Securities Industry Commentator by Bill Singer Esq

2021 Industry Snapshot (FINRA Report)

SEC Charges Real Estate Investment Entity and Principals with Securities Fraud and Registration Violations (SEC Release)

Court Enters Judgments Against Owners and Operators of Three Overseas Binary Option Brokers That Targeted U.S. Investors (SEC Release)

Justice Department Requires Divestitures in Huntington Bancshares Incorporated's Acquisition of TCF Financial Corporation / Thirteen Branches in Michigan will be Divested - Ensuring Bank Customers Have Access to Competitively Priced Products and Services (DOJ Release)

Tampa Man Sentenced To Prison For Manufacturing Counterfeit Federal Reserve Notes While On Federal Supervised Release (DOJ Release)

Farmington Woman Admits Stealing $103K from Bank Customer (DOJ Release)

Two Cargo Handlers at LAX Arrested in Alleged Theft of Gold Bars (DOJ Release)

Whistleblower Gets Screwed But FINRA Doesn't Care (BrokeAndBroker.com)

[T]he defendants raised money to fund residential and small-scale commercial real estate projects, primarily in California and Colorado. Legacy, the Kings, and Trout allegedly defrauded investors by raising money for specific projects and then using the funds on other projects. They also allegedly materially misstated the risks of certain investments, including by misrepresenting the amount of investments already associated with the project. The SEC's complaint also alleges that the Kings, with respect to Colorado Ventures and Radiant, defrauded investors by misusing certain investor funds, which were earmarked for specific projects, but used instead on other projects and/or redirected to the Kings, personally.

[B]etween October 2014 and August 2017, Kai Christian Petersen, Gil Beserglik and Raz Beserglik owned, controlled, and operated three unregistered binary option brokers named Bloombex Options, Morton Finance, and Startling Capital, which together defrauded U.S. and foreign investors out of tens of millions of dollars. According to the complaint, the brokers controlled by the defendants utilized call centers in Germany and Israel that operated as "boiler rooms," in which salespersons used high pressure sales tactics to offer and sell speculative and fraudulent binary options to investors. Employees at these call centers allegedly lied about their names, locations and expertise in trading securities, and falsely told investors that the brokers only earned money if investors made money. In reality, the brokers earned money only from investor losses and thus had no incentive to advise investors on how to trade binary options profitably. The complaint alleged that most investors who traded binary options through the three brokers lost money, and some retirees lost their entire savings. The complaint also alleged that none of the defendants registered with the SEC as brokers or dealers.

Under the agreement with the Justice Department, the parties will divest branches in Michigan, located in Arenac, Charlevoix, Crawford, Newaygo, Otsego, Mecosta, Shiawassee, Wexford and Missaukee counties, and in the City of Midland. The companies also have agreed to suspend existing, and not to enter into new, non-compete agreements with branch managers and loan officers located in the divestiture counties for a period of 180 days following the consummation of their merger. Further, the companies have agreed that any traditional branches located in any overlap market in Michigan and Ohio that are closed within three years of the merger's closing will be sold or leased to an insured depository institution that offers deposit and credit services to small businesses. As a result of the acquisition, Huntington will become the 25th largest bank holding company based on assets.

The proposed merger is subject to the final approval of the Board of Governors of the Federal Reserve System. The department's role when reviewing a proposed bank merger necessarily focuses on the merger's competitive effects. Here, the department has advised the Federal Reserve Board that the department will not challenge the merger provided that the parties divest branches in certain areas of overlap and agree that any traditional branches in Michigan and in the five overlapping counties in Ohio that are closed within three years following the merger, will be marketed to an institution with a demonstrated record of providing services and loans to the local community. The parties' commitments to the department are included as a condition to the Federal Reserve Board Order allowing the transaction.

Huntington is the holding company of The Huntington National Bank, Columbus, Ohio, with approximately $120 billion in assets. Huntington has 839 full-service branches across seven Midwestern states. Huntington provides a wide range of banking and other financial services to consumers, businesses and wealth management customers.

TCF is the holding company of TCF National Bank, Detroit, Michigan, and has approximately $48 billion in assets. TCF has 475 branches primarily located in Michigan, Illinois and Minnesota. TCF also provides a broad array of consumer and business banking services, along with other services like wealth management and specialty leasing services, to its customers.

[I]n 2015 Edwards pleaded guilty in federal court in Jacksonville to charges he manufactured counterfeit Federal Reserve notes (i.e., counterfeit currency), that he and others passed throughout the Jacksonville area.  Edwards was sentenced to 33 months in federal prison, followed by 3 years of supervised release.

After his release from prison in October 2019, and while still on federal supervised release for those prior counterfeiting charges, the Pinellas Park Police Department arrested Edwards for possession of counterfeit currency and forging/making counterfeit bank bills. During the course of arresting Edwards at a hotel, law enforcement found him to be in possession of counterfeit currency, partially completed counterfeit currency, and computer media used to manufacture counterfeit Federal Reserve notes. Follow up investigation by the United States Secret Service determined that Edwards had purchased the computer media used to manufacture the counterfeit notes in Duval County and then transported the computer media to Pinellas County, where he manufactured the counterfeit Federal Reserve notes.    

[B]lanchette was employed by Bank of America as a relationship manager.  As a relationship manager, Blanchette had the authority to cause temporary ATM cards to be activated and assigned to a customer's account.  Between August 2014 and March 2016, Blanchette caused multiple temporary ATM cards to be activated for bank accounts of a customer who Blanchette knew was experiencing cognitive decline.  Without the customer's authorization, Blanchette used the temporary ATM cards to withdraw significant funds from the customer's accounts, keeping a significant portion for her own benefit, and causing a loss of $103,080.

[B]oth men worked for Alliance Ground International, a company that provided ground handling services at LAX. On the evening of April 22, 2020, a shipment of gold bars arrived at LAX on Singapore Airlines. A total of 2,000 gold bars, each weighing one kilogram and valued at approximately $56,000, were being shipped at the direction of a Canadian bank. During a stopover at LAX, the gold was offloaded and secured, but an inventory that evening showed one box containing 25 gold bars was missing.

Moody allegedly found the missing box of gold bars near the Singapore Airlines cargo warehouse on the morning of April 23, placed the box on a belt loader and drove that vehicle to a nearby location, where he removed four of the bars. Soon after, Benson arrived to pick up Moody in a company van, where they exchanged text messages about the gold bars because other employees were in the van. The two defendants later left the airport and went to a nearby parking lot, where Moody gave Benson one of the four gold bars, the indictment states.

The lost box with the 21 remaining gold bars was discovered by other cargo handlers later on April 23, and authorities began an investigation that ultimately led to Moody and Benson.

Moody gave one gold bar to a relative on May 4 "and directed the family member to exchange the gold bar for a vehicle and/or money," according to the indictment. Around this time, Moody buried the remaining two gold bars in the backyard of his residence.

The FBI recovered all four gold bars about two weeks after they went missing from LAX.

• Securities Industry Commentator
• Bill Singer