The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
March 21, 2022
FINRA Bars JP Morgan Securities Rep Over Chase Bank Credit Card Charges (BrokeAndBroker.com Blog)
http://www.brokeandbroker.com/6349/finra-awc-jpm/
Sometimes, something just doesn't sit right with you. You know what I'm saying, right? It's one of those things where you completely understand and agree with a regulator's actions, but . . . and it's that "but" that gives you pause. In today's blog, we have one of those "but" moments.
https://www.justice.gov/usao-sdny/pr/president-sham-united-nations-affiliate-convicted-cryptocurrency-scheme
Asa Saint Clair a/k/a "Asa Williams" a/k/a "Asa Sinclair," 49, was convicted after a one-week jury trial in the United States District Court for the Southern District of New York of one count of wire fraud. As alleged in part in the DOJ Release:
The defendant was charged and convicted in one count with committing wire fraud, in violation of Title 18, United States Code, Section 1343, from in or around November 2017, through in or around September 2019. SAINT CLAIR solicited investors for the launch of IGObit through promised investment returns, representations that the World Sports Alliance, a purported intergovernmental organization, was a close affiliate and partner with the United Nations, and representations about the World Sport Alliance's development projects around the world. World Sports Alliance did not in fact have any relationship with the United Nations and did not, and had not, participated in any international development projects.SAINT CLAIR also represented to investors that their money would be used for the development of IGObit, when he in fact diverted those funds to other entities controlled by him and members of his family, as well as to pay his personal expenses, including dinners at Manhattan restaurants, travel, and online shopping.SAINT CLAIR defrauded more than 60 victims of hundreds of thousands of dollars.
Order Determining Whistleblower Award Claims ('34 Act Release No. 34-94458; Whistleblower Award Proc. File No. 2022-41)
https://www.sec.gov/rules/other/2022/34-94458.pdf
The SEC's Claims Review Staff ("CRS") issued a Preliminary Determination recommending an Award of about $1.5 million to Claimant 1. The SEC adopted CRS' recommendation. The Order asserts that:
[C]laimant provided information which prompted Commission staff to commence an examination and then open an investigation into potential securities laws violations and that the charges brought in the Covered Action were based in part upon Claimant's information. Claimant also assisted the staff during the course of the investigation.
Order Determining Whistleblower Award Claims ('34 Act Release No. 34-94459; Whistleblower Award Proc. File No. 2022-42)
https://www.sec.gov/rules/other/2022/34-94459.pdf
The SEC's Claims Review Staff ("CRS") issued a Preliminary Determination recommending an Award of over $1 million to Claimant 1. The SEC adopted CRS' recommendation. The Order asserts that:
[C]laimant's information prompted the opening of the investigation and saved Commission time and resources. Thereafter, Claimant, an insider who also reported internally, provided continuing assistance, including participating in multiples interviews with Commission staff
Order Determining Whistleblower Award Claims ('34 Act Release No. 34-94460; Whistleblower Award Proc. File No. 2022-43)
https://www.sec.gov/rules/other/2022/34-94460.pdf
The SEC's Claims Review Staff ("CRS") issued a Preliminary Determination recommending an Award of over $400,000 to Claimant 1. The SEC adopted CRS' recommendation. The Order asserts that:
[C]laimant internally Redacted Redacted reported his/her concerns, causing the company to cease the conduct, that Claimant submitted a detailed tip that prompted the opening of the investigation, that Claimant met with the Enforcement staff and provided supplemental information and continuing assistance throughout the investigation, and that the charges in the Covered Action bear a close nexus to the Claimant's allegations.
Order Determining Whistleblower Award Claims ('34 Act Release No. 34-94461; Whistleblower Award Proc. File No. 2022-44)
https://www.sec.gov/rules/other/2022/34-94461.pdf
The SEC's Claims Review Staff ("CRS") issued a Preliminary Determination recommending an Award of over $60,000 to Claimant 1. The SEC adopted CRS' recommendation. The Order asserts that:
[(1)] Claimant provided important, new information in the form of documents and analysis that assisted the Commission's investigation; (2) certain charges in the Covered Action were based on Claimant's information; and (3) there was substantial law enforcement interest in the information provided, as it related to proving fraud that harmed investors.
https://www.finra.org/sites/default/files/fda_documents/2019061764701
%20Geneos%20Wealth%20Management%2C%20Inc.%20CRD%20120894%20AWC%20jlg.pdf
%20Geneos%20Wealth%20Management%2C%20Inc.%20CRD%20120894%20AWC%20jlg.pdf
For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Geneos Wealth Management, Inc. submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Geneos Wealth Management, Inc. has been a FINRA member firm since 2002 with about 340 registered representatives at 180 branches. In accordance with the terms of the AWC, FINRA imposed upon the firm a Censure, $150,000 fine, $250,710.41 plus interest in restitution, and an undertaking to certify compliance with the cited alternative mutual funds issues. As alleged in part in the "Overview' portion of the AWC [Ed: footnotes omitted]:
Bill Singer's Comment: Simply stated, it's just not possible for a regulator -- any regulator -- to draft a better crafted explanation of an investigation, findings, charges, and rationale of sanctions. Uncharacteristically, I am in awe of something published by FINRA. For industry professionals, if you read this AWC, you will come away informed for the effort and you may actually gain some insights as to how to better supervise the cited compliance issues. Great job!!!Between November 9, 2016, and February 6, 2018, Geneos failed to reasonably supervise representatives' recommendations of an alternative mutual fund-the LJM Preservation & Growth Fund (LJM). Geneos permitted the sale of LJM on its platform without having procedures reasonably designed to ensure that the firm and its representatives had a sufficient understanding of its risks and features, including the fact that the fund pursued a risky strategy that relied, in part, on purchasing uncovered options. Geneos also lacked a reasonable supervisory system to review representatives' LJM recommendations. Geneos representatives sold more than $2.5 million in LJM to customers. LJM's value dropped 80% during an extreme volatility event in February 2018 and the fund ultimately liquidated and closed, resulting in losses for Geneos customers. By virtue of the foregoing, Geneos violated FINRA Rules 3110 and 2010.Between April 27, 2018 and June 26, 2018, Geneos negligently omitted to tell three investors in an offering related to GPB Capital Holdings, LLC (GPB Capital) that the issuer failed to timely make required filings with the Securities and Exchange Commission, including filing audited financial statements. By virtue of the foregoing, Geneos violated FINRA Rule 2010.