Archive

June 30, 2021

Investment advisor Securities America, Inc. will pay a $1.75 million civil penalty to resolve charges that it failed to implement policies and procedures that were reasonably designed to protect client assets from misappropriation.  While affiliated entities to whom SAA had delegated responsibility for surveillance of advisory accounts had received automated alerts about potentially suspicious withdrawals from client accounts, those alerts were ignored and approximately $8 million was misappropriated from SAA advisory accounts.  SEC

June 29, 2021

Neovest Inc., a JPMorgan Chase & Co. subsidiary that provides an order and execution management system (OEMS) that facilitates electronic trading, will pay $2.75 million for its failure to register as a broker-dealer. Neovest's OEMS allows customers to route orders for stocks and options to more than 360 customer-selected destination brokers who entered into agreements with Neovest for execution. In exchange for its OEMS services, Neovest received transaction-based compensation, which were sent to J.P. Morgan Securities LLC, a registered broker-dealer, and then transferred to Neovest. SEC

June 25, 2021

Three Credit Suisse entities—Credit Suisse International, Credit Suisse Securities Europe Limited, and Credit Suisse Capital LLC—have been ordered to pay a $1.5 million civil monetary penalty to resolve charges of failing to comply with swap data reporting obligations between 2013 and 2018.  Specifically, the entities reported the mark-to market notational value of underlying equity rather than the daily mark of certain equity swap transactions.  The failure resulted in errors in the majority of the reportable equity swap transactions submitted to the swap dealer repository.  CFTC

May 27, 2021

Bank Julius Baier & Co. Ltd. (BJB), a Swiss bank with international operations, will pay $79 million in penalties and enter into a three-year deferred prosecution agreement to resolve a criminal investigation into the bank’s involvement in a money laundering conspiracy that fueled an international soccer bribery scheme.  BJB admitted that it conspired to launder over $36 million in bribes through the United States to soccer officials with FIFA and other federations, in furtherance of a scheme in which sports marketing companies bribed soccer officials in exchange for broadcasting rights to soccer matches.  BJB’s Anti-Money Laundering controls failed to detect or prevent the money laundering, despite knowing that certain client accounts were associated with international soccer, which was generally understood to involve high-corruption risks.  A BJB executive directed that the opening of these accounts be fast-tracked in the hope that the clients would provide lucrative business.  DOJ

May 17, 2021

Index provider S&P Dow Jones Indices LLC, which publishes the S&P 500 VIX Short Term Futures Index ER, will pay a $9 million penalty to resolve claims that inadequate quality control procedures, including an undisclosed “auto-hold” feature triggered by a VIX spike, caused it publish and disseminate stale index values during a period of unprecedented volatility.  As a result of the stale information, issuers who used the index to offer securities reported incorrect values.  SEC

May 13, 2021

Financial services company State Street Corporation will pay a $115 million criminal penalty and enter into a deferred prosecution agreement following its voluntary disclosure to authorities that, over the course of 17 years, the bank defrauded its clients out of $290 million.  State Street  admitted that it secretly marked up “out-of-pocket” (OOP) expenses charged to clients, despite telling clients that OOP expenses were passed through without markups. State Street executives took steps to conceal the mark-ups from clients, including by misleading clients when they inquired about what they were being charged for OOP expenses. As part of the settlement, defendant agreed to cooperate with ongoing investigations, to enhance its compliance program, and to retain an independent corporate compliance monitor for a period of two years. DOJ

May 12, 2021

Registered broker-dealer GWFS Equities Inc. will pay a penalty of $1.5 million to settle allegations that it failed to respond appropriately when it detected external bad actors gaining, or attempting to gain, access to the retirement accounts of participants in the employer-sponsored retirement plans it serviced, including through the use of improperly obtained electronic login information, user names, email addresses, and passwords. There was no allegation that this personal identifying information was disclosed in a breach of GWFS systems. However, the bad actors used this information to request distributions from plan participant accounts. While GWFS detected and blocked many of these attempts, the SEC charged that GWFS failed to file suspicious activity reports, or filed incomplete SARs, with respect to the account takeovers. SEC

May 4, 2021

Alberto Orian Gonzalez-Delgado was sentenced to 210 months in prison after pleading guilty to conspiracy to commit health care fraud and wire fraud.  He is the last of eight individuals to be sentenced for a money laundering scheme in Florida and Michigan involving the use of nominee owners to fraudulently purchase home health agencies and then bill Medicare for services that were never provided to Medicare beneficiaries.  The defendants caused the payment of approximately $53 million in fraudulent claims.  DOJ

April 30, 2020

The owner of dog training school Universal K-9, Inc., Bradley Lane Croft, has been sentenced to nearly 10 years in prison for defrauding the Veteran Administration’s GI Bill program of more than $1.5 million in connection with 185 fraudulent claims relating to 132 veterans.  Croft had been found guilty of providing false information on instructor names, certifications, and training to the Texas Veterans Commission, laundering money, and submitting fraudulent income tax returns for 2016 and 2017.  USAO WDTX

March 25, 2021

The eighth highest grossing casino in California, Artichoke Joe’s Casino, has agreed to pay $5.3 million in the largest agreed-upon penalty in California’s gambling regulation history.  According to the Attorney General’s Office, Artichoke Joe’s failed to accurately or timely report an investigation by the federal Financial Crimes Enforcement Network (FinCEN) to California’s Bureau of Gambling Control, as required under the Gambling Control Act of 1998.  As a result of the federal investigation, Artichoke Joe’s admitted that it failed to implement and maintain an effective anti-money laundering program and failed to report certain suspicious activity, in violation of the Bank Secrecy Act; the casino will pay a separate $5 million penalty to resolve those charges.  CA AG