The Wall Street Legal & Regulatory Feed
Securities Industry Commentator by Bill Singer Esq
April 29, 2020
HSBC hits pause on mass layoffs after profits plunge by nearly 50% (CNN by Michelle Toh)
GOP Sen. Hawley asks DOJ to open a criminal investigation into Amazon (CNBC by Lauren Feiner)
https://www.cnbc.com/2020/04/28/gop-sen-hawley-asks-doj-to-open-a-criminal-investigation-into-amazon.html
https://www.cnbc.com/2020/04/28/gop-sen-hawley-asks-doj-to-open-a-criminal-investigation-into-amazon.html
As reported in part by CNBC's Feiner:
"Amazon abuses its position as an online platform and collects detailed data about merchandise so Amazon can create copycat products under an Amazon brand," he wrote.Hawley is asking the Justice Department to investigate Amazon on the basis of Section 2 of the Sherman Antitrust Act. The statute, which was used to prosecute Microsoft in the landmark antitrust case at the turn of the century, prohibits unlawful monopolies, which are firms that rise to dominance or maintain it by suppressing competition. The European Commission has already opened an investigation into the ways Amazon uses data from its sellers.
HSBC hits pause on mass layoffs after profits plunge by nearly 50% (CNN by Michelle Toh)
https://www.cnn.com/2020/04/28/investing/hsbc-earnings-profits-coronavirus/index.html
https://www.cnn.com/2020/04/28/investing/hsbc-earnings-profits-coronavirus/index.html
As reported in part by CNN's Toh:
The coronavirus outbreak first hit Asia, where HSBC derives the vast majority of its earnings. The lender has in previous quarters made almost 90% of its profit in the region.Performance there was actually "resilient" compared to expectations, the bank noted. Profit in Asia fell about 25% in the first quarter, compared to steep losses in North America and Europe.HSBC also said it is now hitting pause on parts of its vast restructuring plan, which had included a decision to cut 35,000 jobs and dramatically overhaul its business.
Second Employee in Cash Flow Partners' Bank Fraud Conspiracy Admits Role in Multimillion-Dollar Loan Scheme (DOJ Release)
https://www.justice.gov/usao-nj/pr/second-employee-cash-flow-partners-bank-fraud-conspiracy-admits-role-multimillion-dollar
Jennie Frias, a/k/a "Jennie Castillo," pled guilty to one count of conspiracy to commit bank fraud in a Criminal Information filed in the United States District Court for the District of New Jersey
https://www.justice.gov/usao-nj/press-release/file/1271696/download. As set forth in part in the DOJ Release:
Between March 2016 and May 2018, Cash Flow Partners LLC, a business consulting firm with offices in New York and New Jersey, released internet advertisements and held seminars offering to assist customers in obtaining bank loans, including loans insured by the Federal Deposit Insurance Corporation (FDIC). When customers submitted documentation supporting their bank loan applications to Cash Flow Partners, Frias and others created false documentation to make customers' loan applications appear more financially viable than they actually were. Victim banks sustained losses of over $4 million.One of Frias' conspirators, Raymundo Torres, previously pleaded guilty to charges relating to his role in the Cash Flow bank fraud conspiracy.
https://www.sec.gov/litigation/litreleases/2020/lr24808.htm
In a Complaint filed in the United States District Court for the Central District of California
https://www.sec.gov/litigation/complaints/2020/comp24808.pdf, the SEC charged Donald J. Kellen with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder and Sections 17(a)(1) and 17(a)(3) of the Securities Act. Previously,, the SEC settled related administrative and cease-and-desist orders against Laurel Wealth Advisors, Inc., a registered investment adviser based and Joseph C. Buchanan, another investment adviser representative previously associated with that firm. As alleged in part in the SEC Release:
https://www.sec.gov/litigation/complaints/2020/comp24808.pdf, the SEC charged Donald J. Kellen with violating the antifraud provisions of Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder and Sections 17(a)(1) and 17(a)(3) of the Securities Act. Previously,, the SEC settled related administrative and cease-and-desist orders against Laurel Wealth Advisors, Inc., a registered investment adviser based and Joseph C. Buchanan, another investment adviser representative previously associated with that firm. As alleged in part in the SEC Release:
[F]rom about May 2012 through September 2015, Kellen profited at his clients' expense by cherry-picking profitable trades using an omnibus account, which is intended to facilitate purchases of securities for multiple client accounts. Kellen allegedly delayed allocating the securities from the omnibus account to individual client accounts until after he had observed the securities' price movement over the course the trading day. Kellen allegedly disproportionately allocated profitable trades to his personal accounts and unprofitable trades to his clients' accounts. According to the complaint, this alleged misuse of his omnibus account enabled him to engage in riskless day-trading.
Federal Appellate Court Upholds Enforcement of IRS Summons Seeking Information Concerning Law Firm Clients Involved in Foreign Transactions (DOJ Release)
https://www.justice.gov/opa/pr/federal-appellate-court-upholds-enforcement-irs-summons-seeking-information-concerning-law
In referencing Taylor Lohmeyer Law Firm P.L.L.C., Plaintiff/Appellant, v. United States of America, Defendant/Appellee (Opinion, United States Court of Appeals for the Fifth Circuit, No. 19-50506)
http://www.ca5.uscourts.gov/opinions/pub/19/19-50506-CV0.pdf,
http://www.ca5.uscourts.gov/opinions/pub/19/19-50506-CV0.pdf,
pertinent part, the DOJ Release asserts that:
On April 24, 2020, a federal appellate court upheld an order enforcing an Internal Revenue Service (IRS) summons directed to the Taylor Lohmeyer Law Firm PLLC, the Department of Justice announced. The summons directed the law firm to provide information about clients who used the law firm's services to create and maintain foreign bank accounts and entities. On appeal, the United States Court of Appeals for the Fifth Circuit upheld the trial court's enforcement of the summons and rejected the law firm's "blanket" claim that all responsive materials were protected by the attorney-client privilege. It explained that revealing the fact that the clients participated in specific types of transactions would not necessarily reveal any confidential communication of legal advice protected by the attorney-client privilege.U.S. taxpayers seeking to hide their assets often utilize the services of professional service providers, who may be unaware of their clients' true goals. This action is part of ongoing efforts by the United States to stop persons from using foreign financial accounts and entities to evade taxes. Courts have previously approved John Doe summonses allowing the IRS to identify individuals using offshore accounts to evade their U.S. obligations.
https://www.sec.gov/news/press-release/2020-97
In a Complaint filed in the United States District Court for the Southern District of Florida
https://www.sec.gov/litigation/complaints/2020/comp-pr2020-97.pdf, the SEC charged Praxsyn Corp. and its Chief Executive Officer Frank J. Brady with violating antifraud provisions of the federal securities laws. As alleged in part in the SEC Release:
https://www.sec.gov/litigation/complaints/2020/comp-pr2020-97.pdf, the SEC charged Praxsyn Corp. and its Chief Executive Officer Frank J. Brady with violating antifraud provisions of the federal securities laws. As alleged in part in the SEC Release:
Praxsyn, which is purportedly based in West Palm Beach, Florida, issued a press release on Feb. 27 stating that it was negotiating the sale of millions of N95 masks and "evaluating multiple orders and vetting various suppliers in order to guarantee a supply chain that can deliver millions of masks on a timely schedule." On March 4, Praxsyn issued another press release claiming it had a large number of N95 masks on hand and had created a "direct pipeline from manufacturers and suppliers to buyers" of the masks. Praxsyn's CEO Frank J. Brady was quoted in the release as telling any interested buyers that the company was accepting orders of a minimum of 100,000 masks. Despite these claims, according to the complaint, Praxsyn never had any masks in its possession, any orders for masks, or a single contract with any manufacturer or supplier to obtain masks. After regulatory inquiries, Praxsyn issued a third press release on March 31 admitting that it never had any masks available to sell.
https://www.sec.gov/news/press-release/2020-98
The SEC awarded over $18 million to a whistleblower, who had repeatedly reported the problem internally before contacting the SEC. As set forth in part in the SEC Order
https://www.sec.gov/rules/other/2020/34-88759.pdf, the SEC favorably considered the following:
https://www.sec.gov/rules/other/2020/34-88759.pdf, the SEC favorably considered the following:
[(1)] Claimant's information was significant in that it alerted Commission staff to potential securities violations at the firm and prompted an examination by staff in the Commission's Office of Compliance, Inspections, and Examinations; (2) Claimant provided assistance to staff during the examination; (3) there are important law enforcement interests here as the Covered Action resulted in millions of dollars being returned to retail investors; (4) Claimant suffered hardships as a result of Claimant's internal reporting; and, (5) Claimant reported multiple times internally in an attempt to immediately correct the problem. In determining the appropriate award percentage, we also considered that while Claimant's information was significant, exam staff discovered violations that were broader than what was alleged by Claimant, and that a large portion of the monetary sanctions ordered against the firm related to conduct that was not reported by the Claimant to the Commission.
http://www.brokeandbroker.com/5194/allstate-defamation-u5/
Today's blog considers several ingredients that would get shaken into a volatile cocktail: a boyfriend, a girlfriend, her grandson, a night of drinking, an argument, his banging on a door, and some marijuana in his bag. Shake. Stir. And we then pour out a nasty concoction whereby the boyfriend gets charged with three crimes and winds up getting fired by Allstate Insurance. Which prompts the boyfriend to sue.