February 3, 2018
Securities Industry Commentator: A legal, regulatory, and compliance feed curated by veteran Wall Street lawyer Bill Singer
http://www.rrbdlaw.com/3804/securities-industry-commentator/ In today's Securities Industry Commentator feed: CFTC Orders Deutsche Bank Securities Inc. to Pay $70 Million Penalty for Attempted Manipulation of U.S. Dollar ISDAFIX Benchmark Swap Rates (CFTC Press Release) The CFTC filed an Order against Deutsche Bank Securities Inc. ("DBSI") asserting that from at least January 2007 through May 2012, DBSI made false reports and through the acts of multiple traders manipulate the U.S. Dollar International Swaps and Derivatives Association Fix ("USD ISDAFIX").DBSI agreed to settle the charges Deutsche Bank Securities Inc. ("DBSI") pursuant to a $70 million civil money payment. READ the FULL TEXT CFTC Order. Press Release Alleged Perpetrator of Ski Slope Investment Scheme Agrees to Pay Back Investor Money, Surrender Properties (SEC Press Release 2018-10) In 2016, the SEC filed a Complaint alleging that Ariel Quiros, William Stenger, and their companies made false statements and omitted key information while raising more than $350 million from investors to construct ski resort facilities and a biomedical research facility in Vermont. READ THE FULL TEXT SEC Complaint. The SEC alleged that the investment was a Ponzi-like effort and that over $200 million was allegedly used for other-than-stated purposes, including $50 million spent on Quiros's personal expenses such as the purchase of a luxury condominium, payment of his income taxes and other taxes unrelated to the investments, and acquisition of an unrelated ski resort. In a settlement subject to court approval, Quiros agreed to be held liable for more than $81 million in disgorgement plus a $1 million penalty, and he must forfeit approximately $417,000 in cash. Also, Quiros also agreed to surrender ownership of the two condos and ski resort he purchased with investor funds and give up his stake in more than a dozen other properties, including the Jay Peak Resort FINRA Stuffs Stifel's Trading Ahead Exemptions (BrokeAndBroker.com Blog) Few aspects of regulating Wall Street are more fundamental than those requiring that public customers get the best execution for their orders, particularly when the customers' orders and those of their brokerage firm are competing to get filled at the best price. The simplest way to envision this so-called trading ahead scenario is to imagine that a public customer and her broker-dealer arrive at the exact same time before the exact same door, which is only wide enough for one at a time to fit through. When that narrow opening presents itself, the default regulatory protocol is for the broker-dealer to politely step aside and graciously say "after you." Most of the time, that's what happens. Sometimes, it doesn't. When it doesn't, there are rule exemptions permitting a broker-dealer to get out of line, elbow the customer aside, and bolt through the door. As you might imagine, when such discourtesy occurs in the trading line, Wall Street's regulators don't simply accept any old excuse. If a broker-dealer wants to cite an exemption for cutting in line, the regulators want proof that the trading ahead of a customer satisfied the requirements set forth in the exemption. In a recent FINRA regulatory settlement, we see what happens when a broker-dealer cuts in front of the trading line but can't satisfy the terms of the exemption. Securities Industry Commentator: A legal, regulatory, and compliance feed curated by veteran Wall Street lawyer Bill Singer http://www.rrbdlaw.com/3802/securities-industry-commentator/ In today's Securities Industry Commentator feed: SEC Charges Two Boston-Based Investment Advisers with Fraud (SEC Litigation Release No. 24037) The SEC charged Boston-area investment advisers James S. Polese and Cornelius Peterson with defrauding clients by stealing nearly half a million dollars of client assets.Securities and Exchange Commission v. James S. Polese, et al. (United States District Court for the District of Massachusetts, 18-CV-10186) READ the FULL TEXT SEC Complaint. Ameriprise And Former Rep Battle It Out Over EFL And Defamation (BrokeAndBroker.com Blog) In today's BrokeAndBroker.com Blog we have the interesting scenario in which a disgruntled, former Ameriprise employee sues her former employer for over a million bucks. About a month later, the former employer returns the favor and sues its former employee for six figures. Underlying both lawsuits is an employee forgivable loan, and allegations of defamation and breach of contract. By the time these disputes arrive before a FINRA Arbitration Panel, there ain't much love lost between the parties. It all seems fairly cut and dry. And then our publisher Bill Singer had to go online and started poking around. On the one hand. On the other hand. Maybe. Maybe not. See how you feel about everything when you get to the end of today's blog. Court Enters Consent Judgment Against Richard A. Bailey (SEC Litigation Release No. 24036) The United States. District Court for the District of Delaware entered a consent judgment against Richard A. Bailey, a former officer of GH3 International, Inc., who the SEC alleged had participated in a pump-and-dump scheme involving GH3's common stock, generating more than $700,000 of illicit proceeds for Bailey and seven other named defendants involved in the fraudulent scheme. Without admitting or denying the allegations, Bailey consented to a permanent injunction from violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder and Sections 5 and 17(a) of the Securities Act of 1933; barring him from participating in any offering of a penny stock; and barring him from serving as an officer or a director of a public company. https://www.amazon.com/Ride-Thunder-Vietnam-Victory-Betrayal/dp/B077K8KGWB/ref=sr_1_1?ie=UTF8&qid=1517348599&sr=8-1&keywords=ride+the+thunder+movie Few articles published in the BrokeAndBroker.com Blog attracted more attention than "FINRA Gets One Last Slap In Marine Veteran's Face" (BrokeAndBroker.com Blog, July 31, 2017) In that article, we discussed the plight of Richard S. Botkin, a 15-year Marine Corps veteran, a registered representative since 1986, and author of "Ride the Thunder-A Vietnam War Story of Honor and Triumph." Botkin had appealed to FINRA for reconsideration of the four-month suspension and $15,000 that the self-regulatory-organization had imposed upon him pursuant to a settlement for his alleged violation of the self-regulator's Private Securities Transaction Rule involving his participation in a production company designed to create a documentary film about his book. BrokeAndBroker.com Blog is pleased to inform its readers that Richard's film "Ride the Thunder - A Vietnam War Story of Victory & Betrayal" is now available on Amazon Prime: Incredible True story of American military legend John Ripley and Vietnamese war hero Le Ba Binh & their fight against the communists during the Vietnam War. When the war ends, Ripley goes home & passionately tries to tell the truth of the war to a divided America while Binh is imprisoned & struggles to stay alive in re-education camp while their wives valiantly cope. Rotten Tomatoes 89%
To those readers who asked how they could help Botkin and send a message to FINRA, please visit the Amazon webpage "Ride the Thunder - A Vietnam War Story of Victory & Betrayal" Watch the film on Amazon Prime for free or buy or rent it. Add your message in the "Customer Reviews" Securities Industry Commentator: A legal, regulatory, and compliance feed curated by veteran Wall Street lawyer Bill Singer http://www.rrbdlaw.com/3800/securities-industry-commentator/ In today's Securities Industry Commentator feed: The Man From Sullivan & Cromwell / Under Trump's SEC, Wall Street Secrecy Expands as Enforcement Shrinks (The Intercept by Susan Antilla and Gary Rivlin) https://theintercept.com/2018/01/30/jay-clayton-sec-donald-trump-wall-street/ A towering bit of old-fashioned journalism from two of the very best writers on the financial beat. Among the must-read stories of the year! The tone of the article is set forth in this excerpt: Jay Clayton's rise to SEC chair began with a client call late in November 2016, shortly after Trump's election. How, the client asked, could the incoming administration cut back on Wall Street regulations? In response, the Wall Street Journal reported, Clayton "dashed off" an email laying out his ideas for making it easier for businesses to raise money without so many rules imposed by government. Such deregulatory discourse is in the DNA of a firm like Sullivan & Cromwell, where lawyers dispatch lengthy letters to regulators seeking everything from exemptions from punishment to the insertion of industry-friendly language in new rules. The client shared the email with Trump advisers, who were apparently so impressed that they asked Clayton if there was any administration job that might interest him. By late December, according to the Journal, Clayton was in Mar-a-Lago meeting with the president-elect to discuss the SEC chairpersonship. His appointment was announced a week later, on January 4. Epic Rant About A Tepid FINRA Regulatory Settlement (BrokeAndBrokercom Blog) Ya got yer folks who like takin' tests. Ya got yer folks who don't mind takin' tests but just don't do well on them. Ya got yer folks who don't like takin' tests. Ya got yer folks who don't like takin' tests and just don't do well on them. Then ya got yer folks who think they've figgered it all out and, well, you know, like takin' or not like takin' tests, damn, why not just get someone else to take the damn test for ya and not have to bother with the whole showin' up in person thing. Today's BrokeAndBroker.com Blog explores the interaction between the Financial Industry Regulatory Authority and one of those folks who apparently didn't want to bother with having to sit down and take a test and found someone else to substitute for him. SEC Halts Alleged Initial Coin Offering Scam (SEC Press Release 2018-80) In a Complaint filed in the United States District Court for the Northern District of Texas, the SEC alleges that AriseBank falsely stated that it purchased an FDIC-insured bank which enabled it to offer customers FDIC-insured accounts and that it also offered customers the ability to obtain an AriseBank-branded VISA card to spend any of the 700-plus cryptocurrencies. Also, the Complaint alleges that AriseBank also omitted to disclose the criminal background of key executives. The Court ordered a halt in AriseBank's allegedly fraudulent initial coin offering (ICO) that targeted retail investors to fund what it claimed to be the world's first "decentralized bank." Securities Industry Commentator: A legal, regulatory, and compliance feed curated by veteran Wall Street lawyer Bill Singer http://www.rrbdlaw.com/3797/securities-industry-commentator/ In today's Securities Industry Commentator feed: Eight Individuals Charged With Deceptive Trading Practices Executed on U.S. Commodities Markets (DOJ Press Release 18-111) https://www.justice.gov/opa/pr/eight-individuals-charged-deceptive-trading-practices-executed-us-commodities-markets Eight individuals who allegedly engaged in various deceptive trading practices on U.S. commodities markets in the United States were charged in three different federal courts with crimes including, conspiracy, fraud, and/or spoofing. As set forth in part in the DOJ Press Release: Defined Benefit Pension Plan Dispute Taxes Stockbrokers And Brokerage Firms (BrokeAndBroker.com Blog) Tax season is upon us. Added into that already volatile mix of rules, regulations, laws, and opinions is a lot of uncertainty about the Trump administration's tax reform plans. Public customers should be meeting with their tax professionals and ensuring that any contemplated asset sales or purchases make tax sense. As often develops during this time of year, certain assets are in a highly depreciated or appreciated state and the sale of such an asset could produce an undesirable capital event. All of which prompts a lot of discussion between customers and stockbrokers about tax shelters and transfers of assets and deferring recognition of proceeds and the like. Of course, later on, when the tax bill comes and it turns out that the customer misunderstood the advice or the stockbroker was misinformed, well then it's time to hire an expensive lawyer and likely spend more money on a lawsuit then the damages that you will be awarded but at least you will make the lawyer happy. Securities Industry Commentator: A legal, regulatory, and compliance feed curated by veteran Wall Street lawyer Bill Singer http://www.rrbdlaw.com/3795/securities-industry-commentator/ In today's Securities Industry Commentator feed: FINRA Department of Enforcement, Complainant, vs Joseph C. Farah, Respondent (Order Accepting Offer of Settlement, FINRA Office of Hearing Officers, 2014041432401, January 25, 2018) In response to the filing of a Complaint on May 8, 2017, by the Department of Enforcement of the Financial Industry Regulatory Authority ("FINRA"), Respondent Joseph C. Farah submitted an Offer of Settlement dated January 17, 2018, which the regulator accepted. Under the terms of the Offer of Settlement, without admitting or denying the allegations in the Complaint, Respondent Joseph C. Farah consented to the entry of findings and violations and to the imposition of the sanctions. FINRA Department of Enforcement, Complainant, vs Joseph C. Farah, Respondent (Order Accepting Offer of Settlement, FINRA Office of Hearing Officers, 2014041432401, January 25, 2018) (the "Order"). In accordance with the terms of the Order, FINRA imposed upon Farah a bar from associating with any FINRA member firm in all capacities. While associated with Gold Coast Securities, Farah allegedly persuaded a Gold Coast customer to open a TD Ameritrade account and to provide him with discretionary authority. Farah promised that he would reimburse LN for any losses and, in exchange, take a portion of the profits. There were, however, no profits; and, from November 2012 through October 2013, Farah allegedly excessively traded the account to the tune of over 600 trades that reduced the account's value by over 25 percent. BNP Paribas USA Inc. Pleads Guilty to Antitrust Conspiracy / Sixth Major Bank to Plead Guilty in Ongoing Foreign Currency Exchange Investigation Agrees to Pay $90 Million Criminal Fine (DOJ Press Release) BNP Paribas USA Inc pleaded guilty to a one-count Information filed in the U.S. District Court for the Southern District of New York that alleged that between September 2011 and July 2013, BNPP USA conspired to suppress and eliminate competition by fixing prices in Central and Eastern European, Middle Eastern and African (CEEMEA) currencies. BNPP USA agreed to pay a criminal fine of $90 million. READ the FULL TEXT Information SEC Freezes Assets Behind Alleged Insider Trading (SEC Litigation Release No. 24035) In Securities and Exchange Commission v. One or More Unknown Traders in the Securities of Bioverativ, Inc. (United States District Court for the Southern District of New York, 18-CV-0701), the Court entered an emergency court order freezing assets related to alleged insider trading that yielded approximately $5 million in profits in connection with Sanofi S.A,'s acquisition at $105 a share of Bioverativ Inc, READ the FULL TEXT SEC Complaint The SEC, The Federal Inmate, And The Florida Bar Advice (BrokeAndBroker.com Blog) There are times when you just have to shake your head and wonder. As I get older, I find my neck getting sore from all the back and forth twisting. You start trying to explain something and the words just don't come out and the more you try to think about what to say, the more you realize how stupid and absurd the whole thing is and, maybe, just maybe, there ain't no way to explain the thing you're trying to explain because it's so ridiculous as to be unexplainable. Which brings to mind the eye poppin', jaw droppin' escapades of fraudster Joseph Vitale, now known as federal inmate #15859-104 Nigerian Man Extradited From South Africa For Participating In Business Email Compromise Scams (DOJ Press Release 18-030 Following his arrest in December 2016 in South Africa, Onyekachi Emmanuel Opara of Lagos, Nigeria, was extradited to the United States in connection with an Indictment in the United States District Court for the Southern District of New York charging him with one count of conspiracy to commit wire fraud and one count of wire fraud arising from his alleged participation in fraudulent business email compromise scams that targeted thousands of victims around the world, including the United States.
