Regulatory Violations

February 9, 2016

A federal court ordered Cindy Vandivier and Paul Vandivier of Coconut Creek, Florida to pay almost $3 million in penalties and restitution to settle CFTC charges of fraudulently soliciting customers and misappropriating customer funds in connection with illegal, off-exchange transactions in precious metals.  CFTC

February 5, 2016

The CFTC filed a civil injunctive anti-fraud enforcement action against Rico Omar Cox of Dania Beach, Florida, alleging that between August 2010 through March 2015, Cox fraudulently solicited his trading services for managed commodity futures accounts, and lost most of the $499,000 he traded for or on behalf of at least nine clients. CFTC

February 4, 2016

The U.S. District Court for the Southern District of Florida ordered Worth Group Inc. of Jupiter, Florida, its owner and operator, Andrew Wilshire of Jupiter, Florida, and Wilshire’s sister, Eugenia Mildner also of Jupiter, Florida, who served as Worth’s sole officer and director prior to February 2012, to pay restitution of $1,250,000 and a civil monetary penalty of $1,250,000 as sanctions for engaging in an illegal off-exchange precious metals scheme.  CFTC

February 3, 2016

The CFTC filed a civil injunctive action against Oakmont Financial, Inc. of Boynton Beach, Florida, and Joseph Charles DiCrisci of New York, New York, an Oakmont owner and principal, alleging that the defendants engaged in illegal, off-exchange transactions in precious metals with retail customers on a leveraged, margined, or financed basis.  CFTC

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 19, 2016

Equinox Fund Management LLC, a Denver-based alternative fund manager, will pay over $6 million to settle charges that the firm overcharged management fees and misled investors about how it valued certain assets.  Equinox will refund investors approximately $5.4 million in excessive management fees collected during a seven-year period.  SEC

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

January 13, 2016

Nine of eleven high-ranking executives and board members of Superior Bank and its holding company have settled charged by the SEC based on their alleged involvement in various schemes designed to conceal the extent of loan losses experienced as the bank was faltering in the wake of the financial crisis.  The defendants propped up Superior’s financial condition through straw borrowers, bogus appraisals, and insider deals, allowing the bank to avoid impairment and the reporting of ever-increasing allowances for loan and lease losses.  As a result, Superior overstated its net income in public filings by 99 percent for 2009 and 50 percent for 2010.  The settling defendants will pay at least $2.8 million collectively and are all permanently barred from serving as officers or directors of a public company.  SEC

January 8, 2016

Steven Cohen, founder and manager of hedge fund S.A.C. Capital Advisors LLC, will be prohibited from supervising funds that manage outside money until 2018.  The SEC found that Cohen ignored red flags of insider trading and failed to supervise a former portfolio manager, Mathew Martoma, who engaged in insider trading in 2008 while employed at C.R. Intrinsic Investors, an investment advisory firm that was a wholly-owned subsidiary of S.A.C. Capital Advisors.  C.R. Intrinsic previously paid more than $600 million to settle SEC charges of insider trading.  Several of Cohen’s entities, including C.R. Intrinsic and S.A.C. Capital Advisors, previously paid $1.2 billion to resolve related criminal charges brought by the U.S. Attorney’s Office for the S.D.N.Y.  SEC

January 6, 2016

J.P. Morgan’s brokerage business will pay $4 million to settle charges that it falsely claimed that its advisors were compensated “based on our clients’ performance.”  An SEC investigation found that J.P. Morgan Securities LLCdid not pay representatives based on client performance.  Rather, advisors were paid a salary and a discretionary bonus based on a number of factors, none of which were tied to portfolio performance.  SEC