Financial and Investment Fraud

December 14, 2020

An unidentified SEC whistleblower with audit responsibilities will receive an award of $300,000 based on a finding that the individual reasonably believed that the entity would engage in conduct which would impede an SEC investigation.  The award recognizes that the individual provided high-quality information and continuing assistance during the SEC investigation.  SEC

December 14, 2020

Interdealer brokers TFS-ICAP LLC and TFS-ICAP Ltd. will pay $7 million and admit that between 2014 and 2015 its employees engaged in  “flying” prices and “printing” trades on FX options by representing to clients bids and offers that had not been made, and communicating to clients trades that had not occurred. CFTC

December 10, 2020

Complete Merchant Solutions, LLC (CMS), a payment processor, and its former CEO, Jack Wilson, have agreed to pay $1.5 million in refunds to harmed consumers in order to settle FTC charges of illegally processing millions of dollars in credit card payments that they knew or should have known were fraudulent.  According to the FTC, CMS and Wilson ignored clear red flags while processing payments, including high rates of consumer chargebacks, the use of multiple merchant accounts to avoid chargeback rates, and the submission of sham chargeback reduction plans.  As part of the order, CMS and Wilson are required to conduct enhanced screening and monitoring of certain merchants, and are prohibited from acting as a payment processor for certain companies.  FTC

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 9, 2020

General Electric Co. (GE) has agreed to pay $200 million to settle SEC charges of violating accounting controls, disclosure controls, antifraud, and reporting provisions of securities laws.  According to the SEC, between 2015 to 2017, GE failed to disclose to investors the full picture of some of its profits, including that some of the profits from its power business stemmed from reductions in prior cost estimates, that increases in industrial cash collections came primarily from internal receivable sales between its power and financial services businesses, and that risks had arisen in its insurance business.  When challenges to those businesses were finally disclosed to the public in 2017 and 2018, GE’s stock fell by almost 75%.  SEC

December 9, 2020

A man in Washington D.C. who ran a fraudulent diamond investment Ponzi scheme has been sentenced to 7 years in prison and ordered to pay $23 million in restitution to victims throughout the United States and Canada who were told their funds would be used to purchase rough diamonds that would be cut, polished, and resold at a profit.  To lure investors to the scheme, Jose Angel Aman and his co-conspirators promised that the investments were secured by Aman’s inventory of diamonds, allegedly valued at $25 million.  In fact, there was no $25 million inventory of diamonds, and the funds were used for interest payments to earlier investors and to pay Aman and his co-conspirators.  USAO SDFL

December 8, 2020

UK-based investment advisor BlueCrest Capital Management Limited has agreed to pay over $132 million in disgorgement and interest and over $37 million in penalties, for a total of $170 million, to settle charges of failing to make material disclosures, or making inadequate or misleading disclosures, to investors for more than four years.  The alleged securities law violations involved omissions and inadequate or misleading statements regarding the firm’s transfer of a majority of its highest-performing traders from its flagship client fund, BlueCrest Capital International (BCI), to a proprietary fund, BBSMA Limited, and replacing live traders with an underperforming algorithm while continuing to collect performance fees.  SEC