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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:

Page 19 of 22

August 18, 2015

BNY Mellon will pay $14.8 million to settle charges that it violated the Foreign Corrupt Practices Act (FCPA) by providing valuable student internships to family members of foreign government officials affiliated with a Middle Eastern sovereign wealth fund.  An SEC investigation found that students related to foreign officials were given preferential treatment in that they were not required to meet the normally rigorous criteria of BNY Mellon’s highly competitive internship programs.  This was done to win or retain contracts to manage and service the assets of the sovereign wealth fund the foreign officials were affiliated with.  BNY’s $14.8 million payment includes $8.3 million in disgorgement and a $5 million penalty.  SEC

July 23, 2015

Three former employees of broker-dealer Oppenheimer settled charges stemming from the unregistered sales of billions of shares of penny stocks on behalf of a customer.  This action relates to a previously settled enforcement action against Oppenheimer in which the broker-dealer admitted wrong-doing and paid $20 million to the SEC and the Treasury Department’s Financial Crimes Enforcement Network.  According to the SEC’s order, the former employees failed to make reasonable inquiries or provide appropriate oversight in the face of red flags indicating that their customer’s stock sales were not exempt from registration.  SEC

June 18, 2015

The SEC announced enforcement actions against 36 municipal underwriting firms for violations in municipal bond offerings.  The cases are the first brought against underwriters under the Municipalities Continuing Disclosure Cooperation (MCDC) initiative, a voluntary self-reporting program targeting material misstatements and omissions in municipal bond offering documents.  The SEC’s actions allege that between 2010 and 2014, the 36 firms violated federal securities laws by selling municipal bonds using offering documents that contained materially false statements or omissions about the bond issuers’ compliance with continuing disclosure obligations.  Under the terms of the MCDC initiative, each firm will pay civil penalties based on the number and size of fraudulent offerings identified, up to $500,000.  The firms and penalty amounts are as follows: The Baker Group, LP ($250,000), B.C. Ziegler and Company ($250,000), Benchmark Securities, LLC ($100,000), Bernardi Securities, Inc. ($100,000), BMO Capital Markets GKST Inc. ($250,000), BNY Mellon Capital Markets, LLC ($120,000), BOSC, Inc. ($250,000), Central States Capital Markets, LLC ($60,000), Citigroup Global Markets Inc. ($500,000), City Securities Corporation ($250,000), Davenport & Company LLC ($80,000),Dougherty & Co. LLC ($250,000), First National Capital Markets, Inc. ($100,000),George K. Baum & Company ($250,000), Goldman, Sachs & Co. ($500,000),Hutchinson, Shockey, Erley & Co. ($220,000), J.P. Morgan Securities LLC ($500,000), L.J. Hart and Company ($100,000), Loop Capital Markets, LLC ($60,000), Martin Nelson & Co., Inc. ($100,000), Merchant Capital, L.L.C. ($100,000), Merrill Lynch, Pierce, Fenner & Smith Incorporated ($500,000),Morgan Stanley & Co. LLC ($500,000), The Northern Trust Company ($60,000),Oppenheimer & Co. Inc. ($400,000), Piper Jaffray & Co. ($500,000), Raymond James & Associates, Inc. ($500,000), RBC Capital Markets, LLC ($500,000),Robert W. Baird & Co. Incorporated ($500,000), Siebert Brandford Shank & Co., LLC ($240,000), Smith Hayes Financial Services Corporation ($40,000), Stephens Inc. ($400,000), Sterne, Agee & Leach, Inc. ($80,000), Stifel, Nicolaus & Company, Inc. ($500,000), Wells Nelson & Associates, LLC ($100,000), William Blair & Co., L.L.C. ($80,000).  SEC

July 24, 2014

Morgan Stanley agreed to pay $275M to settle charges of misleading investors in a pair of residential mortgage-backed securities (RMBS) securitizations it underwrote, sponsored, and issued.  In an asset-backed securities offering, federal regulations under the securities laws require the disclosure of delinquency information for the mortgage loans serving as collateral.  Morgan Stanley allegedly misrepresented the current or historical delinquency status of mortgage loans underlying two subprime RMBS securitizations that came against a backdrop of rising borrower delinquencies and unprecedented distress in the subprime market.  SEC

October 20, 2015

Paris-based Crédit Agricole Corporate and Investment Bank, owned by Crédit Agricole S.A. and which operates in over thirty countries, agreed to pay $787.3 million in criminal and civil penalties for violating the International Emergency Economic Powers Act and the Trading With the Enemy Act.  Between August 2003 and September 2008, Crédit Agricole subsidiaries in Geneva knowingly moved approximately $312 million through the US financial system on behalf of sanctioned entities located in Sudan, Burma, Iran and Cuba.  To facilitate these illegal transactions, these subsidiaries used deceptive practices which prevented the government, Crédit Agricole’s New York branch and other US financial institutions from filtering for, and consequently blocking or rejecting, the sanctioned payments.  Whistleblower Insider

October 6, 2015

Fifth Third Bank agreed to pay $85 million to resolve civil fraud claims arising from the bank’s origination of residential mortgage loans insured by the Federal Housing Administration.  FTB made a voluntary disclosure of approximately 1,400 mortgage loans it had certified as eligible for FHA insurance, later determined were materially defective and thus ineligible for FHA insurance, but never self-reported to HUD, resulting in millions of dollars in HUD losses.  This matter arose, in part, from the filing of a whistleblower complaint under the qui tam provisions of the False Claims Act.  DOJ (NY)

September 4, 2015

Walter Investment Management Corp. agreed to pay $29.63 million to resolve allegations that, through its subsidiaries, Reverse Mortgage Solution Inc., REO Management Solutions LLC and RMS Asset Management Solutions LLC, it violated the False Claims Act in connection with the subsidiaries’ participation in the Department of Housing and Urban Development’s Home Equity Conversion Mortgages program, which insures “reverse” mortgage loans.  The allegations originated in a whistleblower lawsuit filed former RMS executive Matthew McDonald under the qui tam provisions of the False Claims Act.  McDonald will receive a whistleblower award of $5.15 million.  DOJ

August 24, 2015

Ayman Shahid, former president of Discovery Sales Inc., pleaded guilty to conspiracy to commit bank fraud.  DSI was the sales arm of affiliated residential construction companies, including Discovery Home Builders and Albert D. Seeno Construction Co.  Shahid admitted he conspired with others to fraudulently cause bank underwriters to approve mortgage loans for unqualified buyers during the height of the financial crisis.  DOJ

May 1, 2015

Paris-based BNP Paribas S.A. was ordered to forfeit $8,833,600,000 and pay a $140,000,000 fine for conspiring to violate the International Emergency Economic Powers Act (IEEPA) and the Trading with the Enemy Act (TWEA) by processing billions of dollars of transactions through the US financial system on behalf of Sudanese, Iranian and Cuban entities subject to U.S. economic sanctions.  It is the largest financial penalty ever imposed in a criminal case and the first time a financial institution has been convicted and sentenced for violations of US economic sanctions.  DOJ  
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