In the Matter of Robinhood Financial, LLC, Respondent (Administrative Complaint, Docket No. E-2020-0047, Office of the Secretary of the Commonwealth of Massachusetts / Securities Division / December 16, 2020)In the Matter of Robinhood Financial, LLC, Respondent (Administrative Complaint, Commonwealth of Massachusetts)A History of SOES, Daytrading, NASD, NASDAQ, DOJ, SEC, Congress, and Robinhood -- and a Massachusetts Complaint and Another FINRA Fine (BrokeAndBroker.com Blog)Luckin Coffee Agrees to Pay $180 Million Penalty to Settle Accounting Fraud Charges (SEC Release)
1) aggressive tactics to attract new, often inexperienced investors; 2) failure to implement policies and procedures reasonably designed to prevent and respond to outages and disruptions on its trading platform; 3) use of strategies such as gamification to encourage and entice continuous and repetitive use of its trading application; 4) failure to follow its own written supervisory procedures regarding the approval of options trading; and 5) breach of the fiduciary conduct standard required by the Act and Regulations.
[F]rom at least April 2019 through January 2020, Luckin intentionally fabricated more than $300 million in retail sales by using related parties to create false sales transactions through three separate purchasing schemes. According to the complaint, certain Luckin employees attempted to conceal the fraud by inflating the company's expenses by more than $190 million, creating a fake operations database, and altering accounting and bank records to reflect the false sales.The complaint further alleges that the company intentionally and materially overstated its reported revenue and expenses, and materially understated its net loss, in its publicly disclosed financial statements in 2019. For example, Luckin allegedly materially overstated its reported revenue by approximately 28% for the period ending June 30, 2019, and by 45% for the period ending September 30, 2019, in its publicly disclosed financial statements. The complaint alleges that during the period of the fraud, Luckin raised more than $864 million from debt and equity investors. After Luckin's misconduct was discovered in the course of the annual external audit of the company's financial statements, Luckin reported the matter to and cooperated with SEC staff, initiated an internal investigation, terminated certain personnel, and added internal accounting controls.
[T]he causes of action relate to Hsu allegedly recommending the purchase of an unsuitable business, not disclosing the financial status of the business, not disclosing her commission on the sale of the business and soliciting a personal loan from Claimant.
The causes of action relate to Hsu's alleged wrongdoing, which Ameriprise did not authorize, and Hsu's deliberate and intentional concealment of her wrongdoing from Ameriprise.As set forth in the FINRA Arbitration Award:
Unless specifically admitted in her Statement of Answer and Crossclaim and Amended Statement of Answer and Crossclaim to Ameriprise, Hsu denied the allegations made in Ameriprise's Crossclaim and asserted various affirmative defenses. In her Crossclaim and Amended Crossclaim, Hsu asserted the following causes of action against Ameriprise: breach of contract as to pre-termination benefits; breach of the implied covenant of good faith and fair dealing; wrongful termination in violation of public policy; statutory violation of Labor Code §§201-218.6; equitable indemnity; implied indemnity; indemnity; and equitable contribution. The causes of action relate to Ameriprise allegedly wrongfully terminating Hsu and failing to pay her bonuses due and refusing to give Hsu access to the computer system in order to property return Claimants' funds.Hsu's Employment-based Crossclaim Severed
[O]n September 26, 2017, the Panel granted Ameriprise's Motion to Sever Hsu's employment related crossclaim.SIDE BAR: As such we've whittled the case down to the customers' claims against Ameriprise and Hsu but removed Hsu's employment claims against Ameriprise.
On May 3, 2018, Claimants submitted notice of withdrawal of all claims against Ameriprise. On July 13, 2018, Claimants submitted notice of withdrawal of all claims against Hsu. Therefore, the Arbitrator made no determination with respect to any of the relief requests contained in the Statement of Claim.SIDE BAR: As such the customers' claims against Ameriprise and Hsu. which is what started all this litigation, are now withdrawn; however, we're still left with Ameriprise's Crossclaim against Hsu.
Hsu did not appear at the evidentiary hearing on September 29, 2020. Upon review of the file, the Panel determined that Hsu received due notice of the hearing and that arbitration of the matter would proceed without Hsu present, in accordance with the Code.At the evidentiary hearing on September 29, 2020, Hsu failed to appear and failed to present a case in favor of her crossclaims against Ameriprise. On this basis the Panel ruled against her crossclaims pursuant to Rule 12603.