Archive

October 5, 2016

Credit Suisse AG will pay a $90 million penalty and admit wrongdoing to settle charges that it misrepresented how it determined a key performance metric of its wealth management business.  Rolf Bӧgli, former Chief Operating Officer of Credit Suisse’s Private Banking Division, will pay an $800,000 penalty to settle charges he was the cause of Credit Suisse’s violations.  An SEC investigation found that Credit Suisse veered from its publicly disclosed methodology for determining net new assets (NNA), a metric valued by investors in financial institutions to measure success in attracting new business.  Disclosures stated that Credit Suisse was individually assessing assets based on each client’s intentions and objectives.  But Credit Suisse at times instead took an undisclosed results-driven approach to determine NNA.  According to the SEC’s orders, Bӧgli pressured employees to classify certain high net worth and ultra-high net worth client assets as NNA despite concerns raised by employees most knowledgeable about a particular client’s intent.  SEC

September 28, 2016

UBS Financial Services will pay more than $15 million to settle charges that it failed to adequately educate and train its sales force about critical aspects of certain complex financial products it sold to retail investors.  The SEC’s order finds that UBS failed to educate and train UBS registered representatives in connection with the sale of reverse convertible notes (RCNs) so that they could form a reasonable basis to make recommendations.  RCNs are complex securities that feature embedded derivatives whose performance is driven by the concept of implied volatility.  Without adequate education and training, certain registered representatives made unsuitable recommendations in the sale of RCNs to certain retail customers in light of their investment profiles.  UBS sold approximately $548 million in RCNs to more than 8,700 relatively inexperienced retail customers.  SEC

September 26, 2016

Merrill Lynch will pay a $12.5 million penalty for failure to maintain effective trading controls, thus failing to prevent erroneous orders from being sent to the markets and causing mini-flash crashes.  An SEC investigation found that Merrill Lynch caused market disruptions on at least 15 occasions from late 2012 through mid-2014 and violated the Market Access Rule because its internal controls in place to prevent erroneous trading orders were set at levels so high that it rendered them ineffective.  The erroneous orders caused certain stock prices to plummet and then suddenly recover within seconds.  SEC

September 19, 2016

Public accounting firm Ernst & Young will pay $9.3 million to settle charges that two of the firm’s audit partners maintained inappropriately close personal relationships with clients and violated rules that ensure firms maintain objectivity and impartiality during audits.  SEC investigations found that Gregory S. Bednar, the senior partner on an engagement team for the audit of a New York-based public company, maintained an improperly close friendship with its chief financial officer, and Pamela Hartford, a different partner serving on an engagement team for the audit of another public company, was romantically involved with its chief accounting officer, Robert Brehl.  Ernst & Young misrepresented in audit reports issued with the companies’ financial statements that it maintained its independence throughout these audits.  SEC

September 8, 2016

SEC investigations found that St. Petersburg, Florida-based Raymond James & Associates and Milwaukee-based Robert W. Baird & Co. failed to establish policies and procedures necessary to determine the amount of commissions their clients were being charged when sub-advisers “traded away” with a broker-dealer outside the client’s wrap fee program.  As a result, the firms’ financial advisors were unable to provide information to their clients about the magnitude of these costs and failed to consider these costs when determining whether the sub-advisers or the wrap fee programs were suitable for clients.  Certain clients were not even aware that they were paying additional costs beyond the single wrap fee they paid for bundled investment services.  Raymond James will pay a $600,000 penalty to settle the charges against it.  Baird will pay a $250,000 penalty.  SEC

September 30, 2016

The CFTC filed a civil enforcement action against Alcibiades Cifuentes and Jennifer Wee Cifuentes, both of West New York, New Jersey, and Cifuentes Fund Management, LLC, alleging the defendants engaged in an off-exchange, leveraged or margined retail foreign currency fraud, commodity pool fraud, and failed to register with the CFTC.  CFTC

September 29, 2016

Angus Partners LLC (d/b/a Angus Energy), a Florida limited liability company with its principal place of business in Fort Lauderdale, Florida, was ordered to pay a $250,000 civil monetary penalty for acting as an unregistered Commodity Trading Advisor and for violating certain disclosure rules applicable to such advisors.  CFTC

September 29, 2016

The CFTC ordered Aden Rusfeldt (a/k/a “Big A”) of Vail, Arizona, to pay over $3.2 million in penalties and restitution for failing to disclose to prospective and current customers of his company, ETF Trend Trading, that he was prohibited by court order from engaging in any commodity-interest related activities.  CFTC

September 28, 2016

The CFTC filed a complaint against eFloorTrade, LLC and its majority owner and sole principal John Moore, charging them with record keeping and supervision failures and charging Moore with making false and misleading statements of material fact, or omitting material facts, in sworn testimony before the CFTC.  CFTC

September 27, 2016

The CFTC filed a civil enforcement action against Kevin Michael Symons of Foothill Ranch, California, his wholly-owned company, FTS Financial, Inc. of Irvine, California, and Jerry Austin Simmons of Charlotte, North Carolina, charging them with the fraudulent promotion of Simmons’ “Real Time Trade Room," an online futures “trading” forum marketed by Defendants as a way to observe Simmons as he purported to trade futures contracts “live.” Additionally, the CFTC’s complaint charges Simmons with soliciting clients to open managed futures trading accounts without being registered with the CFTC as an Associated Person of a Commodity Trading Advisor.  CFTC