View Inc settles charges with SEC over undisclosed warranty liabilities
California-based “smart” window manufacturer View Inc has settled charges with the Securities and Exchange Commission (SEC) for failing to disclose $28 million in projected warranty-related liabilities. The SEC decided not to impose civil penalties due to View’s self-reporting, prompt remedial actions, and cooperation with the investigation. Former CFO Vidul Prakash is also charged for his failure to ensure disclosure of the liabilities.
View’s reports filed with the SEC between December 2020 and May 2021 disclosed warranty liabilities of $22 million to $25 million, omitting the additional costs of shipping and installing new windows. Under generally accepted accounting principles, the total liabilities should have been $48-$53 million. The SEC found View guilty of materially misstating warranty liability for fiscal years 2019 and 2020, as well as the first quarter of 2021.
While the SEC remains committed to holding market participants accountable, the resolution with View highlights, of course, the benefits of cooperation during investigations, resulting in reduced or no penalties. The settlement requires View to cease future violations. Prakash faces charges and potential penalties in a separate complaint filed in the US District Court for the Northern District of California.
SEC publishes fact sheet explaining new swaps rules
In June the Securities and Exchange Commission (SEC) adopted two new rules to address misconduct in the security-based swaps market. The SEC has now produced a fact sheet explaining a little more.
Rule 9j-1 prohibits fraud, manipulation and deception in connection with effecting or entering security-based swap transactions.
Rule 15fh-4(c) prevents undue influence over the chief compliance officer (CCO) of security-based swap dealers and major security-based swap participants (SBS Entities).
CFTC secures victory in precious metals fraud case with hefty penalties
The Commodity Futures Trading Commission (CFTC) has achieved a significant win in its fight against fraud in the precious metals markets. Judge Richard G Andrews of the US District Court for the District of Delaware recently issued a consent order against Argent Asset Group LLC (Argent) and First State Depository Company, LLC (FSD), along with a default judgment and permanent injunction against Robert Higgins.
The court orders, resulting from a CFTC lawsuit filed in October 2022, require Argent and FSD to pay $112.7 million in restitution and a $33 million civil monetary penalty. The defendants are also banned from further violations of the Commodity Exchange Act (CEA) and CFTC regulations and from trading in CFTC-regulated markets. Registration bans have been imposed on them as well.
The lawsuit accused the defendants of misappropriating tens of millions of dollars and making fraudulent misrepresentations to 200 customers or so in connection with the “Maximus Program,” a silver leasing scheme. The scheme falsely promised customers guaranteed monthly lease payments based on the amount of silver they leased to Argent, along with claims of secure storage and insurance. In reality, the defendants misappropriated customers’ precious metals and funds.
The CFTC’s efforts to combat fraud in the precious metals markets remain resolute, as demonstrated by the substantial penalties and commitment to protecting victims’ interests.
Bank of England cross-border payments speech
In a speech at the Global Payments Summit in Cape Town, Bank of England Executive Director for Payments, Victoria Cleland outlined some of the global initiatives being considered to enhance cross-border payments.
Cleland highlighted the importance of global solutions and collaboration among countries to address the challenges of cross-border payments. She mentioned the Committee for Payments and Market Infrastructures (CPMI) and the G20’s endorsement of a clear action plan and targets for 2027 to make cross-border payments faster, cheaper, more transparent, and more accessible.
The speech acknowledged too the achievements and efforts made by public policymakers, financial institutions, and central banks in improving cross-border payments. These include developing frameworks, harmonizing standards, identifying regulatory barriers, and testing cutting-edge technologies. Cleland noted the positive impact of these enhancements, such as reducing barriers to trade and improving financial inclusion.
The speech then discussed the updated priorities for the roadmap to enhance cross-border payments, focusing on three priority themes:
- payment system interoperability and extension,
- cross-border data exchange and message standards, and
- legal, regulatory, and supervisory frameworks.
And emphasized the need for cooperation between central banks, public authorities, and the private sector to implement these priorities effectively.
In terms of payment system interoperability and extension, the speech mentioned the ambition to make national payment systems more interoperable, accessible to more payment service providers, and open for longer hours. The aim is to reduce frictions and improve the experience for consumers and businesses. The speech also discussed the potential for interlinking national payment systems to further streamline cross-border payments.
Regarding cross-border data exchange and message standards, the speech emphasized the importance of adopting the ISO20022 standard worldwide. This common standard can enable payments to include more information, improve efficiency, enhance regulatory compliance, and reduce financial crime. The speech also mentions the need for harmonized API standards to facilitate data exchange between payment systems and participants.
In terms of legal, regulatory, and supervisory frameworks, the speech highlighted the challenges posed by diverging approaches to regulation and supervision. The speaker calls for collaboration and the adoption of international guidance and recommendations to address these issues. The Financial Action Task Force (FATF) and the FSB industry taskforce on legal, regulatory, and supervisory matters are mentioned as key players in improving consistency and effectiveness in these areas.
Cleland concluded by emphasizing the importance of continued collaboration between policymakers and the private sector to improve the payments infrastructure but also encouraging dialog and actions in individual jurisdictions to explore improvements in domestic payment systems.
APRA fines BNK Banking Corporation for data reporting breach
The Australian Prudential Regulation Authority (APRA) has imposed a fine of $247,500 on BNK Banking Corporation Limited (BNK) for failing to meet its legal obligations to report data to APRA. BNK violated the requirements of the Financial Sector (Collection of Data) Act 2001 by missing the deadlines for data submission. Specifically, BNK was 32 days late in filing statistical reports for the month ending February 28, 2023, under the Economic and Financial Statistics program.
Therese McCarthy Hockey, APRA Member, emphasized the importance of timely data reporting and stated that the penalty aims to send a clear message to the industry. APRA relies on accurate and up-to-date information to effectively monitor the safety and stability of Australia’s banking, insurance, and superannuation systems.
Despite the breach, McCarthy Hockey acknowledged that BNK was able to provide sufficient reporting during the period to ensure the organization’s continued prudential soundness.
A selected summary of key developments for regulated financial institutions
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