FCA and BoE issue Policy statement
The Financial Conduct Authority and Bank of England have jointly issued Policy Statement 23/2, which summarises the feedback received by both the FCA and the Bank of England to CP21/31 (Changes to reporting requirements, procedures for data quality and registration of Trade Repositories under UK EMIR )and their response. It also sets out the final rules and approach to the supporting guidance required to support implementation of these proposals.
Man charged in $55m crypto scam
A man has admitted his part in orchestrating an investment fraud scheme that defrauded more than 10,000 victims in excess of $55 million. Michael Glaspie, marketed an investment opportunity under the name “CoinDeal” or “Coin Deal” and claimed that CoinDeal would yield extremely high returns on the premise that one or more technology companies – operated under the banner of “ViRSE” – was about to be acquired by a consortium of wealthy buyers. To entice investors to put money into CoinDeal, Glaspie falsely promised that in the event the returns from CoinDeal failed to materialize, he would repay investors their money with seven percent annual interest over three years. In fact, Glaspie knew he had no means of making such repayments.
CFPB charges TMX Finance
The US Consumer Financial Protection Bureau (CFPB) has charged TitleMax for breaching the Military Lending Act by extending prohibited title loans to military families sometimes by charging nearly three times over the 36% annual interest rate cap. TitleMax tried to hide their unlawful activities by, among other things, altering the personal information of military borrowers to circumvent their protected status. The CFPB also found that TitleMax increased loan payments for borrowers by charging unlawful fees. The CFPB’s order ends TitleMax’s illegal activities, and requires the company to pay more than $5 million in consumer relief and a $10 million civil money penalty.
CFTC charges several people in a $145 million Ponzi scheme
The Commodity Futures Trading Commission (CFTC) has announced it filed a civil enforcement action in the US District Court for the Southern District of Texas, charging fraud and misappropriation against Marcus Todd Brisco and his companies Yas Castellum LLC and Yas Castellum Financial LLC; Tin Quoc Tran; Francisco Story; Fredirick “Ted” Safranko; Michael Shannon Sims; and SAEG Capital General Management LP (SAEG).
The complaint alleges that beginning in approximately April 2020, Tran, Brisco and his companies, and Sims were involved with three interconnected commodity pool scams that fraudulently solicited and misappropriated pool participant funds. The complaint further alleges that Story, Safranko, and SAEG lied to the National Futures Association (NFA) to conceal one or more of the scams.
On February 6, 2023, District Court Judge Lee Rosenthal entered a statutory restraining order against the defendants, freezing their assets, and giving the CFTC immediate access to their books and records. In addition, the court scheduled a preliminary injunction hearing for February 22, 2023.
SEC charges Ozy Media with fraud
The Securities and Exchange Commission (SEC) has charged media and entertainment company Ozy Media Inc, its CEO Carlos R Watson, Jr, its former COO Samir Rao, and its former Chief of Staff Suzee Han with defrauding investors of approximately $50 million through repeated misrepresentations concerning the company’s basic financial condition, business relationships, and fundraising efforts. Rao and Han have agreed to resolve the charges against them.
From at least January 2019 to September 2021, the defendants routinely and purposely presented prospective investors with false financial information that grossly inflated Ozy Media’s annual revenue by at least 100 percent. Watson and Rao also allegedly solicited investments by repeatedly and falsely telling prospective investors that well-known and sophisticated investors would be investing in Ozy Media in some capacity.
The SEC’s complaint charges the defendants with violations of the anti-fraud provisions of the federal securities laws and related rules. The SEC seeks injunctive relief and civil penalties against all defendants, officer and director bars against Watson and Rao, and disgorgement with prejudgment interest against Ozy Media and Watson.
Two insider trading charges from SEC
The SEC has charged Kevin Van de Grift and Gil Friedman with insider trading ahead of the April 2018 public announcement that private equity firm Francisco Partners Management, LP agreed to acquire payment systems company Verifone Systems, Inc. The SEC’s complaint charges Van de Grift and Friedman with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
According to the SEC’s complaint, Friedman – a former Francisco Partners consultant – tipped his close friend, Van de Grift – a day-trader and licensed accountant – with material, nonpublic information concerning Francisco Partners’ potential acquisition of Verifone. The SEC alleges that based on Friedman’s tip, Van de Grift purchased 60,000 shares of Verifone stock from March 5, 2018 through March 9, 2018, and subsequently sold all of these shares the day after the acquisition announcement for a profit of approximately $300,000.
And the SEC has also charged Andrew Stiles for insider trading in the stocks of Eastman Kodak Company and Novavax, Inc based on nonpublic information related to both companies’ planned government partnerships to assist in the fight against COVID-19 at the height of the pandemic. The SEC also charged Andrew Stiles’s cousin, Gray Stiles, for insider trading in Kodak stock that netted the two more than $1.5 million in illegal profits. As with the above case, the SEC’s complaint charges Andrew Stiles and Gray Stiles with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The complaint alleges that, via his employment at a medicine supply chain company, Andrew Stiles learnt of Kodak’s plans to obtain a $765 million loan from the federal government as part of the response to the COVID-19 pandemic
Andrew Stiles allegedly purchased more than 95,000 shares of Kodak stock ahead of the public announcement in July 2020 and tipped his cousin, Gray Stiles, who purchased more than 45,000 shares. After the announcement, Andrew Stiles and Gray Stiles sold their Kodak shares for more than $1.5 million in total profits.
A selected summary of key developments for regulated financial institutions
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