Archive

September 10, 2019

Merrill Lynch, Pierce, Fenner & Smith Inc. has been ordered to a pay the CFTC a $300,000 civil monetary penalty for failing to promptly produce records in response to routine regulatory requests and for failing to supervise its employees to ensure statutory and regulatory obligations were met. Merrill’s delay substantially stalled a CFTC investigation. CFTC

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

September 4, 2019

Chicago-based Options Clearing Corporation (OCC), the registered clearing agency for exchange-listed option contracts on equities, will pay $15 million in penalties to the SEC and $5 million in penalties to the CFTC to resolve allegations that it failed to comply with regulations related to clearing agency standards. As a systemically important financial market utility (SIFMU), OCC is subject to SEC and CFTC regulations regarding the implementation and management of risk management systems, to reduce the risk of disruption in OCC's operations, and allegedly failed to comply with those standards, including through changing policies without obtaining SEC approval. SEC; CFTC

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

August 16, 2019

Brokers Cantor Fitzgerald & Co. and BMO Capital Markets Corporation will pay, respectively, $647,000 and $3.9 million to resolve allegations that they marketed pre-released American Depositary Receipts (ADRs) when they should have known that the transactions were not backed by foreign shares. SEC

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

July 12, 2019

Korea Exchange, Inc., based in Busan, Korea, will pay $150,000 and implement financial management standards in settlement of charges by the CFTC that the company falsely certified to the Commission that it was in compliance with specified international financial management standards and testing requirements. KRX had made the certification in order to maintain its exemption from certain registration requirements. CFTC

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

June 27, 2019

State Street Bank and Trust Company will pay more than $88 million to the SEC to resolve charges that it overcharged its client mutual funds and other registered investment companies. State Street served as custodian, and the clients agreed to reimburse State Street for specified custodial expenses that State Street incurred on their behalf. However, State Street overcharged its clients, adding an undisclosed mark-up on the cost of sending financial transactions through the SWIFT network. SEC

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

June 18, 2019

Wedbush Securities, Inc., will pay more than $8.1 million to the SEC to resolve charges that the securities company improperly obtained pre-released ADRs from depositary banks when it should have known that neither the firm nor its customers owned the foreign shares needed to support those ADRs. This practice inflates the total number of a foreign issuer’s tradeable securities. The SEC further alleged that Wedbush failed to have adequate compliance and training. The consent order requires the company to pay more than $4.8 million in disgorgement, approximately $800,000 in prejudgment interest, and a civil money penalty of more than $2.4 million. SEC

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

June 6, 2019

The SEC has filed a federal court action against Kik Interactive, Inc. The company, which previously offered an online messaging application, raised more than $100 million through the sale of "Kin" tokens, an unregistered digital asset. Kik marketed the Kin cryptocurrency as an investment which would trade on secondary markets, and which Kik would incorporate in its messaging platform, creating a Kin transaction network both on and off the messaging platform. According to the SEC's complaint, these Kik platforms did not, in fact, exist. Kik did not comply with securities registration requirements in offering the Kin tokens for sale, and the SEC alleges that in failing to do so, Kik violated Section 5 of the Securities Act of 1933. SEC

Tagged in: Cryptocurrency, Regulatory Violations, Securities Fraud,

May 10, 2019

Broker-dealer Banca IMI Securities Corp. pleaded guilty to criminal antitrust charges arising from a conspiracy to rig bids to borrow pre-release American Depository Receipts (ADRs) from one of the depository banks permitted to create ADRs. The depository bank instituted an auction process for pre-release ADRs, and Banca IMI conspired with others to submit artificially low, sometimes identical, bids, to the bank. Banca IMI will pay a criminal fine of $2 million. DOJ

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

April 29, 2019

In an enforcement action initiated by the CFTC, Michael Shah and Zilmil, Inc., both of Jacksonville, Florida, have been ordered to pay nearly $23 million for their roles as "affiliate marketers" for unregistered binary options trading schemes, targeting consumers with false and misleading advertising for the trading systems. CFTC

Tagged in: Fraud in CFTC-Regulated Markets, Misrepresentations, Regulatory Violations,

April 15, 2019

Online lending company, Avant, LLC, will pay $3.85 million to settle FTC charges for deceptive loan servicing practices and for misleading its consumers. Allegedly, Avant made unauthorized charges on consumers’ accounts and unlawfully required consumers to agree to automatic payments from their bank accounts. Avant has also been charged with failing to give consumers accurate payoff quotes or timely credit payments made by check. In addition to the monetary sanctions, under the settlement, Avant will be prohibited from taking unauthorized payments or collecting payment by means of remotely created check (RCC). FTC

Tagged in: Financial Institution Fraud,

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