Archive

July 28, 2023

Thomas D. Renison and Timothy J. Allcott, co-founders of ARO Equity, LLC, were sentenced to 48 months and 30 months in prison, respectively, for lying to current and prospective investors about ARO's performance and for using new investors' funds to pay interest to older investors. For at least 3 years, and despite Renison being barred in 2014 by the SEC from associating with any investment adviser or broker-dealer, Renison and Allcott deceptively convinced investors to cash out their retirement accounts and invest instead with ARO, touting double-digit returns and zero downside, ultimately raising nearly $6 million from investors. ARO's investments began failing almost immediately, but Renison and Allcott continued to tell investors their investments were as safe with ARO as they were with a bank. In addition to their prison sentences, Renison was ordered to pay restitution of $6,098,198.30 and Allcott will pay restitution of $6,249,983.30. SEC

July 28, 2023

Summitcrest Capital, Inc., and its principals, Johnny Tseng and Kevin Zhang, raised approximately $19.8 million from Chinese-speaking investors in the United States and China, misleading them to believe the funds would be used to make real estate-related loans "to the general public" and the income from these loans would be used to make interest payments and return of capital to investors. Tseng and Zhang, through their entity SC Development Fund, instead used investor funds for loans to Zhang's many real estate development and contracting businesses. Summitcrest, Tseng, and Zhang are on the hook jointly and severally for $16.6 million in disgorgement and over $4.3 million in prejudgment interest. Summitcrest and Zhang are permanently enjoined from violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act. Additionally, Tseng is barred from acting as an officer or director and will pay disgorgement of $60,000, plus $15,721 in prejudgment interest and a $414,366 penalty. SEC

July 11, 2023

Bank of America has been ordered to pay more than $100 million to harmed consumers, $90 million in penalties to the Consumer Financial Protection Bureau (CFPB), and $60 million in penalties to the Office of the Comptroller of the Currency (OCC) for multiple acts of misconduct.  The bank was found to charge consumers double fees on insufficient funds, withhold promised cash and point rewards on credit cards, and illegally obtain and use consumer credit reports without their approval.  CFPB

June 26, 2023

Sanjay Singh, of Broward County, Florida, and his company, Royal Bengal Logistics Inc., have been charged by the SEC for fraudulently raising $112 million through a 5-year, Ponzi-like scheme, which targeted as many as 1,500 primarily Haitian-American investors through an unregistered securities offering. Singh promised investors guaranteed returns of 12.5 to 325 percent, and that the investors’ funds would be used to expand operations and increase its fleet of semi-trucks and trailers. Despite telling investors Royal Bengal generated up to $1 million in revenue per month, RB instead was operating at a loss and used approximately $70 million of new investor funds to make payments to other investors. Singh misappropriated at least $14 million of investor funds, and diverted more than $19 million into two brokerage accounts he controlled, engaged in highly speculative equities trading on margin in those accounts, and as a result lost more than $1 million of investor money. SEC

May 31, 2023

One of the largest non-depository personal installment lenders in the country, OneMain Financial, has been ordered to pay $20 million in penalties and restitution for tricking borrowers into signing up for optional products and failing to refund interest on purchases they claimed were fully refundable.  As part of the settlement, OneMain was also ordered to adjust its cancellation policies.  CFPB

May 30, 2023

The former head of Wells Fargo’s Community Bank, Carrie Tolstedt, has agreed to pay a $3 million penalty to settle charges of misleading investors about its financial success.  Over a two-year period, Tolstedt publicly and repeatedly touted a metric used by Wells Fargo to measure financial success, even though she knew it did not accurately track accounts or products used or needed by customers.  In addition to the penalty, Tolstedt will pay almost $1.5 million in disgorgement and over $400,000 in pre-judgment interest.  The funds will be combined with prior payments of $500 million by Wells Fargo and $2.5 million by its former CEO and Chairman, John Stumpf, and will be distributed to harmed investors.  SEC

May 23, 2023

Rhode Island-based Citizens Bank, one of the 15 largest banks in the country, has agreed to pay a $9 million fine to the CFPB’s victim relief fund in order to resolve allegations of violating consumer financial protection laws.  Citizens Bank allegedly failed to inform consumers of the status of disputed credit card charges, failed to investigate claims of unauthorized charges, and failed to issue refunds for fees arising from the charges.  CFPB

May 12, 2023

HSBC Bank USA, N.A. has been ordered to pay $45 million to settle charges involving a number of violations of the Commodity Exchange Act.  Over an eight-year period beginning in 2012, HSBC traders systematically structured their trading to move the market prices of issuer swaps in a direction that was favorable to HSBC and unfavorable to its counterparties.  Over several months beginning in 2015, HSBC’s supervisor for its U.S. dollar swap desk repeatedly engaged in spoofing.  Lastly, over a couple months beginning in 2020, HSBC failed to make or keep recordings of mobile phone calls involving swap transactions.  CFTC

May 12, 2023

HSBC Bank USA, N.A., HSBC Securities (USA) Inc., and HSBC Bank plc (collectively HSBC Affiliates) have been ordered to pay $30 million to the CFTC and $15 million to the SEC to settle charges of violating recordkeeping and supervisory requirements.  As part of the settlement, HSBC Affiliates admitted that it failed to stop employees from communicating internally and externally through unapproved mediums, and failed to preserve those messages as business records even if they pertained to the businesses.  CFTC; SEC

May 11, 2023

The Bank of Nova Scotia and Scotia Capital USA Inc. (collectively BNS Affiliates) have been ordered to pay $15 million to the CFTC and $7.5 million to the SEC to settle charges of violating recordkeeping and supervisory requirements.  BNS Affiliates admitted that its employees often communicated internally and externally through unapproved channels, and though some messages pertained to the businesses, failed to preserve those messages as records, and would be unable to produce them if requested.  CFTC; SEC