Securities Industry Commentator by Bill Singer Esq

FINRA Alerts Firms to Phishing Email From "FINRA Support" from the Domain Name "westour.org" (FINRA Regulatory Notice)

Former Chief Operating Officer of Philadelphia Technology Start-Up Charged with Securities Fraud and Embezzlement (DOJ Release)

SEC Charges Former Company Executive with Defrauding Investors (SEC Release)

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SEC Obtains Final Judgment Against Former Executive of Financial Services Company (SEC Release)

Supreme Court Finds President Has Power to Remove FHFA Director

Patrick J. Collins v. Janet L. Yellen, Secretary of the Treasury (Opinion, United States Supreme Court 19-422)

CFTC Charges Texas Man and His Company with Forex Fraud (CFTC Release)

FINRA Bars Rep for Conversion of Blank Customer Check

In the Matter of Arieh Israel, Respondent (FINRA AWC) 

FINRA Fines and Suspends Sales Assistant for Entering False Customer Information

In the Matter of Danielle Matson, Respondent (FINRA AWC)

Veteran Journalist Susan Antilla Discomforts Wall Street Over Racism

(BrokeAndBroker.com Blog)

Attorney Convicted of 28 Counts in FusionPharm Fraud Case Loses Federal Appeal (BrokeAndBroker.com Blog)

FINRA warns member firms of an ongoing phishing campaign that involves fraudulent emails (see sample in Appendix) purporting to be from "FINRA SUPPORT" with the email address "support@westour.org". The email asks the recipient to pay attention "to the report attached below that requires your immediate response" and states that "[t]he attachment contains our updated Public Policy information." The emails may not include an attachment. 

FINRA recommends that anyone who clicked on any link or image in the email immediately notify the appropriate individuals in their firm of the incident. 

The domain of "westour.org" is not connected to FINRA and firms should delete all emails originating from this domain name. 

FINRA reminds firms to verify the legitimacy of any suspicious email prior to responding to it, opening any attachments or clicking on any embedded links. 

FINRA has requested that the Internet domain registrar suspend services for "westour.org".

Geromini was the chief operating officer (COO) for a technology startup headquartered in Philadelphia, Pennsylvania, which specialized in the development of point-of-care diagnostic testing of various diseases. Geromini controlled the company's bank and debit card accounts, and was responsible for soliciting investments in the company through debt and equity fundraising.

From July 2018 through October 2018, the company raised approximately $2.25 million of investor funds. Geromini misrepresented to investors that he would invest their funds to pursue the company's business plan, for example, by using the funds to further develop and commercialize its products and services, for lab expenses, and to pay employee salaries. Instead, Geromini diverted significant portions of their funds out of the company's bank account for purposes inconsistent with its business operations, including to pay himself hundreds of thousands of dollars through unauthorized wire transfers, ATM cash withdrawals, and debit card transactions.

Geromini frequently misrepresented to the company that the unauthorized wire transfers were intended to compensate him for his employment. Geromini told the company's chief executive officer that Geromini had twice secured contracts on behalf of the company with third parties and was, pursuant to his employment agreement, entitled to separate bonus payments. 

lied to investors and stole over $200,000 raised during two 2018 securities offerings. According to the complaint, Geromini disseminated offering documents and financial models to investors that he knew were false and misleading because they did not account for his ongoing theft of investor proceeds. In addition, Geromini allegedly made materially false and misleading statements and omissions during communications with investors about the company's cash burn rate and use of proceeds. For example, the complaint alleges that Geromini falsely told investors that "every penny" of their money would be used in a meaningful, productive manner, when, in reality, he used funds raised during the offerings for personal expenses, including a car, an acquaintance's cosmetic surgery, a vacation, and other entertainment.

James was the CEO of Gore Capital LLC, which he told others was a private equity investment firm. In February 2016, James and the victim agreed to each invest approximately $1.5 million into a company that specialized in extracting and converting cannabinoids from marijuana. They further agreed to form an LCC as a conduit for their joint investment. In April 2016, James incorporated the LLC in Delaware.

On April 20, 2016, James instructed the victim to wire his investment funds into a bank account. James falsely told the victim that the victim also had access to the account. On April 22, 2016, the victim wired $500,000 into the account. On July 12, 2016, James instructed the victim to wire the remaining $1 million of his investment, which the victim did. To induce the victim's payment, James told the victim that he would deposit his own money into the account. In reality, James never wired or deposited any of his own funds.

James later spent $1.35 million of the victim's funds on personal and entertainment expenses for himself.

[O]n April 13, 2020, Asante Berko, a former executive of a foreign-based subsidiary of a U.S. bank holding company, arranged for his firm's client, a Turkish energy company, to funnel at least $2.5 million to a Ghana-based intermediary to pay illicit bribes to Ghanaian government officials in order to gain their approval of an electrical power plant project. The complaint further alleges that Berko helped the intermediary pay more than $200,000 in bribes to various other government officials, and that Berko personally paid more than $60,000 to members of the Ghanaian parliament and other government officials. According to the complaint, Berko took deliberate measures to prevent his employer from detecting his bribery scheme, including misleading his employer's compliance personnel about the true role and purpose of the intermediary company.

Berko consented to the entry of a final judgment that permanently enjoins him from violating the anti-bribery provision of the FCPA, Section 30A of Securities Exchange Act of 1934, and orders him to disgorge $275,000 in ill-gotten gains plus $54,163.92 in prejudgment interest.

The complaint alleges that from at least October 2019 to the present the defendants used various websites and social-media platforms to fraudulently market their forex trading pool as a version of a savings account that offered a greater yield with similarly low or no risk. The defendants called this forex trading pool "The Black Club" and "The Forex Savings Club," which their website claimed had received over $460,000 from 411 participants.

The complaint further alleges the defendants induced participation in their forex trading pool by falsely claiming to "guarantee" to repay participants the funds they contributed to their individual "Forex Savings Accounts" and falsely offered participants "with a 100% certainty" portions of the "substantial profit[s]" to be generated using participants' pooled funds to trade forex. Rather, as alleged in the complaint, the defendants knew or recklessly failed to appreciate that no forex trader can guarantee profitable trading, or the avoidance of losses required to guarantee all participants' contributions, and knew, but failed to inform participants that they had no U.S.-based forex trading accounts.  

On June 22, 2019, Customer A, an insurance customer, gave Israel a blank, signed check intended to be used to pay a policy premium. Israel instead made the check payable to himself, filled in the dollar amount of $3,229, and deposited the check into his own personal checking account. He did not submit the funds for Customer A's premium payment and instead used Customer A's money to pay for his own personal expenses. Customer A did not give Israel permission or authorization to use funds for personal use. Israel did not repay any of the funds to Customer A.

During Respondent's employment at RBC, the firm maintained its customer information within a dedicated system. Firm personnel, including registered representatives and sales assistants entered information into the system upon the opening of new accounts, and when customers wished to change or update information such as addresses. The information entered became a part of the customer's information and the firm's books and records. 

Respondent was authorized to enter information into this customer account system. Between August 2017 and April 2019, following the firm's upgrade of the system adding required fields for customer liabilities and trusted contact, on 16 occasions when updating a customer account profile, Respondent falsely entered "Less than $50,000" for the customer's liabilities and on 16 other occasions, she falsely entered "None or none available" for the customer's trusted contact. These 32 entries were false, in that they did not represent the customers' liabilities or trusted contacts, and each of the entries became part of the customers' account record in the firm's books and records. No customer losses resulted from these entries.

• Securities Industry Commentator
• Bill Singer