The Wall Street Legal & Regulatory Feed

Securities Industry Commentator by Bill Singer Esq

October 12, 2020


Federal Court Orders Pennsylvania Man and His Companies to Pay More Than $1.2 Million in Forex Trading Scheme (CFTC Release)

https://www.justice.gov/usao-edny/pr/former-long-island-liquor-distributor-sentenced-24-months-prison-defrauding-investors
Joseph Falcone, who formerly operated a wine and liquor distribution business known as 3G'S VINO LLC, pled guilty in the United States District Court for the Eastern District of New York to wire fraud, and he was sentenced to 24 months in prison and ordered to pay $1.8 million in restitution to seven of 3G'S investors. As alleged in part in the DOJ Release:

In December 2012, Falcone established 3G'S, which was based in Bethpage and Farmingdale, New York.  Among other products, 3G'S distributed a single-serving wine in a sealed glass, which was featured on the television program "Shark Tank."  Between September 2014 and November 2015, Falcone solicited investments and promised potential investors that their money would be used to fund 3G'S by purchasing the single-serving wine product.  Relying on those promises, investors wired money to bank accounts in Florida controlled by Falcone.  Rather than invest the money as promised, Falcone used approximately $527,064 for his personal benefit - paying off the mortgage on a residence in Florida and funding his online securities trading. 


https://www.cftc.gov/PressRoom/PressReleases/8282-20
The CFTC revoked the Commodity Pool Operator and Commodity Trading Advisor registrations of Phy Capital Investments LLC of Miami, Florida and the Associated Person registration of its owner Fabio Bretas de Freitas, formerly of Miami, Florida. 
As alleged in part in the CFTC Release:

The CFTC initiated revocation proceedings against Phy Capital and Bretas on May 7, 2020. [See CFTC Press Release No. 8163-20] CFTC Judgment Officer Kavita Kumar Puri issued an Initial Decision on Default on August 31, 2020, which was finalized on September 30, 2020. Puri found that Phy Capital and Bretas are subject to statutory disqualification from CFTC registration based on an order entered by the U.S. District Court for the Southern District of New York that, among other things, (1) found that Phy Capital and Bretas misappropriated commodity pool funds and issued false quarterly statements to pool participants, (2) permanently enjoined Phy Capital and Bretas from further violations of the anti-fraud provisions of the Commodity Exchange Act, as charged, and (3) ordered Phy Capital and Bretas jointly and severally to pay more than $17.2 million in monetary relief. [See CFTC Press Release No. 8052-19]

Puri also found that Bretas is subject to disqualification from CFTC registration based on his conviction for conspiracy to commit commodities fraud and wire fraud in connection with the same activities, as entered by the U.S. District Court for the Southern District of New York on February 28, 2020. [See Case No. S3 19 Cr. 257 (LTS)] 

https://www.cftc.gov/PressRoom/PressReleases/8283-20
The United States District Court for the Eastern District of Pennsylvania entered an order of default judgment finding that Michael Salerno and his companies Black Diamond Forex LP, BDF Trading LP, and Advanta FX had solicited members of the public to become foreign currency (forex) traders. The Court ordered Defendants to pay $335,149 in restitution and an $894,000 civil monetary penalty; and Black Diamond Investment Group was ordered to pay $1,488 in disgorgement. Additionally, the Defendants from enjoined engaging in conduct that violates the Commodity Exchange Act, from registering with the CFTC, and from trading in any CFTC-regulated markets. As alleged in part in the CFTC Release:

The CFTC charged that beginning in at least January 2017 and continuing through at least March 2018, Salerno and his Pennsylvania companies solicited individuals on websites such as LinkedIn and Indeed.com and their own websites to become forex traders. Defendants required prospective traders to pay risk deposits that defendants falsely promised to match with some multiple of company funds in proprietary forex trading accounts, and falsely promised to share a portion of the trading profits with the traders and to pay performance bonuses. They also falsely touted Salerno's successful forex trading career, and falsely assured prospective traders that Salerno had amassed no less than $9.5 million in real estate sales that he was using to fund his proprietary trading companies. In reality, Salerno had not traded successfully in the forex markets, had filed for bankruptcy in the same year he claimed to have made real estate sales, and had been convicted of a felony and sentenced to 21 months in prison in 2005. Moreover, defendants never established live trading accounts for anyone, and misappropriated the risk deposits. 

From New York to Sydney, the fallout from the pandemic has changed the calculus for those searching for a house. (Bloomberg by Jack Pitcher, Emily Cadman, Oshrat Carmiel, Julia Fanzeres, and Kristine Aquino)
https://www.bloomberg.com/news/features/2020-10-12/real-estate-market-rent-or-buy-a-house-during-covid-home-hunters-explain-moves?srnd=premium
As usual, Bloomberg manages to produce superior coverage of stories that matter the most. In this most recent iteration, we are offered an examination into what folks are buying/renting during the pandemic -- and why. A wonderful read.

Robinhood Users Say Accounts Were Looted, No One to Call (Bloomberg by Sophie Alexander and Annie Massa)
https://www.bloomberg.com/news/articles/2020-10-09/robinhood-users-had-accounts-looted-say-there-s-no-one-to-call?srnd=premium
Likely, we've all been here. You patronize a business. You have a problem. The better companies respond to your complaint promptly and, when appropriate, propose a fair resolution. The not-so better companies jerk you around, play phone tag, and, well, you know, "we value your business" and all that crap. As reported in part by Bloomberg's Massa:

"A limited number of customers appear to have had their Robinhood account targeted by cyber criminals because of their personal email account (that which is associated with their Robinhood account) being compromised outside of Robinhood," a spokesman for the company said in an email. "We're actively working with those impacted to secure their accounts."

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