The Securities and Exchange Commission recently barred and fined a broker-dealer’s former registered representative for sharing confidential client information with a former c-oworker and fined Qualcomm $7.5 million to settle bribery charges. It also won a successful jury verdict in an insider trading case.
In addition, the Financial Industry Regulatory Authority barred a California-based broker for churning, excessive and unsuitable trading of customer accounts and unauthorized trades.
SEC Suspends, Fines Registered Rep for Sharing Confidential Client Info
Maximilian Santos was suspended by the SEC and fined $75,000 after the regulator found that he had shared confidential client information with a former co-worker who had left the firm after a National Association of Securities Dealers arbitrator found that he had engaged in unauthorized trading in a customer’s account.
According to the SEC, from at least 2005 — the year during which Santos’s former coworker left the firm — through January 2012, Santos shared confidential information pertaining to at least 14 of his customers’ accounts with that former co-worker, and used a personal email address to do so instead of the email provided by the broker-dealer.
Some of the information he sent included certain customers’ account holdings, cash balances and reports of trade activity. He did this without the customers’ knowledge or consent, and without those customers having been given notice of and an opportunity to opt out of the disclosures.
On his co-worker’s departure, Santos had taken over the bulk of his accounts, but despite leaving the firm, the former coworker periodically requested information about his former customers’ accounts from Santos.
Not only did Santos use a personal email address to communicate with his former coworker, to avoid using that coworker’s name in the BD’s email system, he used a personal cellphone to use that personal e-mail account because the broker-dealer blocked access via firm computers to personal email accounts.
Santos also periodically emailed information about his customers’ accounts from his work e-mail account to his personal e-mail account, including stock positions and, on at least one occasion, copies of a customer’s passport, without taking any precautions to keep the data secure.
In addition, he used his personal email account to conduct official business and to service a customer’s account. Among other things, Santos used a personal email address to send wire instructions to the customer; send the customer a stock research report; confirm the customer’s position in a certain security; and field a question from the customer regarding specific trades and the scope of Santos’ authorization to place those trades.
Santos has neither admitted nor denied the SEC’s findings but has consented to the sanctions.
Qualcomm Fined $7.5M for Bribing Chinese Officials With Internships for Relatives
Qualcomm Inc. has agreed to pay $7.5 million to settle charges that it violated the Foreign Corrupt Practices Act by hiring relatives of Chinese government officials deciding whether to select the company’s mobile technology products amid increasing competition in the international telecommunications market.
According to the agency, its investigation found that Qualcomm also provided gifts, travel and entertainment to sway officials at government-owned telecom companies in China. In addition, a lack of sufficient internal controls to detect improper payments meant that Qualcomm misrepresented in its books and records that those were legitimate business expenses.
Qualcomm offered and provided full-time employment and paid internships to foreign officials’ family members internally referred to as “must place” or “special” hires in order to try to obtain or retain business in China. In one such case, an official asked for an internship for her daughter studying in the U.S. and the company obliged, acknowledging in internal communications that her parents “gave us great help for Q.C. new business development.”