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Industry News: Diligence Events

 

Tracking Regulatory Actions, Lawsuits, and Fraud

As part of Castle Hall’s ongoing media monitoring, our analyst team captures news stories related to operational failures, regulatory actions and lawsuits impacting the asset management industry. We call these stories "DiligenceEvents". 
 
Across our diligence monitoring platform, Castle Hall leverages the power of Dow Jones Factiva to create a fully institutional media monitoring tool. Factiva ensures DiligenceEvents media information is permanently archived and fully licensed from the content provider with no copyright infringement. Factiva accesses more than 30,000 premium sources, including licensed publications, websites and blogs, supported by Castle Hall's own review of industry publications and media sources.

Please use your Castle Hall Factiva Reader login information to access articles noted below. If you do not have a Factiva Reader license, please contact your Castle Hall client relationship manager who will be able to activate the necessary access.

DJ_Factiva

2018-06-22

Latvian Authorities is Examining the Connection of Multiple Accounts at ABLV to the $230 Million Russian Fraud

Latvian authorities say they are examining an allegation that a failed bank handled money from a Russian fraud uncovered by Bill Browder, an investor campaigning to expose corruption. ABLV shut this year after the United States Treasury alleged money laundering at Latvia's third largest bank, plunging the Baltic state into financial and political crisis. Riga responded by tightening controls on a dozen Latvian banks which had promoted themselves as a gateway to Western markets for customers largely in Russia, but also in Ukraine and Moldova, promising Swiss-style secrecy...

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Fraud

2018-06-22

Mahathir Seeks to Recover RM18bil of 1MDB Funds, Goldman Sachs Fees

Malaysia will seek to recoup US$4.5bil (RM18bil) of funds that were potentially lost through 1MDB, as well as fees paid to Goldman Sachs Group Inc., according to Prime Minister Tun Dr Mahathir Mohamad. “We have to prove ownership of the money,” Mahathir, 92, said in an interview with Bloomberg Television’s Haslinda Amin on Friday. “The previous government, in order to avoid accusation of some wrongdoing, decided that the money was not theirs, so they’re not making any claims. But we know the money is ours. It’s from 1MDB.” The scandal surrounding the troubled investment company has spawned worldwide investigations, with U.S. officials saying that more than US$4.5bil flowed from 1Malaysia Development Bhd. through a web of opaque transactions and shell companies...

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Fraud

2018-06-21

Relativity Media Investor Claims $12.5 Million Fraud

A hedge fund investor is doubling down on his claim that Ryan Kavanaugh defrauded him into investing into Relativity Media, the twice-bankrupt mini-studio. Carey Metz filed an amended lawsuit in Los Angeles Superior Court on Thursday, accusing Kavanaugh, the founder and CEO, of conning him into making a $10 million investment in the company in 2013. Metz had earlier alleged that Kavanaugh duped him into making a $2.5 million investment in the company as it verged on bankruptcy in 2015. The amended complaint comes two weeks after a New York bankruptcy judge dismissed portions of Metz’s original complaint alleging breach of oral contract, unjust enrichment, and other torts...

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HedgeFund

2018-06-21

Ex-Morgan Stanley broker Ami Forte Fires Back at Firm, FINRA

FINRA barred a former Morgan Stanley branch manager from engaging in principal and supervisory activities earlier this week, and one of the wirehouse's ex-advisors is crying foul. Ami Forte, a once high-profile broker at Morgan Stanley, sharply criticized FINRA for allegedly tarnishing her reputation while issuing a disciplinary action against ex-branch manager Terry McCoy. Forte, who is embroiled in a separate arbitration against Morgan Stanley, is also facing a potential FINRA regulatory action herself, according to BrokerCheck records...

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CoutCases

2018-06-21

NY-based Hedge Fund Drops a $68M Pension Fund Over Ethics Requirements

A New York-based hedge fund is ending a $68 million investment by the Kentucky Retirement Systems, citing new code of conduct requirements imposed by the state, as well as ongoing litigation, the system's executive director said on Thursday. David Eager said the decision by Davidson Kempner Capital Management was a first for the $17 billion public pension system, which has been holding discussions with investment managers about adhering to CFA Institute code of ethics and standards of professional conduct as required by a 2017 Kentucky law...

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HedgeFund, AssetManagers

2018-06-21

Credit Suisse Prevails in Lawsuit Seeking $300 Million for Brokers: U.S. Judge

A federal judge on Thursday dismissed a lawsuit accusing Credit Suisse Group AG of withholding up to $300 million of compensation from U.S.-based brokers when it closed their private banking unit in 2015. U.S. District Judge William Orrick in San Francisco ruled that the plaintiff Christopher Laver was bound by an agreement to arbitrate employment-related disputes, and could not pursue his proposed class action on behalf of roughly 200 brokers. The judge also said any arbitration details should be worked out in New York, where Credit Suisse thought the case belonged...

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Banks

2018-06-21

Bithumb's US $31 MIL. Hack Sends Shock Waves

Bithumb, the largest virtual currency exchange in Korea, announced on June 20 that it has suffered damage from hacking. Bithumb said 35 billion won (US$31 million) worth of virtual money was stolen, including Ripple. The announcement fueled disbelief in the domestic cryptocurrency trading industry as a whole. At the same time, it highlighted the acute need for government regulations in virtual currency trading. This hacking incident happened less than 10 days after Coinrail, a small-sized virtual currency exchange, had 40 billion won worth of virtual currency leaked due to hacking...

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Crypto

2018-06-21

US: SEC Obtains Emergency Court Order to Freeze Assets of Fraudulent ICO 

The U.S. Securities and Exchange Commission (SEC) has received an additional emergency court order to freeze the assets of Dominic Lacroix, owner of PlexCorps, in an ongoing enforcement action, Crowdfund Insider reported June 20. The SEC had previously sued Lacroix for securities fraud and received an emergency asset freeze order in December, 2017. The order was unsealed June 18. The SEC alleges that, since December, Lacroix has been using secret accounts, including an account in his brother’s name which he controlled, to dissipate assets obtained from investors with the PlexCoin ICO...

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SEC

2018-06-21

Monte Dei Paschi, Deutsche Bank, Nomura Face Fines in Italy

Banca Monte dei Paschi di Siena SpA. (BMPS.MI), Deutsche Bank AG (DBK.XE) and Nomura International Plc face fines from Italy's markets watchdog over two complex derivatives transactions. The overall amount of the fines is 2.3 million euros ($2.7 million), according to documents published by the regulator Wednesday. The fines are related to the role of 13 people who were managers at the three banks during the time of two complex and loss-making derivatives, called Alexandria and Santorini. The managers allegedly colluded to disseminate false information and misrepresent Monte dei Paschi's financial accounting, the regulator said. The derivatives have since been closed...

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Banks

2018-06-21

Arif Hussein / Financial Conduct Authority - FCA Criticised by Court for Failing to Sanction Top UBS Bankers Over Interest Rate Rigging

A court has criticised a probe by the City regulator which failed to pursue senior bankers over “widespread” interest rate rigging at UBS. The Upper Tribunal, which hears challenges against Financial Conduct Authority decisions, dismissed an appeal by a junior trader against a ban imposed by the regulator but described the investigation that led to the ban as “troubling”. The FCA barred former UBS derivatives trader Arif Hussein from working in financial services after finding that he had manipulated the Libor interest rate to assist his own trading positions in 2009, a finding that tribunal rejected...

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Banks,Fraud,CourtCases

2018-06-21

Daniel Michalow - The Hedge-fund Manager who Says he's a #metoo Scapegoat Plans to Take Legal Action Against $50 Billion D.E. Shaw

Things might be about to get heated in a dispute between the $50 billion hedge fund D.E. Shaw and a former portfolio manager. Daniel Michalow, who was a senior portfolio manager in the firm's discretionary macro group, plans to take legal action against his former employer next month, a person familiar with the matter said. Michalow plans to file a statement of claim in arbitration next month with the Financial Industry Regulatory Authority. Michalow plans to accuse the New York hedge fund, in its response to Michalow's termination, of defaming him in internal and external communications and to the media...

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#metoo, HedgeFund

2018-06-20

Sean Stewart / Perella Weinberg Partners - Jailed Ex-Perella Banker May be Freed in Insider-trading Appeal 

A former Perella Weinberg Partners LP banker convicted of tipping his father to five health-care mergers may be the latest insider-trader to win his freedom, as another case threatens to fall apart on appeal. In an unusual request that signals the court may have decided to overturn all or part of Sean Stewart’s conviction, a federal appeals panel in Manhattan invited him on Tuesday to file a request to be released from prison while it considers his appeal...

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Banks,Fraud,CourtCases

2018-06-20

Ex-TCW Fund Manager Ordered to Turn Over Texts in Harassment Lawsuit

A New York State judge on Tuesday ordered a former TCW Group Inc fund manager to hand over text messages sent to her friend around the same time that she had messaged about an alleged sexual encounter with her boss. Fund manager Sara Tirschwell filed a $30 million lawsuit earlier this year claiming TCW terminated her in retaliation for complaining that her boss, TCW head of alternative products Jess Ravich, coerced her into having sex. Attorneys for TCW and Ravich said on Tuesday that they believe a text message Tirschwell sent to her friend about having sex with Ravich in May 2016 was fabricated, an allegation representatives for Tirschwell deny...

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AssetManagers, #metoo

2018-06-20

Deutsche Bank to  Pay $205M to Settle New York Forex Probe 

Deutsche Bank to pay $205M to settle New York forex probe. Financial Services Superintendent Maria T. Vullo announced that Deutsche Bank AG has agreed to pay a fine of $205M as part of a consent order with the New York State Department of Financial Services for violations of New York banking law, including efforts to improperly coordinate trading activity through online chat rooms, improperly sharing confidential customer information, trading aggressively to skew prices, and misleading customers...

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Banks,Fraud

2018-06-19

Perry Santillo / Christopher Parris / Paul Larocco / John Piccarreto / Thomas Brenner -  $102M Ponzi Scheme Funded Luxury Cars, Las Vegas Party: SEC 

A group of formerly registered advisors set up a $102 million Ponzi scheme that defrauded more than 600 investors nationwide and paid for luxury cars, houses across the country and an extravagant party at a Las Vegas nightclub, says the SEC. Perry Santillo, Christopher Parris, Paul LaRocco, John Piccarreto and Thomas Brenner, along with the three investment firms associated with the men, have been charged with securities fraud violations in a federal court in Manhattan. The court also granted the SEC’s request for an asset freeze and a temporary restraining order...

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Advisors, SEC

2018-06-19

Whitebox Advisors / Strategic Value Partners / Citadel LLC / Cerebus - McKinsey Investments Weren't Disclosed in Bankruptcy Cases; Retirement Fund Invested in Hedge Funds with Financial Interests in Six Bankrupt Companies the Consulting Firm was Advising

A McKinsey & Co. retirement fund held investments that gave it a financial interest in the outcome of six bankruptcy cases in which the company also was serving as an adviser, court and regulatory filings show. McKinsey's restructuring unit, known as McKinsey RTS, didn't disclose those investments publicly. Rules governing the chapter 11 bankruptcy process require advisers to disclose all relationships that might give rise to a conflict of interest, to ensure that advisers will be disinterested advocates for their clients and that other participants in the cases are aware of them...

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Advisors, HedgeFund

2018-06-19

Italian Prosecutor Appeals Against Morgan Stanley Case Ruling

Italian prosecutors said on Tuesday they would appeal against a decision by an administrative court not to hear a case over derivatives that targeted Morgan Stanley . The case centers on Morgan Stanley derivative transactions made by the Italian state between 1995 and 2005 and terminated in December 2011 and January 2012. The prosecution had asked for 2.7 billion euros ($3.1 billion) in damages from the U.S. investment bank, but in a ruling published last week, the Court of Accounts said it did not have the jurisdiction to take the case. Morgan Stanley has denied any wrongdoing and its lawyers have argued that a civil court should have jurisdiction over proceedings...

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Banks,CourtCases

2018-06-19

Bank of America - Merrill Lynch - BOFA's Merrill Admits Misleading Customers, to Pay $42 Million SEC Fine

Bank of America Corp's Merrill Lynch unit admitted to misleading brokerage customers about which firms processed their trades and agreed to pay a $42 million fine under a settlement with the U.S. Securities and Exchange Commission announced on Tuesday. The settlement follows a similar agreement with the New York attorney general in a related probe nearly three months ago, under which Merrill Lynch also admitted to wrongdoing and agreed to pay a $42 million fine...

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Banks, SEC

2018-06-19

FINRA Fines Former Morgan Stanley Broker $15,000 for Supervisory Failures

Former Morgan Stanley broker Terry Lee McCoy has agreed to pay $15,000 and be barred from acting as a securities principal in order to settle Financial Industry Regulatory Authority charges that he violated the Municipal Securities Rulemaking Board’s supervision rule. McCoy, who neither admitted nor denied FINRA’s charges, worked out of Palm Harbor, Fla. FINRA registration information shows that he was there from 1999 until 2016, and has worked at several other firms since becoming a broker in 1986...

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2018-06-19

JPMorgan Sues $100M Merrill Broker for  ‘Aggressive Solicitation’

A broker resigned from JPMorgan on the Friday before Memorial Day, and then over the holiday weekend, proceeded to call his clients’ cell phones to encourage them to move their assets to Merrill Lynch. Now, JPMorgan is accusing that broker of “aggressive solicitation of clients,” both before he resigned from the bank and after he joined his new firm, Merrill Lynch, according to a lawsuit filed by the bank. The bank claims advisor Gabriel Campbell’s actions violate a non-solicitation contract he had signed...

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Banks

2018-06-19

KKR & Co. / PIMCO / Prisma Capital / Blackstone - Advisers: We Didn't Wreck Pensions; Hedge Fund Managers Seek Lawsuit Dismissal 

Money managers who sold hedge fund investments to the Kentucky Retirement Systems say their investment advice was transparent and sound, and they've asked that a lawsuit accusing them of misrepresentation and conspiracy be dismissed. Late Friday, attorneys for big hedge fund firms — KKR & Co., Pacific Alternative Asset Management, Prisma Capital Partners and Blackstone Group — filed briefs in Franklin Circuit Court arguing that a lawsuit filed in December by eight current and former state government employees be thrown out...

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Advisors, HedgeFund, AssetManagers

2018-06-19

Malaysia Seeks to Lay Multiple Charges Against Ex-PM Najib over 1MDB: Mahathir

Embezzlement and bribery with government money are among the charges that Malaysia is looking to bring against former prime minister Najib Razak following a probe into funds allegedly looted from the state-run fund 1MDB, Prime Minister Mahathir Mohamad said on Tuesday. Mahathir told Reuters in an interview that Malaysian investigators already "have an almost perfect case" against the principal suspects who had defrauded 1Malaysia Development Berhad (1MDB) and misappropriated billions of dollars in public funds. He also described Najib, who founded 1MDB in 2009, as playing a central role...

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Fraud

2018-06-19

Texas State Sen. Carlos Uresti Resigns After Felony Convictions 

Finally heeding calls from his colleagues on both sides of the aisle, state Sen. Carlos Uresti announced his resignation Monday, four months after he was found guilty of 11 felonies. The news comes just over a week before the San Antonio Democrat is set to be sentenced by a federal judge in San Antonio; experts predict his penalty will be 8 to 12 years of prison time... Uresti was indicted last year on charges including fraud and money laundering stemming from his involvement with FourWinds Logistics, a now-defunct oilfield services company found to have perpetrated a Ponzi scheme against investors. Uresti worked as general counsel for the company, owned a 1 percent stake and earned a commission for recruiting investors, according to court documents...

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Fraud

2018-06-19

Manfred Bredl / FM Wealth Management / Eco-plant Corporation - 'It was very sophisticated' - Kiwi Pours $500K into Alleged Scam

A New Zealand man has poured $525,000 into what is believed to be a sophisticated global investment scam and is warning others against being taken in. Authorities are looking into the apparent ruse which has allegedly duped other Kiwis out of their life savings. Manfred Bredl, 63, believed he was investing in a groundbreaking carbon emissions scheme, reportedly backed by the Mexican Government...

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Fraud

2018-06-18

Larry A. Holley / Patricia Enright (Gray)/Treasure Enterprize, LLC - Pastor Indicted for Scheme to Defraud Investors 

On May 22, 2018, the United States District Court for the Eastern District of Michigan unsealed an indictment charging Larry A. Holley of Grand Blanc, Michigan and Patricia Enright, a.k.a. Patricia Gray, 57, of Flint, Michigan with conspiracy to commit wire and mail fraud, wire fraud, mail fraud, and money laundering. Holley and Gray are currently defendants in a parallel enforcement action brought by the SEC. According to the indictment, Enright and Holley, who is a pastor at Abundant Life Ministries in Flint, operated Treasure Enterprise, LLC, which fraudulently purported to provide financial planning and asset management services to investors...

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AssetManagers, SEC

2018-06-18

JP Morgan Chairman Rob Priestly Quits ASX, Future Fund Boards

Priestley quits ASX, Future Fund. JP Morgan chair Rob Priestley has resigned from the ASX and Future Fund boards in the wake of ACCC criminal cartel allegations against ANZ. Mr Priestley said he will continue as chairman of JP Morgan. JP Morgan was granted immunity from the case as the key ACCC informant, while the other underwriters, Deutsche and Citibank, were charged in the case along with ANZ, the issuer. Mr Priestley today announced he was stepping aside from the board of the ASX, saying: “I am very conscious of the unique role that the ASX plays at the heart of Australia’s financial marketplace and with all of its participants...

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Banks

2018-06-18

JPMorgan to Pay $65 Million for Dollar Benchmark Manipulation; The CFTC Said the Bank's Employees Between 2007 and 2012 Made False Reports and Attempted to Manipulate the U.S. Dollar International Swaps and Derivatives Association Fix

JPMorgan Chase & Co. agreed to pay a $65 million fine to settle claims that it tried to manipulate a global interest rate benchmark, the latest fine levied by U.S. regulators to punish crisis-era manipulation schemes by large banks. The Commodity Futures Trading Commission said JPMorgan employees between 2007 and 2012 made false reports and attempted to manipulate the U.S. Dollar International Swaps and Derivatives Association Fix, a benchmark that is referenced in many derivatives products...

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Banks

2018-06-18

Francis Lorenzo / Charles Vista - U.S. Supreme Court to Review Scope of Investor Protection Laws 

The U.S. Supreme Court on Monday agreed to hear an appeal by a New York investment banker banned from the industry by the Securities and Exchange Commission in a case that could limit the scope of those who can be held liable under laws protecting investors from securities fraud. The justices will review a lower court ruling that upheld most of the SEC's liability findings against Francis Lorenzo, who served as the investment banking director at a broker-dealer called Charles Vista that was expelled from the securities industry in 2014. The case involved misleading emails he sent to investors about a financially struggling clean-energy company....

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SEC

2018-06-16

Chatham Financial Planner, Firm Barred, Fined $500,000

A Chatham financial planner and his company are barred from selling securities and fined $500,000 for deceptively selling $6.1 million in unregistered securities to elderly and retired people. Richard Belott of Warren, and his company Financial Planning Advisors LLC on East Main Street, Chatham, had its registration to sell securities, bonds, notes and promissory notes, revoked by the The state Bureau of Securities. The revocation and a $500,000 civil penalty against Belott and FPA were announced by state Attorney General Gurbir S. Grewal and the state Division of Consumer Affairs on Friday, designated World Elder Abuse Awareness Day...

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Advisors

2018-06-16

Fraud Charges in Theranos Case; Founder Elizabeth Holmes and a Former Top Exec are Accused of Deceiving Investors

Theranos Inc. founder Elizabeth Holmes and former company President and Chief Operating Officer Ramesh "Sunny" Balwani have been charged by a federal grand jury of wire fraud and conspiracy to commit wire fraud, the Justice Department said Friday. According to the Justice Department, the two engaged in a "multi-million dollar scheme to defraud investors" and were also involved in a separate plan to "defraud doctors and patients." Minutes before the Justice Department's announcement, Bloomberg reported that Holmes had stepped down as Theranos' chief executive but that the Silicon Valley company said she would remain chair of the board...

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Fraud

2018-06-16

Hector May / Securities America - May's 'Victims' Take Action Against Supervisor 

Clients of a Rockland County financial investor who accuse him of ripping them off filed a complaint Friday against a nationwide brokerage house accusating it of not properly supervising and auditing Hector May's investments of their money. The nine clients claim Securities America "aided and abetted" May and allowed his alleged "Ponzi-type fraud to persist for many years," said Jenice Malecki, a Manhattan securities lawyer representing some of May's clients. Malecki said May operated as a registered representative of Securities America. Therefore, Malecki argues that Securities America is responsible for his activities and that of his company, Executive Compensation Planners...

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Fraud

2018-06-16

Westpac / Sudhir Sinha - Westpac Hit with Legal Action Over Poor Advice

Westpac has been taken to court by the corporate watchdog over its handling of the now-banned fin­ancial planner Sudhir Sinha, who “systemically” failed his obligations to almost 200 customers by charging them fees when no services was provided over six years. The Australian Securities & Investments Commission yesterday said it had served Westpac with charges in the Federal Court, alleging that in four sample client files Mr Sinha breached the best-interests duties by providing inappropriate financial advice to customers...

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CourtCases

2018-06-16

Allies Appeal for a Milken Pardon; Anthony Scaramucci, Gary Winnick and Others Advocate for 1980s 'Junk Bond' King.

Some of President Trump's current and former advisors have urged him to pardon Michael Milken, the "junk bond" king of the 1980s who went to jail for securities fraud but has since become a high-profile philanthropist and crusader for cancer prevention, child education and other causes. Anthony Scaramucci, a financier who briefly was White House communications director last year, confirmed Friday that he is among the advocates along with Gary Winnick, a former associate of Milken's in the 1980s...

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Advisors

2018-06-15

Karti P. Chidambaram / P. Chidambaram India Said to Probe Sequoia Capital's Role in Alleged Money Laundering

India is probing whether Sequoia Capital had any role in an alleged money laundering case involving a former minister’s son, according to people with knowledge of the matter. The Enforcement Directorate, which investigates forex violations, is examining why the Silicon Valley venture firm bought shares of a healthcare start-up at a premium from a company allegedly controlled by Karti P. Chidambaram, the son of former Finance Minister P. Chidambaram, the people said, asking not to be identified as they aren’t authorized to speak publicly...

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Fraud

2018-06-15

German Lillevyali / GL Financial Group - Missing Russian Fund Manager Believed to be in Cyprus 

German Lillevyali, a Russian fund manager with an Estonian passport who has disappeared leaving investors fearing for the fate of their funds, is reportedly in Cyprus, Bloomberg reported on Friday. Lillevyali, 53, owner of the GL Financial Group, which is licenced in Switzerland and the UK and has affiliates in Nicosia, London, Geneva, Zurich and Belize, was managing $250 million (213m) in funds. Executives working for Russian billionaire Oleg Deripaska, Switzerland’s Novartis AG, and San-Francisco-based Levi Stauss & Co. are among Lillevyali’s customers...

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2018-06-15

Adam Hand / Jehu Hand / Learned Hand - Former Stockbroker Sentenced for Microcap Stock Manipulation Scheme 

A former California stockbroker was sentenced today in federal court in Boston in connection with his role in a scheme to manipulate the stock of a publicly traded microcap company. Adam Hand, 53, of Newport Beach, Calif., was senteneced by U.S. District Court Judge William G. Young to 30 months in prison and three years of supervised release. In July 2016, Hand pleaded guilty to an information charging him with conspiracy to commit securities fraud. In May 2018, his brother, Jehu Hand, DOJ - USAOconvicted-two-market-manipulation-schemes) following a 13-day trial of conspiracy, securities fraud and wire fraud...

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Fraud,CourtCases

2018-06-15

The Central Bank of Ireland Issued a Fine of €443,000 on Appian Asset Management for Regulatory Breaches 

The Central Bank of Ireland (CBI) has issued a fine of €443,000 on Appian Asset Management for regulatory breaches causing the loss of client funds. In a statement today, the CBI said that Appian’s historic regulatory failures left it exposed to a cyber-fraud by a third party where, acting on the instructions of a fraudster impersonating a client, it facilitated a series of transactions resulting in the loss of €650,000 of a client’s funds. The breaches were admitted by Appian, one of the best known asset management companies operating in Ireland, and the client has been fully reimbursed...

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AssetManagers

2018-06-15

Italian Court Cannot Hear a 2.7 Billion Euros Case Over Derivatives Brought Against Morgan Stanley 

An Italian administrative court has ruled that it cannot hear a case over derivatives brought against Morgan Stanley that included a request for 2.7 billion euros ($3.1 billion) in damages from the U.S. investment bank. The ruling by the Court of Accounts published on Friday was made on April 19. A spokesman for Morgan Stanley declined to comment. "This court does not have jurisdiction," reads an excerpt from the ruling obtained by Reuters. The administrative court can appeal. The state now has three months to bring the matter before a new tribunal if it so chooses...

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Banks

2018-06-15

Citigroup to Pay $100 Million to Settle U.S. Libor Rigging Probe

Citigroup Inc has agreed to pay $100 million to settle charges by most U.S. states that it rigged the Libor benchmark interest rate to boost profit at the expense of investors. The settlement was announced by New York State Attorney General Barbara Underwood, whose office has led a probe by 41 U.S. states and Washington, D.C. into rate manipulation by banks. Libor is short for the London Interbank Offered Rate...

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Banks

2018-06-14

Philadelphia Investment Adviser Who Bilked Clients Out of $1.6 Million Has Pled Guilty to Running Ponzi Scheme

First Assistant U.S. Attorney Jennifer Arbittier Williams announced today that a Philadelphia investment adviser who bilked clients out of $1.6 million has pled guilty. Carl Frederic Sealey, 43, chairman of Global Standard Industries Inc. (GSI) and SEK Industries Inc., pled guilty to fraud charges this week in connection with a scheme in which Sealey used his investors' money to fund his own lavish lifestyle instead of using it to finance real estate deals. Sealey claimed his company had more than $15 billion in managed domestic assets and another $33 billion offshore...

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Advisors

2018-06-14

Former Managing Director of HBFS Financial Services Charged with Fraud 

Freddy David, the former managing director of HBFS Financial Services, has been charged with fraud offences by the City of London Police. Mr David, 49, of Borehamwood, Herts, has been released on bail and will attend court on July 2. He was charged with obtaining money transfer by deception and fraud by abuse of position. Mr David was arrested in November last year as part of an investigation by the City of London Police and the Financial Conduct Authority (FCA)...

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Fraud

2018-06-14

Ben Cheng / Amaya Inc. - OSC Reaches Settlement with Former Star Money Manager in Amaya Insider Trading Case 

The Ontario Securities Commission has reached a settlement agreement with former star Bay Street money manager Ben Cheng, following allegations that he broke securities laws by leaking confidential information about a multibillion-dollar takeover deal involving online gambling company Amaya Inc. Settlement terms will be disclosed if the agreement is accepted by an OSC panel at a hearing on Friday. The proposed civil settlement with Mr. Cheng comes a week after a Quebec judge threw out a quasi-criminal case alleging illegal insider trading around the same transaction against David Baazov, Amaya's founder and former chief executive officer...

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AssetManagers

2018-06-14

Regulator in Brazil Fines Morgan Stanley and RBC BRL42.9m for Colluding to Manipulate Rates 

Reuters has reported that Brazil's antitrust watchdog has fined Morgan Stanley (NYSE: MS) and Royal Bank of Canada (RY.TO) for manipulating foreign exchange rates. The two firms were fined a total of BRL42.9m. Morgan Stanley has to pay BRL30.28m While the Canadian bank would have to pay BRL12.586m. The firms were accused of colluding to manipulate rates on offshore spot-market transactions involving the Brazilian real...

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Banks

2018-06-14

Jho Low, Alleged Ringleader in 1MDB Scandal, Sought Deal with Malaysia but was Rejected 

Jho Low, the alleged mastermind of one of the world's largest purported frauds, has reached out to authorities in Malaysia, offering to drop his claim to more than a billion dollars in assets in return for immunity from criminal prosecution, according to people familiar with the offer. Prime Minister Mahathir Mohamad rejected the offer, which was communicated via an intermediary, the people said. Mr. Low, who the U.S. Justice Department alleges oversaw a scheme to steal $4.5 billion from a Malaysian state fund between 2009 and 2015, is living in Hong Kong, Macau and mainland China, say people with knowledge of his movements...

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Fraud

2018-06-14

Badr Jafar / Arif Naqvi - UAE's Jafar Faily Behind Lawsuit Against Abraaj on $100 Million Loan Default

An ally of Abraaj's founder Arif Naqvi has turned against the private equity firm after its financial woes deepened in the wake of allegations it misued investor money and defaulted on loans, three sources and court documents show. Badr Jafar, an Abraaj board member, is one of the main figures behind a lawsuit filed by a little-known fund in the Cayman Islands that could further push Dubai-based Abraaj towards liquidation, the sources familiar with the matter said. The petition was filed this month by Saint Vincent-based Auctus Fund against Abraaj Investment Management Ltd (AIML) for non-payment of a $100 million, according to a copy seen by Reuters...

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Privateequity,

2018-06-13

Hayman Capital / J. Kyle Bass / United Development Funding - UDF's Lawsuit Against Kyle Bass' Hedge Fund Can Continue, Judge Rules

A lawsuit for business disparagement against Dallas hedge fund Hayman Capital and its manager, J. Kyle Bass, will continue after a Dallas county court at law judge Monday refused to dismiss the suit as a SLAPP action under the Texas Citizens Participation Act. The one-page ruling was made without comment by Judge Sally Montgomery, but it nominally allows discovery to proceed in the lawsuit filed in November by United Development Funding, a limited partnership that creates and administers a family of real estate investment funds...

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HedgeFund

2018-06-13

Bernie Madoff / Ezra Merkin - Madoff Customers' Recovery Tops 75 PCT with Merkin Settlement 

The court-appointed trustee liquidating Bernard Madoff's firm on Wednesday announced a $280 million settlement with one of the swindler's earliest investors, enabling customers to recoup more than 75 percent of the principal they lost. The accord with hedge fund manager Ezra Merkin also resolved claims against Ascot Partners LP, a "feeder fund" he ran that sent customers' money to Madoff, often without their knowledge, as well as his management company Gabriel Capital Corp...

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HedgeFund

2018-06-13

Elias Sacal / BVG World SA / Eduardo Cepeda - Mexico Judge Cancels Arrest Warrant for JPMorgan Executive, Bank Says 

A judge in Mexico canceled an arrest warrant for the country head of U.S. investment bank JPMorgan Chase & Co and another employee, the bank said on Wednesday, just days after it was issued. The fourth district judge of Acapulco in the state of Guerrero had signed the warrant, for alleged fraud related to a 2007 loan to a Mexican real estate developer. The developer, Elias Sacal, also filed a $1.2 billion lawsuit against the bank in New York, accusing it of fraudulently inducing the developer to transfer properties based on a false promise it would sell them...

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Banks

2018-06-13

Merrill Lynch - Merrill Settles Bond Case with SEC

Bank of America Merrill Lynch will pay $15.7 million to settle claims that its traders lied about how much they paid to acquire mortgage bonds, allowing the bank to charge a higher price to clients buying securities. The sanction includes $10.5 million that must be returned to customers and a $5.2 million civil penalty, the Securities and Exchange Commission said Tuesday. In some cases, the SEC said, Merrill's traders also failed to disclose that their markups "bore no reasonable relationship to the prevailing market prices." The bank neither admitted nor denied the SEC's claims...

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SEC, Banks

2018-06-13

Credit Suisse - Court Curbs Legal Weapon in Fighting Fraud by Banks

A powerful law used by New York's top prosecutor to bring fraud charges against Wall Street firms was reined in by the state's highest court on Tuesday, a decision that could imperil an $11 billion lawsuit against Credit Suisse and blunt a favored tool for pursuing wrongdoing by banks and their executives. The 4-to-1 decision by the New York State Court of Appeals said the statute of limitations for bringing claims under the Martin Act, a sweeping state securities law, is three years, not six...

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Banks

2018-06-13

Credit Suisse to Get $385 Million in Lehman Bankruptcy Claim 

Credit Suisse will get $385 million from its bankruptcy claim against Lehman Brothers Holdings, the Swiss bank said on Wednesday, less than the $1.2 billion it sought from the failed U.S. investment bank for terminated derivatives transactions. The deal, which still must be approved by a U.S. court, also means the Swiss bank's Strategic Resolution Unit (SRU) will take a roughly $70 million impact in the case dating to 2009, Credit Suisse said...

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Banks

2018-06-13

Achim Kraemer / Phillippe Bohart / Colin Bermingham / Carlo Palombo - Traders Accused of Rigging Interest Rate "We're Led to Think Actions Permitted" 

Traders accused of rigging a vital benchmark interest rate to boost their employer's profits and their own pay and bonuses were led to believe their actions were permitted, a court has heard. Achim Kraemer, 53, Philippe Moryoussef, 49, Sisse Bohart, 41, Colin Bermingham, 61, and Carlo Palombo, 39, are on trial accused of manipulating the process used to set the Euribor - the euro interbank offered rate. Kraemer, a trader at Deutsche Bank, and the remaining four defendants who worked at Barclays, face one count of conspiracy to defraud between January 2005 and December 2009...

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Banks

2018-06-12

Martin Shkreli - Pharma Bro Still Owes the Feds Big Bucks

Martin Shkreli still owes the feds more than $450,000 — and prosecutors want a judge to force E-Trade to liquidate enough of the disgraced pharmaceutical exec’s money to cover the cost. Prosecutors Tuesday asked Brooklyn federal judge Judge Kiyo Matsumoto to allow them access to Shkreli’s $5 million account to pay the remaining $464,894.13 he still owes in court fines and restitution. Mastumoto has yet to rule on the motion. Attorneys for Shkreli did not immediately return a request for comment. The government’s request comes almost a year after the 35-year-old was convicted of defrauding hedge fund investors...

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Fraud

2018-06-12

Sarah Miles Brouilette / ATB Financial - Former Alberta Loan Officer Charged for Allegedly Taking Out Loans in Other People's Names

Sarah Miles Brouilette, a 38-year-old former ATB Financial loan officer, is facing charges for allegedly taking out loans in other people's names to the tune of $1.15 million. The RCMP said it was first called to investigate the Red Deer woman last August. This was after ATB Financial — a Crown corporation that provides financial services to more than 750,000 Albertans — told police she had forged a client's signature on loan documents. The force's written statement on Tuesday said police investigators, along with ATB's investigative division, started looking into “a series of fraudulent transactions” involving the accused...

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Fraud

2018-06-12

Rachael Leigh Konz / Paul Mabry III - Ex-Morgan Advisor Seeks to Nullify $1.2M Arbitration Loss 

A former Morgan Stanley broker is asking a federal court to vacate a $1.2 million dispute resolution against her on the grounds that one of the arbitrators may have had conflicting interests. Rachael Leigh Konz filed a petition to vacate the award because the three-member FINRA panel was not appointed in accordance with the regulator’s own rules, according to the petition. One of the arbitrators, Paul Mabry III, should have been disqualified from sitting on the panel because he was employed by a law firm that worked with other financial institutions — excluding him from being a “public arbitrator,” per FINRA rules, the petition argues...

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Advisors

2018-06-12

Yahoo Fined £250,000 Over 2014 Data Breach

Yahoo's British subsidiary has been fined £250,000 by the UK's data watchdog after losing the data of more than half a million people. The fine is equivalent to just less than 50p for ever British user who was affected by the attack and follows another fine of $35m (£26m) issued by the US Securities and Exchange Commission. Although the data breach took place in 2014, Yahoo kept the loss of around 500 million international users quiet until 2016. That data breach at Yahoo is just another in a long line of security woes at the company, which was acquired by Altaba in 2017 after a period of rapid decline...

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CourtCases

2018-06-12

Elias Sacal Cabagie / BVG World SA/ Eduardo Cepeda - JPMorgan Sued Over Mexican Property Transfer 

A Mexican real estate developer has filed a $1.2 billion lawsuit accusing JPMorgan Chase & Co of fraudulently inducing it to transfer properties based on a false promise it would sell them. The complaint by Elias Sacal Cababie and his BVG World SA was filed with the U.S. District Court in Manhattan on Monday, the same day BVG said a Mexican judge had issued an arrest warrant for JPMorgan's country head, Eduardo Cepeda, for alleged fraud related to a 2007 loan...

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AssetManagers

2018-06-12

Steve Denison - Record Fine for Auditor PWC for Failings Over BHS

PWC has been hit with a record fine from the accountancy regulator and one of its partners has been given a 15-year ban from the industry for work carried out on BHS before its controversial sale by Sir Philip Green. The Financial Reporting Council has fined the accounting giant £10 million, reduced to about £6.5 million as part of a settlement, while Steve Denison, who had worked at PWC for more than 30 years, has been handed a £500,000 fine, reduced to £325,000, and a 15-year ban. The fines are the largest ever imposed by the regulator and the fine against PWC is the maximum that it can impose on the Big Four accounting firms, which also include Deloitte, KPMG and EY...

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Fraud

2018-06-12

Mother's Inheritance Seized from £22m Investment Fraudster

A fraudster who scammed investors out of £22 million has been ordered to hand over an inheritance from his mother, including a £30,000 pension payout from her employer. Benjamin Wilson, 39, who is serving seven years in prison for fraud, received the sum from the John Lewis Partnership after his mother, who had been an employee at Waitrose, died in 2015. The financial regulator yesterday secured permission from the courts to seize the money and said that it also would seek to confiscate Wilson's full share of his mother's estate, estimated to be worth about £145,000...

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Fraud

2018-06-12

The President of JPMorgan Arrested in Mexico  

A Mexican judge last week ordered the arrest of the president in Mexico of US investment bank JPMorgan, accused of an alleged fraud linked to a 2007 case involving a Mexican real estate developer, the company BVG World said Monday. Eduardo Cepeda, who for 30 years has worked for the firm, and Miguel Ángel Barbosa, another employee of the bank, were accused by BVG World of fraud in a line of credit that the lender granted him for investments that lost value during the financial crisis, said the company. JPMorgan explained, in a statement sent by email, that its lawyers were working on a response, but that the bank has full confidence in Cepeda, president of the financial institution in the country...

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Banks

2018-06-12

Watchdog Steps into Invesco Trust Row

The City regulator has waded into the escalating row between Invesco Perpetual and a popular investment trust. The Financial Conduct Authority has requested information about the unusual situation, it emerged yesterday. Invesco also made its first public comments about the ruptured relationship, which centres on a row about fees and the behaviour of individuals involved. Invesco, based in Henley, is in dispute with Invesco Perpetual Enhanced Income, a Jersey-registered investment trust. The row started in April when Invesco decided to step down as manager of the trust, which specialises in corporate and sovereign fixed-income...

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AssetManagers

2018-06-11

Woman suing Point72 and Steve Cohen speaks out about alleged gender and pay discrimination

Lauren Bonner says quitting wasn't an option. Bonner is head of talent analytics at hedge fund Point72, a job that gives her access to data like compensation and college grade point averages for individuals hired by the firm. But as she tells it, that data unveiled a gross injustice — one that, inspired by the broader #MeToo movement, encouraged her to take action. In February, Bonner filed a gender-bias lawsuit against Connecticut-based Point72, though she continues to go to work at the firm's Manhattan office every day...

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#metoo

2018-06-11

Two Ex-Penn West Executives Must Face U.S. SEC Fraud Charges

A U.S. judge has ordered two former finance executives at Penn West Petroleum Ltd, now known as Obsidian Energy Ltd, to face regulatory charges that they helped engineer a multi-year accounting fraud to reduce the Canadian company's operating expenses. In a decision made public on Monday, U.S. District Judge Gregory Woods in Manhattan said the Securities and Exchange Commission's complaint raised a "strong inference" that Todd Takeyasu and Jeffery Curran intended to defraud investors. Prior to being terminated in 2014, Takeyasu had been Penn West's chief financial officer, and Curran reported to him as vice president of accounting and reporting...

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SEC,Fraud

2018-06-11

A Morgan Stanley VP Faces Federal Conspiracy Charges for his Alleged Role in a Sweeping Insider-trading Ring

He was a Morgan Stanley vice president, a hedge fund manager and, according to prosecutors, the "linchpin" of a multinational hacking scam that allowed him to pocket $14 million in illicit insider-trading profits. But it’s his post as pastor of the Slavic Evangelical Baptist Church in a Philadelphia suburb that might give Vitaly Korchevsky the most trouble at a trial beginning Monday...

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HedgeFund

2018-06-11

SEC Barred New Jersey Adviser Who Pled Guilty to One Count of Conspiracy

The Securities and Exchange Commission has barred New Jersey adviser Larry Werbel, who in September 2017 pled guilty to one count of conspiracy to commit securities fraud and one count of investment adviser fraud. Mr. Werbel, a resident of Milburn, N.J., owns and operates Evolution Partners Wealth Management, an investment adviser that was registered from 2011 through 2015. In connection with his plea, Mr. Werbel, admitted that as a registered investment adviser with an office in Cleveland, Ohio, from 2011 through 2014, he introduced his clients to VGTel Inc., which he described as an…

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SEC, Advisors

2018-06-11

Dubai's Abraaj Commingled About $95 Million After it Faced Cash Shortages

Deloitte found that there was commingling of Abraaj's own money in the health-care fund and its fourth fund Abraaj Group, the Middle Eastern investment firm which has been roiled by allegations of misused funds, commingled about $95 million after it faced cash shortages, according to the findings of a review by Deloitte. The accounting firm, which was hired by Abraaj to examine its finances, found that there was commingling of Abraaj's own money in the health-care fund and its fourth fund... Abraaj still owes $94.6 million to its so-called Private Equity Fund IV, but all money has been accounted for and there's no evidence of embezzlement or misappropriation...

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Privateequity,

2018-06-11

Ashbury Heights Capital is Seeking $30 Million for Misused Intellectual Property 

A San Francisco state court has ruled that fraud and breach of contract claims brought by plaintiff Ashbury Heights Capital against FactSet Research Systems, Revere Data and its founder, Doug Engmann are sufficiently supported by evidence and may proceed to trial. The court denied the defendant’s motion for summary judgment, finding that a jury could find for Ashbury on all its claims. Ashbury is founded by MIT graduates Eric McGill and Paul Mingardi. According to the complaint, data partner Revere and its founder Doug Engmann, the former head of the Pacific Stock Exchange, misused Ashbury’s intellectual property to prop up its own sales, while hiding licensing revenues owed and fraudulently concealing other misuses of the technology...

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Fraud

2018-06-11

VEREIT, a Real Estate Operating Company, Enters into Settlement Agreement and Release with Vanguard

VEREIT, Inc. (NYSE: VER) announced today that on June 7, 2018, VEREIT, Inc. and VEREIT Operating Partnership, L.P. (collectively "VEREIT" or the "Company") entered into a Settlement Agreement and Release (the "Settlement Agreement") to settle the previously disclosed litigation with Vanguard Specialized Funds... Pursuant to the terms of the Settlement Agreement, the parties have agreed that Vanguard will dismiss all claims against the Company and the other defendants with prejudice and the Company will pay Vanguard the sum of $90 million in connection with the settlement of the claims...

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CourtCases

2018-06-10

Some Abraaj's Investors Allege the Firm Misused Money it Managed but Founder Arif Naqvi Denies Wrongdoing

Arif Naqvi wooed the likes of Bill Gates, the World Bank and U.S. pension funds with an ambitious pitch: Invest in his emerging-markets funds to make money—and help poor people, too. Now some investors in the funds of Abraaj, the Dubai-based private-equity firm he founded, are alleging the company misused some of the nearly $14 billion it managed, and a lender is suing for an unpaid debt. Mr. Naqvi is trying to keep his firm afloat and defend his reputation. The 57-year-old Pakistani deal maker was in crisis talks last week. Buyout firm Cerberus Capital Management offered $125 million for Abraaj's fund-management unit, people familiar with the offer said...

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Privateequity,

2018-06-09

The Head of RBC was Dismissed for Alleged Improper Relationship

The head of Royal Bank of Canada's U.S. capital markets business allegedly violated company policies on workplace relationships, leading to his dismissal earlier this week. Blair Fleming's departure was announced in a short memo to staff on Monday afternoon, although at the time, no reason was given. His abrupt departure after more than 30 years at the bank prompted speculation within the financial services industry. And by Friday, Douglas McGregor, the bank's group head of capital markets, had dispatched an internal memo that did not specifically name Mr. Fleming, but encouraged employees to “speak up" when they see improper behaviour...

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#metoo, Banks
2018-05-08

FINRA Sanctions Fifth Third Securities, Inc., $6 Million for Cost and Fee Disclosure Failures and Unsuitable Recommendations Related to Variable Annuity Exchanges

The Financial Industry Regulatory Authority (FINRA) announced today it has fined Fifth Third Securities, Inc., $4 million and required the firm to pay approximately $2 million in restitution to customers for failing to appropriately consider and accurately describe the costs and benefits of variable annuity (VA) exchanges, and for recommending exchanges without a reasonable basis to believe the exchanges were suitable. This is the second significant FINRA enforcement action against Fifth Third involving the firm's sale of variable annuities...

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AssetManagers

2018-06-08

OSC to Consider Settlement with Former Head of Crystal Wealth

The Ontario Securities Commission (OSC) will hold a hearing next week to consider a settlement with the former head of defunct fund manager Crystal Wealth Management System Ltd. concerning allegations of fraud and other misconduct, the regulator announced on Friday. The June 13 hearing will consider a possible settlement with Clayton Smith, the former ultimate designated person and chief compliance officer at the Burlington, Ont.-based company. The terms of the settlement will only be revealed if the deal is approved. Smith “engaged in fraud, and breached his duty to act fairly, honestly and in good faith with clients, while directing the affairs,” of Crystal Wealth, according to the OSC’s statement of allegations...

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Fraud

2018-06-08

Ex-Wells Fargo Rep Barred for Alleged $800 ATM Card Theft

Another registered rep has been ousted from the industry this week for allegedly stealing customer funds. Ruben Gerardo Aleman Escalante, a rep with Wells Fargo Advisors in San Diego, purportedly swiped $800 from a bank customer by using the customer’s ATM card to withdraw the funds without the customer’s approval, FINRA claimed in its settlement with the bank rep. He allegedly withdrew the funds from the customer’s checking account on July 3, 2017, first taking out $500 and later withdrawing an additional $300, according to FINRA...

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Advisors

2018-06-08

AMP Fronts Court Over Advice 

AMP fronts court over advice. Wealth manager AMP wants to fight shareholder class actions bought against it in the NSW Supreme Court instead of the Federal Court in Melbourne. AMP, which has admitted charging customers for financial advice that was never given and subsequently lying to the corporate watchdog about its behaviour, is facing class actions from several competing law firms. In what could shape up to be one of Australia’s largest ever investor class actions, the first proceedings against AMP, bought by Quinn Emanuel Urquhart & Sullivan, was filed in the NSW Supreme Court...

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2018-06-08

Jho Low - Arrest Warrants Issued for Key Suspect Related to 1MDB Corruption Probe

Singapore confirmed on Friday that arrest warrants had been issued for Malaysian financier Jho Low following investigations into alleged money laundering offences in connection with funds diverted from the 1Malaysia Development Berhad fund. Jho Low is considered to be a key figure in the corruption case investigating the diversion of state funds from 1MBD, which has also implicated former Malaysian Prime Minister Najib Razak...

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Corruption

2018-06-08

Malaysia Considering Seeking Return of Goldman Sachs' 1MDB Fees

Malaysia is considering asking the U.S. Department of Justice (DoJ) to get Goldman Sachs to return nearly $600 million in fees it earned from bonds raised for scandal-tainted 1Malaysia Development Berhad (1MDB), two sources familiar with the matter said on Friday. Malaysia is scrambling to bring home billions of dollars allegedly siphoned off from 1MDB, a state fund founded by ex-premier Najib Razak, who lost a general election last month. His successor, Prime Minister Mahathir Mohamad, said Malaysia is also seeking to arrest financier Low Taek Jho, a central figure in the scandal who advised on investments and negotiated deals for 1MDB...

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AssetManagers

2018-06-08

Public Investment Corporation pays IT Exec R7m to Leave

The Public Investment Corporation (PIC) has paid its chief IT executive Vuyokazi Menye about R7.5m to leave the organisation, while the organisation signed an acknowledgment that she had done nothing wrong. Her subordinate, head of IT security Simphiwe Mayisela, was dismissed following a hearing last Friday. The PIC is the biggest asset manager in the South African economy and manages close to R2-trillion in government pension and other funds. The two are casualties of a frantic attempt by PIC CE Dan Matjila and his board to unmask the identity of an anonymous whistle-blower who e-mailed executives and board members with allegations that Matjila had corruptly funded...

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AssetManagers

2018-06-07

Robert Dekas / Oppenheimer & Co. - Finra Panel Awards Oppenheimer Client $800,000 in Damages

A hearing panel of the Financial Industry Regulatory Authority Inc. has awarded Robert Dekas $800,000 in damages for unauthorized and unsuitable trades made by Oppenheimer & Co. in 2016. Specifically, the client charged that Oppenheimer executed unauthorized trades in his accounts at the firm and invested funds in unsuitable investments, including IShares Russell 2000 Index puts and calls, ProShares Trust PSHS Short S&P 500 ETFs and the Global Chartist Fund. In his claim, Mr. Dekas requested compensatory damages in excess of $2 million, and punitive and exemplary damages in excess of $1.5 million...

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AssetManagers

2018-06-07

Tom Hayes is Serving 11 Years in Prison for his Role in the Libor Scandal and Claims he Was Framed by UBS

Tom Hayes has many regrets. Manipulating Libor is not one of them. In a two-month epistolary correspondence with Financial News, Hayes, who is serving an 11-year sentence in a Nottinghamshire prison for his role in the Libor scandal, blames himself for trusting colleagues and superiors, laments his inability to push his side of the scandal in the press during the trial, and even claims he was "framed" by UBS, a charge his former employer declined to comment on. In the handwritten letters, Hayes, 38, speaks movingly of the toll his 2015 criminal conviction has taken on him and his family, and bemoans the fact he will not see his six-year-old son Joshua grow up or have another child with his wife Sarah...

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Fraud

2018-06-07

Ralph T. Iannelli / Essex Capital Corporation - SEC Seeks Emergency Relief Against Equipment Leasing Company and its Founder in $80 Million Fraud

The Securities and Exchange Commission charged an equipment leasing company and its founder with defrauding investors in connection with sales of over $80 million in promissory notes. According to the SEC's complaint, between 2014 and 2017, Essex Capital Corporation and its founder, Ralph T. Iannelli, made a series of false and misleading statements and illusory personal guarantees to registered investment advisers to induce them to invest millions of dollars of their clients' money in Essex's failing equipment leasing business...

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SEC, Advisors

2018-06-07

Elliott Management - Korean Govt, Elliott Begin Pretrial Negotiations on June 14

The South Korean government and Elliott Management next week will enter negotiation for an out-of-court settlement over the U.S. activist fund’s $670 million damage claim for the former administration’s interference in the 2015 merger between Samsung units. According to sources with knowledge to the affair on Wednesday, the two sides recently have reached an agreement to open negotiations on June 14 and are fine-tuning the difference over the location of the meeting. Elliott proposed a meeting in Japan, but Seoul wants the fund representatives to come to Korea...

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HedgeFund

2018-06-07

Muhammad Ibrahim / 1MDB - Governor of Bank Negara Malaysia Resigns Amid Controversy 

Governor Muhammad Ibrahim denied allegations of impropriety, stating that corruption accusations were "totally untrue". Prime Minister Mahathir Mohamad announced the resignation of Malaysia's central bank governor as questions swirled over the role the monetary authority played in a deal linked to scandal-plagued state fund 1MDB. The governor of Malaysia's central bank Bank Negara Malaysia has resigned, the Prime Minister of Malaysia, Mahathir Mohamad, announced on Wednesday...

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Banks

2018-06-07

Saxo Bank Guilty in Currency Case

The Copenhagen Post A judgment handed down in Denmark's Eastern High Court, Ostre Landsret, could open Saxo Bank up for multiple lawsuits. The court ruled that the bank acted illegally over currency dealings in Swiss francs in 2015. Saxo Bank was told to pay 1.6 million kroner (£136,000) plus interest to Greyzone, the firm that lodged the case. Other customers also suffered losses and are expected to resort to legal action too...

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Banks

2018-06-07

Enough Information that Jho Low is Among Main Criminals in 1MDB: Malaysia Home Minister

The Malaysian authorities have sufficient information that Low Taek Jho, widely known as Jho Low, is among the main criminals involved in the 1Malaysia Development Berhad (1MDB) scandal, said Home Minister Muhyiddin Yassin on Thursday (Jun 7). As such, stern action will be taken to bring Low to justice although it will take some time before any arrest is made, he added. "We have enough information regarding Jho Low. Everyone knows that he is among the main culprits associated with the 1MDB scandal – one of the biggest scandals in the world...

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CourtCases

2018-06-06

Riordan, Lewis & Haden - DOJ Targetting Private Equity Firms in False Claims Act Litigation

A recent complaint by the US Department of Justice against private equity firm Riordan, Lewis & Haden signals that such firms could be a new class of defendants in False Claims Act cases. Private equity firms are thus well-advised to be vigilant and take steps to limit the risk of enforcement litigation. The False Claims Act (FCA) has long been a powerful tool for the federal government to generate large recoveries from government contractors, including companies in the healthcare industry. In fiscal year 2017 alone, the US Department of Justice (DOJ) recovered more than $3.7 billion in settlements and judgments in civil cases brought under the FCA...

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Privateequity,

2018-06-06

UK Regulator Slaps Rs 8 Cr Fine on London Branch of Canara Bank 

The UK financial sector regulator FCA today imposed a fine of 896,100 pounds (about Rs 8 crore) on the London branch of Canara Bank and also stopped it from accepting deposits for nearly 5 months for not adhering to anti-money laundering (AML) regulations. Meanwhile, the bank in a BSE filing said Financial Conduct Authority (FCA) "acknowledges that senior management at Canara Bank have fully cooperated and engaged with FCA's investigation and that the firm's substantive AML deficiencies now have been rectified". FCA in a notice said it has imposed a penalty of 896,100 pounds on the bank and restricted it from accepting deposits from new customers for 147 days...

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Banks

2018-06-06

Henry Brock - Utah Financial Advisor Sentenced to Prison for Tax Evasion, Securities Fraud and Wire Fraud

A St. George, Utah, financial advisor was sentenced to 72 months in prison on June 4th for his role in selling fraudulent tax-avoidance and investment strategies to his clients, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department's Tax Division and U.S. Attorney John W. Huber for the District of Utah. According to documents and information provided to the court, Henry Brock, pleaded guilty to tax evasion, securities fraud and wire fraud. Brock founded a financial services company in 2009 and served as the president from 2009 through 2017. As President, he marketed and sold a fraudulent tax scheme, called "IRA Exit Strategy," to potential investors...

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Advisors

2018-06-06

Credit Suisse to Pay $47 Million to Settle Hiring Corruption Probe

Credit Suisse will pay a penalty of about $47 million to resolve a U.S. Department of Justice corruption probe into its hiring practices in the Asia Pacific region between 2007 and 2013, the Swiss bank said in a statement on Wednesday. The bank said no criminal charges were brought, that it had set aside money in previous periods to cover the penalty and that it did not expect an impact on second-quarter results. The U.S. investigation looked into whether Credit Suisse hired referrals from government agencies in Asia in exchange for business...

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Banks

2018-06-06

JPMorgan Could Turn Witness Against Citigroup and Deutsche Bank Facing Criminal Cartel Charges with Fines Up to $10M.

US investment bank JPMorgan Chase and Co could reportedly turn witness against its big banking peers in a landmark Australian case in which three other major financial institutions face criminal cartel charges. Competition watchdog the Australian Competition and Consumer Commission (ACCC) has laid formal criminal charges against three top multinational banks, namely ANZ, Citigroup Inc and Deutsche Bank AG over a A$2.5 billion (US$1.9 billion) rights issue sold to institutional investors in August 2015...

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Banks

2018-06-05

Yorkville Advisors LLC - How the Pursuit of the Next Bernie Madoff Led to an Embarrassing SEC Loss in Court

SEC dismisses all claims against fund and executives after judge says “no material evidence of fraud or negligence” to support its case In October 2012 the Securities and Exchange Commission charged hedge fund Yorkville Advisors LLC, its president, and its chief financial officer with fraud. The SEC alleged the hedge fund advisory firm and its two executives had been “scheming to overvalue assets under management and exaggerate the reported returns of hedge funds they managed in order to hide losses and increase the fees collected from investors"...

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SEC, Advisors

2018-06-07

Stockbroker Who Blew Through $400K of Clients' Money Going to Prison

A Toms River stockbroker who represented himself at his fraud trial and lost was sentenced to 10 years in state prison Thursday for stealing $408,000 from four investors. A jury convicted Jeffrey D. Griffin, Jr., 43, in Passaic County Superior Court last month on theft by deception, misapplication of entrusted property, two counts of violation of New Jersey's Uniform Securities Act, and money laundering, the state Attorney General's Office announced. Jeffrey Griffin Jr. On Thursday, the judge sent him to state prison and ordered him to pay back all the money he swindled...

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Fraud

2018-06-05

Nomura Holdings/Michael Gramins - U.S. Judge Throws Out Nomura Bond Trader's Conviction

A U.S. judge on Tuesday threw out the conspiracy conviction of a former Nomura Holdings Inc trader accused of lying to customers about mortgage bond prices, a setback for prosecutors in their crackdown on improper sales tactics. U.S. District Judge Robert Chatigny's decision to set aside Michael Gramins' conviction means both convictions won by prosecutors at trial in their 5-1/2-year probe have now been tossed. Two other traders have been acquitted. Chatigny said the Hartford, Connecticut jury that convicted Gramins last June 15 may have been improperly influenced by another trader who testified that Gramins owed him a duty to tell the truth about bond prices...

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Fraud,CourtCases

2018-06-05

ANZ, Citigroup and Deutsche Bank Executives Charged with Criminal Cartel Offences

The ACCC says the top bankers involved in the $2.5 billion share deal at the centre of the charges will face court next month. The Australian Competition and Consumer Commission (ACCC) has formally laid criminal cartel charges against the ANZ, Citigroup, Deutsche Bank and six senior executives. Those charged include ANZ's global head of treasury, Rick Moscati, and Citigroup's former country head for Australia, Stephen Roberts. The charges relate to the sale of $2.5 billion ANZ shares to institutional investors in August 2015...

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Banks

2018-06-05

deVere USA / Benjamin Anderson / Bradley Hamilton - SEC Charges Investment Adviser and Two Former Managers for Misleading Retail Clients

The Securities and Exchange Commission today announced that New York-based investment adviser deVere USA, Inc. has agreed to pay an $8 million civil penalty related to its failure to disclose conflicts of interest to its retail clients. The settlement will result in the establishment of a Fair Fund for distribution of the penalty to affected clients. The SEC also announced the filing of a litigated action against two deVere USA investment adviser representatives, one of whom was the CEO of the firm. According to the SEC's order, deVere USA failed to disclose agreements with overseas product and service providers that resulted in compensation being paid to deVere USA advisers and an overseas affiliate...

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SEC, Advisors

2018-06-05

Societe Generale Reaches Agreements with The DOJ, The CFTC, and The PNF to Resolve Their Pending IBOR and Libya-related Investigations

Societe Generale has reached agreements with the U.S. Department of Justice ('DOJ') and the U.S. Commodity Futures Trading Commission ('CFTC') to resolve their investigations relating to Societe Generale's IBOR submissions, and with the DOJ and the French Parquet National Financier ('PNF') to resolve their investigations relating to certain transactions involving Libyan counterparties.The PNF and DOJ agreements have been submitted for approval to the competent French and U.S. courts for hearings on 4th June and 5th June, respectively... Societe Generale has agreed to pay penalties totaling approximately $1.3 billion to the DOJ, the CFTC and the PNF...

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AssetManagers

2018-06-05

Rosmah Mansor / Najib Razak - Wife of Ex-Malaysia PM Questioned, New Graft Scandal Unfolds

Anti-corruption investigators questioned the wife of former Malaysian Prime Minister Najib Razak on Tuesday about alleged theft and money-laundering involving the 1MDB state investment fund, as officials announced a probe into other suspicious multibillion-dollar transactions under Najib's leadership. The prosecution of Najib and his wife Rosmah Mansor over the 1MDB scandal, which helped lead to Najib's stunning ouster in May 9 national elections, could be sped up with the government's appointment Tuesday of a new attorney-general...

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Fraud

2018-05-04

Nancy Hurst/Steven Battel/Bruce Battel/Robert Yevchak - Wells Fargo Sues $300m Breakaway Team Over Client Data Issues

Wells Fargo is suing a team of brokers who jumped to Kestra Private Wealth Services after receiving a client complaint that her personal information, including Social Security and account numbers, had been taken without her authorization. Wells Fargo says that the former wirehouse advsiors took more data than allowed under the Broker Protocol, an industrywide agreement that permits brokers changing employers to take basic client contact information with them. Both Wells Fargo and Kestra are members of the protocol. Team members Nancy Hurst, Steven Battel, Bruce Battel and Robert Yevchak left Wells Fargo in April to form an independent practice, Liberty Wealth Solutions, in Paramus, New Jersey...

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Banks

2018-06-04

Sparrow Fund Management - Hedge Fund Sues Mimedx Over Short-selling Claims

Hedge fund Sparrow Fund Management LP said in a lawsuit it was falsely accused by MiMedx Group Inc. of trying to illegally manipulate the biotech firm’s stock price. MiMedx accused Sparrow of being part of a conspiracy of short sellers and publishing disparaging statements under the pseudonym Aurelius Value, despite knowing the claims had no merit, according to Sparrow’s defamation suit filed Monday in Manhattan federal court...

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CourtCases,Fraud

2018-06-04

Ross Mclellan - Former State Street Executive Faces U.S. Fraud Trial

A former executive at State Street Corp went on trial on Monday on U.S. charges that he participated in a scheme to defraud the bank's clients by charging them secret commissions on billions of dollars in trades. Jury selection wrapped up on Monday in Boston federal court in the case of Ross McLellan, a former executive vice president at the bank accused of committing securities fraud and wire fraud. Lawyers will deliver their opening statements on Tuesday. McLellan is one four former employees of the Boston-based bank who have since 2016 faced charges by the U.S. Justice Department that they engaged in schemes to overcharge institutional clients, allowing State Street to earn millions of dollars...

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Banks

2018-06-04

Legg Mason to Pay $64 Million Fine Related to Gaddafi-era Bribery 

Asset manager Legg Mason Inc. (LM) will pay a $64.2 million penalty to resolve a criminal probe into the firm's bribing of Libyan officials between 2004 and 2010, the Justice Department said late Monday. The company was accused of violating the Foreign Corrupt Practices Act. Through its subsidiary Permal Group Ltd., the company partnered with the Paris-headquartered Société Générale S.A. and paid bribes to a Libyan "broker" to solicit business from Libyan companies...

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AssetManagers

2018-06-04

Sergey Aleynikov - Ex-Goldman Sachs Programmer Seeks to Overturn Code Theft Conviction 

Former Goldman Sachs Group Inc programer Sergey Aleynikov on Monday filed a new challenge to his criminal conviction of stealing computer code from the investment bank when he left for another job. Aleynikov, whose case partly inspired Michael Lewis' bestselling book "Flash Boys" on high-frequency trading in the U.S. equity market, previously got his conviction overturned by the judge who oversaw his 2015 trial in Manhattan Supreme Court. A New York appeals court reinstated the conviction, and the New York Court of Appeals, the state's highest court, upheld that decision last month...

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CourtCases

2018-06-02

HSBC / Bernie Madoff - Case Over Madoff Ponzi Scheme May Take Four Months

A claim against the Irish arm of HSBC bank for $333 million (€284 million) related to the Ponzi scheme run by jailed US fraudster Bernie Madoff is expected to take four months to hear, a High Court judge has said. Mr Justice Twomey made the comment during a ruling on discovery issues. He said the ruling will help reduce court time and, although the possibility was remote, may even facilitate settlement of the dispute prior to the trial. His ruling concerns a case taken by Defender Ltd, a British Virgin Islands (BVI) registered investment fund, against HSBC Institutional Trust Services Ireland Ltd, with registered officers at Grand Canal Square, Dublin...

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Banks

2018-06-01

SEC Charges 13 Private Fund Advisors for failure to File Form PF 

Thirteen registered investment advisors have been charged by the Securities and Exchange Commission for repeatedly being delinquent in providing information on their filings over multiple years. The SEC said in a statement Friday the advisors failed to file annual reports on Form PF informing the agency about the private funds they advise, including the amount of assets under management, fund strategy, performance, and use of borrowed money and derivatives. Form PF collects various data points on private equity firms – such as borrowings – that could be useful reference points for prospective LPs. The SEC since 2012 has required private fund advisors managing $150 million or more of assets to make annual filings on Form PF. ..

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SEC, Advisors

2018-06-01

Craig Schmell - Drug Memoir Writer and Morgan Stanley Tangle in Court

A fired advisor who accuses Morgan Stanley of wrongful termination over the publication of his memoir about alcohol and drug abuse will not be forced into arbitration ― at least not yet. Last week, a federal judge in New Jersey partially ruled against Morgan Stanley, which is seeking, for the second time, to force Craig Schmell into arbitration. Schmell is an advisor of 26 years and author of “The Uninvited: How I Crashed My Way into Finding Myself.” While the firm fired him because of purported reputational risk stemming from Schemll's memoir, Schmell contends Morgan Stanley's real reason was that he is a recovering addict, according to his lawsuit...

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Advisors

2018-06-01

Raj Rajaratnam - Rajaratnam Fails to Cut U.S. Insider Trading Conviction, Sentence

A federal appeals court on Friday rejected a bid by Raj Rajaratnam, the highest-profile hedge fund manager convicted in a sweeping U.S. crackdown on insider trading, to void much of his 2011 conviction and shorten his 11-year prison term. By a 3-0 vote, the 2nd U.S. Circuit Court of Appeals in Manhattan said the Galleon Group founder waived his claim that his trades did not qualify as insider trading by not raising it in an earlier appeal, citing "society's strong interest in the finality of criminal convictions." It also said Rajaratnam did not show he was "actually innocent." The court also rejected Rajaratnam's challenge to his $53.8 million forfeiture order...

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Fraud,CourtCases

2018-06-01

Emeline Tang Wei Lang - Former Senior VP of HSBC Pleads Guilty to Cheating Victims, Including her Relatives, of Over $5 Million 

A former senior vice-president of The Hongkong and Shanghai Banking Corporation (HSBC) cheated five people - four of whom were her relatives - of over $5.2 million in a scam that spanned 12 years. She did this to fund a gambling habit. Emeline Tang Wei Leng, 40, pleaded guilty on Friday (June 1) to 34 charges including cheating, forgery and offences dealing with the benefits of criminal behaviour. Another 223 charges related to the same offences will be taken into consideration for her sentencing...

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Banks

2018-05-30

Sisse Bohart / Barclays - Ex-Trader Feared Losing Job Over Loss on First Day 

A former Barclays trader who stands accused of rigging the European Interbank Offered Rate (Euribor) for commercial gain yesterday told a London court she feared losing her job when she lost "a lot of money" on her first trade. Danish national Sisse Bohart, 40, told Southwark Crown Court that despite being given a target of raising £750,000 - up from an initial aim of £500,000 - she in fact lost €25,000 (£21,760), prompting her manager, Colin Bermingham, to respond by nearly "clapping his hands". Describing how she feared being fired from her role as assistant trader on the money desk, Bohart said: "I wouldn't say he was clapping his hands but he was close to...

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CourtCases

2018-05-28

D.B. Zwirn & Co. - Former Hedge Fund CFO Barred, Ordered to Pay $227,500 Penalty 

The Securities and Exchange Commission has barred Perry Gruss over his role as chief financial officer at D.B. Zwirn & Co., a once high-flying hedge fund that ceased operations in 2009. In the related civil case, a New York judge has imposed a penalty of $227,500 against him. In its complaint filed in 2011, the SEC alleged that Mr. Gruss aided and abetted Zwirn's improper transfers of monies between its privately managed client funds, including transfers of $576 million to fund the firm's own investments, and transfers of $273 million to allow the same client fund to repay the firm's… [Full article available to InvestmentNews subscribers]

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HedgeFund, SEC

2018-05-28

Hearing for Dr M's Bid to Revive 1MDB-Linked Lawsuit Against Najib in August

The Federal Court will hear in August, Prime Minister Tun Dr Mahathir Mohamad’s bid to reinstate his misfeasance lawsuit against his predecessor Datuk Seri Najib Razak over 1Malaysia Development Berhad (1MDB) investigations. Dr Mahathir’s lawyer Mohamed Haniff Khatri Abdulla said the Federal Court will be hearing his client’s application to review the apex court’s previous refusal to hear a bid to restore the case. “Najib’s lawyer asked for extension of time to put in the affidavit since Najib cannot be contacted currently. “Court has fixed matter for hearing on 6.8.2018,” he said in a statement today...

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CourtCases

2018-05-26

Platinum Partners - Co-Founder Pleads Guilty to a Wire-fraud Conspiracy in a "Ponzi-esque" Scheme

A co-founder of defunct hedge fund Platinum Partners pleaded guilty Friday to a single count of wire-fraud conspiracy in connection with what federal prosecutors had called a bribery-and-kickback scheme. Murray Huberfeld, 57 years old, was arrested in 2016 and accused of a bribery scheme involving a former New York City union official. He entered the guilty plea in Manhattan federal court. For the past several years, Platinum Partners, a firm known for its unusual investing style and superlative performance, has been embroiled in legal trouble. About six months after Mr. Huberfeld's arrest, federal prosecutors in Brooklyn charged other people associated with Platinum of operating a "Ponzi-esque" scheme...

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HedgeFund

2018-05-26

Brisbane Financial Planner Charged with Ripping Off $5.9 Million from Investors and Faces 12 Years Behind Bars

A disgraced Brisbane financial planner faces up to 12 years behind bars after the corporate cop charged him yesterday with ripping off about $5.9 million from investors. Ben Jayaweera did not enter a plea in Brisbane Magistrates Court to the six counts of fraud but later told City Beat that he would defend the case. ASIC alleges that he used his now-defunct Growth Plus Financial Group to defraud numerous clients between September 2013 and October 2015. The company operated an unregistered managed investment scheme which claimed to be a diversified fund...

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Fraud

2018-05-25

A Former Edward Jones Broker Filed a Lawsuit Claiming the Firm’s Policies Discriminate Against African Americans

A former Edward Jones broker is suing the firm, claiming its policies and practices discriminate against African Americans. The former broker, Wayne Bland, is African-American and filed the lawsuit Thursday in U.S. District Court in Illinois, InvestmentNews reports. The complaint, which seeks class-action status, alleges Edward Jones "employs company-wide policies and practices regarding training, compensation, partnerships, and the assignment of territories, business opportunities and sales support that unlawfully segregate its workforce and deny African Americans the income and advancement opportunities because of their race"...

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CourtCases

2018-05-24

Stock Promoter Sentenced to 44 Months' Imprisonment for $131 Million Market Manipulation Scheme

Earlier today, in federal court in Brooklyn, Louis Petrossi, a former registered broker, was sentenced by United States District Court Judge Brian M. Cogan to 44 months’ imprisonment, to be followed by three years’ supervised release, for his role in the fraudulent market manipulation of ForceField Energy Inc. (ForceField), a publicly-traded company previously listed on the NASDAQ under the ticker symbol "FNRG." The Court also ordered Petrossi to pay $8 million in restitution and $335,748.78 in forfeiture. On May 2, 2017, following a two-week trial, a federal jury convicted Petrossi of conspiracy to commit securities fraud, conspiracy to commit wire fraud, money laundering conspiracy and securities fraud...

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Fraud,CourtCases

2018-05-24

Singapore Warns Eight Cryptocurrency Exchanges not to Engage in Unauthorized Trading

Eight cryptocurrency exchanges in Singapore have been warned not to engage in unauthorised trading, specifically, those involving securities or futures contracts. The Monetary Authority of Singapore (MAS) said it also instructed an Initial Coin Offering (ICO) issuer to cease its offering of digital tokens to investors in the country. The island will get its first Bitcoin ATM in March, but does it really need another currency which main appeal is the anonymity it offers, especially since Singapore is reportedly susceptible to money laundering? The industry regulator last year had cautioned the public to understand the risks before investing in cryptocurrencies, stressing that these were not recognised as legal tender and functioned in an unregulated environment...

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Crypto

2018-05-24

Guggenheim Partners Agrees $30M Settlement with Top Female Fund Manager 

Guggenheim Partners has agreed to pay its top female fund manager $30 million (£25.6 million) in compensation. According to the Financial Times, the fund giant made the settlement with its fixed income chief investment officer Anne Walsh and global CIO Scott Minerd last year. The payment was made following an internal dispute with Guggenheim's chief executive Mark Walter, who was accused of favouritism by rewarding those most loyal to him at the expense of others. According to the FT, which claimed to have spoken to current and former employees at Guggenheim, the firm agreed last summer to pay Walsh and her attorneys a total of $30 million...

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#metoo

2018-05-24

California Man Claiming to be a Billionaire Financier Convicted in Multimillion-Dollar Fraud Scheme

Following a two-week trial, a federal jury in Denver, Colorado, has convicted a California man of multiple charges for his role in an investment scheme in which he falsely told investors that he was a billionaire who could access certain financing, including hundreds of millions in cash in an overseas bank account, in exchange for up-front fees... Kenneth Brewington, 55, of Corona, California, was convicted of one count of conspiracy to commit mail and wire fraud, one count of mail fraud, five counts of wire fraud, one count of conspiracy to commit money laundering, one count of laundering monetary instruments, and two counts of engaging in monetary transactions in property derived from specified unlawful activity...

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Fraud

2018-05-24

New 1MDB Probe Risks Peeling Back Corruption Built Up Over Decades 

Investigations into the 1Malaysia Development Bhd. scandal have thus far focused on the alleged involvement of former Prime Minister Najib Razak. But Malaysia's new government faces an awkward problem: How far should it pursue the companies that played a supporting role in one of the world's largest-ever financial swindles? Since Mr. Najib was forced out of office in an election upset, succeeded by veteran premier Mahathir Mohamad, the extent of the alleged theft from 1MDB has faced renewed scrutiny. If Mr. Mahathir follows through on election promises to fully investigate the scandal, he will need to step into some of Malaysia's most important boardrooms. Among the companies exemplifying the links to 1MDB are two large conglomerates, Tanjong PLC and Genting Group...

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2018-05-23

Chase Files Data Breach-Related Lawsuit Against Landry's, Seeks $20M

JPMorgan Chase Bank NA and its payment processing and merchant acquiring business, Paymentech LLC, have filed a lawsuit against Houston-based Landry’s Inc. related to a data breach discovered in 2015. The lawsuit, filed May 17 in U.S. District Court in Houston, claims Landry’s breached a contract with Chase Paymentech by refusing to reimburse Chase Paymentech for payments it had to make related to the data breach. Chase Paymentech is seeking more than $20 million from Landry's...

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CourtCases

2018-05-23

Abraaj Tapped the $1.6 Billion Buyout Fund to Help Finance its Own Business

Problems are spreading at Abraaj Group. Already under scrutiny for allegedly mismanaging money in a health-care fund, the Dubai-based private-equity firm used more than $200 million of investor money from a $1.6 billion buyout fund to help finance its own business rather than buy or invest in companies as it is intended, according to people familiar with the situation. Abraaj executives including founder Arif Naqvi met Wednesday with investors in the ballroom of London's Langham Hotel to discuss the buyout fund. Abraaj used some of the money for its own purposes as recently as this year, some of the people said...

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Privateequity,

2018-05-23

A Former Manhattan Hedge-fund Exec at Snow Park Capital Says That her Ex-boss Repeatedly Groped her

A former Manhattan hedge-fund exec says her ex-boss repeatedly groped her, pressured her for sex and then physically attacked her when he saw her recording him in an attempt to document her ordeal. Kate Merli, who was chief financial officer of Snow Park Capital Partners, alleges in a $2 million Manhattan Supreme Court suit that Jeffrey Pierce continually suggested they become intimate, and in front of co-workers discussed how attractive she was. The lewd comments continued, court papers allege, and in July 2017, Pierce pawed at her, Merli, 31, claims. She began recording him on her phone, but Pierce became furious and insisted she delete the recording, the suit ­alleges...

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#metoo, HedgeFund

2018-05-22

London Investment Bankers Charged in German Cum-Ex Tax Case

Frankfurt prosecutors have charged six people -- including three former London-based investment bankers -- for allegedly getting improper refunds on taxes on dividends. The charges cover 61 short sales of shares of companies listed on the German benchmark DAX between 2006 and 2008. The trades were valued at 15.8 billion euros ($18.7 billion), costing tax authorities 106 million euros, the Frankfurt General Prosecutor’s Office said Tuesday in an emailed statement that didn’t identify the suspects... [Full article available to Bloomberg subscribers if free article limit reached]

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Banks

2018-05-22

UBS Group: 2nd Cir. Affirms Dismissal of Securities Fraud Suit

UBS Group AG said in its Form 20-F report filed with the U.S. Securities and Exchange Commission for the fiscal year ended December 31, 2017, that the United States Court of Appeals for the Second Circuit affirmed the dismissal of the plaintiff's claim related to the Bernard L. Madoff Investment Securities LLC (BMIS) investment fraud,. A large number of alleged beneficiaries have filed claims against UBS entities (and non-UBS entities) for purported losses relating to the Madoff fraud. The majority of these cases have been filed in Luxembourg, where decisions that the claims in eight test cases were inadmissible have been affirmed by the Luxembourg Court of Appeal, and the Luxembourg Supreme Court has dismissed a further appeal in one of the test cases...

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Fraud

2018-05-22

FEDS: Union boss Norman Seabrook Reckless with $20 Million of Members' Money

Correction officers' union boss Norman Seabrook knew investing $20 million of members' money in a hedge fund was a sketchy idea, prosecutors charged Friday. But Seabrook went ahead with the investment anyway, federal prosecutors said in a new indictment that discloses fresh evidence they plan to introduce at his retrial in Manhattan Federal Court... Seabrook is accused of accepting a $60,000 kickback in exchange for steering union money to the hedge fund run by Murray Huberfeld. The new indictment represents a change in prosecutors' strategy. During Seabrook's first bribery trial, which ended in a mistrial, the jury never learned that Platinum eventually went bankrupt.

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HedgeFund

2018-05-22

Charges Against Barclays Over Qatar Crisis Funding Dismissed

Three charges against Barclays over its emergency fundraising during the financial crisis have been dismissed. The Serious Fraud Office (SFO) had accused the bank of two offences of conspiring to commit fraud by false representations regarding advisory services agreements with Qatar Holding in 2008. It had faced a further charge of unlawful financial assistance in connection with a $3bn Qatar loan to the bank. The bank said in a statement to the stock market, confirmed by the SFO, that all the charges had been thrown out at Southwark Crown Court...

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Banks

2018-05-22

JP Morgan Chase: FX Price-fixing Suit vs HSBC, RBS dismissed

The United States District Court for the Southern District of New York granted in part and denied in part Defendants' Motion to Dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) the case captioned JOHN NYPL, et al., Plaintiffs, v. JPMORGAN CHASE & CO., et al., Defendants, No. 15 Civ. 9300 (LGS)(S.D.N.Y.). The Plaintiffs commenced this putative class action under the Sherman Antitrust Act (Sherman Act), alleging that they paid inflated foreign currency exchange rates caused by an alleged conspiracy among Defendants to fix prices in the foreign exchange (FX) or foreign currency market...

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Banks

2018-05-22

Icahn Seeks to Block Amtrust Buyout as the Takeover Price Per Share is Less Than Half what Amtrust was Trading

US billionaire investor Carl Icahn on Monday said he has initiated a lawsuit against the sale of US insurance holding company Amtrust Financial Services (NASDAQ:AFSI) to a group of investors led by Stone Point Capital LLC. Icahn, who owns a stake of about 9.4% in the insurer, has commenced litigation against the company's chief executive Barry Zyskind and board members George Karfunkel and Leak Karfunkel, according to a statement. The activist investor claims that the agreed transaction undervalues Amtrust. The takeover price of USD 13.50 (EUR 11.41) per share is less than half what Amtrust was trading for in early 2017, the statement said further...

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Insurance,

2018-05-22

Malaysian Prime Minister Deceived Parliament Over the Finances of State Fund 1MDB 

The government of ousted Malaysian Prime Minister Najib Razak deceived parliament over the finances of state fund 1MDB and suppressed an investigation by intimidating and purging anti-corruption agents, officials said on Tuesday. "It is clear that the previous government has conducted an exercise of deception to the public about certain hot-button items, especially 1MDB, and even misrepresented the financial situation to parliament," new Finance Minister Lim Guan Eng said in a statement. Lim said he had discovered that Malaysia has been "bailing out" 1Malaysia Development Berhad (1MDB) debt obligations since April 2017, but the true financial situation was still unclear because officials were unable to access certain "red files"...

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Fraud

2018-05-22

Roger Odell Hudspeth II was Sentenced to More than 10 years in Prison for Orchestrating an Investment Scheme

A former investment adviser in Virginia has been sentenced for orchestrating an investment scheme that caused his clients to lose millions of dollars. The Virginian-Pilot reports 49-year-old Roger Odell Hudspeth II was sentenced to more than 10 years in prison Monday. Court documents show Hudspeth was an investment adviser and owner of Dominion Investment Advisors, LLC. Prosecutors say Hudspeth and others held social security maximization seminars to obtain clients who were often in or near retirement. Hudspeth would steer investors to investment offerings that were highly speculative, illiquid, and high risk by making material misrepresentations and omissions...


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Advisors
2018-05-20

Private Equity Could Pay if Companies Violate GDPR; the Broad Scope of the EU Rules Means Firms May be Held Liable for Portfolio Company Infractions

Even as buyout firms and others work to comply with the European Union's data-privacy regulation, how the rule will be enforced remains in question. The General Data Protection Regulation that goes into effect on May 25 requires organisations to protect personal data and report breaches or else they may be fined up to €20 million, or 4% of their annual global revenue. While private-equity firms themselves don't typically process much personal data, lawyers have warned they may be held liable for such data breaches and penalised if companies they own fail to comply...

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GDPR, Privateequity

2018-05-19

Abraaj's Alleged Misuse of Money Said to go Beyond the $1 Billion Healthcare Fund

Two separate examinations into the alleged misuse of money at embattled Middle Eastern investment firm Abraaj Group found potential irregularities in its $1 billion healthcare fund as well as its other vehicles, according to people with knowledge of the matter. An audit commissioned some months ago by four high-profile investors including the Bill & Melinda Gates Foundation suggested that money from the healthcare fund was being diverted elsewhere, said the people, asking not to be identified because the matter is private. Preliminary findings from a separate review by Deloitte - at Dubai-based Abraaj’s request - also threw up potential discrepancies in the accounting at some of the other pools, they said...

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Privateequity,

2018-05-18

Brokers’ Offices are Harassment Cases Waiting to Explode

He was one of Morgan Stanley’s top financial advisers in Beverly Hills. She was a Brazilian waitress and bartender at an L.A. Sports Club. He asked her to fly to Brazil to work as a translator for him and one of his celebrity clients, pop star Katy Perry, she recalls. He then offered her entree into the securities industry as an administrative assistant. In March, the assistant, Lorena Alcantara, accused the adviser, Michael Ladge, of sexual harassment, saying he had an ulterior motive for hiring someone with no administrative experience and limited English skills... [Full article available to Bloomberg subscribers if free article limit reached]

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#metoo

2018-05-18

First Investor Class Action Against AMP Hits the Courts

As if the much diminished wealth manager AMP was not in enough strife already, the first of five planned investor class actions gets underway in the NSW Supreme Court. The first of five class actions against embattled wealth-management company AMP got underway in Sydney this morning as law firms compete to take on angry shareholders who have seen the value of their investments plunge. Law firm Quinn Emanuel Urquhart Sullivan is seeking approval from the NSW Supreme Court to act for AMP shareholders who bought the company's stock from May 2013 to mid-April...

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CourtCases

2018-05-18

Ex-Malaysia PM to Face Graft Probe as Police Seize Jewelry, Handbags

Ousted Malaysian Prime Minister Najib Razak has been summoned by the anti-graft agency amid a probe into troubled state fund 1MDB, sources said on Friday, after police launched pre-dawn raids on premises linked to Najib and confiscated jewelry, luxury handbags and cash. Police have been searching Najib's home and other places as part of an investigation into scandal-plagued 1Malaysia Development Berhad (1MDB), an extraordinary turn of events that few would have predicted before his shock defeat in the May 9 general election...

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2018-05-18

UBS has Been Awarded $9.7 Million to Compensate for Costs Related to a Lawsuit Settlement

UBS Financial Services Inc. of Puerto Rico has been awarded $9.7 million by Finra to compensate for costs related to a lawsuit settlement with the ex-wife of a former client of the broker-dealer. The dispute originates in 2001 when a divorce agreement between David Efron and Madeleine Candelario led to a lien on Mr. Efron's brokerage account at UBS to protect the $4.1 million he owed his ex-wife in the settlement. Five-years' worth of legal delays later, Mr. Efron had withdrawn money from his UBS account to bring the balance below what was owed Ms. Candelario, who sued UBS for the assets in 2007. UBS lost that lawsuit and agreed to a $4.4 million payment to Ms. Candelario...

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CourtCases

2018-05-16

9 Big Banks Accused of Rigging Mexican Government Bonds

The Boston Retirement System is suing nine global banks and their subsidiaries for allegedly conspiring to fix Mexican government bond prices between Jan. 1, 2006, and April 18, 2017. The class-action complaint was filed May 14 in the U.S. District Court for the Southern District of New York. A total of 50 financial institutions were named as defendants, including Spain-based banks Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA; U.K.-based banks HSBC Holdings PLC and Barclays PLC; Germany-based Deutsche Bank AG; Switzerland-based Credit Suisse Group AG; and U.S. banks JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc...

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Banks

2018-05-16

SEC Charges Three Former Constellation Healthcare Executives who Falsified Financial Information

The Securities and Exchange Commission today announced fraud charges against three former Constellation Healthcare Technologies Inc. executives who falsified financial and other information they provided to a private firm in the course of negotiating the private firm’s acquisition of a majority stake in Constellation. Houston-based Constellation filed for bankruptcy in March, a little more than a year after the January 2017 acquisition. According to the SEC’s complaint, the executives convinced a private firm to acquire a majority of Constellation’s equity and provided fake information, including financial statements for three fictitious subsidiaries supposedly acquired for more than $62 million...

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SEC

2018-05-17

Some Employees of Wells Fargo Altered Information on Documents Related to Corporate Customers

Some employees in a Wells Fargo & Co. unit that handles business banking improperly altered information on documents related to corporate customers as the bank was trying to comply with a regulatory consent order over anti-money laundering controls, according to people familiar with the matter, cited by The Wall Street Journal. WSJ reported that employees allegedly added or altered the information without customers' knowledge, including Social Security numbers, addresses and dates of birth. The bank issued a statement: "This matter involves documents used for internal purposes. No customers were negatively impacted, no data left the company, and no products or services were sold as a result"...

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Banks
2018-05-10

RBS Settles US Department of Justice Investigation with $4.9BN Fine

Royal Bank of Scotland has agreed a $4.9bn (£3.6bn) penalty with the US Department of Justice to end an investigation into sales of financial products in the run-up to the financial crisis, clearing the way for the UK government to sell its 71% stake in the bank. The RBS chief executive, Ross McEwan, said the agreement in principle was a milestone moment for the bank. The penalty relates to the sale of financial products linked to risky mortgages in the US between 2005 and 2007...

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Banks
2018-05-09

The Founder of Premium Point was Charged with Inflating the Value of Assets by More Than $200 Million

Federal prosecutors on Wednesday charged the founder of New York investment firm Premium Point Investments LP and two former members of the firm with inflating the value of assets held by the firm's hedge funds by more than $200 million. In an indictment unsealed in Manhattan federal court, prosecutors charged Premium Point founder Anilesh Ahuja, 49; former partner Amin Majidi, 52; and former trader Jeremy Shor, 46 with securities fraud, wire fraud and conspiracy. The U.S. Securities and Exchange Commission also announced related civil charges...

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HedgeFund
2018-05-10

Abraaj Allegations Shake Up Middle Eastern Deal Making

Allegations that one of the biggest and oldest private equity firms in the Middle East misused client money, including from the Bill & Melinda Gates Foundation and the World Bank, have sent shock waves through the ranks of local dealmakers, according to Bloomberg. Dubai's Abraaj Group, has shaken up its top ranks, cut dozens of jobs and hired outside help to probe the matter and patch up relations with clients, but the fallout may just start to ripple through. Bloomberg reported that since the allegations surfaced in February, private equity deals and fundraising in the region, which had already been slowing, have come to a halt, according to interviews with about a dozen financial industry executives...

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Privateequity,
2018-05-10

Stockbroker Stole $400K; Toms River Man Guilty of 5 Crimes

A Passaic jury found a Toms River stockbroker guilty of stealing more than $400,000 from investors and using it for personal day trading and his own expenses, Attorney General Gurbir S. Grewal announced. Jeffrey D. Griffin Jr., 43, was found guilty of five crimes — theft by deception, misapplication of entrusted property, money laundering and two counts of violating the state's Uniform Securities Act, according to a news release from the attorney general. The verdict, rendered late Tuesday, followed a trial before Superior Court Judge Joseph Portelli. At the trial, Anthony Torntore and Alyssa Bloom, deputy attorneys general, presented evidence that, from August 2010 through July 2011, Griffin stole $408,000 from four investors — three men and a woman...

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Fraud
2018-05-10

Gores' firm, Platinum Equity, is Tied to an Illegal Scheme That Nearly Doubles the Cost of Jail Phone Calls

One of the companies owned by Pistons owner Tom Gores' private equity firm is one of two defendants in a lawsuit filed in a Massachusetts court last week. According to a lawsuit filed May 2 by consumer and prisoner rights groups, Gores' company is tied to an illegal kickback scheme that nearly doubles the cost of jail phone calls made by inmates in Massachusetts. The alleged scheme involves the Bristol County Sheriff's Office in Massachusetts and Securus Technologies — a company owned by Gores' Platinum Equity firm that operates private telephone systems in many jails across the country, including Michigan...

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Privateequity,
2018-05-10

Malaysia's Najib Goes Quietly, Sunk by Scandal

In the end, Najib Razak gave up without a fuss, the first prime minister of Malaysia ever to lose a general election. After a bruising campaign in which he traded barbs and insults with his former mentor, Mahathir Mohamad, Najib's Barisan Nasional coalition was trounced in Wednesday's poll... News broke in 2015 that about $700 million allegedly stolen from 1MDB had made its way into his personal bank accounts. He has denied any wrongdoing and has been cleared by Malaysia's attorney-general even as U.S. authorities allege that over $4.5 billion was stolen from the fund in a fraud orchestrated by a financier known to be close to Najib and his family...

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Fraud
2018-05-09

SEC Correctly Found No Jurisdiction Over Market Makers' Improper Fee Petition

A Seventh Circuit panel has affirmed the SEC's dismissal of a petition seeking damages from various securities exchanges for improper fees for lack of jurisdiction. The court deferred to the Commission's conclusion that the Exchange Act does not provide jurisdiction over lawsuits initiated by private parties. In addition, the petition sought only an accounting, and a refund, of improper fees, which are not cognizable claims under the relevant provisions (CBOE v. SEC, May 7, 2018, Flaum, J.)...

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SEC
2018-05-09

CME Says It's About to Win 14-Year-Old Eurex Antitrust Suit

CME Group Inc. says it’s poised to win a 14-year-old court case that alleges its anti-competitive behavior blocked a huge German exchange from getting a foothold in the U.S. The judge, CME disclosed in its latest quarterly report, told litigants on April 27 that he “reached a preliminary decision” granting CME’s motion for summary judgment of the antitrust claim. The court “is expected to issue a written decision finalizing that decision and dismissing the entire case,” CME said. Court records show U.S. District Judge Thomas Durkin decided the trial will no longer begin on June 4... [Full article available to Crain subscribers]

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CourtCases
2018-05-09

Wealth Manager Loses $1.2 Million Insider-Trading Bail Fight

A Swiss wealth manager embroiled in an insider-trading case linked to Air Liquide SA's $13.2 billion takeover of Airgas Inc. has lost his bid to avoid posting bail of $1.2 million. A ruling from France's top court revealed that a man identified as Thierry Z., working for wealth-management firm Stokors SA, was charged by criminal authorities late last year "for enabling the acquisition of shares by a third party on the basis of insider information." The charges relate to a transaction that generated a $5.2 million profit for his client, Mr. A., according to the previously unreported April 10 ruling at Paris's Cour de Cassation that was posted online last week...

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