Failure to Safeguard Research = Serious Compliance Failure

Safeguard reseach SEC fine financial institution

Failure to Safeguard Research Led to a Massive SEC Fine

A global banking and investment firm that encouraged its research analysts to frequently communicate with its customers—but failed to employ safeguards as to the release of nonpublic information—has been hit with a $9.5 million penalty. The bank was also charged with publishing an improper research report and failure to preserve certain electronic records requested by the Securities and Exchange Commission (SEC) during its investigation.

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Hedge Fund Managers Fined for Bribing African Officials

SEC Hedge Fund Bribing African Officials

Bribery Didn’t Escape the Notice of the SEC

The aggressiveness of US regulators in going after Foreign Corrupt Practices Act (FCPA) violators was demonstrated again last month when the Securities and Exchange Commission (SEC) assessed a $200 million penalty against a major asset manager. Founded over twenty years ago, the organization is one of the world’s largest institutional alternative asset managers with approximately $37 billion in assets under management (AUM). But that pedigree did not stop the fund’s managers from employing overseas agents who paid huge bribes to officials in Africa in order to get lucrative fund business.

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After Iran: OFAC Enforces Sanctions Violations

OFAC is wasting no time in settling the judicial score with previous Iran sanctions violators

OFAC is wasting no time in settling the judicial score with previous Iran sanctions violators

Just over a year ago, the Islamic Republic of Iran and the five permanent members of the UN plus Germany (collectively dubbed “P5+1”) signed an agreement that was hailed by some as a crucial diplomatic tool necessary to deconstruct—over a 15-year period—Iran’s budding nuclear weapons capability. But for Iran, the main motivation in signing the agreement was the short-term relief from “crippling economic sanctions.” In January 2016, those sanctions were officially lifted and, worldwide, businesses wasted no time in rushing to ink contracts with Iran. For other global enterprises, however, the “sanctions never existed.” Now the Office of Foreign Assets Control (OFAC) is wasting no time in settling the judicial score with previous Iran sanctions violators.

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CFTC Orders $7.2 Million in Penalties and Restitution

Investment Firms that Steal from Investors will Pay the Price

Stealing from Investors Brings CFTC Censure

A Waterford, Michigan, “introducing broker” and its principal have been ordered to jointly and severally pay $7.2 million in restitution and penalties in connection with an investment scheme in which they promised investors a 300 percent return on initial investment—and then lied to investigators in the course of the investigation into the fraud. The time-worn caution to investors: “If it sounds too good to be true, it probably is,” once again rings in the ears of those defrauded.

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Record-Breaking “Blue Sheet” Fine Assessed

Failure to deliver Blue Sheets Will Hit Companies in the Pocket

Failure to Deliver Blue Sheets Will Cost Companies Large Sums of Money

“Blue Sheets” are critical trade data reports that may be requested by the Securities and Exchange Commission (SEC) to assist it in the investigation of suspected market manipulation and insider trading cases. Given their importance, the reports must be filed timely and contain accurate information. But in the last two years, the Financial Industry Regulatory Authority (FINRA), the self-regulatory agency that enforces various SEC rules, has found it necessary to assess huge fines against some of its members for alleged violations of the filing rule. Last month, it broke a record in the assessment of a multi-million dollar fine against a European-based investment bank over alleged Blue Sheet non-compliance.

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Broken Hearts—and Busted Heartbreakers

The SEC Has Started to Regulate Love

The SEC and FINRA Are Regulating Love

When you think of online dating sites, chances are words like Cupid or Lovestruck come to mind. But FINRA? SEC? Last month, both the Financial Industry Regulatory Authority and the Securities and Exchange Commission got involved when an online dating scheme turned out to be a scam which—quite romantically—defrauded several women and their families of millions of dollars for the criminal Casanova’s investment scheme. Now those agencies and the Federal Trade Commission (FTC) are joining forces to warn unsuspecting online lovers of the financial risks they may be exposing themselves to.

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The Odds of Winning Millions—as a Whistleblower

Whistleblowers Can Win Millions

Blowing the Whistle on Violators Can Be Worthwhile

Under the whistleblower provisions of the Dodd-Frank Wall Street Reform Act of 2010 (Dodd-Frank), both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) were empowered to extend monetary awards to whistleblowers who provide tips and original information to the two agencies that lead to enforcement actions with sanctions that exceed $1 million. The “winning whistleblower” can receive an award valued between 10 percent and 30 percent of the amount of the penalties collected. Since its inception in 2011, the SEC’s whistleblower program alone has paid over $57 million to whistleblowers. And the odds of winning just keep getting better.

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SEC Revises Rules for Jobs Act Thresholds

The SEC Has Made it Easier for Start-ups to Access Funding

The SEC Has Made it Easier for Start-ups to Access Funding

In 2012, the Jumpstart Our Business Startups Act (JOBS Act) was signed into law in order to, among other things, encourage the funding of small businesses by easing various securities regulations. Included in the legislation were various directives to the Securities and Exchange Commission (SEC) to revise some of its rules in order to implement the act. In early May, the SEC announced formal approval of revisions to its rules related to the thresholds for registration, termination of registration, and suspension of reporting under Section 12(g) of the Exchange Act.

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SEC Assesses Millions in FCPA Fines

Lax record keeping results in SEC fines

Lax record keeping results in SEC fines

In the last fiscal quarter, the Securities and Exchange Commission ramped up its prosecution of Foreign Corrupt Practices Act (FCPA) cases imposing fines totaling $37 million against U.S. companies engaging in business overseas. It is part of an aggressive stance by the SEC to counter what it sees as laxity in record keeping and financial controls over payments made by U.S. entities to overseas agents. While bona fide agent fees may pose no problem, failure to abide by strict FCPA rules can lead to charges of conducting corrupt practices on foreign soil.

Resort Operator to Pay $9 Million Fine

In April, the SEC announced that the Las Vegas Sands Corporation agreed to pay a $9 million penalty in settlement of charges that it failed to properly document payment of millions of dollars to an overseas consultant hired to facilitate business dealings in China and the port of Macao. The defendant corporation owns or operates five luxury resorts in that locale, and the SEC alleged that the $62 million in consultant’s payments were not accurately noted in corporate records or were lacking in proper supporting documentation.

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