Four Firms Are Ordered to Pay $4.75M for Market Access Rule Violations
The Financial Industry Regulatory Authority, CBOE Holdings company Bats, the New York Stock Exchange, NASDAQ, and their affiliated Exchanges have fined four financial firms $4.75M collectively for violating the Securities Exchange Act of 1934’s Rule 15c3-5, which is also known as the Market Access Rule. The fines are: $2.5M for Deutsche Bank (DB), $800K for J.P. Morgan (JPM), $1M for Citigroup (C), and $450K for Interactive Brokers (IBKR).
The firms have given market access to quite a number clients that engage in millions of trades daily. However, according to FINRA, Bats, NASDAQ, and NYSE, when doing so, they purportedly did not comply with at least one of the Market Access Rule’s provisions when they did not put in place certain risk management controls and procedures so that orders that were “erroneous or duplicative,” or went beyond certain kinds of thresholds, could be detected or prevented. The firms are also accused of not having systems in place for properly supervising customer trading so that “potentially volatile and manipulative activity” could be avoided.
Halliburton Company Settles Foreign Corrupt Practices Act Violation Allegations for $29.2
The US Securities and Exchange Commission has announced that Halliburton Company will pay over $29.2M to settle charges brought by the regulator accusing the company of violating the Foreign Corrupt Practices Act’s (FCPA) provisions regarding internal accounting controls and books and records. It purportedly did this as it was winning oil field service contracts and while making payments to an Angola-based company. Halliburton made about $14M from the deals involved.
According to the regulator, officials at Sonangol, which is the state oil company of Angola, told the multinational company in 2008 that it would have to partner with additional Angolan-owned business in that country to meet the content regulations for foreign companies.
Halliburton assigned Jeannot Lorenz, now an ex-VP of the company, to lead those efforts. When more oil company projects became available for bidding, Lorenz sought to retain an Angolan company that belonged to an ex-Halliburton employee who was friends with a Sonangol official. This official would end up approving several subcontracts to the company. Halliburton went on to outsource over $13M of business to the Angolan company.
The SEC claims that Halliburton went into contracts with the other company more to satisfy content requirements than for the “stated scope of work.” The regulator accused Lorenz of violating internal accounting controls at Halliburton, not performing competitive bidding, and failing to substantiate the necessity of a single supply source.
Halliburton will pay $14M in disgorgement, $1.2M in prejudgment interest, and a $14M penalty. Although it is settling, Halliburton it is not denying or admitting to the SEC charges. The same goes for Lorenz, who is settling and will pay a $75K penalty.
At The SSEK Partners Group, our securities fraud law firm is here to represent investors that have sustained losses because of negligent or wrongful acts. Contact one of our securities lawyers today.
FINRA, Bats, NASDAQ, and NYSE Fine Firms for Market Access Rule Violations, FINRA, July 27, 2017
The SEC Order in the Halliburton Case (PDF)
Rule 15c3-5 — Risk Management Controls for Brokers or Dealers with Market Access, SEC