Morgan Stanley to Acquire E*TRADE, Creating a Leader in all Major Wealth Management Channels (BusinessWire)Members Exchange Closes Additional Round of Strategic Financing, Announces July 24th Launch Date / Strategic Investment led by J.P. Morgan, Goldman Sachs, Jane Street Capital / MEMX to Launch Exchange on July 24, 2020, Pending Regulatory Approval (BusinessWire)Notice of Filing of a Proposed Rule Change to Amend the FINRA Code of Arbitration Procedure for Customer Disputes and the FINRA Code of Arbitration Procedure for Industry Disputes to Apply Minimum Fees to Requests for Expungement of Customer Dispute Information (SEC Rel. No. 34-88251; File No. SR-FINRA-2020-005 / February 20, 2020)
SEC Charges Former Legal Department Employee and His Father with Insider Trading (SEC Release)Morgan Stanley to Acquire E*TRADE, Creating a Leader in all Major Wealth Management Channels (BusinessWire)SEC Obtains Final Judgment Against Unregistered Broker (SEC Release)SEC Obtains Final Judgment Against Former Research Analyst Who Tipped Hedge Fund Portfolio Manager (SEC Release)SEC Obtains Partial Summary Judgment Against Investment Adviser and Principal for False and Misleading Marketing of Investment StrategiesBiotech Company Employee Sentenced for Securities Fraud (DOJ Release)Romanian Hackers Sentenced / Members of Bayrob Criminal Enterprise Infected Thousands of Computers with Malware, Stole Millions of Dollars (FBI Release)North Dakota Man Is Arrested On Multiple Federal Charges For Alleged Investment Scheme / The Defendant Resided in Haywood County and Targeted Victims at, or Near, Retirement Age (DOJ Release)SEC Halts Alleged Ongoing Offering Fraud (SEC Release)CFTC Charges Investment Firm and VP with Commodity Pool Fraud (CFTC Release)
Members Exchange Closes Additional Round of Strategic Financing, Announces July 24th Launch Date / Strategic Investment led by J.P. Morgan, Goldman Sachs, Jane Street Capital / MEMX to Launch Exchange on July 24, 2020, Pending Regulatory Approval (BusinessWire)The combination will significantly increase the scale and breadth of Morgan Stanley's Wealth Management franchise, and positions Morgan Stanley to be an industry leader in Wealth Management across all channels and wealth segments. E*TRADE has over 5.2 million client accounts with over $360 billion of retail client assets, adding to Morgan Stanley's existing 3 million client relationships and $2.7 trillion of client assets. Morgan Stanley's full-service, advisor-driven model coupled with E*TRADE's direct-to-consumer and digital capabilities, will allow the combined business to have best-in-class product and service offerings to support the full spectrum of wealth.
MEMX will begin onboarding trading members later this month and plans to go live as a U.S. equity exchange on July 24, 2020. In order to prepare future members for the launch - allowing them time to connect, test, and certify as well as to ensure diverse liquidity on day one of trading - MEMX has released additional details, including testing and certification timelines, in a blog post on their website.
FINRA is proposing to amend the Code of Arbitration Procedure for Customer Disputes ("Customer Code") and the Code of Arbitration Procedure for Industry Disputes ("Industry Code") (together, "Codes") to apply minimum fees to requests for expungement of customer dispute information. The proposed rule change would amend Part IX (Fees and Awards) of the Codes to apply minimum filing fees to requests for expungement of customer dispute information, whether the request is made as part of the customer arbitration or the associated person files an expungement request in a separate arbitration ("straight-in request"). The proposed rule change would also apply a minimum process fee and member surcharge to straight-in requests, as well as a minimum hearing session fee to expungement-only hearings.. . .As discussed above, an expungement request is a non-monetary claim and parties requesting expungement should pay the fees associated with such requests under the Codes. FINRA is concerned about practices to avoid fees applicable to expungement requests, particularly straight-in requests. For example, FINRA is aware that associated persons who file a straight-in request often add a small monetary claim (typically, one dollar) to the expungement request to reduce the fees assessed against the associated person and qualify for an arbitration heard by a single arbitrator. Further, the small damages claim reduces the member fees that the forum assesses firms when an arbitration claim is filed. Thus, adding a claim for one dollar in a straight-in request against a member firm reduces the fees assessed to the associated person requesting expungement and member firm from $9,475 to $300.24 Often, the associated person will subsequently drop the claim for one dollar.. . .In response to these comments, FINRA declines to reduce or eliminate the proposed minimum filing fee. The $1,425 filing fee proposed in the Notice corresponds to the minimum claim amount tier for a three-person panel to decide an arbitration. As noted above, FINRA believes that most expungement requests should be decided by a three-person panel. In addition, an expungement request without a damages claim is a non-monetary claim under the Codes, which requires a three-person panel and currently requires a filing fee of $1,575. Thus, under the proposed rule change, an associated person, or a requesting party if it is an on-behalf-of request, would be required to pay a $1,575 filing fee for an expungement request made during a customer arbitration or straight-in request. Associated persons should not be able to reduce the filing fee from the $1,575 owed for a non-monetary claim to $50-and reduce the hearing session fee to $50, the member surcharge to $150 and the process fee to $0-merely by adding a small monetary claim, that the associated person often subsequently drops. Today, persons who do not add a small monetary claim to a straight-in request pay the $1,575 filing fee associated with non-monetary claims. The proposal would ensure that all associated persons who request expungement are subject to the same minimum filing fee. In addition, as with other non-monetary claims, FINRA incurs costs to process expungement requests. Accordingly, expungement requests should be subject to the same minimum filing fee as other non-monetary claims. . . .
learned through his employment that AIG was negotiating an acquisition of Validus Holdings, Ltd., an insurance company. According to the complaint, based on this information Jon Aronson purchased Validus shares and tipped his father, Elliet N. Aronson of Massachusetts, who also purchased shares. The complaint further alleges that Jon Aronson sold his shares and advised his father to do the same before the acquisition was announced, but Elliet Aronson opted to continue holding his shares, profiting $20,310 from his sales after the announcement.
[K]ouyoumdjian, a formerly registered, and later disbarred, stockbroker, acted as an unregistered broker of the common stock of ForceField Energy, Inc., then a public "alternative energy" company with common stock traded on the Nasdaq Capital Market. Kouyoumdjian solicited potential investors in a nationwide cold-calling campaign, touted the supposed merits of ForceField, negotiated and closed stock sales, and was paid commissions for each investment by ForceField's Chairman through an offshore bank account he controlled.
[A]ggarwal tipped Lee in advance of the public announcement of an internet search engine partnership between two technology companies. Lee's trading enabled the S.A.C. Capital hedge fund that Lee managed to generate more than $350,000 in illegal profits. Lee also traded in his personal securities account on the nonpublic information he received from Aggarwal.
[T]he SEC's complaint alleges that the defendants breached their fiduciary duties and defrauded their advisory clients and prospective clients through the use of marketing materials that included false and misleading statements regarding the performance of the firm's Vireo AlphaSector investment strategies.The court's order holds that defendants defrauded their clients, and that the SEC is entitled to summary judgment on its claims that defendants violated the antifraud provisions of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The court's order further finds that the defendants knew there were misleading statements in their marketing materials and that there had been inadequate due diligence, yet they failed to inform their clients. Instead, as the court found, the defendants continued to sell the Vireo AlphaSector investment strategies despite their knowledge that representations about the strategies were false and misleading. The court also rejected the defendants' affirmative defense of selective enforcement and denied defendants' motion for summary judgment on all counts.
Herod admitted that, beginning in or about December 2016, he engaged in manipulative trades in PixarBio stock that were intended to simulate market demand for the stock and thereby artificially inflate its price and trading volume. The trades included overlapping orders to buy and sell PixarBio shares at the same price per share (a manipulative technique known as "matched trading"), as well as small purchases submitted shortly before the market closed that were intended to boost the closing price (a technique known as "marking the close"). Herod admitted to sharing the proceeds of his trading with Reynolds and PixarBio itself.Herod also admitted that, between January 2017 and September 2017, he made materially false statements to the Securities and Exchange Commission (SEC) and provided a back-dated document to the SEC, with the intent to obstruct the SEC's investigation of trading in PixarBio shares.
A break finally came when a Bayrob participant accidentally logged into his personal email instead of his criminal one. AOL, who was investigating his abuse of their network, connected the two accounts. That personal account led to online profiles in Romania and on social media-essentially the first action tying one of the suspects to the crimes.
[B]eginning as early as October 2017, and continuing through at least February 2019, Pyatt, often using the alias Daniel G. Randolph, solicited friends and acquaintances to invest their money in a "communal account," or "fund," held by his company, Winston Reed Investments, LLC (WRI). As alleged in the indictment, Pyatt represented to his victim-investors that he had made significant amounts of money through his own investing and day trading activities, and that he wanted to invest the victims' money using a similar strategy so that they could experience the same wealth that he enjoyed.
The indictment alleges that, in order to induce the victims to part with their money, Pyatt made a number of false and fraudulent representations. Pyatt told the investors that he would make trades with the investors' money on a daily basis, that he would be trading futures and forex, and that he would specialize in energy-related stocks. Pyatt also falsely promised large returns on investments, assuring victims that the "low average expected return on investments" would be 15% per month, with a goal of a return of 100% in three to four months. Pyatt represented to his victims that he would receive a fee for WRI's services of just 10% of all gains, and that he would not charge his investors any fees if he did not make a profit.
According to the allegations in the indictment, contrary to the promises he made to his victim-investors, Pyatt simply stole the vast majority of the investors' money. The indictment alleges that Pyatt misappropriated over $100,000 to pay for personal expenses, including jewelry, groceries, cigars, and a Chevrolet Corvette. Pyatt also withdrew tens of thousands of dollars in cash, and made several Ponzi-style payments to his investors, falsely implying that the returned funds were trading profits.
As alleged in the indictment, Pyatt perpetuated the fraud by making misrepresentations to victim-investors about the fund's performance. For example, for months, Pyatt regularly provided his investors with false updates that purported to describe his trading activity and the considerable positive returns he was earning on their investments. Then, in February 2019, after reporting substantial monthly gains to his investors for more than a year, Pyatt allegedly notified his investors by email that a "complete and catastrophic" loss had occurred, and that their money was gone. Pyatt allegedly claimed that he was investigating the loss with the assistance of a forensics firm, and he told his investors that the loss was due to a technical oversight or failure by the brokerage firm holding the investment account. According to the indictment, all of these representations were false; in reality, the money was gone because Pyatt spent it.The indictment further alleges that, during at least a substantial portion of the scheme, Pyatt resided in Haywood County and targeted local victims. In total, the indictment alleges that Pyatt stole at least $218,000 from his victim investors, many of whom were at, or near, retirement age.
[B]eginning in April 2017, Winston Reed Investments LLC and Mark N. Pyatt raised hundreds of thousands of dollars from retail investors by representing they would use a sophisticated trading strategy to trade in futures contracts, foreign exchange, and stocks. Instead, Pyatt allegedly used the vast majority of investor money for personal items, including vehicles, jewelry, groceries, and cigars. Winston Reed and Pyatt also allegedly used a portion of new investor money to make payments to other investors. The complaint further alleges that in an attempt to cover up his fraud, Pyatt provided investors with updates purporting to show substantial monthly returns based on his trading, and later claimed that all investor money had been lost as a result of a broker-dealer not following his trading instructions.
[F]rom April 2017 through February 2019, WRI and Pyatt fraudulently solicited and received approximately $200,000 from at least 19 pool participants in connection with pooled trades in commodity futures contracts and retail foreign exchange transactions, among other things.As further alleged, WRI and Pyatt misappropriated most of pool participants' funds for business expenses, personal use, and to make Ponzi-like payments to other pool participants. In addition, despite incurring overall net trading losses, WRI and Pyatt sent reports to investors falsely claiming large profits of between approximately 19 and 86% per month.