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SEC Announces Enforcement Results for FY 2021

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3 years ago

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Washington, D.C.–(Newsfile Corp. – November 18, 2021) – The Securities and Exchange Commission today announced that it filed 434 new enforcement actions in fiscal year 2021, representing a 7 percent increase over the prior year. Seventy percent of these new or “stand-alone” actions involved at least one individual defendant or respondent. The new actions spanned the entire securities waterfront, including against emerging threats in the crypto and SPAC spaces. For example, the SEC charged a company for operating an unregistered online digital asset exchange, charged a crypto lending platform and top executives alleging a $2 billion fraud, and brought an action against a special purpose acquisition company, its merger target, top executives, and others for alleged misconduct in a SPAC transaction. The SEC’s whistleblower program was critical to these efforts and had a record-breaking year.

The agency filed 697 total enforcement actions in fiscal year 2021, including the 434 new actions, 120 actions against issuers who were delinquent in making required filings with the SEC, and 143 “follow-on” administrative proceedings seeking bars against individuals based on criminal convictions, civil injunctions, or other orders. This represented a 3 percent decrease over the total actions filed in fiscal year 2020.

“The SEC’s Enforcement Division is the cop on the beat for America’s securities laws,” said Chair Gary Gensler. “As these results show, we go after misconduct wherever we find it in the financial system, holding individuals and companies accountable, without fear or favor, across the $100-plus trillion capital markets we oversee.”

“This year has seen a number of critically important and first-of-their-kind enforcement actions, as well as record-breaking achievements for our whistleblower program, which we expect will lead to even more successful actions in the future,” said Gurbir S. Grewal, Director of the SEC’s Division of Enforcement. “Undeterred by the challenges of the pandemic, the dedicated public servants in the Enforcement Division have continued to overcome obstacles to bring these cases that protect investors and promote market integrity.”

In fiscal year 2021, which ended on Sept. 30, the SEC also obtained judgments and orders for nearly $2.4 billion in disgorgement and more than $1.4 billion in penalties, which represented a respective 33 percent decrease and 33 percent increase over amounts ordered in the prior fiscal year in these categories.

Fiscal year 2021 also was a record year for whistleblower awards, with the SEC awarding a total of $564 million to 108 whistleblowers. The whistleblower program also surpassed $1 billion in awards over the life of the program.

Overview of SEC Enforcement in Fiscal Year 2021

In fiscal year 2021, the SEC filed noteworthy enforcement actions across new areas, including a number of first-of-their-kind actions:

In addition, the SEC filed impactful enforcement actions that spanned the securities markets, including the following matters:

Other examples of enforcement actions in key priority areas include:

Holding Individuals Accountable

Ensuring Gatekeepers Live Up to Their Obligations

  • Suspended two former KPMG auditors for alleged improper professional conduct during the audit of the not-for-profit College of New Rochelle.
  • Charged a CPA with failing to register his firm with the Public Company Accounting Oversight Board (PCAOB) and failures in auditing and reviewing the financial statements of a public company client.
  • Charged an audit firm partner for allegedly engaging in improper professional conduct during audits of a public company client.
  • Charged two attorneys – one of whom was previously disbarred – for their roles in an alleged scheme to fraudulently facilitate the sale of millions of shares of microcap securities to retail investors.
  • Barred a securities lawyer from practicing or appearing before the SEC.

Rooting Out Misconduct in Crypto

  • Charged entities and individuals with unregistered and/or fraudulent offerings of digital asset securities, including: fraud and unregistered offering charges against three individuals who founded and promoted digital asset companies; charges against an issuer and its founders for allegedly defrauding more than a thousand investors in an unregistered offering of digital asset securities; and charges against Ripple Labs and two of its executives alleging a $1.3 billion unregistered offering.
  • Took action against other misconduct in the crypto market, including charging the operator of ICO listing website Coinschedule.com with unlawfully touting digital asset securities.

Policing Financial Fraud and Issuer Disclosure

Charging Improper Conduct by Investment Professionals

  • Brought an action against UK-based investment adviser BlueCrest Capital Management for inadequate disclosures and other misstatements and omissions concerning its transfer of top traders to another fund, which will result in $170 million being returned to harmed investors.
  • Charged investment advisers and their portfolio managers with misleading investors and others about their risk management practices over funds that lost more than $1 billion in two trading days.
  • Charged a fund manager with fraudulently raising and misappropriating tens of millions of dollars in a private fund.
  • Charged an unregistered investment adviser for allegedly defrauding a Puerto Rican municipality and misappropriating more than $7 million of taxpayer funds.
  • Charged a rogue trader with causing millions of dollars of losses through unauthorized trading and bankrupting his broker-dealer firm.
  • Charged a robo-adviser with breaching its fiduciary duties in connection with its investment of client assets into exchange-traded funds sponsored by its parent company.
  • Charged an investment adviser for breaching its fiduciary duties in connection with its receipt of revenue sharing payments.

Protecting Market Integrity

  • Charged S&P Dow Jones Indices for failures relating to a quality control feature of one of its volatility-related indices, which led S&P to publish and distribute stale index values during a period of unprecedented volatility.
  • Charged former credit ratings agency Morningstar Credit Ratings with alleged disclosure and internal control violations in rating commercial mortgage-backed securities.
  • Brought charges against UBS and other investment advisers and broker-dealers as part of the Division of Enforcement’s Exchange-Traded Products Initiative, which utilizes trading data analytics to uncover potential violations of the securities laws.
  • Charged a company, its principal, and its trader with causing broker-dealers to violate Reg SHO by mismarking trades and related issues.
  • Charged a global securities pricing service with compliance deficiencies related to so-called single broker quotes.
  • Charged a broker-dealer for failures related to filing Suspicious Activity Reports.

Cracking Down on Insider Trading and Market Manipulation

  • Brought insider trading charges against numerous individuals, including:
  • Charged two individuals for alleged wash trading in the options of certain “meme stocks” in early 2021.
  • Charged a quantitative analyst and a hedge fund trader for allegedly perpetrating front-running schemes, which were uncovered by the SEC’s data analytics tools.
  • Charged numerous individuals, including the chairman of a public company, for their roles in alleged long-running fraudulent schemes that generated hundreds of millions of dollars from unlawful stock sales and harmed retail investors in the U.S. and around the world.

Enforcing the Foreign Corrupt Practices Act

  • Charged Goldman Sachs in connection with the 1Malaysia Development Berhad (1MDB) bribery scheme, resulting in the company paying more than $1 billion to settle the SEC’s charges.
  • Charged Deutsche Bank for internal control failures relating to its payments to third-party intermediaries that resulted in approximately $7 million in bribe payments or payments for unknown services.
  • Charged WPP, the world’s largest advertising group, with violating the anti-bribery, books and records, and internal accounting controls provisions of the FCPA, resulting in a more than $19 million settlement.
  • Charged Brazilian meat producers with an extensive, multi-year bribery scheme, resulting in a nearly $27 million settlement to resolve the SEC’s charges.

Guarding Against Public Finance Abuse

Pursing Wrongdoing in Securities Offerings

  • Charged an Israeli company and its former top executives with deceiving U.S. investors out of more than $100 million through fraudulent and unregistered sales of risky “binary option” securities.
  • Charged two former executives of a subprime automobile finance company with misleading investors about the loans that backed their $100 million offering.
  • Charged a company and two managing members with participating in a fraudulent, unregistered offering of securities in a purported “green” mining venture.
  • Charged a top executive at two companies for allegedly defrauding investors by “scalping” (secretly selling stock while paying promoters to recommend retail investors buy the stock), misappropriating funds, and falsely promoting apps that he claimed would facilitate cryptocurrency transactions and help combat the coronavirus.
  • Charged the co-founders of a San Francisco-based medical testing company for allegedly defrauding investors out of $60 million by falsely portraying the company as a successful start-up with a proven business model and strong prospects for future growth, and the former CEO of another Silicon Valley technology company for allegedly defrauding investors out of $80 million by falsely claiming strong and consistent growth.
  • Brought actions against wrongdoers targeting affinity groups, including:
    • Charging a jewelry wholesaler with raising more than $69 million and operating a fraudulent Ponzi-like scheme targeting current and retired police officers and firefighters;
    • Charging a company and its CEO for an alleged $119 million securities fraud targeting members of the South Asian American community;
    • Charging a New Jersey resident with defrauding investors, most of whom were members of the Orthodox Jewish community; and
    • Charging a Florida payday loan company and its CEO with fraudulently raising at least $66 million from retain investors including members of the Venezuelan-American community.

Swiftly Acting to Protect Investors

Achieving Success in Litigation

  • Investment adviser World Tree Financial and co-owners Wesley Kyle Perkins and Priscilla Perkins were found liable for a fraudulent cherry-picking scheme and related misrepresentations.
  • Investment adviser Richard Duncan was found liable for violating the anti-fraud provisions of the Investment Advisers Act for soliciting his clients’ investments in an advance-fee scam.
  • Final judgments were entered against investment adviser Westport Capital Markets and its owner, Chris McClure, ordering disgorgement and related interest of more than $820,000, and civil penalties of $500,000 against Westport and $200,000 against McClure. The final judgments follow a March 2020 jury verdict, as well as a prior grant of partial summary judgment, both in the SEC’s favor.

Rewarding and Protecting Whistleblowers

  • Gave the highest awards in the program’s history, including a $114 million award to a whistleblower whose information and assistance led to the successful enforcement of an SEC action and related actions by another agency; and a $110 million award to another whistleblower who provided significant independent analysis that substantially advanced both the SEC’s investigation and another agency’s related investigation.
  • Charged a broker-dealer with violating a whistleblower protection rule that prohibits taking any action to impede an individual from communicating directly with the SEC about a possible securities law violation.
  • Charged a registered investment adviser with allegedly violating whistleblower protection laws by including language in termination and separation agreements that impeded individuals from coming forward to the SEC and by retaliating against a known whistleblower, along with charging that entity and others with running a Ponzi-like scheme that raised more than $1.7 billion from more than 17,000 retail investors.
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Fintech Pulse: Evolving Fintech Investments and Partnerships Signal Industry Transformation

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2 days ago

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November 12, 2024

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fintech-pulse:-evolving-fintech-investments-and-partnerships-signal-industry-transformation

 

Fintech is on an accelerated trajectory of investment, collaboration, and innovation. This pulse tracks the most significant developments in the sector, from high-profile investments to global platform expansions. Each update in this briefing serves as a key indicator of where the industry is headed.

1. European Fintechs Face Regulatory Pressures Amid New Investment Surge

The European fintech sector finds itself at a crossroads with increasing scrutiny and rising costs due to stringent regulations. While investments continue to flow into the continent’s financial technology companies, challenges in meeting new compliance requirements, especially around data privacy and cybersecurity, create a complex landscape for scaling. This tension between opportunity and operational limitations might affect European fintechs’ growth strategies.

Source: Financial Times

2. Shopify, Slack Founders Join Peter Thiel in Fintech Investment Push

Tobi Lütke of Shopify and Stewart Butterfield of Slack, along with investor Peter Thiel, have co-invested in a new fintech initiative that aims to bolster small business access to capital. By merging technology with a streamlined funding model, this new initiative targets underserved SMBs, highlighting a broader trend of high-profile tech leaders pivoting to fintech investment. The participation of Lütke and Butterfield signals increased cross-sector collaboration in fintech, bringing expertise from e-commerce and communication technology into the financial arena.

Source: Yahoo Finance

3. Lean Technologies Raises $67.5 Million to Drive Fintech Innovation in the Middle East

Riyadh-based fintech platform Lean Technologies recently secured a $67.5 million Series B investment round, aiming to expand its operations across the Middle East. This funding reflects growing investor interest in emerging markets and the potential of Middle Eastern fintech to bridge regional gaps in financial services access. As Lean Technologies broadens its service offerings, the funding will support further technological integration and scalability across financial ecosystems in the region.

Source: Fintech Global

4. Apollo Global Management Invests in Fintech for Private Offerings Support

Apollo Global Management has taken steps to enhance its services for private offerings by investing in specialized fintech solutions. This development signifies a growing trend among private equity firms to adopt fintech as a core component in their service expansion, particularly for personalized client services. Apollo’s strategy of integrating fintech solutions into private offerings marks a strategic shift toward digitalization within traditional financial sectors.

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Source: Bloomberg

5. Juniper Research Names 2025’s Future Leaders in Fintech

Juniper Research has revealed its picks for the top future leaders in fintech for 2025. This list emphasizes innovation in fields such as AI, open banking, and decentralized finance, highlighting startups that exhibit potential for reshaping industry standards. As these up-and-coming firms push the boundaries of traditional finance, they exemplify the rising tide of next-generation financial technology poised to become industry mainstays.

Source: Globe Newswire

Conclusion

The convergence of seasoned tech giants with fintech, new funding rounds for region-specific platforms, and the rise of future industry leaders underscore the momentum of the fintech sector. Each of these stories reflects a broader narrative: fintech is not only diversifying in services but also rapidly integrating into traditional finance and tech, paving the way for a transformative era.

 

The post Fintech Pulse: Evolving Fintech Investments and Partnerships Signal Industry Transformation appeared first on HIPTHER Alerts.

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Fintech Pulse: Industry Innovations and Partnerships Drive Global Fintech Forward

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3 days ago

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November 11, 2024

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fintech-pulse:-industry-innovations-and-partnerships-drive-global-fintech-forward

 

In this edition of Fintech Pulse, we delve into groundbreaking announcements from the 2024 Hong Kong Fintech Week, spotlight strategic collaborations fostering financial accessibility, and examine significant profit growth in global fintech companies. Here’s our comprehensive breakdown of the latest happenings in fintech.

1. Bairong’s Full-Scenario AI Products Showcase at Hong Kong Fintech Week

Source: PRNewswire

At the 2024 Hong Kong Fintech Week, Bairong showcased its range of AI-driven solutions designed to support the digital transformation of financial institutions. Their new “full-scenario” suite aims to enhance data analysis, financial risk management, and credit scoring. The offering underscores Bairong’s strategic vision to advance financial decision-making with AI technology that serves a variety of sectors, including banking, insurance, and asset management.

This development aligns with broader industry trends emphasizing the power of AI to bridge operational gaps in traditional finance. Bairong’s solutions promise to optimize financial workflows, identifying high-risk factors in real-time. The commitment to developing comprehensive, adaptable AI tools demonstrates Bairong’s ambition to stay at the forefront of AI-powered fintech innovations.

2. SBI and APIX Establish Innovation Hub to Propel Fintech Partnerships

Source: The Paypers

SBI Holdings, Japan’s major financial services group, recently announced the launch of an Innovation Hub in partnership with APIX to advance fintech collaboration and innovation. The hub will serve as a catalyst for startups and financial technology firms to collaborate, leveraging APIX’s open innovation platform for API exchange.

Through this hub, SBI and APIX aim to address critical technological needs in the fintech sector. Startups and established firms can collaborate on new technologies and bring forward interoperable systems for the industry. This initiative marks a new phase in fintech alliances, where regulatory support and open innovation can accelerate fintech growth on a global scale.

3. Wise’s Record Profits Point to Growing Market Dominance

Source: MSN

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British fintech giant Wise reported a 55% surge in profits, driven by an expanding customer base and increased market share. The company’s cross-border payment solutions are seeing widespread adoption, as it provides individuals and businesses with affordable currency exchange options, bypassing high fees associated with traditional banks.

Wise’s success underscores the current demand for transparent, low-cost international payments. As the firm continues to focus on product expansion and market penetration, its financial trajectory showcases how fintech firms can challenge the status quo in cross-border transactions, maintaining profitability while serving a rapidly growing user base.

4. Parker Secures $20 Million Series B Funding for Fintech Data Suite

Source: Forbes

Fintech startup Parker raised $20 million in a Series B funding round, with the goal of expanding its suite of financial data tools. Parker’s product range enables small and medium enterprises (SMEs) to gather and analyze data, facilitating more informed financial decisions. This funding reflects investor confidence in the need for specialized financial data tools tailored to SMEs, a sector often underserved in financial innovation.

By addressing the needs of smaller businesses, Parker is positioning itself as a key player in the niche market of financial data, which has typically been dominated by larger corporate-focused platforms. This funding round highlights the growing trend of venture capital backing for niche fintech solutions aimed at smaller, agile businesses.

5. The Payments Group and HubPeople’s Cash Payments Initiative for Online Daters

Source: PRNewswire

The Payments Group, a digital payments solution provider, announced a collaboration with HubPeople, an online dating platform, to integrate cash payment solutions for over 100 million users globally. This partnership aims to reach users who may not have access to traditional banking or prefer alternative payment methods.

The initiative points to the broader trend of payments inclusivity in fintech, whereby payment firms are making financial transactions more accessible for underserved communities. By integrating cash payment solutions, The Payments Group and HubPeople highlight the importance of flexibility in payment options, acknowledging the diverse financial preferences of users worldwide.

Industry Implications and Observations

These stories collectively reveal several key trends and insights about the evolving fintech landscape. The focus on AI, digital collaboration hubs, profitability through transparency, specialized data tools, and inclusive payment solutions are reshaping financial services. Fintech’s current trajectory indicates a robust push towards not only digital transformation but also inclusivity and global accessibility.

As financial technology continues to innovate, these advancements illustrate the increasing overlap between technology and finance, as well as the potential for fintech to foster inclusive growth. With companies like Bairong and Wise setting benchmarks for AI and cross-border payments, respectively, and emerging startups like Parker developing new, data-centric tools, fintech’s future promises a dynamic shift towards improved service and enhanced user engagement.

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The post Fintech Pulse: Industry Innovations and Partnerships Drive Global Fintech Forward appeared first on HIPTHER Alerts.

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Fintech Pulse: The Latest Trends and Insights Shaping Fintech

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1 week ago

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November 7, 2024

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In today’s dynamic fintech landscape, developments range from notable appointments to industry conferences, global ranking achievements, and the ongoing struggle between digital innovation and traditional cash reliance. This op-ed-style daily briefing dives into key updates and their potential impacts on the fintech industry, touching on politics, corporate shifts, and emerging trends.

1. Trump’s Potential Impact on Fintech: Policy Shifts and Market Reactions

As Donald Trump continues to be a central figure in U.S. politics, his stance on financial regulations and fintech could significantly influence the sector’s future. Historically, Trump has advocated for deregulation, which benefited banks and other financial services firms. His policies were known to relax certain compliance requirements, which made it easier for fintech companies to expand.

Under Trump’s administration, fintech firms might anticipate reduced regulatory constraints, particularly for newer sectors such as crypto and online lending. This relaxed stance could lower compliance costs for startups, allowing more resources to flow into technology and product innovation. However, a deregulated environment also increases the risk of market manipulation and consumer harm, raising concerns among advocates for tighter oversight.

The question remains whether a Trump-influenced regulatory environment would favor long-term fintech innovation or lead to an environment that could increase risks for both investors and consumers. As debates continue, fintech companies may need to be agile in adjusting to potential policy changes.
Source: Forbes

2. Hong Kong’s Love for Cash: Fintech Growth Stymied by Cultural Preferences

Hong Kong’s journey toward a cashless society faces a unique cultural hurdle—its residents’ affinity for cash, particularly among taxi drivers. Despite the proliferation of digital wallets and payment platforms in Asia, cash remains king in this metropolis. The attachment to cash among certain groups, especially cab drivers, poses a significant challenge for fintech companies aiming to promote mobile and digital payments in Hong Kong.

This resistance to cashless options highlights the complexities of fintech adoption, where technology alone cannot drive transformation without aligning with user behavior. For Hong Kong, overcoming this challenge may require fintech firms to develop hybrid solutions that incorporate cash with digital functionality or offer incentives for digital adoption. Until then, Hong Kong’s fintech ambitions will remain somewhat constrained by the cultural fondness for cash.

This preference for cash also has implications for Hong Kong’s broader economy. If the city cannot shift toward digital transactions, it may fall behind other financial hubs in terms of fintech innovation and integration.
Source: Bloomberg

3. Dave Inc. Joins the KBW Fintech Conference: Setting the Stage for New Partnerships

Next week, Dave Inc. is set to participate in KBW’s annual Fintech Conference, a major industry event in New York City. Scheduled for November 14, the conference will bring together industry leaders, investors, and innovators. Dave Inc.’s involvement underscores its ongoing commitment to establishing new partnerships and tapping into emerging fintech trends.

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For Dave, a prominent U.S.-based neobank, participating in high-profile conferences like this not only enhances visibility but also presents networking opportunities with potential investors and partners. The company’s growth strategy focuses on making financial services more accessible and affordable for underserved communities. With industry leaders present, the conference may foster collaborative efforts, especially in areas such as lending, personal finance, and digital banking.

The KBW Fintech Conference could provide Dave Inc. with critical insights and alliances to further its mission, potentially accelerating product innovation and geographical expansion.
Source: GlobeNewswire

4. MeridianLink’s Recognition in IDC Fintech Rankings: A Boost in Reputation

MeridianLink has recently been recognized in IDC’s Global Fintech Rankings, securing a spot in the Top 50. This accolade acknowledges the company’s commitment to digital transformation within the financial services sector, where it focuses on providing cloud-based software solutions for banks, credit unions, and financial institutions.

Being named to this prestigious list elevates MeridianLink’s reputation within the fintech community. This recognition could help MeridianLink secure more significant contracts with major financial institutions, as industry recognition often leads to increased trust among potential clients. Additionally, this placement in the IDC rankings may serve as a strategic advantage when pursuing funding and partnerships in a competitive market.

This recognition is a testament to MeridianLink’s innovation in fintech, showing how its cloud-based solutions align with industry trends toward digital-first financial services.
Source: Business Wire

5. Leadership Change at Alliant Credit Union: Navigating Transition with New Interim CEO

Alliant Credit Union has named Ken Schaafsma as the interim CEO following the departure of Dennis Devine. Schaafsma, who was previously the CFO, will guide the organization through this transitional phase as it searches for a permanent CEO. Leadership changes in financial institutions often signal shifts in strategic focus or operational adjustments, and Schaafsma’s background in finance could mean an emphasis on fiscal discipline and profitability.

As a credit union with a significant member base, Alliant’s choice of leadership may influence its approach to digital services and customer engagement. With Schaafsma’s familiarity with the organization’s financial health, his interim tenure may bring stability during this transitional period.

In an industry undergoing rapid digital transformation, Alliant Credit Union’s ability to maintain a clear strategic vision and leadership stability will be crucial in keeping pace with fintech competitors.
Source: Fintech Futures

 

The post Fintech Pulse: The Latest Trends and Insights Shaping Fintech appeared first on HIPTHER Alerts.

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