FINRA Lawyer Blog

In a complex and shifting global scenario, the financial industry faces numerous challenges relating to anti-money laundering (AML) compliance. In a rapidly changing regulatory environment, within an unstable geopolitical context, financial institutions have to adapt to new technologies and innovative operating models. As regulators worldwide coordinate to increase transparency and target wrongdoers, AML has taken…

Last week, federal prosecutors charged Delaney Equity Group with participating in a fraudulent scheme involving the sale of bogus shell company shares. The Florida-based broker-dealer allegedly conspired to sell shares of fraudulent microcap companies to investors at a profit. The Department of Justice has accused the defendant of “unlawfully” selling “unregistered securities” between late 2009…

The over 80 subpoenas recently issued to companies in the cryptocurrency sector have provided a logical corollary to the agency’s many warnings about ICOs potential violations of security laws. The time for warnings is over. Now, the SEC’s intentions have evolved into enforcement actions, forever changing the scenario for new cryptocurrency initiatives. In late 2017,…

Hip-hop star Shawn Carter, aka Jay-Z, has just received a subpoena to appear in court after he failed to testify in connection with the SEC’s probe into Iconix Brand Group’s accounting practices. Iconix acquired intangible assets from Jay-Z’s clothing brand Rocawear in 2007, which boasted $700 million in annual sales at the time. The agreement…

Recently, British comedian John Oliver dedicated his weekly show to cryptocurrency. Drawing from a seemingly endless supply of ICO Ponzi schemes, pump-and-dumps, and grandiose cryptocurrency speakers, the program emphasized the hitherto lax regulations that have enabled fraudulent schemes to flourish. Oliver coined the hashtag #CraefulGang, a play on the popular caption #HODLGang, well known to…

FINRA has fined Aegis Capital Corp. $550,000 for failing to implement required anti-money laundering (AML) and supervisory programs designed to prevent fraudulent activity. The violations specifically affected low-priced securities transactions involving DVP (delivery versus payment) accounts. According to the outcome of FINRA’s investigation, the supervisory system Aegis used “was not reasonably designed to satisfy its…

FINRA recently announced monetary sanctions against Wedbush Securities in the amount of. $1.5 million for SEC rule violations and associated compliance failures. According to FINRA, Wedbush violated the SEC Customer Protection Rule, which requires broker-dealers to maintain a certain degree of physical possession and control over customer securities. The object of the rule is to…

Celebrity endorsements add an element of trust for investors who are just entering the ICO market. But the strategy did not turn out well for Centra Tech, as a third arrest has just been made in connection with the SEC’s allegations that the company defrauded investors out of over $25 million. Earlier this year, I…

A new proposed SEC regulation vows to “enhance the quality and transparency of investors’ relationships with investment advisers and broker-dealers.” If “Regulation Best Interest” is finally implemented, broker-dealers will be required to “act in the best interest” of their retail customers whenever they recommend any securities transactions or investments. Following numerous penalties in cases where…

The SEC is effectively expanding its jurisdiction into the cryptocurrency and ICO market. Dozens of companies, possibly hundreds, are receiving SEC subpoenas, which I advise them to take very seriously. High profile companies, including giants like TechCrunch’s cryptofund, are currently dealing with these subpoenas. One of the problems is that nobody knows exactly what is…