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Home > Blog > Monthly Archives: February 2015

Monthly Archives: February 2015

UBS V10 Currency Structured Notes Under Investigation by U.S. Justice Department

The U.S. Justice Department is looking into the UBS V10 Enhanced FX Carry Strategy, a product sold to investors such as hedge funds and pension funds. Focusing on whether banks misrepresented how currency transactions were priced, authorities’ broaden their examination into manipulation in the foreign-exchange market.

The V10 product “allows an investor to potentially profit in moves in 10 of the most liquid major currencies by taking advantage of opportunities based on interest rate differentials,” according to a 2009 UBS publication.

Through interviews with UBS employees in 2013, the V10 product first arose in the Justice Department with investigators probing commissions on the product and whether the bank respected its fiduciary duties to clients. In recent weeks, the questions were raised once again as the agency pursued to secure proffer agreements.

For more information visit: http://www.bloomberg.com/news/articles/2015-02-08/ubs-currency-product-sales-targeted-by-u-s-justice-department

SEC Charges Oppenheimer and Orders Payment of $20 Million for Securities Law Violations

Oppenheimer & Co. has been charged by the SEC for violating federal securities laws while wrongly selling penny stocks in unregistered offerings on behalf of clients. Oppenheimer admitted their wrongdoing and will pay $10 million to settle the SEC’s charges, as well as another $10 million to settle a parallel action by the Treasury Department’s Financial Crimes Enforcement Network.

The SEC found Oppenheimer engaged in two courses of misconduct.  The first involved aiding and abetting illegal activity by a customer and ignoring red flags that business was being conducted without and valid exemption from the broker-dealer registration requirements of the federal securities laws. Oppenheimer failed to recognize the resulting liabilities and expenses in violation of the books-and-records requirements, and improperly recorded transactions for customers in Oppenheimer’s records. Oppenheimer also failed to file Suspicious Activity Reports as mandatory under the Bank Secrecy Act to report potential misconduct and its clients, and the firm failed to properly report, withhold, and remit more than $3 million in backup withholding taxes from sales profits. .

The second course of misconduct involved Oppenheimer again engaging on behalf of another client in unregistered sales of billions of shares of penny stocks. The firm’s liability stems from its failure to react to red flags and conduct a searching inquiry into whether the sales were exempt from registration requirements of the federal securities laws, and its failure reasonably to supervise with a view toward detecting and preventing violations of the registration provisions. The SEC’s investigation, which is continuing, discovered that the sales generated approximately $12 million in profits of which Oppenheimer was paid $588,400 in commissions.

The SEC’s order is requiring Oppenheimer to stop and abstain from committing or causing any violations and any future violations of Section 15(a) and 17(a) of the Securities Exchange Act of 1934 and Rules 17a-3 and 17a-8, and of Section 5 of the Securities Act of 1933.  In addition to the financial remedies, Oppenheimer agreed to be censured and undertake such corrective measures as retaining an independent consultant to review its policies and procedures over a five-year period.


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