Securities Fraud

April 17, 2023

Jonah Engler and Barbara Desiderio, already enjoined from further violations of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act, will pay over $5 million in disgorgement, interest, and civil penalties for illegally trading in retail customer accounts as their company, Global Arena Capital Corp., was going out of business. Engler, Desiderio, and two others caused customer losses of over $4 million, while generating over $2.4 million in unlawful markups, markdowns, and commissions for Global Arena. SEC

March 28, 2023

James K. Couture, a Massachusetts-based investment adviser, defrauded his clients of nearly $3 million from 2009 to December 2019, convincing them to sell portions of their securities to fund large money transfers to an entity Couture controlled—a detail not shared with his clients. Couture consented to a final judgment enjoining him from future violations of the securities laws’ antifraud provisions. Couture will spend 100 months in prison and was ordered to pay approximately $4.7 million in restitution and forfeiture for his deceptive, Ponzi-like scheme. SEC

February 16, 2023

Derivative clearing organization (DCO) The Options Clearing Corporation (“OCC”) has been ordered to pay $17 million to the SEC and $5 million to the CFTC for its failure to establish, implement, maintain, and enforce policies and procedures to manage operational risks related to its automated systems, in violation of numerous rules and regulations, including the Commodity Exchange Act and CFTC regulations called DCO Core Principles.  Due to those deficiencies, between 2019 and 2021, OCC’s Clearing Fund was underfunded by $200 million to nearly $600 million.  OCC previously settled other charges with the SEC for $15 million and the CFTC for $5 million.  SEC; CFTC

January 19, 2023

Cryptocurrency company Nexo Capital Inc. has agreed to pay $22.5 million and comply with a cease and desist order in order to settle SEC charges of failing to register the offer and sale of its retail crypto asset lending product.  The company has agreed to pay another $22.5 million and comply with additional terms in order to settle similar charges in California, Indiana, Kentucky, Maryland, New York, Oklahoma, South Carolina, Vermont, Washington, and Wisconsin.  As part of those additional terms, Nexo must notify all remaining U.S. investors to withdraw all remaining assets from Nexo’s platform by April 2023.  SEC, AG NY

December 13, 2022

Danske Bank will pay over $2 billion to resolve charges from the SEC and DOJ arising from failures in its anti-money laundering compliance program at an Estonian bank it acquired and began operating as a branch in 2007, and from its failure to disclose the risks posed by the program’s significant deficiencies.  Danske Bank had received information from an internal whistleblower, conducted internal audits, and received information from regulators, from which it knew that the Estonian branch served high-risk customers, including many Russians, who were engaged in billions of dollars in suspicious and potentially criminal transactions; that its internal policies were inadequate; and, that its AML and KYC procedures were not being followed.  Despite this knowledge, the bank made materially misleading statements and omissions that it complied with its AML obligations and that it had effectively managed its AML risks.  These statements mislead investors and U.S. banks and allowed its high-risk customers to gain unlawful access to the U.S. financial system.  Danske agreed to pay an SEC penalty of $413 million and, as part of a criminal plea to conspiracy to commit bank fraud, will forfeit over $2 billion, with $850 million of that amount being credited from separate criminal or civil resolutions with foreign and domestic authorities, including the SEC.  DOJ, SEC, SDNY

November 21, 2022

Ruixue “Serena” Shi will spend 20 years in federal prison and has been ordered to pay nearly $36 million in restitution for defrauding investors out of tens of millions of dollars. Shi, convicted on one count of wire fraud, was the general manager of Global House Buyer LLC, a China-based real estate company with an office in Los Angeles. Shi inked a deal with Dakota Development, a subsidiary of SBE Entertainment, to build a real estate development in the City of Coachella consisting of luxury condos, a hotel complex, and conference facilities. Shi solicited investments from mostly Chinese investors, preying on their ignorance of English and trust in the American economy, and led them to believe their investment would help them obtain an American visa. USAO CDCA

November 2, 2022

CBS and former CBS President and CEO Leslie Moonves will pay $30.5 million for working with a LAPD captain to conceal sexual assault allegations against Moonves, misleading investors by concealing information about the allegations, and for insider trading based on that information. CBS executives coordinated with the LAPD captain to prevent the complaint from being leaked to the press. As part of the settlement, CBS will reform its HR practices around sexual harassment, and Moonves is prohibited from serving as an officer or a director of any public company doing business in NY, without written approval by OAG. NYAG