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Top Ten SEC and CFTC Recoveries of 2023

Posted  January 24, 2024

It was an active year for fraud enforcement at the Securities and Exchange Commission (SEC) and Commodities Futures Trading Commission (CFTC).  Though by no means was it a record year for either regulator in terms of big-ticket wins.  Aside from the CFTC’s $1.7 billion recovery from South African crypto company Mirror Trading for foul play with foreign currency transactions, the balance of the Top-10 recoveries was just about $1.2 billion.

What is perhaps most surprising about the tally of top recoveries is how many of them came from the CFTC, responsible for going after commodities fraud.  It is considerably smaller than the securities fraud regulator with significantly fewer resources.  That is why the SEC is traditionally much more active than the SEC and typically responsible for recovering billions of dollars more a year with its enforcement activity.  The Top-10 list tells a very different story with the CFTC responsible for or involved in 6 of the Top-10 recoveries and 5 of the 6 largest recoveries.

As in past years, several of the largest recoveries involved violations of the Foreign Corrupt Practices Act (FCPA), which prevents paying bribes to foreign officials to secure government contracts or other types of business favor.  It remains a high priority for both SEC and CFTC fraud enforcement (see our listing of Top FCPA Recoveries for 2023).  Rounding out the Top-10 were schemes involving cryptocurrency fraud, misrepresentations in the sale of securities and commodities, market manipulation and trading violations, and record-keeping violations.

It is very likely whistleblowers were involved in at least some of these enforcement actions.  Since the SEC Whistleblower Program and CFTC Whistleblower Program were created under the Dodd-Frank Act, which provide significant financial incentives for reporting fraud to these agencies, whistleblowers are playing an increasingly critical role in the SEC and CFTC enforcement regimes (see our listing of Top-10 SEC/CFTC whistleblower awards).  However, both agencies strictly enforce their commitment to maintain the identity of their whistleblowers so never disclose when whistleblowers are involved.

With all that context, here is our listing of the Top-10 SEC and CFTC recoveries for 2023.

1 — Mirror Trading (CFTC).  On September 7, a federal district court in Texas entered a consent order against South African crypto company Mirror Trading International Proprietary Limited, finding it liable for fraud in connection with retail foreign currency (forex) transactions, fraud by a commodity pool operator (CPO), registration violations, and failure to comply with CPO regulations.  The order requires the company to pay more than $1.7 billion in restitution to defrauded victims and follows a previous default order against the company’s founder and CEO Cornelius Johannes Steynberg, requiring him to pay over $1.7 billion in restitution to defrauded victims and an over $1.7 billion civil monetary penalty, the highest civil monetary penalty ordered in any CFTC case.

2 — Financial Institutions (SEC/CFTC).  On August 8, roughly a dozen financial institutions agreed to pay combined penalties of $549 million to settle SEC charges (for $289 million) and CFTC charges (for $260 million) of widespread and longstanding failures to maintain and preserve electronic communications, violating the agencies’ recordkeeping provisions.  The SEC settled similar actions with other financial institutions on May 11, May 12, and September 29 along with a more sweeping settlement in September 2022 for combined penalties exceeding a billion dollars.

3 — Argent Asset/First State (CFTC).  On June 20, a federal district court in Delaware entered a consent order against Argent Asset Group LLC and First State Depository Company requiring the companies to pay roughly $146 million in restitution and penalties for misappropriating tens of millions of dollars and making fraudulent misrepresentations to customers in connection with the purchase and sale of precious metals.

4 — Albemarle (SEC).  On September 29, Charlotte-based specialty chemicals company Albemarle Corporation agreed to pay roughly $104 million to settle SEC charges of violating the FCPA’s anti-bribery, recordkeeping, and internal accounting controls provisions in connection with illicit payments to officials at public-sector oil refineries in Vietnam, India, Indonesia, and India.

5 — Highrise Advantage (CFTC).  On December 20, a federal court in Florida issued a default judgment ordering Avinash Singh and his company Highrise Advantage to pay roughly $102 million in restitution and penalties relating to their role in a multi-level, multi-million dollar off-exchange foreign currency (forex) scheme.

6 — Freepoint (CFTC).  On December 14, Connecticut-based commodities merchant Freepoint Commodities agreed to pay $91 million in penalties and disgorgement to settle CFTC charges of violating the Commodities Exchange Act by securing material non-public information from a South American state-owned enterprise in connection with the purchase and sale of fuel oil.  The company also agreed to pay roughly $98 million to settle DOJ charges of violating the FCPA by paying bribes to Brazilian government officials to secure business with Brazil’s state-owned and state-controlled oil company, Petróleo Brasileiro S.A. – Petrobras (Petrobras).

7 — Philips (SEC).  On May 11, Amsterdam-based Koninklijke Philips agreed to pay roughly $62 million to settle SEC charges of violating the FCPA through illicit payments to Chinese officials to secure preferential business treatment in connection with its sales of medical diagnostic equipment.

8 — Vale (SEC).  On March 28, Brazilian mining company Vale S.A., one of the largest iron ore producers in the world, agreed to pay $55.9 million to settle charges of making false disclosures about the safety of its dams prior to the January 2019 collapse of the Brumadinho dam.

9 — Swap Dealers (CFTC).  On September 29, Goldman Sachs, JP Morgan, and Bank of America agreed to pay a total of roughly $53 million to settle CFTC charges relating to a variety of swap dealer activities including failures related to swap data reporting.

10 — Exelon (SEC).  On September 28, Exelon Corporation and its electric utility subsidiary Commonwealth Edison Company agreed to pay $46.2 million to settle SEC charges of a multi-year scheme to corruptly influence and reward then-Speaker of the Illinois House of Representatives Michael Madigan.  According to the SEC, the purpose was to influence Madigan regarding legislation favorable to ComEd.

If you think you might have information relating to potential securities or commodities fraud and would like to speak  to an experienced member of our whistleblower lawyer team, please don’t hesitate to contact us for a free and confidential consult.  Maybe you’ll make one of the Top-10 lists in the years to come!

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Annual Whistleblower Insider Top Ten Lists

Every January, Whistleblower Insider looks back at the significant government enforcement actions of the past year. Our Top Ten lists highlight the biggest recoveries and significant enforcement efforts by different government actors in cases of interest to whistleblowers.
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Tagged in: Bribery and Bid-Rigging, Cryptocurrency, FCPA, Financial and Investment Fraud, Fraud in CFTC-Regulated Markets, Misrepresentations, Securities Fraud, Top 10,