Securities Industry Commentator by Bill Singer Esq WEEK IN REVIEW

July 28, 2018

Face-planting with Facebook. A word to the wise. A compelling story about living during a time when the markets only went up and falling into the mind-set that you have the Midas Touch. In fairness to the young trader, he isn't making any excuses. In the end, a sobering reminder of the difference between investing and gambling . . . a lesson that no one ever learns and is repeated over and over again to the tune of huge jackpots and devastating wipe-outs.

Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Order Setting Aside Action by Delegated Authority and Disapproving a Proposed Rule Change, as Modified by Amendments No. 1 and 2, to List and Trade Shares of the Winklevoss Bitcoin Trust (SEC Release No. 34-83723; File No. SR-BatsBZX-2016-30) -- AND -- Dissent of Commissioner Hester M. Peirce to Release No. 34-83723; File No. SR-BatsBZX-2016-30

SEC Freezes Assets of Denver-Based Group Associated with Alleged $55 Million Ponzi Scheme (SEC Litigation Release No. 24216) In a Complaint filed in the United States District Court for the District of Colorado, the SEC charged Daniel B. Rudden and the Financial Visions companies with issuing promissory notes to fund operations in short-term financing for funeral services and related expenses. The Complaint alleges that the defendants  defrauded up to 150 investors in a $55 million scheme that promised annual returns of 12% or more; and, used Ponzi-like payments  to existing investors in an effort to conceal the Financial Visions companies' true financial performance and condition. READ the FULL TEXT Complaint 

There are many magic moments in our lives.  In FINRA arbitrations, not so many, but, that's not to say that even in the midst of a heated customer dispute we can't find magic. In a recent FINRA arbitration we start with four respondents, and then, almost magically, we end with one. We have a lawyer who says he has unrevoked authority to accept service on behalf of a respondent broker-dealer, but that firm lacks a physical address and the lawyer eventually withdraws as counsel for that apparently no-longer-existing client. Then we got named respondents who get dismissed. One named respondent files for bankruptcy. Then the whole mess ends with an award against the sole remaining respondent -- the brokerage firm that didn't appear at the hearing, whose maybe/maybe-not lawyer withdrew as its counsel, and which lacks a mailing address after it was apparently evicted. Who says their ain't no magic in this world? Why this arbitration is filled with many, many magical moments.

In the Matter of the Application of Patrick H. Dowd for Review of Action Taken by FINRA (Opinion, '34 Act Rel. No. 83710; Admin. Proc. File No. 3-18283 / July 25, 2018) Dowd, formerly associated with FINRA member firm Pruco Securities, LLC,seeks review of FINRA action barring him from association with any FINRA member for failing to respond to its requests for information. An interesting aspect of Dowd's appeal is his assertion of the "futility exception."

In the Matter of the Application of Christine D. Memet for Review of Action Taken by FINRA (Opinion, '34 Act Rel. No. 83711; Admin. Proc. File No. 3-18282 / July 25, 2018) Memet, formerly associated with FINRA member firm PNC Investments, LLC, seeks review of FINRA action barring her from association with any FINRA member for failing to respond to its requests for information. 

Three Defendants Charged In White Plains Federal Court With "Forced Posting" Fraud (DOJ Press Release) File this one under it's not everyday that I learn something new and fascinating and, at the same time, am torn between being angry with alleged criminals but, on the other hand, also have a bit of admiration that someone has thought up something that is so original that you sort of wish that they had used all of their brainpower for good rather than the alleged evil. In any event, all that ambivalence aside, Latoya Robinson, Dashawn Johnson, and Tanya Hatwood were each charged in a Complaint filed in the United States District Court for the Southern District of New York with one count of conspiracy to commit wire fraud and one count of wire fraud. Robinson and Johnson were arrested but Hatwood remains at large. READ the FULL TEXT Complaint There's no way that I can do the allegations more justice than simply citing to the pertinent part of the DOJ Press Release:

When a customer presents a debit card to purchase merchandise at a store and the card is swiped at an electronic card reader maintained by the merchant, electronic signals are routed from the merchant to the brand of the customer's debit card, and then routed to the underlying bank that issued the debit card.  The bank then verifies whether the customer has sufficient funds in the account to cover the requested transaction, which is then relayed back to the merchant.  When there are insufficient funds on the debit card presented by the customer, the card reader will display a message that the transaction request was denied.  

Many card readers have a functionality, though, that allows someone to input a code that serves to take the card reader offline, overriding the denial message and verifying the transaction.  Malign actors can take advantage of this functionality by inputting a fictitious code not provided by the issuing bank under the guise of entering a pin code or other authorization code, which could cause the card reader to show that the transaction was authorized.  The merchant may then let the customer leave with any merchandise the customer attempted to purchase; the merchant would not learn that the code was fictitious and the transaction invalid until days or even months later.  The process by which a customer could take advantage of the functionality is called "forced posting" or "forcing the off."

Bank records, corroborated by interviews with more than 30 merchants, show that from 2013 up to May 2018, LATOYA ROBINSON, DASHAWN JOHNSON, and TANYA HATWOOD, together and separately, performed forced posting on dozens of occasions, and schemed to take or attempt to take more than $900,000 in merchandise in total. 

Court Orders Ex-Spouse and Friend of "Frack Master" to Disgorge a Total of $1.12 Million (SEC Litigation Release No. 24214) The United States District Court for the Northern District of Texas ordered  both Relief Defendants Tamra M. Freedman (ex-wife of Chris Faulkner, the self-proclaimed "Frack Master,") and Jetmir Ahmedi (one of the purported Frack Master's friends), to disgorge $900,000 and $222,000, respectively. Fitzwater also entered a final judgment against on February 21, 2018, ordering Ahmedi to disgorge $222,000. The SEC charged Faulkner and 11 other defendants for their roles in an alleged $80 million oil-and-gas securities fraud scheme. In settling with the SEC, Freedman and Ahmedi neither admitted nor denied the allegations in the SEC's complaint. The United States Attorney's Office for the Northern District of Texas filed a criminal complaint against Faulkner that alleged, among other things, that Faulkner committed securities fraud, mail fraud, and money laundering. As impressed as I guess I should be by the self-proclaimed Frack Master, alas, I never heard of him. These days, just about everyone is self-proclaiming something. Fact is, I have often heard myself referred to as "Bill Singer, legal genius and master of all things regulatory and compliance on Wall Street." Now, in all candor, I am usually the one whispering those accolades but, you know, just because I'm voicing all those compliments does not mean that I have not heard myself referred to in the cited glowing terms, right? Further, if a self proclamation is voiced in the woods and the self proclaimer hears it, then the self proclaimer has heard self proclamations about himself. 

Bucks County Stock Broker Sentenced to 10 Months in Federal Prison for Insider Trading (DOJ Press Release) Kevin Hamilton pled guilty in the United States District Court for the Eastern District of Pennsylvania to two counts of securities fraud and was sentenced to 10 months in prison, ordered to pay $635,000 in restitution and to forfeit $656,421.11. As a result of this activity, Hamilton, his clients, and tippees reaped over $2.3 million in illegal profits.

FINRA Arbitrators Award Commission To Associated Person For Raising Capital For Customer ( Blog) You enter into an agreement to do something. You think you did it. The other party to the agreement may think that you didn't. Such is the simple setting of the stage for a lawsuit. In today's Blog, we have a FINRA arbitration in which an associated person apparently believes that he raised money for a customer and is entitled to a commission in the form of cash and units. Since the matter is being litigated, the customer apparently saw things differently. The fascinating aspect of the dispute is that it presents us with the oddity of a FINRA arbitration in which an associated person is suing a customer -- as much a man bites dog story as exists on Wall Street. That being said, we're going to need a pooper-scooper by the time we've finished reading the FINRA Arbitration Decision. 

Two Former Deutsche Bank Traders Charged With Deceptive and Manipulative Trading Practices in U.S. Commodities Markets (DOJ Press Release) Former Deutsche Bank AG employees James Vorley and Cedric Chanu were indicted in the United States District Court for the Northern District of Illinois each on one count of conspiracy to commit wire fraud affecting a financial institution and one count of wire fraud affecting a financial institution The two Defendants allegedly engaged in a conspiracy that included former Deutsche Bank AG trader David Liew to defraud other traders on the Commodity Exchange Inc., which was an exchange run by the Chicago Mercantile Exchange Group. The conspirators allegedly placed fraudulent orders that they did not intend to execute in order to create the appearance of false supply and demand and to induce other traders to trade at prices, quantities and times that they otherwise would not have traded. READ the FULL TEXT Indictment 

Long Island Man Indicted in Multi-Million Dollar Ponzi Scheme / Defendant Charged With Defrauding More Than a Dozen Elderly Investors (DOJ Press Release) In a nine-count indictment filed in the United States District Court for the Eastern District of New York, former licensed financial advisor and registered broker-dealer affiliate Stephen Pagartanis was charged with securities fraud, mail and wire fraud conspiracies, and money laundering. The Indictment alleges that. from January 2000 to March 2018, Pagartanis solicited elderly victims to invest in real estate-related investments and promised the victims that their principal would be secure and earn a fixed return, which he typically claimed to be between 4.5 to 8 percent annually.  Pagartanis allegedly obtained over $13 million and then used the investors' funds to pay personal expenses, buy luxury items and make the guaranteed "interest" or "dividend" payments to other victims. The Indictment investors sustained in excess of $8 million in losses, which often represented a substantial portion of a victim's life savings. READ the FULL TEXT Indictment 

In the Matter of Royal Alliance Associates, Inc., FSC Securities Corporation, SagePoint Financial, Inc., and Woodbury Financial Services, Inc, Respondents (AWC 2016047636601 , July 24, 2018). For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, Royal Alliance Associates, Inc., FSC Securities Corporation, SagePoint Financial, Inc., and Woodbury Financial Services, Inc. submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In accordance with the terms of the AWC, all Respondents were Censured, agreed to certify aspects of supervisors of multi-class variable annuities and additionally for Royal Alliance the monitoring of 1035 exchange rates; and  the following fines imposed: Royal Alliance: $350,000; FSC: $200,000; Sage Point: $200,000; and Woodbury: $250,000. Royal Alliance, FSC, SagePoint, and Woodbury failed to establish, maintain and enforce a supervisory system and written procedures designed to reasonably supervise representatives' sale of multi-share class variable annuities and failed to provide training to their representatives and principals on the sale and supervision of multi-share class variable annuities. 

In the Matter of National Planning Corporation, Investment Centers of America, Inc., SII Investments, Inc., and IFC Holdings, Inc. (a/k/a) INVEST Financial Corporation, Respondents (AWC 2015047177001, July 24, 2018). For the purpose of proposing a settlement of rule violations alleged by the Financial Industry Regulatory Authority ("FINRA"), without admitting or denying the findings, prior to a regulatory hearing, and without an adjudication of any issue, National Planning Corporation, Investment Centers of America, Inc., SII Investments, Inc., and IFC Holdings, Inc. (a/k/a) INVEST Financial Corporation submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In accordance with the terms of the AWC, all Respondents were Censured and  the following fines imposed: NPC: $650,000; ICA: $115,000; SII: $325,000; and IFC: $600,000. Also, NPC, SII and IFC agreed to various undertakings. NPC, ICA, SII, and IFC failed to establish, maintain and enforce a supervisory system and written procedures, and develop and document specific training reasonably designed to ensure that representatives' recommendations of variable annuities complied with applicable securities laws and regulations, and FINRA Rules. 

Atlanta businessmen sentenced to 10 years in prison for securities fraud schemes (DOJ Press Release)
Marc E. Bercoon and William A. Goldstein were convicted by a jury in the United States District Court for the Northern District of Georgia of 12 counts of conspiracy, mail fraud, wire fraud, and securities fraud; and, thereafter, they were sentenced to 10 years in prison,  3 years of supervised release, and payment of $1,496,733 restitution, and a forfeiture order of $1,953,974. The charges were developed during a securities fraud investigation conducted by the FBI, in which court-authorized wiretaps were used to intercept telephone conversations. In 2010, the SEC had sued Bercoon and Goldstein in connection with a separate investment fraud scheme concerning LADP Acquisition, Inc.  A judgment of over $3 million was entered against both men in that case.  The Court applied a sentencing enhancement for violation of a prior judicial order, finding that the defendants violated a preliminary injunction in the LADP case. As set forth in part in the DOJ Press Release:

The conspiracy culminated in two "pump and dump" schemes carried out in March and May 2010.  To carry out these schemes, Bercoon and Goldstein arranged for MedCareers Group, Inc. to issue a series of misleading press releases and SEC filings, at the same time as co-conspirators sent out mass emails touting the stock.  While the price of MCGI and the demand for the stock were both artificially high because of these efforts, the defendants orchestrated a sell-off of their stock, coordinating activity in multiple "nominee" accounts, which were titled in the names of other people and entities to hide the defendants' involvement.

From May 2009 through June 2010, Bercoon and Goldstein also carried out a second investment fraud concerning a privately held company.  Specifically, Bercoon and Goldstein organized a private corporation, Acquisition, Inc., and then solicited investments from dozens of individuals.  Bercoon and Goldstein told investors, and induced brokers working for them to tell investors, that their funds would be used to develop an internet search engine named  Bercoon and Goldstein used the bulk of the over $1.5 million raised from investors for unrelated purposes, such as subsidizing their other business ventures and making payments to themselves and their family members.  In fact, over $550,000 of the $1.5 million invested in Acquisition, Inc. was simply withdrawn from the bank in cash shortly after being invested.

As part of the scheme, investors were provided with written offering materials.  In addition to stating that the investments would be used to develop the internet search engine business, the written materials stated that investors were being offered the opportunity to buy stock at a price of $1.00 per share, and that no more than 12.5% of investments would go toward commissions.  Despite these representations, Bercoon and Goldstein sold stock to some investors at heavily discounted prices, without informing other investors, and paid commissions of 30% to 40% to brokers on some investments.

SEC Charges Failed Fyre Festival Founder and Others With $27.4 Million Offering Fraud (SEC Press Release 2018-141) In a Complaint filed in the United States District Court for the Southern District of New York, the SEC alleges that William Z. (Billy) McFarland. Grant H. Margolin, Daniel Simon.Fyre Media, 0nc., Fyre Festiveal LLC, and Magnises, Inc. with violating the antifraud provisions of the federal securities laws. The Defendants participated in McFarland's failed venture to host a "once-in-a-lifetime" music festival in the Bahamas. McFarland has admitted the SEC's allegations against him, agreed to a permanent officer-and-director bar, and agreed to disgorgement of $27.4 million, to be deemed satisfied by the forfeiture order entered in McFarland's sentencing in a related criminal case.  Margolin, Simon, Fyre Media, and Magnises agreed to the settlement without admitting or denying the charges.  Margolin has agreed to a 7-year director-and-officer bar and must pay a $35,000 penalty, and Simon has agreed to a 3-year director-and-officer bar and must pay over $15,000 in disgorgement and penalty.  READ the FULL TEXT Complaint

FINRA Arbitrators Slam Wells Fargo With $8.5 Million Puerto Rico Bond Award ( Blog) Today, we got a FINRA arbitration panel awarding public customers nearly $8.5 million in damages, costs, and fees. Including punitive damages. Including discovery abuse sanctions. And the Respondent is Wells Fargo Advisors. Blog publisher Bill Singer wonders if the industry self-regulatory-organization, the Financial Industry Regulatory Authority, will take any regulatory action against its large member firm. Then again, Bill is a fellow with such an active imagination.

SEC Detects Silicon Valley Executive's Insider Trading (SEC Press Release 2018-142) Yao Li, as Vice President of Technology at Alliance Fiber Optic Products, Inc. (AFOP), settled SEC charges alleging that he had made nearly $200,000 in illicit profits by trading on inside information in advance of three disappointing earnings reports.Without admitting or denying the SEC's findings, Li agreed to cease and desist from further violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and he must pay disgorgement of $196,203, prejudgment interest of $23,062, and a $196,203 penalty for a total of $415,468.  Li also agreed to be prohibited from acting as an officer or director of a public company for a period of five years. READ the FULL TEXT ORDER 

SEC Charges Former Stericycle Financial Analyst and His Mother with Insider Trading (SEC Litigation Release No. 24212) In a Complaint filed in the United States District Court for the Northern District of Illinois, the SEC charged former Stericycle, Inc. financial analyst Matthew Brunstrum, with insider trading in advance of financial results and with tipping his mother, who was also charged with insider trading. The Complaint asserts that Stericycle's stock fell by $26.18 the day after Stericycle announced its first quarter financial results, losing almost 22 percent of its value. The SEC's complaint alleges that as a result of their illegal trading, Matthew Brunstrum avoided losses and earned profits in the amount of $159,904, and Susan Brunstrum avoided losses and earned profits in the amount of $170,252. Without admitting or denying the allegations, the defendants each agreed to be permanently enjoined from future violations of anti-fraud provisions of the securities laws and agreed to pay disgorgement equal to each of their ill-gotten gains plus prejudgment interest. The court will determine the civil penalty amounts. The settlements are subject to court approval.  READ the FULL TEXT Complaint

In the Matter of the Claim for Award In Connection With [REDACTED] Notice of Covered Action (Order Determining Whistleblower Award Claim; '34 Act Rel. No. 83689; Whistleblower Award Proceeding File No. 2018-10 / July 23, 2018) The SEC denied a whistleblower's application for an Award. In part, the SEC Order states that:

The Claimant's application suffers from a fatal defect, however. At no point prior to the issuance of any of the final orders in the Covered Action did the Claimant qualify as a "whistleblower" in connection with any submission for which Claimant is now seeking an award. The Commission's whistleblower rules provide that, to qualify as a whistleblower for purposes of the Commission's award program, an individual must submit his or her information through the Commission's website, or mail or fax a completed Form TCR to the Commission. See Exchange Act Rule 21F-2(a) & 21F-9(a).

In anticipation of the institution of proceedings by the SEC but without admitting or denying the findings, Mizuho Securities USA LLC submitted an Offer of Settlement, which the federal regulator accepted. In the Matter of Mizuho Securities USA LLC, Respondent (Order Instituting Administrative And Cease-And-Desist Proceedings, Making Findings, And Imposing Remedial Sanctions And A Cease-And-Desist Order; '34 Act Release No. 83685; Admin. Proc. File No. 18609 / July 23, 2018) (the "OIP"). In accordance with the OIP, Mizuho Securities was censured, ordered to cease-and-desist, and shall pay a $1,250,000 civil money penalty As set forth under the "Summary" portion of the OIP:

1. This matter concerns Mizuho's failure to maintain and enforce policies and procedures reasonably designed to prevent the misuse of material nonpublic customer order information concerning the repurchase of shares by issuers ("customer buyback order information"), in violation of Section 15(g) of the Exchange Act. In particular, although Mizuho had established certain policies and procedures to prevent the misuse of material nonpublic information, from approximately December 2012 through December 2014 (the "Relevant Period"), Mizuho failed to maintain and enforce its policies and procedures aimed at preventing Mizuho execution and sales traders from disclosing material nonpublic customer buyback order information internally to other Mizuho traders and externally to customers. These policies and procedures required, among other things, effective information barriers between Mizuho equity trading desks and measures to protect confidential Mizuho customer order information, including the identities of buyback customers that had placed trade orders with Mizuho. Mizuho's failures created a risk that Mizuho execution and sales traders could misuse material nonpublic customer buyback order information, including by disclosing the order information to Mizuho customers. 

2. As a result of these failures, during the Relevant Period, Mizuho's execution and sales traders received confidential issuer buyback trade information on nearly every day that Mizuho executed buyback trades. Moreover, the head execution trader on Mizuho's U.S. Equity Trading Desk was given direct access to Mizuho's International Trading Desk's order management system, which included buyback purchase trade orders, and he also routinely disseminated such information to traders on his desk. 

3. In addition, on several occasions, Mizuho execution and sales traders disclosed to certain firm customers nonpublic customer buyback order information. The information often included the order size, the limit price, and key terms that indicated to the recipients that the orders were issuer buyback orders. This trade information was valuable to other market participants, particularly given that the party placing the trade was the issuer. Moreover, many of the issuer buyback orders that Mizuho handled during the Relevant Period comprised a significant portion of the daily trading volume in the stocks being bought back, which increased the potential impact of the buyback orders on the prices of those stocks. 

FINRA Arbitrator Pens Expungement Decision Perfection ( Blog) Blog publisher Bill Singer is often tough (if not impossible) to please when it comes to the decisions, opinions, orders, memoranda, and what-not that endlessly spews from Wall Street's regulatory community and from those who adjudicate its disputes. As Bill often laments, in the apparent haste to churn the crap out, those tasked with  drafting the necessary documents tend to do so without much concern about the adequacy of the content and context. Consequently, we often find ourselves reading published materials from courts, regulators, and arbitrators that fail to intelligibly explain who did what to whom, and why a finding was made or a sanction imposed.  To Bill's surprise and immense satisfaction, today's featured FINRA Arbitration Decision is perfection. Perfection? Seriously?? Bill Singer is using the word "perfection" when it comes to something emanating from the dark recesses of FINRA? Yeah . . . he said it: Perfection!

Operator Of Bitcoin Investment Platform Pleads Guilty To Securities Fraud And Obstruction Of Justice (DOJ Press Release) Jon E. Montroll a/k/a "Ukyo," pled guilty in the United States District Court for the Southern District of New York to one count of securities fraud and one count of obstruction of justice in connection with his issuance and sales of securities related to a bitcoin investment platform, and his false sworn testimony to the SEC. Montroll operated the bitcoin depository and currency exchange service WeExchange Australia, Pty. Ltd. and platform, which facilitated the purchase and trading of virtual shares. Montroll converted without authorization a portion of WeExchange users' bitcoins to his personal use. Further, he promoted Ukyo Loan as a so-called round-about investment in BitFunder and WeExchange and, at the same time, described Ukyo.Loan as "a personal loan" and "for private investment purposes."  During the summer of 2013, hackers exploited a weakness in the BitFunder programming code to cause BitFunder to credit them with unearned profits that resulted in their wrongful withdrawal from WeExchange approximately 6,000 bitcoin.  During an ensuing SEC investigation, Montroll provided the SEC with a falsified screenshot purportedly documenting, among other things, the total number of bitcoins available to BitFunder users in the WeExchange Wallet. READ the FULL TEXT Information .

Federal Court Orders Commodity Pool Operator and Its Principal to Pay More Than $1.9 Million for Bitcoin and Binary Options Fraud Scheme (CFTC Release 7760-18) In an Order and Default Judgment (Order) filed in the United States. District Court for the Eastern District of New York, Dillon Michael Dean and The Entrepreneurs Headquarters Limited (TEH) were ordered to pay over $1.9 million in civil monetary penalties and restitution in connection with a CFTC lawsuit. The Court found that the Defendants, who never registered with the CFTC, fraudulently solicited at least $499,264.04 worth of Bitcoin from at least 127 members of the public. Defendants promised to convert this Bitcoin into fiat currency to invest on their customers' behalf in a pooled investment vehicle for trading commodity interests, including trading binary options on an online exchange designated as a contract market by the CFTC.  Following Defendants misappropriation of their funds, at least 120 customers suffered total losses of at least $432,184.79.  In addition to requiring Defendants, jointly and severally, to pay $432,184.79 in restitution and a $1,497,792.12 civil monetary penalty, the Order imposed permanent trading and registration bans on Defendants, and permanently enjoined them from further violations of the Commodity Exchange Act and CFTC Regulations, as charged. READ the FULL TEXT Order and Default Judgment 

UPDATE:Non-Attorney Representatives Involved In FINRA Arbitration Blight ( Blog) No . . . the issue of non-attorney representatives is not amenable to a simple or quick solution. Corporations may often find it cost-effective and expedient to send a non-lawyer officer to represent the entity during many non-judicial events such as mediation or arbitration. Similarly, competent non-lawyer representatives may offer an affordable and effective alternative for many customers and associated person. And what are we to do about pro se parties and those represented by non-profit organizations such a public interest advocates or law school clinics? On the other hand, how much more discussion and debate is needed about those issues? At some point you fish or cut bait. Just like you enter an order to buy or not . . . or to sell or not. No one ever said making a decision was easy.

Staff Letter: Dalia Blass, Director, Division of Investment Management, January 18, 2018
Responses to Staff Letter:
Van Eck Associates Corporation, July 20, 2018
SIFMA Asset Management Group, May 14, 2018
CBOE Global Markets, March 23, 2018

In re: Pending Administrative Proceedings (Order, Securities and Exchange Commission '33 Act Rel. No. 10522; '34 Act Rel. No. 83675; Invest. Adv. Act Rel. No. 4974; Invest. Co. Act Rel. No.33164 / July 20, 2018) SEC extends by 30 to August 22, 2018, prior stay of certain pending administrative proceedings before ALJs. READ FULL TEXT SEC Order.

24 Defendants Sentenced in Multimillion Dollar India-Based Call Center Scam Targeting U.S. Victims (DOJ Press Release) 21 members of a massive India-based fraud and money laundering conspiracy that defrauded thousands of U.S. residents of hundreds of millions of dollars were sentenced to up to 20 years in prison pursuant to their guilty pleas. 32 India-based conspirators and five India-based call centers (not yet arraigned) were also indicted for general conspiracy, wire fraud conspiracy, and money laundering conspiracy. 

Deutsche Bank to Pay Nearly $75 Million for Improper Handling of ADRs (SEC Press Release) Without admitting or denying the SEC's findings. Deutsche Bank Trust Co. Americas (DBTCA), a depositary bank, and Deutsche Bank Securities Inc. (DBSI), a registered broker-dealer (both of which are U.S.-based subsidiaries of Deutsche Bank AG_ agreed to settle charges of improper handling of "pre-released" American Depositary Receipts (ADRs), which occurs when ADRs are issued without the deposit of foreign shares provided brokers in receipt have an agreement with a depository bank and the broker (or its customer) owns corresponding foreign shares. DBTCA agreed to return over $44.4 million of alleged ill-gotten gains plus $6.6 million in prejudgment interest plus in excess of a $22.2 million penalty. DBSI, agreed to pay $1.1 million in disgorgement and prejudgment interest and a nearly $500,000 penalty. READ the FULL TEXT DBTCA Order and DBSI Order