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☆ US Justice Dept warns of steeper penalties for firms that fall foul of messaging policies
▼ + stars: | 2023-03-03 | by ( Chris Prentice | ) www.reuters.com time to read: +3 min

MIAMI, March 3 (Reuters) - Companies may face steeper penalties for misconduct if they lack policies around employees' use of personal cell phones and messaging apps, a top U.S. Justice Department official said on Friday. The agency will evaluate how companies have crafted policies around the use of such platforms and how they have directed employees on those policies. Use of such platforms, including ephemeral messaging apps, can complicate government investigations into wrongdoing if companies do not retain the records. That is an issue that prosecutors will address as they investigate wrongdoing, Polite told Reuters in an interview. "They will be required to report back to us on an annual basis about both the design and implementation of those policies," Polite said.

☆ US Justice Dept to take on corporate policies for personal devices, messaging apps
▼ + stars: | 2023-03-03 | by ( Chris Prentice | ) www.reuters.com time to read: +1 min

MIAMI, March 3 (Reuters) - A top U.S. Justice Department official on Friday will announce details of the agency's plans to scrutinize companies' policies around employee use of personal devices and messaging apps when investigating potential misconduct. Those probes have led to hefty penalties for firms including JPMorgan Chase & Co , Barclays (BARC.L), Bank of America (BAC.N) and Morgan Stanley (MS.N). The agency has more recently opened similar probes into other firms including BlackRock Inc. Polite will also discuss details of a new Justice Department policy aimed at getting companies to tie compensation and bonuses to compliance. He and other officials have been rolling out a series of new policies aimed at tackling corporate crime and encouraging companies to be more proactive in reporting misconduct to the government.

In a statement, U.S. Assistant Attorney General Kenneth Polite called the charges a "groundbreaking" effort to prevent the misuse of so-called 10b5-1 trading plans. The U.S. Securities and Exchange Commission also announced civil insider trading charges against Peizer in a parallel action. Executives can use trading plans under rule 10b5-1 as a defense against insider trading charges by planning to sell shares in advance at predetermined times. In a recent case, the SEC in September charged Cheetah Mobile Inc's (0C9y.F) CEO and its former president with insider trading in connection with a trading plan. The SEC in December voted to make changes to the insider trading programs to address concerns over abuse.

Law firms Akin Gump Strauss Hauer & Feld LLP FollowNEW YORK, Feb 28 (Reuters) - The U.S. Commodity Futures Trading Commission (CFTC) has hired a former New York prosecutor with expertise in cryptocurrency and cyber crimes to lead its enforcement unit, the agency said in a statement on Tuesday. CFTC Chairman Rostin Behnam in the statement described McGinley as a "leader in combatting modern financial fraud". "His background as a prosecutor with unique experience in commodities, crypto, and cyber-crimes and frauds makes him an ideal person to lead the CFTC’s enforcement team," Behnam said. McGinley, whose appointment is effective immediately, replaces the CFTC's acting director of enforcement and veteran CFTC official Gretchen Lowe. Reporting by Chris Prentice Editing by Mark PotterOur Standards: The Thomson Reuters Trust Principles.

Prime Trust made $650 million in wire transfer deposits into the Binance.US account during the quarter, the bank records show. The Binance global exchange, Binance CEO Zhao and Prime Trust did not respond to detailed questions about the transfers. Among the dealers on Binance.US was Merit Peak, according to company messages, the trading firm managed by CEO Zhao. From January to March 2021, the account records show that Merit Peak received 89 transfers from the Binance.US SEN account totalling $404 million. These transfers often immediately followed a deposit into the Binance.US account by Prime Trust, the crypto custodian firm for Binance.US client funds.

[1/2] The Activision booth is shown at the E3 2017 Electronic Entertainment Expo in Los Angeles, California, U.S. June 13, 2017. REUTERS/ Mike Blake/File PhotoWASHINGTON/NEW YORK, Feb 3 (Reuters) - Activision Blizzard Inc (ATVI.O) has agreed to pay $35 million to settle U.S. Securities and Exchange Commission charges that it failed to have systems in place to properly handle employee complaints and violated whistleblower protection rules, the regulator said on Friday. The SEC said the company knew employee retention issues were "a particularly important risk in its business" but did not have adequate measures in place to manage workplace misconduct complaints between 2018 and 2021. Representatives for Activision Blizzard, which did not admit or deny the SEC's charges, said in a statement they were "pleased to have amicably resolved this matter" and had "enhanced" their workplace reporting and contract language. Microsoft Corp (MSFT.O), which makes Xbox, had made a $69 billion bid to acquire Activision Blizzard, but the Federal Trade Commission asked a judge in December to block the transaction.

☆ U.S. securities regulator probes investment advisers over crypto custody -sources
▼ + stars: | 2023-01-27 | by ( Chris Prentice | ) www.reuters.com time to read: +3 min

NEW YORK, Jan 26 (Reuters) - The U.S. Securities and Exchange Commission is probing registered investment advisers over whether they are meeting rules around custody of client crypto assets, three sources with knowledge of the inquiry told Reuters. SEC enforcement staff are asking investment advisers for details around what the firms did to assess custody for platforms including FTX, one of the sources said. By law, investment advisers cannot have custody of client funds or securities if they do not meet certain requirements to protect the assets. "This is an obvious compliance issue for investment advisers. Under Democratic leadership, the SEC has made crypto a priority area for enforcement, nearly doubling the size of its crypto team last year.

☆ With eyes on FTX bankruptcy, U.S. regulator seeks more due diligence authority
▼ + stars: | 2023-01-26 | by ( Chris Prentice | ) www.reuters.com time to read: +2 min

NEW YORK, Jan 26 (Reuters) - A top official with the U.S. Commodity Futures Trading Commission (CFTC) is pressing lawmakers to give regulators authority to dig into the books of any firm seeking to acquire significant interest in any registered market player. Without this, unregistered firms can buy their way into U.S.-regulated markets without meaningfully opening their books to regulators, she said. The Commission needs Congress to give the agency authority to conduct due diligence to protect customers and maintain market stability, she said. Questions have mounted over due diligence in crypto following a string of bankruptcies and the announcement in December of U.S. charges against FTX's founder and former head Sam Bankman-Fried for allegedly committing fraud. Reuters has previously reported details of FTX's strategy of "acquisitions for regulatory purposes", including Ledger X, which gave the company three CFTC licenses in one swoop.

☆ U.S. securities regulator awards whistleblowers more than $28 million
▼ + stars: | 2023-01-24 | by ( ) www.reuters.com time to read: +1 min

NEW YORK, Jan 24 (Reuters) - The U.S. Securities and Exchange Commission (SEC) on Tuesday said it has awarded a whistleblower payout of more than $28 million to joint tipsters who shared "critical information" for one of the agency's enforcement actions. The whistleblowers, who were not identified, provided information that prompted the opening of an SEC investigation and ultimately to a successful action, the agency said. The SEC did not disclose which enforcement action was involved. The SEC has paid more than $1.3 billion in over 300 awards to individuals for their information through fiscal 2022, the agency said in November. Its largest-ever payout of $114 million went to a single tipster in October 2020.

☆ Bloomberg to pay $5 mln to settle SEC charges related to fixed-income valuations
▼ + stars: | 2023-01-23 | by ( Chris Prentice | ) www.reuters.com time to read: +1 min

Bloomberg failed to disclose to customers of its BVAL service that its daily price valuations for fixed-income securities could be based on a single data input from at least 2016 to October 2022, the SEC said in a statement. Bloomberg did not admit or deny the SEC's charges and a spokesperson for the company declined to comment. While it found no evidence Bloomberg listed any erroneous prices, the agency said there were instances when its valuations were not derived in accordance with its stated methodologies. For a "very small fraction of total reported valuations", Bloomberg determined prices of certain fixed income securities based on "uncorroborated single broker quotes", the SEC's order said. The SEC "will hold service providers, such as Bloomberg, accountable for misrepresentations that impact investors," said Osman Nawaz, chief of the SEC enforcement division's complex financial products unit.

☆ Crypto firm Nexo Capital agrees to pay $45 mln to settle U.S. SEC, state charges
▼ + stars: | 2023-01-19 | by ( Chris Prentice | ) www.reuters.com time to read: +1 min

NEW YORK, Jan 19 (Reuters) - Nexo Capital Inc has agreed to pay $45 million in penalties to settle charges from the U.S. Securities and Exchange Commission and state regulators that the crypto firm failed to register its crypto asset lending product, the SEC said on Thursday. Nexo has agreed to pay a $22.5 million penalty to the SEC and another $22.5 million in fines to state regulators in relation to its Earn Interest Product to U.S. investors, the SEC said in a statement. Nexo began to offer its lending product around June 2020, allowing U.S. investors to give their crypto assets to the company in exchange for a promise of interest, the SEC said. The company ceased offering the product to new investors after the SEC announced similar charges against another company in February 2022. Last week, the SEC sued Genesis Global Capital LLC and Gemini Trust Company LLC for their lending product.

WASHINGTON, Jan 18 (Reuters) - U.S. authorities said on Wednesday they have arrested the majority shareholder and cofounder of Hong Kong-registered virtual currency exchange Bitzlato Ltd for allegedly processing $700 million in illicit funds. It also broke rules requiring significant vetting of customers and failed to meet requirements aimed at preventing money laundering, authorities said. REUTERS/Dado Ruvic/Illustration 1 2Prosecutors said Bitzlato knowingly serviced U.S. customers and conducted transactions with U.S.-based exchanges using U.S. online infrastructure. "Identifying Bitzlato as a primary money laundering concern effectively renders the exchange an international pariah," Deputy Treasury Secretary Wally Adeyemo said at the news conference. "None of the mainstream financial institutions will deal with an entity identified as a primary money laundering concern," she said.

The CFTC already allows self-certification for exchanges to list contracts for other products, such as commodities. Lawmakers were considering a similar process as part of proposed crypto legislation being hammered out last year. But CFTC Commissioner Christy Goldsmith Romero said the process would open the door to "regulatory arbitrage" as some crypto assets are likely securities that need to be overseen by a different agency, the Securities and Exchange Commission (SEC). Federal prosecutors have brought charges against three of FTX's former top executives, accusing them defrauding investors and misappropriating customer funds. "Gatekeepers should have seriously questioned the operational environment at FTX in the lead-up to its meltdown,” she said.

REUTERS/Dado Ruvic/IllustrationWASHINGTON, Jan 18 (Reuters) - U.S. authorities said on Wednesday they have arrested the majority shareholder and cofounder of Hong Kong-registered virtual currency exchange Bitzlato Ltd for allegedly processing hundreds of million of dollars in illicit funds. The action, done in conjunction with the U.S. Treasury Department's Financial Crimes Enforcement Network and foreign authorities, marked the first major action by the Justice Department's National Cryptocurrency Enforcement Network. Treasury's Financial Crimes Enforcement Network (FinCEN) said it has prohibited certain transmittals of funds involving Bitzlato by any covered financial institution after labeling Bitzlato Ltd a "money laundering concern" related to Russian illicit finance. By midday Wednesday, Bitzlato's website was replaced by a notice saying that the service had been seized by French authorities "as part of a coordinated international law enforcement action." Reporting by Daphne Psaledakis, Raphael Satter, Kanishka Singh, Chris Prentice Writing by Chris Prentice; Editing by David GregorioOur Standards: The Thomson Reuters Trust Principles.

Genesis, a part of Digital Currency Group, entered into a deal with Gemini in December 2020 to offer Gemini customers the chance to loan their crypto assets to Genesis in exchange for earning interest, the SEC said. Beginning in February 2021, they raised billions of dollars' worth of crypto assets from investors, the SEC said. The firms violated securities laws through the offer and sale of crypto assets through their Gemini Earn product, the SEC said. In November 2022, Genesis told investors they could not withdraw their crypto assets as volatility in the crypto markets prompted a liquidity crunch. Gemini and other Genesis creditors have been agitating for a solution to avoid a situation similar to FTX's rapid descent into bankruptcy.

☆ U.S. SEC charges McDonald's ex-CEO for misrepresentations to investors
▼ + stars: | 2023-01-09 | by ( Chris Prentice | ) www.reuters.com time to read: +2 min

[1/2] Steve Easterbrook, CEO of McDonald's Corp., attends the annual Allen and Co. Sun Valley media conference in Sun Valley, Idaho, U.S., July 10, 2019. REUTERS/Brendan McDermidNEW YORK, Jan 9 (Reuters) - The U.S. Securities and Exchange Commission (SEC) on Monday charged former McDonald's Corp Chief Executive Stephen Easterbrook with making false and misleading statements to investors about the circumstances of his 2019 termination. The SEC hit Easterbrook with a five-year officer and director bar and a $400,000 civil penalty. McDonald's fired Easterbrook in November 2019 for exercising "poor judgment" by engaging in a relationship with a McDonald's employee, the SEC said. McDonald's said in a statement that the settlement reinforced the fact it held Easterbrook "accountable for his misconduct."

Senator Richard Burr said on Friday that the U.S. Securities and Exchange Commission informed him this week it has concluded investigation concerning him with no action. U.S. authorities investigated Burr, a North Carolina lawmaker who did not seek reelection last year, for his stock trades before the downturn caused by the coronavirus pandemic. Burr denied any wrongdoing and said he relied solely on news reports to make decisions on his stock transactions. He said in January 2021 the Justice Department had closed a related probe. Reporting by Nate Raymond Additional reporting and writing by Chris Prentice, Editing by Franklin Paul and Philippa FletcherOur Standards: The Thomson Reuters Trust Principles.

☆ U.S. securities regulator probes FTX investors' due diligence -sources
▼ + stars: | 2023-01-05 | by ( Chris Prentice | ) www.reuters.com time to read: +3 min

REUTERS/Dado Ruvic/Illustration/File PhotoNEW YORK, Jan 5 (Reuters) - The U.S. Securities and Exchange Commission (SEC) is seeking details about FTX investors' due diligence, according to two sources familiar with the inquiry, as fallout from the crypto firm's collapse spreads. Reuters and others previously reported that U.S. authorities sent document requests to investors and potential investors in FTX, seeking details on their communications with FTX officials. Those inquiries predated last month's SEC charges against FTX founder Sam Bankman-Fried for allegedly defrauding such investors. The SEC's inquiries to investors have continued after SEC filed those charges, and the agency has now shifted its focus to the firms' diligence, the sources said. FTX filed for bankruptcy in November amid what its new CEO later described as a "complete failure of corporate controls".

☆ Coinbase to pay $50 mln to settle NY state investigation, invest $50 mln in compliance
▼ + stars: | 2023-01-04 | by ( Industry Insight | Saw Law Firms Move Past The Pandemic Into A More Client-Focused Service Environment | Thomson Reuters Institute | ) www.reuters.com time to read: +2 min

WASHINGTON, Jan 4 (Reuters) - U.S.-based cryptocurrency exchange Coinbase Inc (COIN.O) has reached a $100 million settlement with New York's Department of Financial Services (DFS), the exchange and the regulator said in statements on Wednesday. The settlement, which includes a $50 million penalty, caps the regulator's investigation into the firm's compliance with requirements to prevent money laundering. “Coinbase failed to build and maintain a functional compliance program that could keep pace with its growth. That failure exposed the Coinbase platform to potential criminal activity," said New York DFS Superintendent Adrienne Harris. Coinbase, a publicly traded firm and one of the largest global crypto exchanges, will pay another $50 million to boost compliance efforts aimed at blocking potential criminals from using the exchange, the company said.

Bankman-Fried is accused of illegally using FTX customer deposits to support his Alameda Research hedge fund, buy real estate and make millions of dollars in political contributions. He is scheduled to appear at 2 p.m. EST (1900 GMT) on Tuesday before U.S. District Judge Lewis Kaplan in Manhattan to enter a plea. It is not unusual for criminal defendants to initially plead not guilty. Bankman-Fried has admitted to making mistakes running FTX but said he did not believe he was criminally liable. The prosecution case was strengthened by last month's guilty pleas of two of Bankman-Fried's closest associates.

☆ Prosecutors charge two top executives in connection with FTX collapse
▼ + stars: | 2022-12-22 | by ( ) www.reuters.com time to read: +1 min

WASHINGTON, Dec 21 (Reuters) - Federal prosecutors on Wednesday said they have charged Caroline Ellison, the former CEO of Alameda Research, and Zixiao (Gary) Wang, the former Chief Technology Officer of FTX Trading Ltd. (FTX) with defrauding investors in the crypto trading platform. U.S. Attorney Damian Williams said in a video statement that both Wang and Ellison have pleaded guilty to the charges and have agreed to cooperate with prosecutors. He said that Sam Bankman-Fried, founder of FTX, is now in FBI custody and is on his way to the United States. Williams also gave a stark warning in the video: "If you participated in misconduct at FTX or Alameda, now is the time to get ahead of it. Reporting by Chris Prentice and Luc Cohen; Editing by Megan Davies & Shri NavaratnamOur Standards: The Thomson Reuters Trust Principles.

NEW YORK, Dec 20 (Reuters) - Two Morgan Stanley (MS.N) equity syndicate bankers, Pawan Passi and Charles Leisure, are no longer listed as registered brokers at the Wall Street firm, according to industry regulator FINRA's website. His FINRA profile includes a disclosure about a pending customer dispute that alleges "misrepresentation with respect to block trading" in 2021. The broker registration for Leisure, an executive director, also ended Dec. 16, his FINRA profile showed. Arnaud Blanchard became the head of the equity syndicate desk in New York earlier this year, according to his LinkedIn profile. Morgan Stanley in February disclosed that U.S. regulators and prosecutors were probing various aspects of the investment bank's block trading business.

OAKLAND, Calif., Dec 19 (Reuters) - Mark Zuckerberg considered saying in a 2017 speech that Facebook was looking into "organizations like Cambridge Analytica," according to details from a deposition of him by the U.S. Securities and Exchange Commission. Zuckerberg in the deposition also acknowledges asking colleagues in January 2017 to assess Cambridge's claims about its influence in elections. Media reports in March 2018 suggested that Cambridge kept leveraging Facebook data, prompting government investigations related to data protection practices that Facebook settled in the United States for at least $5.1 billion. In the draft obtained by the SEC, Zuckerberg proposed saying: "We are already looking into foreign actors including Russian intelligence, actors in other former Soviet states and organizations like Cambridge Analytica." Zamaan Qureshi, policy advisor for consumer advocacy group The Real Facebook Oversight Board, said the deposition should increase users' doubts of Meta.

Dec 20 (Reuters) - Wells Fargo & Co (WFC.N) agreed to pay $3.7 billion to settle charges from a U.S. consumer watchdog over widespread mismanagement of car loans, mortgages and bank accounts, the regulator said Tuesday. "Wells Fargo is a corporate recidivist that puts one-third of American households at risk of harm,” CFPB Director Rohit Chopra told journalists in a briefing. Shares of Wells Fargo were down less than 1% in late morning trading. Wells Fargo has faced multiple enforcement actions taken by the CFPB and other banking regulators for violations across the bank's business lines. Scharf became CEO in 2019, the fourth person to lead Wells Fargo since the scandal emerged.

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