Financial Enforcement Actions | Week of Sep 26 to Oct 02

Enforcement Report Sep 26 - Oct 02 feat image

Enforcement Report Sep 26 - Oct 02

FTC

3 Enforcement Documents

$0.00 in Fines

Penalties: N/A
Respondent: National Landmark Logistics LLC., also d/b/a UBS TRStar Systems, LLC, National Landmark Service Of United Recovery LLC., Liberty Solutions & Associates, LLC., LSA Processing System, LLC., Silverlake Landmark Recovery Group, LLC., Jean Cellent, a/k/a Jean-Pierre Cellent, in his individual and corporate capacity, James Dennison, in his individual and corporate capacity, and Eric Dennison, in his individual and corporate capacity,
Violation: Defendants fail to provide consumers, either orally in their initial communication with the consumer or in writing within five days after the initial oral communication, a notice containing (1) the amount of the debt; (2) the name of the creditor to whom the debt is owed; (3) a statement that unless the consumer disputes the debt, the debt will be assumed valid; (4) a statement that if the consumer disputes all or part of the debt in writing within 30 days, Defendants will obtain verification of the debt and mail it to the consumer; and (5) a statement that, upon the consumer’s written request within the 30- day period, the debt collector will provide the name and address of the original creditor, if different from the current creditor. 31... Read More

Penalties: N/A
Respondent: Absolute Financial Services, LLC, Absolute Financial Services Recovery, LLC, AFSR Global Logistics, LLC, LaShone ELAM, a/k/a LaShone Caldwell, in her individual and corporate capacity, and Talesia Neely, in her individual and corporate capacity,
Violation: Defendants fail to provide consumers, either orally in their initial communication with the consumer or in writing within five days after the initial oral communication, a notice containing (1) the amount of the debt; (2) the name of the creditor to whom the debt is owed; (3) a statement that unless the consumer disputes the debt, the debt will be assumed valid; (4) a statement that if the consumer disputes all or part of the debt in writing within 30 days, Defendants will obtain verification of the debt and mail it to the consumer; and (5) a statement that, upon the consumer’s written request within the 30- day period, the debt collector will provide the name and address of the original creditor, if different from the current creditor... Read More

Penalties: N/A
Respondent: Axon Enterprise, Inc.
Violation: Respondent and the accompanying declaration fail to satisfy Rule 3.45, only offering cursory explanations of the confidential nature of “the information” contained in “the materials,” and rehashing the six-factor test set forth in Bristol-Myers Co., 90 F.T.C. 455, 456 (1977)... Read More

FRS

1 Enforcement Document

$0.00 in Fines

Penalties: N/A
Respondent: Atlantic Community Bankers Bank Camp Hill, Pennsylvania and Federal Reserve Bank Of Philadelphia
Violation: Atlantic Community Bankers Bank, Camp Hill, Pennsylvania, (the “Bank”) is a state-chartered bank that is a member of the Federal Reserve System; WHEREAS, the most recent examination of the Bank conducted by the Federal Reserve Bank of Philadelphia (the “Reserve Bank”) identified deficiencies in the Bank’s compliance with applicable laws, rules, and regulations relating to anti-money laundering (“AML”), including the Bank Secrecy Act (“BSA”) (31 U.S.C. § 5311 et seq... Read More

FINRA

9 Enforcement Documents

$98,500.00 in Fines

Penalties: $15,000.00
Respondent: Walter Osvaldo Vazquez
Violation: Between May 2017 and June 2018, Vazquez used two personal email accounts to send and receive emails without providing copies to his employing firm, thereby preventing the firm from capturing the securities-related communications. As a result, Vazquez violated FINRA Rules 4511 and 2010. In addition, between August 2015 and March 2018, while associated with two member firms, Vazquez created and provided sixteen consolidated account statements to one customer. The consolidated statements did not identify the firm with which Vazquez was associated at the time and did not differentiate between the assets held at the member firm and those held away... Read More

Penalties: $48,000.00
Respondent: FIS Brokerage & Securities Services LLC,
Violation: From November 2015 through September 2019, the supervisory system and pretrade risk management controls maintained by the firm were not reasonably designed to prevent the entry of erroneous orders. This conduct violated Rule 15c3-5 of the Securities Exchange Act of 1934, as amended (the Exchange Act), specifically Rules 15c3-5(b) and 15c3-5(c)(1)(ii), and FINRA Rules 3110 and 2010... Read More

Penalties: $5,000.00
Respondent: Michael R. Jeppson
Violation: In anticipation of joining another FINRA member firm, Jeppson improperly removed nonpublic personal customer information from Merrill Lynch, without Merrill Lynch’s or the customers’ knowledge or consent. As a result, Jeppson violated FINRA Rule 2010 by 2 causing Merrill Lynch to violate Regulation S-P: Privacy of Consumer Financial Information and Safeguarding Personal Information... Read More

Penalties: $10,000.00
Respondent: Michael Kris Pina
Violation: In April 2019 and July 2019, pursuant to Rule 8210, FINRA issued requests to Pina in which it asked Pina to, among other things, identify each of his loans and the amount he still owed to each lender. In Pina's written responses on April 17, 2019 and July 22, 2019, although he accurately described two of the loans, he failed to disclose the loan from customer MP, and misstated the amount that he owed at the time to customer JP. In January 2020, during his investigative testimony, Pina corrected his prior misstatements and testified truthfully about his loan from MP and the amount he still owed to JP. By virtue of the foregoing, Pina violated FINRA Rules 8210 and 2010... Read More

Penalties: $5,000.00
Respondent: Scott Joseph Bird
Violation: In November 2018, the affiliate commenced another review of Respondent's PFA and required Respondent to submit certain PFA bank statements that would have reflected Respondent's continued failure to maintain a balanced PFA. Therefore, Respondent falsified seven bank statements, before submitting them to the affiliate, in order to conceal the failure. Respondent altered the bank statements to omit returned check fees and related overdraft fees and interest charges that were imposed because Respondent failed to timely request payments from the affiliate... Read More

Penalties: $5,000.00
Respondent: Kevin Shivan-Yee Liu
Violation: Liu circumvented DCF’s policies and procedures by transferring 495 files containing confidential information, as defined by the firm, to a personal cloud storage site or personal email account. Almost all of the file transfers occurred shortly before Liu informed DCF that he was resigning to assume a position elsewhere. Liu, in connection with his pending departure, falsely certified to the firm that he was not taking any confidential information with him. By virtue of his misconduct, Liu violated FINRA Rule 2010... Read More

Penalties: N/A
Respondent: Cynthia Kay Parrott Cooney
Violation: On August 27, 2020, FINRA staff sent Respondent a request for on-the-record testimony under FINRA Rule 8210. Based on her duties as a Client Associate at Wells Fargo, Respondent was an associated person and therefore required to comply with FINRA’s request. As stated in her email to FINRA staff on August 29, 2020, and by this agreement, Respondent acknowledges that she received FINRA’s request and will neither appear for on-the-record testimony nor cooperate with FINRA’s investigation. By refusing to appear for on-the-record testimony as requested under FINRA Rule 8210, Respondent violated FINRA Rules 8210 and 2010... Read More

Penalties: N/A
Respondent: Robert Barnard
Violation: On September 11, 2020, FINRA staff, pursuant to FINRA Rule 8210, requested the Respondent appear for on-the-record testimony in connection with FINRA's investigation of him. In an email to FINRA staff on September 15, 2020, and by this agreement, Respondent acknowledges that he received FINRA's request and will not appear for on-the-record testimony at any time. By refusing to appear for on-the-record testimony as requested pursuant to FINRA Rule 8210, Respondent violated FINRA Rules 8210 and 2010... Read More

CME

7 Enforcement Documents

$285,500.00 in Fines

Penalties: $25,000.00
Respondent: 303 Proprietary Trading LP
Violation: Pursuant to an offer of settlement in which 303 Proprietary Trading LP (“303 Prop”) neither admitted nor denied the rule violation upon which the penalty is based, on September 23, 2020, a Panel of the Chicago Mercantile Exchange Business Conduct Committee (“Panel”) found that on multiple dates between March 1, 2017, and July 31, 2017, a trader employed by 303 Prop entered and canceled large orders in CME Live Cattle and Lean Hogs futures markets on the Globex electronic trading platform without the intent to trade. After receiving fills on smaller orders he entered that were resting on the opposite side of the order book, the employee canceled the larger order... Read More

Penalties: $50,000.00
Respondent: 303 Proprietary Trading LP
Violation: Pursuant to an offer of settlement in which 303 Proprietary Trading LP (“303 Prop”) neither admitted nor denied the rule violation upon which the penalty is based, on September 23, 2020, a Panel of the Commodity Exchange Business Conduct Committee (“Panel”) found that on multiple dates between May 31, 2017, and December 11, 2017, a trader employed by 303 Prop entered layered orders in Commodity Exchange Copper futures markets on the Globex electronic trading platform without the intent to trade... Read More

Penalties: $15,000.00
Respondent: Barry Scher
Violation: Pursuant to an offer of settlement in which Barry Scher (“Scher”) neither admitted nor denied the rule violation upon which the penalty is based, on September 24, 2020, 2020, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found that on certain days between October 8, 2018, and October 19, 2018, Scher directed a clerk on the trading floor to enter buy and sell orders in October 2018 Live Cattle futures contracts for accounts with common beneficial ownership... Read More

Penalties: $50,000.00
Respondent: Brendan Delovitch
Violation: Pursuant to an offer of settlement in which Brendan Delovitch (“Delovitch”) neither admitted nor denied the rule violation upon which the penalty is based, on September 23, 2020, a Panel of the Commodity Exchange Business Conduct Committee (“Panel”) found that on multiple dates between May 31, 2017, and December 11, 2017, Delovitch entered layered orders in the July 2017, September 2017, December 2017, and March 2018 Copper futures markets without the intent to trade... Read More

Penalties: $85,000.00
Respondent: Ronin Capital LLC
Violation: Pursuant to an offer of settlement in which Ronin Capital LLC (“Ronin”) neither admitted nor denied the rule violations upon which the penalty is based, on September 24, 2020, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found that on June 4, 2019, a Ronin trader executed All-or-None transactions in CME covered December 2019 Eurodollar 9762 put options opposite an affiliate account with common beneficial ownership... Read More

Penalties: $25,000.00
Respondent: Timothy O’Leary
Violation: Pursuant to an offer of settlement in which Timothy O’Leary (“O’Leary”) neither admitted nor denied the rule violation upon which the penalty is based, on September 24, 2020, a Panel of the Chicago Mercantile Exchange (“CME”) Business Conduct Committee (“Panel”) found that on June 4, 2019, O’Leary executed All-orNone transactions in CME covered December 2019 Eurodollar 9762 put options for an account owned by his employer opposite an affiliate account with common beneficial ownership... Read More

Penalties: $35,000.00
Respondent: Wesley Johnson
Violation: Pursuant to an offer of settlement in which Wesley Johnson (“Johnson”) neither admitted nor denied the rule violation upon which the penalty is based, on September 23, 2020, a Panel of the Chicago Mercantile Exchange Business Conduct Committee (“Panel”) found that on multiple dates between March 1, 2017, and July 31, 2017, Johnson entered large orders in the April 2017, June 2017, August 2017, October 2017, December 2017, and April 2018 Live Cattle, and in the June 2017, July 2017, August 2017, October 2017, December 2017 and February 2018 Lean Hogs futures markets without the intent to trade... Read More

SEC

35 Enforcement Documents

$61,940,870.76 in Fines

Penalties: N/A
Respondent: Kroll Bond Rating Agency, LLC
Violation: As a result of the conduct described above, KBRA willfully violated Exchange Act Section 15E(c)(3)(A) by failing to establish, maintain and enforce effective internal controls governing the implementation and adherence to its policies, procedures, and methodologies for determining conduit/fusion CMBS ratings... Read More

Penalties: $350,000.00
Respondent: Manitex International, Inc.
Violation: As a result of the conduct described above, Manitex violated Section 17(a) of the Securities Act which prohibits fraudulent conduct in connection with the offer or sale of securities, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, which prohibit fraudulent conduct in connection with the purchase or sale of securities. As a result of the conduct described above, Manitex violated Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 promulgated thereunder which require issuers of securities registered pursuant to Section 12 of the Exchange Act to file periodic and other reports with the Commission, including annual, quarterly and current reports, on the appropriate forms and within the period specified on the form that must contain any material information necessary to make the required statements made in the report not misleading... Read More

Penalties: $5,000,000.00
Respondent: Morgan Stanley & Co. LLC.,
Violation: As a result of the conduct described above, MS&Co willfully violated Section 200(g) of Reg SHO, id. § 242.200(g), which requires a broker or dealer to mark sales of a security as “long” only if it is deemed to own the security being sold, among other requirements... Read More

Penalties: $250,000.00
Respondent: Salt Blockchain Inc., f/k/a Salt Lending Holdings, Inc.
Violation: As a result of the conduct described above, Salt violated Section 5(a) of the Securities Act which states that unless a registration statement is in effect as to a security, it shall be unlawful for any person, directly or indirectly, to make use of any means or instruments of transportation or communication in interstate commerce or of the mails to sell such security through the use or medium of any prospectus or otherwise; or to carry or cause to be carried through the mails or in interstate commerce, by any means or instruments of transportation, any such security for the purpose of sale or for delivery after sale... Read More

Penalties: $80,000.00
Respondent: Andrew Rooke
Violation: At Rooke’s direction, the GM took charge of the SVW relationship, secured the financing for SVW’s crane purchases, and, on behalf of Manitex, guaranteed the financing for the cranes. The GM, in consultation with Rooke, then created a purported financing subsidiary for SVW called Rental Consulting Services Company (“RCSC”), to conceal the fact that Manitex was making the financing payments. In order to make the payments, the GM created a series of fraudulent invoices on RCSC letterhead for fictitious services that RCSC purportedly provided to Manitex... Read More

Penalties: $115,000.00
Respondent: Interface, INC., Gregory J. Bauer, CPA, and Patrick C. Lynch, CPA,
Violation: Based on the foregoing, the Commission finds that Respondent Interface violated Securities Act Sections 17(a)(2) and 17(a)(3) and Exchange Act Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B), and Exchange Act Rules 12b-20, 13a-1, 13a-11, and 13a-13. Based on the foregoing, the Commission finds that Respondent Bauer: (a) willfully violated Securities Act Sections 17(a)(2) and 17(a)(3) and Exchange Act Rule 13b2-1; and (b) caused Interface’s violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act, and Rules 12b-20, 13a-1, 13a-11, and 13a-13 promulgated thereunder... Read More

Penalties: $1,400,000.00
Respondent: BGC PARTNERS, INC.,
Violation: BGC violated Sections 17(a)(2) and 17(a)(3) of the Securities Act. Section 17(a)(2) prohibits any person from obtaining money or property in the offer or sale of securities by means of an untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading. Section 17(a)(3) of the Securities Act prohibits any person from engaging in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser. Negligence is sufficient to establish violations of Sections 17(a)(2) and 17(a)(3). Aaron v. SEC, 446 U.S. 680, 697 (1980)... Read More

Penalties: $1,500,000.00
Respondent: Fulton Financial Corporation,
Violation: Fulton failed to devise and maintain a sufficient system of internal accounting controls related to its closing process, use of a third-party valuation expert in its fair value analysis, management’s review for reasonableness of the inputs to a third-party expert’s discounted cash flow analysis, and the documentation and review of proposed but unrecorded accounting adjustments. Fulton also maintained inaccurate books and records that reflected an erroneous valuation allowance over two quarters that was $1.3 million higher than it would have been had Fulton followed its disclosed valuation process. Accordingly, Fulton violated Section 13(a) of the Exchange Act and Rules 13a-1, 13a-13 and 12b-20 thereunder and Exchange Act Sections 13(b)(2)(A) and (B)... Read More

Penalties: $6,000,000.00
Respondent: HP INC.
Violation: HP violated Section 17(a)(2) and (3) of the Securities Act, which prohibit any person from directly or indirectly obtaining money or property by means of any untrue statement of a material fact or any omission to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading, or engaging in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon the purchaser, in the offer or sales of securities... Read More

Penalties: $35,000,000.00
Respondent: J.P. Morgan Securities LLC
Violation: In anticipation of the institution of these proceedings, Respondent has submitted an Offer of Settlement (“Offer”) that the Commission has determined to accept. Respondent admits the facts set forth in Section III below, acknowledges that its conduct violated the federal securities laws, admits the Commission’s jurisdiction over it and the subject matter of these proceedings, and consents to the entry of this Order Instituting Administrative and Cease-and-Desist Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 15(b) of the Securities Exchange Act of 1934, Making Findings, and Imposing Remedial Sanctions and a Cease-and-Desist Order (“Order”), as set forth below... Read More

Penalties: $764,836.30
Respondent: Kroll Bond Rating Agency, LLC
Violation: On September 29, 2020, the Securities and Exchange Commission (“Commission”) issued an Order (the “Order”)1 that simultaneously instituted and settled public administrative and ceaseand-desist proceedings against Kroll Bond Rating Agency, LLC (“KBRA”). The Commission found that beginning in 2018, KBRA, a Nationally Recognized Statistical Rating Organization (“NRSRO”), in rating certain collateralized loan obligation (“CLO”) combination notes (“Combo Notes”), failed to establish, maintain, enforce and document certain policies and procedures, in violation of Rule 17g-8(b)(1) of the Securities Exchange Act of 1934 (“Exchange Act”). The Commission ordered KBRA to cease and desist from committing or causing any violations and any future violations of Rule 17g 8(b)(1) of the Exchange Act. The Commission also ordered that KBRA be censured and to comply with undertakings enumerated in the Order... Read More

Penalties: $55,000.00
Respondent: MICHAEL SCHNEIDER, CPA
Violation: Schneider willfully violated Section 17(a) of the Securities Act which prohibits fraudulent conduct in connection with the offer or sale of securities, and Section 10(b) of the Exchange Act and Rule 10b-5 thereunder, which prohibit fraudulent conduct in connection with the purchase or sale of securities. As a result of the conduct described above, Schneider willfully violated Section 13(b)(5) of the Exchange Act which prohibits anyone from knowingly circumventing or knowingly failing to implement a system of internal accounting controls, or knowingly falsifying any book, record or account. Also, Schneider willfully violated Exchange Act Rule 13b2-1, which prohibits any person from, directly or indirectly, falsifying or causing to be falsified, any book, record or account subject to Exchange Act Section 13(b)(2)... Read More

Penalties: $9,500,000.00
Respondent: FIAT CHRYSLER AUTOMOBILES N.V
Violation: Section 13(a) of the Exchange Act requires that every issuer of a security registered pursuant to Section 12 of the Exchange Act file with the Commission periodic and current reports with the Commission. Rule 12b-20 under the Exchange Act requires issuers to add to their statements or reports such further material information, if any, as may be necessary to make the required statements, in the light of the circumstances under which they are made, not misleading. Rule 13a-16 of the Exchange Act requires foreign private issuers with classes of securities registered pursuant to Section 12 to furnish to the Commission accurate reports on Form 6-K. As a result of the conduct described above, FCA violated Section 13(a) of the Exchange Act and Rules 13a-16 and 12b-20 thereunder... Read More

Penalties: $300,000.00
Respondent: GREAT PLAINS TRUST COMPANY, INC.
Violation: Section 7(a) of the Investment Company Act prohibits an investment company not registered with the Commission from engaging in any business in interstate commerce, including offering, selling, purchasing or redeeming interests in the investment company. As a result of the conduct described above, Great Plains caused the Trust Funds’ violations of Section 7(a) of the Investment Company Act. Section 5(a) of the Securities Act prohibits the sale of securities in interstate commerce or the mails before a registration statement is in effect. Section 5(c) of the Securities Act prohibits the offer to sell any security in interstate commerce or the mails unless a registration statement has been filed as to such security with the Commission. As a result of the conduct described above, Great Plains violated Sections 5(a) and 5(c) of the Securities Act... Read More

Penalties: $764,836.30
Respondent: Kroll Bond Rating Agency, LLC
Violation: Section 938 of the Dodd-Frank Act, entitled “Universal Ratings Symbols,” provides that the Commission shall require, by rule, each NRSRO to establish, maintain, and enforce written policies and procedures that, in relevant part, “(1) assess the probability that an issuer of a security or money market instrument will default, fail to make timely payments, or otherwise not make payments to investors in accordance with the terms of the security or money market instrument... Read More

Penalties: $600,000.00
Respondent: HILTON WORLDWIDE HOLDINGS INC.,
Violation: This matter arises from Hilton Worldwide Holdings Inc.’s failure to disclose in its definitive proxy statements approximately $1.7 million worth of certain travel-related perquisites and personal benefits it paid to, or on behalf of, its Chief Executive Officer, President, and member of its board of directors (the “CEO”) and certain other executives who were eligible for travelrelated benefits (together with the CEO, the “Named Executive Officers”), from 2015 through 2018. The Board-authorized perquisites included, among other things, expenses associated with the CEO’s personal use of Hilton’s corporate aircraft and the Named Executive Officers’ hotel stays. In connection with this conduct, Hilton violated Sections 13(a) and 14(a) of the Exchange Act and Rules 12b-20, 13a-1, and 14a-3 thereunder... Read More

Penalties: $8,824.00
Respondent: Scott Eugene Bachman,
Violation: This matter concerns Bachman’s violations of the broker-dealer and securities registration provisions of the federal securities laws in connection with the sale of securities related to an oil and gas drilling project known as “Woodland-OP1 Oddfellows A-1” (the “Oddfellows Project”). Since July 17, 2017, Bachman has been a principal and served as the co-manager of Crudefunders, LLC, which previously operated an online equity crowdfunding portal. Crudefunders has never been registered in any capacity with the Commission. Between August 2017 and December 2017, Bachman directed Crudefunders’ Director of Client Relations to distribute promotional materials to potential investors concerning the Oddfellows Project, and to offer and sell securities, in the form of “membership units” of an LLC, through phone calls and emails. Bachman directed the use of investor funds in connection with the Oddfellows Project, and, at Bachman’s direction, Crudefunders received transaction-based compensation for its sales of securities. However, Bachman was not registered with the Commission as a broker-dealer or associated with a registered broker-dealer. In addition, these securities were not registered and did not qualify for any exemption from registration. Therefore, Bachman violated Section 15(a)(1) of the Exchange Act and Sections 5(a) and 5(c) of the Securities Act... Read More

Penalties: $148,263.10
Respondent: Raymond Allan Fine
Violation: This matter concerns violations of the federal securities laws by Raymond Allan Fine in connection with three oil and gas drilling projects conducted by Crudefunders, LLC (“Crudefunders”), an unregistered, online equity crowdfunding portal. Between July 2014 and July 2017, Fine was one of the owners and managers of Crudefunders, which conducted several securities offerings through telephone solicitations and its web site, www.crudefunders.com. Fine violated Sections 17(a)(2) and 17(a)(3) of the Securities Act by making undisclosed withdrawals from investor funds in order to pay for Crudefunders’ business operations and provide compensation for himself and other Crudefunders employees. Fine also violated Securities Act Sections 5(a) and 5(c) by offering and selling unregistered securities that did not qualify for an exemption, and violated Exchange Act Section 15(a) by acting as an unregistered broker-dealer in connection with three of Crudefunders’ offerings... Read More

Penalties: $89,111.06
Respondent: David Taylor
Violation: This matter concerns violations of the federal securities laws by Taylor in connection with an oil drilling project conducted by Crudefunders, LLC (“Crudefunders”), an unregistered, online equity crowdfunding portal. Between July 2014 and December 2017, Taylor was one of the owners and managers of Crudefunders, which conducted several securities offerings through telephone solicitations and its web site, www.crudefunders.com. Taylor violated Sections 17(a)(2) and 17(a)(3) of the Securities Act by making undisclosed withdrawals from investor funds in order to pay for Crudefunders’ business operations and provide compensation for himself and other Crudefunders employees. Taylor also violated Securities Act Sections 5(a) and 5(c) by offering and selling unregistered securities that did not qualify for an exemption, and violated Exchange Act Section 15(a) by acting as an unregistered broker-dealer... Read More

CFTC

18 Enforcement Documents

$448,682,280.00 in Fines

Penalties: $400,000.00
Respondent: A&A Trading, Inc.,
Violation: A&A Trading violated Regulation 166.3 in two ways. First, A&A Trading’s policies and procedures required the filing of a SAR under limited and incomplete circumstances— requiring a SAR filing for “[u]nusual customer wire activity, such as frequent transfers not consistent with margin requirements.” A&A Trading’s policy, therefore, failed to account for all the circumstances in which a SAR is required—in particular to Harris’s activity, transactions that were “not the sort [of transactions] in which the particular customer would normally be expected to engage” and transactions that involved potential “criminal activity.” Either circumstance would be included in an adequate SAR policy. In any event, after learning of Harris’s unauthorized trading, A&A Trading failed to file a SAR 8 concerning Harris’s unauthorized trading. That is, even if A&A Trading’s policy could be read to require a SAR filing under the circumstances, it failed to follow that policy... Read More

Penalties: $4,500,000.00
Respondent: Citibank N.A., Citigroup Energy Inc., and Citigroup Global Markets, Inc.,
Violation: Citi violated Regulation 166.3 because it failed to diligently supervise the operations of the Audio Preservation System. Citi’s supervisory system was inadequate because it lacked adequate procedures to detect and elevate risks in the Audio Preservation System, and it failed to perform its supervisory duties diligently. The failures adequately to oversee the Audio Preservation System are all the more serious given that Citi used the Audio Preservation System “stopgap” as a long-term solution to comply with regulatory and legal preservation and retention requirements. Citi failed to supervise the Audio Preservation System by (a) failing to ensure the that the GVO group was adequately staffed, including employing individuals with adequate technical knowledge of the System; (b) failing to detect, at the highest levels of the GVO group, the risks of deletions posed by the System and failing to take steps to address the risk of deletion (including, for example, failing to take appropriate steps to ensure that GVO staff knew how best to ensure that the Retention Rule setting would not result in the deletion of audio intended to be preserved); (c) failing to ensure procedures were in place to document, understand, and test changes to the Audio Preservation System; and (d) failing to have adequate procedures in place to ensure that other business functions—including the legal and compliance functions who used the Audio Preservation System to respond to regulatory inquires—were made aware of the risk of deletion posed by the System... Read More

Penalties: $445,000.00
Respondent: ARB Trading Group LP,
Violation: During the Relevant Period, ARB Trading, through Traders 1, 2, 3, 4, and 5 (collectively, the “Traders”) engaged in hundreds of instances of the disruptive trading practice known as “spoofing” (bidding or offering with the intent to cancel the bid or offer before execution). In the aggregate, the Traders engaged in spoofing in the lean hogs and live cattle futures contracts traded on the Chicago Mercantile Exchange (“CME”); silver and copper futures contracts traded on the Commodity Exchange (“COMEX”); soybean futures contracts traded on the Chicago Board of Trade (“CBOT”); and cotton, canola, and sugar futures contracts traded on ICE Futures, US (“ICE”), all of which are futures exchanges and designated contract markets. CME, COMEX, and CBOT are owned and operated by CME Group Inc., while ICE is owned and operated by Intercontinental Exchange, Inc. This conduct violated Section 4c(a)(5)(C) of the Act, 7 U.S.C. § 6c(a)(5)(C) (2018)... Read More

Penalties: $100,000.00
Respondent: Brendan Delovitch,
Violation: During the Relevant Period, Delovitch engaged in multiple instances of the disruptive trading practice known as “spoofing” (bidding or offering with the intent to cancel the bid or offer before execution) involving futures contracts including, copper and silver futures contracts traded on Commodity Exchange (“COMEX”), soybean futures contracts traded on Chicago Board of Trade (“CBOT”), and live cattle futures contracts traded on Chicago Mercantile Exchange (“CME”), designated contract markets owned and operated by CME Group Inc. This conduct violated Section 4c(a)(5)(C) of the Act, 7 U.S.C. § 6c(a)(5)(C) (2018)... Read More

Penalties: $135,000.00
Respondent: Thomas Donino,
Violation: During the Relevant Period, Donino engaged in multiple instances of the disruptive trading practice known as “spoofing” (bidding or offering with the intent to cancel the bid or offer before execution) involving futures contracts including, among other contracts, soybean futures contracts, gold futures contracts, and crude oil futures contracts, traded on Chicago Board of Trade (“CBOT”), Commodity Exchange (“COMEX”), and New York Mercantile Exchange (“NYMEX”), respectively, designated contract markets owned and operated by CME Group Inc. This conduct violated Section 4c(a)(5)(C) of the Act, 7 U.S.C. § 6c(a)(5)(C) (2018)... Read More

Penalties: $100,000.00
Respondent: Rajeev Kansal,
Violation: During the Relevant Period, Kansal engaged in multiple instances of the disruptive trading practice known as “spoofing” (bidding or offering with the intent to cancel the bid or offer before execution) involving futures contracts, including cotton futures contracts between May 2018 and April 2019 and sugar futures contracts between May 2020 and June 2020, traded on ICE Futures, U.S. (“ICE”), a designated contract market. This conduct violated Section 4c(a)(5)(C) of the Act, 7 U.S.C. § 6c(a)(5)(C) (2018)... Read More

Penalties: $100,000.00
Respondent: Wesley Johnson
Violation: During the Relevant Period, Johnson engaged in multiple instances of the disruptive trading practice known as “spoofing” (bidding or offering with the intent to cancel the bid or offer before execution) involving futures contracts including, lean hogs and live cattle futures contracts traded on the Chicago Mercantile Exchange (“CME”), a designated contract markets owned and operated by CME Group Inc. This conduct violated Section 4c(a)(5)(C) of the Act, 7 U.S.C. § 6c(a)(5)(C) (2018)... Read More

Penalties: $450,000.00
Respondent: FNY Partners Fund LP,
Violation: During the Relevant Period, Respondent, by and through one of its former traders, Trader A, engaged in multiple instances of the disruptive trading practice known as “spoofing” (i.e., bidding or offering with the intent to cancel the bid or offer before execution) involving futures contracts including, among other contracts, soybean futures contracts, gold futures contracts, and crude oil futures contracts, traded on Chicago Board of Trade (“CBOT”), Commodity Exchange (“COMEX”), and New York Mercantile Exchange (“NYMEX”), respectively, designated contract markets that are owned and operated by CME Group Inc. This conduct violated Section 4c(a)(5)(C) of the Act, 7 U.S.C. § 6c(a)(5)(C) (2018)... Read More

Penalties: $300,000.00
Respondent: Gain Capital Group, LLC
Violation: Respondent failed to diligently supervise its customer accounts in violation of Regulation 166.3, 17 C.F.R. § 166.3 (2019). Specifically, Respondent, through its officers, employees, and agents, failed to implement adequate policies and procedures relating to reviews of introduced customer accounts and failed to diligently follow the procedures in place. These accounts were introduced by Foremost, a registered independent introducing broker (“IB”) and independently traded by and through one of Foremost’s principals and associated persons (“AP”) Mark Miller (“Miller”), who used multiple trading schemes to defraud a Foremost customer (“Customer”)... Read More

Penalties: $669,750.00
Respondent: Marcus Schultz,
Violation: Schultz engaged in a scheme to defraud Energy Company by intentionally misappropriating Energy Company’s Inside Information. Schultz did so by: (1) disclosing it to Person A knowing that Person A would trade on the basis of this information, and (2) in some instances, disclosing it to Person A knowing that Person A would further disclose this information to Person B and Person C and that Person B and Person C would trade on the basis of this information. Schultz personally benefitted from his disclosures to Person A by sharing in the profits Person A, Person B, and/or Person C generated by trading on the basis of this information. By doing so, Schultz, breached the duty of trust and confidence he owed to Energy Company and thus violating Section 6(c)(1) of the Act and Regulation 180.1(a)(1) and (3)... Read More

Penalties: $5,000,000.00
Respondent: Morgan Stanley Capital Services LLC
Violation: The Commodity Futures Trading Commission (“Commission”) has reason to believe that since becoming provisionally registered as a swap dealer on December 31, 2012, Morgan Stanley Capital Services LLC (“Morgan Stanley” or “Respondent”) violated Sections 2(a)(13)(F) and (G) of the Commodity Exchange Act (the “Act”), 7 U.S.C. §§ 2(a)(13)(F), (G) (2018), and Commission Regulations (“Regulations”) 43.3(a), 45.3, 45.4, 45.5, and 45.6, 17 C.F.R. §§ 43.3(a), 45.3, 45.4, 45.5, 45.6 (2019). Therefore, the Commission deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted to determine whether Respondent engaged in the violations set forth herein and to determine whether any order should be issued imposing remedial sanctions... Read More

Penalties: $436,000,000.00
Respondent: JPMorgan Chase & Co., JPMorgan Chase Bank, N.A., and J.P. Morgan Securities LLC,
Violation: The Commodity Futures Trading Commission (“Commission”) has reason to believe that, from at least 2008 through 2016 (“Relevant Period”), JPMorgan Chase Bank, N.A. (“JPMCB”), J.P. Morgan Securities LLC (“JPMS”), and JPMorgan Chase & Co. (“JPMC & Co.”) (collectively, “JPM” or “Respondents”) violated Section 9(a)(2) of the Commodity Exchange Act (the “Act” or “CEA”), 7 U.S.C. § 13(a)(2) (2018); for conduct occurring on or after July 16, 2011, violated Section 4c(a)(5)(C) of the Act, 7 U.S.C. § 6c(a)(5)(C) (2018); and for conduct occurring on or after August 15, 2011, violated Section 6(c)(1) and 6(c)(3) of the Act, 7 U.S.C. § 9(1), (3) (2018), and Regulations 180.1(a)(1) and (3) and 180.2 of the Commission Regulations (“Regulations”), 17 C.F.R. §§ 180.1(a)(1), (3), 180.2 (2019); and further has reason to believe that JPMS violated Regulation 166.3, 17 C.F.R. § 166.3 (2019). Therefore, the Commission deems it appropriate and in the public interest that public administrative proceedings be, and hereby are, instituted to determine whether Respondents engaged in the violations set forth herein, and to determine whether any order shall be issued imposing remedial sanctions... Read More

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