Securities Industry Commentator by Bill Singer Esq

August 5, 2020

Walt Bettinger expects 'hundreds' of Charles Schwab Corp. staff tasked with wiring TD Ameritrade merger to soon soar to 'thousands' of Schwab and TD workers / The Charles Schwab Corp. CEO reassured Wall Street analysts looking for a sign Schwab believes what it promises about an imminent closing that it has yet to schedule. (RIABiz by Oisin Breen)

SEC Charges CEO and Company with Defrauding First Responders and Others Out of Millions (SEC Release)

NYMEX and Two Former Employees to Pay $4 Million for Disclosing Material Non-Public Information (CFTC Release)

CFTC Advisory Warns Customers to Carefully Assess Precious Metals Pitches Touting CARES Act Rules (CFTC Release)
The interest and principal of a PPP loan may be forgiven if the proceeds are spent on the prescribed expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses. All in all a commendable approach to a devastating pandemic. Unfortunately, when I am confronted with such a high-minded, government-funded program, I immediately remind myself that the road to Hell is paved with good intentions, and that no good deed goes unpunished. Truly, I hate it when I'm right.
RIABiz's Oisin Breen delivers another insightful report on a major Wall Street development. This time, Oisin tackles the Schwab TD merger. There are lots of moving parts. Some will mesh. Others will jam. 

SEC Charges CEO and Company with Defrauding First Responders and Others Out of Millions (SEC Release)
In a Complaint filed in the United States District Court for the Western District of Texas, the SEC alleged that Victor Lee Farias and his company Integrity Aviation & Leasing ("IAL") had violated the registration provisions of Sections 5(a) and 5(c) of the Securities Act, and the antifraud provisions of Section 17(a) of the Securities Act and Section 10(b) of the Securities Exchange Act and Rule 10b-5 thereunder. As alleged in part in the SEC Release, Farias and IAL had:

raised $14 million from investors, promising that they would use the funds to purchase engines and other aircraft parts for leasing to major airlines. As alleged, Farias and IAL falsely touted Farias's supposed investment experience and IAL's purported competitive advantages, such as an algorithm that supposedly identified profitable leasing opportunities, and represented that all investments would be secured by IAL's assets. According to the complaint, many of the investors were retirees who, in order to invest their retirement funds, had to withdraw the funds from their retirement accounts and deposit them in newly created self-directed IRA accounts. The complaint alleges that IAL never purchased any engines and spent only a small portion of investor funds on aircraft parts. Farias and IAL allegedly diverted more than $11.6 million for unauthorized purposes, such as making $6.5 million in Ponzi-like payments to investors and investing $2.7 million to fund a friend's business. Farias also allegedly misappropriated $2.4 million for personal expenses. According to the complaint, Farias continued to mislead investors after he learned of the SEC's investigation, including by using the letterhead from the SEC's investigative subpoena as "proof" for investors that he was working with the SEC to take IAL public.

NYMEX and Two Former Employees to Pay $4 Million for Disclosing Material Non-Public Information (CFTC Release)
The United States District Court for the Southern District of New York entered a Consent Order against the New York Mercantile Exchange ("NYMEX") and its former employees William Byrnes and Christopher Curtin. This case marks the first time that the CFTC charged an exchange with violations of the Commodities Exchange Act and CFTC regulations' proscriptions against disclosures of material non-public information by exchange employees. The CFTC continues its litigation against remaining Defendant Ron Eibschutz. As alleged in part in the CFTC Release:

The order finds Byrnes and Curtin directly liable for their improper disclosures and NYMEX vicariously liable for the misconduct of its former employees. In addition, Byrnes and Curtin are permanently banned from trading commodity interests and registering with the CFTC and are enjoined from future violations of the CEA and CFTC regulations, as charged. The order also enjoins NYMEX to the extent the CEA and CFTC regulations apply under the vicarious liability provision of the CEA. In addition, the order imposes a $4 million civil monetary penalty jointly and severally on NYMEX, Byrnes, and Curtin, with the liability of Byrnes and Curtin capped, respectively, at $300,000 and $200,000.

. . . .

The order finds that on numerous occasions between 2008 and 2010, Byrnes and Curtin, while acting in the scope of their employment as NYMEX employees, willfully and knowingly disclosed material non-public information obtained through special access. The order finds that Byrnes and Curtin improperly disclosed to commodities broker and defendant Ron Eibschutz the identities of counterparties to crude oil options and natural gas futures trades, trade details such as price and volume, and other confidential information.
The CFTC issued a Customer Advisory
COVID19PreciousMetals.htm about unregistered gold and silver dealers, who are advising investors to purchase precious metals via the relaxed rules under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act"). The CFTC warns that such CARES Act sales offer foist hidden fees and exorbitant premiums upon unwary investors.