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December 21, 2021

Financial services firm NatWest Markets Plc has pleaded guilty to charges related to its manipulation of the market for U.S. Treasury futures contracts and for the purchase and sale of U.S. Treasury securities in the secondary (cash) market.  NatWest will pay approximately $35 million in criminal fines, restitution, and forfeiture.  The government charged that NatWest traders engaged in spoofing by placing orders with the intent to cancel those orders before execution in order to artificially push up or down the prevailing market price.  DOJ; USAO CT

Tagged in: Criminal Proceedings, Financial and Investment Fraud, Financial Institution Fraud, Market Manipulation and Trading Violations,

December 20, 2021

Private equity fund adviser Global Infrastructure Management, LLC will pay a $4.5 million civil penalty to resolve SEC charges that the company overcharged clients by failing to offset certain portfolio company fees against management fees charged to clients, as it was required to do under the offering and governing documents. Global has previously repaid $5.4 million to affected clients.  SEC

Tagged in: Financial and Investment Fraud, Financial Institution Fraud, Misrepresentations,

December 17, 2021

J.P. Morgan Chase entities, including broker-dealer J.P. Morgan Securities LLC, will pay a total of $200 million -- $125 million as an SEC penalty and $75 million as a CFTC penalty -- to resolve claims that firm employees communicated both internally and externally on unapproved channels, failed to preserve written communications, and failed to supervise.  Defendants admitted that employees, including senior and supervisory employees, regularly and openly communicated about business using personal devices, text messages, WhatsApp, and other private messaging, none of which were preserved by the firm, in violation of recordkeeping requirements.  As a result, J.P. Morgan entities were unable to provide information in response to subpoenas and information requests from regulators.  SEC; CFTC

Tagged in: Financial and Investment Fraud, Financial Institution Fraud, Fraud in CFTC-Regulated Markets, Regulatory Violations, Securities Fraud,

December 15, 2021

Broker-dealer Wedbush Securities Inc. has agreed to pay $1.2 million to resolve allegations related to the unregistered sale of large blocks of 50 different low-priced microcap companies by Silverton SA, a former offshore customer.  The SEC also found that Wedbush failed to file SARs for certain suspicious transactions that it executed for Silverton, despite the presence of numerous red flags.  SEC

Tagged in: Financial and Investment Fraud, Financial Institution Fraud, Money Laundering, Regulatory Violations,

November 22, 2021

Seven financial institutions – Barclays Capital Inc., Citigroup Global Markets Inc., Goldman Sachs & Co. LLC, J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, NatWest Markets Securities Inc., and Washington Mutual Mortgage Securities Corp. – have agreed to collectively pay $32.5 million to resolve claims by New Mexico that the banks did not adequately disclose the characteristics of certain mortgage-backed securities sold to New Mexico pension funds and a state-run investment council between 2003 and 2010.  The settlement resolves a qui tam action under the New Mexico Fraud Against Taxpayers Act brought by Integra REC, LLC.  NM

Tagged in: FCA State, Financial Institution Fraud, Housing and Mortgage Fraud, Whistleblower Case,

October 19, 2021

JPay, a financial services company which, among other services, provides debit cards to prisoners to meet their essential needs as they are released from incarceration, will pay $6 million – $4 million in restitution and $2 million as a civil penalty – to resolve allegations that they violated the Consumer Financial Protection Act and Electronic Fund Transfer Act by charging consumers unlawful fees.  As part of the settlement, JPay is also limited in fees it can impose on release cards going forward.  CFPB

Tagged in: Correctional Services Fraud, Financial and Investment Fraud, Financial Institution Fraud,

September 27, 2021

Citibank, N.A. and Citigroup Global Markets Limited, which are provisionally registered swap dealers, will pay a $1 million civil penalty to resolve allegations that they failed to properly report Legal Entity Identifier information to a swap data repository as required by applicable regulations.  In addition, Citi was found to have supervisory failures and to be out of compliance with a prior 2017 order on related matters.  CFTC

Tagged in: CFTC Whistleblower Reward Program, Financial and Investment Fraud, Financial Institution Fraud, Regulatory Violations,

September 27, 2021

Wells Fargo Bank, N.A. will pay $72.6 million to resolve claims that it violated the Financial Institutions Reform Recovery and Enforcement Act (“FIRREA”) by overcharging commercial customers from 2010 to 2017 for foreign exchange (“FX”) service. The government alleged that the bank fraudulently marked up the prices on currency it was selling and marked down the prices on currency it was buying, and concealed those markups from customers through various misrepresentations and deceptive practices. The total settlement includes a $37.3 million civil penalty and forfeiture, as well as $35.3 million in restitution to customers.  USAO SDNY

Tagged in: Financial and Investment Fraud, Financial Institution Fraud, FIRREA, Foreign Exchange, Misrepresentations,

August 30, 2021

KMS Financial Services Inc. will pay $200,000 to resolve SEC charges that the investment advisor and broker-dealer violated Regulation S-P regarding the safeguarding of customer records and information. The SEC alleged that between September 2018 and December 2019, email accounts of KMS personnel were taken over by unauthorized third parties, resulting in the exposure of personally identifying information of nearly 5,000 KMS customers and clients.  The SEC found that KMS failed to adopt written policies and procedures requiring additional firm-wide security measures until May 2020, and did not fully implement those additional security measures firm-wide until August 2020, placing additional customer and client records and information at risk.  SEC

Tagged in: Cybersecurity and Data Breaches, Financial and Investment Fraud, Financial Institution Fraud, Regulatory Violations,

August 30, 2021

Cambridge Investment Research Inc. and related entities will pay $250,000 to resolve SEC charges that the investment advisor and broker-dealer violated Regulation S-P regarding the safeguarding of customer records and information. The SEC alleged that between January 2018 and June 2021, email accounts of Cambridge personnel were taken over by unauthorized third parties, resulting in the exposure or potential exposure of personally identifying information of approximately 5,000 Cambridge customers and clients.  The SEC found that Cambridge discovered the first email account takeover in January 2018, but failed to adopt and implement firm-wide enhanced security measures for cloud-based email accounts until 2021, resulting in the exposure and potential exposure of additional customer and client records and information.  SEC

Tagged in: Cybersecurity and Data Breaches, Financial and Investment Fraud, Financial Institution Fraud, Regulatory Violations,

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