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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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July 27, 2022

Three registered broker-dealers have been ordered to pay civil penalties based on SEC findings that each had deficiencies in its programs to prevent customer identity theft, in violation of the SEC’s Identity Theft Red Flags Rule, or Regulation S-ID.  J.P. Morgan Securities LLC will pay $1.2 million, UBS Financial Services Inc. will pay $925,000, and TradeStation Securities, Inc. will pay $425,000.  The SEC found that the broker-dealers’ cybersecurity policies failed to detect identity theft red flags in connection with customer accounts or to incorporate those red flags into their programs, and that the firms failed to adequately train staff, failed to review and update the policies as required, did not include appropriate board oversight, and failed to oversee service provider arrangements.  SEC

Tagged in: Cybersecurity and Data Breaches, Financial and Investment Fraud, Financial Institution Fraud, Regulatory Violations,

July 26, 2022

Hyundai Capital America will pay $19 million for their failures to provide accurate information to nationwide credit reporting companies, tarnishing the records of more than 2.2 million consumer accounts through no fault of their own. Between January 2016 and March 2020, because of their outdated systems and processes, Hyundai violated the Fair Credit Reporting Act and failed to: report complete and accurate loan and lease account information; provide date of first delinquency information when required; modify or delete information when required; have reasonable identity theft procedures; and have reasonable accuracy and integrity policies and procedures. CFPB

Tagged in: Regulatory Violations,

July 18, 2022

Equitable Financial Life Insurance Company has agreed to pay $50 million to settle charges of providing statements to 1.4 million variable annuity investors, which included public school teachers and staff, that failed to list all fees paid during the period.  In addition to the monetary settlement, Equitable has agreed to cease and desist from future violations and revise how it presents fee information.  SEC

Tagged in: Financial and Investment Fraud, Financial Institution Fraud, Misrepresentations, Regulatory Violations,

July 15, 2022

A number of California- and Colorado-based people and their affiliated entities have been ordered to pay over $29 million in total in order to resolve multiple charges of violating CFTC regulations.  A federal judge had found California-based John D. Black, his associates Christopher Mancuso and Joseph Tufo, and his entities Financial Tree, Financial Solution Group, and New Money Advisors—as well as Colorado-based John P. Glenn and his law firm—liable for solicitation fraud in connection with binary options and forex transactions, registration violations, and other charges.  CFTC

Tagged in: Financial and Investment Fraud, Fraud in CFTC-Regulated Markets, Regulatory Violations,

June 30, 2022

Interactive Brokers LLC has been ordered to pay over $1 million in disgorgement and civil monetary penalty for its failure to supervise employees’ handling of exchange fees charged to customers.  By failing to ensure that its employees accurately assessed fees, Interactive Brokers overcharged its customers over $710,000.  CFTC

Tagged in: Financial and Investment Fraud, Fraud in CFTC-Regulated Markets, Regulatory Violations,

June 28, 2022

In response to SEC charges, audit firm Ernst & Young LLP admitted that its employees cheated on CPA exams and in continuing professional education courses, and that the firm withheld evidence of this misconduct during the SEC’s investigation.  EY agreed to pay a $100 million penalty and undertake extensive remedial measures.  The cheating took place on the ethics component of CPA exams and in courses required to maintain CPA licenses, including ones designed to ensure that accountants can properly evaluate whether clients’ financial statements comply with Generally Accepted Accounting Principles.  SEC

Tagged in: Accounting Fraud, Financial and Investment Fraud, Regulatory Violations,

June 24, 2022

Starberry Limited will pay over $1.3 million in a civil monetary penalty for acting as an unregistered futures commission merchant and will disgorge the same amount in unlawfully-earned commission and fees. Starberry accepted more than $400 million from a foreign customer, invested it in crude oil futures contracts through more than 12,500 NYMEX WTI trades, and earned over $86 million in profits for the investor. CFTC

Tagged in: Fraud in CFTC-Regulated Markets, Regulatory Violations,

May 20, 2022

Wells Fargo Advisors, which is a registered broker-dealer and investment advisor, agreed to pay $7 million to resolve allegations that it had an inadequate anti-money laundering system.  As a result, the SEC alleged, Wells Fargo did not file timely suspicious activity reports including with respect to foreign wire transfers to or from its customers’ brokerage accounts.  SEC

Tagged in: Financial and Investment Fraud, Financial Institution Fraud, Money Laundering, Regulatory Violations,

May 5, 2022

Arthur Hayes, Benjamin Delo, and Samuel Reed, co-founders of BitMEX, were ordered to pay $30 million for AML violations and for illegally operating a cryptocurrency derivatives trading platform. From late 2014 through 2020, the defendants failed to implement and enforce preventative controls against unlawful conduct. BitMEX operated without CFTC approval to operate as a Designated Contract Market or a Swap Execution Facility. Further, BitMEX operated without registration as a Futures Commission Merchant, failed to implement a Customer Information Program, did not employ proper KYC procedures, and failed to implement an adequate AML program. CFTC

Tagged in: Financial and Investment Fraud, Fraud in CFTC-Regulated Markets, Regulatory Violations,

April 7, 2022

Alan Friedland, Fintech Investment Group, Inc., and Compcoin LLC will pay $1.8 million to settle allegations of Commodities Exchange Act violations. Friedland, through his companies, fraudulently solicited customers to invest in a nonexistent proprietary forex trading algorithm, ART, which promised highly successful prediction of forex rates for its users. The defendants solicited customers over a 2-year period, knowing that the required approval from National Futures Association had not been obtained. The approval never materialized, and the investors were saddled with a worthless digital asset. The Court entered an order for permanent injunction, monetary sanctions, and equitable relief against the defendants. CFTC

Tagged in: Financial and Investment Fraud, Foreign Exchange, Misrepresentations, Regulatory Violations,

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