Blog Posts Tagged With Financial Institutions and Regulated Entities

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In re Aegis Capital Corporation (A.P. Mar. 28, 2018, Settled); In re Kevin McKenna, et al. (A.P. Mar. 28, 2018, Settled); In re Eugene Terracciano (A.P. Mar. 28, 2018, Contested)

Actions against Respondents, a registered broker-dealer, its CEO, and two former AML compliance officers, for alleged failure to file required Suspicious Activity Reports (“SARs”).  According to the SEC, Respondents failed to submit SARs related to potential market manipulation despite numerous red flags indicating potential money laundering activity that were brought directly to the attention of Respondents compliance officers and CEO.  Respondent broker-dealer has agreed to pay a civil penalty of $750,000 and retain a compliance ... Continue Reading

In re Timary Delorme (A.P. Mar. 27, 2018, Settled)

Action against Respondent, a registered representative, in connection with an alleged pump-and-dump trading scheme.  According to the SEC, the scheme involved manipulative trading using the stocks of several microcap issuers.  The SEC alleges that Respondent bought these stocks for her customers’ accounts, received material benefits paid to her husband, and engaged in matched trading with another participant in the scheme.  Respondent has agreed to pay a civil penalty of $50,000 and to an industry and ... Continue Reading

In re JH Darbie & Co., Inc., et al. (A.P. Mar. 27, 2018, Settled)

Action against Respondents, a broker-dealer and its founder and CEO, for alleged failure to properly compute and report net capital.  According to the SEC, as a result of computation errors, Respondent broker-dealer operated with a net capital deficiency and violated net capital reporting and books and records provisions.  The SEC alleges that Respondent CEO caused the violations by failing to properly compute and report Respondent broker-dealer’s net capital.  Respondent broker-dealer has agreed to pay a ... Continue Reading

In re Wedbush Securities, Inc. (A.P. Mar. 27, 2018, Contested)

Action against Respondent, a broker-dealer and investment adviser, for alleged failure to reasonably supervise one of its registered representatives engaged in manipulative trading activity of penny stocks.  According to the SEC, Respondent was aware of aspects of its representative’s activities and failed to take appropriate action.

SEC Order

SEC Press Release

In re Timary Delorme ... Continue Reading

SEC v. McKinley Mortgage Co. LLC, et al. (E.D. Cal. Mar. 22, 2018, Settled)

Action against Defendants, an investment advisory entity, its founder and owner, its accounting manager, and the founder and owner’s brother and son, in connection with alleged misuse of investor funds.  According to the SEC, Defendants falsely stated to investors that investments in their private real estate investment fund were secure and earned high returns, and misused portions of the fund for Defendant owner’s personal expenses and the fund’s operational expenses.  The SEC alleges that the ... Continue Reading

In re Electronic Transaction Clearing, Inc. (A.P. Mar. 19, 2018, Settled)

Action against Respondent, a broker-dealer, for alleged violations of the Customer Protection Rule, hypothecation rules, and the financial reporting rule.  According to the SEC, Respondent moved cash customers’ fully paid securities to its omnibus margin account maintained at another clearing firm to meet the in-house margin requirements of that clearing firm.  The SEC further alleges that Respondent delivered fully paid securities of two cash customers to another clearing firm’s depository trust company in exchange for ... Continue Reading

In re BDO Canada LLP f/k/a BDA Dunwoody LLP (A.P. Mar. 13, 2018, Settled)

Action against Respondent, a Canadian public accounting firm, for alleged improper professional conduct in the course of its audits of an issuer.  The SEC alleges that Respondent stated that it performed its audits in accordance with PCAOB standards but used the work of another independent auditor, and thus failed to comply with PCAOB auditing standards.  Respondent has agreed to pay a civil penalty of $50,000.

SEC Order

SEC Press Release

SEC Order Deloitte & Touche ... Continue Reading

In re Credit Karma, Inc. (A.P. Mar. 12, 2018, Settled)

Action against Respondent, a pre-IPO internet-based financial technology company, for allegedly failing to properly register employee equity grants and associated distributions.  The SEC alleges that Respondent issued approximately $13.8 million in stock options to its employees without registering the offering.  Respondent has agreed to pay a civil penalty of $160,000.

SEC Order ... Continue Reading

In re Merrill Lynch, Pierce, Fenner, and Smith Inc. (A.P. Mar. 8, 2018, Settled)

Action against Respondent, a registered broker-dealer, for allegedly effecting an unregistered distribution of a China-based issuer’s shares.  The SEC alleges that Respondent negligently facilitated a purported gift of shares to the issuer’s Chairman that was an unregistered distribution, despite red flags that the gift was an unregistered sale being made by or on behalf of an affiliate of the issuer.  Accordingly, the SEC found that Respondent failed to make a reasonable inquiry and therefore the ... Continue Reading

In re Voya Investments, LLC and Directed Services, LLC (A.P. Mar. 8, 2018, Settled)

Action against Respondents, two investment advisers, for alleged failure to disclose conflicts of interest.  The SEC alleges that Respondents periodically recalled portfolio securities of mutual funds they advised in order to enable the record holders of the loans to take dividend-received deductions, resulting in an undisclosed conflict of interest.  Respondents have agreed to pay, jointly and severally, disgorgement of $2,635,490.25, prejudgment interest of $511,978.89, and a civil penalty of $500,000.

SEC Order

SEC Press Release ... Continue Reading

In re New York Stock Exchange, LLC, et al. (A.P. Mar. 6, 2018, Settled)

Action against Respondents, three stock exchanges, for alleged failure to implement required and effective rules, failure to comply with exchange rules, and failure to comply with Regulation SCI.  The SEC alleges that Respondents inaccurately identified stock prices as “automated” during a period of technical difficulties, erroneously implemented a trading halt, applied price collars during unusual market volatility without a rule to permit them, lacked required policies and procedures for backup and disaster recovery capabilities, and ... Continue Reading

In re Financial Fiduciaries, LLC and Thomas Batterman (A.P. Mar. 5, 2018, Settled)

Action against Respondents, a financial advisory firm and its principal, for alleged failure to disclose conflicts of interest to clients.  The SEC alleges that Respondent firm accepted referrals from a wealth management company that also acted as its trustee, without disclosing the relationship to clients.  The corporate Respondent has agreed to pay a civil penalty of $40,000.  The individual Respondent has agreed to pay a civil penalty of $20,000.

SEC Order ... Continue Reading

In re Edwin Shaw, LLC (A.P. Mar. 5, 2018, Settled)

Action against Respondent, a firm specializing in facilitating EB-5 investments, for allegedly operating as a broker-dealer without registering with the Commission.  The SEC alleges that Respondent facilitated 30 or more foreign investments in the United States through the EB-5 program without registering as a broker-dealer.  Respondent has agreed to pay disgorgement of $400,000, prejudgment interest of $ 54,209.20, and a civil penalty of $90,535.

SEC Order

SEC Press Release ... Continue Reading

In re Ameriprise Financial Services, Inc. (A.P. Feb. 28, 2018, Settled)

Action against Respondent, a broker-dealer and investment adviser, for allegedly disadvantaging certain customers by failing to determine that they were eligible for a less expensive share class, and recommending and selling them more expensive share classes in certain mutual funds when less expensive share classes were available.  Respondent has agreed to pay a civil penalty of $230,000.

SEC Press Release ... Continue Reading

SEC v. Strong Investment Management, et al. (C.D. Cal. Feb. 21, 2018, Contested)

Action against Defendants, an investment advisory firm, its president and sole owner, and its former CCO in connection with an alleged “cherry picking” scheme.  According to the SEC, Defendant president traded securities in the firm’s account but delayed allocating the securities to specific client accounts until he had observed the securities’ performance over the course of the day, then allocating profitable trades to himself and unprofitable trades to Defendant firm’s clients.  The SEC further alleges ... Continue Reading

SEC v. Alan Weinberg, et al. (D.D.C. Feb. 16, 2018, Settled)

Action against Defendants, an accountant and his firm, for alleged issuance of misleading audit reports in connection with a fraudulent scheme to create and sell shell companies.  According to the SEC, Defendants issued audit reports falsely asserting that audits of shell companies had been performed according to PCAOB standards, despite audit failures and red flags that they were enabling a fraud.  Defendants agreed to pay, jointly and severally, disgorgement and prejudgment interest in the amount ... Continue Reading

SEC v. Jonathan Strum (D.D.C. Feb. 16, 2018, Settled)

Action against Defendant, an attorney, for alleged assistance in aiding and abetting a fraudulent scheme to create and sell fraudulent shell companies.  According to the SEC, Defendant drafted false and misleading registration statements and periodic reports and signed fraudulent opinion letters.  Defendant has agreed to pay disgorgement and prejudgment interest totaling $33,010.89 and to a permanent bar.

SEC Litigation Release

SEC v. Perlstein, Linked Case ... Continue Reading

In re Deutsche Bank Securities Inc. and Benjamin Solomon (A.P. Feb. 12, 2018, Settled)

Actions against Respondents, a registered broker-dealer and a former supervisor of its commercial mortgage-backed securities  (“CMBS”) trading desk, for alleged failure to establish or implement policies and procedures reasonably designed to prevent and detect traders and salespeople from making false and misleading statements regarding Respondent’s profit on CMBS trades in the secondary and, in the case of the individual Respondent, for failure to reasonably supervise the traders under his control.  Respondent broker-dealer has agreed to ... Continue Reading

In re Wedbush Securities, Inc. (A.P. Feb. 5, 2018, Settled)

Action against Respondent, a registered broker-dealer, for alleged failure to adequately fund its Reserve Account.  The SEC alleges that a calculation error by Respondent resulted in ongoing Reserve Account deficiencies and further alleges that Respondent’s failure to adequately fund the Reserve Account resulted in inaccurate financial reporting filings with the SEC.  The SEC also alleges a pattern of violations by Respondent, noting five sanctions from various agencies in recent years.  Respondent has agreed to retain ... Continue Reading

In re Deutsche Bank Securities, Inc. (A.P. Feb. 1, 2018, Settled)

Action against Respondent for an alleged attempt to manipulate the U.S. Dollar International Swaps and Derivatives Association Fix benchmark (ISDAFIX).  The CFTC alleges that Respondent’s traders attempted to manipulate the benchmark by strategically bidding, offering, and executing transactions in targeted interest rate products at or near the rate fixing time.  The CFTC further alleges that Respondent’s traders attempted to manipulate the final published rate by submitting false rates.  Respondent has agreed to pay a civil ... Continue Reading

SEC v. James S. Polese and Cornelius Peterson (D. Mass. Jan. 31, 2018, Contested)

Action against Defendants, two investment advisers, for alleged fraud and other breaches of fiduciary duty. According to the SEC, Defendants made unauthorized withdrawals from a client’s account and used the funds for personal expenses. In addition, the SEC alleges that Defendants risked client funds by using their assets as collateral to secure loan financing for an entity in which Defendants were investors, and invested client funds in an investment vehicle in which Defendants held a ... Continue Reading

In re Deutsche Bank AG, et al. (A.P. Jan. 29, 2018, Settled)

Action against Respondent for allegedly attempting to manipulate the price of precious metals futures contracts using manual spoofing techniques and trading for the purpose of triggering customer stop-loss orders. The CFTC alleges that traders on Defendant’s precious metals desk, acting in a coordinated manner, placed spoof orders and exchanged messages soliciting others to engage in spoofing and regarding their successes in manipulating the markets. The CFTC further alleges that Defendant failed to adequately supervise its ... Continue Reading

In re UBS AG (A.P. Jan. 29, 2018, Settled)

Action against Respondent for allegedly attempting to manipulate the price of precious metals futures contracts using several manual spoofing techniques and trading for the purpose of triggering customer stop-loss orders. Respondent self-reported the issue following an internal investigation and has agreed to pay a $15 million civil penalty and an undertaking to maintain adequate spoofing surveillance and training programs.

 CFTC Press Release ... Continue Reading

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