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- SEC Order Rejecting Acquisition of Chicago Stock Exchange (CSX) by Chinese-Baesd Company
- Kyle Moffatt Named Chief Accountant in SEC CorpFinance
- SEC Suspends Trading in 3 Issuers Claiming Involvement in Cryptocurrency and Blockchain Technology
- Karen Garnett, Assoc. Director of SEC CorpFinance, to Leave After 23 Years of Service
- Louisiana Adviser Barred for Hiding Losses from Investors
- Connecticut HF Manager Illegally Diverted Investor Money - Now Owes Nearly $13Mn
- White House Cleaning House of Advisors Without Full Security Clearance
- Goldman Projects 30% Growth in Wealth Management Advisor Force
- Whistleblower Alleges Manipulation of CBOE Volatility Index
- FINRA Looking Into VIX (CBOE Volatility Index) Manipulation: WSJ
- Atlanta-Area Resident Charged with Misusing Investor Funds - SEC
- FINRA Announces 2018 West Region Networking Seminar
- Alberto Arevalo, Associate Director in Office of International Affairs, to Retire From SEC
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NEWSLETTERS & ALERTS
Individual Defrauds Hundreds of Broker-Dealers, Gets 15 Months in Jail
In March, a Massachusetts resident was sentenced to 15 months in jail for orchestrating a scheme that defrauded numerous brokerage firms. The defendant was also ordered to pay over $20,000 in restitution to 3 brokerage firms for losses caused by his fraudulent conduct.
THE SCHEME. From 2007 through April 2015, Nathanial Ponn opened several hundred brokerage accounts at various broker-dealers. Upon opening these accounts, Ponn purported to fund them with bank transfers, mostly Automated Clearing House ("ACH") transfers, from bank accounts that were substantially underfunded or fictitious.
However, before the brokerage firms discovered the fraud, many of them credited Ponn's brokerage accounts, which allowed him to purchase securities and to attempt to withdraw money. Once the broker firms discovered the bogus nature of the bank transfers, they locked Ponn's accounts, sold off the accounts' holdings, and ultimately closed the fraudulently opened accounts.
INCURRED LOSSES. All told, Ponn opened some 600 brokerage accounts and ‘arranged’ around $8.7 million in bogus bank transfers. Based on these 'transfers', brokerage firms credited Ponn's accounts for approximately $6.3 million, which Ponn then used to purchase approximately $2.9 million's worth of securities. He also attempted to withdraw at least $271,000 from these accounts.
Although internal control procedures of most firms prevented Ponn from making cash withdrawals before the bank transfers were confirmed, he was able to withdraw $300 during the scheme. And, the $2.9 million in fraudulent securities purchases caused the brokerage firms to suffer net trading losses of approximately $26,000, while putting them at risk for much more.
On 12/7/16, Ponn pled guilty to 3 counts of wire fraud in the parallel criminal action.. The SEC's litigation against Ponn continues. [SEC Compliant]