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Financial and Investment Fraud

This archive displays posts tagged as relevant to financial and investment fraud. You may also be interested in the following pages:

Page 46 of 91

August 28, 2020

Herbalife Nutrition Ltd. will pay over $123 million to resolve claims that the US-based company violated the Foreign Corrupt Practices Act by paying bribes to Chinese officials and other state-owned entities in order to secure required direct selling licenses, improperly influence Chinese investigations into Herbalife's business, and improperly influence Chinese state-owned and state-controlled media for the purpose of removing negative media reports about Herbalife. Herbalife admitted that over the course of ten years it falsified its books and records in order to provide corrupt payments and benefits to Chinese government officials.  To resolve criminal charges, Herbalife will enter into a deferred prosecution agreement and pay a $55 million criminal penalty; to resolve civil charges by the SEC, Herbalife will pay disgorgement and interest totaling approximately $67 million.  DOJ; USAO SDNY; SEC

August 26, 2020

LA-based clothing company Ambiance Apparel and its owner Sang Bum “Ed” Noh have pleaded guilty to customs violations and tax offenses, agreeing to pay a total of $118 million, which includes $36 million in previously-seized cash.  Defendants evaded import tariffs by colluding with Asian manufacturers for the submission of invoices to CBP that fraudulently understated the value of imported clothing. The fraudulent invoices indicated payment terms by letter of credit; a second invoice for the balance of the actual price was paid by defendants by wire transfer. In less than five years, Ambiance undervalued imports by about $82.6 million and failed to pay more than $17.1 million in tariffs. In addition, defendants failed to properly report cash transactions and maintained a second set of books for cash transactions, evading nearly $17 million in taxes.  The company will be placed on probation for five years and will be ordered to undertake specific compliance procedures.  USAO CD Cal

August 25, 2020

Computer manufacturer Super Micro Computer, Inc. has agreed to pay a penalty of $17.5 million to resolve allegations that the company prematurely recognized revenue and understated expenses.  The SEC alleged that the company, including its former CFO, Howard Hideshima, pushed employees to maximize end-of-quarter revenue.  Hideshima agreed to pay disgorgement and penalties totaling $350,000.  SEC

August 19, 2020

The Bank of Nova Scotia (Scotiabank) has been ordered to pay $127.4 million to the CFTC and $60.4 million in criminal fines, forfeiture, and restitution to the DOJ for attempting to manipulate prices and spoofing in precious metals futures contracts, making false and misleading statements to investigators, and failing to comply with swap dealer conduct and supervision requirements.  The alleged misconduct occurred over the eight years ending in 2016 and involved four precious metals traders in New York, London, and Hong Kong.  From the penalty paid to the CFTC, a record-breaking $42 million will go toward resolving the price manipulation and spoofing allegations, and a record-breaking $17 million will go toward resolving the false and misleading statements allegations.  In addition to the fines, Scotiabank has entered into a deferred prosecution agreement and agreed to retain an independent monitor.  CFTC; DOJ; USAO NJ 

Catch of the Week: Interactive Brokers Pays $38 Million for Failures in Money-Laundering and Supervision

Posted  08/14/20
Computer screen with graphs
Brokerage firm Interactive Brokers LLC will pay $38 million in penalties to settle charges from multiple U.S. market regulators regarding its anti-money laundering practices, including alleged failures to file suspicious activity reports (SARs).  The discount broker has paid an $11.5 million penalty to settle charges with the Securities and Exchange Commission over the deficiencies in its internal controls that...

August 10, 2020

Greenwich, Connecticut-based brokerage firm Interactive Brokers LLC will pay fines and disgorgement totaling $23.7 million to the SEC and CFTC, as well as a $15 million penalty to the Financial Industry Regulatory Authority (FINRA), to resolve allegations related to the firm's anti-money laundering policies.  The SEC penalty of $11.5 million resolves charges that over the course of one year the brokerage failed to file more than 150 Suspicious Activity Reports (SARs) for U.S. microcap securities trades it executed on behalf of its customers.  The SEC order finds that defendant failed to recognize red flags concerning transactions, failed to properly investigate suspicious activity, and failed to file SARs even when suspicious transactions were flagged by compliance personnel. The $11.5 CFTC penalty, together with over $700,000 in restitution, resolves charges including that the firm, which is a registered futures commission merchant, failed to detect and report suspicious transactions, including in its handling of the accounts of Haena ParkSEC; CFTC

August 7, 2020

A Canadian member of a large international fraud and money laundering ring has been sentenced to over 10 years in prison and ordered to pay $14.5 million in restitution for his role in defrauding victims from Australia, New Zealand, the United Kingdom, and Asia.  From at least 2014 to 2019, Brooks Thomas Nesbitt set up and operated “boiler rooms” to defraud victims using high-pressure sales of worthless investments.  Nesbitt then contracted with fellow fraudsters Mary Kathryn Marr and Michel Marc Chateau to launder the funds through funnel bank accounts, many of which were located in Florida and other states.  USAO MDFL

July 31, 2020

Canadian company Bausch Health, formerly known as Valeant Pharmaceuticals, will pay a $45 million penalty to resolve charges that its executives engaged in improper revenue recognition and misleading disclosures in SEC filings and earnings presentations between 2014 and 2015.  The company was alleged to have recorded false sales of products to specialty pharmacy Philidor Rx Services and its affiliates, which were controlled by Valeant.  In addition, Valeant allegedly misrepresented the source and materiality of revenue it received following a 500% increase in the price of its diabetes drug Glumetza.  Former CEO J. Michael Pearson will pay a civil penalty of $250,000; former CFO Howard B. Schiller will pay a civil penalty of $100,000; former controller Tanya Carro will pay a civil penalty of $75,000.  The individuals also agreed to return specified portions of their incentive compensation to the company.  SEC

July 28, 2020

Houston-based VALIC Financial Advisors will pay $40 million to resolve charges that it failed to disclose payments made as a result of referrals and failed to disclose fees it received for steering clients to certain mutual funds. With respect to its mutual fund fee disclosure practices, VFA was alleged to steer individual clients to more expensive funds that VFA was able to purchase through its clearing broker’s no-transaction fee program and with respect to which VFA received both 12b-1 fees and revenue sharing from the clearing broker, while VFA was also receiving advisory fees from the individual clients, telling clients those fees would cover execution costs.  With respect to the referral payments, VFA failed to disclose that its parent company paid an entity associated with Florida teachers’ unions in exchange for the entity’s exclusive endorsement of VFA as its preferred financial services partner and the entity’s agreement to not promote or endorse VFA’s competitors.  In addition to the penalty, VFA has agreed to provide Florida K-12 teachers who participate in its advisory product in Florida’s 403(b) and 457(b) retirement programs with its most favorable rates in the Florida K-12 market.  SEC

July 28, 2020

Savraj Gata-Aura, a British citizen, has been sentenced to four years in prison and ordered to forfeit nearly $3 million for his role in a massive Ponzi scheme involving coworking space Bar Works that defrauded over 800 investors of more than $40 million.  Together with fellow British citizen Renwick Haddow—who was widely reported to be disqualified from serving as the director of a U.K. company and was managing Bar Works under the alias “Jonathan Black”—Gata-Aura solicited investors by making material misrepresentations about Bar Works’ management and the company’s financial condition.  Haddow is due to be sentenced later this year.  USAO SDNY
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