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Tag: FINMA

  • BULLETIN: Traders Operated ‘The Cartel’; Banks Charged Criminally

    breakingnews72Forex traders at four multinational banks — Citicorp, JPMorgan Chase & Co., Barclays PLC and Royal Bank of Scotland plc — formed “The Cartel” and conspired to manipulate the prices of the U.S. dollar and the euro, the U.S. Department of Justice said today.

    All four banks have been charged criminally in an investigation that began when Eric Holder was Attorney General, said Loretta Lynch, Holder’s successor.

    UBS AG, a fifth multinational, has been charged criminally with manipulating the London Interbank Offered Rate (LIBOR) and other benchmark interest rates, the Justice Department said. The UBS prosecution came about after the agency ripped up an earlier nonprosecution agreement (NPA) with bank, alleging that UBS had violated the terms of a pact reached in December 2012 to resolve the LIBOR matter.

    Barclays also breached an NPA struck in June 2012 over the LIBOR matter and has agreed to pay an additional $60 million, the Justice Department said.

    The charges, all felonies, include conspiring to fix prices and rig bids. They are filed against Citicorp, Barclays, JPMorgan and RBS.

    A felony charge of wire fraud was filed against UBS, the Justice Department said.

    “In other words,” Lynch said, according to her prepared remarks released by the Justice Department, “UBS promised, in other resolutions, not to commit additional crimes — but it did.”

    As for Citicorp, Barclays, JPMorgan and RBS, Lynch said, “Starting as early as December 2007, currency traders at several multinational banks formed a group dubbed ‘The Cartel.’ It is perhaps fitting that those traders chose that name, as it aptly describes the brazenly illegal behavior they were engaged in on a near-daily basis. For more than five years, traders in ‘The Cartel’ used a private electronic chatroom to manipulate the spot market’s exchange rate between euros and dollars using coded language to conceal their collusion.”

    All five of the banks have agreed to plead guilty to the criminal charges at the “parent level,” the Justice Department said.

    Here, according to the Justice Department, are the market-manipulation timelines and the agreed-to criminal fines:

    • Citicorp, involved from as early as December 2007 until at least January 2013, $925 million.
    • Barclays, involved from as early as December 2007 until July 2011, and then from December 2011 until August 2012, $650 million.
    • JPMorgan, involved from at least as early as July 2010 until January 2013, $550 million.
    • RBS, involved from at least as early as December 2007 until at least April 2010, $395 million.
    • UBS (for NPA breach that occurred after December 2012), $203 million.

    A statement by the Justice Department includes the type of language the agency normally directs at street criminals when it is trying to send a message. In this instance, however, the language is directed at the banks. From the statement (italics added):

    Citicorp, Barclays, JPMorgan, RBS and UBS have each agreed to a three-year period of corporate probation, which, if approved by the court, will be overseen by the court and require regular reporting to authorities as well as cessation of all criminal activity.  All five banks will continue cooperating with the government’s ongoing criminal investigations, and no plea agreement prevents the department from prosecuting culpable individuals for related misconduct.  Citicorp, Barclays, JPMorgan and RBS have agreed to send disclosure notices to all of their customers and counter-parties that may have been affected by the sales and trading practices described in the plea agreements.

    Today, in connection with its FX investigation, the Federal Reserve also announced that it was imposing on the five banks fines of over $1.6 billion; and Barclays settled related claims with the New York State Department of Financial Services (DFS), the Commodity Futures Trading Commission (CFTC) and the United Kingdom’s Financial Conduct Authority (FCA) for an additional combined penalty of approximately $1.3 billion.  In conjunction with previously announced settlements with regulatory agencies in the United States and abroad, including the Office of the Comptroller of the Currency (OCC) and the Swiss Financial Market Supervisory Authority (FINMA), today’s resolutions bring the total fines and penalties paid by these five banks for their conduct in the FX spot market to nearly $9 billion. 

    Holder, Lynch said, “oversaw this investigation from its inception.

    “His relentless work made this resolution possible, and I want to thank him for his commitment to this important effort,” she said.

    Lynch replaced Holder last month.

  • BULLETIN: Man Implicated By Jamaica In Alleged $326 Million Ponzi Known As ‘Cash Plus’ Now Accused By United States Of Orchestrating Separate HYIP Scheme That Funneled Cash To Latvian And Jamaican Accounts

    EDITOR’S NOTE: You might feel a chill after reading the story below about Bertram A. Hill and co-defendants implicated by the SEC in an international fraud scheme that ensnared investors in the United States and Europe. The SEC case includes an allegation that U.S. retail brokers were solicited to push unqualified clients to a murky Massachusetts firm that funneled business to Hill, who was suspended by FINRA in 2002, had an unpaid FINRA fine of $5,000 and yet somehow was operating under the radar. If that’s not shocking enough, Hill already had been implicated by Jamaican authorities in a Ponzi scheme that allegedly gathered hundreds of millions of dollars — and yet allegedly still was able to line up millions of dollars from new investors more than two years after being charged criminally with fraud in Jamaica. Records show the case in Jamaica was brought in April 2008. The new scheme, according to the SEC, began in December 2010, about two months ago. Accounts from Jamaican media in 2008 noted that “heavily armed police officers” were patrolling the grounds during a court appearance by Hill and his brother, Carlos Hill, in 2008. A “handful” of protesters unhappy that arrests had been made demanded that Carlos Hill, the alleged mastermind of the Jamaican scheme, be set free, according to the Jamaica Observer. (See link at bottom of story.) Among the victims in the later-to-emerge scheme, which the SEC alleged was unrelated to the Jamaican scheme, were a “boarding school for boys” in Brandon, Fla., a retired school teacher from California, an unidentified U.S. investor who plowed about $250,000 into the scheme, an investor in the United Kingdom who plowed at least $1.3 million into the scheme and an investor in Switzerland who plowed more than $1.8 million into the scheme.

    “[T]hese securities were fictitious and nearly $3 million of investor funds were quickly wired out of the country to accounts in Latvia and Jamaica,” the SEC charged.

    BULLETIN: The SEC has filed an emergency action in federal court in New Jersey to halt a “Swiss debentures” scheme allegedly operated in the United States by a man charged criminally in Jamaica with laying waste to investors in a $326 million Ponzi scheme.

    U.S. District Judge Anne E. Thompson has frozen the assets of the defendants in the U.S. case, while also ordering the repatriation of assets and expedited discovery.

    The Jamaican scheme, which was exposed in 2008, is known as “Cash Plus.” It has become the subject of global intrigue and an international money-chase, playing out not only in the Caribbean but also in venues such as Europe and the emirate of Dubai in the Persian Gulf. Dubai is one of seven emirates of the United Arab Emirates.

    The alleged U.S.-based scheme appears to have begun in late 2010 and has the hallmarks of a prime-bank/HYIP hybrid that promised spectacular returns of up to 100 percent monthly, according to the SEC complaint.

    Investigators said the U.S. case against Bertram A. Hill was “unrelated” to the alleged Jamaican fraud for which he faces trial this year, but that millions of dollars had been “spirited” to Latvia and Jamaica from bank and brokerage accounts in the United States without investors’ knowledge or permission.

    Hill, according to the SEC allegations, was booted by the Financial Industry Regulatory Authority (FINRA) amid customer complaints 2002. FINRA, the SEC said, leveled a $5,000 fine against Hill that remains unpaid

    Hill, whose age was not immediately known, resides in Red Bank, N.J., according to court filings. The SEC said he presided over a company known as Secure Capital Funding Corp. (SCF), which purported to be a subsidiary of a firm known as “ST Underwriters.”

    ST Underwriters, the SEC said, held itself out as a “private banking group” operating out of Panama and as a subsidiary of a company known as “Secure Trust.”

    Although Secure Trust “purports to be a business operating in Switzerland,” the SEC said, it “is not authorized by the Swiss Financial Markets Supervisory Authority . . . to do financial business in Switzerland and is on FINMA’s published “black list.”

    A mysterious company known as PP&M Trade Partners, which purported to be located in Elkart Ind., also was part of the fraud, the SEC alleged. PP&M was under the control of Kiavanni Pringle of Metheun, Mass., according to the agency.

    Pringle, whose age was not immediately known, also has been named a co-defendant in the case. Despite the assertion PP&M was operating as a financial-services business in Indiana, the Indiana location proved to be a “warehouse where another business with which Mr. Pringle was previously associated stores televisions and other merchandise,” the SEC said.

    PP&M actually was operating from Pringle’s home in Massachusetts and had “no clients” prior to November 2010, the SEC said.

    Pringle and PP&M used “multiple, detailed websites” to engage retail brokers to find investors for the scheme, the SEC alleged. The brokers were offered “commissions” of up to 4 percent from purported “gains” enjoyed by clients.

    “None of the offerings and sales of purported Swiss debentures made by Defendants beginning in December 2010 have been registered with the Commission by an issuer in accordance with the federal securities laws,” the SEC said. “At least some of the sales made by Defendants have been made to persons who did not qualify as ‘accredited investors’ so as to exempt Defendants from the obligation to register the securities offerings and make required disclosures. None of the Defendants ever sought or obtained an exemption from the registration requirements.”

    Read the stunning SEC complaint, which asserts that at least some of the investors didn’t even know with whom they were doing business because the “true identities” of the alleged schemers were not disclosed.

    Read a 2008 story in the Jamaica Observer that outlines allegations made against Hill nearly three years before a new scheme allegedly took root in the United States.