A CEO now apologizes for illegal bond market manipulation that took place in the Japanese futures market in 2021.
Kentaro Okuda, the CEO of Nomura Holdings Inc., publicly apologized during his first appearance following allegations that an employee manipulated the bond futures market.
Last week, Japan’s financial regulator suggested a fine for Nomura’s domestic securities unit for allegedly manipulating the prices of Japanese government bond futures in 2021.
As a result, Toyota Finance Corp. and several other companies have since decided to exclude Japan’s largest brokerage from their debt underwriting deals, according to Bloomberg.
“I would like to apologize for the trouble caused,” Okuda stated at a Nikkei financial forum in Tokyo on Wednesday.
This apology comes as Nomura seeks to take advantage of a resurgence in the Japanese bond market, spurred by changes in the country’s monetary policy.
The Securities and Exchange Surveillance Commission has recommended that the Financial Services Agency impose a fine of ¥21.8 million (approximately $152,000) on Nomura after discovering that a dealer profited from placing large orders for Japanese government bond (JGB) futures without the intention of actually buying or selling all of them.
The FSA typically enforces such penalties a few weeks later.
In a statement released last week, Nomura indicated that it has been working to improve its JGB futures trading operations since the incident and has committed to enhancing internal controls to prevent future occurrences.
In recent years, other securities firms, including those affiliated with Citigroup Inc. and Mitsubishi UFJ Financial Group Inc., have faced penalties for manipulating JGB futures prices.
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Barclays is now fined for illegal swap-reporting manipulation, violating its power as a registered dealer with the CFTC.
The Commodity Futures Trading Commission (CFTC) has announced the filing and settlement of charges against Barclays Bank PLC for breaching the Commodity Exchange Act (CEA) and CFTC regulations related to swap reporting.
As a registered swap dealer with the CFTC, Barclays is required to strictly adhere to these regulations.
Barclays will now pay a civil monetary penalty of $4 million, must cease any violations of the CEA and CFTC regulations, and comply with specific conditions outlined in the order.
Barclays has admitted to the facts presented and acknowledged that its actions violated the CEA and CFTC regulations, per Bloomberg.
Ian McGinley, Director of Enforcement, stated, “In the past year, the CFTC has imposed over $60 million in penalties on six registered swap dealers, including Barclays, due to swap data reporting violations.
This resolution, which includes admissions, underscores our commitment to making sure that the costs of non-compliance exceed the costs of adhering to the law.”
The order indicates that from 2018 to 2023, Barclays failed to report millions of swap transactions accurately or in a timely manner, violating CEA and CFTC regulations.
The reporting issues included:
Misreporting due to duplicate swap identifiers.
Incorrect reporting of primary economic terms.
Misreported time stamps.
Errors in continuation data reporting.
Late reporting.
Overall, Barclays did not accurately or promptly report over five million swap transactions during the specified period.
In accepting Barclays’ settlement offer (bribe), the CFTC acknowledged the bank’s “significant cooperation” during the investigation.
This cooperation included proactively identifying swap reporting issues and voluntarily providing detailed information about the violations, per Bloomberg.
The CFTC also recognized Barclays’ efforts to remediate the situation, which involved engaging third-party vendors to review and validate its swap reporting processes.
As a result of this cooperation and remediation, the CFTC reduced the civil monetary penalty.
The enforcement action was conducted by CFTC staff members Jason T. Wright, A. Daniel Ullman II, and Paul G. Hayeck, along with former staff member Lauren Bennett.
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Market News Today – Barclays Is Now Fined For Illegal Swap-Reporting Manipulation.
The SEC is now seeking to ban an oversight board for ‘massive fraud’, after obtaining a $250 million final judgement against the firm.
The Securities and Exchange Commission has charged Olayinka Oyebola and his accounting firm, Olayinka Oyebola & Co. (Chartered Accountants), with complicity in a significant securities fraud scheme orchestrated by businessman Mmobuosi Odogwu Banye, also known as Dozy Mmobuosi, along with three U.S. companies he controlled, referred to as the Tingo entities.
Recently, the SEC secured a final judgment of $250 million against Mmobuosi and the Tingo entities, per a press release.
The SEC’s complaint alleges that Oyebola and his firm knowingly neglected to act after discovering that Mmobuosi and the Tingo entities had fabricated several audit reports featuring Oyebola’s signature, which were submitted in SEC filings as if they were legitimately issued by his firm.
Oyebola is accused of making significant misstatements to the auditor of one of the Tingo entities and of helping Mmobuosi hide the fact that the audit reports were fraudulent.
This deception led auditors, investors, and regulators to rely on these false reports to their detriment.
The SEC claims that Oyebola’s actions facilitated Mmobuosi and the Tingo entities in executing a multi-year scheme to artificially inflate their financial metrics and defraud investors globally.
Antonia M. Apps, Director of the SEC’s New York Regional Office, stated, “As alleged, Oyebola and his firm violated the public trust and failed to fulfill their responsibilities as public accountants by assisting Mmobuosi and the Tingo entities in executing and concealing their fraud.
We will hold accountable those who undermine the integrity of public markets.”
The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charges Oyebola and his firm with aiding and abetting violations of federal securities laws related to fraud committed by Mmobuosi and the Tingo entities.
Oyebola is also charged with helping Mmobuosi mislead auditors.
The SEC is seeking civil penalties and permanent injunctive relief, including a ban on Oyebola and his firm from serving as auditors for U.S. public companies or providing significant assistance in preparing SEC financial statements.
The investigation is being conducted by SEC staff members Michael DiBattista, Christopher Mele, Jeremy Brandt, Gerald Gross, and Rebecca Reilly, under the supervision of Tejal D. Shah.
The litigation is led by David Zetlin-Jones and DiBattista, supervised by Alexander Vasilescu, all from the New York Regional Office.
The SEC also acknowledges the assistance of the Israel Securities Authority.
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The SEC is now seeking to ban an oversight board for ‘massive fraud’, after obtaining a $250 million final judgement against the firm.
The Securities and Exchange Commission has charged Olayinka Oyebola and his accounting firm, Olayinka Oyebola & Co. (Chartered Accountants), with complicity in a significant securities fraud scheme orchestrated by businessman Mmobuosi Odogwu Banye, also known as Dozy Mmobuosi, along with three U.S. companies he controlled, referred to as the Tingo entities.
Recently, the SEC secured a final judgment of $250 million against Mmobuosi and the Tingo entities, per a press release.
The SEC’s complaint alleges that Oyebola and his firm knowingly neglected to act after discovering that Mmobuosi and the Tingo entities had fabricated several audit reports featuring Oyebola’s signature, which were submitted in SEC filings as if they were legitimately issued by his firm.
Oyebola is accused of making significant misstatements to the auditor of one of the Tingo entities and of helping Mmobuosi hide the fact that the audit reports were fraudulent.
This deception led auditors, investors, and regulators to rely on these false reports to their detriment.
The SEC claims that Oyebola’s actions facilitated Mmobuosi and the Tingo entities in executing a multi-year scheme to artificially inflate their financial metrics and defraud investors globally.
Antonia M. Apps, Director of the SEC’s New York Regional Office, stated, “As alleged, Oyebola and his firm violated the public trust and failed to fulfill their responsibilities as public accountants by assisting Mmobuosi and the Tingo entities in executing and concealing their fraud.
We will hold accountable those who undermine the integrity of public markets.”
The SEC’s complaint, filed in the U.S. District Court for the Southern District of New York, charges Oyebola and his firm with aiding and abetting violations of federal securities laws related to fraud committed by Mmobuosi and the Tingo entities.
Oyebola is also charged with helping Mmobuosi mislead auditors.
The SEC is seeking civil penalties and permanent injunctive relief, including a ban on Oyebola and his firm from serving as auditors for U.S. public companies or providing significant assistance in preparing SEC financial statements.
The investigation is being conducted by SEC staff members Michael DiBattista, Christopher Mele, Jeremy Brandt, Gerald Gross, and Rebecca Reilly, under the supervision of Tejal D. Shah.
The litigation is led by David Zetlin-Jones and DiBattista, supervised by Alexander Vasilescu, all from the New York Regional Office.
The SEC also acknowledges the assistance of the Israel Securities Authority.
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Market News Today – SEC Now To Ban An Oversight Board For ‘Massive Fraud’.
TD Bank now gets caught with illegal market manipulation and has agreed to pay over $20 million under a deal with the SEC.
Investors are calling it ‘pay to play’.
The U.S. broker-dealer unit of Toronto Dominion Bank (TD Securities USA) has agreed to pay more than $20 million to resolve allegations of manipulating the U.S. Treasuries market.
This settlement comes as part of an agreement with U.S. authorities, concluding a lengthy investigation, per Reuters.
In a court filing on Monday, TD Securities admitted to engaging in spoofing practices within the U.S. Treasuries market as part of a deal with the U.S. Justice Department.
The firm also settled related civil charges with the Securities and Exchange Commission (SEC).
Additionally, the bank faced charges for not properly supervising its former head of the U.S. Treasuries trading desk.
From April 2018 to May 2019, a former employee manipulated the U.S. Treasury cash securities market by placing orders he had no intention of executing, a tactic known as “spoofing.”
This practice aims to create a misleading impression of market demand.
U.S. regulators have taken a strong stance against spoofing, which is designed to distort market activity.
However, the criminal bank has now been let go off what investors deem as ‘easily’.
Under the terms of TD’s agreement, the Justice Department will refrain from prosecuting the firm as long as it adheres to the three-year agreement and implements significant compliance improvements.
The DOJ decided not to appoint a third-party monitor for compliance, based on the company’s efforts to address the issues.
As part of the settlement, TD Securities will pay a $12.5 million criminal penalty related to civil investigations by the SEC and the Financial Industry Regulatory Authority (FINRA).
This amount is in addition to an approximately $9.5 million criminal penalty outlined in the agreement.
The bank will also compensate victims with $4.7 million and forfeit $1.4 million.
This settlement comes at a time when the Canadian bank is reportedly on the verge of pleading guilty to separate charges concerning its U.S. retail bank’s alleged failure to prevent money laundering linked to Chinese crime groups and illegal fentanyl sales, as reported by the Wall Street Journal last week.
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TD Bank now gets caught with illegal market manipulation and has agreed to pay over $20 million under a deal with the SEC.
Investors are calling it ‘pay to play’.
The U.S. broker-dealer unit of Toronto Dominion Bank (TD Securities USA) has agreed to pay more than $20 million to resolve allegations of manipulating the U.S. Treasuries market.
This settlement comes as part of an agreement with U.S. authorities, concluding a lengthy investigation, per Reuters.
In a court filing on Monday, TD Securities admitted to engaging in spoofing practices within the U.S. Treasuries market as part of a deal with the U.S. Justice Department.
The firm also settled related civil charges with the Securities and Exchange Commission (SEC).
Additionally, the bank faced charges for not properly supervising its former head of the U.S. Treasuries trading desk.
From April 2018 to May 2019, a former employee manipulated the U.S. Treasury cash securities market by placing orders he had no intention of executing, a tactic known as “spoofing.”
This practice aims to create a misleading impression of market demand.
U.S. regulators have taken a strong stance against spoofing, which is designed to distort market activity.
However, the criminal bank has now been let go off what investors deem as ‘easily’.
Under the terms of TD’s agreement, the Justice Department will refrain from prosecuting the firm as long as it adheres to the three-year agreement and implements significant compliance improvements.
The DOJ decided not to appoint a third-party monitor for compliance, based on the company’s efforts to address the issues.
As part of the settlement, TD Securities will pay a $12.5 million criminal penalty related to civil investigations by the SEC and the Financial Industry Regulatory Authority (FINRA).
This amount is in addition to an approximately $9.5 million criminal penalty outlined in the agreement.
The bank will also compensate victims with $4.7 million and forfeit $1.4 million.
This settlement comes at a time when the Canadian bank is reportedly on the verge of pleading guilty to separate charges concerning its U.S. retail bank’s alleged failure to prevent money laundering linked to Chinese crime groups and illegal fentanyl sales, as reported by the Wall Street Journal last week.
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Market News Today – TD Bank Now Gets Caught With Illegal Market Manipulation.
Illegal short sellers will now face life sentence in prison after the National Assembly approved the amendment.
The National Assembly has approved an amendment to the Capital Markets Act aimed at enhancing penalties for illegal short selling, per Business Korea.
Under this new law, individuals who profit illegally from short selling exceeding 5 billion won (around $3.79 million) could face severe penalties, including prison sentences of up to life imprisonment.
On September 27, financial authorities confirmed that the amendment, designed to overhaul the short selling system, passed the National Assembly on September 26.
The legislation mandates that institutional investors must establish an electronic short selling system, and both institutional and corporate investors are now required to implement internal control standards.
Approximately 101 companies, representing 92% of domestic short selling transactions, must adopt these electronic systems.
These firms will also be obligated to report stock balances and over-the-counter (OTC) transactions to the exchange, increasing their compliance responsibilities under the newly instituted central monitoring system.
Securities firms will need to annually verify the internal controls and electronic systems of institutional and corporate investors, following a checklist, and report the findings to the Financial Supervisory Service (FSS).
Non-compliance could result in fines of up to 100 million won.
To standardize short selling conditions for individual and institutional investors, the repayment period for loan transactions related to short selling will also be constrained.
Violations of this rule will incur fines of up to 100 million won, with loan terms extendable in 90-day increments for a maximum of 12 months.
Additionally, the amendment seeks to deter repeated illegal short selling by increasing administrative penalties.
Fines for unfair trading and illegal short selling will rise from three to five times the illicit profit to four to six times.
Offenders earning over 5 billion won from illegal short selling may now face the same enhanced prison terms as those engaging in unfair trading.
Administrative sanctions will be broadened, allowing regulators to restrict trading of financial investment products for up to five years and limit the appointment or reappointment of executives at listed companies.
This aims to tackle the high recidivism rate among financial criminals by effectively barring them from the market for a specified duration.
To combat the concealment of illegal profits, accounts suspected of being involved in unfair trading or illegal short selling can be frozen for up to six months, with a possible extension of an additional six months.
The amended law will take effect on March 31 of next year, providing time for the implementation of the electronic short selling system, which is expected to be operational by then.
However, restrictions on trading financial products and executive appointments will begin six months after the law is enacted, following public consultations.
Upcoming revisions to the enforcement decree will lower the short selling disclosure threshold from 0.5% to 0.01% of outstanding shares and reduce the collateral ratio for individual short sellers to match that of institutional investors, with completion expected by next month.
A representative from the Financial Services Commission (FSC) noted that limiting the loan repayment period for short selling transactions to 12 months, along with finalizing amendments to the Financial Investment Business Regulations, will lower the collateral ratio for individual short sellers from 120% to 105%, leveling the playing field.
The FSC official added, “With the electronic short selling system set to launch in March, the improvements to the short selling framework will be fully realized.
Our goal is to restore investor confidence and enhance the competitiveness of the South Korean stock market.”
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This year we’ve been able to increase push notifications slots making it more convenient than ever for new readers to receive their daily market news and updates.
Illegal short sellers will now face life sentence in prison after the National Assembly approved the amendment.
The National Assembly has approved an amendment to the Capital Markets Act aimed at enhancing penalties for illegal short selling, per Business Korea.
Under this new law, individuals who profit illegally from short selling exceeding 5 billion won (around $3.79 million) could face severe penalties, including prison sentences of up to life imprisonment.
On September 27, financial authorities confirmed that the amendment, designed to overhaul the short selling system, passed the National Assembly on September 26.
The legislation mandates that institutional investors must establish an electronic short selling system, and both institutional and corporate investors are now required to implement internal control standards.
Approximately 101 companies, representing 92% of domestic short selling transactions, must adopt these electronic systems.
These firms will also be obligated to report stock balances and over-the-counter (OTC) transactions to the exchange, increasing their compliance responsibilities under the newly instituted central monitoring system.
Securities firms will need to annually verify the internal controls and electronic systems of institutional and corporate investors, following a checklist, and report the findings to the Financial Supervisory Service (FSS).
Non-compliance could result in fines of up to 100 million won.
To standardize short selling conditions for individual and institutional investors, the repayment period for loan transactions related to short selling will also be constrained.
Violations of this rule will incur fines of up to 100 million won, with loan terms extendable in 90-day increments for a maximum of 12 months.
Additionally, the amendment seeks to deter repeated illegal short selling by increasing administrative penalties.
Fines for unfair trading and illegal short selling will rise from three to five times the illicit profit to four to six times.
Offenders earning over 5 billion won from illegal short selling may now face the same enhanced prison terms as those engaging in unfair trading.
Administrative sanctions will be broadened, allowing regulators to restrict trading of financial investment products for up to five years and limit the appointment or reappointment of executives at listed companies.
This aims to tackle the high recidivism rate among financial criminals by effectively barring them from the market for a specified duration.
To combat the concealment of illegal profits, accounts suspected of being involved in unfair trading or illegal short selling can be frozen for up to six months, with a possible extension of an additional six months.
The amended law will take effect on March 31 of next year, providing time for the implementation of the electronic short selling system, which is expected to be operational by then.
However, restrictions on trading financial products and executive appointments will begin six months after the law is enacted, following public consultations.
Upcoming revisions to the enforcement decree will lower the short selling disclosure threshold from 0.5% to 0.01% of outstanding shares and reduce the collateral ratio for individual short sellers to match that of institutional investors, with completion expected by next month.
A representative from the Financial Services Commission (FSC) noted that limiting the loan repayment period for short selling transactions to 12 months, along with finalizing amendments to the Financial Investment Business Regulations, will lower the collateral ratio for individual short sellers from 120% to 105%, leveling the playing field.
The FSC official added, “With the electronic short selling system set to launch in March, the improvements to the short selling framework will be fully realized.
Our goal is to restore investor confidence and enhance the competitiveness of the South Korean stock market.”
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Market News Today – Illegal Short Sellers Will Now Face Life Sentence In Prison.
Korean regulators now impose billions in fines for illegal trading, particularly when ‘naked short selling’, increasing fees upwards of 5,000%.
The Financial Supervisory Service (FSS) of South Korea is ramping up its enforcement against short sale violations, shifting from treating these breaches as minor infractions subject to low fines to imposing substantial penalties based on the scale of the violations.
This change follows amendments to the Financial Investment Services and Capital Markets Act (FSCMA), which allow penalties to be calculated based on the volume of short sale orders, significantly increasing potential fines.
In March 2023, the Securities and Futures Commission (SFC), part of the FSS, applied this new penalty calculation for the first time, imposing fines on two institutional investors for engaging in illegal short sales.
One case involved an investor mistakenly placing sell orders for shares that were not yet available, leading to a naked short sale.
The other involved an error in inventory management, resulting in a similar breach.
The fines totaled KRW 3.87 billion and KRW 2.18 billion, respectively.
Recent enforcement actions highlight the regulators’ commitment to addressing short sale violations.
In December 2023, the SFC levied penalties of KRW 11.44 billion against a French financial group’s affiliate and additional fines against its Korean affiliate and a UK-based group.
By July 2024, the SFC imposed record fines of KRW 16.94 billion and KRW 10.23 billion on two Swiss-based financial group affiliates.
As investigations into global investment banks continue, it remains unclear whether even larger penalties will follow.
While the SFC has imposed significant fines, a recent court ruling overturned one of its penalties against a European broker for a naked short sale, deeming the fine excessive.
This case involved the broker mistakenly executing sell orders for the wrong fund, leading to a court challenge of the SFC’s authority in imposing such fines.
In a notable escalation, the SFC made a criminal referral in December 2023 for two global investment banks accused of failing to properly document their lending transactions, resulting in prolonged naked short sales.
This marked a significant shift as it was the first time Korean regulators sought criminal liabilities for short sale breaches.
In March 2024, the prosecutor’s office indicted one of the banks and its employees for violating laws against naked short sales.
As Korean regulators continue to maintain strict oversight on illegal short sale activities, it remains to be seen whether they will pursue criminal investigations into other market participants exhibiting similar patterns of behavior.
Interestingly, despite imposing more record fines in July 2024, the SFC chose not to refer any cases for criminal prosecution, highlighting the complexities of regulatory enforcement in this area, per IFLR.
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This year we’ve been able to increase push notifications slots making it more convenient than ever for new readers to receive their daily market news and updates.
