Securities Industry Commentator by Bill Singer Esq

July 12, 2019

https://www.justice.gov/usao-cdca/pr/former-hollywood-digital-marketing-executive-and-professional-poker-player-charged
In an Indictment filed in the United States District Court for the Central District of California, Dennnis Blieden was charged with 11 counts of wire fraud, one count of aggravated identity theft, and two forfeiture counts. Sure -- I could synopsize the DOJ Release but, omigod, you really need to see how fascinating a tale the federal prosecutors weaved in their own words: 

According to the indictment, between October 2015 and March 2019, Blieden was the controller and vice president of accounting and finance for StyleHaul, a digital company once based in Hollywood, but which relocated to London in April. In this role, Blieden had control over the company's bank accounts, and allegedly abused this authority to wire the company's money to his personal bank accounts. 

Blieden is charged with disguising his fraudulent behavior in various ways, including creating a fictitious lease in May 2018 for the rental of a condominium in Rosarito Beach, Mexico, which bore a forged signature of a StyleHaul executive.

The indictment further alleges that Blieden illicitly transferred $230,000 of StyleHaul's funds for his own personal use by falsely representing that the condominium was being rented for business purposes for StyleHaul's clients and employees. Blieden also created fictitious wire transfer letters purportedly from Western Union to make it falsely appear that he had caused wire transfers from StyleHaul to a client to pay money due to the client, the indictment alleges.

Blieden, who has entered and won professional poker tournaments, also frequently engaged in online gambling with crypto-currency he purchased with embezzled money, according to the government's motion requesting detention in this case. During the course of the alleged scheme, Blieden used money he stole from his employer to write $1,204,000 in personal checks to poker players, $1,134,956 was used to pay off his credit cards, and $8,473,734 was transferred to Blieden's crypto-currency accounts, according to court documents.

Shortly before his dismissal from StyleHaul, on February 21 and 22, Blieden entered into two poker tournaments, wherein the buy-in amounts were $52,000 and $103,000, respectively, court papers state. . . .

http://www.brokeandbroker.com/4689/finra-extraordinary-cooperation/
The way I understand it, Moses went up a mountain and God gave him two stone tablets consisting of Ten Commandments. On those two stones was the Law. Do this. Don't do that. Amazingly, those few words seemed to work and folks lived their lives by figuring out which of the 10 do's and don'ts they had (or had not) broken. Many years later, someone apparently had far too much time on his hands and figured we ought to tinker with the majestic simplicity of the whole two tablets and ten commandments thing. That resulted in the promulgation of Deuteronomy, which means the "Second Law," or, as modern lawyers would likely phrase it, the "Restatement of Law." What previously took two stones and 10 commandments, mushrooms in Deuteronomy in the form of Chapters 12 - 26. In offering a more up-to-date guidance as to the Ten Commandments, we expanded to 15 chapters. Clearly, Deuteronomy marks the beginning of bureaucracy. Over the ensuing millennia, we have expanded upon the original two stone tablets and gone way beyond the restatement of Deuteronomy. Title 18 of the United States Code is man's effort to promulgate a criminal code and the attendant criminal rules of procedure. At last glance, Title 18 ended with Chapter 601, and with Section 6005. Anyone have any idea how many stone tablets it would take to enter 6005 sections of law? 

https://www.justice.gov/usao-sdny/pr/hedge-fund-founder-ceo-and-cio-anilesh-ahuja-and-former-trader-jeremy-shor-convicted
After a six-week in the United States District Court for the Southern District of New York, Anilesh Ahuja a/k/a "Neil" and Jeremy Shor were each found guilty on one count of conspiracy to commit securities fraud, securities fraud, conspiracy to commit wire fraud, and wire fraud. As set forth in part in the DOJ Release:

Premium Point Investments

In or about 2008, AHUJA co-founded PPI, where he was the chief executive officer and chief investment officer.  PPI managed hedge funds focused primarily on structured credit products, including residential mortgage backed securities ("RMBS").   PPI's flagship mortgage credit fund (the "Hedge Fund") was launched in or about October 2009.  A segregated ERISA fund held the same positions as the Mortgage Credit Fund.  In 2013, PPI launched a new fund (the "New Issue Fund") that purchased and securitized pools of mortgages that were not issued or guaranteed by a government agency.  At various relevant times between 2008 and 2016, PPI managed billions in assets.  JEREMY SHOR was employed by PPI as a trader, where he focused on non-agency RMBS - i.e., RMBS securities that were not issued by a government agency.   

The Scheme to Mismark Securities 

From at least in or about 2014 through at least in or about 2016, AHUJA and SHOR participated in a scheme to defraud PPI's investors and potential investors in the Hedge Fund and the New Issue Fund by deceptively mismarking each month the value of certain securities held in these funds, and thus fraudulently inflating the NAV of those funds as reported to investors and potential investors. 

PPI fraudulently obtained inflated quotes, including from corrupt brokers, and manipulated its valuation process to inflate the purported value of securities held by the funds.    The effect of the mismarking scheme was to materially overstate the reported NAV - at times by more than $100 million across the funds managed by PPI.  This benefited PPI in at least two ways.  First, PPI was able to charge its investors higher management and performance fees.  Second, the PPI was able to forestall redemptions by investors who would have requested a return of their funds had they known PPI's true performance and operating health.

The mismarking scheme evolved as a result of demands by AHUJA that PPI maintain its track record of success and keep pace with the performance of peer funds, regardless of market conditions or the actual performance of the funds.  To achieve the goal of posting competitive returns, AHUJA, along with another partner, set an inflated "target" return for the Hedge Fund and New Issue Fund at the end of each month, which was at times based in part on the performance of peer funds.  The traders at PPI were then tasked with "reverse engineering" marks to meet the "targets."

https://www.ssb.texas.gov/sites/default/files/Woodland_Patman_ENF-19-CDO-1783.pdf
The Texas State Securities Board entered an Emergency Cease and Desist Order to stop the ongoing fundraising efforts of Patman, the director of operations for Woodland Resources, and company principals, Jeremy "JB" Yowell and Brett Kroh. In part the TSSB Order alleges that Michael E. Patman of Woodland Resources LLC is touting his decades of earning profits for investors through oil and gas drilling programs. Allegedly not disclosed to potential investors is that in 2010 the United States District Court for the Northern District of Texas ordered Patman and Sundance Resources, Inc. for which Patman served as Chairman of the Board, CEO, and President, to pay nearly $13 million in damages to investors who had sued them for fraud and breach of contract. Further non-disclosure extends to the bankruptcy of Patman Drilling International, Inc., for which Patman served CEO

FINRA Fines BNP Paribas Securities for Trade Reporting and Supervision. In the Matter of BNP Paribas Securities Corp., Respondent (FINRA AWC 2013039188301)
http://www.finra.org/sites/default/files/fda_documents/2013039188301
%20BNP%20Paribas%20Securities%20Corp.%20CRD%2015794%20AWC%20jm.pdf
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, BNP Paribas Securities submitted a Letter of Acceptance, Waiver and Consent ("AWC"), which FINRA accepted. In accordance with the terms of the AWC, FINRA imposed upon BNP Paribas Securities a Censure and $60,000 fine for violations for FINRA Rule 7230A, and $40,000 fine for violations of NASD Rule 3010 and FINRA Rules 3110 and 2010. As set forth in part in the "Overview" section of the AWC:

During the period from December 2011 through February 2014, BNP Paribas failed to report to the FINRA/Nasdaq Trade Reporting Facility ("FNTRF") approximately 676 transactions effected pursuant to the exercise of an Over-the-Counter ("OTC") option, and during the period from January 2015 through December 2016, the Firm failed to timely report to the FNTRF approximately 564 transactions effected pursuant to the exercise of an OTC option. 

In addition, during the period from December 2011 through September 2017 (the "Review Period"), BNP Paribas did not establish and maintain a reasonably designed supervisory system to achieve compliance with the timely reporting of transactions effected pursuant to the exercise of an OTC option to the FNTRF.