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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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SEC Suspends Trading in Company for Making False Cryptocurrency-Related Claims about SEC Regulation and Registration

Posted on October 22, 2018 at 1:45 PM

The SEC suspended trading in the securities of a company amid questions surrounding its statements about partnering with a claimed SEC-qualified custodian for use with cryptocurrency transactions and a purportedly registered public offering of preferred stock.

The SEC’s trading suspension order says that two August 2018 press releases issued by Nevada-based American Retail Group, Inc. (OTC: ARGB) aka Simex, Inc. claimed that the company had partnered with an SEC qualified custodia...

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FINRA Amends Capital Acquisition Broker Rule 331 to Conform to FinCEN's Final Rule on Customer Due Diligence Requirements for Financial Institutions

Posted on October 21, 2018 at 5:25 PM
FINRA filed for immediate effectiveness amendments to Capital Acquisition Broker (CAB) Rule 331 (Anti-Money Laundering Compliance Program) to reflect the Financial Crimes Enforcement Network's (FinCEN) adoption of a final rule on Customer Due Diligence Requirements for Financial Institutions (CDD Rule). On November 21, 2017, FINRA published Regulatory Notice 17-40 to provide guidance to member firms regarding their obligations under FINRA Rule 3310 (Anti-Money Laundering Compliance Program) ... Read Full Post »

Regulatory Notice 18-35 - SEC Approves Rule Change to Modify the Dissemination Protocols for Agency Debt Securities

Posted on October 17, 2018 at 1:45 PM

The SEC approved a rule change to modify the dissemination protocols for transactions in agency debt securities to apply a $5 million dissemination cap uniformly, regardless of the rating assigned to the security.

FINRA disseminates transaction information on agency debt securities and displays either the actual size (volume) of the transaction or a capped amount, depending on the size of the transaction and the rating assigned to the security. Currently, for transactions in agency ...

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SEC Investigative Report: Public Companies Should Consider Cyber Threats When Implementing Internal Accounting Controls

Posted on October 17, 2018 at 1:20 PM

The SEC issued an investigative report cautioning that public companies should consider cyber threats when implementing internal accounting controls. The report is based on the SEC Enforcement Division's investigations of nine public companies that fell victim to cyber fraud, losing millions of dollars in the process.

The SEC's investigations focused on "business email compromises" (BECs) in which perpetrators posed as company executives or vendors and used emails to dupe company person...

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DOJ Issues New Guidance on Compliance Monitors

Posted on October 16, 2018 at 7:20 PM
Brian Benczkowski, Assistant Attorney General for the Criminal Division of the United States Department of Justice (DOJ), announced the "Selection of Monitors in Criminal Division Matters" memorandum (the Benczkowski Memorandum). The Benczkowski Memorandum supplements the existing 2008 Selection and Use of Monitors in Deferred Prosecution Agreements and Non-Prosecution Agreements with Corporations (the Morford Memorandum) and replaces prior guidance issued in 2009 by then Assistant Attorney Gene... Read Full Post »

FINRA Monthly Disciplinary Actions October 2018

Posted on October 15, 2018 at 9:25 PM
FINRA issued its monthly disciplinary actions report. It reported 11 cases (AWC's) involving member firms and 28 cases involving associated persons. FINRA also reported complaints against 8 individuals. INDIVIDUALS' CASES. Fines for cases involving individuals ranged from $5K to $15K, restitutions ranged up to $240K, and suspensions ranged up to 24 months. Five individuals were barred for refusing/failing to cooperate with FINRA investigations. Among the topics covered in these cases... Read Full Post »

DFS Finds Multiple Deficiencies in Bank???s Compliance with Anti-Money Laundering Laws and Office of Foreign Asset Controls Regulations

Posted on October 12, 2018 at 10:05 AM

NY's Department of Financial Services (DFS) announced that it had fined United Arab Emirates-based Mashreqbank PSC and its New York branch $40 million for violations of U.S. Bank Secrecy Act (BSA) and Anti-Money Laundering (AML) laws in the New York branch’s U.S. dollar clearing operations. Under a consent order, Mashreqbank must:

  • Immediately hire a third-party compliance consultant to oversee and address deficiencies in the branch’s compliance function, including c...

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SEC Stops Fraudulent ICO That Falsely Claimed SEC Approval

Posted on October 11, 2018 at 2:05 PM

The SEC announced that it has obtained an emergency court order halting a planned initial coin offering (ICO), which backers falsely claimed was approved by the SEC. The order also halts ongoing pre-ICO sales by the company, Blockvest LLC and its founder, Reginald Buddy Ringgold, III.

An SEC complaint unsealed alleged that:

  • Blockvest falsely claimed its ICO and its affiliates received regulatory approval from various agencies, including the SEC. 
  • Blockvest and Ri...
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DOJ Enforcement Actions - Week of October 8, 2018

Posted on October 10, 2018 at 9:55 AM

The Department of Justice (DOJ) actions and enforcement matters for the week include:

Tuesday, October 9, 2018

Texas Hospital Administrator Convicted of Health Care Fraud for Role in $16 Million Medicare Fraud Scheme

Tuesday, October 9, 2018

Former Manager for a Colorado Resort Sentenced to Prison for Tax Fraud

Tuesday, October 9, 2018

Miami-Area Pharmacy Owner Pleads Guilty for Role in $8.4 Million Medicare Fraud Scheme

Tuesda...

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California Enacts a First-of-Its-Kind Commercial Financing Disclosure Law

Posted on October 9, 2018 at 1:55 PM

California Governor Jerry Brown signed into law SB 1235 (the Act), which requires disclosures of key terms in connection with certain commercial financing by non-banks and could impact bank/non-bank arrangements as well. California now becomes the first state to require consumer-style disclosures for commercial financing. The Act helps comparisons of financing options by recipients of covered financing offers by establishing a general framework for the disclosure requirements. The Act becomes...

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