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Regulatory Violations

This archive displays posts tagged as relevant to violations of rules and regulations government the financial markets and its participants. You may also be interested in the following pages:

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January 29, 2019

Four public companies – Grupo Simec S.A.B de C.V., Lifeway Foods Inc., Digital Turbine Inc., and CytoDyn Inc. – have agreed to cease and desist orders, findings of violations, and civil penalties with respect to their failures to maintain internal control over financial reporting (ICFR).  Although each of the companies had disclosed material weaknesses in ICFR, the SEC found that they had failed to adequately remediate the weaknesses.  SEC

December 26, 2018

JPMorgan Chase Bank N.A. has agreed to pay more than $135 million to settle charges that it improperly handled “pre-released” American Depositary Receipts (ADRs).  ADRs are securities that represent shares in a foreign company, and ordinarily require that a corresponding number of foreign shares be held at a depository bank. However, “pre-release” allows ADRs to be issued without the deposit of foreign shares, provided that brokers have an agreement with a depository bank and the broker or its customer owns the required number of foreign shares. The SEC found that JPMorgan improperly provided ADRs to brokers when, in fact, neither the broker nor its customer had the foreign shares needed to support those new ADRs, a practice which can result in inappropriate short selling and dividend arbitrage. SEC

December 21, 2018

Lon Olen Friedrichsen of Alton, Iowa, has been ordered to pay $2.1 million following a CFTC complaint alleging that he improperly solicited customers to obtain access to their futures trading accounts by misrepresenting his registration and experience.  Friedrichsen then ran up substantial losses in the customer accounts, but created false statements to conceal those losses.  CFTC

December 21, 2018

Advisory firms American Portfolios Advisers Inc. and PPS Advisors Inc., together with PPS's CEO/CIO, Lawrence Nicholas Passaretti, will pay more than $1.8 million to settle SEC charges that they improperly recommended mutual fund share classes that paid 12b-1 fees to the firms' representatives.  In addition, the companies misrepresented to customers that their advisors did not receive 12b-1 fees and/or only selected more expensive share classes when less expensive classes were not available.  SEC

December 21, 2018

Newport Private Capital LLC and its principal, Jonathan Hansen, have been ordered to pay a $315,000 penalty for a "cherry-picking" scheme by which NPC entered multiple orders for commodity interests, but only allocated the orders to specific customer accounts after they were executed.  The defendants then preferentially allocated the transactions that turned out to be profitable to accounts in the name of Hansen's spouse, and not to the accounts of other NPC customers.  CFTC

December 19, 2018

Following charges brought by the CFTC in 2016, Haena Park and companies affiliated with her, Phaetra Capital GP LLC, Phaetra Capital Management LP, and Argenta Group LLC, have been ordered to pay $23 million in restitution to defrauded investors in commodity pools operated by defendants.  Park made material misrepresentations and omissions concerning her trading expertise, and the defendants made and issued false documents to conceal their trading losses and misappropriations of investor funds, in addition to commingling funds and failing to operate the commodity pool as a separate legal entity.  CFTC

December 17, 2018

UBS Financial Services Inc. has agreed to pay a $5 million penalty to the SEC, and a $10 million penalty to the U.S. Treasury Department's Financial Crimes Enforcement Network (FinCEN) and Financial Industry Regulatory Authority (FINRA), to resolve claims that it failed to file required Suspicious Activity Reports (SARs) for transactions suspected to involve fraud or with no apparent lawful purpose.

December 17, 2018

Bank of New York Mellon has agreed to pay more than $54 million to settle charges that it improperly handled “pre-released” American Depositary Receipts (ADRs).  ADRs are securities that represent shares in a foreign company, and ordinarily require that a corresponding number of foreign shares be held at a depository bank. However, “pre-release” allows ADRs to be issued without the deposit of foreign shares, provided that brokers have an agreement with a depository bank and the broker or its customer owns the required number of foreign shares. The SEC found that BNY Mellon improperly provided ADRs to brokers when, in fact, neither the broker nor its customer had the foreign shares needed to support those new ADRs, a practice which can result in inappropriate short selling and dividend arbitrage. SEC

November 29, 2018

Professional boxer Floyd Mayweather Jr. and music producer DJ Khaled have settled SEC charges that they promoted initial coin offerings (ICOs) by Centra Tech Inc. without making required disclosures about payments they received from Centra Tech.  Mayweather agreed to pay disgorgement, penalties, and interest totaling $614,775, and Khaled agreed to pay a total of $152,725. SEC

November 16, 2018

CarrierEQ Inc. (Airfox) and Paragon Coin Inc. have agreed to pay civil penalties of $250,000 each to resolve charges that they conducted initial coin offerings (ICOs) in 2017 without registering the ICOs pursuant to federal securities laws.  Airfox's offering had raised $15 million and Paragon had raised $12 million.  The companies also agreed to provide compensation to harmed investors and to register their tokens as securities.  SEC
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