Securities Industry Commentator by Bill Singer Esq

July 16, 2019
In response to two SEC Orders Instituting Proceedings,  Nomura Securities International Inc.agreed to be Censured and to reimburse customers over $20.7 million to Residential Mortgage Backed Securities customers and over $4.2 million to Commercial Mortgage Backed Securities customers; and to further pay a $1 million penalty in the RMBS-related case and a $500,000 penalty in the CMBS-related case. The Orders reference the allegedly substantial cooperation by Nomura during the SEC's investigation, including remedial efforts by the firm to improve its surveillance procedures and other internal controls.repay approximately $25 million to customers for its failure to adequately supervise traders in mortgage-backed securities.   
SEC Nomura CMBS Order
SEC Nomura RMBS Order
As set forth in part in the SEC Release:

[N]omura bond traders made false and misleading statements to customers while negotiating sales of commercial and residential mortgage-backed securities (CMBS and RMBS).  According to the SEC's orders, several Nomura traders misled customers about the prices at which Nomura had bought securities, the amount of profit Nomura would receive on the customers' potential trades, and who currently owned the securities, with traders often pretending that they were still negotiating with a third-party seller when Nomura had, in fact, already bought a security.  The SEC's orders further find that Nomura lacked compliance and surveillance procedures that were reasonably designed to prevent and detect this misconduct, which inflated the firm's profits on CMBS and RMBS transactions at its customers' expense.  The SEC previously filed charges against two CMBS and three RMBS traders at Nomura, whose misrepresentations are described in the SEC's orders. /
Another day. Another FINRA fine and suspension because some registered rep still doesn't understand why it's not okay (as in also being dangerous) to email customers' confidential information to a personal email account. Making matters worse, one enterprising rep also downloaded customer info onto a portable hard drive.
Without admitting or denying the allegations in a Complaint filed by the SEC in the United States District Court for the Southern District of Texas, Defendants Conn's Inc.and its former Chief Operating Officer Michael J. Poppe consented to the entry of a final judgment imposing a $1.1 million civil penalty and an injunction against future violations of antifraud provision Section 17(a)(3) of the Securities Act and the books-and-records and internal controls provisions of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Exchange Act and Rules 12b-20, 13a-1, 13a-11, and 13a-13 thereunder. Further, Poppe consented to a final judgment imposing a $50,000 civil penalty and an injunction against future violations of the antifraud provision of Section 17(a)(3) of the Securities Act. As set forth in part in the SEC Release:

[F]rom at least the second quarter of fiscal 2013 through the second quarter of fiscal 2015,  Conn's and its COO, Michael J. Poppe, a Texas resident, understated the company's allowance for bad debts and overstated income on its financial statements through improper accounting practices. Conn's allegedly increased the risk to its credit portfolio by lending to customers with poor or no credit histories. However, Conn's failed to incorporate this information into the company's forecasting model, which caused its bad debt expense to be understated and its income to be overstated. Additionally, Conn's allegedly used a "roll rate" model to forecast its allowance for bad debts that included management bias. Specifically, Conn's allegedly plugged estimates into this model that reflected unduly optimistic expectations, which were inconsistent with historical roll rates. Conn's took corrective actions in the second and third quarters of fiscal year 2015, resulting in significant increases to its allowance for bad debts. Conn's cited to these increases when it reported a loss for its credit segment in the second quarter of fiscal 2015 and a loss for the company in the third quarter of fiscal 2015. The market reacted to Conn's earnings announcements with 30 percent and 41 percent stock drops, respectively.
In a Complaint filed in the United States District Court for the Central District of California, the SEC charged Richard Vu Nguyen a/k/a Nguyen Thanh Vu and his company NTV Financial Group, Inc. with with violating the antifraud provisions of Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder, as well as Sections 206(1), 206(2), and 206(4) of the Investment Advisers Act of 1940 and Rule 206(4)-8 thereunder. The Court enjoined Nguyen and NTV from violating the above-provisions and from accessing third-parties' securities brokerage accounts even with consen; and the Order continues the asset freezes previously entered against Nguyen, NTV, and Do, and appoints a permanent receiver over NTV. As set forth in part in the SEC Release, the Defendants:

defrauded at least 80 investors of $2.4 million by, among other things, making false and misleading statements about Nguyen's experience and failing to disclose that Nguyen was misappropriating investor funds to pay his personal and business expenses and those of Nguyen's girlfriend, the relief defendant. The complaint further alleges that Nguyen and NTV improperly acted as investment advisers and defrauded at least 30 clients by accessing their brokerage accounts using their usernames and passwords and trading securities in their accounts in exchange for half of any trading profits.
In a Complaint filed in the United States District Court for the Southern District of Florida, the SEC charged Henry J.  "Trae" Wieniewitz, III and his company Wieniewitz Financial LLC with violations of the securities registration provisions of Sections 5(a) and 5(c) of the Securities Act, and the broker-dealer registration provisions of Section 15(a)(1) of the Securities Exchange Act. Wieniewitz and Wieniewitz Financial settled the SEC's charges as to liability without admitting or denying the allegations, and agreed to be subject to injunctions, with the Court to determine the amounts of disgorgement, interest, and penalties at a later date. As set forth in part in the SEC Release:

[W]ieniewitz and Wieniewitz Financial illegally offered and sold Woodbridge and 1 Global securities to more than 630 retail investors from at least February 2016 to July 2018. The SEC alleges that throughout this period, Wieniewitz and his company were neither registered as broker-dealers with the Commission nor associated with a registered broker-dealer. Wieniewitz and Wieniewitz Financial raised more than $11.4 million and reaped approximately $500,000 in commissions from unlawful sales of Woodbridge securities, and raised more than $53 million and obtained approximately $3 million in commissions from unlawful sales of 1 Global securities.