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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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Catch of the Week: DOJ Charges North Korean and Malaysian Nationals for Bank Fraud, Money Laundering and Sanctions Violations

Posted  09/11/20
A list titled "SANCTIONS LIST"
The Department of Justice announced a criminal complaint charging Ri Jong Chol, Ri Yu Gyong, North Korean nationals, and Gan Chee Lim, a Malaysia national, for conspiracy to violate North Korean Sanctions Regulations, bank fraud, and conspiracy to launder funds.  The DOJ said defendants allegedly established and utilized front companies that transmitted U.S. dollar wires through the United States to purchase...

Catch of the Week: Interactive Brokers Pays $38 Million for Failures in Money-Laundering and Supervision

Posted  08/14/20
Computer screen with graphs
Brokerage firm Interactive Brokers LLC will pay $38 million in penalties to settle charges from multiple U.S. market regulators regarding its anti-money laundering practices, including alleged failures to file suspicious activity reports (SARs).  The discount broker has paid an $11.5 million penalty to settle charges with the Securities and Exchange Commission over the deficiencies in its internal controls that...

August 10, 2020

Greenwich, Connecticut-based brokerage firm Interactive Brokers LLC will pay fines and disgorgement totaling $23.7 million to the SEC and CFTC, as well as a $15 million penalty to the Financial Industry Regulatory Authority (FINRA), to resolve allegations related to the firm's anti-money laundering policies.  The SEC penalty of $11.5 million resolves charges that over the course of one year the brokerage failed to file more than 150 Suspicious Activity Reports (SARs) for U.S. microcap securities trades it executed on behalf of its customers.  The SEC order finds that defendant failed to recognize red flags concerning transactions, failed to properly investigate suspicious activity, and failed to file SARs even when suspicious transactions were flagged by compliance personnel. The $11.5 CFTC penalty, together with over $700,000 in restitution, resolves charges including that the firm, which is a registered futures commission merchant, failed to detect and report suspicious transactions, including in its handling of the accounts of Haena ParkSEC; CFTC

July 20, 2020

UBS Financial Services Inc. and two of its registered representatives will pay $10 million in penalties, disgorgement, and interest to resolve claims that UBS improperly redirected municipal bond offerings away from retail customers and to “flippers,” who re-sold the bonds to other broker-dealers, including UBS.  This practice allowed UBS to circumvent the priority retail order periods set by bond issuers and improperly obtain a greater allocation of bonds for its own inventory.  SEC

June 26, 2020

Telegram Group Inc. and its subsidiary TON Issuer Inc. will return more than $1.2 billion to investors and pay a $18.5 million civil penalty to resolve SEC charges that it conducted an unlawful unregistered offering of its digital tokens called “Grams.” The SEC alleged that the Grams were securities sold by defendants in order to raise capital to finance for their own business, which included the development of their own blockchain and a mobile messenger application.  SEC

May 15, 2020

Credit rating agency Morningstar will pay $3.5 million to settle charges that it violated conflict of interest rules by having credit rating analysts in its asset-backed securities group engage in marketing to issuers, including offering to provide indicative ratings.  SEC rules prohibit rating agencies from issuing or maintaining a credit rating where an analyst who participates in determining or monitoring credit ratings also participates in sales and marketing activity, and require agencies to have policies to address conflicts of interest.  SEC

April 6, 2020

Cantor Fitzgerald & Co. has agreed to pay $3.2 million to settle charges of willfully providing the SEC with incomplete and inaccurate securities trading information, also known as “blue sheet data,” for approximately 35 million transactions, over the course of five years.  Because the SEC uses that information to investigate insider trading and other fraudulent activity, Cantor Fitzgerald’s actions prevented the SEC from carrying out its duty to protect investors.  Cantor Fitzgerald has since retained an outside consultant and adopted new policies and procedures relating to the proper submission of blue sheet data.  SEC

February 27, 2020

Wells Fargo Clearing Services and Wells Fargo Advisors Financial Network will pay a $35 million penalty to resolve charges that certain of Wells Fargo's investment advisors and registered representatives made unsuitable recommendations to retail clients regarding single-inverse ETF products.  The SEC charged that Wells Fargo lacked policies and procedures that would have detected such unsuitable recommendations, and failed to adequately supervise and train its financial professionals, who did not fully understand the products they were recommending.  Wells Fargo did not admit or deny the SEC's findings; the penalty will be distributed to harmed individuals.  SEC

February 21, 2020

Husam Tayeh of Illinois and his Nevada corporations, Dinar Corps., Inc. and My Monex, Inc., have agreed to pay the CFTC more than $22.6 million in disgorgement and civil monetary penalties after being found liable for violations of the Commodity Exchange Act arising from defendants’ alleged registration violations, misappropriation of investor funds, and fraudulent solicitation of customers to engage in financed retail forex transactions involving Iraqi Dinar and Vietnamese Dong.  To settle a related criminal action, Tayeh has been sentenced to 1 year in prison, ordered to forfeit more than $8 million, and ordered to pay more than $150,000 in restitution to victims.  CFTC

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
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