SA or PDVSA.  DOJ

Tagged in: Criminal Proceedings, Financial and Investment Fraud, Money Laundering,

October 24, 2018

A small-dollar lender that operates in Tennessee, Alabama, Kentucky, and Mississippi, has settled with the CFPB for allegedly violating the Consumer Financial Protection Act (CFPA). Cash Express, LLC allegedly sent letters to its customers to threaten them with lawsuits, misrepresented that it would report negative information to credit agencies, and withheld funds from cashed checks to satisfy prior loans. It has now been ordered to pay restitution of $32,000 as well as a $200,000 penalty. CFPB

Tagged in: Financial Institution Fraud,

October 9, 2018

HSBC will pay a $765 million civil penalty under the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) to settle claims that it misrepresented the quality of assets in residential mortgage-backed securities (RMBS) that HSBC packaged and sold to investors between 2005 and 2007.  HSBC was also alleged to have misrepresented the due diligence procedures it followed in reviewing loans for securitization, claiming to follow more stringent procedures than it actually did follow.  USAO Colorado.

Tagged in: Financial and Investment Fraud, Financial Institution Fraud, FIRREA, Housing and Mortgage Fraud, Misrepresentations,

September 26, 2018

Two brokerage firms, UK-based TFS-ICAP LIMITED and New York-based TFS-ICAP LLC, pled guilty to securities fraud under New York's Martin Act for their roles in posting fake trades, bids, and offers by inter-dealer brokers for emerging market foreign exchange currency options.  The fake trades were intended to create a false appearance of liquidity in the emerging markets FX options market and encourage traders to buy and sell FX options via TFS-ICAP rather than other brokers.  In addition to the criminal pleas by the companies, a civil settlement requires them to implement remedial procedures, retain an independent monitor, pay $1.5 million, and cooperate in ongoing investigations.  NY AG.

Tagged in: Financial and Investment Fraud, Financial Institution Fraud, Foreign Exchange, Market Manipulation and Trading Violations,

September 26, 2018

Registered broker-dealer and investment advisor Voya Financial Advisors Inc. will pay $1 million to resolve SEC allegations that it failed to comply with the Safeguards Rule, Identity Theft Red Flags Rule, and related regulations in its response to a computer systems intrusion that compromised personal information of thousands of customers. SEC

Tagged in: Cybersecurity and Data Breaches, Financial and Investment Fraud, Financial Institution Fraud,

August 20, 2018

Merrill Lynch, Pierce, Fenner & Smith has agreed to pay $8.9 million to resolve claims that it violated the anti-fraud provisions of the Investment Advisers Act by failing to disclose its conflicts of interests to clients. According to the SEC, the violation occurred when Merrill Lynch failed to go through with a planned vote on whether to stop offering certain products managed by a third party, and then failed to disclose to clients that this decision was due to its own business interests. SEC

Tagged in: Financial Institution Fraud, Regulatory Violations, Securities Fraud,

August 14, 2018

In the largest civil penalty imposed by the Justice Department for FIRREA violations leading up to the 2008 financial crisis, the Royal Bank of Scotland Group plc (RBS) will pay $4.9 billion to resolve claims that it knowingly misled investors of its residential mortgage-backed securities (RMBS), including Fannie Mae and Freddie Mac. According to a statement of facts included with settlement details, RBS knew from its own reviews that its loans carried a high risk of default but failed to disclose that to investors. Furthermore, it allowed its due diligence process to become a total sham by not requiring that loan originators correct errors, instructing due diligence vendors to waive defects, and self-imposing caps on the number of faulty loans it removed from a RMBS. DOJ; USAO MA

Tagged in: Financial Institution Fraud, FIRREA, Housing and Mortgage Fraud, Misrepresentations, Securities Fraud,

August 2, 2018

Aurora Loan Services, LLC, a subsidiary of Lehman Brothers Holdings, Inc., has agreed to pay a civil penalty of $41 million to settle allegations of FIRREA violations in the loans it sold between 2004 and 2008. The mortgage originator gave preferential treatment to five "Platinum" lenders by allowing them to underwrite their own loans and freeing them from quality control standards that were imposed on other lenders. The resulting decline in loan quality was linked to a higher rate of default, hurting investors who bought residential-based mortgage securities from Lehman Brothers. USAO CO

Tagged in: Financial and Investment Fraud, Financial Institution Fraud, FIRREA, Housing and Mortgage Fraud, Misrepresentations, Securities Fraud,

August 1, 2018

Wells Fargo Bank has agreed to pay a civil penalty of $2.09 billion to settle allegations that it knowingly misrepresented the quality of its mortgage loans to investors, in violation of FIRREA, in order to double its production of subprime and Alt-A loans. Nearly half of those loans subsequently defaulted, leading to billions of dollars in losses for investors, including federally insured financial institutions. DOJ; USAO NDCA

Tagged in: Financial and Investment Fraud, Financial Institution Fraud, FIRREA, Misrepresentations, Securities Fraud,

July 20, 2018

The CFPB announced a proposed settlement with TCF National Bank regarding the bank’s marketing and sale of overdraft services. TCF allegedly obscured the overdraft fees it charged and made consenting to overdraft fees seem mandatory for new customers to open an account. TCF has agreed to pay $25 million in restitution to customers who were charged overdraft fees and has agreed to an injunction to prevent future violations. CFPB

Tagged in: Financial Institution Fraud,

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