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February 05, 2016 at 03:38 AM
Among recent enforcement actions by the Securities and Exchange Commission, Wells Fargo & Co. has agreed to pay $1.2 billion to settle a lawsuit that brought claims of mortgage fraud against the firm.
In addition, the SEC charged a lending company and a brokerage firm with fraud and imposed a $1 million penalty on a brokerage firm for violating anti-money laundering protocols.
Wells Fargo to Pay $1.2 Billion on Mortgage Fraud Claims
Wells Fargo has agreed to pay $1.2 billion to settle a 2012 lawsuit filed in Manhattan that alleged misconduct by the firm in the origination and underwriting of government-insured mortgages.
In an 8-K filing with the SEC, the firm said it had “reached an agreement in principle” not only with the U.S. Attorney’s Office for the Southern District of New York, but also with the U.S. Attorney’s Office in San Francisco and the U.S. Department of Housing and Urban Development to pay $1.2 billion “to resolve certain civil claims … relating to the company’s Federal Housing Administration (‘FHA’) lending program for the time period 2001–2010, as well as other potential civil claims relating to the company’s FHA lending activities for other periods.”
The Department of Justice had sought both damages and civil penalties under the False Claims Act when the suit was first filed.
Brokerage Firm to Pay $1 Million to Settle AML Charges From SEC
Miami-based brokerage firm E.S. Financial Services, now named Brickell Global Markets, has agreed to settle SEC charges that it violated anti-money laundering rules by allowing foreign entities to buy and sell securities without verifying the identities of the non-U.S. citizens who beneficially owned them.
According to the agency, during SEC examinations of E.S. Financial Services, the firm twice failed to provide required books and records identifying certain foreign customers whom they were soliciting directly and to whom they were providing investment advice.
In the SEC examination that followed, E.S. Financial’s customer identification program (CIP) failed to obtain and maintain documentation to verify the identities of certain non-U.S. customers who traded through a brokerage account opened by a Central American bank affiliated with the firm.
During a period of aproximately 10 years, E.S. Financial maintained a brokerage account for a Central American bank that was supposedly trading for its sole benefit. The firm, however, allowed 13 non-U.S. corporate entities and, in turn, 23 non-U.S. citizens who were their beneficial owners to execute more than $23 million in securities transactions through the Central American bank’s brokerage account.
