Regulatory Actions and Updates from Around the Globe

Enforcement Highlights – May 2021

United States: 

• The Securities and Exchange Commission (SEC) charged BitConnect and five individuals for allegedly promoting a global unregistered digital asset securities offering that raised over $2 billion from retail investors.

• SEC charged Under Armour Inc. with failing to adequately disclose known uncertainties concerning its future revenue prospects and misleading investors. Under Armour agreed to a $9 million settlement.

• SEC charged Colorado-based GWFS Equities Inc. for failures related to filing suspicious activity reports (SARs). GWFS agreed to a settlement that imposes a $1.5 million penalty, a censure, and an order to cease and desist from future violations.

• SEC charged New Jersey-based healthcare company Premier Healthcare Solution LLC and its founder, Josiah David (formerly known as Dennis Lee) with fraudulently raising almost $4 million from over 130 investors nationwide.

• The SEC charged LJM Funds Management Ltd., LJM Partners Ltd., and their portfolio managers with fraudulently misleading investors regarding investment risks, resulting in a $1 billion trading loss.

• The SEC charged and fined S&P Dow Jones Indices LLC $9 million for failures relating to a previously undisclosed quality control feature of one of its volatility-related indices, which led S&P DJI to publish and disseminate stale index values during a period of unprecedented volatility. 

United Kingdom:

• The Financial Conduct Authority (FCA) fined Sapien Capital Ltd £178,000 for serious financial crime control failings in relation to cum/ex trading, which led to the risk of facilitating fraudulent trading and money laundering.

• The FCA charged Ian Hudson with fraudulent trading and carrying on regulated activities without authorization.

Hong Kong:

• The Securities and Futures Commission (SFC) reprimanded and fined Ewarton Securities Limited $1.5 million for breaches and failures of internal controls.

• The Market Misconduct Tribunal (MMT) fined China Medical & HealthCare Group Limited (formerly COL Capital Limited) and six former and current directors $4.2 million for failing to disclose inside information following SFC proceedings.

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Regulatory Actions and Updates from Around the Globe

Enforcement Highlights – April 2021

United States: 

• The SEC awarded over USD $3 million to two whistleblowers who brought to light key issues and violations to help improve SEC’s ongoing compliance efforts.

• SEC filed charges against 8 companies for failing to disclose complete reporting information on required Form 12b-25 filings.

• The SEC charged fund manager and former race car team owner Andrew T. Franzone with multimillion-dollar investment fraud and misappropriation scheme.

• The SEC filed charges against Spot Tech House Ltd., a binary options trading platform, and two of its top executives with defrauding investors out of more than USD $100 million through unregistered online sales.

• The SEC charged seven individuals with defrauding investors out of more than USD $16 million through an oil-and-gas market manipulation scheme.

United Kingdom:

• The Financial Conduct Authority (FCA) commenced criminal proceedings against 2 individuals for conducting unauthorized regulated business activities in the UK.

• The FCA banned and fined UK financial adviser Simon Varley £68,300 for providing unqualified, dishonest financial advice to retail customers.

Hong Kong:

• The Securities and Futures Commission (SFC) fined Optimas Capital Limited $1.05 million over multiple failures with their short position reporting processes.

• The Market Misconduct Tribunal (MMT) sanctioned two former executives of Asia Telemedia Limited (ATML), now known as Yunfeng Financial Group Limited, for insider dealing.

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Regulatory Actions and Updates from Around the Globe

Enforcement Highlights – March 2021

United States: 

• The SEC charged the founder of San Francisco-based biotech company uBiome for defrauding investors out of USD $60 million with false claims of the company’s successful business model and track record.  

• The SEC charged 7 individuals and tech company Airborne Wireless Network with running a fraudulent fundraising scheme that generated nearly USD $45 million.

• The SEC charged private investor George Heckler for running a decade-long scheme defrauding investors of over USD $90 million through two private hedge funds.

• The SEC charged Seth P. Levine, owner of real estate firm Norse Holdings, LLC, that defrauding at least 60 people out of millions based on false and misleading claims about real estate investments.

• The SEC took action against California-based stock trader Andrew L. Fassari (known as @OCMillionaire on Twitter) for a $900K fraudulent Twitter scheme for a now-defunct cannabis company.

United Kingdom:

• The Financial Conduct Authority (FCA) fined over £530,000 24 Hour Trading Academy for giving unauthorized trading advice via Whatsapp to consumers.

• The FCA fined experienced trader Mr. Adrian Geoffrey Horn £52,500 for executing trades with himself (“wash trading”) and prohibited him from participating in regulated activities.

Hong Kong:

• The Securities and Futures Commission of Hong Kong fined Yardley Securities Limited $5 million for failing to comply with AML/CFT regulatory requirements while handling third-party fund transfers.

• SFC reprimanded and fined Sino-Rich Securities & Futures Limited $7.2 million for failures in complying with AML/CFT regulatory requirements when handling cash deposits and third-party fund transfers.

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Is your AML compliance too expensive, time-consuming, or ineffective?

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Regulatory Actions and Updates from Around the Globe

Enforcement Highlights – February 2021

United States: 

• The U.S. Securities and Exchanges Commission (SEC) suspended trading in the securities of 15 companies due to questionable trading and social media activity targeted at artificially inflating their stock price.

• The SEC charged an Oklahoma-based gas exploration and production company, Gulfport Energy Corporation, and its former CEO Moore, for failing to properly disclose executive perks and related person transactions.

• The SEC charged three individuals with running a Ponzi-like scheme that raised over $1.7 billion from 17,000 retail investors through securities issued by a New York-based registered investment adviser GPB Capital.

• FINRA fined Atlanta-based investment firm Triad Advisors $200,000 over findings that it neglected to follow proper compliance procedures when switching customers’ investments between funds.

• The SEC’s initial fine of $5 million on two Ukrainian traders and their firm for defrauding investors was increased to $7.5 million in February 2021 by a U.S. Supreme Court judge.

• OFAC fined BitPay, Inc., a digital currency company based in Georgia, more than $500,000 for over 2,100 international sanctions violations from multiple digital currency transactions.

United Kingdom:

• FCA began criminal proceedings against two brothers, former Goldman Sachs and Clifford Chance employees, for fraud by false representation and insider trading.

Hong Kong:

• The Securities and Futures Commission (SFC) reprimanded Brilliance Asset Management Limited and fined it $3.15M over failures to ensure short position reports (SPRs) for four collective investment schemes.

• SFC prohibited 13 brokers from dealing with assets held in 54 trading accounts related to a suspected social media ramp-and-dump scam involving the manipulation of the market

Regulatory Updates

Singapore:

The Monetary Authority of Singapore (MAS) recently published its Technology Risk Management Guidelines with a focus on establishing robust governance to ensure cyber resilience and sound technology risk practices for those companies operating both inside and outside of Singapore.

Upcoming Events:

The New Consumer: How to Ensure Integrity
in the Virtual Economy

Join our upcoming fireside event as we discuss the rise of virtual marketplaces as the new eCommerce, and how every player in these marketplaces – from consumers to payment processors – can establish a vibrant digital ecosystem built on integrity and accountability.

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Is your AML compliance too expensive, time-consuming, or ineffective?

iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.

Request a demo today.

Regulatory Actions and Updates from Around the Globe

Enforcement Highlights – January 2021

United States: 

• The Securities and Exchange Commission (SEC) charged online entertainment and live streaming company Vuuzle Media USD $14 million for securities fraud.

• Fund manager at MG Capital Management real estate fund was charged by the SEC with misappropriating $7 million from retail investors.

• The SEC charged Deutsche Bank AG with violations of the Foreign Corrupt Practices Act (FCPA) due to a lack of sufficient internal accounting controls. The bank agreed to pay $43 million in disgorgement and interest.

Germany:

• BaFin imposed a EUR 282,500 fine on SLEEPZ AG e-commerce group for failing to comply with financial reporting requirements.

Hong Kong:

• The Securities and Futures Commission (SFC) has issued restriction notices to five brokers to freeze client accounts related to suspected market manipulation.

Regulatory Updates

Austria:

An Austrian startup building an app for trading in security tokens became the first fintech company to be admitted to Austria’s Financial Market Authority (FMA) regulatory sandbox.

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FMA announced that it has granted registration to 18 virtual asset providers since tightening anti-money laundering regulations in January 2020.

Past events:

Mergers & Acquisitions – The Future of Enhanced Due Diligence

Missed our January 2021 Fireside Chat? Watch the full event where guest panelists discuss the trends for enhanced due diligence within mergers and acquisitions for both buyers and sellers, and the importance that proper due diligence plays in successful M&A transactions.

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Is your AML compliance too expensive, time-consuming, or ineffective?

iComply enables financial services providers to reduce costs, risk, and complexity and improve staff capacity, effectiveness, and customer experience.

Request a demo today.