OCC revises bank enforcement manual
The Office of the Comptroller of the Currency (OCC) has announced revisions to its policies and procedures manual on bank enforcement actions to reflect its consideration of actions against banks that exhibit or fail to correct persistent weaknesses.
Policies and Procedures Manual (PPM) 5310-3, “Bank Enforcement Actions and Related Matters,” now includes “Appendix C: Actions Against Banks With Persistent Weaknesses,” which provides greater transparency and clarity about how the OCC determines if a bank has persistent weaknesses and the possible additional actions the agency may take to address them. The policy is focused on larger and more complex banks the OCC supervises.
SEC obtains judgment in crypto case
The Securities and Exchange Commission (SEC) has concluded its case against The Hydrogen Technology Corporation, its former CEO Michael Ross Kane, and Tyler Ostern, the CEO of Moonwalkers Trading Limited. The case involved the unregistered offers and sales of crypto securities called “Hydro” and a scheme to manipulate the trading volume and price of those securities, resulting in excess of $2 million in profits for Hydrogen. As part of the settlement, Hydrogen and Kane are required to pay nearly $3 million in disgorgement, prejudgment interest, and penalties. The judgments permanently enjoin Hydrogen and Kane from violating securities laws and impose conduct-based injunctions. Hydrogen must disgorge $1,516,703.53 with interest and pay a civil penalty of $1,035,000, while Kane is required to disgorge $45,818.79 with interest and pay a civil penalty of $207,000. Kane is also prohibited from acting as a director or officer of a public company. The SEC’s actions highlight its commitment to addressing unregistered securities offerings and market manipulation in the cryptocurrency industry.
IRS investigation results in prison sentence for ex-investment adviser
Shawn Good has been sentenced to 87 months in federal prison for carrying out a $7 million investment fraud scheme. Good, who was employed as a registered representative and investment advisor for Morgan Stanley Smith Barney, LLC, pleaded guilty to wire fraud and money laundering. He targeted more than a dozen clients deceiving them into investing in purported real estate projects and tax-free municipal bonds. Good promised low-risk investments with returns of 6% to 10% over short terms. He used the funds to finance a lavish lifestyle, including luxury cars, exotic vacations, and real estate. Good’s scheme was uncovered thanks to the victims’ and the efforts of the IRS and the State Bureau of Investigation. In addition to the prison term, Good has been ordered to pay $3,619,594 in restitution.
JMLSG publishes new consultation
Joint Money Laundering Steering Group (JMLSG) has published proposed revisions to its guidance.
The proposed revisions take account of amendments relating to discrepancy reporting, as introduced by The Money Laundering and Terrorist Financing (Amendment) (No. 2) Regulations 2022 (affecting Part I Chapter 5 Paragraph 5.3.129A).
Comments on the proposed revisions should be received by 26th June 2023.
JMLSG has also published amendments to Part II of its Guidance: Sector 8 (Non-life providers of investment fund products) and Sector 9 (Discretionary and advisory investment management).
ASIC brings consumer protection charges
The Australian Securities & Investments Commission (ASIC) has commenced civil penalty proceedings against Ferratum Australia Pty Ltd (Ferratum) for charging prohibited fees and overcharging consumers who paid off loans early.
ASIC alleges that between March 2019 and August 2021, Ferratum breached consumer credit protection laws in relation to small amount credit contracts by:
- charging borrowers prohibited fees such as direct debit fees when using certain credit cards and fees to alter direct debit arrangements
- entering into contracts with borrowers which imposed prohibited fees
- incorrectly calculating the amounts borrowers had to pay when they repaid their contracts early, leading borrowers to pay more than they had to, and
- failing to act efficiently, honestly and fairly by ensuring it had an accurate and reliable system to calculate, record and monitor the amounts required to pay out contracts early.
ASIC Deputy Chair Sarah Court said: “The credit protection laws are designed to protect consumers who need to access small amount loans. ASIC is concerned that the alleged conduct harmed consumers with low incomes and low bank account balances. These types of practices are especially harmful during the COVID-19 pandemic”.
A selected summary of key developments for regulated financial institutions
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