SEC Halts Microcap Fraud Scheme Orchestrated Through International Accounts

The Securities and Exchange Commission has filed an emergency action and obtained an asset freeze against two individuals and their companies in a scheme that generated more than $165 million of illegal sales of stock in at least 50 microcap companies.  SEC investigators unraveled the multi-year scheme with the assistance of more than a dozen international regulators and sophisticated analysis of nearly 400 bank and brokerage accounts.

According to the SEC’s complaint unsealed today, U.K. citizen Roger Knox and his Swiss-based company Wintercap SA helped microcap securities holders evade federal securities laws that restrict sales by large shareholders.  The complaint charges that Knox and Wintercap, formerly Silverton SA, helped sellers conceal their stock ownership and provided anonymous access to brokerage accounts to sell the shares in the U.S. market.  For three specific issuers detailed in the complaint, Knox sold the stocks when their price and trading volume were inflated by promotional campaigns.  Michael T. Gastauer allegedly aided and abetted the fraud by establishing several U.S. corporations and allowing Knox to use their bank accounts to disburse the proceeds of his illegal stock sales. read more »

The $500 Million Central Bank Heist—and How It Was Foiled

Officials in Angola have charged four men in connection with an alleged plot to siphon off a big chunk of its central-bank reserves, The Wall Street Journal reports.

The charges stem from a $500 million transfer that authorities in Angola allege was part of a convoluted plot to defraud the southern African country in the final weeks of President José Eduardo dos Santos’s 38-year rule.

If Angolan prosecutors are right, a teller at a suburban London branch of HSBC Holdings PLC helped thwart one of the biggest attempted bank heists ever. read more »

U.S inquiry deepens Danske money-laundering crisis

Danske Bank (DANSKE.CO) faces a U.S. criminal investigation into a 200 billion euro ($230 billion) money laundering scandal at its Estonian branch which has rocked investor faith in Denmark’s biggest lender and forced its chief executive to quit.

Shares in Danske Bank have lost a third of their value this year on fears of a U.S. inquiry because of the potential for significant penalties such as fines or being frozen out of dollar funding. read more »

Federal Court Finds that Virtual Currencies Are Commodities

Court Denies Defendants’ Motion to Dismiss in Commodity Fraud Case Involving the Virtual Currency My Big Coin

Agreeing with the CFTC’s arguments, the Court held that the CFTC had sufficiently alleged that the particular virtual currency at issue, My Big Coin was a commodity under the Commodity Exchange Act because the CFTC alleged that MBC “is a virtual currency and it is undisputed that there is futures trading in virtual currencies (specifically involving Bitcoin).”  According to the Court, the term “commodity” “includes a host of specifically enumerated agricultural products as well as ‘all other goods and articles . . . and all services rights and interests . . . in which contracts for future delivery are presently or in the future dealt in.”  The Court specifically agreed with the CFTC that “Congress’ approach to defining ‘commodity’ signals an intent that courts focus on categories—not specific items.”  The Court found that ‘[t]his broad approach also accords with Congress’s goal of ‘strengthening the federal regulation of the . . . commodity futures trading industry,’ . . . since an expansive definition of ‘commodity’ reasonably assures that the CEA’s regulatory scheme and enforcement provisions will comprehensively protect and police the markets.” read more »