Securities Industry Commentator by Bill Singer Esq

SEC Cites League of Extraordinary Advisers In Denying Waiver of Bar (BrokeAndBroker.com Blog)

SEC Charges Ratings Agency With Disclosure And Internal Controls Failures Relating To Undisclosed Model Adjustments (SEC Release)

Craig C. Garrick, Jr. Sentenced To A Year In Federal Prison For Securities Fraud / Defrauded Victims out of $450,000 in Financial Fraud Scheme (DOJ Release)

Northampton County Man Sentenced to 4 1/2 Years for Bilking Family, Friends & Fraternity Brothers out of Over $1 Million in Phony Stock Scheme (DOJ Release)

Nigerian National Sentenced to Prison for $11 Million Global Fraud Scheme (DOJ Release)

FINRA Censures and Fines Actinver Securities Inc. over AML Issues

In the Matter of Actinver Securities, Inc., Respondent (FINRA AWC)

FINRA Fines and Suspends Rep Over Reg SP Violations

In the Matter of Nathaniel Leigh Goldenberg, Respondent (FINRA AWC)

[I]n 30 CMBS transactions totaling $30 billion that Morningstar rated from 2015 to 2016, the credit rating agency permitted analysts to make undisclosed adjustments to key stresses in the model that it used in determining the rating for that transaction.  The complaint also alleges that Morningstar failed to establish and enforce an effective internal control structure governing the adjustments for a total of 31 transactions.

According to the complaint, analysts frequently made these undisclosed adjustments to reduce the stress applied in the model and, by easing the stresses, Morningstar lowered the credit enhancement it required for many of the ratings it awarded classes of the CMBS transactions.  This, the complaint alleges, in certain instances benefited the issuers that paid for the ratings because it enabled those issuers to pay investors less interest than they would have without the adjustments.

[F]rom 2019 to 2020, he induced victims to invest at least $450,000 in his company without disclosing the fact that he was serving a probationary sentence for felony charges of mortgage fraud arising out of the Utah State Courts. Garrick also admitted that that he planned to use, and did use, investment money for his own benefit and living expenses; that he knew it was illegal to fraudulently take money from investors; to make a misrepresentation or an omission of a material; and to engage in conduct that operates as a fraud or deceit upon a person, in connection with the purchase or sale of securities.

[F]or almost ten years, from September 2010 until June 2020, he defrauded life-long friends, fraternity brothers from Phi Kappa Psi fraternity at Lafayette College, and even his wife by promising to sell them "founders shares" of Esperion Therapeutics, Inc. McCabe claimed to have acquired shares of Esperion through a corporation he owned, McCabe Properties, Inc., at a very low price - approximately $2.67 per share. Over the course of nearly a decade, the defendant took in more than $1 million from more than 50 investors who thought they were getting in on the 'ground floor' of Esperion, by selling to them almost 387,000 phony "founders shares." If McCabe had possessed these "founders shares" in reality, his investors would have made a fortune, as shares of Esperion peaked at more than $38 per share recently. McCabe's investors believed they were soon going to be able to cash out their fortunes, but they were stalled at every opportunity by various misrepresentations the defendant made regarding a purported inability to liquidate their holdings. Ultimately, the defendant's victims uncovered his fraud in June 2020, at which point he admitted to them that he had been lying all along.

operated a group of companies known as the Invictus Group based in Nigeria and elsewhere. From approximately 2015 to 2019, Okeke and others engaged in a conspiracy to conduct various computer-based frauds. The conspirators obtained and compiled the credentials of hundreds of victims, including victims in the Eastern District of Virginia.

As part of the scheme, Okeke and other conspirators engaged in an email compromise scheme targeting Unatrac Holding Limited, the export sales office for Caterpillar heavy industrial and farm equipment. In April 2018, a Unatrac executive fell prey to a phishing email that allowed conspirators to capture login credentials. The conspirators sent fraudulent wire transfer requests and attached fake invoices. Okeke participated in the effort to victimize Unatrac through fraudulent wire transfers totaling nearly $11 million, which was transferred overseas. Additionally, Okeke engaged in other forms of cyberfraud, including sending phishing emails to capture email credentials, creating fraudulent web pages, and causing other losses to numerous victims.

During the period August 26, 2015 to March 11, 2017, Actinver failed to establish and implement an Anti-Money Laundering (AML) program that could be reasonably expected to detect and cause the reporting of suspicious activity. Specifically, Actinver's AML surveillance system was unreasonable because it generated reports that were inaccurate and failed to capture certain potentially suspicious activity. In addition, the firm failed to tailor its AML program to the risk presented by its practice of allowing customers to engage in foreign currency exchange and maintain accounts used primarily for managing cash. 

Actinver also failed to reasonably implement certain aspects of its AML program. Although the firm's AML program included procedures that required the firm to gather specific information and forms when opening foreign accounts or accounts for Politically Exposed Persons (PEPs), Actinver's registered representatives frequently failed to obtain these forms or left information blank on the forms. Finally, the firm failed to follow its procedures regarding responses to inquiries from its clearing firm concerning red flags of potentially suspicious activity. 

As a result of these failures, Actinver violated FINRA Rules 3310(a) and 2010. 

In addition, the firm failed to conduct an adequate independent AML test in 2016, because the testing failed to review key aspects of the firm's AML program. Therefore, the firm violated FINRA Rules 3310(c) and 2010. 

Finally, Actinver failed to have its Chief Executive Officer complete the firm's Annual Certification Requirement in 2015 and 2017 in violation of FINRA Rules 3130(b) and 2010.

In June 2020, Goldenberg voluntarily left IAA to start his own RIA. Prior to his departure from IAA, Goldenberg saved copies of documents containing nonpublic personal information (NPI) for at least four customers into an electronic folder on a thumb drive with the intention of using this information at his new RIA. This NPI included names, birthdates, social security numbers, and account numbers of four customers. Goldenberg kept the customer documents and NPI in his possession on June 15, 2020 after he left IAA, in violation of IAA's policies and without providing notice to or obtaining consent from these four customers.

• Securities Industry Commentator
• Bill Singer