Financial and Investment Fraud

September 28, 2018

Credit Suisse Securities LLC has agreed to pay $5 million to the SEC and $5 million to New York to settle charges of violating the Securities Act by making material misrepresentations about retail customer orders. Between 2011 to 2015, the company allegedly failed to disclose to retail customers that their electronic system gave preferential treatment to orders that had a public reporting component over orders that did not. Additionally, the routing tactic used by the system gave customers of these non-reported orders less favorable execution prices. NY AG; SEC

September 26, 2018

Two brokerage firms, UK-based TFS-ICAP LIMITED and New York-based TFS-ICAP LLC, pled guilty to securities fraud under New York's Martin Act for their roles in posting fake trades, bids, and offers by inter-dealer brokers for emerging market foreign exchange currency options.  The fake trades were intended to create a false appearance of liquidity in the emerging markets FX options market and encourage traders to buy and sell FX options via TFS-ICAP rather than other brokers.  In addition to the criminal pleas by the companies, a civil settlement requires them to implement remedial procedures, retain an independent monitor, pay $1.5 million, and cooperate in ongoing investigations.  NY AG.

September 26, 2018

Registered broker-dealer and investment advisor Voya Financial Advisors Inc. will pay $1 million to resolve SEC allegations that it failed to comply with the Safeguards Rule, Identity Theft Red Flags Rule, and related regulations in its response to a computer systems intrusion that compromised personal information of thousands of customers. SEC

September 10, 2018

Michael Brian Anderson, a shrimper and fisherman, has been sentenced to 77 months in prison for defrauding Customs & Border Protection (CBP), after earlier being convicted of false statements, mail fraud, and money laundering. Under the Continued Dumping and Subsidy Offset Act of 2000 (CDSOA), federal subsidies are made available to American shrimpers to offset revenue lost to competitors in the global marketplace. As a domestic shrimper, Anderson was eligible to apply for the subsidies but fraudulently inflated his expenses to more than $24 million for a two year period. He then received $800,00 in subsidies, which he used to purchase boats, real estate, and stocks. In addition to his prison sentence, he is now due to pay restitution to CBP for $818,234. USAO SDGA

August 2, 2018

Aurora Loan Services, LLC, a subsidiary of Lehman Brothers Holdings, Inc., has agreed to pay a civil penalty of $41 million to settle allegations of FIRREA violations in the loans it sold between 2004 and 2008. The mortgage originator gave preferential treatment to five "Platinum" lenders by allowing them to underwrite their own loans and freeing them from quality control standards that were imposed on other lenders. The resulting decline in loan quality was linked to a higher rate of default, hurting investors who bought residential-based mortgage securities from Lehman Brothers. USAO CO

August 1, 2018

Wells Fargo Bank has agreed to pay a civil penalty of $2.09 billion to settle allegations that it knowingly misrepresented the quality of its mortgage loans to investors, in violation of FIRREA, in order to double its production of subprime and Alt-A loans. Nearly half of those loans subsequently defaulted, leading to billions of dollars in losses for investors, including federally insured financial institutions. DOJ; USAO NDCA

July 20, 2018

The Northern District of Illinois announced criminal charges against David Ballard, the vice president of an insurance underwriting group, for fraudulently issuing and collecting premium payments on “matching deductible” policies. Ballard allegedly stole more than $13.5 million through the scam. USAO NDIL

July 12, 2018

Navnoor Kang, the former head of the New York State Common Retirement Fund, the third-largest pension in the country, was sentenced to 21 months in prison for conspiracy to commit securities fraud and wire fraud.  Kang accepted bribes in return for steering over $2 billion worth of investments to particular firms, generating massive commissions for those who bribed him.  The USAO of SDNY coordinated with the SEC, which brought its own civil enforcement action against Kang.  USAO SDNY