Friday, May 29, 2015

Thursday, May 28, GAFI Recap: Compliance Officer Turned Criminal, Discover Financial's Anti-Money Laundering Woes & The Fed Awards $65b In Term Deposits

Fraud charges against William Quigley 
Enforcement action against Discover Financial Services (DFS)
Two penny stock promoters charged in Canada
Fed awards $65 billion in 7-day term deposit offering
OFC publishes a paper that aims to predict stock market crashes
  • The SEC announced fraud charges against William Quigley of Long Island for "fleecing investors and stealing money from a brokerage firm" -- Quigley was the Director of Compliance at the firm. “We allege a classic situation of the fox guarding the henhouse as William Quigley subverted his position of trust as compliance director and stole money from investors and his own firm,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.
  • The Federal Reserve brought an enforcement action against the credit card issuer Discover Financial Services (DFS). The company has agreed to improve anti-money laundering policies through a series of plans that must be submitted to the Fed within 90 days. It is unclear what penalties have occurred or will occur if Discover fails to provide adequate improvements. This also suggests we may be seeing charges brought against Discover in the near future from other regulatory agencies such as the Department of Justice through the Foreign Corrupt Practices Act or the Federal Trade Commission.
  • The SEC charged two penny stock promoters in Canada, Mike Taxon and Itamar Cohen, with manipulating the stock of Raven Gold Corporation (RVNG) and natural gas production company Kentucky USA Energy (KYUS). “Taxon and Cohen lured investors to these stocks by depicting the illusion of an active market and positive market trends,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office.
  • On May 28, 2015, the Federal Reserve offered a seven-day floating-rate term deposit with the rate set equal to the sum of the interest rate paid on excess reserves (IOER) plus a fixed spread of 1 basis point. The offering awarded 42 participants a total of $65 billion, $15 billion less than the offering held last week on the same terms.
  • The OFC published a paper that provides readers with a framework that can predict stock market crashes like the 2008 financial crisis. The framework is designed to predict a system-wide collapse with the use of  market liquidity indicators.