Securities Industry Commentator by Bill Singer Esq

Two Mint Hill Residents Plead Guilty To Federal Charges For Stealing More Than $400,000 From An Elderly, Dementia-Afflicted Victim / Charges Are Pending Against Third Individual (DOJ Release)

How Private Equity Is Ruining American Health Care / Investors have been buying up doctor's offices, cutting costs, and, critics say, putting pressure on physicians in ways that hurt patients. The pandemic could make things even worse. (Bloomberg Businessweek by Heather Perlberg)

American Well pulls in $194 million to keep up with the skyrocketing demand for telemedicine (CNBC by Christina Farr)

A $150 Billion Pile of Frozen Loans Starts to Worry U.S. Banks (Bloomberg by Jennifer Surane and Hannah Levitt)

The SEC Halted a Stock Over Virus Claims. Then the Company Got a PPP Loan (Bloomberg by Matt Robinson and Greg Farrell)

[In]Securities Guest Blog: Dear Prudence by Aegis Frumento Esq (BrokeAndBroker.com Blog)

Weekly mortgage applications point to a remarkable recovery in homebuying (CNBC by Diana Olick)

Sheltering Americans Give Record Chill to Tourism This Summer (Bloomberg by Steve Matthews)

Investor Ricky Sandler pushes for herd immunity approach to coronavirus after his hedge fund loses billions (CNBC by Brian Schwartz)

Traders Beware: U.S. taps new tools to find fraud in volatile commodities market (Reuters by Chris Prentice)

CFTC Division of Enforcement Issues Civil Monetary Penalty Guidance (CFTC Release)

Stockbroker Fined and Suspended Over Video Gaming Franchise.

In the Matter of Christopher M. Roumayeh, Respondent (FINRA AWC)

[F]rom January 2015 through September 2019, Harrison, Williams, and their co-conspirator, Donna Graves, engaged in a scheme to defraud a victim identified in court documents as "K.T." The victim was an elderly widow who lived alone and suffered from dementia and other physical and mental challenges.

According to court records, beginning in February 2014, Graves and Williams provided housekeeping services for the victim through a business owned and operated by Graves. Court records show that Harrison, Williams, and Graves isolated the victim from her friends and family, and induced the victim to give them power and control over her financial and personal affairs.  Once they gained access and control, Williams, Harrison, and Graves engaged in numerous illegal and unauthorized financial transactions that substantially depleted the victim's money and property.  Specifically, the co-conspirators emptied the victim's bank accounts and used the money to pay for personal expenses, they fraudulently "maxed out" at least one credit card in the victim's name, they fraudulently transferred or attempted to transfer the victim's assets to themselves, they pawned the victim's jewelry, and they stole the victim's federal benefits.  Additionally, Williams unlawfully used the victim's money to set up other businesses in her name, including a business selling handbags online and a business selling weight loss-related services. As a result of the fraudulent scheme, the co-conspirators defrauded the victim of more than $400,000. 

There's nothing inherently wrong with any of this. But some doctors say that the private equity playbook, which involves buying companies, drastically cutting costs, and then selling for a profit-the goal is generally to make an annualized return of 20% to 30% within three to five years-creates problems that are unique to health care. "I know private equity does this in other industries, but in medicine you're dealing with people's health and their lives," says Michael Rains, a doctor who worked at U.S. Dermatology Partners, a big private equity-backed chain. "You can't serve two masters. You can't serve patients and investors."

Investment firms, and the practices they fund, say these concerns are overblown. They point out that they're giving doctors a financial shelter from the rapidly changing medical environment, a particularly attractive prospect now, and that money from private equity firms has expanded care to more patients. But they've also made it next to impossible to track the industry's impact or reach. Firms rarely announce their investments and routinely subject doctors to nondisclosure agreements that make it difficult for them to speak publicly. . . .

The rapid rollout of forbearance programs in March averted financial ruin for millions of households, giving Congress time to bolster unemployment benefits and offer emergency aid to businesses. The goal was to avoid a tidal wave of defaults by borrowers who began losing income when states locked down commerce to slow infections. More than 30 million people have since filed jobless claims.

But many lenders offered to postpone bills with no proof of hardship, and many borrowers kept working. Some signed up for the programs as a precaution, taking a break from payments to shore up their savings. That's made it impossible for banks to gauge the degree to which their loan portfolios are at risk of going bad.

As telemedicine has expanded its scope, American Well has faced increased competition from upstarts such as Nurx, Hims and Roman, which are targeting their services to millennials. There are also start-ups focusing on women's health and maternity, such as Tia and Maven. And there are players in the space, such as Livongo and Omada, which are catering to those with chronic conditions, like diabetes and heart disease. 

Some health-tech experts caution that not every type of visit is well suited to telemedicine, and there are cases where patients need to get exams or testing in person. There are also language barriers, and many doctors aren't a fan of the medium because it's more challenging to relate to a patient online. 

The U.S. Securities and Exchange Commission suspended trading in the shares of Predictive Technology Group on April 21 after questioning whether the company could, as it claimed, "immediately distribute large quantities of serology tests to detect the presence of Covid-19 antibodies," according to the order.

On May 6, the Salt Lake City-based company received a $1.7 million loan as part of the Small Business Administration's Paycheck Protection Program, according to a regulatory filing.

The company's shares resumed trading that same day after a two-week suspension. . .

Mortgage applications to purchase a home rose 6% last week from the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. Purchase volume was just 1.5% lower than a year ago, a rather stunning recovery from just six weeks ago, when purchase volume was down 35% annually.

Travel spending for the holiday weekend will plunge by nearly two-thirds to $4.2 billion, according to estimates released this week by the U.S. Travel Association, an industry group. Almost everyone who does take a trip will likely drive. Domestic air traffic has dropped more than 90% below year-earlier figures, according to government figures.

Sandler, who has no medical experience, notes that he supports the proposal of herd immunity over the "Plan A" of long term social distancing. "In my mind, the choice is obvious and clearly Plan B for so many reasons, not the least of which is that it is the path least likely to lead to civil unrest," he says in the letter. 

part of a broader Justice Department initiative to dramatically expand the scope of market manipulation the agency targets for criminal prosecutions, beyond traditional insider trading and futures manipulation into a range of asset classes, sources told Reuters.

The staff guidance provides a three-pronged approach to evaluate the appropriate penalty to recommend to the Commission: (1) the "gravity of the violation;" (2) "mitigating and aggravating circumstances;" and (3) "other considerations." In applying the various factors, staff will be guided by the overarching consideration of ensuring that any proposed penalty achieves the dual goals of specific and general deterrence.

Factors in considering the "gravity of the violation" may include the respondent's role in the violations, the respondent's state of mind, including whether the conduct was intentional or willful, and the nature and scope of any consequences flowing from the violations. Factors related to "mitigating and aggravating circumstances" may include the respondent's conduct, such as self-reporting the misconduct, the extent of cooperation and remediation, or attempts to alleviate the violation by returning victim funds or improving a compliance program, or at the other end, any acts of concealment, obstruction, or prior misconduct. Among "other considerations," the Division's recommendation may take into account additional factors such as a timely settlement and remedies and sanctions to be imposed in parallel actions by other civil or criminal authorities or self-regulatory agencies.

During the period of June 2014 through June 2019 (the "Relevant Period"), Roumayeh engaged in two outside business activities without providing prior written notice to Merrill Lynch. Specifically, Roumayeh and his Firm customer ("Customer A") purchased a franchise involved in the professional video gaming industry (the "Franchise"). As the owner, Roumayeh managed the Franchise's day-to-day operations. He also formed five corporate entities related to the Franchise's operations, serving as an officer and director for them, and solicited prospective investors in the Franchise. In addition, Roumayeh formed and managed a separate limited liability company through which he purchased commercial real estate. By engaging in outside business activities without providing prior written notice to Merrill Lynch, Roumayeh violated FINRA Rules 3270 and 2010. 

In March 2019, Roumayeh participated in a private securities transaction by soliciting a publicly-traded company ("Company X") to invest approximately $5.5 million in exchange for shares in the Franchise. Roumayeh participated in this private securities transaction without notifying, and receiving prior written approval from, Merrill Lynch, in violation of FINRA Rules 3280 and 2010.

• Securities Industry Commentator
• Bill Singer