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August 14, 2018

New Mexico is seeking lead plaintiff status for its Public Employees Retirement Association (PERA) in a bid to recover nearly $4 million lost by the fund when Pacific Gas and Electric Company (PG&E)'s stock took a tumble after the Northern California wildfires last year. The lawsuit alleges that PG&E misled investors about its compliance with California safety laws and subsequent risk of wildfire. NM AG

Tagged in: Misrepresentations, 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 24, 2018

The SEC announced Yao Li, Vice President of Technology at Alliance Fiber Optic Products, has agreed to pay disgorgement of $196,203, prejudgment interest of $23,062, and a $196,203 penalty (for a total of $415,468) to settle charges that he made nearly $200,000 in illicit profits by trading on inside information in advance of three disappointing earnings announcements by the company. SEC

Tagged in: Insider Trading, Securities Fraud,

July 24, 2018

The SEC announced New York entrepreneur William Z. McFarland has agreed to a permanent officer-and-director bar and disgorgement of $27.4 million to settle charges of fraudulently inducing investments into his companies Fyre Media, Inc., Fyre Festival LLC, and Magnises, Inc. SEC

Tagged in: Misrepresentations, Securities Fraud,

July 20, 2018

Two subsidiaries of Deutsche Bank will pay just under $75M to settle allegations that they improperly handled “pre-releases” of American Depository Receipts (ADRs). ADRs are U.S. securities that represent foreign shares of a foreign company and require a corresponding number of foreign shares to be held in custody at a depository bank. The SEC found that the companies’ practices allowed inappropriate short selling and inappropriate profiting around ADR dividend payments. SEC

Tagged in: Financial Institution Fraud, Securities Fraud,

July 18, 2018

The SEC has charged Temenous Advisory, a Connecticut-based investing advisory firm, of putting $19M investor money into high-risk investments and also receiving high commissions from those investments. The misled senior citizens and individuals approaching retirement into buying stakes in four risk, illiquid private offerings. SEC

Tagged in: Regulatory Violations, Securities Fraud,

July 17, 2018

Rodolfo Sablon has pled guilty to insider trading charges in connection with a tender offer for his role in an insider trading scheme based on material, nonpublic information that Sablon received from a former employee at the bank. Sablon collected more than $2M in illicit investments based off of his scheme. USAO Southern District of New York

Tagged in: Insider Trading, Securities Fraud,

July 13, 2018

William Liberman of Florida was sentenced to 84 months in prison for his role in a stock pump-and-dump scheme.  Liberman and his co-conspirators made false representations about the performance of multiple companies of which he was an officer, in order to drive up the value of the stock and enrich themselves.  Liberman earned more the $1.2 million through the scheme, which left 12,000 investors with a total loss of $19 million.  He also failed to report the income, evading over $400,000 in federal taxes, which he has been ordered to pay, along with $5.3 million in restitution to investors.  USAO CT

Tagged in: Misrepresentations, Securities Fraud,

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