Financial Enforcement Actions | Week of September 23 to 28

Weekly Enforcement Action Tracker

NYSE

2 Enforcement Documents

$23,125.00 in Fines

Penalties: $15,625.00
Respondent: Merrill Lynch, Pierce, Fenner, & Smith Incorporated
Violation: Merrill Lynch, Pierce, Fenner & Smith Incorporated violated NYSE Arca Rules 11.18(a), (b), and (c), and 11.1(b), by failing to adequately supervise trading activity for potential cross-product manipulation or mini-manipulation and failing to adhere to principles of good business practice in the conduct of its affairs… Read More

Penalties: $7,500.00
Respondent: BNP Paribas Securities Corp.
Violation: BNP Paribas Securities Corp. violated NYSE Arca Equities Rules 6.18 and 6.3.03 by failing to have a supervisory system reasonably designed to achieve compliance with NYSE Arca Rules, and failing to provide sufficient documentary evidence that it performed the supervisory reviews set forth in its written supervisory procedures… Read More

FINRA

8 Enforcement Documents

$65,000.00 in Fines

Penalties: $7,500.00
Respondent: Timothy J. Scherwa
Violation: Between May 15, 2014, and May 15, 2017, (the “Relevant Period”), while associated with Wells Fargo, Scherwa improperly exercised discretionary trading authority and effected approximately 382 trades in twelve non-discretionary accounts. By exercising such discretion without prior written authorization, Scherwa violated NASD Rule 2510(b) and FINRA Rule 2010. During the Relevant Period, Scherwa also falsely stated on three Firm annual compliance certifications that he did not have accounts for which he exercised discretion over trading activities, in violation of FINRA Rule 2010… Read More

Penalties: $5,000.00
Respondent: Kenneth E. Greer, Jr.
Violation: From January 2016 through October 2016, while associated with Liberty Tree, Greer participated in outside business activities without providing written notice to the Firm, in violation of FINRA Rules 3270 and 2010… Read More

Penalties: $35,000.00
Respondent: Lincoln Investment
Violation: From August 1, 2015, through September 1, 2017 (the “Relevant Period”), Lincoln failed to implement reasonably-designed surveillance procedures to monitor its registered representatives’ rates of effecting variable annuity exchanges, in violation of FINRA Rules 2330(d), 3110, and 2010… Read More

Penalties: $10,000.00
Respondent: Robert Charles Torcivia (“Torcivia”)
Violation: Between December 2007 and February 2015 (the “Relevant Period”), Torcivia improperly accepted fiduciary and beneficiary designations from three separate senior customers contrary to the policies of the firms with which he was associated at the time. Each of these three customers had a longstanding friendship with Torcivia… Read More

Penalties: N/A
Respondent: Atiq U. Khan
Violation: Respondent violated FINRA Rules 8210 and 2010 by failing to respond timely to Rule 8210 requests for on-the-record testimony and failing to respond to Rule 8210 requests for documents… Read More

Penalties: TBD
Respondent: Partho S. Ghosh
Violation: Between May and July 2016, while registered through NYLIFE Securities LLC (“NYLIFE” or the “Firm”), Partho S. Ghosh engaged in an undisclosed and unapproved outside business activity. Specifically, Ghosh did not provide the Firm with prior written notice that he was the owner and sole director of a Delaware corporation, P.S. Ghosh, Inc. (“PSGI”), through which he marketed “structured finance solutions” to potential customers… Read More

Penalties: N/A
Respondent: Jacob Daniel Bourne
Violation: Respondent violated FINRA Rules 8210 and 2010 in September 2018 by failing to provide documents and information as requested pursuant to FINRA Rule 8210 in connection with an investigation concerning his involvement in a potential mismarking incident on the Firm’s U.S. inflation desk. In response to a request for documents and information pursuant to FINRA Rule 8210, Respondent stated that he would not provide the materials requested, and would not cooperate in the future… Read More

Penalties: $7,500.00
Respondent: Geoffrey Colin Turner
Violation: During the period from December 19, 2014 through June 9, 2015 (the “Relevant Period”), Turner recommended certain L-share variable annuities to his customers without a reasonable basis for believing that the recommendations were suitable. As a result, Turner violated FINRA Rules 2111, 2330(b)(1)(A) and 2010… Read More

FTC

1 Enforcement Document

$2,107,156.24 in Fines

Image Source: The Verge

Penalties: $2,107,156.24
Respondent: Tatto Inc.
Violation: The defendants sent text messages containing celebrity gossip alerts, horoscopes, or fun facts to consumers, but according to the FTC, defendants never got permission for the monthly subscription fees they charged… Read More

SEC

62 Enforcement Documents

$1,857,017,941.70 in Fines

Image Source: Wall Street Journal

Penalties: $1,786,673,797.00
Respondent: Petroleo Brasileiro S.A. – Petrobras
Violation: This matter relates to a massive corruption scheme, perpetrated by certain former senior executives of Petrobras—a Brazilian government-controlled oil and gas company—who were appointed by the Brazilian government and who conspired with Petrobras’s largest contractors and suppliers, resulting in material misstatements and omissions by Petrobras… Read More

Penalties: $500,000.00
Respondent: TD Ameritrade, Inc.
Violation: This proceeding concerns Respondent’s failure to file certain Suspicious Activity Reports (“SARs”) as required by Section 17(a) of the Exchange Act and Rule 17a-8 thereunder. These provisions require broker-dealers, such as Respondent, to comply with the Bank Secrecy 2 Act (“BSA”) requirement to file SARs. The BSA and implementing regulations require broker-dealers to file SARs with a federal governmental agency—the Financial Crimes Enforcement Network (“FinCEN”)—to report certain suspicious transactions that are conducted or attempted by, at, or through the broker-dealer… Read More

Penalties: N/A
Respondent: United Development Funding III, LP, United Development Funding IV and United Development Funding Income Fund V
Violation: All of the Respondents are delinquent in their periodic filings with the Commission and have repeatedly failed to meet their obligations to file timely periodic reports… Read More

Penalties: $125,000.00
Respondent: Patricio Contesse González
Violation: Respondent’s role in causing his employer, Sociedad Química y Minera de Chile, S.A. (“SQM”), to violate the books and records and internal accounting control provisions of the Foreign Corrupt Practices Act (“FCPA”), and his circumvention of internal accounting controls, falsification of SQM’s books and records, and misleading of SQM’s accountants… Read More

Penalties: $900,847.25
Respondent: Thomas J. Caufield
Violation: Caufield misled investors about the franchise’s bleak financial condition, used new investor money to repay earlier investors, and falsely claimed that investors’ notes were secured by assets… Read More

Penalties: $83,688.49
Respondent: Lichter, Yu and Associates, Inc., et al.
Violation: These proceedings involve Respondents’ improper professional conduct and violations of the federal securities laws in their audit of the FY 2015 financial statements of Code Rebel Corporation (“Code Rebel” or “the Company”) in which Code Rebel materially overstated the Company’s assets by recording as “Cash and Cash Equivalents” approximately $2.2 million that had been misappropriated. The misappropriated cash constituted 77% of Code Rebel’s reported current assets and approximately 80% of its reported cash and cash equivalents… Read More

Penalties: $819,328.73
Respondent: SG Americas Securities, LLC
Violation: These proceedings arise out of improper practices by Newedge USA, LLC (“Newedge”), predecessor-in-interest to SG Americas, involving the pre-release of American Depositary Receipts (“ADRs”)… Read More

Penalties: $65,000.00
Respondent: Hudson Housing Capital LLC
Violation: HHC, which registered with the Commission as an investment adviser in 2012, has failed to timely distribute annual audited financial statements to the investors in numerous private investment funds that it advised in each fiscal year from 2012 through 2017, in violation of Section 206(4) of the Advisers Act and Rule 206(4)-2 thereunder, commonly referred to as the “custody rule… Read More

Penalties: $1,000,000.00
Respondent: Voya Financial Advisors, Inc.
Violation: These proceedings arise out of VFA’s failure to adopt written policies and procedures reasonably designed to protect customer records and information, in violation of Rule 30(a) of Regulation S-P (17 C.F.R. § 248.30(a)) (the “Safeguards Rule”), and VFA’s failure to develop and implement a written Identity Theft Prevention Program as required by Rule 201 of Regulation S-ID (17 C.F.R. § 248.201) (the “Identity Theft Red Flags Rule”)… Read More

Penalties: $40,000.00
Respondent: James Thomas Bramlette, the Pelorus Group, LLC, Anthony Mark Hartman, Private Placement Capital Notes II, LLC, Stone Mountain Equities, LLC, Travis Kozlowski, Entelecus Fund, LLC, Aaron John Wernli
Violation: From at least 2014, investors were promised returns of up to 24% and were encouraged to put their retirement savings in the resort. In reality, the resort was uninhabitable and was suffering significant losses each month. The resort was in foreclosure and parts of it were put up for auction for unpaid property taxes… Read More

Penalties: $1,050,000.00
Respondent: Putnam Investment Management, LLC and Zachary Harrison
Violation: $1,050,000.00 Rather than attempting to sell the securities into the market, Harrison prearranged with broker-dealers to temporarily sell the securities and repurchase them at a small markup, usually the next business day. Harrison’s conduct caused Putnam to prearrange dealer-interposed cross trades in which trading counterparties purchased fixed income securities from certain Putnam advisory accounts and then resold the securities to other Putnam advisory accounts… Read More

Penalties: $309,271.73
Respondent: Thomas Earl Hayden, et al.
Violation: These proceedings concern insider trading and tipping by Thomas Earl Hayden, II (“Hayden”), a Monster Beverage Corporation (“Monster”) employee, in advance of an August 2014 announcement regarding Monster’s partnership with the Coca-Cola Company (“Coke”)… Read More

Penalties: $185,100.05
Respondent: Gary Bernard Ross
Violation: These proceedings concern insider trading by investment adviser Ross, who misappropriated material non-public information from his client Thomas Earl Hayden, II (the “Advisory Client”) about an impending partnership between Monster Beverage Corporation (“Monster”) and the Coca-Cola Company (“Coke”)… Read More

Penalties: $5,000,000.00
Respondent: Credit Suisse Securities (USA) LLC
Violation: Beginning in mid-2011 and continuing until March 2015, when RES closed, RES made material misrepresentations and omissions concerning its handling of held retail equity orders, in violation of Section 17(a)(2) of the Securities Act… Read More

Penalties: $10,000.00
Respondent: Mota Group, Inc. and Mota “Michael” Faro
Violation: This matter involves the negligent failure of Mota and its Chief Executive Officer, Michael Faro, to ensure the accuracy of the financial statements Mota filed with the Commission in connection with the proposed sale of its securities in a planned initial public offering (“IPO”)… Read More

Penalties: $34,820,000.00
Respondent: Walgreens Boots Alliance, Inc., Gregory D. Wasson, and Wade D. Miquelon
Violation: This case involves negligent failures by Walgreen Co. (“Walgreens”) and its senior leadership to adequately disclose to the market known increases in risk regarding the company’s ability to achieve a financial goal… Read More

Penalties: $56,029.70
Respondent: Unal Patel and Amish Patel
Violation: On February 23, 2016, Unal Patel received material nonpublic information in a late evening telephone call from a close friend working at The Southern Company (“Southern”), regarding Southern’s imminent acquisition of PowerSecure International, Inc. (“PowerSecure”)… Read More

Penalties: $1,890,000.00
Respondent: Thomas J. Connerton and Safety Technologies LLC
Violation: Misleading people into investing in his company and then taking their money for his personal use was found guilty by a federal jury in a parallel criminal case… Read More

Penalties: $4,265,000.00
Respondent: LendingClub Asset Management, LLC, et al.
Violation: Respondents improperly adjusted monthly returns for BBFQ and other LCA-managed funds to improve reported returns… Read More

Penalties: $6,300,000.00
Respondent: Carlos I. Uresti and Stanley P. Bates
Violation: Uresti, then a licensed attorney and Texas state senator, provided a veneer of credibility to FWLL and served as the company’s counsel, broker, and escrow agent. Together, Uresti and Bates allegedly raised over $11 million by misrepresenting the profitability and safety of investments in the FWLL venture, including presenting a doctored bank statement to investors showing that FWLL had over $18 million in cash, when in reality the company had less than $100,000… Read More

Penalties: $7,800,000.00
Respondent: Stryker Corporation
Violation: This matter concerns violations of the books and records and internal accounting controls provisions of the Exchange Act by Stryker, a global leader in the medical technology industry, related to its operations in India, China, and Kuwait… Read More

Penalties: $800,000.00
Respondent: COR Clearing, LLC
Violation: COR failed to file SARs with respect to a subset of these transactions. As a result of this conduct, COR willfully violated Section 17(a) of the Exchange Act and Rule 17a-8 thereunder… Read More

Penalties: $5,225,726.00
Respondent: NL Technology, LLC et al.
Violation: Ngo fabricated bank statements, financial records, and other documents, and impersonated third parties in order to conceal the fraud, and that Baca disseminated some of those fabricated documents to investors… Read More

X