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Tag: Swiss Financial Market Supervisory Authority

  • 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.

  • SEC: Penny-Stock Scammers Used ‘Intricate Web Of Offshore Corporations, Foreign Accounts, And Financial Institutions . . . In Canada, Nevis, Panama, Switzerland, And The Turks And Caicos Islands’

    breakingnews72Two Canadians have been charged by the SEC in an alleged pump-and-dump scheme that included a reverse merger between a “shell public company” and a startup, “blast emails” and a concerted hype campaign, the U.S. agency said.

    Named defendants are Bruce D. Strebinger, 38, of Vancouver, and Brent Howard Chapman, 38, who “is or has been residing in Antigua,” the SEC said. The complaint is filed in U.S. District Court for the Northern District of Georgia.

    “Strebinger and Chapman rigged a penny stock in their favor while staging a massive promotional campaign,” said William P. Hicks, associate director for enforcement in the SEC’s Atlanta Regional Office. “They disguised their scheme by dumping their shares in relatively small amounts over extended periods of time, and they attempted to hide their proceeds from U.S. regulators by routing them through offshore accounts.”

    The shell was known as Americas Energy Company-AECo. Its stock was suspended, with the company being liquidated in bankruptcy, the SEC said. The other company was a startup coal mining and oil and gas exploration business based in Nashville, Tennessee” that became known as Americas Energy Company Inc.

    From the complaint (italics added):

    The promotion began in September 2009 and continued through April 2010. While the promotion continued and the Stock price soared, Strebinger and Chapman sold their Stock for $17 million through offshore accounts, including accounts with Swiss financial institutions in the names of three entities: (1) Muskateer Investments, Inc. (“Muskateer”), beneficially owned by Strebinger; (2) Furla Blue SpA (“Furla”), beneficially owned by Strebinger’s wife, Anne Strebinger (“Strebinger’s Wife” ); and (3) Lance Investments S.A. (“Lance), beneficially owned by Chapman.”

    The promotion increased investor demand for the Stock and enabled Strebinger and Chapman to reap huge profits through sales of the Stock while simultaneously concealing from investors not only that Strebinger and Chapman owned a significant portion of Americas Stock, but also that it was Strebinger and Chapman who were together marketing and funding a multi-million dollar promotional campaign related to the Stock.”

    All in all, the SEC charged, the duo sold their shares “through an intricate web of offshore corporations, foreign accounts, and financial institutions located in Canada, Nevis, Panama, Switzerland, and the Turks and Caicos Islands.”

    Assisting in the probe were the British Columbia Securities Commission, the Swiss Financial Market Supervisory Authority and the Financial Industry Regulatory Authority, the SEC said.

  • URGENT >> BULLETIN >> MOVING: CFTC Chairman Issues Extraordinary Statement In Response To Congressional Proposal To Cut Agency Budget In Wake Of White-Collar Fraud Epidemic And Expanded Responsibilities

    UPDATED 9:05 P.M. EDT (U.S.A.) The white-collar fraud epidemic has become a political football — one that actually uses a football analogy. This is a statement from Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission:

    “The result of the House bill is to effectively put the interests of Wall Street ahead of those of the American public by significantly underfunding the agency Congress tasked to oversee derivatives – the same complex financial instruments that helped contribute to the most significant economic downturn since the Great Depression.

    “The CFTC’s hardworking staff is just 10 percent more in numbers than at our peak in the 1990s, yet Congress has now directed the agency to oversee the swaps market that is eight times larger than the futures market. Picture the NFL expanding eightfold to play more than 100 football games in a weekend, leaving just one referee per game, and, in some cases, no referee. Imagine the mayhem on the field, the resulting injuries to players, and the loss of confidence fans would have in the integrity of the game.

    “We would not want similar mayhem and loss of confidence in markets so critical to farmers, ranchers and end users that may result from this bill’s significant underfunding of the CFTC.”

    The statement comes on the heels of vote by the House Appropriations Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies to cut the CFTC budget, the agency said on its website.

    It also occurred on the same day the CFTC announced that it had filed and simultaneously settled charges against Luis Salazar-Correa of Las Vegas.

    Salazar-Correa and his Nevada-based company, Prosperity Team LLC, were accused of fraudulently soliciting at least 183 individuals and drafting them into a Forex Ponzi scheme that gathered at least $2.482 million.

    Demonstrating that the fraud epidemic is a global plague and that the world’s antifraud agencies are cooperating in a bid to tame the beast, CFTC thanked the Cyprus Securities and Exchange Commission, the International Financial Services Commission of Belize, the Swiss Financial Market Supervisory Authority and the U.K. Financial Services Authority for assisting in the Salazar-Correa/Prosperity Team probe.

    CFTC also thanked the FBI, the SEC and the U.S. Attorney’s Office in Nevada.

    In March Congressional testimony, Gensler said the agency needed both more employees and more money to carry out its tasks.

    The CFTC, Gensler said in March, needed to add about 305 employees to its current staff of 710 to keep up with its expanded responsibilities. It also needed an additional outlay of tens of millions of dollars, the chairman said.

    But Rep. Jack Kingston, a Georgia Republican, apparently has joined other politicians in advancing a bill that would slash $25 million from CFTC’s current budget of about $205 million.

    In the era of white-collar fraud, the proposed bill would provide the CFTC only $25,000 “for the expenses for consultations and meetings hosted by the Commission with foreign governmental and other regulatory officials.”

     

  • BULLETIN: CFTC Moves Against Alleged Texas Forex Fraudster Christopher B. Cornett; Agency Says Huckster Is Convicted Felon Once Banned By NASD; 5 International Law-Enforcement Agencies Assisted In Probe

    BULLETIN: The CFTC has gone to federal court in Texas, alleging that Christopher B. Cornett of the town of Buda was operating a Forex- pool fraud and misappropriation scheme that gathered more than $14 million in phases between June 2008 and October 2011.

    Cornett has been charged civilly with fraud, which allegedly operated through entities the CFTC identified as ITLDU, ICM, International Forex Management LLC and/or IFM LLC.

    “[M]ost, if not all, of the profits, losses and account balances that Cornett reported to pool participants were false,” the CFTC said.

    Five international agencies, according to the CFTC, assisted in the probe: the U.K. Financial Services Authority, the British Virgin Islands Financial Services Commission, the Ontario Securities Commission, Germany’s BaFin, and the Swiss Financial Market Supervisory Authority.

    In 2003, according to the CFTC, the National Association of Securities Dealers (NASD) “barred [Cornett] with association with any NASD member in any capacity” and ordered Cornett to pay restitution in the amount of $28,423.73 for signing a customer’s name on the back of a check and using the funds for Cornett’s personal benefit without the authorization, knowledge or consent of the customer.”

    NASD was the predecessor agency of the Financial Industry Regulatory Authority (FINRA).

    Also in 2003, Cornett was sentenced to 37 months in federal prison after pleading guilty to five counts of bank fraud, the CFTC said.

    Read the CFTC complaint.