An irreverent Wall Street Blog
BrokeAndBroker.com Blog by Bill Singer WEEK IN REVIEW
January 14, 2017Guilty Plea In FOREX Price Fixing Case
On January 12, 2017, Central and Eastern European, Middle Eastern, and African Emerging Markets ("CEEMEA") currency dealer Christopher Cummins pleaded guilty to a one-count Information filed in the United States District Court for the Southern District of New York ("SDNY").The Information alleged that Cummins knowingly entered into and engaged in a combination and conspiracy to suppress and eliminate competition by fixing prices for CEEMEA currencies traded in the United States and elsewhere. READ
We got a registered representative. We got a married couple who are clients of said rep. We got a $35,000 loan from the couple to . . .? Well, now we got a problem because the loan was either made solely to the rep or it was made solely to his unregistered wife. Under the first set of circumstances, the loan likely violated FINRA's and the employer firm's rules. Under the other set of circumstances, it may be much ado about nothing. The problem is that the case was settled but the question remains unanswered. In the background, if you listen, you may hear Jackson Browne singing "can we call it a loan, and a debt that I owe, on a bet that I lost?" READ
Yet another new year. Yet another FINRA regulatory settlement involving the alleged willful nondisclosure of tax liens. Yet another year and another case in which we are left to ponder what exactly rises to willfully failing to disclose according to FINRA's rules. Frankly, many (likely most) of these nondisclosure cases are spot on with their accusations that a given respondent intentionally, knowingly, willfully, and with the intent to deceive decided against disclosing the existence of tax liens. The point of concern, however, is not with the 99% who are likely guilty but with the 1% who are not. READ
On May 20, 2015, the Department of Justice / Antitrust Division obtained guilty pleas and some $2.5 billion in criminal fines for conspiring to fix prices and rig bids in the foreign currency exchange spot market settlements from Barclays PLC, Citicorp, JPMorgan Chase & Co., and The Royal Bank of Scotland plc.
The other shoe has dropped.
The Feds are back on the scent with United States of America v. Richard Usher, Rohan Ramchandani, and Christopher Ashton, Defendants, which charges three Defendants employed by some of the settling institutions with Conspiracy to Restrain Trade in connection with their alleged roles in manipulating hundreds of billions of dollars in the foreign currency exchange spot market for U.S. dollars and euros. READ
The regulation of Wall Street is often a messy undertaking, exacerbated when multiple parties pursue a concerted course of misconduct and take steps to cover up the underlying acts. Consider a recent Securities and Exchange Commission investigation, which produced three separate regulatory settlements. At the core of the charges were an RIA/BD, a President/CEO; a lawyer; and a wealthy widow. How can you not want to read further with that dramatic foreshadowing? READ
There are 13 federal Courts of Appeal and as of today, the DCCir disagrees with the 10Cir on the issue of whether SEC ALJs are constitutionally serving per the Appointments Clause; hence, we got a split in the circuits. That being said, I would think that, for now, SEC ALJs cannot be deemed as disinterested parties and, as such, should not be ruling on whether they serve in compliance with the Appointments Clause. Which is not to say the life must come to a halt at the SEC. The federal securities regulator could take its docket into the federal courts, where many of us believe it belongs. Another option would be for the SEC's Chair and commissioners to conduct plenary hearings and issue the ultimate decisions. Another option would be to appoint ALJs in conformity with the law.
If the Supreme Court eventually rules that the SEC's ALJ system was and is constitutional, that's great; on the other hand, if the Supreme Court finds the SEC's ALJ system unconstitutional, you can hear the cash registers go "ka-ching" at defense law firms all over the country. Worse -- what happens if the Supreme Court fails to achieve a majority consensus and the disparate circuit positions remain? Talk about a new day for forum shopping. READ
As the BrokeAndBroker.com Blog often laments, a lot of what gets published as a FINRA Arbitration Decision requires the reader to fill in the blanks. We are teased with a list of titillating causes of action only to find nary a word as to the underlying activity at issue. They allege wrongful termination but we can't find any explanation of who did what and when and why there was a problem. It's all conclusory. Similarly, we often learn of a stunning award but it is presented without arbitrators' rationale. Sadly, today's featured article present yet another in an overly long line of cases that initially elicit a "WOW!!!" but ultimately ends without an explanation as to how it was calculated or why the arbitrators came up with the sums. All of which reminds me of how T. S. Eliot so aptly and poetically phrased it:
This is the way the world ends
Not with a bang but a whimper
Leave it to the SEC and the federal courts to turn this into a winter of discontent. As the frigid temperatures of 2017 fall upon us, those of us in the legal community are now trying to figure out whether the federal securities regulator is acting in a constitutional or unconstitutional manner -- and whether its enforcement docket will soon be upended amid charges that any cases handled by the organization's administrative law judges must be overturned. Add to that prospect the concerns that all prior cases handled by SEC ALJs may also be subject to constitutional challenge and you have one hell of a mess -- but for the fact that a lot of industry lawyers may soon be enjoying one hell of a lovely payday! READ