Archive

March 10, 2016

Texas-based oil company Magnum Hunter Resources Corporation as well as two former senior officers and two consultants will pay $290,000 collectively to settle charges of deficient evaluation of, and failure to maintain control over, Magnum Hunter’s internal controls over financial reporting (ICFR) between December 2011 and September 2013.  ICFR refers to a company’s process for providing reasonable assurance to the public regarding the reliability of its financial reporting.  SEC rules require company management to evaluate and annually report on the effectiveness of ICFR, including disclosing any identified material weaknesses that create a reasonable possibility that the company will not timely prevent or detect a material misstatement of its financial statements.  According to the SEC’s orders, Magnum Hunter enjoyed rapid growth in 2010 and significant acquisitions in 2010 and 2011 which strained its accounting resources.  Despite assessments that there was inadequate control over the financial reporting process, a material weakness was not reported.  SEC

March 9, 2016

Cyprus-based company Banc de Binary Ltd., its founder Oren Shabat Laurent, and three affiliates, will pay $11 million to settle charges of illegally selling binary options to U.S. investors.  The SEC’s 2013 complaint alleged that the defendants failed to register the offering before soliciting U.S. customers and failed to register as a broker-dealer before communicating directly with U.S. clients.  Binary options differ from more conventional options contracts because the payout typically depends entirely on whether the price of a particular asset underlying the option will rise above or fall below a specified amount.  The defendants will pay about $9 million to the SEC and $2 million to the CFTC which filed a parallel action.  A fair fund has been established to distribute money to the harmed investors.  SEC  

March 8, 2016

The SEC charged fund manager Steven Zoernack and his firm EquityStar Capital Management with operating without registration, providing false and misleading data to investors, and actively hiding Zoernack’s checkered past, including two felony fraud convictions and a bankruptcy filing.  SEC

March 7, 2016

The SEC charged the Rhode Island state agency now known as the Rhode Island Commerce Corporation and its bond underwriter Wells Fargo Securities with defrauding investors in connection with a municipal bond offering to finance a start-up video game company called 38 Studios.  The Rhode Island agency loaned $50 million in bond proceeds to 38 Studios.  However, the bond offering documents produced by the agency and Wells Fargo failed to disclose that 38 Studios had conveyed it needed at least $75 million in funding to produce a particular video game.  Therefore, investors were not fully informed that 38 Studios faced a funding shortfall even with the loan proceeds.  When 38 Studios was unable to obtain additional financing, the company defaulted on the loan.  The SEC also charged Wells Fargo’s lead banker on the deal and two Rhode Island agency executives with aiding and abetting the fraud.  The SEC’s complaint further alleges that Wells Fargo and the lead banker on the 38 Studios deal failed to disclose that Wells Fargo had a side deal with 38 Studios which enabled it to receive nearly double the amount of compensation disclosed in offering documents.  SEC

March 28, 2016

California announced a $8,500,000 settlement with Wells Fargo Bank over privacy violations that included recording consumers’ phone calls without timely telling consumers they were being recorded, as required by California law. As part of the settlement, which is in the form of a stipulated judgment, Wells Fargo will pay civil penalties totaling $7,616,000 and will reimburse the prosecutors’ investigative costs of $384,000. In addition, Wells Fargo will contribute $500,000 to two statewide organizations dedicated to advancing consumer protection and privacy rights. CA

March 23, 2016

Gilbert G. Lundstrom, the former CEO of TierOne Bank -- a $3 billion publicly-traded commercial bank formerly headquartered in Lincoln, Nebraska -- was sentenced to 132 months in prison and to pay a $1.2 million fine for orchestrating a scheme to defraud TierOne’s shareholders and to mislead regulators by concealing more than $100 million in losses on loans and declining real estate.  DOJ

March 23, 2016

JPMorgan Ventures Energy Corp. and JPMorgan Chase Bank, N.A.  have agreed to pay a $225,000 penalty to resolve charges of failing to comply with their obligations to submit accurate large trader reports for physical commodity swap positions.  CFTC

March 15, 2016

The CFTC announced that a federal district court has unsealed a civil complaint the CFTC filed with the Northern District of Illinois on February 2, 2016, against two foreign web-based binary options firms, Vault Options, Ltd. and Global Trader 365, both Israeli web-based companies. The CFTC’s complaint alleges that the two firms unlawfully solicited and accepted more than $1 million from at least 50 U.S. customers to trade off-exchange binary options contracts, defrauded those customers, and operated as unregistered Futures Commission Merchants.  CFTC

March 14, 2016

The CFTC ordered Florida-based IBFX, Inc. to pay a $1 million penalty for failing to meet capital requirements, failing to report minimum net capital violations on time, supervisory failures, and violating a previous CFTC order.  CFTC

March 9, 2016

A Las Vegas court ordered Banc de Binary Ltd., ET Binary Options Ltd., BO Systems Ltd., BDB Services Ltd., and Oren Shabat Laurent to pay over $9 million in penalties and restitution for violating the CFTC's prohibition against trading binary options off-exchange.  CFTC