US announces new Russia sanctions designations, releases new guidance
On April 6, 2018, the US Department of the Treasury’s Office of Foreign Assets Control (OFAC) announced new designations of seven high-net-worth Russian individuals and 12 companies they own or control, 17 senior Russian government officials, and a state-owned Russian weapons trading company and its subsidiary, a Russian bank. The designation announcement followed the release of the Report Regarding Senior Foreign Political Figures and Oligarchs in Russia and Russian Parastatal Entities pursuant to Section 241 of the Counter America’s Adversaries Through Sanctions Act (“CAATSA”) on January 29, 2018, and restricts dealings with a number of individuals and companies of economic significance. To read our full briefing please click here.
British citizen extradited to New York for alleged $37 million Bitcoin scam
The United States Attorney for the Southern District of New York and the Assistant Director-in-Charge of the New York office of the Federal Bureau of Investigation (FBI) has announced that Renwick Haddow, a British citizen, has been extradited to the United States from Morocco. Mr Haddow was charged by complaint in June 2017 for engaging in schemes to defraud individuals. According to the US complaint, Mr Haddow solicited investments in start-up companies, including a Bitcoin store, by making material misrepresentations about, amongst other things, the management, operations, and historical performance of various companies that he created and controlled. Mr Haddow has been charged with two counts of wire fraud, with each charge carrying a maximum sentence of 20 years' imprisonment.
SEC obtains emergency order freezing $27 million in stock sales from purported cryptocurrency company
The Securities and Exchange Commission (SEC) has obtained a court order freezing more than $27 million in trading proceeds from alleged illegal distributions and sales of restricted shares in Longfin Corporation stock. According to the SEC complaint, the CEO and controlling shareholder of Longfin issued more than two million unregistered restricted shares to individuals who subsequently sold them to the public while the company's stock price was elevated, following announcement of the acquisition of a purported cryptocurrency business. Collectively the individuals enjoyed more than $27 million in profits from the sales of the unregistered shares. The SEC complaint charges the individuals with violation of section 5 of the Securities Act of 1933 and seeks injunctive relief, disgorgement of ill-gotten gains, and penalties, among other relief.
SEC awards more than $2.2 million to whistleblower who first reported information to another federal agency The SEC has announced a whistleblower award of more than $2.2 million to a whistleblower whose information allowed the SEC to open an investigation and successful enforcement action. This is the first award paid under the "safe harbour" of Exchange Act Rule 21F-4(b)(7), which provides that if a whistleblower submits information to another federal agency and submits the same information to the SEC within 120 days, then the SEC will treat the information as though it had been submitted to the SEC at the same time as was submitted to the other agency.Since issuing its first award in 2012, the SEC has awarded more than $266 million to 55 individuals under the whistleblower program. In that time, almost $1.5 billion in monetary sanctions have been ordered against wrongdoers based on actionable information received from whistleblowers, including more than $740 million in disgorgement of ill-gotten gains and interest, the majority of which has been or is scheduled to be returned to harmed investors.
SEC halts fraudulent scheme involving unregistered ICO
The SEC has charged two co-founders of a purported financial services start-up with orchestrating a fraudulent initial coin offering (ICO) that raised more than $32 million from investors. The two individuals allegedly claimed that funds raised in the ICO would help build a suite of financial products. They claimed, for example, to offer a debit card that would allow users to instantly convert cryptocurrencies into US dollars or other legal tender. The SEC also alleges that to promote the ICO, the individuals created fictional executives with impressive biographies, posted false or misleading marketing materials to their company's website, and paid celebrities to tout the ICO on social media. The SEC’s complaint, filed in federal court in the Southern District of New York, charges the individuals with violating the anti-fraud and registration provisions of the federal securities laws. The complaint seeks permanent injunctions, return of allegedly ill-gotten gains plus interest and penalties, as well as bars against the two individuals serving as public company officers or directors and from participating in any offering of digital or other securities. In a parallel action, the US Attorney’s Office for the Southern District of New York has announced criminal charges.
Dun and Bradstreet settle FCPA charges with $9 million
The SEC has announced that The Dun and Bradstreet Corporation has agreed to pay more than $9 million to settle allegations that it breached the Foreign Corrupt Practices Act (FCPA) by accepting unlawful payments and falsely recording them as legitimate business expenses. The SEC's order has found that Dun & Bradstreet violated Sections 13(b)(2)(A) and 13(b)(2)(B) of the Securities Exchange Act of 1934. Without admitting or denying the allegations, the company has agreed to pay disgorgement of $6,077,820, prejudgment interest of $1,143,664, and a civil penalty of $2 million.In connection with the SEC's enforcement action, the Department of Justice (DOJ) has announced that it has “declined prosecution consistent with the FCPA Corporate Enforcement Policy.” Under the policy the DOJ has agreed to not take criminal action against companies involved in foreign bribery as the three factors of voluntary disclosure, full cooperation, and robust remediation have been met.
Cybersecurity Tech Accord signed by over 30 global technology companies
34 global technology and security companies, including Microsoft and Facebook, have signed a Cybersecurity Tech Accord, jointly pledging to support various initiatives in a bid to protect their customers. The companies that have signed the pledge have committed to the following:
- stronger defences against cyberattacks;
- promising not to help governments launch cyberattacks against innocent citizens and enterprises; and
- building new partnerships with industry, civil society and security researchers to improve technical collaboration, coordinate vulnerability disclosures, share threats and minimize the potential for malicious code to be introduced into cyberspace.
CFTC charges multiple individuals and companies with operating fraudulent binary options scheme
The Commodity Futures Trading Commission (CFTC) has charged multiple individuals and companies with operating a fraudulent scheme involving binary options fraud and a virtual currency known as ATM Coin and acting as a common enterprise in carrying out the fraudulent scheme. Binary options are transactions that allow customers to make predictive trades as to whether the price of a certain commodity will rise or fall by a certain date and time. As alleged in the CFTC’s Complaint, binary options must be traded on a registered board of trade in order to be lawfully offered in the United States. The Complaint alleges that none of the Defendants execute transactions on a registered board of trade and none has ever been registered with the CFTC in any capacity. The US Court has entered a Statutory Restraining Order freezing the defendants' assets and prohibiting them from destroying their books and records, and granting the CFTC immediate access to those records. The United States Attorney for the Eastern District of New York has also filed a parallel criminal action. In its continuing litigation, the CFTC seeks restitution to defrauded customers, disgorgement of ill-gotten gains, civil monetary penalties, permanent registration and trading bans, and permanent injunctions from future violations of the Commodity Exchange Act and CFTC Regulations.