Securities Industry Commentator by Bill Singer Esq

Guest Blog: Fair Credit Reporting Act (FCRA) and Regulation S-P by Regulated or Aggrieved (BrokeAndBroker.com Blog)

Statement on the Order Granting Temporary Conditional Exemptive Relief from Certain Requirements of the National Market System Plan Governing the Consolidated Audit Trail by SEC Commissioner Hester M. Peirce

SEC Denies Award To Whistleblower Claimant

Order Determining Whistleblower Award Claims

SEC Denies Award To Whistleblower Claimant

Order Determining Whistleblower Award Claims

2021 TSSB Emergency Order Dismissed and Set Aside

In the Matter of Whiskey & Wealth Club Limited a/k/a Whiskey & Wealth Club a/k/a Whisky & Wealth Club; Scott Sciberras; William Fielding; Alex Mook; Richard Falconer; and Benjamin Dunlop (Texas State Securities Board Agreed Order)

FINRA Fines and Suspends Rep for Insurance OBA

In the Matter of Michael Ohlemacher, Respondent (FINRA AWC)

FINRA Arbitrators Award RBC Wealth Mgmt Over $1.4 Million Promissory Notes Breach Case

In the Matter of the Arbitration Between RBC Wealth Management, a division of RBC Capital Markets, LLC, v. David William Weigel, Respondent, v. John Bernard Moran, Third-Party Respondent (FINRA Arbitration Award )

I support granting temporary exemptive relief for certain provisions of the consolidated audit trail ("CAT"). The CAT, a project designed to give the Securities and Exchange Commission and other regulators comprehensive market insight, has proved much harder and more expensive to implement than anyone anticipated. I have grave concerns about the whole project. The dollars, distraction, dissension, and drain of endless meetings over the past several years of CAT implementation are reasons enough to reconsider the entire project; the risks to liberty and security posed by the project should compel us to do so.

With respect to liberty, I plead with my fellow Americans to care about your financial privacy. Why should the government, without any indication of wrongdoing on your part, follow you around the securities markets to monitor every order you place and every trade you make? With respect to security, I plead with my fellow regulators to rethink the wisdom of creating a massive database of information that hackers may try to exploit for their nefarious ends. Given these concerns, my preference would be to see the project placed in the SEC's catacombs-dead and buried forever.

Nevertheless, the CAT lives on, so I support granting additional time to resolve a number of implementation issues, which is what today's order does.

[T]he CRS concluded that Claimant's information did not either (1) cause the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant's information, pursuant to Rule 21F-4(c)(1); or (2) significantly contribute to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The CRS determined that the investigation that led to the Covered Action was opened and pursued as a result of referrals from another regulatory agency (the "Other Agency"). The CRS also determined that Claimant's information did not significantly contribute to the Covered Action and consisted primarily of publicly available information, information already known to the staff, or information that was otherwise vague and unsubstantiated. 

The CRS also concluded that Claimant did not qualify for an award because Claimant's information was provided before July 21, 2010, the date of the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), and thus did not constitute original information within the meaning of Section 21F(b)(l) of the Exchange Act and Rules 21F-3(a)(2) and 21F-4(b)(1)(iv) thereunder. The CRS determined that Claimant's whistleblower application was based on emails sent to the Commission and other agencies beginning in Redacted The record before the CRS demonstrated that Claimant's information provided to the Commission after July 21, 2010 was already known to the staff, publicly available, or contained general or vague allegations of wrongdoing that were unsubstantiated and did not lead to the success of the Covered Action under Rule 21F-4(c)(2) of the Exchange Act.

[R]ule 21F-9(a) requires a whistleblower to submit information through the Commission's online Tips, Complaint, or Referral ("TCR") portal, or by mailing or faxing a Form TCR to the Commission's Office of the Whistleblower. Claimant's whistleblower application stated that Claimant submitted information to the Commission by email on or about Redacted but Claimant did not cite to any specific TCR submission. The CRS concluded that Claimant did not submit any information pursuant to these procedures until Redacted 

The CRS also concluded that Claimant did not qualify for an award because Claimant did not provide information to the Commission that led to the successful enforcement of the Covered Action. The CRS concluded that none of the information submitted by Claimant either (1) caused the Commission to (a) commence an examination, open or reopen an investigation, or inquire into different conduct as part of a current Commission examination or investigation, and (b) thereafter bring an action based, in whole or in part, on conduct that was the subject of claimant's information, pursuant to Rule 21F-4(c)(1); or (2) significantly contributed to the success of a Commission judicial or administrative enforcement action under Rule 21F-4(c)(2) of the Exchange Act. The record demonstrated that Enforcement staff opened the investigation that led to the Covered Action (the "Investigation") on Redacted based upon a source other than the Claimant, that Claimant submitted his/her Form TCR almost three years after the Investigation was opened, and that staff responsible for the Investigation confirmed that Claimant's information was not used in the Investigation or the resulting litigated enforcement action in any way.

Risky Whiskey - Securities Commissioner Stops International Investment Scheme (TSSB Release)

https://www.ssb.texas.gov/news-publications/risky-whiskey-securities-commissioner-stops-international-investment-scheme

The Texas State Securities Board entered an emergency cease and desist order https://www.ssb.texas.gov/sites/default/files/2021-11/ENF_21_CDO_1853.pdf

to stop an allegedly illegal international whiskey investment scheme purportedly advertised by Whiskey & Wealth Club Limited. Also named in the Order are Scott Sciberras, a Co-Founder, Director and CEO; William Fielding, a Co-Founder, Director and COO; Alex Mook, a Wealth Manager; Richard Falconer, a Wealth Advisor; and Benjamin Dunlop, a Senior Wealth Manager. As alleged in part in the TSSB Release:

[W]hiskey & Wealth Club is advertising the scheme through the internet - using a website, and promoting advertisements published in Reddit, and social media platforms such as Facebook, YouTube, Instagram, and LinkedIn. It is also allegedly using other media to bolster its legitimacy, including various press releases and articles published in Forbes, Bloomberg, Yahoo Finance and Fox Business News. The pitch is simple: whiskey improves with age and investing in whiskey improves returns over time. Investors purchase casks of whiskey from foreign distilleries, store the whiskey in overseas facilities and then sell the whiskey for a profit. Whiskey & Wealth Club is touting the returns - claiming investors can earn between 12 and 20 percent annualized returns if investors hold their whiskey for at least three years and preferably five to 10 years. Whiskey & Wealth Club purportedly provides discounted brokerage services, permitting investors to liquidate their whiskey for a below-market fee. Although Whiskey & Wealth Club is reportedly touting the profits it earns after three years or longer, there's a problem: according to the order, Whiskey & Wealth Club has been incorporated for less than three years. Moreover, according to Companies House, the UK registrar for corporations, Whiskey & Wealth Club's corporate accounts are also overdue.

13. Respondent Whiskey & Wealth Club, representing its commitment to complying with the law and as a measure of good faith, has executed an Undertaking, which shall be deemed filed contemporaneously with the execution and entry of this Agreed Order and is hereby fully incorporated within this Agreed Order.

14. As described within the Undertaking, Respondent Whiskey & Wealth Club is committed to reviewing its marketing materials and purchase contracts. 

Ohlemacher sold insurance products primarily through WSLIC, the firm's insurance affiliate. Firm policy allowed Ohlemacher to refer clients to insurance companies not affiliated with WSLIC for certain insurance products not offered by WSLIC, and to receive compensation for such referrals, provided he sought and received prior written permission from both W&S Brokerage and WSLIC. From 2012 through 2020, Ohlemacher engaged in an outside business activity where he referred at least eighty individuals - both W&S Brokerage clients and non-clients - to an insurance company not affiliated with WSLIC, earning over $94,000 in commissions. Ohlemacher never disclosed this outside business activity in writing to W&S Brokerage or WSLIC, nor did he receive firm approval for it. In addition, during the relevant period, Ohlemacher falsely attested on five annual compliance questionnaires that he had disclosed all outside business activities. 

Thxerefore, Ohlemacher violated FINRA Rules 3270 and 2010.

• Securities Industry Commentator
• Bill Singer