[F]rom at least January 2017 to October 2019, the firms' identity theft prevention programs did not include reasonable policies and procedures to identify relevant red flags of identity theft in connection with customer accounts or to incorporate those red flags into their programs. In addition, the SEC's orders find that the firms' programs did not include reasonable policies and procedures to respond appropriately to detected identity theft red flags, or to ensure that the programs were updated periodically to reflect changes in identity theft risks to customers.

. . .

JPMorgan: The JPMorgan order also finds that the firm failed to exercise appropriate and effective oversight of all service provider arrangements and failed to train staff to effectively implement one of its identify theft prevention programs in 2017. 

UBS: The UBS order also finds that the firm failed to periodically review new or existing types of customer accounts to determine whether and how its identity theft prevention program should apply to them; failed to adequately involve the board of directors in the oversight, development, implementation, and administration of the program; and failed to train its employees to effectively implement the program.

TradeStation: The TradeStation order also finds that the firm failed to adequately involve its board of directors in the oversight, development, implementation, and administration of its identity theft prevention program and failed to exercise appropriate and effective oversight of service provider arrangements.

The SEC's orders find that each firm violated Rule 201 of Regulation S-ID. Without admitting or denying the SEC's findings, each firm agreed to cease and desist from future violations of the charged provision, to be censured, and to pay the following penalties: JPMorgan: $1.2 million, UBS: $925,000, and TradeStation: $425,000.

[O]kunak directed the creation of, and in some cases approved for processing and payment, falsified purchase orders and invoices that purported to relate to services being performed for his employer, but in reality did not. As described in the complaint, the purchase orders and invoices were instead used to direct funds to companies in which Okunak had an interest, companies performing services for companies in which he had an interest, and to pay for his personal expenses. For example, Okunak allegedly used falsified purchase orders and invoices to direct $2.5 million to a company he owned, and directed $90,000 to a sports complex operator to pay for his suite license fee. According to the complaint, Okunak circumvented internal controls by submitting false certifications that failed to disclose his conflict of interest and his knowledge of improper payments. We allege that Okunak also circumvented controls related to the onboarding and payment of vendors.

[F]rom September 2020 through January 2022, Murray, formerly of North Canton, Ohio, solicited prospective investors in a Facebook group for current and former members of the Navy and offered securities in Deep Dive Strategies, LLC, a fund he controlled. In the unregistered offering, Murray, who was acting as an unregistered investment adviser, raised nearly $355,000 from approximately 44 investors in 14 states and told investors that the fund would invest in publicly traded securities. However, according to the complaint, Murray used a portion of the investor funds to trade options and misappropriated about $148,000 for his personal gain, including to gamble at a casino.

[F]rom approximately January to April 2020, Weitzberg and Gonzalez caused PASO to issue press releases and tweets that created the false impression that PASO was actively negotiating a merger with another entity. As alleged, Gonzalez, with Weitzberg's authorization, also promoted the fictional narrative of an upcoming merger by posting public letters falsely claiming that Gonzalez and a member of PASO's board of advisors purchased millions of PASO shares. The complaint alleges additional deceptive acts by Gonzalez, including impersonating a chiropractor to promote PASO on a radio talk show, and misleadingly posing as an unaffiliated investor-using a pseudonym-to post false and misleading statements promoting the merger and insider purchases on an Internet chat board.

[A]lthough Claimant 1 did not file a Form TCR within 30 days of first contacting the Commission, Claimant 1 satisfies Exchange Act Rule 21F-9(e) and is entitled to a waiver of this procedural requirement because the record reflects that Claimant 1 submitted a Form TCR within 30 days of learning of the TCR filing requirement and Claimant 1 otherwise unambiguously qualifies for an award.

. . .

[C]laimant 2's information did not lead to the success of the Covered Action because it was duplicative of information that staff had already learned prior to Claimant 2's submissions. None of the information provided by Claimant 2 helped the Enforcement staff (1) save time and resources, (2) recommend bringing additional charges, or (3) recommend bringing charges against any additional parties.

. . .

Claimant 3 has not shown what information (if any) Claimant 3 provided to the Federal Reserve, when Claimant 3 provided it, that it was the same information that Claimant 3 provided to the Commission and that Claimant 3 provided the information to the Commission within 120 days of providing it to the Federal Reserve. 

Moreover, as noted, Claimant 3 did not comply with the procedural requirements of Rule 21F-9 in Claimant 3'submissions of information to the Commission. Claimant 3 does not qualify for an automatic waiver of the TCR filing requirements under Rule 21F-9(e) because the record does not unambiguously demonstrate that Claimant 3 otherwise qualifies for an award. For all of these reasons, Rule 21F-4(b)(7) is not applicable to Claimant 3's award claim.

From at least in or about 2017 through in or about 2019, BIRNBAUM obtained more than $3 million in investments for Cash4Cases based on fraudulent misrepresentations.  These investments were in the form of promissory notes, titled "Investor Security Agreements" ("ISAs"), which purported to provide the relevant investors with a security interest in the recoveries associated with certain specified lawsuits that were ostensibly purchased by Cash4Cases.  In fact, in some instances, the lawsuits that were either never funded by Cash4Cases or BIRNBAUM had previously pledged their recoveries to other parties. 

To help carry out his fraud, BIRNBAUM directed an employee to falsify his company's books and records to make it appear that the recoveries from lawsuits that had already been paid out were still available to be pledged as collateral to new investors.

BIRNBAUM also misappropriated a substantial portion of investors' funds for his personal use and to make promised payments to earlier investors in Ponzi-like manner.  As one example, BIRNBAUM obtained a $1 million investment for Cash4Cases in September 2019.  Prior to this investment, BIRNBAUM told the investor that Cash4Cases would use the money exclusively for advances to litigants.  However, contrary to this representation, BIRNBAUM used the money to make a $530,000 down payment on the purchase of a house and to pay for other personal expenses and Ponzi-like payments to earlier investors.

Smith managed and owned two Hollywood-based production companies, Hoplite Entertainment Inc., and Hoplite Inc. To convince a private lender to fund a $2 million loan in 2020, Smith falsely represented that his two companies had accounts receivable of $3,348,000, and he submitted falsified license agreements and other forgeries to back up the claim.

Based on these and other misrepresentations, the victim lender agreed to the loan and, on September 30, 2020, transferred $1,951,416 to a Hoplite Entertainment bank account.

To convince the private lender to give him additional time to repay the loan, court documents state, Smith falsely represented that payment was imminent. He also emailed a fake record showing a $100,000 wire payment from Hoplite, Inc. to the lender. In fact, the loan was never repaid.

[F]rom January 2016 to March 2021, Talsma defrauded Amazon by using the internet to create numerous Amazon accounts and email accounts to rent textbooks and sell the textbooks for a profit when he should have returned the textbooks or paid the agreed upon buy-out price.  Talsma caused Amazon to ship the textbooks through the United States Postal Service or across state lines using private commercial carriers.  He concealed his fraudulent activities in part by recruiting and paying unwitting individuals to accept shipments of stolen textbooks at their homes so that Amazon would not detect a pattern of large volumes of books going to locations associated with him.  Over time, Talsma taught some of these same individuals his scheme to defraud and actively supervised their participation in the fraud.  Defendant shared the profits of the fraud scheme with these individuals after he sold the textbooks over the internet and at various bookstores, including a bookstore in Kalamazoo, Michigan.  Additionally, according to the plea agreement, Talsma also ordered rental textbooks in the names of unwitting individuals and then pretended to be those individuals when calling Amazon and falsely claiming that he did not receive the textbooks.  Talsma then received a credit from Amazon that he used to order additional textbooks.  The fraud scheme caused losses to Amazon well in excess of $3,000,000.00.           

From at least in or about 2017 until at least in or about 2018, RAQUEL MOURA BORGES represented to Victim-1 that she was making financial investments, including a private placement investment in a particular Brazilian company, on Victim-1's behalf.  In or about December 2017, over the course of three transactions, BORGES caused approximately $2.7 million to be transferred from Victim-1's account to accounts controlled by BORGES. Contrary to the representations made by BORGES to Victim-1 and in violation of the duties she owed Victim-1, none of the $2.7 million was actually invested on Victim-1's behalf.  Instead, BORGES diverted the money to others and spent approximately $160,000 on interior design fees for an apartment in Manhattan, New York that BORGES owned and used personally.  To conceal her misappropriation of Victim-1's funds, in or about June 2018, BORGES sent Victim-1 a fake bank statement that falsely reflected a transfer of $2.7 million for the purpose of a "private placement purchase." 

From at least in or about 2016 until at least in or about 2017, BORGES represented to Victim-2 that she was making financial investments on Victim-2's behalf.  In or about August 2016, BORGES caused approximately $1.95 million to be transferred from Victim-2's account to a GAIA account controlled by BORGES (the "GAIA Account").  The purported reason for the transfer was an investment in real estate in New York.  Contrary to the representations made by BORGES to Victim-2, and in violation of the duties she owed Victim-2, none of the $1.95 million was actually invested on Victim-2's behalf.  Instead, on or about August 23, 2016, the same date that the $1.95 million wire from Victim-2's account arrived in the GAIA Account, BORGES signed a check drawn on the GAIA Account in the amount of $1,500,000 payable to herself (the "$1.5M Check").  The "For" line of the $1.5M Check read "RB's new house."  Also on or about August 23, 2016, BORGES caused the $1.5M Check to be deposited into her personal account. 

In or about October 2017, in a meeting with a family member of Victim-2 and in a subsequent e-mail communication, BORGES admitted, in substance and relevant part, that she had misappropriated Victim-2's money. Among other things, BORGES stated, in sum and substance, that BORGES had used Victim-2's money to cover other clients' losses and that BORGES would find a way to pay back Victim-2. 

Under the proposed consent order, which is subject to court approval and was filed in conjunction with a complaint today in the U.S. District Court for the Eastern District of Pennsylvania, Trident has agreed to invest over $20 million to increase credit opportunities in neighborhoods of color in the Philadelphia metropolitan area. Trident will invest at least: $18.4 million in a loan subsidy fund for residents of neighborhoods of color in the Philadelphia metropolitan area; $750,000 for development of community partnerships to provide services that increase access to residential mortgage credit; $875,000 for advertising and outreach; and $375,000 for consumer financial education. Because Trident no longer operates a lending business, it will contract with another lender to provide loan subsidies and services to the "redlined" communities. Trident will ensure that the lender employs at least four mortgage loan officers dedicated to serving neighborhoods of color in and around Philadelphia, Camden, and Wilmington; maintains at least four office locations in those neighborhoods; and employs a full-time manager of community lending who will oversee the continued development of lending in neighborhoods of color in the Philadelphia metropolitan area. Trident will also pay a civil money penalty of $4 million.

Trident has also entered into agreements with Pennsylvania, New Jersey, and Delaware. Those agreements resolve allegations against both Trident and Fox & Roach LP, a real estate affiliate of Trident. In addition to the settlement terms included in the federal consent order, under the agreements with Pennsylvania and New Jersey, Trident will reimburse the states for costs incurred in conducting the investigations. Fox & Roach will also invest $150,000 in marketing to communities of color in the Philadelphia metropolitan area.

ETS was a card processing company located in Virginia that provided equipment and services to facilitate credit and debit card payment transactions for merchant clients, including government municipalities, private businesses, and charity organizations throughout the country.  According to the indictment, between 2012 and 2019, the defendants, at the direction of ETS president Ed Vaughan, are alleged to have defrauded ETS merchant clients by deliberately disguising a portion of their processing fees for thousands of clients.  The indictment describes how the defendants executed their fraud, including by embedding the hidden markups in "Interchange fees," misleading merchant clients in emails and contracts, and failing to disclose the true fee structure in billing and account statements. 

The indictment also details how Vaughan and Akkad used the fraudulently obtained funds to personally enrich themselves through multimillion-dollar bonuses, luxury vehicles and private aircraft, and high-end real estate purchases.  In addition, because the fraud was concealed prior to ETS' acquisition, Vaughan received an additional $107 million, and Akkad received $33 million from the sale of the company. 

[U]meh participated in a series of online scams - including romance, advance fee and business email compromise (BEC) schemes - designed to defraud victims into sending money to accounts controlled by him and his co-conspirators. Romance scams occur when a criminal adopts a fake online identity to gain a victim's affection and trust. The scammer then uses the illusion of a romantic or close relationship to manipulate and/or steal from the victim. Advance fee scams occur when a criminal asks a victim to pay a fee up front-usually described as a fee, tax, or commission-in order to obtain a bigger payout later, but that payout never occurs. BEC schemes occur when a criminal sends email messages that appear to come from a known source (e.g., "spoofing" a legitimate business email account) to cause victims to transfer funds to accounts controlled by the scammers.

It is alleged that Umeh used fake passports in the names of numerous aliases to open bank accounts in and round Boston to collect and launder the proceeds of the online scams. Umeh and co-conspirators then rapidly executed large cash withdrawals from those accounts, often within days of the deposit and generally structured in amounts less than $10,000, allegedly in an effort to evade detection and currency transaction reporting requirements. 

[H]aywood is a District of Columbia-based financial services professional who managed investments on behalf of his family and friends. On Jan. 22, 2020, at approximately 9 a.m., Neurotrope, a clinical-stage biopharmaceutical company (now known as Synaptogenix) announced that it was being awarded a $2.7 million grant from the National Institutes of Health following positive clinical trial results for a medicine for the treatment of Alzheimer's disease. This resulted in an increase of its stock price to a high of $3.85 per share.

Later that day, at approximately 12:50 p.m., Haywood spoke to a representative of Neurotrope by telephone. The person offered to share material non-public information relating to Neurotrope with Haywood so long as Haywood agreed not to execute or attempt to execute any stock trades with the information. Haywood agreed to receive material non-public information, subject to these conditions. The representative then informed Haywood that Neurotrope would issue a registered direct offering later that day and invited him to participate in it. The offering was expected to cause Neurotrope's stock price to fall.

Immediately after receiving material non-public information, Haywood sold or attempted to sell shares of Neurotrope worth over $328,701.16, despite having agreed to receive the information, and not to execute or attempt to execute any stock trade with it. Based on the daily closing price of $1.42 per share, Haywood avoided a loss of at least $179,297.18 on the sale of those shares between the time he received the material non-public information, and the time the registered direct offering was announced to the public.

In April 2019, Green and four other individuals formed an entity (Company A) for the purpose of pooling their funds to invest. Green and the four other individuals were the sole shareholders of Company A. Although he did not contribute any funds to Company A, Green served as a director of Company A and as its president. Company A's shareholders, including Green, expected to receive a return from Company A's investment. In April 2019, Green attended a meeting with the other Company A shareholders, and they agreed to wire $350,000 to an asset manager to invest. Company A and the asset manager entered into a Management and Deposit Agreement, dated April 22, 2019, pursuant to which Company A agreed to provide the funds to the asset manager's escrow agent, and the asset manager agreed to place Company A's funds, once released from escrow, "into one or more asset enhancement transactions." Green conducted due diligence on the asset manager, opened Company A's bank account, and facilitated the $350,000 wire from Company A to the asset manager's escrow agent. The asset manager subsequently filed for bankruptcy in 2021. 

Green did not provide prior written notice to his firm before engaging in the above-described business activity with Company A. Therefore, Green violated FINRA Rules 3270 and 2010. 

In April 2019, Baraker and four other individuals formed an entity (Company A) for the purpose of pooling their funds to invest. Baraker and the four other individuals were the sole shareholders of Company A. Baraker, as the managing member of a personal limited liability company (Company B), signed Company A's shareholder agreement.² Although he did not contribute any funds to Company A, Baraker served as a director and the treasurer of Company A. Company A's shareholders, including Baraker, expected to receive a return from Company A's investment.

In April 2019, Baraker attended a meeting with the other Company A sharebolders, and they agreed to wire $350,000 to an asset manager to invest. Company A and the asset manager entered into a Management and Deposit Agreement. dated April 22, 2019, pursuant to which the asset manager agreed to place Company A's funds "into one or more asset enhancement transactions." Baraker, on behalf of Company A. signed the Management and Deposit Agreement and an escrow agreement with the asset manager. Baraker also conducted due diligence on the asset manager, opened Company A's bank account, and facilitated the $350,000 wire from Company A to the asset manager's escrow agent. The asset manager subsequently filed for bankruptcy in 2021.

Baraker did not provide prior written notice to his firm before engaging in the above-described business activities with Company A or Company B. Therefore, Baraker violated FINRA Rules 3270 and 2010. 
= = = = =
Footnote 2: Although Baraker formed Company B in 2015, it was not active until April 2019 when Baraker used Company B to facilitate his participation in the transactions involving Company A.

In April 2019, Vial and four other individuals formed an entity (Company A) for the purpose of pooling their own funds to invest. Vial, as the president of a personally owned corporation (Company B), signed Company A's shareholder agreement. 2 Vial and the four other individuals were the sole shareholders of Company A. Vial served as a director of Company A and as its corporate secretaiy. Company A's shareholders, including Vial, expected to receive a return from Company A's investment. 
In April 2019, Vial attended a meeting with the other Company A shareholders, and they agreed to wire $350,000 to an asset manager to invest, with Vial contributing a portion of that amount through Company B. Vial also conducted due diligence on the asset manager. Company A and the asset manager entered into a Management and Deposit Agreement, dated April 22, 2019, pursuant to which Company A agreed to provide the funds to the asset manager's escrow agent, and the asset manager agreed to place Company A's funds, once released from escrow, "into one or more asset enhancement transactions." The asset manager subsequently filed for bankruptcy in 2021. 

Vial did not provide prior written notice to his firm before engaging in the above-described business activities with Company A and Company B. Therefore, Vial violated FINRA Rules 3270 and 2010.
= = = = =
Footnote 2: Although Vial formed Company B in June 2018, it was not active until April 2019 when Vial used Company B to facilitate his participation in the transactions involving Company A and the asset manager. Furthermore, Vial disclosed Company B in writing to his firm in January 2019, but the disclosure was not updated in April 2019 to specifically include Company B's participation in the transactions involving Company A. 

From October 2017 to August 2018, Hogan participated in five private securities transactions in Asia-based funds by three Merrill Lynch customers, who invested a total of $630,000 in the funds. Hogan participated in the transactions by soliciting the investments from the customers and directing his assistants to process the investment documentation. Specifically, in October 2017, Hogan solicited Customer A to invest approximately $220,000 in a Hong Kong equity fund and solicited Customer B to invest approximately $110,000 in the same fund. Between June and August 2018, Hogan solicited Customer C to invest a total of $300,000, in three separate transactions, in a Vietnam equity fund. Merrill Lynch did not offer these funds for investment by customers, and the customers' investments were not custodied with the firm. 

In December 2018, Hogan disclosed, on the firm's AIM system, that he had personally invested in the Hong Kong equity fund but attested that he had not co-invested with customers or solicited others in connection with the investment. Contrary to this representation, Customers A and B had invested in the same fund, based upon Hogan's recommendation, prior to Hogan's AIM disclosure. Hogan did not provide written notice to Merrill Lynch prior to participating in private securities transactions by Customers A and B in the Hong Kong equity fund or by Customer C in the Vietnam equity fund.

Therefore, Hogan violated FINRA Rules 3280 and 2010.

On January 7, 2020, while associated with Charles Schwab, Young was indicted by a Maricopa County, Arizona grand jury for three felonies: one count of aggravated assault and two counts of endangerment. Young received written notice of the indictment on March 17, 2020. Young willfully failed to amend his Form U4 to disclose the felony charges against him within 30 days as required. On July 12, 2021, Young pled guilty to a felony charge, which rendered him statutorily disqualified from associating with a member firm. Young was required, but willfully failed to amend his Form U4 to disclose the felony guilty plea against him within 10 days, or by July 22, 2021. In fact, Young amended his Form U4 to disclose the felony conviction and the previous three felony charges when he resigned from Charles Schwab on July 26, 2021, four days after the deadline for disclosing the felony conviction and over a year after the deadline for disclosing the felony charges. The felony charges and guilty plea were material facts that an employer or customer would want to know about a representative. Additionally, Young falsely stated on two annual compliance questionnaires that he had not been charged with any felonies. By virtue of the foregoing, Young violated Article V, Section 2(c) of FINRA's By-Laws and FINRA Rules 1122 and 2010.

Respondent understands that this settlement includes a finding that he willfully misrepresented a material fact on a Form U4, and that under Section 3(a)(39)(F) of the Securities Exchange Act of 1934 and Article III, Section 4 of FINRA's By-Laws, this misrepresentation makes him subject to a statutory disqualification with respect to association with a member.