Archive

September 14, 2017

The Securities and Exchange Commission today charged the investment services subsidiary of SunTrust Banks with collecting more than $1.1 million in avoidable fees from clients by improperly recommending more expensive share classes of various mutual funds when cheaper shares of the same funds were available. SunTrust Investment Services has agreed to pay a penalty of more than $1.1 million to settle the charges.  SunTrust separately began refunding the overcharged fees plus interest to affected clients after the SEC started its investigation.  SEC examiners cited the practice during a compliance review of the firm in mid-2015.  More than 4,500 accounts were affected. SEC

September 7, 2017

The Securities and Exchange Commission today announced that State Street has agreed to pay more than $35 million to settle charges that it fraudulently charged secret markups for transition management services and separately omitted material information about the operation of its platform for trading U.S. Treasury securities. An SEC order finds that State Street’s scheme to overcharge transition management customers generated approximately $20 million in improper revenue for the firm.  State Street used false trading statements, pre-trade estimates, and post-trade reports to misrepresent its compensation on various transactions, especially purchases and sales of bonds and other securities that trade outside large transparent markets. SEC

August 21, 2017

The Securities and Exchange Commission today announced that hedge fund advisory firm Deerfield Management Company L.P. has agreed to pay more than $4.6 million to settle charges that it failed to establish, maintain, and enforce policies and procedures reasonably designed to prevent the misuse of inside information, including information about confidential government decisions. The case relates to insider trading charges that the SEC recently filed against current and former Deerfield analysts, a political intelligence analyst who passed them information, and an employee at the Centers for Medicare and Medicaid Services (CMS). According to the SEC’s order, Deerfield conducted extensive research in the health care sector to help inform its investment decisions, and engaged research firms specializing in political intelligence about upcoming regulatory and legislative decisions.  But Deerfield’s policies and procedures required only an initial review of the research firms’ own policies and procedures, and Deerfield otherwise placed the burden on its own employees to police themselves by identifying issues and informing supervisors. SEC

November 28, 2017

The Commodity Futures Trading Commission (CFTC) obtained a Consent Order against Defendants Joseph Dufresne (a/k/a/ Joseph James) and Megan Renkow (a/k/a Megan James), both of Palos Verdes Estates, California, and their companies, United Business Servicing, LLC and United Business Servicing, Inc. (collectively, United Business), doing business as SchoolofTrade.com (SoT), who were charged with fraud and other violations in connection with the offer and sale of futures trading strategies and systems. The Consent Order, entered by Judge John A. Kronstadt, U.S. District Judge for the Central District of California, on November 22, 2017, requires Dufresne, Renkow, and United Business jointly and severally, to pay restitution to defrauded investors totaling $3,941,157 and a $1 million civil monetary penalty. CFTC

October 23, 2017

Mark Johnson, former head of global foreign exchange cash trading at HSBC Bank, was found guilty for his role in a scheme to defraud an HSBC client through a multimillion-dollar scheme commonly referred to as “front running.”  DOJ

August 8, 2017

PHH Corp., PHH Mortgage Corp. and PHH Home Loans agreed to pay roughly $75 million to resolve charges they violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the U.S. Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA), guaranteed by the United States Department of Veterans Affairs (VA), and purchased by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) that did not meet applicable requirements.  The allegations originated in a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by former PHH employee Mary Bozzelli.  She will receive a whistleblower award of roughly $9 million from the proceeds of the government's recovery.  DOJ

November 21, 2017

The CFPB ordered Citibank, N.A. to pay $3.75 million in redress to consumers and a $2.75 million civil money penalty for misleading borrowers into believing that they were not eligible for a valuable tax deduction on interest paid on certain student loans, incorrectly charging late fees and added interest to the student loan balances of borrowers who were still in school and eligible to defer their loan payments, and misleading consumers about how much they had to pay in their monthly bills and failing to disclose required information after denying borrowers’ requests to release loan cosigners. CFPB

November 20, 2017

The CFPB fined Xerox Business Services, LLC, now called Conduent Business Services, a $1.1 million civil penalty for software errors that led to the sending of incorrect consumer information about more than one million borrowers to credit reporting agencies. The company also failed to notify all of its auto lender clients about known flaws in its software that led to the errors. CFPB

November 15, 2017

The CFPB sued Think Finance for its role in deceiving consumers into repaying loans that were not legally owed. The Bureau seeks to recoup relief for harmed consumers and impose a penalty. CFPB

November 13, 2017

The Commodity Futures Trading Commission (CFTC) today announced that Judge David G. Campbell of U.S. District Court for the District of Arizona entered a Consent Order against Defendants Derek Springfield and his company, Draven, LLC (Draven), both of Mesa, Arizona finding that they fraudulently solicited and received at least $1.8 million from approximately 112 commodity pool participants in connection with pooled investments in commodity futures and foreign currency exchange (forex). The Order, entered on November 13, 2017, also finds that the Defendants engaged in fraudulent sales practices, misappropriated pool participant funds, and provided false account statements to pool participants. The Order requires the Defendants to pay, jointly and severally, $1,487,964.45 in restitution to defrauded customers and an $800,000 civil monetary penalty. The Order also imposes permanent trading and registration bans against Defendants, among other things, and prohibits them from committing further violations of the Commodity Exchange Act and CFTC Regulations, as charged. CFTC