Weekly Enforcement Action Tracker (Mar 11 – Mar 16)

Weekly Enforcement Action Tracker (Mar 11 – Mar 16)

FRS

Penalties: N/A
Respondent: Industrial and Commercial Bank of China LTD
Violation: Identified significant deficiencies in the Branch’s risk management and compliance with applicable federal and state laws, rules, and regulations relating to anti-money laundering (“AML”) compliance, including the Bank Secrecy Act… Read More

FTC

3 Enforcement Document

$7,677,654.00 in Fines

Penalties: $437,000.00
Respondent: Tachht Refunds
Violation: The defendants bombarded people with illegal spam email and used fake celebrity endorsements and false weight-loss claims to pitch their products… Read More

Penalties: $40,654
Respondent: Nectar Brand LLC
Violation: Claimed in promotional materials that its mattresses were “Designed and Assembled in the USA,” but in fact, the mattresses are wholly imported from China, with no assembly taking place in the United States… Read More

Penalties: $7,200,000.00
Respondent: Allstar Marketing Group Refunds
Violation: The company’s “buy-one-get-one-free” offer did not disclose all the costs, and some customers were charged for more products than they wanted… Read More

SEC

11 Enforcement Documents

$554,139.45 in Fines

Penalties: TBD
Respondent: Dennis J. Mancino, William T. Hirschy, DJK Investments 10 Inc., TJM Investments Inc., and WT Consulting Group, LLC
Violation: From at least February 2017 through the present, Defendants Dennis J. Mancino and William T. Hirschy, along with the entities they controlled, DJK INvestments 10 Inc., TJM Investments Inc., and WT Consulting Group, LLC, intentionally engaged in a fraudulent scheme to manipulate the market for the stock of micro-cap companies – HD View 360, Inc. and West Coast Ventures Group Corp. and profit from that manipulation… Read More

Penalties: TBD
Respondent: Beaufort Securities Ltd. and Panayiotis Kyriacou a/k/a Peter Kyriacou
Violation: In at least early 2018, Defendants Beaufort and Kyriacou—a United Kingdom-based brokerage firm and its U.K.-based investment manager—intentionally facilitated a scheme to manipulate the market of microcap stock publicly-traded in the United States and registered with the Commission… Read More

Penalties: TBD
Respondent: Beaufort Securities Ltd. and Panayiotis Kyriacou a/k/a Peter Kyriacou; Dennis J. Mancino, William T. Hirschy, DJK Investments 10 Inc., TJM Investments Inc., and WT Consulting Group, LLC
Violation: opened brokerage accounts for the undercover agent in the names of nominees in order to conceal his identity and his connection to the anticipated trading activity in the accounts suggested that the undercover agent could create the false appearance that HD View’s stock was liquid in advance of a pump-and-dump by “gam[ing] the market”… Read More

Penalties: $3,776.28
Respondent: John W. Adams and AIP, LLC
Violation: Failed to provide updated negative financial information to shareholders prior to the Tender Offer… Read More

Penalties: N/A
Respondent: David Gray
Violation: Misrepresented to investors that their money would be used to develop and market LottoNet’s business, violated Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Exchange Act and Rule 10b-5… Read More

Penalties: N/A
Respondent: Edmund W. Bailey
Violation: While Bailey was employed by the Commission, he and the Independence Team that he supervised participated personally and substantially in connection with BRO’s decision to investigate Audit Firm’s tax-loaned staff policies and practices and in the subsequent BRO Investigation… Read More

Penalties: $100,000.00
Respondent: KPMG Inc.
Violation: KPMG South Africa engaged in improper professional conduct under Section 4C(a)(2) of the Exchange Act and Rule 102(e)(1)(ii) of the Commission’s Rules of Practice by failing to perform an adequate analysis under AU 543 regarding whether it could serve as Issuer A’s principal auditor and use the work of KPMG Zimbabwe; and to comply with AU 543 and AU 230 in using the audit work of an unregistered auditing firm… Read More

Penalties: $141,305.83
Respondent: KPMG
Violation: These proceedings arise out of KPMG Zimbabwe’s playing a substantial role in the audits of Issuer A from at least 2013 through 2014 without being registered with the Public Company Accounting Oversight Board (“PCAOB”)… Read More

Penalties: $50,000.00
Respondent: BDO Canada LLP (f/k/a BDO Dunwoody LLP)
Violation: BDO Canada engaged in improper professional conduct under Section 4C(a)(2) of the Exchange Act and Rule 102(e)(1)(ii) of the Commission’s Rules of Practice by failing to instruct Deloitte Zimbabwe to perform its audit in accordance with PCAOB standards or to perform procedures to evaluate the impact of Deloitte Zimbabwe having applied ISAs… Read More

Penalties: $99,057.34
Respondent: Deloitte & Touche Chartered Accountants
Violation: These proceedings arise out of Deloitte Zimbabwe’s playing a substantial role in the audits of Issuer A from 2006 until 2012 without being registered with the Public Company Accounting Oversight Board (“PCAOB”)… Read More

Penalties: $160,000.00
Respondent: Credit Karma, Inc
Violation: Credit Karma offered to sell and sold its securities without a registration statement filed or in effect and without a valid exemption from registration. As a result of the conduct described above, Credit Karma violated Section 5(a) and 5(c) of the Securities Act… Read More

FINRA

21 Enforcement Documents

$489,422.17 in Fines

Penalties: N/A
Respondent: Stephen J. Woods
Violation: Woods failed to produce documents and information in response to a FINRA Rule 8210 request, in violation of FINRA Rules 8210 and 2010…Read More

Penalties: $60,000.00
Respondent: Ascendiant Capital Markets, LLC
Violation: Respondent ACM charged unfair and unreasonable prices with fraudulently excessive and undisclosed markups in principal basis stock sales made by ACM to its corporate customer NOA from April 30, 2012, to September 11, 2012… Read More

Penalties: $5,000.00
Respondent: Michael Anthony McGregor
Violation: Between August 2014 and May 2015 (the “Relevant Period”), McGregor engaged in quantitatively unsuitable trading in two accounts of customer WC in violation of FINRA Rules 2111 and 2010… Read More

Penalties: N/A
Respondent: Austin Wayne Morton
Violation: On two separate occasions in September and October 2016, Morton converted a total of $36,000 from “GR” in violation of FINRA Rule 2010 & Morton was compensated in the amount of $2,000 cash for assisting GR in locating and cashing out a variable annuity and thereby engaged in an undisclosed outside business activity in violation of FINRA Rules 3270 and 2010…. Read More

Penalties: $12,500.00
Respondent: R. M. Stark & Co., Inc.
Violation: RM Stark failed to conduct inspections of two non-OSJ locations that have been open at the firm since 2009… Read More

Penalties: $46,922.17
Respondent: Bolton Global Capital
Violation: the firm’s supervisory system did not provide for supervision reasonably designed to achieve compliance with respect to the applicable securities laws and regulations, and the Rules of FINRA, to ensure the firm charged reasonable fixed income markups and markdowns… Read More

Penalties: TBD
Respondent: Melanie A. Melton
Violation: Respondent Melanie A. Melton failed to respond to two requests for written information and documents as requested pursuant to FINRA Rule 8210 in violation of FINRA Rules 8210 and 2010… Read More

Penalties: $25,000.00
Respondent: MCM Securities LLC
Violation: Between April 2014 and June 2016, MCM distributed offering documents in connection with the sale of three unregistered offerings that failed to disclose the relationship between the issuers and MCM. By reason of the foregoing, MCM violated FINRA Rules 2210(d)(1)(A) and 2010. In addition, during the period July 20, 2016, through June 6, 2017, MCM conducted a securities business while failing to maintain sufficient net capital, maintained inaccurate financial books and records, and failed to file accurate quarterly FOCUS reports… Read More

Penalties: $7,500.00
Respondent: Donald C. Leary Jr.
Violation: Between May 2014 and October 2016 (the “Relevant Period”), while associated with NAP, Leary engaged in an unapproved outside business activity without prior notice to NAP, in violation of FINRA Rules 3270 and 2010. Further, in 2015, Leary provided inaccurate responses on NAP’s compliance forms concerning his participation in outside business activities, in violation of FINRA Rule 2010… Read More

Penalties: $7,500.00
Respondent: UBS Securities LLC
Violation:  the firm’s compliance with the short interest reporting requirements of FINRA Rule 4560 during the fourth quarter 2014 (the “review period”). The firm violated FINRA Rule 4560 during the review period… Read More

Penalties: $10,000.00
Respondent: Michael D. Hanke
Violation: Hanke exercised discretion without written authorization in a customer account, in violation of NASD Conduct Rule 2510(b) and FINRA Rule 2010. He also marked the order tickets for most of the discretionary transactions as “unsolicited,” when in fact the transactions had been solicited, in violation of FINRA Rules 4511 and 2010… Read More

Penalties: $17,500.00
Respondent: Liquidnet, Inc.
Violation: In both reviews, the firm reported information to OATS with times accurate to the second. As described below, the inaccuracies in the submitted reports were limited to the population of the millisecond field for certain Reportable Order Events (“ROEs”)… Read More

Penalties: N/A
Respondent: John N. Milne
Violation: Milne violated FINRA Rules 8210 and 2010… Read More

Penalties: $2,500.00
Respondent: Peter M. Torabkhan
Violation: Between January 2014 and June 2015, while registered with EJS, Torabkhan exercised discretion in the accounts of two customers without having obtained written authorization from the customers to place discretionary trades and without the Firm having accepted the accounts as discretionary, in violation of NASD Rule 2510 and FINRA Rule 2010… Read More

Penalties: $10,000.00
Respondent: William Bernard Lyons
Violation: By failing to reasonably supervise Abadi’s outside business activities with ACS, and to supervise Abadi’s private securities transactions, Lyons violated NASD Rule 3010(b) (for conduct occurring before December 1, 2014), FINRA Rule 3110(b) (for conduct occurring on and after December 1, 2014) and FINRA Rule 2010… Read More

Penalties: $5,000.00
Respondent: Ricardo A. Estrada
Violation: During the period from June 2015 through July 2016, Estrada engaged in an outside business activity without seeking prior approval from MML. Specifically, Estrada failed to disclose that he formed a corporate entity to earn finder’s fees, invest in real estate, and invest in small start-up companies. In connection with this activity, he received approximately $7,575 in finder-fee compensation… Read More

Penalties: $10,000.00
Respondent: Douglas F. Bradley
Violation: During February and March 2015, Bradley recommended and effectuated a sequence of mutual-fund transactions designed to avoid the mutual fund’s “soft close” to new investors, and in doing so, he effectively bypassed systems and restrictions that his firm had put in place to abide by such mutual-fund soft closes. Bradley thereby violated FINRA Rule 2010… Read More

Penalties: $250,000.00
Respondent: Credit Suisse Securities USA LLC
Violation: the Firm failed to have a supervisory system reasonably designed to achieve compliance with applicable securities laws and regulations and the applicable FINRA Rules regarding reconciliation of its Nostro bank accounts and the treatment of breaks across the Firm’s books and records. Through these actions, the Firm violated NASD Rule 3010(a) and FINRA Rule 2010… Read More

Penalties: $5,000.00
Respondent: Micahel M. Hurtgen
Violation: Between October 2015 and January 2016, while associated with RJFS, Hurtgen violated FINRA Rules 3280 and 2010 by soliciting at least fourteen individuals, ten of whom were customers of the Firm, to invest in a private placement offering… Read More

Penalties: $10,000.00
Respondent: Douglas F. Bradley
Violation: During February and March 2015, Bradley recommended and effectuated a sequence of mutual-fund transactions designed to avoid the mutual fund’s “soft close” to new investors, and in doing so, he effectively bypassed systems and restrictions that his firm had put in place to abide by such mutual-fund soft closes. Bradley thereby violated FINRA Rule 2010… Read More

Penalties: $5,000.00
Respondent: Martin Earl Brooks
Violation: On April 5, 2016, without prior written authorization, Brooks exercised discretionary trading authority for five different Firm customers, by purchasing shares in a real estate fund for each customer, in violation of NASD Rule 2510(b) and FINRA Rule 2010. Brooks also violated FINRA Rules 4511 and 2010 by mismarking the five order tickets associated with the trades… Read More

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