Blog Posts Tagged With Financial Institutions and Regulated Entities

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In re LBB Associates LTD., LLP, and Carlos Lopez, CPA (A.P. Jan. 14, 2018, Contested)

Action against Respondents, an accounting firm and its managing partner, for alleged violations of PCAOB standards while auditing a technology firm.  According to the SEC, Respondents failed to investigate red flags suggesting that undisclosed related-party transactions had occurred, improperly reviewed known related-party transactions, and allowed the same person to serve as both engagement and EQR partner on the audits, contrary to PCAOB standards.

SEC Order
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In re Katz, Sapper & Miller, LLP, and Scott C. Price, CPA (A.P. Jan. 9, 2019, Settled)

Action against Respondents, an accounting firm and one of its partners, for alleged misconduct related to investment fund audits.  According to the SEC, Respondents violated the Advisers Act’s custody rule by auditing the same financial statements that they themselves prepared.  The SEC also alleges that Respondents lacked relevant knowledge, training, and experience, failed to exercise due professional care, and, with respect to Respondent firm, failed to implement sufficient quality control standards.  Respondent firm has agreed
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In re Lightyear Capital LLC (A.P. Dec. 26, 2018, Settled)

Action against Respondent, a registered investment adviser, for alleged violations of the Investment Advisers Act with respect to the management of private equity and employee funds.  According to the SEC, Respondent failed to properly allocate certain expenses to certain of its funds and co-investors and failed to properly offset management fees in connection with fee-sharing agreements and implement policies, including ones consistent with representations to investors.  Respondent has agreed to pay a civil penalty of
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SEC v. Joseph A. Meyer, Jr. and Statim Holdings, Inc. (N.D. Ga. Dec. 26, 2018, Contested)

Action against Defendants, an investment adviser and its principal, for alleged fraud against investors. According to the SEC, Defendants misappropriated funds from the investment fund they managed and falsified the fund’s books to support illusory promises of guaranteed returns and loss protection.

SEC Litigation Release

SEC Complaint
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In re JPMorgan Chase Bank, N.A. (A.P. Dec. 26, 2018, Settled)

Action against Respondent, a financial services firms, in connection with an industry-wide sweep into practices related to the pre-release of American Depositary Receipts (ADRs).  According to the SEC, Respondent pre-released ADRs to pre-release brokers pursuant to an agreement which required the broker receiving the pre-released ADRs to represent, among other things, that it beneficially owned the ordinary shares (or an equivalent security) represented by the ADRs.  The SEC alleges that Respondent should have known or
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In re American Portfolios Advisors, Inc. (A.P. Dec. 21, 2018, Settled)

Action against Respondent, an investment adviser, for alleged violations of the antifraud and compliance provisions of the federal securities laws.  According to the SEC, Respondent invested client funds in mutual fund share classes that charged 12b-1 fees when less expensive share classes were available.  The SEC alleges that Respondent failed to disclose conflicts of interest, violated the duty of best execution, and failed to maintain adequate compliance policies.  Respondent has agreed to pay disgorgement of
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In re Crowe Horwath, et al. (A.P. Dec. 21, 2018, Settled)

Action against Respondents, an auditing firm and two of its partners, for alleged audit standard violations.  According to the SEC, Respondents conducted a deficient audit despite known fraud risks and failed to maintain independence due to an ongoing business relationship with the audited company.  Respondent firm and partners have agreed to pay respective civil penalties of $1.5 million, $25,000, and $15,000.  Respondent partners have agreed not to appear or practice as accountants before the SEC.
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In re Wealthfront Advisers, LLC (f/k/a Wealthfront, Inc.) (A.P. Dec. 21, 2018, Settled)

Action against Respondent, a robo-adviser, for alleged false statements to clients.  According to the SEC, Respondent failed to monitor client accounts for transactions that would cause wash sales, despite promising to do so, improperly published client testimonials, improperly paid for client referrals, and failed to implement adequate policies, procedures, and a compliance program.  Respondent has agreed to pay a civil penalty of $250,000.

SEC Order

SEC Press Release
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In re PPS Advisors, Inc., and Lawrence Nicholas Passaretti (A.P. Dec. 21, 2018, Settled)

Action against Respondents, an investment adviser and its CEO, for alleged violations of the antifraud and compliance provisions of the federal securities laws.  According to the SEC, Respondents invested client funds in mutual fund share classes that charged 12b-1 fees when less expensive share classes were available.  The SEC alleges that Respondents failed to disclose conflicts of interest, violated the duty of best execution, and failed to maintain adequate compliance policies.  Respondents have agreed to
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In re Mitchell J. Rubin, CPA, and Michael Bernstein, CPA (Dec. 21, 2018, Settled)

Action against Respondents, two partners of a defunct auditing firm, for alleged audit standard violations.  According to the SEC, Respondents performed a deficient audit and failed to address identified fraud risks.  The SEC further alleges that one Respondent failed to comply with partner rotation requirements. Respondents have agreed to pay civil penalties of $25,000 each.  Respondents have also agreed not to appear or practice as accountants before the SEC.

SEC Order 

SEC Press Release 

Related
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In re Hedgeable, Inc. (A.P. Dec. 21, 2018, Settled)

Action against Respondent, a robo-adviser, for alleged misleading statements to clients regarding Respondent’s performance.  According to the SEC, Respondent’s promotional material included select data from high-performing client accounts and made false comparisons against competitors’ trading models.  The SEC also alleges that Respondent failed to maintain required records and a compliance program reasonably designed to prevent violations of the securities laws.    Respondent has agreed to pay a civil penalty of $80,000.

SEC Order

SEC Press Release
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In re Thoroughbred Financial Services, LLC, et al. (A.P. Dec. 21, 2018, Settled)

Action against Respondents, an investment adviser and its representatives, for alleged breaches of fiduciary duty and fraud.  According to the SEC, Respondents invested client funds in certain mutual fund share classes that charged 12b-1 fees when less expensive share classes were available.  The SEC further alleges that Respondents misled clients and maintained inadequate policies and procedures.  Respondent adviser has agreed to pay $740,250.20 in disgorgement, $108,368.10 in prejudgment interest, and a civil penalty of $260,000. 
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In re Sterling Global Strategies LLC (A.P. Dec. 20, 2018, Settled)

Action against Respondent, a registered investment adviser, for alleged material misstatements and omissions with respect to the performance of its index in back-testing.  According to the SEC, Respondent greatly overstated the index’s performance.  Respondent has agreed to pay a civil penalty of $175,000.

SEC Order
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In re Andrew F. Nicoletta, et al. (A.P. Dec. 19, 2018, Settled)

Action against Respondents, a trader and his three companies, for alleged violations of Rule 105 of Regulation M of the Exchange Act.  According to the SEC, Respondents short sold stock during Rule 105’s restricted period and then repurchased the same stock, netting $643,932 in illegal profits.  Respondents have agreed to pay disgorgement of $643,932, prejudgment interest of $78,052, and a civil penalty of $370,583.

SEC Order
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In re Central States Capital Markets, LLC (A.P. Dec. 19, 2018, Settled)

Action against Respondent, a broker-dealer, for alleged failure to file Suspicious Activity Reports (SARs).  According to the SEC, Respondent failed to submit SARs for certain transactions, despite red flags that the transactions were being used to hide the customer’s involvement in a payday-lending business.  Respondent has agreed to retain a compliance consultant for a period of two years and to pay $400,000 in a related civil forfeiture action brought by the U.S. Attorney’s Office for
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In re Ancora Advisors, LLC (A.P. Dec. 18, 2018, Settled)

Action against Respondent, an investment adviser, in connection with alleged “pay-to-play” campaign contributions.  According to the SEC, Respondent’s associates made campaign contributions to an official with influence over a public pension system’s selection of investment advisers and provided services to the pension system within two years of the contributions in violation of Rule 206(4)-5.  Respondent has agreed to pay a civil penalty of $100,000.

SEC Order
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In re The Bank of New York Mellon (A.P. Dec. 17, 2018, Settled)

Action against Respondent, a financial services firm, in connection with an industry-wide sweep into practices related to the pre-release of American Depositary Receipts (ADRs).  According to the SEC, Respondent  pre-released ADRs to pre-release brokers pursuant to an agreement which required the broker receiving the pre-released ADRs to represent, among other things, that it beneficially owned the ordinary shares (or an equivalent security) represented by the ADRs.  The SEC alleges that Respondent should have known or
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In re UBS Financial Services Inc. (A.P. Dec. 17, 2018, Settled)

Action against Respondent, a broker-dealer, in connection with alleged failure to file Suspicious Activity Reports (SARs).  According to the SEC, Respondent failed to submit SARs related to money transfer services, despite red flags such as suspicious fund transfers and alerts generated by an internal monitoring system.  Respondent has agreed to pay a civil penalty of $5 million.  Respondent has separately agreed to pay $10 million to FINRA and FinCEN.

SEC Order 

SEC Administrative Summary
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In re NB Alternatives Advisers LLC (A.P. Dec. 17, 2018, Settled)

Action against Respondent, a registered investment adviser, for alleged Investment Advisers Act violations.  According to the SEC, Respondent charged three private equity fund clients for $2 million worth of employee time that was not actually spent providing services to the funds.  Respondent has agreed to pay disgorgement of $2,073,988, prejudgment interest of $284,620, and a civil penalty of $375,000.

SEC Order 

SEC Administrative Summary
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In re Yucaipa Master Manager, LLC (A.P. Dec. 13, 2018, Settled)

Action against Respondent, a registered investment adviser, for alleged violations of the Investment Advisers Act.  According to the SEC, Respondent failed to disclose conflicts of interest related to third-party service provider agreements and certain administrative costs charged to Respondent’s funds.  The SEC also alleges that Respondent misallocated some of its costs.  Respondent has agreed to pay disgorgement of $1,863,242, prejudgment interest of $71,070, and a civil penalty of $1 million.

SEC Order  

SEC Administrative Summary
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In re Landaas & Company and Robert W. Landaas (A.P. Dec. 12, 2018, Settled)

Action against Respondents, an investment adviser and broker-dealer and its owner and chairman, for alleged failure to disclose conflicts of interest.  According to the SEC, Respondents did not disclose that a clearing broker shared mutual fund revenues with Respondents and that Respondents kept portions of client fees paid to the broker.  The SEC further alleges that Respondents’ procedures were inadequate to ensure best execution.  Respondents have agreed to jointly and severally pay $408,483.06 in disgorgement,
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In re MUFG Securities Americas Inc. (A.P. Dec. 10, 2018, Settled)

Action against Respondent, a broker-dealer, for alleged incomplete and inaccurate regulatory filings.  According to the SEC, Respondent lacked adequate processes for validating the accuracy of the information provided in its electronic “blue sheets” submissions.  Respondent has agreed to pay a civil penalty of $1.4 million.

SEC Order 

SEC Press Release
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