Archive

December 16, 2016

The SEC announced on-going cease and desist proceedings against Utah-based broker dealer Wilson-Davis & Co, and settled proceedings against a former Wilson-Davis proprietary trader, Anthony Kerrigon, Wilson-Davis’ vice president/head trader Byron Barkley, and Wilson-Davis’ Chairman/CEO Paul Davis for violations of Regulation SHO.  Regulation SHO requires that before a broker-dealer effects a short sale, the broker-dealer must “locate” a source of borrowable securities that can be delivered on the date that delivery is due.  The rule includes a limited exception for short sales executed in connection with bona fide market making.  The SEC alleges that from at least November 2011 to May 2013, Wilson-Davis relied on the bona-fide market making exception for all short sales by its proprietary trading group and that this reliance was improper for certain trades.  While improperly availing itself of the exception, Wilson-Davis engaged in numerous short sales in over-the-counter equity securities which violated Rule 203(b)(1) of Regulation SHO and resulted in improper trading profits.  In addition, Wilson-Davis violated various provisions of the Market Access Rule.  Kerrigone, Barkley, and Davis will pay, collectively, over $700,0000 to settle the charges against them.  SEC

January 12, 2017

New York announced the resolution of a four-year investigation of Citigroup Global Markets, Inc. (CGMI), a subsidiary of Citigroup, that revealed that CGMI had overcharged over 47,000 of its customers more than $22.5 million in fees. After the Attorney General’s Office launched its investigation, CGMI revised its policies and procedures to address the fee overcharge issues uncovered in the investigation, and as a part of the agreement CGMI admits the findings of Attorney General Schneiderman’s investigation. In cooperation with the Attorney General’s investigation, in October 2014 CGMI began reimbursing its customers in full with interest, for the overcharged fees. The agreement also requires CGMI to report fee overcharge issues to the New York Attorney General’s office for the next three years and to pay a penalty of $1 million to the State of New York. The fee overcharges at issue in the investigation arose (1) when CGMI overcharged some of its customers more than the fees they had negotiated on their managed investment accounts, and (2) when CGMI overcharged customers by failing to rebate certain customers’ accounts after periods of inactivity when fees should not have been charged but were charged. NY

January 9, 2017

EJS Capital Management, LLC,  Alex Vladimar Ekdeshman, and Edward J. Servider were ordered to pay over $11.6 million in sanctions for their role in a fraudulent, off-exchange foreign currency scheme involving misappropriation of customer funds and false statements to customers to conceal the fraud. The order was entered by the United States District Court for the Southern District of New York. A number of Relief Defendants were ordered to pay $760,375 in disgorgement. CFTC

December 28, 2016

The CFTC filed a civil enforcement action against Brett G. Hartshorn for fraudulently soliciting/managing at least $906,000 to invest in off-exchange foreign currency. Hartshorn is charged with misappropriating at least $57,414 of client funds, failing to register with the CFTC as a Commodity Trading Advisor, and failing to produce books and records to the agency. CFTC

November 15, 2016

JPMorgan Chase and its Hong Kong-based subsidiary JPMorgan Securities (Asia Pacific) Limited agreed to pay a combined total of roughly $265 million to resolve foreign bribery charges relating to JPMorgan’s so-called Sons and Daughters Program.  This was a scheme in which the bank secured large business deals in China by awarding prestigious jobs to relatives and friends of Chinese government officials.  As part of the settlement, JPMorgan agreed to pay the DOJ a criminal penalty of $72 million.  JPMorgan also agreed to pay the SEC roughly $130 million to settle charges that the bank’s conduct violated the Foreign Corrupt Practices Act.  The Federal Reserve System’s Board of Governors also assessed a $61.9 million civil penalty.  Whistleblower Insider

December 21, 2016

Goldman Sachs was ordered to pay a $120 million civil monetary penalty by the CFTC for attempted manipulation of and false reporting of U.S. dollar ISDAFIX benchmark swap rates. The CFTC found that between January 2007 and continuing through March 2012, Goldman attempted to manipulate and made false reports concerning the U.S. Dollar International Swaps and Derivatives Association Fix, a global benchmark for interest rate products. Goldman was additionally ordered to cease and desist from further violations and take specified remedial steps. CFTC.

November 16, 2016

IB Capital FX, LLC (a/k/a IB Capital FX (NZ) LLP) d/b/a IB Capital, Michel Geurkink, and Emad Echadi, were ordered to pay $35 million in restitution to defrauded customers and a $420,000 civil monetary penalty for soliciting and accepting at least $50 million from approximately 1,850 customers for off-exchange margined retail foreign currency trading without being registered with the CFTC.  CFTC

September 29, 2016

Wells Fargo Bank N.A., doing business as Wells Fargo Dealer Services, agreed to change its policies and pay over $4.1 million to resolve allegations that it violated the Servicemembers Civil Relief Act by repossessing 413 cars owned by protected servicemembers without obtaining a court order.  DOJ

October 19, 2016

The Yorkshire Group, Inc. and its principal Scott Platto were ordered to pay over $1.5 million in penalties and restitution for engaging in an illegal off-exchange precious metals transaction scheme.  CFTC

October 11, 2016

The CFPB took action against Navy Federal Credit Union for making false threats about debt collection to its members, which include active-duty military, retired service members, and their families. The credit union also unfairly restricted account access when members had a delinquent loan. Navy Federal Credit Union is correcting its debt collection practices and will pay roughly $23 million in redress to victims along with a civil money penalty of $5.5 million.  CFPB