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Violations were found in 25-50% of audits reviewed, depending on the audit standard at issue, the SEC said. "Marcum neglected its essential gatekeeper function in service to its own growth," said SEC Chair Gary Gensler in a statement. The SEC found the deficiencies were not limited to Marcum's SPAC clients. In addition to the civil penalty, settlement requires Marcum undertake remedial actions including hiring an independent consultant to review its policies procedures and to abide by certain restrictions when taking on new clients. Reporting by Chris Prentice; Editing by Conor HumphriesOur Standards: The Thomson Reuters Trust Principles.
Persons: Marcum, Nikola, Gary Gensler, Chris Prentice, Conor Humphries Organizations: Nikola, U.S . Securities, Exchange Commission, SEC, SPACs, Marcum, DraftKings Inc, Thomson
The regulator's heightened scrutiny of crypto firms comes in response to the industry's failure to comply with the agency's regulations, SEC enforcement director Gurbir Grewal said at a Rutgers University and Lowenstein Sandler LLP event in New York. "We have worked thoughtfully and incrementally in this space," Grewal said on Friday. The SEC began targeting initial coin sales as unregistered securities offerings, but has increasingly focused on crypto firms acting as unregistered exchanges and broker-dealers. The SEC last week sued Binance and Coinbase, two of the world's largest crypto exchanges, for allegedly breaking its rules. Coinbase has said the agency hardened its stance and became less willing to work with crypto firms in the wake of the FTX scandal in late 2022.
Persons: Gurbir Grewal, Lowenstein Sandler, Grewal, you'd, Binance, Coinbase, Chris Prentice, Nick Macfie Organizations: YORK, U.S . Securities, Exchange Commission, SEC, Rutgers University, Lowenstein, Capitol, Democratic, Thomson Locations: New York, noncompliance
Silicon Valley Bank had booked a $1.8 billion loss on the sale of a bond portfolio to Goldman. "SVB engaged Goldman Sachs to assist with a proposed capital raise and sold the firm a portfolio of securities. Goldman had disclosed last month it was cooperating with government probes into its dealings with Silicon Valley Bank. In March, Reuters reported U.S. prosecutors were investigating the collapse of Silicon Valley Bank. Silicon Valley Bank's demise sent shockwaves through the industry and brought on the worst crisis for the sector in 15 years.
Persons: Goldman Sachs Group's, SVB, Goldman Sachs, Goldman, shockwaves, Niket, Saeed Azhar, Chris Prentice, Krishna Chandra Eluri, Maju Samuel Organizations: U.S . Federal Reserve, Securities and Exchange Commission, Silicon Valley Bank, Wall Street, Bank, Goldman, Reuters, Fed, SEC, Thomson Locations: Silicon, Bengaluru, New York
REUTERS/David SwansonJune 7 (Reuters) - Coinbase (COIN.O) Chief Executive Brian Armstrong on Wednesday hit back at the U.S Securities and Exchange Commission (SEC) Chair over the agency's lawsuit against the crypto exchange, calling him an "outlier," while also reassuring customers that their funds were safe. Crypto companies, including Coinbase, dispute that crypto tokens are securities and have repeatedly called for the SEC to create clear rules. SETTLEMENT BREAKDOWNLast July, Coinbase disclosed an SEC probe into its asset listing processes, staking programs and yield-generating products. Grewal said despite the lawsuit, Coinbase would still be interested in a dialogue with the SEC about how to bring cryptocurrency into the regulatory perimeter. "If there were an opportunity for a real conversation, of course we would take it up, but I want to be very clear: Coinbase is absolutely committed to defending itself in court," he said.
Persons: Brian Armstrong, David Swanson, Coinbase, Armstrong, Gary Gensler, Gensler, ” Armstrong, Binance, hasn’t, haven’t, Paul Grewal, Grewal, Hannah Lang, Manya Saini, Niket, Chris Prentice, Shounak Dasgupta, Michelle Price Organizations: Milken, Global Conference, REUTERS, U.S Securities and Exchange Commission, SEC, Bloomberg, Monday, CNBC, Reuters, U.S ., Appeals, Circuit, Thomson Locations: Beverly Hills , California, U.S, Solana, Cardano, Washington, Bengaluru
Former SEC chief Harvey Pitt passes away at 78
  + stars: | 2023-05-31 | by ( ) www.reuters.com   time to read: +2 min
May 31 (Reuters) - Harvey Pitt, a former chairman of the U.S. Securities and Exchange Commission, passed away on Tuesday, according to a statement from the director of the SEC Historical Society shared with Reuters. At the time, fellow SEC Commissioner Roel Campos said: "There has certainly never been anyone who loved this agency more than Chairman Pitt." Pitt was a graduate of St. John's University School of Law and the City University of New York, according to the SEC's website. He passed away on Tuesday, according to the statement from Jane Cobb, executive director of the SEC Historical Society. "Over the years, Harvey has been extremely generous with his time and sage advice," said Michael Piwowar, a former SEC commissioner.
Persons: Harvey Pitt, Pitt, George W, Bush, Roel Campos, Jane Cobb, Harvey, Michael Piwowar, Chris Prentice, Douglas Gillison, Niket, Shinjini Ganguli, Paul Simao Organizations: U.S . Securities, Exchange Commission, SEC Historical Society, Reuters, SEC, FBI, Enron, San Francisco Chronicle, Oxley, St, John's University School of Law, City University of New, Georgetown University, University of Pennsylvania, Kalorama Partners, Thomson Locations: City University of New York, Washington, New York, Bengaluru
Companies Coinbase Global Inc FollowMay 30 (Reuters) - A former product manager for Coinbase Global Inc (COIN.O) and his brother have agreed to settle U.S. Securities and Exchange Commission (SEC) charges related to insider trading of crypto asset securities. A lawyer for Ishan Wahi declined to comment on the settlement. Ishan Wahi was sentenced to two years in prison earlier this month. In January, Nikhil Wahi was sentenced to 10 months in prison. In pleading guilty to the criminal charges, Ishan Wahi said he did not believe any of the relevant tokens were securities.
Persons: Ishan Wahi, Nikhil Wahi, Gurbir Grewal, Nikhil, , Kanishka Singh, Chris Prentice, Hannah Lang, Bill Berkrot, Cynthia Osterman Organizations: Coinbase, Coinbase Global Inc, U.S, Securities, Exchange Commission, SEC, Thomson
WASHINGTON, May 10 (Reuters) - A U.S. accounting watchdog found unacceptable deficiencies in audits of U.S.-listed Chinese companies performed by KPMG in China and PricewaterhouseCoopers in Hong Kong, the government agency said on Wednesday. The deficiencies were so great that auditors failed to obtain enough evidence to substantiate companies' financial statements, PCAOB Chair Erica Williams told reporters on Wednesday. KPMG Huazhen in China said in a statement it has taken steps to address the issues the PCAOB had found. With its 2023 work, the PCAOB expects it will have inspected auditors representing 99% of the work in the region. The agency will continue to demand full access to do its work, Williams said.
WASHINGTON, May 10 (Reuters) - The U.S. Public Company Accounting Oversight Board (PCAOB) found unacceptable deficiencies in audits of U.S.-listed Chinese companies performed by KPMG in China and PriceWaterhouseCoopers in Hong Kong, the government agency said on Wednesday. The U.S. audit watchdog published the findings of its inspections after gaining access to Chinese company auditors' records for the first time last year following more than a decade of negotiations with Chinese authorities. The deficiencies were so great that auditors failed to obtain sufficient evidence to substantiate companies' financial statements, PCAOB Chair Erica Williams told reporters on Wednesday. The two firms represented 40% of the market share of U.S.-listed companies audited by Hong Kong and mainland China firms, she said. While the findings are consistent with what the agency usually discovers when gaining access to a foreign country's audit records for the first time, they will likely raise worries among global investors over the accuracy of U.S.-listed Chinese companies' public financial statements.
NEW YORK, May 10 (Reuters) - Federal prosecutors in Washington are looking into short seller activity around the recent volatility in U.S. bank shares sparked by the failure of three regional lenders since March, a source familiar with the matter said. Short sellers arrange to borrow shares they consider overvalued and sell them in the hopes that if the price drops they can repurchase them for less and pocket the difference. Critics say short sellers hurt companies, but short sellers and advocates say they act as an important check on public firms. Since at least 2021, the Justice Department and the SEC have been investigating potential manipulation by short sellers and hedge funds around the publication of negative research reports. The source did not say whether the latest interest in bank stocks was related to that pre-existing probe.
Hindenburg said Icahn Enterprises LP (IEP) (IEP.O) valued a meat packing company in which it owns a 90% stake three times over its market value. IEP cited "the lack of material trading volume" in Viskase's stock as grounds for the valuation mark-up in the filing. Viskase's shares are traded in the over-the-counter market rather than a major exchange such as Nasdaq or the New York Stock Exchange. On Thursday, IEP said after the stock market closed that it would preserve its dividend at $2 per unit for the first quarter. IEP's stock rose 10% in afterhours trading on the announcement.
NEW YORK, May 4 (Reuters) - The U.S. Securities and Exchange Commission is focused on identifying and prosecuting any form of misconduct that might threaten investors, capital formation or markets more broadly, SEC Chair Gary Gensler told Reuters on Thursday. Gensler made the comment in a written response when asked about a Reuters report that federal and state regulators were assessing the possibility of "market manipulation" behind big moves in banking share prices in recent days. "As I’ve said, in times of increased volatility and uncertainty, the SEC is particularly focused on identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly,” he said. Reporting by Chris Prentice, writing by Andrea ShalalOur Standards: The Thomson Reuters Trust Principles.
NEW YORK, May 4 (Reuters) - The practice of short selling is coming under increased scrutiny as shares of regional banks remain under pressure, with some calls for more regulatory oversight of the practice. Short sellers, who borrow shares they expect to fall and hope to repay the loan for less later to pocket the difference, have profited from the banking crisis. During the financial crisis, short selling was temporarily banned in the U.S., although a New York Federal Reserve review later showed the curb did not achieve the intended effect. The SEC declined to comment on Thursday when asked if it should impose a short selling ban. While some market participants criticized the practice, others, like non-profit group Better Markets, said short sellers warned markets about the challenges regional banks were facing.
Companies Robinhood Markets Inc FollowMay 3 (Reuters) - Massachusetts' highest court on Wednesday heard arguments on whether to revive a state fiduciary duty rule that was central to an enforcement action securities regulators filed against the online brokerage Robinhood. Lawyers for a Robinhood Markets Inc (HOOD.O) subsidiary and Massachusetts Secretary of State Bill Galvin argued before the state's Supreme Judicial Court over the legality of a 2020 state regulation, which Robinhood has said oversteps Galvin's authority. He argued that Robinhood violated the rule he adopted that raised the investment-advice standard for brokers and that its broker-dealer license in the state should be revoked. "Secretary Galvin feels strongly in the need to apply fiduciary duty standards to financial professionals," a spokesperson said. "The Robinhood case is the perfect example of the need for such a rule in Massachusetts."
May 1 (Reuters) - Regulators seized First Republic Bank (FRC.N) and sold its assets to JPMorgan Chase & Co (JPM.N) on Monday, in a deal to resolve the largest U.S. bank failure since the 2008 financial crisis and draw a line under a lingering banking turmoil. Shares of JPMorgan rose 2% on Monday, while those of mid-tier banks fell and the KBW Regional Banking Index (.KRX) closed down 2.7%. [1/3] People walk past a First Republic Bank branch in San Francisco, California, U.S. April 28, 2023. "This is not the world financial crisis, this is not the savings and loan crisis. The failed bank's 84 offices in eight states will reopen as branches of JPMorgan Chase Bank from Monday, it added.
WASHINGTON, May 1 (Reuters) - JPMorgan Chase & Co's (JPM.N) deal to buy First Republic Bank pushed the Biden administration into a corner, leaving officials scrambling to explain how their stance against mergers squared with allowing the largest U.S. bank to get even bigger. At a White House event on small business on Monday, President Joe Biden hailed the sale of the troubled San Francisco-based lender, saying it would protect all depositors and avert a government bailout. "A poorly supervised bank was snapped up by an even bigger bank — ultimately taxpayers will be on the hook," Warren tweeted. "No recent administration has done more to promote competition, address (the) concentration process across industries," she told a White House briefing. Jean-Pierre added that Biden administration officials valued the fact that community banks offer services to those who might not otherwise have banking access.
NEW YORK, April 30 (Reuters) - PNC Financial Services Group (PNC.N) and JPMorgan Chase & Co (JPM.N) were among banks set to submit final bids for First Republic Bank (FRC.N) by midday Sunday in an auction being run by U.S. regulators, sources familiar with the matter said. Citizens Financial Group Inc (CFG.N) was another bidder in the final phase of the process, according to one of the sources familiar with the matter. Guggenheim Securities is advising the FDIC, two sources familiar with the matter said on Saturday. Citizens Financial Group Inc (CFG.N) was another bidder vying for the bank, according to sources familiar with the matter on Saturday. But fearing further bank runs, regulators took the exceptional step of insuring all deposits at both Silicon Valley Bank and Signature.
NEW YORK, April 30 (Reuters) - PNC Financial Services Group (PNC.N) and JPMorgan Chase & Co (JPM.N) were among banks set to submit final bids for First Republic Bank (FRC.N) by midday Sunday in an auction being run by U.S. regulators, sources familiar with the matter. FDIC was not immediately available for comment. The banks declined to comment. Citizens Financial Group Inc (CFG.N) was another bidder vying for the bank, according to sources familiar with the matter on Saturday. Reporting by Chris Prentice and Nupur Anand, writing by Megan Davies; Editing by Paritosh BansalOur Standards: The Thomson Reuters Trust Principles.
According to the Fed, SVB's management bore significant blame and bank examiners also made grave missteps. Randal Quarles, who was appointed to the Fed by President Donald Trump in 2017, oversaw the Fed's bank supervision until his resignation in 2021. Patrick McHenry, the Republican chair of the House of Representatives Financial Services Committee, blasted the Fed report as a "thinly veiled attempt" to justify positions like those of Warren. According to the report, the 2018 law caused the Fed to raise the supervisory threshold for large banks, i.e. those smaller than the "global systemically important banks," to $100 billion in assets from $50 billion -- delaying stricter oversight of SVB "by at least three years."
Guggenheim Securities is advising the U.S. Federal Deposit Insurance Corp (FDIC) on the sale process, two sources familiar with the matter said. The process kicked off this week after First Republic, which got swept up in a banking crisis last month, failed to come up with a deal without government help, three of the sources familiar with the situation said. A deal for First Republic would come less then two months after Silicon Valley Bank and Signature Bank failed amid a deposit flight from U.S. lenders, forcing the Federal Reserve to step in with emergency measures to calm markets. A sale would bring to an end a weeks-long effort by First Republic to survive the market rout. When that deal failed to stabilize First Republic, the lender, known best for its rich clientele, tried to find other private-sector solutions.
Depositors had pulled $100 billion from accounts at the bank in the panic triggered by the SVB and Signature failures, imperiling its survival. Both SVB and Signature failed last month. Both SVB and Signature grew quickly in recent years, outpacing the ability of regulators to keep up, especially with shrinking resources. Regulators closed Signature two days after SVB was shuttered. Signature lost 20% of its total deposits in a matter of hours on the day that SVB failed, FDIC Chair Martin Gruenberg has said.
The assertion in the introduction that the Fed should focus on large bank capital requirements is disconnected from the report's conclusions. AMERICAN BANK ASSOCIATION PRESIDENT AND CEO ROB NICOLS"We take any bank failure seriously, and we will review the findings and proposed policy changes in these reports carefully, including where the conclusions may differ. JONATHAN MONDILLO, HEAD OF NORTH AMERICAN FIXED INCOME AT ABRDN"We're likely to see higher capital requirements. What that means for the overall markets is that the devil is in the details: how stringent those capital requirements will be. A potential First Republic Bank failure could similarly present a risk to the long-term investment strategy of high net-worth individuals."
June 2022*Oversight of compliance monitoring and testing*Sanctions country of interest risk managementMay 2022*Risk management program: Supervisors found that SVB's risk management program was not effective or comprehensive, and resulted in a reactive approach rather than a holistic approach to risk management and reporting to senior management and the board. *Board effectiveness: The board of SVB did not provide effective oversight of the bank's management, and did not hold senior management accountable for executing a sound risk management program. November 2021* Enhanced liquidity risk management project plan: Fed officials identified weaknesses in the bank's risk management plans and said addressing them "will likely require an accelerated effort." August 2021* Governance process for lending procedures: The Fed found a "critical gap" in underlying documents for SVB's management to implement high-level policy objectives. * Loan risk rating granularity: While the bank's risk ratings were deemed timely and accurate, the system was not "sufficiently granular" for a bank of its size.
Both SVB and Signature failed last month. Regulators shut SVB on March 10, a day after customers withdrew $42 billion and queued requests for another $100 billion the following morning. Both SVB and Signature grew quickly in recent years, outpacing the ability of regulators to keep up, especially with shrinking resources. Regulators closed Signature two days after SVB was shuttered. Signature lost 20% of its total deposits in a matter of hours on the day that SVB failed, FDIC Chair Martin Gruenberg has said.
Below are key details from the government's post-mortems, which underscore management failings at Silicon Valley Bank and Signature Bank and too-slow, too-soft responses from regulators. * In 2022, SVB failed to test its capacity to borrow at the discount window and did not have appropriate collateral and operational arrangements in place to obtain contingency funding, the U.S. central bank said. The New York-based bank's board of directors and management pursued "rapid, unrestrained growth" without adequate risk management. * The Fed's judgments of SVB were "not always appropriate" given that bank's weaknesses. A single examiner was responsible for reviewing the bank's interest-rate risk and investment portfolio, and in some cases, would also review liquidity and model risk management during a two-to-three-week timeframe.
Fed Vice Chair for Supervision Michael Barr called the review "unflinching," describing the U.S. central bank's oversight of the Santa Clara, California-based bank inadequate and regulatory standards too low. * Silicon Valley Bank was "acutely exposed" to risks from rising interest rates and slowing activity in the technology sector in ways that senior leaders and its board of directors did not appreciate. * In 2022, SVB failed to test its capacity to borrow at the discount window and did not have appropriate collateral and operational arrangements in place to obtain contingency funding. * Fed supervisors discussed conducting an interest-rate risk review of SVB during 2022 but decided to prioritize other exams and defer it to the third quarter of 2023. * The level of Fed resources dedicated to its regional bank oversight "proved insufficient."
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