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Financial Institution Fraud

This archive displays posts tagged as relevant to fraud by or involving financial institutions. You may also be interested in the following pages:

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November 8, 2019

Wells Fargo Bank, N.A. will pay $14.475 million -- a $10 million penalty, and $4.475 million in restitution -- to resolve CFTC charges related to the bank's actions in a single 2014 FX forward contract trade valued at approximately $4 billion.  The contract required Wells Fargo to calculate the price based on a weighted average spot rate on the relevant day.  However, Wells Fargo had no system in place to accurately determine such a rate, but rather that inform the counterparty of that fact, Wells Fargo simply picked a rate it believed was in the range and provided the counterparty with a false spreadsheet that purported to calculate the rate but that did not, in fact, reflect relevant trades.  CFTC

Legislation Watch: Proposed Amendments to Bank Secrecy Act Include Whistleblower Rewards

Posted  10/23/19
Currency in laundry machine
Currently in the 116th Congress, both the House and Senate are considering bills that would amend existing law to provide a whistleblower reporting system and meaningful financial rewards to whistleblowers who come forward to the federal government to report unlawful money laundering and other violations of specified banking laws. We have previously written on the important benefits that would be available with...

October 15, 2019

Fabio Bretas de Freitas and Phy Capital Investments LLC have been ordered to pay over $17 million for their roles in $7 million Ponzi-like scheme.  To carry out the scheme, Bretas and Phy falsely represented that they had developed propriety software capable of netting a 49% profit on futures trading.  In addition to the monetary penalty, Bretas awaits sentencing in a related case out of the US District Court for the Southern District of New York; Bretas and Phy are also permanently banned from trading in CFTC-regulated markets.  CFTC

October 2, 2019

Brokerage firms BGC Financial LP and GFI Securities LLC will pay $15 million and $10 million, respectively, to the CFTC, and $7.5 million and $5 million, respectively, in penalties under New York's Martin Act based on the admitted practices of their brokers in posting sham bids and offers on foreign exchange options in emerging markets currencies referred to as EFX options.  This so-called "flying" of prices was done to create a false appearance of greater liquidity in the EFX options market. In addition, the brokers engaged in the "printing" of fake trades on EFX options, falsely representing that trades had occurred at particular levels and prices in an effort to induce follow-on trades at the same levels.  In addition to the monetary penalties, the brokerage firms have agreed to additional compliance, monitoring, and oversight.  CFTCNY

October 1, 2019

Six financial institutions, each registered or provisionally-registered swap dealers, have been ordered to pay penalties to the CFTC for their failure properly report swap data to a swap data repository as required, and/or for their failure to adequately supervise in connection with swap data reporting.  HSBC Bank USA, N.A. will pay a $650,000 fine;  Société Générale International Limited will pay a $2.5 million fine; The Northern Trust Company will pay a $1 million fine; NatWest Markets Plc will pay  $850,000; The Bank of New York Mellon will pay $750,000, and PNC Bank, National Association will pay $300,000CFTC

October 1, 2019

RBC Capital Markets, LLC, a registered futures commission merchant and subsidiary of the Royal Bank of Canada, will pay $5 million to resolve charges by the CFTC that RBC engaged in improper, fictitious, exchange for physical wash transactions (Wash EFPs), despite an earlier consent order between RBC and the CFTC regarding wash sales and fictitious transactions.  In the present action, the CFTC also found that RBC failed to meet its supervisory obligations, resulting in its failure to detect at least 385 Wash EFPs.  CFTC

October 1, 2019

Three firms will pay a total of $3 million to resolve claims that each violated the Commodity Exchange Act's prohibition on spoofing.  Morgan Stanley Capital Group Inc. will pay $1.5 million for engaging in spoofing the precious metals futures markets; Belvedere Trading LLC will pay $1.1 million for engaging in spoofing in the Chicago Mercantile Exchange E-mini S&P 500 futures market; and, Mitsubishi International Corporation will pay $400,000 for acts of spoofing silver and gold futures on the Commodity Exchange, Inc. markets.  CFTC

September 27, 2019

Advisory firms BMO Harris Financial Advisors Inc. and BMO Asset Management Corp. have agreed to pay over $37 million to resolve allegations that the companies violated the Investment Advisers Act by steering customers in their Managed Asset Allocation Program to more expensive investments from which the BMO advisor entities profited without disclosing this practice or the associated conflict of interest.  BMO will pay $29.73 million in disgorgement and prejudgment interest, along with a civil penalty of $8.25 million.  SEC

September 17, 2019

Raymond James & Associates, Inc., Raymond James Financial Services Advisors, Inc., and Raymond James Financial Services, Inc. will pay $15 million to resolve allegations that they improperly charged advisory fees on inactive retail client accounts without adequate suitability review, and charged excess commissions for brokerage customer investments in certain unit investment trusts that Raymond James recommend clients sell before their maturity, without adequate review of whether those recommendations were suitable.  SEC

September 16, 2019

Two subsidiaries of Prudential Financial, Inc., AST Investment Services Inc. and PGIM Investments LLC, will pay a civil monetary penalty of $5 million and disgorge $27.6 million to resolve charges that they failed to disclose a conflict of interest that arose between the subsidiaries, which served as investment advisors to 94 insurance-dedicated mutual funds, and Prudential, following a 2006 reorganization.  The reorganization was designed so that Prudential could receive certain tax benefits, but resulted in increased costs to the funds, which were not disclosed to the funds' boards of trustees of the beneficial owners of the funds' shares.  Prudential had previously reimbursed the funds for $155 million, and AST and PI self-reported to the SEC.  SEC
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