Financial Institution Fraud

January 17, 2020

Citibank, N.A. will pay $18 million to the Office of the Comptroller of the Currency to resolve claims that it violated the Flood Disaster Protection Act by failing to "force-place" flood insurance on behalf of borrowers as required by law.  OCC

January 9, 2020

Registered broker-dealer and investment adviser J.P. Morgan Securities LLC will refund over $16 million to customers, and pay penalties and interest of $1.8 million to resolve claims that the company failed to provide certain retail retirement account and charitable organization brokerage customers with sales charge waivers and lower fee share classes when selling certain mutual funds to them. SEC

January 2, 2020

A private bank headquartered in Switzerland, Union Bancaire Privée, has agreed to pay an additional $14 million for its failure to comply in part with a 2016 non-prosecution agreement.  Between 2015 and 2016, DOJ had signed non-prosecution agreements with some 80 Swiss banks, imposing penalties of $1.36 billion in total for the banks' role in facilitating fraud.  As part of the agreements, the banks were required to disclose all U.S.-related accounts that it knew or should have known about upon signing, and had agreed to continue disclosing all material information related to U.S. accounts thereafter; however, UBP failed to do so.  DOJ

December 16, 2019

A Goldman Sachs executive charged with violating the Foreign Corrupt Practices Act has been permanently banned from the securities industry and ordered to pay disgorgement of $43.7 million.  In order to secure lucrative business for Goldman Sachs, managing director Tim Leissner had allegedly directed a third party intermediary to bribe government officials in Malaysia and the Emirate of Abu Dhabi.  SEC

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

October 15, 2019

Fabio Bretas de Freitas and Phy Capital Investments LLC have been ordered to pay approximately $23 million in penalties, restitution, disgorgement, and interest, 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.  CFTC;  NY

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 $300,000.  CFTC