Securities Industry Commentator by Bill Singer Esq

China's Divorce Spike Is a Warning to Rest of Locked-Down World /  Filings started rising in March as couples emerged from quarantine (Bloomberg by Sheridan Prasso)

Former Investment Banker Found Liable in International Insider Trading Scheme (SEC Release)

SEC Awards $450,000 to Whistleblower (SEC Release)

Federal Courts Reject FINRA Arbitrators' Manifest Disregard in Respondeat Superior Case (BrokeAndBroker.com Blog)

Georgia Man Arrested for Orchestrating Scheme to Defraud Health Care Benefit Programs Related to COVID-19 and Genetic Cancer Testing (DOJ Release)

Shanghai divorce lawyer Steve Li at Gentle & Trust Law Firm says his caseload has increased 25% since the city's lockdown eased in mid-March. Infidelity used to be the No. 1 reason clients showed up at his office door, he says, adding that "people have time to have love affairs when they're not at home." Like Christmas in the West, China's multiday Lunar New Year holiday can strain familial bonds. When the virus hit in late January, on the eve of the festivities, couples in many cities had to endure an additional two months trapped under the same roof, sometimes with extended family. For many it was too much. "The more time they spent together, the more they hate each other," Li says of his new cases. "People need space. Not just for couples-this applies to everybody."

On October 18, 2019, the Commission charged Cohen with securities fraud for his participation in an international insider trading scheme. The complaint alleged that Cohen obtained nonpublic information about potential corporate acquisitions of Syngenta AG and Buffalo Wild Wings, Inc., each of whom had engaged his then-employer to provide related advisory services. According to the complaint, Cohen misappropriated this highly confidential information by tipping a trader based in Switzerland, who further tipped defendant George Nikas. Both the Switzerland-based trader and Nikas traded in the securities of Syngenta, and Nikas also traded in the securities of Buffalo Wild Wings, prior to market-moving public disclosures about the acquisitions of these companies, and as a result generated millions of dollars of illegal profits.

[H]ere, the record reflects that Claimant became aware of the potential securities law violations in connection with Claimant's compliance-related responsibilities. However, an exception applies if [a]t least 120 days have elapsed since you provided the information to the relevant entity's audit committee, chief legal officer, chief compliance officer (or their equivalents), or your supervisor, or since you received the information, if you received it under circumstances indicating that the entity's audit committee, chief legal officer, chief compliance officer (or their equivalents), or your supervisor
was already aware of the information.

Here, Claimant first reported certain of the information to the firm's [Redacted], who was also Claimant's supervisor, and then waited more than 120 days to report the same information to the Commission. The rest of the information that led to the successful action that Claimant reported to the Commission would have been known to Claimant's supervisor at the time. Because Claimant satisfies the 120-day exception, the compliance officer exclusion does not apply here to disqualify Claimant's information from treatment as original information. 

Applying the award criteria in Rule 21F-6 of the Securities Exchange Act of 1934 to the specific facts and circumstances here, we find the proposed award amount is appropriate. In reaching that determination, we positively assessed the following facts: (i) although not the source of the investigation, Claimant's information was significant in that it refocused the investigation on the violations that were ultimately charged; (ii) Claimant assisted Commission staff early in the investigation including by meeting with them in-person; (iii) Claimant suffered unique hardships as a result of Claimant's internal reporting, including [Redacted]; and (iv) Claimant participated in Claimant's employer's internal compliance program.

As the COVID-19 crisis began to escalate, Santos used the pandemic as an opportunity to expand his pre-existing kickback schemes and to capitalize on a national emergency for his own financial gain. Santos agreed with others to be paid kickbacks on a per-test basis for COVID-19 tests, provided that those tests were bundled with a much more expensive respiratory pathogen panel (RPP) test, which does not identify or treat COVID-19. Santos sought to maximize his kickback profits and to bleed federal health care resources at a time when Medicare beneficiaries across the United States were in dire need of coverage for medical treatment and services.

On March 19, 2020, Santos made the following statements in a telephone call explaining that he viewed the pandemic as a money-making opportunity:

• "[W]hile there are people going through what they are going through, you can either go bankrupt or you can prosper." 
  
• "[T]he good thing is we're opening a lot of doors through this coronavirus testing." 
  
• Santos noted that his other work was on hold because "everybody has been chasing the Covid dollar bird."

• Securities Industry Commentator
• Bill Singer