Securities Industry Commentator by Bill Singer Esq

FINRA Baseball Caps, Rice Krispies Treats, Hiring Spree, and ZOOM OTRs

(BrokeAndBroker.com Blog)

Crisis begins to hit professional and public-sector jobs once considered safe (Washington Post by Andrew Van Dam)

42-year-old retiree: 'I lost more than $600,000 due to the pandemic. Now I'm second-guessing early retirement' (CNBC by Sam Dogen)

BlackRock, Voya Revive a Credit Trade That Returned Double-Digits (Bloomberg by Claire Boston and Melissa Karsh)

Massachusetts Man Charged With Orchestrating Ponzi Scheme, Defrauding Clients of More than $10 Million (SEC Release)

Israel's Largest Bank, Bank Hapoalim, Admits To Conspiring With U.S. Taxpayers To Hide Assets And Income In Offshore Accounts / Bank Hapoalim (Switzerland) Pleads Guilty and Bank Hapoalim B.M. Enters into Deferred Prosecution Agreement for Criminal Misconduct; Agree to Pay Nearly $875 Million (DOJ Release)

In 2012, I quit my job in investment banking and retired at 34. A few years later, my wife also left her job and joined me in early retirement. We had a net worth of about $3 million.

For nearly eight years, we saw our passive income streams (mostly from dividend-paying stocks, interest from savings, municipal bonds and rental income) grow steadily. Then came the financial consequences of the coronavirus pandemic.

While we feel very fortunate that the economic downturn hasn't affected us as severely as it has for other families, we still lost a ton of money and must now prepare for the worst.

Under the terms of the new program, investment firms pledge certain types of top-rated asset-backed securities, collateralized loan obligations or commercial mortgage-backed securities as collateral and receive cheap loans from the Fed to buy new ABS.

By purchasing the securities with borrowed money and holding them as the market recovered, firms were able to net eye-popping returns from some ultra-safe securities in 2009 and 2010.

[W]eiss, the principal of Family Endowment Partners, LP, an investment adviser registered with the U.S. Securities and Exchange Commission, fleeced his own clients of millions of dollars through purported investments in a now defunct Florida tobacco company and a series of private securities offerings. Weiss allegedly told his clients that their money would be used for investment purposes when, in fact, he diverted it to make Ponzi payments and to fund his lifestyle. Weiss then told his clients that they were making money when their funds had already been misappropriated. As alleged, he continued to lie to them about the value of their investments to prevent them from learning of his thefts and to convince them to continue paying him fees for "managing" their money. Weiss allegedly defrauded his investors of millions of dollars. He misspent his clients' investment funds on himself, payments to prior investors, and to prop up his other unrelated businesses.

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• Plea Agreement https://www.justice.gov/usao-sdny/press-release/file/1272321/download
• Criminal Information https://www.justice.gov/usao-sdny/press-release/file/1272326/download
• Deferred Prosecution Agreement https://www.justice.gov/usao-sdny/press-release/file/1272331/download

From at least in or about 2002, and continuing until at least in or about 2014, the Bank conspired with employees, U.S. customers, and others to:  (1) defraud the United States with respect to taxes; (2) file false federal tax returns; and (3) commit tax evasion.  Employees of BHBM and BHS assisted U.S. customers in concealing their ownership and control of assets and funds held at the Bank, which enabled those U.S. customers to evade their U.S. tax obligations, by engaging in the following conduct:

• Assisting U.S. customers with opening and maintaining accounts in the names of pseudonyms, code names, trust accounts, and offshore nominee entities;
• Opening customer accounts for known U.S. customers using non-U.S. forms of identification;
• Enabling U.S. taxpayers to evade U.S reporting requirements on securities' earnings in violation of the Bank's agreements with the IRS;
• Providing "hold mail" services for a fee, avoiding any correspondence regarding the undeclared account being sent to the U.S.;
• Offering back-to-back loans for U.S. taxpayers to enable them to access funds in the United States that were held in offshore accounts at the Bank in Switzerland and Israel; and
• Processing wire transfers or issuing checks in amounts of less than $10,000 that were drawn on the accounts of U.S. taxpayers or entities in order to avoid triggering scrutiny.

At least four senior executives of the Bank, including two former members of BHS's board of directors, were directly involved in aiding and abetting tax evasion of U.S. taxpayers.

Under today's resolutions, the Bank is required to cooperate fully with ongoing investigations and affirmatively disclose any information it may later uncover regarding U.S.-related accounts.  The Bank is also required to disclose information consistent with the Department of Justice's Swiss Bank Program relating to accounts closed between Jan. 1, 2009, and Dec. 31, 2019.  The agreements provide no protection from criminal or civil prosecution for any individuals.

BHBM will pay a total of $214.38 million, which has three parts.  First, BHBM has agreed to pay $77,877,099 in restitution to the IRS, which represents the unpaid taxes resulting from BHBM's participation in the conspiracy.  Second, BHBM has agreed to forfeit $35,696,929 to the United States, which represents gross fees (not profits) that the bank earned on its undeclared accounts between 2002 and 2014.  Finally, BHBM has agreed to pay a penalty of $100,811,585.

BHS will pay a total of $402.53 million, which also has three parts.  First, BHS has agreed to pay $138,908,073 in restitution to the IRS, which represents the unpaid taxes resulting from BHS's participation in the conspiracy.  Second, BHS has agreed to forfeit $124,628,449 in gross fees to the United States.  Finally, BHS has agreed to pay a fine of $138,998,399.  These payments were approved by Judge Vyskocil today in connection with BHS's plea and sentencing.

Both the penalty and fine amounts take into consideration that the Bank, after initially providing deficient cooperation through an inadequate internal investigation and the provision of incomplete and inaccurate information and data to the Government, thereafter conducted a thorough internal investigation, provided client-identifying information, and cooperated in ongoing investigations and prosecutions.  The Bank further implemented remedial measures to protect against the use of its services for tax evasion in the future.

The Board of Governors of the Federal Reserve System is also announcing today that it has reached a resolution with BHBM, by which BHBM has agreed to a cease and desist order, certain remedial steps to ensure its compliance with U.S. law in its ongoing operations, and a civil monetary penalty of $37.35 million.  Additionally, the New York State Department of Financial Services is announcing a similar resolution by which BHBM has agreed to a consent order and a monetary penalty of $220 million.

• Securities Industry Commentator
• Bill Singer