Securities Industry Commentator by Bill Singer Esq

February 8, 2018

SEC Office of Compliance Inspections and Examinations Announces 2018 Examination Priorities (SEC Press Release 2018-12)
OCIE published its 2018 examination priorities, which consist of (1) compliance and risks in critical market infrastructure; (2) matters of importance to retail investors, including seniors and those saving for retirement; (3) FINRA and MSRB; (4) cybersecurity; and (5) anti-money laundering programs. READ the FULL TEXT OCIE 2018 Exam Priorities Report

In a nine-count superseding indictment, 36 individuals are charged for their alleged roles in the Infraud Organization, an Internet-based cybercriminal enterprise engaged in the large-scale acquisition, sale, and dissemination of stolen identities, compromised debit and credit cards, personally identifiable information, financial and banking information, computer malware, and other contraband. READ the FULL TEXT Superseding Indictment.
As set forth in part in the DOJ Press Release:

According to the indictment, the Infraud Organization was created in October 2010 by Svyatoslav Bondarenko aka "Obnon," aka "Rector," aka "Helkern," 34, of Ukraine, to promote and grow interest in the Infraud Organization as the premier destination for carding-purchasing retail items with counterfeit or stolen credit card information-on the Internet.  Under the slogan, "In Fraud We Trust," the organization directed traffic and potential purchasers to the automated vending sites of its members, which served as online conduits to traffic in stolen means of identification, stolen financial and banking information, malware, and other illicit goods.  It also provided an escrow service to facilitate illicit digital currency transactions among its members and employed screening protocols that purported to ensure only high quality vendors of stolen cards, personally identifiable information, and other contraband were permitted to advertise to members. 

According to the indictment, Infraud members held defined roles within the organization's hierarchy.  "Administrators" managed day-to-day operation of and strategic planning for the organization, approved and monitored membership, and meted out punishments and rewards to members.  "Super Moderators" oversaw and administered specific subject-matter areas within their expertise.  "Moderators" moderated one or two specific sub-forums within their areas of subject-matter expertise.  "Vendors" sold illicit products and services to Infraud members.  Finally, "VIP Members" and "Members" used the Infraud forum to gather information and to facilitate their criminal activities.  As of March 2017, there were 10,901 registered members of the Infraud Organization. 

Rankles Raised In FINRA Expungement ( Blog)
A broker-dealer's customer complains. It happens. Not all such complaints, however, allege misconduct by a stockbroker -- sometimes, customers are unhappy with the slow payment of dividends or interest, or a lousy online interface, or the firm's margin policies. In industry parlance, not every complaint is about "sales practices." In a recent FINRA expungement arbitration, a registered rep seeks to expunge from her industry record what was disclosed as something that looks a lot like a customer complaint about sales practices but for the fact that the employer broker-dealer, the customer, and an independent FINRA arbitrator all seem to agree that no such allegations were ever made. 

Rabobank NA Pleads Guilty, Agrees to Pay Over $360 Million / As a Result of Rabobank's Bank Secrecy Act and Anti-Money Laundering Failures it Processed over $360 Million in Illicit Funds and then Conspired with its Executives in an Attempt to Conceal These Ongoing Failures From its Regulator (DOJ Press Release)
Rabobank National Association (Rabobank) pled guilty to a felony conspiracy charge for impairing, impeding and obstructing its primary regulator, the Department of the Treasury's Office of the Comptroller of the Currency (the OCC) by concealing deficiencies in its anti-money laundering (AML) program and for obstructing the OCC's examination of Rabobank.  Rabobank will forfeit $368,701,259 as a result of allowing illicit funds to be processed without adequate Bank Secrecy Act (BSA) or AML review. READ the FULL TEXT:
  • Information  
  • Plea Agreement. 
As set forth in part in the DOJ Press Release:

At today's hearing, Rabobank pleaded guilty to conspiracy to defraud the United States and to corruptly obstruct an examination of a financial institution. In pleading guilty, Rabobank admitted to conspiring with several former executives to defraud the United States by unlawfully impeding the OCC's ability to regulate the bank, and to obstruct an examination by the OCC of its operations throughout California, including its Calexico and Tecate bank branches.  Rabobank admitted that its deficient AML program allowed hundreds of millions of dollars in untraceable cash, sourced from Mexico and elsewhere, to be deposited into its rural bank branches in Imperial County, and transferred via wire transfers, checks, and cash transactions, without proper notification to federal regulators as required by law.  Knowing these failures, during the OCC's 2012 examination of Rabobank's BSA/AML compliance program, Rabobank executives actively sought to hide and minimize the deficiencies in its AML program in an effort to deceive the regulators as to its true state in hopes of avoiding regulatory sanctions that had previously been imposed on Rabobank in 2006 and 2008 for nearly identical failures.