2018 Compliance Roundup - The Naughty List


 “He’s making a list and checking it twice. . .”

As part of our end of year wrap up, we present to you The Naughty List. The definitive list of individuals and corporations who will be receiving a bag of coal this year.

Be sure to check in tomorrow, when we post The Nice List. Subscribe to stay notified.

 The 2018 Naughty List

  1.  Fifth Third Securities makes the list for cost and fee disclosure failures and unsuitable recommendations related to variable annuity exchanges.  According to FINRA, Fifth Third was fined $4 million and required to pay approximately $2 million in restitution to customers. They failed to appropriately consider and accurately describe the costs and benefits of variable annuity (VA) exchanges, and recommended exchanges without a reasonable basis to believe the exchanges were suitable. FINRA fines have reportedly risen over the past few years, and this regulator is serious about suitability.
  2. The 6,500 defendants in 2018 white collar prosecutions, according to a speech by Deputy Attorney General Rod J. Rosenstein delivered at the American Conference Institute's 35th International Conference on the Foreign Corrupt Practices Act. Fighting white collar crime, especially bribery and corruption, is a top priority for the U.S. Department of Justice. Anti-bribery and Corruption enforcement was more effective and efficient in 2018 as these naughty list members can attest.
  3. Reginald Buddy Ringgold, III. and his company Blockvest LLC makes our naughty list after the Securities and Exchange Commission (SEC) obtained an emergency court order halting a planned initial coin offering (ICO). Backers of the ICO falsely claimed that it and its affiliates received regulatory approval from various agencies, including the SEC. According to the SEC's complaint, Blockvest and Ringgold violated federal law by using the SEC seal without permission and falsely claiming their crypto fund was "licensed and regulated."  Want to learn more about crypto-assets and ICOs? Watch our on-demand on Cryptocurrency and ICO Compliance, co-hosted by Elin Cherry, CEO of Elinphant. 
  4. Cherubim Interests Inc. (CHIT), PDX Partners Inc. (PDXP), and Victura Construction Group Inc. (VICT) make the naughty list for a different crypto-related reason. The SEC suspended trading of these companies after they claimed to acquire AAA-rated assets from a subsidiary of a private equity investor in cryptocurrency and blockchain technology. According to the SEC, there are questions regarding the nature of the companies’ business operations and the value of their assets. (The SEC had had previously warned investors about companies publicly announcing ICO or coin/token related events for the sole purpose of moving the price of the company's common stock). 
  5. SocGen paid $585 million to resolve Libya FCPA offenses. In addition to being on the naughty list, the 2018 enforcement action is the fifth biggest FCPA case ever. FCPA enforcement will continue to be a huge priority in 2019. Prepare for the new year by browsing our ABC resources, compiled to here to help companies mitigate conduct risk.
  6. UBS was hit with a $5 Million fine for Significant Deficiencies in Anti-Money Laundering Programs by FINRA. Allegedly, UBS failed to establish and implement anti-money laundering (AML) programs reasonably designed to monitor certain high-risk transactions in customer accounts. UBS fines totaled $15 Million to FINRA, SEC and FinCEN.

For more on what companies and enforcement cases received big fines in 2018, watch our on-demand Webinar, SEC & FINRA Mid-Year Regulatory Update, co-hosted by attorneys Brian Rubin and Adam Pollet of Eversheds Sutherland. 

To help your firm stay off the 2019 list, check out our Webinar, End of Year Compliance Wrap Up, presented in November with NorthPoint Compliance

Or request a demonstration and speak with a MCO Sales Director about how we can help you to mitigate misconduct risk.

Tune in tomorrow when we cover the "2018 Nice List". Subscribe to our blog today.