Market Manipulation and Trading Violations

May 25, 2016

The CFTC ordered Citibank and its Japanese affiliates to pay a $175 million penalty for attempting to manipulate the Yen LIBOR and Euroyen TIBOR rates and false reporting of the Euroyen TIBOR and U.S. dollar LIBOR rates.  CFTC

May 25, 2016

The CFTC ordered Citibank to pay $250 million for attempting to manipulate and falsely report the U.S. dollar ISDAFIX benchmark rate.  CFTC

April 5, 2016

A federal court has ordered UAE residents Heet Khara and Nasim Salim to pay $2.69 million in civil penalties for spoofing in the gold and silver futures markets.  CFTC

March 14, 2016

The SEC charged microcap company RVPlus Inc. and its CEO, Lee Peterson, with making bogus claims in the company’s public filings and in statements to private investors and with unlawfully distributing RVPlus’ stock.  The SEC alleges that starting in 2012, Peterson filed periodic reports with the SEC claiming that RVPlus had a lucrative relationship with the United Nations and clean energy agreements with governmental bodies in Nigeria, Haiti, and Liberia worth $2.8 billion.  RVPlus had no relationship with the U.N. and the contracts were fictitious.  In addition, the SEC alleges that RVPlus and Peterson gained control of more than 90 percent of RVPlus’ free trading shares and gave them individuals who unlawfully sold them into the market.  SEC

January 31, 2016

Barclays Capital Inc. and Credit Suisse Securities (USA) LLC will collectively pay $154.3 million to the SEC and New York Attorney General to settle separate cases finding that they violated federal securities laws while operating alternative trading systems known as dark pools and Credit Suisse’s Light Pool.  Barclays will pay $35 million in penalties to the SEC and $35 million in penalties to the New York Attorney General.  Credit Suisse will pay $30 million in penalties and $24.3 million in disgorgement and prejudgment interest to the SEC and $30 million in penalties to the New York Attorney General.  The settlements address misstatements by Barclays and Credit Suisse to subscribers about the material operations of their alternative trading systems.  SEC

February 1, 2016

Barclays Capital Inc. and Credit Suisse Securities (USA) LLC will pay a combined $154.3 million to the State of New York and the SEC to settle investigations into false statements and omissions made in connection with the marketing of their respective dark pools and other high-speed electronic equities trading services. Dark pools are private exchanges for trading securities that are not viewable by the general public and are completed outside of public stock exchanges. Barclays admitted to core facts set forth in the Attorney General’s Complaint from June 2014 alleging misrepresentations about how it operated its dark pool, “Barclays LX,” including that it misled investors and violated securities laws. NY

January 14, 2016

Goldman, Sachs & Co. will pay $15 million to settle charges that its securities lending practices violating federal regulations.  The SEC’s order found that Goldman violated Regulation SHO by improperly providing “locates” — representations that the firm believes it can obtain a security necessary to settle a short sale — when it had failed to perform an adequate review of the securities to be located.  Specifically, Goldman employees routinely processed customer locate requests by relying on a function of Goldman’s order management system which allowed orders to be placed based on the start-of-day inventory reported to Goldman by large financial institutions.  However, this function allowed locates to be provided even when the automated system had already deemed the inventory depleted based on locate requests placed earlier in the day.  Additionally, when questioned about the firm’s lending practices by SEC examiners, Goldman Sachs provided incomplete responses that adversely affected and unnecessarily prolonged the SEC’s examination.  SEC

December 22, 2015

Morgan Stanley Investment Management will pay $8.8 million to settle charges that one of its portfolio managers, Sheila Huang, unlawfully conducted prearranged trading known as “parking” that favored certain advisory client accounts over others.  An SEC investigation found that Huang arranged sales of mortgage-backed securities to brokerage firm SG Americas at predetermined prices that would enable her to buy back the positions at a small markup into other accounts advised by Morgan Stanley.  Huang also sold additional bonds at above-market prices to avoid incurring losses in certain accounts, but repurchased them at unfavorable prices in a fund that she managed without disclosing it to the disadvantaged fund client.  SG Americas also agreed to pay more than $1 million to settle SEC charges related to its role in these transactions.  SEC

December 15, 2015

The SEC charged New Jersey resident Samuel DelPresto and his company MLF Group, Inc. with illicitly pocketing $13 million from an elaborate pump-and-dump scheme.  The SEC alleges that DelPresto teamed with others to secretly obtain control of substantially all available stock in four microcap companies,BioNeutral Group, NXT Nutritionals Holdings, Mesa Energy Holdings, and Clear-Lite Holdings, and facilitate coordinated trading that created the appearance of liquidity and market demand for the stocks.  After unwitting investors were enticed through promotional campaigns to buy the stock at inflated prices, DelPresto dumped his shares on the market.  In a parallel action, the U.S. Attorney’s Office for the District of new Jersey announced criminal charges against DelPresto.  SEC