The SEC charged a Banco Espirito Santo S.A. ("BES"), a Lisbon,Portugal-based multinational banking conglomerate, with a tri-fecta of violations - broker-dealer, investment adviser  and securities transaction registration violations. The based bank offered brokerage services and investment advice between 2004 and 2009 to some 3,800 U.S.-resident customers and clients who primarily were Portuguese immigrants.  BES offered and sold securities to these U.S. customers and clients without the intermediation of a registered broker-dealer.  In addition, none of these securities transactions were registered and many of the offerings didn't qualify for an exemption from registration. SEC Administrative Proceedings. According to the SEC, BES used several means to conduct its U.S. business, including:

• Via its Portugal-based Departmento de Marketing de Comunicacao & Estudo do Consumidor (Department of Marketing, Communications, and Consumer Research) to mail U.S. residents marketing materials.
• With a  customer service call center operated by a 3rd party and located in Portugal - i.e., the ES Contact Center - employed individuals who were dedicated to servicing BES's U.S. customers and offered such U.S. customers various financial products.
• With a state-licensed money transmission service named Espirito Santo e commercial Lisbona Inc., with offices in Connecticut, New Jersey, and Rhode Island.
• Through U.S.-dedicated International Private Banking relationship managers who visited the U.S. about twice a year to meet with clients and serviced U.S. clients from Portugal.

Settlement Sanctions. For allegedly violating Section 15(a) of the Securities Exchange Act of 1934, and Section 203(a) of the Investment Advisers Act of 1940 (acting as unregistered BD and IA), and for willfully violating Sections 5(a) and 5(c) of the Securities Act of 1933 by offering and selling securities in the U.S. without registration and without an applicable exemption, BES agreed to pay nearly $7 million in disgorgement, prejudgment interest and penalties. BES also has agreed to an undertaking that requires it to pay a certain minimum rate of interest to its U.S. customers and clients on securities purchased through BES, and to make whole each of its U.S. customers and clients for any realized or unrealized losses with respect to any securities purchased through BES. SEC NYRO Staff Credits. Investigation by:  Amelia Cottrell, John Lehmann, Charles Riely.  Assisted by B/D exam team:  Robert Sollazzo, Ellen Hersh, Ashok Ginde, Jennifer Grumbrecht. For further details, go to:  [SEC PR 11-221, 10/24/11]   and    [SEC Administrative Proceedings 3-14599]