FINRA Doesn't Bank On It When It Comes To Wife Of Former UBS Employee (BrokeAndBroker.com Blog)
https://www.brokeandbroker.com/6961/finra-ubs-motherway/
A former UBS rep sued his former UBS investment adviser brokerage firm. Also, the former rep sued UBS Bank. The Bank didn't file an Answer or appear in the proceedings, and the arbitrators declined to make any determination against the Bank. When it came time for the former UBS rep to pay the arbitration Award rendered against him, FINRA pointed a finger at his wife's finances when he argued that he had an inability to pay the arbitration award. Depending on your view, that's an odd consistency or inconsistency.

Foreign National Sentenced for Victimizing U.S. Persons Through Cyber-Enabled Fraud Schemes (DOJ Release)
https://www.justice.gov/opa/pr/foreign-national-sentenced-victimizing-us-persons-through-cyber-enabled-fraud-schemes
In the United States District Court for the District of Arizona Solomon Ekunke Okpe, 31, was sentenced to four years and one month in prison after pleading guilty to pleaded guilty to conspiracy to commit wire, bank, and mail fraud. Previously, co-conspirator Johnson Uke Obogo was sentenced to one year and one day in prison. As alleged in part in the DOJ Release:

[B]etween December 2011 and January 2017, Solomon Ekunke Okpe, 31, of Lagos, and his co-conspirators devised and executed business email compromise (BEC), work-from-home, check-cashing, romance, and credit card scams that targeted unsuspecting individuals, banks, and businesses in the United States and elsewhere, and were intended to cause more than a million dollars in losses to U.S. victims. Among the victims of the scheme were First American Holding Company and MidFirst Bank. 

To execute the scheme, Okpe and his co-conspirators launched email phishing attacks to steal victim login credentials and other sensitive information, hacked into victim online accounts, impersonated people, and assumed fake identities to defraud individuals, banks, and businesses, and trafficked, possessed, and used stolen credit cards in furtherance of the scheme. For instance, in BEC scams, Okpe and his co-conspirators posed as trusted individuals in order to deceive banks and companies into making unauthorized wire transfers to bank accounts specified by the co-conspirators. The co-conspirators also falsely posed as online employers on job websites and forums and purported to “hire” individuals in Arizona and elsewhere to positions that were marketed as legitimate. In reality, these work-from-home “employees” were often unwittingly directed to perform tasks that would facilitate the co-conspirators’ fraud schemes. Some of these tasks included creating bank and payment processing accounts, transferring/withdrawing money from these accounts, or cashing/depositing counterfeit checks. 

Okpe and his co-conspirators additionally conducted romance scams by creating accounts on dating websites, feigning interest in romantic relationships with individuals under fictitious identities, and causing these victims to transfer their moneys overseas and/or receive money from wire-transfer scams. Okpe caused and intended to cause individual romance scam victims to suffer tens of thousands of dollars of losses.

Okpe was previously arrested in Malaysia at the request of the United States and detained for over two years as he contested extradition to the United States. 

Queens Investment Advisor Indicted for Multi-Million Dollar Securities Fraud Scheme / Victim Gave the Defendant More than $4 Million to Purchase Securities Which He Used to Pay Personal Expenses and for Day Trading (DOJ Release)
https://www.justice.gov/usao-edny/pr/queens-investment-advisor-indicted-multi-million-dollar-securities-fraud-scheme
-and-
SEC Obtains Emergency Relief Against Long Island Investment Adviser and Firm Charged with Fraud (SEC Release)
https://www.sec.gov/news/press-release/2023-62

In the United States District Court for the Eastern District of New York, a 16-count Indictment was filed charing Janues Capital, Inc.'s Founder/Executive Director Surage Roshan Perera was charged with securities fraud, investment advisor fraud, wire fraud, and money laundering. https://www.justice.gov/d9/2023-03/perera.indictment.pdf. As alleged in part in the DOJ Release:

[B]etween February 2022 and March 2023, Perera contacted Jane Doe via telephone calls, emails and text messages to solicit her to purchase stock in companies that traded on the NASDAQ and NYSE, in exchange for a fee.  Perera falsely told Jane Doe that he had relationships with large institutions, and could purchase shares of those publicly-traded companies at discounted prices.  The defendant also told Jane Doe that her investment was a low risk venture and he would use her investment capital to purchase shares in those public-traded companies.  As a result, Jane Doe gave Perera more than $4.2 million.  However, instead of investing Jane Doe’s money in those securities, Perera misappropriated those funds by, among other things: (1) paying redemptions to Jane Doe, (2) paying personal expenses, and (3) funding his day trading.  To conceal his fraudulent scheme, Perera sent fraudulent confirmation notices and account statements to Jane Doe.

In the United States District Court for the Eastern District of New York, the SEC filed a Complaint charging Janues Capital, Inc. and the firm's former broker Surage Roshan Perera with violating antifraud provisions of the federal securities laws; and, further, charging Perera with aiding and abetting Janues’ alleged violations.
https://www.sec.gov/litigation/complaints/2023/comp-pr2023-62.pdf The Complaint names Relief Defendant Nishani Alahakoon. The Court granted emergency relief including a temporary restraining order and an asset freeze. As alleged in part in the DOJ Release:

[F]rom February 2022 until March 2023, Perera, a Long Island, NY resident, falsely told an investor, not named in the complaint, that Janues had access to specific restricted securities at discounted prices though connections with large, institutional investors. He allegedly claimed to also exercise a trading strategy, which he referred to as ‘Options Straddles,’ that would not only prevent any trading losses but also guarantee returns on some of the investments of up to 9 percent with the potential for returns of 50 percent. According to the complaint, Perera and Janues misappropriated at least $3.5 million of the investor’s funds to engage in highly speculative and leveraged trading. In total, Perera engaged in more than $2.5 billion in securities transactions, with nearly $3 million in trading losses. Perera then allegedly concealed the misappropriation and losses by providing the investor with phony confirmations and account statements that falsely showed the expected returns. The complaint also alleges that Perera further attempted to hide the losses by using funds received from other sources to make Ponzi-like payments to the investor.

SEC Charges Texas Resident with Orchestrating Three Separate Schemes Defrauding Investors Out of Over $8.4 Million (SEC Release)
https://www.sec.gov/litigation/litreleases/2023/lr25677.htm
In the United States District Court for the Northern District of Texas, the SEC fled a Complaint charging Aaron Cain McKnight and others with allegedly orchestrating investment schemes that defrauded at least 28 investors. As alleged in part in the SEC Release:

[B]etween March 2018 and September 2021, McKnight ran three schemes that, while separate, followed a similar pattern. In each scheme, McKnight allegedly portrayed himself as an experienced professional controlling financial services firms, through which he offered investment opportunities that promised extraordinary returns but that, in reality, did not exist. Using his fabricated credentials, he allegedly raised funds from numerous investors only to then use the investors' money for non-investment purposes, including personal expenses, operation of his outside business, and/or Ponzi-like payments to earlier investors.

The SEC further alleges that lawyer Kenneth Miller and his law firm, Frost & Miller, LLP ("F&M"), substantially assisted McKnight's first scheme by receiving and immediately distributing over $2 million of investor funds at McKnight's direction. According to the SEC, Miller and F&M provided this assistance despite not having a clear understanding of why the funds were sent to F&M, who the funds had come from or were going to, or what function the investors expected F&M to serve.

The SEC's complaint, filed in Texas federal court, charges McKnight and two entities he employed in one of the schemes, BPM Global Investments, LLC ("BPM Global") and BPM Asset Management, LLC ("BPMAM"), with violating various antifraud provisions of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 thereunder. The complaint also charges Sherry Rebekka Sims, Harmony Brooke McKnight, Miller, and F&M with aiding and abetting certain of these violations, and names Timothy Neher and his company, Accelerated Venture Partners, LLC, as relief defendants. Additionally, the complaint charges McKnight and Harmony McKnight as control persons under Section 20(a) of the Exchange Act for the violations of BPM Global and BPMAM. The SEC's complaint seeks permanent injunctions, including conduct-based injunctions, disgorgement of ill-gotten gains, civil penalties, and officer and director bars.

Without admitting or denying the SEC's allegations, Sims consented to a bifurcated settlement, agreeing to the entry of a final judgment that, among other things, permanently enjoins her from violating the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, and from soliciting, or issuing guarantees in connection with, the purchase or sale of securities. Civil penalties will be determined by the court at a later date upon motion of the Commission.

SEC Denies Whistleblower Award to Claimant
Order Determining Whistleblower Award Claim ('34 Act Release No. 34-97205; Whistleblower Award Proc. File No. 2023-43)
https://www.sec.gov/rules/other/2023/34-97205.pdf
The Office of the Whistleblower ("OWB") issued a Preliminary Determination Disposition recommending the denial of a Whistleblower Award to Claimant 2. The Commission ordered that OWBs recommendations be approved. The Order asserts in part that [Ed: footnotes omitted]:

First, the record shows that Claimant 2 did not provide the Commission with information that caused the staff to open an examination or investigation or caused the staff to inquire into different conduct. According to a supplemental staff declaration, the Investigation was opened by Enforcement staff in REDACTED based upon an REDACTED referral (the “Referral”) from the Commission’s Office of Compliance Inspections and Examinations, now the Division of Examinations, and not based upon any information from Claimant 2. Commission staff have confirmed, in a supplemental declaration, which we credit, that the Referral was based on an examination (the “Exam”) begun in REDACTED approximately five months before Claimant 2 contacted the Other Organization. The supplemental declaration also confirms that the Exam was initiated based on information from sources within the Commission. And while the Referral indicates that staff assigned to the Exam communicated with Other Organization staff prior to commencing the Exam REDACTED in those communications occurred at least five months before Claimant 2 contacted Other Organization with his/her information. Accordingly, the record demonstrates that Claimant 2’s information did not cause Commission staff to commence an examination or open the Investigation. 

SEC Awards Whistleblower Award to Claimants 1, 2 and 4 But Denies Award to Claimant 3
Order Determining Whistleblower Award Claim ('34 Act Release No. 34-97202; Whistleblower Award Proc. File No. 2023-42)
https://www.sec.gov/rules/other/2023/34-97202.pdf
The SEC's Claims Review Staff ("CRS") issued a Preliminary Determination recommending a Whistleblower Award to Claimant 1 and Claimant 2, and the denial of an Award to Claimant 3 and Claimant 4. The Commission found Claimant 4 eligible for an Award (reversing CRS), reallocated the 30% among Claimants 1, 2, and 4; and denied an Award to Claimant 3. The Order asserts in part that [Ed: footnotes omitted]:

We also disagree with Claimant 1’s argument that the award should be based on any amounts collected in the Bankruptcy Action. As we noted in connection with the adoption of several rule amendments, “our statutory authority does not extend to paying whistleblower awards for recoveries in bankruptcy proceedings or other proceedings that may in some way ‘result from’ the Commission’s enforcement action and the activities of the whistleblower.” Under Section 21F of the Exchange Act, the Commission is authorized to pay whistleblower awards only on the basis of monetary sanctions that are imposed in a covered judicial or administrative action or related action. A covered judicial or administrative action means an “action brought by the Commission under the securities laws that results in monetary sanctions
exceeding $1,000,000.”  A related action must be brought by one of the authorities specified in the statute.Bankruptcy proceedings are not brought by either the Commission acting under the securities laws or by one of the designated related-action authorities, and orders to pay money that result from bankruptcy proceedings are not imposed in Commission covered actions or related actions. 

. . .

Claimant 3’s lack of awareness of the NoCA posting or of the 90-day deadline is not an “extraordinary circumstance” that would excuse his/her failure to submit a timely Form WBAPP. Nothing interfered with his/her ability to monitor the Commission’s web page or submit an application by the 90-day deadline. Furthermore, there are no unique circumstances here that might support the Commission’s exercise of its separate, discretionary authority under Section 36(a) of the Exchange Act to exempt Claimant 3 from the 90-day filing deadline.

CFTC Charges Binance and Its Founder, Changpeng Zhao, with Willful Evasion of Federal Law and Operating an Illegal Digital Asset Derivatives Exchange (CFTC Release)
https://www.cftc.gov/PressRoom/PressReleases/8680-23
March 27, 2023
In the United States District Court for the Northern District of Illinois, the CFTC filed a Complaint charging Changpeng Zhao and Binance Holdings Limited, Binance Holdings (IE) Limited, and Binance (Services) Holdings Limited (together, "Binance") with numerous violations of the Commodity Exchange Act (CEA) and CFTC regulations; and also charging Binance's former Chief Compliance Officer Samuel Lim with aiding and abetting Binance’s violations. In part the CFTC Release alleges that:

According to the complaint, Binance has offered and executed commodity derivatives transactions to and for U.S. persons from July 2019 through the present. As alleged, Binance’s compliance program has been ineffective and, at Zhao’s direction, Binance has instructed its employees and customers to circumvent compliance controls in order to maximize corporate profits.

The complaint charges that for much of the relevant period, Binance did not require its customers to provide any identity-verifying information before trading on the platform, despite the legal duty that entities like Binance functioning as futures commission merchants (FCMs) collect such information, and failed to implement basic compliance procedures designed to prevent and detect terrorist financing and money laundering.

The complaint further alleges that even after Binance purported to restrict U.S. customers from trading on its platform, Binance instructed its customers – in particular its commercially valuable U.S.-based VIP customers – on the best methods for evading Binance’s compliance controls. In addition, the complaint charges Binance with acting as a designated contract market or swap execution facility based on its role in facilitating derivatives transactions without registering with the CFTC, as required.

The complaint also charges the entity defendants with failing to diligently supervise Binance’s activities as an FCM. Among the numerous supervisory failures detailed in the complaint is Binance’s instruction to employees to communicate with U.S.-based customers concerning control evasion through a messaging application that was set to automatically delete written communications. According to the complaint, the reason Binance used that communication method was to avoid leaving any evidence of their efforts to retain U.S.-based customers. 

The complaint further charges the Binance, Zhao and Lim with willful evasion of the requirements of the CEA. As alleged, the defendants conducted certain activities outside the U.S. designed to avoid CFTC regulation, such as intentionally structuring their entities and transactions to avoid registration requirements and instructing U.S. customers as well as other customers as to how to evade Binance’s compliance controls.

As alleged, Zhao is liable for Binance’s violations based on his control over Binance and his long-running failure to act in good faith concerning Binance’s misconduct. According to the complaint, Zhao owned and controlled dozens of entities that operate the Binance platform as a common enterprise. Zhao is alleged to have been responsible for all major strategic decisions at Binance, including devising the secret plot to instruct U.S.-based VIP customers to evade Binance’s compliance controls and instructing Binance employees to ensure all communications about their control subversion took place over applications that facilitated the automatic destruction of evidence. 

Lim, Binance’s CCO from 2018 through 2022, is charged with willfully aiding and abetting Binance’s violations through intentional conduct that undermined Binance’s compliance program. Lim is also charged with conducting activities to willfully evade or attempt to evade applicable provisions of the CEA, including promoting the use of “creative means” to assist customers in circumventing Binance’s compliance controls and implementing a corporate policy that instructed Binance’s U.S. customers to access the trading facility through a virtual private network to avoid Binance’s IP address-based controls or create “new” accounts through off-shore shell companies to evade Binance’s KYC-based controls.

FINRA Sanction Newbridge Securities Corporation for Alternative Mutual Fund Supervision
In the Matter of Newbridge Securities Corporation, Respondent (FINRA AWC 2019061764901)
https://www.finra.org/sites/default/files/fda_documents/2019061764901
%20Newbridge%20Securities%20Corporation%20CRD%20104065%20AWC%20lp.pdf
%20Jason%20Adams%20CRD%202690575%20AWC%20va.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, Newbridge Securities Corporation submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that Newbridge Securities Corporation has been a FINRA member firm since 2000 with 195 registered representatives at 49 branches. In accordance with the terms of the AWC, FINRA imposed upon Newbridge Securities Corporation a Censure, $50,000 fine, $114,025.24 in restitution plus interest, and an undertaking to certify compliance with the cited issues. As alleged in the "Overview" of the AWC [Ed: footnote omitted]:

Between October 25, 2016 and February 8, 2018, Newbridge failed to reasonably supervise representatives’ recommendations of an alternative mutual fund—the LJM Preservation & Growth Fund (LJM). Newbridge permitted the sale of LJM on its platform without conducting reasonable due diligence and without 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. Newbridge also lacked a reasonable supervisory system to review representatives’ LJM recommendations. Newbridge representatives sold approximately $323,000 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 thousands of dollars in losses for
Newbridge’s customers. By virtue of the foregoing, Newbridge violated FINRA Rules 3110 and 2010. 

FINRA Sanction NatAlliance Securities and Supervisor for Traders' Bond Marks
In the Matter of NatAlliance Securities, LLC and Jason Adams, Respondents (FINRA AWC  2020068495402)
https://www.finra.org/sites/default/files/fda_documents/2020068495402
%20NatAlliance%20Securities%2C%20LLC%20CRD%2039455%20and
%20Jason%20Adams%20CRD%202690575%20AWC%20va.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, NatAlliance Securities, LLC and Jason Adams submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. The AWC asserts that NatAlliance Securities, LLC has been a FINRA member firm since 1997 with 66 registered representatives at 13 branches; and Jason Adams was first registered in 1996 and by 2019, he was registered with NatAlliance. In accordance with the terms of the AWC, FINRA imposed upon

• NatAlliance Securities, LLC Censure, a $40,000 fine, and an undertaking to certify compliance with the issues cited; and
• Jason Adams a $5,000 fine, two-month suspension from associating with any FINRA member in Principal-only capacities, and an undertaking to complete 20 hours of continuing education concerning supervisory responsibilities.

 As alleged in the "Overview" of the AWC [Ed: footnote omitted]:

From January 2019 through the present, NatAlliance failed to establish and maintain a supervisory system, including written supervisory procedures, reasonably designed to review its traders’ bond marks to ensure accurate books and records, in violation of FINRA Rules 3110 and 2010. From April 2020 through September 2020, Trader A, a former NatAlliance proprietary corporate bond trader, inaccurately marked the value of numerous bonds in his trading book. Due to Trader A’s mismarking, NatAlliance failed to make and keep accurate books and records of the firm’s net capital, thereby filing four inaccurate monthly FOCUS reports between April 2020 and July 2020, in violation of Section 17(a) of the Exchange Act, Exchange Act Rules 17a-3 and 17a-5, and FINRA Rules 4511 and 2010. From April 2020 through September 2020, Adams failed to reasonably supervise Trader A, in violation of FINRA Rules 3110 and 2010.

= = =

Footnote 3: In October 2022, Trader A entered into an AWC for violating FINRA Rules 4511 and 2010, for which he was suspended for four months in all capacities and fined $5,000.