Whitepapers
BlackRock Charged With Removing Whistleblower Incentives in Separation Agreements
The Securities and Exchange Commission today announced that New York-based asset manager BlackRock Inc. has agreed to pay a $340,000 penalty to settle charges that it improperly used separation agreements in which exiting employees were forced to waive their ability to obtain whistleblower awards.
According to the SEC’s order, more than 1,000 departing BlackRock employees signed separation agreements containing violative language stating that they “waive any right to recovery of incentives for reporting of misconduct” in order to receive their monetary separation payments from the firm.
BlackRock added the waiver provision in October 2011 after the SEC adopted its whistleblower program rules, and the firm continued using it in separation agreements until March 2016.Read More
Citadel Securities Paying $22 Million for Misleading Clients About Pricing Trades
The Securities and Exchange Commission today announced that Citadel Securities LLC has agreed to pay $22.6 million to settle charges that its business unit handling retail customer orders from other brokerage firms made misleading statements to them about the way it priced trades.
The SEC’s order finds that Citadel Execution Services suggested to its broker-dealer clients that upon receiving retail orders they forwarded from their own customers, it either took the other side of the trade and provided the best price that it observed on various market data feeds or sought to obtain that price in the marketplace. The process of taking the other side of the trade of the retail orders is known as “internalization.”
BNY Mellon Settles Charges Stemming From Miscalculations of Regulatory Capital Figures
The Securities and Exchange Commission today announced that BNY Mellon has agreed to pay a $6.6 million penalty to settle charges stemming from miscalculations of its risk-based capital ratios and risk-weighted assets reported to investors.
An SEC investigation found that BNY Mellon deviated from regulatory capital rules by excluding from its calculations approximately $14 billion in collateralized loan obligation assets that the firm consolidated onto its balance sheet in 2010. BNY Mellon never obtained Federal Reserve Board approval as required under regulatory capital rules to exclude the assets from its calculations. Due to the miscalculations and the firm’s lack of internal accounting controls to ensure its financial statements were being prepared properly, BNY Mellon ... Read More
Biomet Charged With Repeating FCPA Violations
The Securities and Exchange Commission today announced that a Warsaw, Ind.-based medical device manufacturer has agreed to pay more than $30 million to resolve parallel SEC and Department of Justice investigations into the company’s repeat violations of the Foreign Corrupt Practices Act (FCPA).
Biomet first faced FCPA charges from the SEC and entered into a deferred prosecution agreement with the Department of Justice in March 2012, agreeing to pay more than $22 million to settle both cases. As part of the SEC settlement, Biomet agreed to retain an independent compliance consultant to review its FCPA compliance program. After the settlement as Biomet was implementing recommendations from t... Read More
SEC Announces 2017 Examination Priorities
The Securities and Exchange Commission today announced its Office of Compliance Inspections and Examinations’ (OCIE) 2017 priorities. Areas of focus include electronic investment advice, money market funds, and financial exploitation of senior investors. The priorities also reflect a continuing focus on protecting retail investors, including individuals investing for their retirement, and assessing market-wide risks.
“These priorities make clear we are continuing to focus on a wide range of issues impacting our markets, from traditional areas such as market-wide risks to new forms of technology including automated investment advice,” said SEC Chair Mary Jo White. “Whether it is protecting our most vulnerable senior investors or those investing in the trillion dollar money... Read More
ITG Paying $24 Million for Improper Handling of ADRs
The Securities and Exchange Commission today announced that broker ITG agreed to pay more than $24.4 million to settle charges that it violated federal securities laws when it prompted the issuance of American Depository Receipts (ADRs) without possessing the underlying foreign shares.
ADRs are U.S. securities that represent shares of a foreign company, and for all issued ADRs there must be a corresponding number of foreign shares in custody. On behalf of counterparties, ITG obtained ADRs from depositary banks that administer ADR programs.
The SEC’s order finds that ITG facilitated transactions known as “pre-releases” of ADRs to its counterparties without owning the foreign shares or taking the necessary steps to ensure they were custodied by the counterparty on whos... Read More
Investment Adviser, Lawyer Settle Charges in Secret Referral Fee Scheme
The Securities and Exchange Commission today announced that a Connecticut-based investment adviser has agreed to admit wrongdoing and pay more than $575,000 to settle charges that he defrauded a client and then compounded his scheme by attempting to mislead SEC investigators while lying to other clients about the status of the SEC’s investigation.
According to the SEC’s order against John W. Rafal, he secretly paid a lawyer for referring a legal client’s large account to Essex Financial Services, an investment advisory firm Rafal founded. Instead of disclosing the referral fee arrangement to the elderly widow who owned the account, as required by law, Rafal and the lawyer agreed to disguise the payments as legal services purportedly provided by the lawyer’s firm. After othe... Read More
SEC Awards $5.5 Million to Whistleblower
The Securities and Exchange Commission today announced an award of more than $5.5 million to a whistleblower who provided critical information that helped the SEC uncover an ongoing scheme.
According to the SEC’s order, the whistleblower was employed at the company involved in the wrongdoing and reported the information directly to the SEC, which brought a successful enforcement action to end the scheme.
“Whistleblowers play a key role in bringing wrongdoing to the SEC’s attention, and this whistleblower helped prevent further harm to a vulnerable investor community by boldly stepping forward while still employed at the company,” said Jane Norberg, Chief of the SEC’s Office of the Whistleblower.
SEC enforcement actions from whistleblower tips have resulted in ... Read More
Wire and Cable Manufacturer Settles FCPA and Accounting Charges
The Securities and Exchange Commission today announced that Kentucky-based General Cable Corporation agreed to pay more than $75 million to resolve parallel SEC and U.S. Department of Justice investigations related to its violations of the Foreign Corrupt Practices Act (FCPA). The company agreed to pay an additional $6.5 million penalty to the SEC to settle separate accounting-related violations.
According to the SEC’s orders instituting settled administrative proceedings, General Cable’s overseas subsidiaries made improper payments to foreign government officials for a dozen years to obtain or retain business in Angola, Bangladesh, China, Egypt, Indonesia, and Thailand. General Cable’s weak internal controls also failed to detect improper inventory accounting at its Brazilia... Read More
Businessman Settles Charges of Fraudulent EB-5 Offering
The Securities and Exchange Commission today announced that a Florida-based businessman has agreed to settle charges that he misused investor funds intended to create U.S. jobs through the EB-5 Immigrant Investor Program.
The SEC alleges that Jason Adam Ogden, the CEO of a pair of smoothie and frozen yogurt franchises called Juiceblendz and Yoblendz, formed AJN Investments LLC to conduct an investment offering in conjunction with the EB-5 program, which provides foreign investors a path to permanent residency when their investments create at least 10 jobs for American workers. Investors were allegedly told that their money would help build and operate Juiceblendz and Yoblendz stores in strip malls and create a sufficient amount of jobs for them to qualify for an EB-5 visa ... Read More
SEC Charges Lawyer With Stealing Investor Money in EB-5 Offerings
The Securities and Exchange Commission today charged a California-based attorney with defrauding investors seeking to participate in the EB-5 immigrant investor program, stealing their money to buy a yacht and prop up his other businesses.
The SEC alleges that Emilio Francisco raised $72 million from investors in China solicited through his marketing firm PDC Capital to invest in EB-5 projects that included opening Caffe Primo restaurants, developing assisted living facilities, and renovating a production facility for environmentally friendly agriculture and cleaning products. Under the EB-5 program, foreign investors can apply to permanently live and work in the U.S. by investing money in certain projects that bring about American jobs.
According to the SEC’s compla... Read More
Teva Pharmaceutical Paying $519 Million to Settle FCPA Charges
The Securities and Exchange Commission today announced that Teva Pharmaceutical Industries Limited has agreed to pay more than $519 million to settle parallel civil and criminal charges that it violated the Foreign Corrupt Practices Act by paying bribes to foreign government officials in Russia, Ukraine, and Mexico.
The SEC’s complaint alleges that Teva made more than $214 million in illicit profits by making the influential payments to increase its market share and obtain regulatory and formulary approvals as well as favorable drug purchase and prescription decisions.
“As alleged in our complaint, Teva failed to devise and maintain proper internal accounting controls to prevent the company’s payments of bribes to win business in certain regions around the globe,” sa... Read More