Archive

November 20, 2018

The owner of Venezuelan news network Globovision, Raul Gorrin Balisario, has been charged in an international money-laundering conspiracy that included the payment of millions of dollars in bribes to two high-level Venezuelan officials to secure the rights to conduct foreign currency exchange transactions at favorable rates for the Venezuelan government.  Two others pleaded guilty to charges arising under the same scheme.  Alejandro Andrade Cedeno, the former Venezuelan national treasurer, admitted to receiving over $1 billion in bribes.  Gabriel Arturo Jimenez Aray, the former owner of Banco Peravia in the Dominican Republic, admitted that he conspired with Gorrin and others to acquire the bank, through which he helped launder bribe money and other proceeds of the scheme.  DOJ; USAO SDFL

November 19, 2018

In a deferred prosecution agreement, Société Générale S.A. will pay penalties of $1.34 billion to federal and state prosecutors and regulators in relation to criminal charges that SG violated sanctions laws by processing billions of dollars in illegal transactions involving Cuban credit facilities through the U.S. financial system on behalf of entities subject to U.S. economic sanctions. According to a stipulated statement of facts, from approximately 2004 through 2010, SG operated 21 credit facilities that provided significant money flow to Cuban banks, entities controlled by Cuba, and Cuban and foreign corporations for business conducted in Cuba, primarily for the finance of oil transactions between a Dutch commodities trading firm and a Cuban corporation with a state monopoly on the production and refining of crude oil in Cuba.  The total penalties include: $717.2 million in civil forfeitures; $81.265 million to the Federal Reserve; $53.9 million to the Office of Foreign Assets Control; $325 million to the New York State Department of Financial Services; and, $162.8 million to the New York County District Attorney.  USAO SDNY

November 16, 2018

CarrierEQ Inc. (Airfox) and Paragon Coin Inc. have agreed to pay civil penalties of $250,000 each to resolve charges that they conducted initial coin offerings (ICOs) in 2017 without registering the ICOs pursuant to federal securities laws.  Airfox's offering had raised $15 million and Paragon had raised $12 million.  The companies also agreed to provide compensation to harmed investors and to register their tokens as securities.  SEC

November 7, 2018

Citibank N.A. has agreed to pay $38.7 million to settle charges that it improperly handled “pre-released” American Depositary Receipts (ADRs).  ADRs are securities that represent shares in a foreign company, and ordinarily require that a corresponding number of foreign shares be held at a depository bank. However, "pre-release” allows ADRs to be issued without the deposit of foreign shares, provided that brokers have an agreement with a depository bank and the broker or its customer owns the required number of foreign shares. The SEC found that Citibank improperly provided ADRs to brokers when, in fact, neither the broker nor its customer had the foreign shares needed to support those new ADRs.  SEC

November 8, 2018

Zachary Coburn, the founder of EtherDelta, a digital "token" trading platform, settled SEC charges that the platform operated as an unregistered exchange.  Over an 18-month period, EtherDelta's users executed more than 3.6 million orders for ERC20 tokens, including tokens that are securities under the federal securities laws.  Because it was functioning as an online national securities exchange, EtherDelta was required to register with the SEC or qualify for an exemption.  Coburn consented to the order and agreed to pay $300,000 in disgorgement plus $13,000 in prejudgment interest and a $75,000 penalty.  SEC

November 8, 2018

Commerzbank AG agreed to pay a $12 million civil fine and adopt compliance procedures to settle CFTC charges that it failed to supervise its Swap Dealer's activities and made misleading statements and material omissions to the CFTC concerning its Swap Dealer’s operations and compliance with the CEA and CFTC Regulations.  The CFTC found that Commerzbank failed to adopt any effective process for determining whether swap transactions with certain non-U.S. swap counterparties were subject to Dodd-Frank, failed to report swap transactions to swap data repositories, failed to submit Large Trader Reports, and and failed to execute certain swaps on swap execution facilities, all in violation of application rules and regulations.  CFTC

November 7, 2018

ITG Inc. and its affiliate AlterNet Securities Inc. have agreed to pay a $12 million SEC fine to settle charges that ITG made misstatements about the operation of its dark pool, POSIT, and failed to establish adequate safeguards and procedures to protect POSIT subscribers’ confidential trading information.  The SEC found that ITG improperly disclosed the confidential dark pool trading information of firm clients, and failed to disclose certain structural features of the dark pool, including segmentation and speed limits.  SEC

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

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.

October 5, 2018

Ameriprise Financial Services agreed to pay $375,000 to New Jersey to resolve an investigation that Ameriprise sold unsuitable non-traded real estate investment trusts (REITs) and non-traded business development companies (BDCs) to customers, did not reasonably supervise the sale of these alternative investments, and did not keep required books and records.  Most of the alternative investment offerings sold by Ameriprise during the relevant time period were registered with the New Jersey Bureau of Securities as conditioned upon heightened suitability standards for sales to New Jersey residents, but Ameriprise had failed to meet the New Jersey Prospectus Suitability Standards.  NJ