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The Policy Patty Toolkit Blog covers emerging issues on governance, risk and compliance controls.

This Blog is made available by the Policy Patty Toolkit for informational purposes only to cover emerging legal, governance, regulatory and compliance matters and issues. The postings are not intended to provide specific professional advice (legal, tax, or accounting) to an identified problem or issue. By using this Blog, you understand and acknowledge that there is no attorney-client relationship formed between us and should not use this site as a substitute for legal advice from your legal counsel regarding a particular matter or advice from another professional.

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NYS DFS Fines Deutsche Bank AG $205 Million for Unlawful, Unsafe and Unsound Conduct in its Foreign Exchange Trading Business

Posted on June 20, 2018 at 1:00 PM

The NY Department of Financial Services (“DFS”) announced that Deutsche Bank AG has agreed to pay a fine of $205 million as part of a consent order for violations of New York banking law, including efforts to improperly coordinate trading activity through online chat rooms, improperly sharing confidential customer information, trading aggressively to skew prices, and misleading customers. The violations announced today stem from an investigation by DFS into the bank’s F...

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Merrill Lynch Admits to Misleading Customers about Trading Venues

Posted on June 19, 2018 at 2:55 PM

The SEC charged Merrill Lynch, Pierce, Fenner & Smith with misleading customers about how it handled their orders. Merrill Lynch agreed to settle the charges, admit wrongdoing, and pay a $42 million penalty.

According to the SEC’s order, Merrill Lynch:

  • Falsely informed customers that it had executed millions of orders internally when it actually had routed them for execution at other broker-dealers, including proprietary trading firms and wholesale market makers. &...
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City of Chicago Issues New Data Protection Ordinance

Posted on June 18, 2018 at 1:25 PM

The City of Chicago recently introduced the Personal Data Collection, and Protection Ordinance (“the Ordinance”) requiring: (1) prior opt-in consent from Chicago residents to use, disclose or sell their personal information; (2) notice to affected Chicago residents and the City of Chicago in the event of a data breach; (3) registration requirements if business qualifies as “data brokers;” (4) specific notification to mobile device users for location services; and ...

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Former Executives at Publicly Traded Transportation Company Charged with $245 Million Accounting and Securities Fraud Scheme

Posted on June 18, 2018 at 8:15 AM

The Department of Justice (DOJ) announced that two former executives of Roadrunner Transportation Systems Inc., a publicly traded transportation and trucking company formerly headquartered in Cudahy, Wisconsin, were charged in an indictment for their alleged participation in a complex accounting and securities fraud scheme that resulted in a loss of more than $245 million in shareholder value.

Mark R. Wogsland and Bret S. Naggs were charged with:

• one count of conspiracy to...

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DOJ Announces Nurse Practitioner Pleads Guilty in Compounding Pharmacy Fraud Scheme

Posted on June 16, 2018 at 8:45 AM

The DOJ announced that a Mississippi-based nurse practitioner pleaded guilty for her role in a scheme to defraud health care benefit programs including TRICARE, the health care benefit program serving U.S. military, veterans and their respective family members. Susan K. Perry pleaded guilty to one count of conspiracy to commit health care fraud and is scheduled to be sentenced in September. Perry was charged in a 13-count indictment and had been scheduled to begin trial on June 26.

As ...

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European Commission welcomes agreement on stronger rules criminalizing money laundering

Posted on June 13, 2018 at 4:00 PM

The European Commission issued a statement on June 8th announcing more robust rules on the criminalization of money laundering and penalties for offenses. The new rules were first proposed in December 2016 and are intended to align money laundering offenses and sanctions throughout the European Union (EU), with a special emphasis on terrorism financing.

Directive’s Objective

The new directive aims at blocking access by criminals to financial resources, including those used f...

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SEC Charges Merrill Lynch for Failure to Supervise RMBS Traders

Posted on June 12, 2018 at 2:45 PM

The SEC announced that Merrill Lynch, Pierce, Fenner & Smith Inc. will pay more than $15 million to settle charges that its employees misled customers into overpaying for Residential Mortgage Backed Securities (RMBS). Merrill Lynch agreed to repay more than $10.5 million to its customers and to pay penalties of approximately $5.2 million.

In its order, the SEC found:

  • Merrill Lynch traders and salespersons convinced the bank’s customers to overpay for RMBS by deceiv...
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FINRA's Proposed Rule Change to Extend the Implementation of FINRA Rule 4240 (Margin Requirements for Credit Default Swaps)

Posted on June 12, 2018 at 8:30 AM

FINRA filed with the SEC a proposed rule change to extend to July 18, 2019 the implementation of FINRA Rule 4240. FINRA Rule 4240 implements an interim pilot program with respect to margin requirements for certain transactions in credit default swaps that are security-based swaps

On May 22, 2009, the Commission approved FINRA Rule 4240, which implements an interim pilot program (the “Interim Pilot Program”;)with respect to margin requirements for certain transactions in cred...

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FTC Action Halts MOBE, a Massive Internet Business Coaching Scheme

Posted on June 11, 2018 at 3:50 PM

The FTC charged three individuals and nine businesses with bilking more than $125 million from thousands of consumers with a fraudulent business education program called MOBE (“My Online Business Education”). A federal court halted the scheme and froze the defendants’ assets at the FTC’s request.

According to the FTC:

  • The defendants behind this international operation target U.S. consumers—including service members, veterans, and older adultsR...
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FINRA Proposes Rule Change to Amend the Security Futures Risk Disclosure Statement

Posted on June 9, 2018 at 9:10 AM

FINRA is filing with the SEC a proposed rule change to update the 2002 security futures risk disclosure statement (“2002 Statement” or “Statement”). The proposed changes would incorporate prior supplements pertaining to Sections 5.2 (Settlement by Physical Delivery) and 8.1 (Corporate Events), make a technical change to Section 5.2 to reflect that the normal clearance and settlement cycle for securities transactions is now two business days, amend Section 6.1 (Protecti...

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