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December 17, 2020

Robinhood Financial LLC will pay $65 million to resolve an SEC investigation into its disclosures regarding the firm’s receipt of "payment for order flow" – payments from trading firms for routing customer orders to them – as well as its alleged failure to secure best execution on customer orders.  According to the SEC, while Robinhood advertised to customers that trades were "commission-free," it steered customer orders to trading firms that paid Robinhood for order flow but provided inferior trade prices to Robinhood customers, thereby misrepresenting the true cost of trades.  SEC; See 2021 FINRA penalty

December 9, 2020

ICE Data Pricing & Reference Data LLC agreed to pay $8 million to resolve charges that between 2015 and 2020 it failed to take adequate steps to ensure the accuracy of securities pricing data it supplied to clients, including by relying on single broker quotes which did not reasonably reflect the value of certain securities.  This conduct affected the prices ICE Data PRD provided for more than 40,000 fixed-income securities. SEC

December 7, 2020

The largest non-bank mortgage servicer in the country, Nationstar Mortgage, has agreed to pay $79.2 million in restitution to over 55,000 borrowers in all 50 states and the District of Columbia who were harmed by the lender’s noncompliance with numerous laws, including the Consumer Financial Protection Act of 2010, Real Estate Settlement Procedures Act (RESPA), and Homeowner’s Protection Action of 1998 (HPA), from 2011 to 2017.  Additionally, Nationstar will pay another $7.1 million in costs and penalties to government parties.  CFPB; DOJ; CA AG; NY AG; PA AG

October 21, 2020

Cryptocurrency issuer Kik Interactive Inc. will pay a $5 million penalty in a consent judgment resolving claims by the SEC that Kik’s unregistered offering of digital “Kin” tokens in 2017 violated U.S. securities laws.  The consent judgment finds that Kin tokens were investment contracts and the offering did not qualify for any exemption from registration requirements.  Kik sold the tokens through both public and private sales; the court found that the sales were a single integrated offering.   SEC

October 15, 2020

Energy company Andeavor LLC will pay a $20 million penalty to resolve allegations that, while the company was in merger discussions with Marathon Petroleum  Corp. in 2018, it implemented a stock buyback plan without taking adequate compliance steps, including an evaluation of whether the company was in possession of material non-public information about corporate developments.  The Marathon merger, which valued Andeavor at over $150 per share, was announced one month after Andeavor completed the buyback at an average price of $97 per share.  SEC

October 14, 2020

Michael Allen Worley of Baton Rouge, Louisiana, was sentenced to 12 years in prison following his plea of guilty on charges including bank fraud.  Worley admitted that between 2014 and 2018 he fraudulently obtained more than $40 million in loans and investments from banks and private equity firms for himself and his businesses.  Worley’s fraud included false statements that inflated his assets, understated and omitted his liabilities, misrepresented his income, and misrepresented the intended use of loan proceeds. Worley was also ordered to pay $15.75 million in restitution to his victims.  USAO MD LA

October 13, 2020

Nissan Motor Acceptance Corporation, an auto financing subsidiary of the car manufacturer, has agreed to pay a civil penalty of $4 million and provide up to $1 million in restitution to customers to settle charges that the company engaged in illegal collections and repossession practices.  The company was alleged to have repossessed cars despite the customer having made payments or taken other actions to avoid repossession; imposed improper storage fees; refused to return personal property to customers; overcharged customers making payments by telephone; and mislead customers regarding their right to bankruptcy relief.  CFPB

September 30, 2020

Morgan Stanley & Co. LLC will pay a total of $10 million in civil monetary penalties to the SEC and CFTC.  In an agreement with the SEC, the company will pay a $5 million civil monetary penalty arising from charges that the firm violated the short sale procedures of Regulation SHO. Specifically, Morgan Stanley improperly used “long” and “short” aggregation units when it hedged synthetic exposure to swaps by purchasing or selling the securities referenced in the swaps.  The aggregation units were not independent and did not have separate trading strategies.  As a result, Morgan Stanley should have netted the long and short positions of both units together or across the entire broker-dealer and marked the orders as long or short based on that netting. The CFTC, which also imposed a $5 million penalty, charged that Morgan Stanley failed to comply with swap data reporting obligations, inaccurately reporting swap data for approximately three million swaps. SEC; CFTC

September 30, 2020

Marcus Schulz will pay over $1 million – a $670,000 penalty and $427,000 in disgorgement – to resolve CFTC allegations that, while employed as an energy trader, he passed on confidential information to an outside broker, including information about his employers block trade orders.  The broker would then arrange to take the other side of the order at prices that allowed the broker and others involved in the scheme to make a profit on offsetting trades, which profits they shared with Schulz.  CFTC
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