Financial Enforcement Actions | Week of July 18 to July 24

Enforcement Report July 18 - 24 feat image

Enforcement Report July 18 - 24

UK-FCA

1 Enforcement Documents

£0.00 in Fines

Penalties: N/A
Respondent: Sultan Exchange Ltd,
Violation: Sultan has failed to provide the information required by the Authority, including further information that the Authority considered necessary to determine the application pursuant to Regulation 14(2)... Read More

CFTC

2 Enforcement Documents

$0.00 in Fines

Penalties: N/A
Respondent: Southwest Group, LLC.
Violation: During the Relevant Period, Southwest Group acted as a retail foreign exchange dealer (“RFED”) without being registered with the Commission as such, by being, or offering to be, the counterparty to financed retail foreign currency (“forex”) transactions for U.S. retail forex customers who were not eligible contract participants (“ECPs”) as defined in Section 1a(18) of the Act, 7 U.S.C. § 1a(18) (2018). By acting as an RFED without being registered in that capacity, Southwest Group violated Section 2(c)(2)(C)(iii)(I)(aa) of the Act and Regulation 5.3(a)(6)(i)... Read More

FTC

4 Enforcement Documents

$0.00 in Fines

Penalties: N/A
Respondent: Indivior Inc.
Violation: Indivior promoted the sale or use of Suboxone Film using false and misleading claims that Suboxone Film was less susceptible to accidental pediatric exposure than Suboxone Tablets. These misrepresentations coerced a majority of consumers to switch to the more expensive Suboxone Film before the entry of lower-cost generic Suboxone Tablets, thereby preserving the lucrative Suboxone monopoly and harming consumers. Indivior also knowingly submitted a petition to the Food and Drug Administration on September 25, 2012, fraudulently claiming that Suboxone Tablets had been discontinued due to safety concerns about the tablet formulation of the drug, and took other steps to fraudulently delay the entry of generic competition for Suboxone in order to maintain higher prices for Suboxone... Read More

CFPB

6 Enforcement Documents

$645,000.00 in Fines

Penalties: $645,000.00
Respondent: Prime Choice Funding, Inc.
Violation: Prime Choice violated § 1026.24(c) because, as described in numerous Prime Choice mortgage advertisements stated a simple annual interest rate more conspicuously than the APR... Read More

Penalties: N/A
Respondent: Sovereign Lending Group, Inc.
Violation: Respondent agrees to the issuance of the Consent Order, without admitting or denying any of the findings of fact or conclusions of law, except that Respondent admits the facts necessary to establish the Bureau’s jurisdiction over Respondent and the subject matter of this action. Respondent agrees that the Consent Order will be deemed an “order issued with the consent of the person concerned” under 12 U.S.C. § 5563(b)(4), and agrees that the Consent Order will become a final order, effective upon issuance, and will be fully enforceable by the Bureau under 12 U.S.C. §§ 5563(d)(1) and 5565. Respondent voluntarily enters into this Stipulation and Consent to the Issuance of a Consent Order... Read More

FINRA

17 Enforcement Documents

$872,574.44 in Fines

Penalties: $5,000.00
Respondent: Steven Harris
Violation: Harris moved for an extension of time in which to respond to the Complaint. That motion was granted, and the new deadline for Harris to file an Answer or otherwise respond to the Complaint became May 28, 2020... Read More

Penalties: $7,500.00
Respondent: Stephen John Cass
Violation: From January 1, 2015 through December 31, 2016, Cass, the Firm’s AMLCO, failed to establish and implement an AML program that was reasonably designed to detect and cause the reporting of suspicious activity related to the Firm’s microcap or low-priced securities liquidation business... Read More

Penalties: $78,014.18
Respondent: Gelber Securities, LLC
Violation: On November 16, 2017 and March 5, 2018, the Firm violated Rule 14e-4 promulgated under the Securities Exchange Act of 1934, as amended ( "SEA Rule 14e-4") and FINRA Rule 2010 when it tendered shares in excess of its net long position, as defined under SEA Rule 14e-4, in two separate partial tender offers... Read More

Penalties: $15,000.00
Respondent: The Enterprise Securities Company
Violation: Between February and June 2018, Enterprise acted as a placement agent in connection with a contingency offering of securities on behalf of an Issuer... Read More

Penalties: N/A
Respondent: Chams Khwaja
Violation: Khwaja failed to respond to either the first or second Rule 8210 request, Enforcement filed and served a Complaint alleging that he had violated FINRA Rules 8210 and 2010... Read More

Penalties: $5,000.00
Respondent: Terence Patrick Dolan, Jr.
Violation: From January 1, 2015 through December 31, 2016 (the “Relevant Period”), Dolan, the Firm’s CEO, failed to establish, maintain and enforce a supervisory system, including written supervisory procedures (“WSPs”) and training for the Firm’s registered representatives (“RRs”), relating to performing a reasonable inquiry of and identifying “red flags” relating to the deposit and sale of microcap or low-priced securities to prevent violation of Section 5 of the Securities Act of 1933 (the “Securities Act”)... Read More

Penalties: N/A
Respondent: Travis Scott Hughes
Violation: FINRA Rule 1210.05 provides that an associated person taking a representative examination is subject to the Rules of Conduct. FINRA Rule 1210.05 further provides that “[a]n applicant cannot receive assistance while taking the examination” and an associated person who violates the Rules of Conduct is deemed to have violated FINRA Rule 2010... Read More

Penalties: $150,000.00
Respondent: Canaccord Genuity LLC
Violation: Between August 1, 2015 and June 29, 2017, Canaccord violated FINRA Rules 7450 and 2010 by failing to submit, and submitting inaccurate, OATS reports, and Exchange Act Rule 10b-10 and FINRA Rule 2010 by providing customers with confirmations that included misleading or inaccurate information. Respondent also violated FINRA Rules 6622 and 2010 by misusing the prior reference price modifier in trade reports, and Exchange Act Rule 17a-3 and FINRA Rules 4511 and 2010 by using inaccurate execution times on customer order tickets... Read More

Penalties: N/A
Respondent: Bryant Edwin Caveness
Violation: In connection with FINRA's investigation into Caveness's potential receipt of checks from senior customers, FINRA staff issued Caveness a request to provide information and documents pursuant to FINRA Rule 8210... Read More

Penalties: $40,000.00
Respondent: BMO Capital Markets Corp.
Violation: In the period January 9, 2017 through August 15, 2017, BMO failed to transmit ROEs to OATS. As a result, the firm violated FINRA Rules 7450 and 2010. In the period October 1, 2017 through December 31, 2018, BMO failed to make publicly available all accurate and complete information in quarterly reports required in order to comply with Rule 606 of Regulation NMS ("Rule 606")... Read More

Penalties: $175,000.00
Respondent: Virtu Americas LLC (f/k/a KCG Americas LLC)
Violation: Virtu failed to provide best execution with respect to 13,136 customer orders it had received from two of its broker-dealer clients outside of normal trading hours, by failing to use reasonable diligence to ascertain the best market for the subject securities and by failing to buy or sell in such market so that the resultant prices to the customers were as favorable as possible under prevailing market conditions... Read More

Penalties: $20,713.06
Respondent: Two Sigma Securities, LLC ("Two Sigma" or the "Firm")
Violation: On May 29. 2018 (the "Relevant Period"). the Firm failed to correctly calculate its net long position and, as a result, over-tendered shares in excess of its net long position when participating in the partial tender offer for ABC Corporation ("ABC")... Read More

Penalties: $376,344.20
Respondent: Concorde Investment Services, LLC Kimberlee Elizabeth Levy
Violation: From April 2013 to March 2014, Concorde and Levy failed to reasonably supervise JT, a former registered representative of the Firm, who permitted her then-husband, RC, to conduct a securities business with Concorde customers while RC was serving a one-year suspension imposed by FINRA. From March 2014, when Concorde hired RC upon the completion of his suspension, to July 2016, when Concorde and Levy terminated RC and JT, Concorde and Levy failed to reasonably supervise RC and, as a result, did not identify that he recommended unsuitable trades in several customers’ accounts, among other things... Read More

Penalties: N/A
Respondent: Brendan D. Feitelberg
Violation: Feitelberg failed to exhaust his administrative remedies. But Feitelberg’s failure to avail himself of FINRA’s procedures for avoiding a suspension or bar appears to have resulted from the same illness that prevented him from filing a timely appeal with the Commission... Read More

Penalties: N/A
Respondent: Marshall Owen Isaacson
Violation: In connection with FINRA's investigation into whether Isaacson made unsuitable investment recommendations, FINRA staff issued Isaacson a request for documents and information pursuant to FINRA Rule 8210... Read More

Penalties: N/A
Respondent: Stephen Sloane
Violation: Sloane failed to consider the effect of the strategy’s costs on the Treasury customers’ potential returns... Read More

SEC

18 Enforcement Documents

$2,441,185.71 in Fines

Penalties: $300,000.00
Respondent: Carlos Renato Cano,
Violation: As a result of the conduct described above, Cano willfully violated Section 17(a) of the Securities Act and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, which prohibit fraudulent conduct in the offer or sale of securities and in connection with the purchase or sale of securities. As a result of the conduct described above, Cano willfully aided and abetted and caused IIG’s violations of Sections 206(1) and 206(2) of the Advisers Act, which prohibit fraudulent conduct by an investment adviser... Read More

Penalties: $72,922.00
Respondent: Edmond Leung,
Violation: Leung again became aware of material, nonpublic information concerning a transaction between Sangamo and another pharmaceutical company. On the morning of May 10, 2017, Leung tipped his cousin, Joseph Zhang, to purchase Sangamo stock, indicating that Zhang should do so quickly. Immediately after talking to Leung, Zhang placed several market orders and purchased 16,900 shares of Sangamo common stock just hours before Sangamo announced its collaboration with another pharmaceutical company. The next day, Sangamo’s stock price rose almost 60%. In the days following the announcement, Zhang sold his entire position in Sangamo stock for a $66,703 profit. As a result of this conduct, Leung violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder... Read More

Penalties: $81,733.71
Respondent: Irth Communications
Violation: During the Relevant Period, Irth provided clients various investor relations, media relations, public relations, as well as social media services. During this time, Irth tweeted or retweeted twenty-three times positive news articles describing the business, products, and securities of nine clients. Irth received approximately $35,000 in compensation from these nine clients attributable to these twenty-three tweets and re-tweets. Irth failed to disclose the source or the amount of the compensation it received for the twenty-three relevant tweets. 5. As a result of the conduct described above, Irth and Haag violated Section 17(b) of the Securities Act, which prohibits publishing, giving publicity to, or circulating “any notice, circular, advertisement or communication which, though not purporting to offer a security for sale, describes such security for a consideration received or to be received, directly or indirectly, from an issuer without fully disclosing the receipt, whether past or prospective, of such consideration and the amount thereof... Read More

Penalties: $52,966.00
Respondent: John J. Marvin
Violation: This matter involves negligent conduct by John J. Marvin (“Marvin”), a registered representative with UBS Financial Services Inc. (“UBS”). In 2015 and 2016, Marvin placed orders during retail order periods for new issue municipal bonds with UBS’s syndicate desk on behalf of a customer. The customer was an unregistered broker engaged in the business of buying and immediately reselling, or “flipping,” new issue municipal bonds. Municipal issuers hold retail order periods to prioritize the sale of bonds to retail investors, and often require that the customer’s zip code be included in the order to denote that the customer resides in the issuer’s jurisdiction and is entitled to retail priority. Marvin negligently submitted some of his flipper customer’s orders with inaccurate zip codes during retail order periods. As a result of the conduct described herein, Marvin violated Rules G-11(k) and G17 of the Municipal Securities Rulemaking Board (“MSRB”)... Read More

Penalties: $138,979.00
Respondent: Joseph Zhang
Violation: Leung, then a manager in Sangamo’s information technology department, became aware of material, nonpublic information concerning a transaction between Sangamo and another pharmaceutical company. On the morning of May 10, 2017, Leung tipped Zhang to purchase Sangamo stock, indicating that Zhang should do so quickly. Immediately after talking to Leung, Zhang placed several market orders and purchased 16,900 shares of Sangamo common stock just hours before Sangamo announced its collaboration with another pharmaceutical company. The next day, Sangamo’s stock price rose almost 60%. In the days following the announcement, Zhang sold his entire position in Sangamo stock for a $66,703 profit. As a result of this conduct, Zhang violated Section 10(b) of the Exchange Act and Rule 10b-5 thereunder... Read More

Penalties: N/A
Respondent: Merlyn Curt Geisler
Violation: The Securities and Exchange Commission (“Commission”) deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted pursuant to Section 15(b) of the Securities Exchange Act of 1934 (“Exchange Act”) against Merlyn Curt Geisler (“Respondent”)... Read More

Penalties: $1,750,000.00
Respondent: UBS Financial Services
Violation: During the relevant period, UBS improperly allocated bonds to the flippers on hundreds of retail orders when those flippers were not eligible for retail priority. In addition, UBS, through certain registered representatives, improperly obtained negotiated new issue bonds for UBS’s inventory by placing indications of interest with the flippers who then placed customer orders with the underwriting syndicate, instead of UBS submitting dealer orders directly with the syndicate on its own behalf. This practice circumvented the priority of orders and improperly gave UBS access to a higher priority in the bond allocation process. As a result of this conduct, UBS violated MSRB Rules G-11(k) and G-17. In addition, UBS violated MSRB Rule G-27, and failed reasonably to supervise, within the meaning of Section 15(b)(4)(E) of the Exchange Act, their registered representatives with respect to their violations of the federal securities laws and MSRB rules. UBS also violated Section 15B(c)(1) of the Exchange Act... Read More

Penalties: $44,585.00
Respondent: William S. Costas
Violation: Costas helped UBS bond traders improperly obtain new issue municipal bonds for UBS’s own inventory through his flipper customer. Costas did this by facilitating the UBS traders’ use of his flipper customer as a proxy to place orders for UBS’s inventory, with the understanding that the flipper, in turn, would place the orders as a “customer” of an underwriting firm in primary bond offerings. This practice circumvented the priority of orders and gave the UBS traders’ orders higher priority in the bond allocation process. Once the flipper customer had obtained the bonds from the underwriter, Costas facilitated the sale of the bonds from the flipper to UBS. As a result of the conduct described herein, Costas violated Rules G-11(k) and G-17 of the Municipal Securities Rulemaking Board (“MSRB”)... Read More

Penalties: N/A
Respondent: YouPlus, Inc., et al.
Violation: The SEC's complaint alleges that, between 2018 and 2019, Shaukat Shamim, the founder and CEO of YouPlus, a private company that purported to have developed a machine-learning tool to analyze videos on the internet, raised funds from investors while repeatedly misrepresenting the company's financial condition. According to the complaint, Shamim falsely told investors that YouPlus earned millions of dollars in annual revenue and had more than 100 customers, including Fortune 500 companies. When one investor pressed Shamim for information substantiating those claims, Shamim allegedly provided the investor with falsified bank statements in an effort to conceal the fraud. The scheme allegedly unraveled in late 2019 when Shamim confessed to certain investors that YouPlus had in fact earned less than $500,000 and obtained only four paying customers from the company's inception in 2013... Read More

Penalties: N/A
Respondent: Harold L. Altvater
Violation: The SEC's complaint, filed on June 27, 2017, alleged that on three occasions between October 2013 and January 2014, Altvater traded in Ariad's stock on the basis of non-public information learned in advance of announcements about the safety profile of and U.S. Food and Drug Administration (FDA) decisions regarding Ariad's only FDA-approved drug. According to the SEC's complaint, Altvater learned the information from his wife, an Ariad employee. By purchasing shares ahead of a positive announcement, and selling shares ahead of negative announcements, Altvater allegedly avoided losses and obtained illegal profits totaling over $100,000. Further, the SEC's complaint alleges that Altvater tipped a friend, who also profited by trading Ariad stock on the basis of non-public information learned from Altvater's wife... Read More

Penalties: N/A
Respondent: Mark L. Hopkins
Violation: Hopkins violated and unless restrained and enjoined, will continue to violate, Section 17(a)(1) of the Securities Act [15 U.S.C. § 77q(a)(1)]... Read More

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