SEC Penalizes Morgan Stanley for Violating Market Access Rule
The Securities and Exchange Commission today penalized Morgan Stanley & Co. LLC for violating the market access rule when it failed to uphold credit limits for a customer firm with a rogue trader who engaged in fraudulent trading of Apple stock. The market access rule requires broker-dealers to have adequate risk controls in place before providing customers with access to the markets. An SEC investigation found that Morgan Stanley, which offers institutional customers direct market access through an electronic trading desk, did not have the risk management controls necessary to prevent the rogue trader from entering orders that exceeded pre-set…
Read MoreSEC Sanctions Operator of Bitcoin-Related Stock Exchange for Registration Violations
The Securities and Exchange Commission today sanctioned a computer programmer for operating two online venues that traded securities using virtual currencies Bitcoin or Litecoin without registering the venues as broker-dealers or stock exchanges. The programmer, Ethan Burnside, also was sanctioned for conducting unregistered offerings. He significantly cooperated with the SEC’s investigation and agreed to settle the case by paying more than $68,000 comprising his profits from the unregistered venues plus interest and a penalty. He also is barred from the securities industry. According to the SEC’s order instituting a settled administrative proceeding, Burnside and his company BTC Trading Corp. operated…
Read MoreSEC Sanctions Eight Audit Firms for Violating Auditor Independence Rules
The Securities and Exchange Commission today sanctioned eight firms for violating auditor independence rules when they prepared the financial statements of brokerage firms that were their audit clients. SEC investigations found that the audit firms, which agreed to settle the cases, generally took data from financial documents provided by clients during audits and used it to prepare their financial statements and notes to the financial statements. Under auditor independence rules, firms cannot jeopardize their objectivity and impartiality in the auditing process by providing such non-audit services to audit clients. By preparing the financial statements, these particular firms essentially put themselves…
Read MoreSEC Charges Virginia Beach-Based Bank Holding Company With Accounting Violations
The Securities and Exchange Commission today charged a Virginia Beach-based bank holding company and its former chief financial officer with violating the federal securities laws by improperly accounting for a deferred tax asset (DTA) that was not fully realizable due to the company’s deteriorating loan portfolio and financial condition. Hampton Roads Bankshares, which is the holding company for the Bank of Hampton Roads and Shore Bank, agreed to pay a $200,000 penalty to settle the SEC’s charges. Former CFO Neal Petrovich agreed to pay $25,000 to settle the charges against him. A DTA is an asset on a company’s balance…
Read MoreSEC Charges Montana Man in Pump-and-Dump Scheme Involving Virginia-Based Penny Stock Company
The Securities and Exchange Commission today charged a penny stock promoter in Montana with orchestrating a fraudulent pump-and-dump scheme involving the stock of a Northern Virginia-based company that claims to be in the airport security business. The SEC alleges that Matthew Carley, who lives in Bozeman, Mont., engineered a reverse merger and gained control of free-trading shares of Red Branch Technologies located in Ashburn, Va. Carley then orchestrated two blast e-mail campaigns promoting Red Branch stock, and he timed the e-mails to coincide with the dissemination of materially false and misleading company press releases touting technology related to airport security…
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