Securities Industry Commentator by Bill Singer Esq

Notice of Filing of a Proposed Rule Change to Adopt FINRA Rule 3241 (Registered Person Being Named a Customer's Beneficiary or Holding a Position of Trust for a Customer) (SEC Release)

Manhattan apartment sales worst on record, biggest plunge in 30 years (CNBC by Robert Frank)

U.S. farmers scramble for help as COVID-19 scuttles immigrant workforce (Reuters by Mark Weinraub, Julie Ingwersen)

Defendant Charged In Connection With Fraudulent Silver Trading Program Pleads Guilty To Money Laundering (DOJ Release)

SEC Charges Alexion Pharmaceuticals With FCPA Violations (SEC Release)

SEC Obtains Final Judgments Against Florida Participants in Fraudulent Offering Scheme Involving Investments of CMOs (SEC Release)

West Monroe Man Sentenced for Bilking Nearly $2 Million from Online Customers (DOJ Release)

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

To further address potential conflicts of interest that can result in registered persons exploiting or taking advantage of being named beneficiaries or holding positions of trust for personal monetary gain, FINRA proposes adopting new Rule 3241 to create a uniform, national standard to govern registered persons holding positions of trust. This new national standard will better protect investors and provide consistency across member firms' policies and procedures. Proposed Rule 3241 would provide that a registered person must decline: 

(1) Being named a beneficiary of a customer's estate9 or receiving a bequest from a customer's estate upon learning of such status unless the registered person provides written notice upon learning of such status and receives written approval from the member firm prior to being named a beneficiary of a customer's estate or receiving a bequest from a customer's estate; and

(2) Being named as an executor or trustee or holding a power of attorney or similar position for or on behalf of a customer unless: 

(a) Upon learning of such status, the registered person provides written notice and receives written approval from the member firm prior to acting in such capacity or receiving any fees, assets or other benefit in relation to acting in such capacity; and 

(b) The registered person does not derive financial gain from acting in such capacity other than from fees or other charges that are reasonable and customary for acting in such capacity.

The proposed rule change would not apply where the customer is a member of the registered person's immediate family.The proposed rule change applies to customers who are not immediate family members because of the greater potential risk that the registered person has been named a beneficiary or to a position of trust by virtue of the broker-customer relationship. The proposed rule change also would not affect the applicability of other rules (e.g., FINRA Rule 2150 regarding improper use of customer securities or funds). If the proposed rule change is approved, FINRA would assess registered persons' and firms' conduct pursuant to Rule 3241 to determine the effectiveness of the rule in addressing potential conflicts of interest and evaluate whether additional rulemaking or other action is appropriate.

The total number of sales in the second quarter fell by 54%, the largest percentage decline in 30 years, according to a report from Miller Samuel and Douglas Elliman. The median sales price fell 18% to $1 million, which is the biggest decline in a decade.

There were only 1,147 sales in the quarter - the lowest number on record, according to Compass.

The United States is the world's No. 3 exporter of wheat, a crop in high demand during the pandemic. A sustained labor shortage could impact the soy and corn harvests that start in September.

Harvesting companies and farmers interviewed by Reuters said their new U.S. employees have required more training and quit at higher rates than usual, as the combines head north and begin to bring in other major export crops.

she was aware that Gaylen Rust had collected millions of dollars by offering and selling a silver trading program to many investors located throughout the United States.  She admitted knowing that Rust had misrepresented to investors that their money would be used to purchase and trade significant amounts of physical silver bullion.

[F]rom around 1996 and continuing to Nov. 15, 2018, the defendants conspired to defraud investors and potential investors by offering and inducing them to purchase investments in a silver trading program.  According to the indictment, Gaylen Rust, who offered and sold investments in the program, made false and fraudulent statements regarding his scheme, both directly and indirectly, to investors and potential investors through various means including meetings, phone calls, mailings, and emails.

Among other things, the indictment alleges the defendants failed to disclose to investors that their funds would be used for purposes other than to invest in silver and trading silver; that Gaylen Rust was not licensed to sell securities, trade commodities or operate a commodity pool; that investor funds were being laundered through transfers in and out of the defendants'  personal accounts; and that investment account statements provided to investors were false and not based on actual silver trades.

In order to convince investors that their investments were profitable and to convince potential investors that the silver program was earning money, the defendants operated the trading program as a Ponzi scheme.  The defendants used investment money from later investors to pay the promised returns to earlier investors, creating the false impression that the silver trading program was profitable, the investments were safe and secure, and that the promised returns were being generated.  Ponzi payments of approximately $150 million were made to investors, representing those payments as profits from the operation of the silver trading program.

[T]wo Alexion subsidiaries made payments to foreign government officials to secure favorable treatment for Alexion's primary drug, Soliris. The order finds that, from 2010 to 2015, Alexion Turkey paid Turkish government officials to improperly influence them to approve patient prescriptions and provide other favorable regulatory treatment for Soliris. The order similarly finds that from 2011 to 2015, Alexion Russia made improper payments to Russian government health care officials to favorably influence the regulatory treatment of and the budget allocated to Soliris as well as to increase the number of approved Soliris prescriptions. Alexion Russia and Alexion Turkey maintained false books and records of these improper payments, which Alexion's internal accounting controls were not sufficient to detect or prevent. Further, the order finds that Alexion's subsidiaries in Brazil and Colombia failed to maintain accurate books and records, including by creating or directing third parties to create inaccurate financial records concerning payments to patient advocacy organizations. 

Geisler and Gunn consented to entry of final judgments without admitting or denying the allegations of the complaint, and agreed to be permanently enjoined from future violations of the antifraud provisions 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 thereunder and the securities registration provisions of Sections 5(a) and (c) of the Securities Act and the broker-dealer registration provision of Section 15(a) of the Exchange Act. Geisler agreed to pay disgorgement of $653,000, prejudgment interest of $111,604 and a civil penalty of $150,000. Gunn agreed to pay disgorgement of $197,500, prejudgment interest of $33,754 and a civil penalty of $50,000.

The SEC also sought, and the Court granted, dismissal of its claims against Coddington and the entities that he used to perpetrate the fraud, Golden Summit Investors Group Ltd. and Extreme Capital Ltd., and the entities that Geisler and Gunn used to solicit investments, SouthCom Management LLC, Fidelity Asset Services Corp. and Geisco FNF, LLC.

The Commission's civil case is continuing against Jesse W. Erwin, Jr., Seth A. Leyton, Lewis P. Malouf, Stonerock Capital Group LLC, Daniel Scott Coddington, Coddington Family Trust, and Joanna I. Columbia.

[B]yrd used eBay and PayPal to defraud hundreds of eBay customers out of nearly $2 million over a five-week period. Byrd listed and sold gold bullion and/or various types and quantities of gold coins, and primarily received payment through PayPal. Byrd never sent the purchased merchandise to the customers. When eBay customers inquired about the status of their purchase, Byrd provided fraudulent shipping and tracking information to delay the discovery that he had not sent the coins. As part of the scheme, between March 2019 and June 2019, the defendant utilized existing bank accounts and established new bank accounts to conduct financial transactions with the proceeds from his fraudulent coin sales.

In September of 2019, law enforcement officers executed a court-authorized search warrant at Byrd's residence and found $228,700 in cash, a cashier's check in the amount of $140,499.22, a Harley Davidson motorcycle, three Rolex watches, 66 gold and silver coins, and 11 firearms.

• Securities Industry Commentator
• Bill Singer