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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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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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Volcker Rule 2.0 - Change May be Coming

Posted on May 21, 2018 at 2:40 PM

Wall Street may be getting a break from the Volcker rule by getting more trading freedom as a result of changes U.S. regulators are considering.The draft changes are designed to lower the burden banks face to prove that short-term trades don’t violate the rule. Regulators are also seeking to alter the definition of permitted hedging and market-making activities, to limit the rule’s impact on non-U.S. investment funds, and reduce compliance requirements for banks with trading desks...

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Multiple Regulators Fine Instinet for Market Access Rule Violations

Posted on April 15, 2018 at 3:25 PM

Instinet censured and fined a total of $1.575 million for violations of various provisions of Rule 15c3-5 of the Securities Exchange Act of 1934 (known as the Market Access Rule) and related exchange supervisory rules. The action was taken by various regulators - FINRA and others. The fine was apportioned among FINRA and the Exchanges.

In settling this matter, Instinet neither admitted nor denied the charges but consented to the entry of FINRA’s and the Exchanges’ findings.

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FINRA Proposed Rule Change Relating to the Establishment of a Second Trade Reporting Facility in Conjunction with Nasdaq, Inc.

Posted on April 11, 2018 at 2:20 PM

FINRA filed a rule change with the SEC to adopt rules relating to the establishment of a second Trade Reporting Facility or “TRF” to be operated in conjunction with Nasdaq, Inc. (“Nasdaq”). The second FINRA/Nasdaq Trade Reporting Facility (“FINRA/Nasdaq TRF Chicago”) would provide FINRA members with another mechanism for reporting over-the-counter (“OTC”) trades in NMS stocks and complying with FINRA’s requirements with respect to bac...

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Investment Adviser Settles Charges for Cheating Clients in Fraudulent Cherry-Picking Scheme

Posted on March 8, 2018 at 8:05 PM

The SEC settled charges against an Austin, Texas-based investment adviser for defrauding his clients through a “cherry-picking” scheme. Robert Mark Magee, who is the principal, sole owner, and sole employee of Valor Capital Asset Management LLC, agreed to be banned from the securities industry and pay more than $715,000 to resolve the charges.

The settlement stems from the following activities:

• Magee traded securities in Valor’s omnibus account but waite...

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SEC Charges U.K. Brokerage Firm, Investment Manager, CEO, and Others for Manipulative Trading in U.S. Microcap Stocks

Posted on March 4, 2018 at 2:35 PM

The SEC announced securities fraud charges against:

• a U.K.-based broker-dealer and its investment manager for manipulative trading in the securities of HD View 360 Inc., a U.S.-based microcap issuer;

• HD View’s CEO, another individual, and three entities they control for manipulating HD View’s securities as well as the securities of another microcap issuer, West Coast Ventures Group Corp.

The SEC also instituted an order suspending trading in the...

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Insider Bought Minutes After Warnings Not to Trade

Posted on February 28, 2018 at 6:25 PM

The SEC settled an insider trading case with a former employee of Merck & Co. who purchased 80 shares of a company that his employer was preparing to acquire in a tender offer. In announcing the settlement, the

Yang Xie, former Director of Global Health Outcomes Research for Merck, received an email from a Merck attorney discussing a contemplated merger between Merck and Cubist Pharmaceuticals, Inc. Notice was provided in the email that recipients not to trade in Cubist's stock unti...

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SEC Charges Former Bitcoin-Denominated Exchange and Operator with Fraud

Posted on February 25, 2018 at 3:10 PM

The SEC charged a former bitcoin-denominated platform and its operator (BitFunder and its founder Jon E. Montroll) with: 1) operating an unregistered securities exchange and defrauding users of that exchange; and 2) making false and misleading statements in connection with an unregistered offering of securities.

BitFunder and Montroll allegedly:

• operated BitFunder as an unregistered online securities exchange;

• defrauded exchange users by misappropriating the...

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