The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
August 17, 2018
It's August. It's a Friday in August. As such, it's a quiet news day on Wall Street. That being said, it's also a sad day because of the death of Aretha Franklin. As a child of the Sixties, I loved her music and am saddened by her loss. Rest in Peace. Among my favorite tunes was one that often reminds me of Wall Street: "Chain of Fools"
Citigroup to Pay More Than $10 Million for Books and Records Violations and Inadequate Controls (SEC Press Release 2018-155)
https://www.sec.gov/news/press-release/2018-155-0
Citigroup Inc. and its U.S. broker-dealer subsidiary Citigroup Global Markets Inc. (CGMI) agreed to pay a $5.75 million penalty to settle SEC charges of inaccurate books and records and CGMI's failure reasonably to supervise traders. Citigroup and CGMI settled without admitting or denying the SEC's findings and agreed to cease and desist from future violations. From 2013 to 2016, three CGMI traders allegedly mismarked illiquid positions in certain proprietary accounts they managed, in two cases covering losses from widespread unauthorized trading and the ultimate recognition of $81 million in losses. In the second action, Citigroup subsidiary Grupo Financiero Banamex S.A. de C.V. loaned approximately $3.3 billion to Oceanografia, S.A. (OSA) between 2008 and 2014 based on invoices and work estimates for services that OSA provided to Petroleos Mexicanos (Pemex), the Mexican state-owned oil company. Many of the OSA work estimates were fraudulent and did not reflect amounts Pemex actually owed to OSA. Citigroup ultimately lost approximately $475 million as a result of OSA's fraud. READ the FULL TEXT CGMI/Citigroup Order http://www.sec.gov/litigation/admin/2018/34-83859.pdf and the Citigroup Order http://www.sec.gov/litigation/admin/2018/34-83858.pdf
$5 Million Awarded In FINRA Customer Arbitration. Now Let's Beat The Dead Horse (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/4140/finra-windsor-arbitration/
The BrokeAndBroker.com Blog's publisher, Bill Singer, has long advocated for the creation of an Anti-Fraud Fund on Wall Street to serve as a back-stop for defrauded public investors who obtain awards of compensatory damages against insolvent industry firms and registered representatives. Bill does not favor extending such a guaranty into punitive damages or "unreasonable" attorneys' fee and other charges, but he does believe that the securities industry has the wherewithal and the moral/ethical obligation to put its money where its dirty mouth has been. While there may be legitimate debate as to how best to fund the anti-fraud fund, that only goes to the mechanics of doing the right thing. In the case of the Financial Industry Regulatory Authority, we have a self-regulatory-organization that needs to get behind this pro-consumer effort and with haste. Over the years, the BrokeAndBroker.com Blog has presented cases that question the fairness of FINRA's mandatory arbitration forum. Similarly, Bill Singer often criticizes FINRA for the regulator's inept and incompetent oversight of miscreants and recidivists. In today's featured FINRA public customer arbitration, we see the troubling history of two victims dealing with the FINRA community, and we are forced to ask whether their apparent arbitration "victory" is anything more than a sham. FINRA's regulatory mandate is set out in FINRA Rule 2010: Standards of Commercial Honor and Principles of Trade: "A member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade." Today's BrokeAndBroker.com Blog asks whether the self-regulatory-organization itself will observe high standards of commercial honor and just and equitable principles of trade when it comes to seeing that justice is done for defrauded public investors.
Three More Florida Residents Sentenced in $6,000,000 Investment Fraud (DOJ Press Release)
https://www.justice.gov/usao-co/pr/three-more-florida-residents-sentenced-6000000-investment-fraud
https://www.justice.gov/usao-co/pr/three-more-florida-residents-sentenced-6000000-investment-fraud
In response to their guilty pleas to conspiracy to commit fraud and money laundering,.Steven Dykes, Pasquale Rubbo, and Angela Monaco,were sentenced in the United States District Court for the District of Colorado respectively to 108 months, 106 months, and 74 months in prison. Previously, co-conspirators Joseph Rubbo and Nicolas Rubbo were sentenced in a related case to 60 months and 48 months of imprisonment, respectively. The conpiracy defrauded over 30 mostly elderly investors out of over $6,000,000 in an investment fraud scheme that focused on a television production company based in South Florida, VIP Television, LLC, as well as a cleaning product, the "Scrubbieglove," which was also patented in Florida. Investors sent money to both of these companies as a result of false statements about VIP Television's merger opportunities and interest in the Scrubbieglove by entities such as QVC, Walgreens, and Bed, Bath & Beyond. All of the defendants except Monaco had previous convictions for similar criminal activity.