Charles Schwab Settles SEC Probe of Independent Advisers

Brokerage had inconsistent policies on reporting suspicious transactions, the SEC alleges

Charles Schwab & Co. agreed this week to pay $2.8 million to settle U.S. allegations that it lacked consistent policies for reporting suspicious transactions.

The brokerage, a unit of Charles Schwab Corp., failed to file suspicious-activity reports in 2012 and 2013 involving 37 independent investment advisers who were suspected of harming their clients, according to a complaint filed in San Francisco federal court by the Securities and Exchange Commission. Schwab didn’t employ the advisers, but it did execute the trades and held securities for the advisers’ clients.

Schwab investigated and stopped working with the advisers, but it didn’t have clear, consistent policies regarding the types of transactions on which suspicious reports needed to be filed to the U.S. Treasury Department, the SEC alleged. Its failure to file the reports was due to that lack of clarity, and regulators weren’t alerted to suspicious activity as a result, the SEC said.

The transactions involved conflicts of interest, excessive advisory fees and instances in which advisers “cherry picked” trading profits for themselves instead of clients, the SEC alleged. read more »

Glencore to cooperate with U.S. corruption investigation

Glencore Plc said on Wednesday it would cooperate with U.S. authorities after they demanded documents about the mining firm’s business in Democratic Republic of Congo, Venezuela and Nigeria as part of a corruption investigation.

Switzerland-based Glencore received a subpoena from the DoJ last week requesting documents and records on compliance with the U.S. Foreign Corrupt Practices Act and money-laundering statutes. read more »

Time Traders

In today’s markets, every microsecond counts. Discover how the UK’s National Physical Laboratory is keeping regulators up to speed

Just after 2.30 p.m. local time on 6 May 2010, Wall Street experienced one of the biggest, and briefest, crashes in its history. Within minutes, the Dow, one of the three most-followed US market indices, plunged 9%, while prices of individual shares became intensely volatile, in some cases fluctuating between tens of dollars and cents in the same second. More than $850bn was wiped off stock values – although by the end of the trading day they had mostly recovered.

What caused the Flash Crash, as it came to be known? Early theories blamed either an error in trading software, or a human at a computer inadvertently selling a large number of shares – the so-called fat-finger hypothesis. Some analysts even claimed the Flash Crash was merely part of the more exaggerated ups and downs we should expect as financial trading becomes more decentralized and complex. But many suspected foul play.

In April 2015, at the request of US prosecutors, Navinder Singh Sarao was arrested at his parents’ semi-detached home in Hounslow, west London, UK. A lone trader, Sarao, then 36, was accused of crafting “spoofing” algorithms that could order thousands of future contracts, only to cancel them at the last minute before the actual purchases went through. By exploiting the resultant dips in markets, he allegedly earned some $40m (£27m) over five years. read more »

Crypto-Trading Startup Bancor Says $13.5 Million Lost in Breach

Bancor, an Israeli startup that facilitates trading in digital tokens, said a criminal made off with a $13.5 million cache, mostly comprised of Ether.

Using emergency protocols, the company managed to freeze an additional $10 million of its own Bancor tokens, known as BNT, limiting damage from the theft on Monday, the firm said in statement on Twitter. The breach occurred in a wallet used for certain contracts, it said, noting investigators are still pinning down details of what happened.

“We are now working together with dozens of cryptocurrency exchanges to trace the stolen funds and make it more difficult for the thief to liquidate them,” it said.

BNT was down almost 14 percent Monday evening in New York, according to CoinMarketCap.com. A message posted on Bancor’s website said it’s undergoing maintenance and “will be back online soon.” read more »