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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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December 9, 2020

ICE Data Pricing & Reference Data LLC agreed to pay $8 million to resolve charges that between 2015 and 2020 it failed to take adequate steps to ensure the accuracy of securities pricing data it supplied to clients, including by relying on single broker quotes which did not reasonably reflect the value of certain securities.  This conduct affected the prices ICE Data PRD provided for more than 40,000 fixed-income securities. SEC

Sunshine State Local Elections Shine Light on How Dark Shell Company Data Can Be

Posted  11/18/20
By Sarah “Poppy” Alexander
top-secret-seal
Amidst the ongoing saga of the US national elections, Florida local elections may not have made much of a ripple.  But one small scandal in the Sunshine State reveals a lot about the ongoing problem the US has with shell corporations and their hidden ownership structures. The story is convoluted, as most shell company stories are.  A political donor, Proclivity, who had never donated money in Florida before,...

October 21, 2020

Cryptocurrency issuer Kik Interactive Inc. will pay a $5 million penalty in a consent judgment resolving claims by the SEC that Kik’s unregistered offering of digital “Kin” tokens in 2017 violated U.S. securities laws.  The consent judgment finds that Kin tokens were investment contracts and the offering did not qualify for any exemption from registration requirements.  Kik sold the tokens through both public and private sales; the court found that the sales were a single integrated offering.   SEC

October 15, 2020

Energy company Andeavor LLC will pay a $20 million penalty to resolve allegations that, while the company was in merger discussions with Marathon Petroleum  Corp. in 2018, it implemented a stock buyback plan without taking adequate compliance steps, including an evaluation of whether the company was in possession of material non-public information about corporate developments.  The Marathon merger, which valued Andeavor at over $150 per share, was announced one month after Andeavor completed the buyback at an average price of $97 per share.  SEC

September 30, 2020

Morgan Stanley & Co. LLC will pay a total of $10 million in civil monetary penalties to the SEC and CFTC.  In an agreement with the SEC, the company will pay a $5 million civil monetary penalty arising from charges that the firm violated the short sale procedures of Regulation SHO. Specifically, Morgan Stanley improperly used “long” and “short” aggregation units when it hedged synthetic exposure to swaps by purchasing or selling the securities referenced in the swaps.  The aggregation units were not independent and did not have separate trading strategies.  As a result, Morgan Stanley should have netted the long and short positions of both units together or across the entire broker-dealer and marked the orders as long or short based on that netting. The CFTC, which also imposed a $5 million penalty, charged that Morgan Stanley failed to comply with swap data reporting obligations, inaccurately reporting swap data for approximately three million swaps. SEC; CFTC

September 28, 2020

Citibank N.A. and its related entities Citigroup Energy Inc. and Citigroup Global Markets, Inc. will pay a $4.5 million penalty for maintaining an inadequate telephone audio recording and preservation system.  According to the charges, Citibank internal reporting described the audio preservation system as having a flaw that was a “ticking time bomb” that could lead to the deletion of audio recordings.  When Citibank was required to produce recordings in response to a CFTC subpoena, the company disclosed that millions of audio files for 982 users had been deleted as a result of the flaw.  CFTC

September 15, 2020

Online gaming and gambling platform Unikm, Inc. agreed to pay a $6.1 million penalty to resolve allegations that the company unlawfully sold unregistered securities in its initial coin offering of “UnikoinGold” (UKG) tokens.  The recovered funds will be used to repay injured investors.  SEC

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
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