Nov 7, 2018 | Shareholder & Investor Protection
On November 7, 2018, the Securities and Exchange Commission announced that Citibank N.A. has agreed to pay $38.7 million to settle charges of improper handling of “pre-released” American Depositary Receipts (“ADRs”).
According to the SEC, ADRs – U.S. securities that represent foreign shares of a foreign company – require a corresponding number of foreign shares to be held in custody at a depositary bank. The practice of “pre-release” allows ADRs to be issued without the deposit of foreign shares provided brokers receiving them have an agreement with a depositary bank and the broker or its customer owns the number of foreign shares that corresponds to the number of shares the ADR represents.
The SEC found that Citibank improperly provided ADRs to brokers in thousands of pre-release transactions when neither the broker nor its customers had the foreign shares needed to support those new ADRs. Such practices, according to the SCE, resulted in inflating the total number of a foreign issuer’s tradeable securities, which resulted in abusive practices like inappropriate short selling and dividend arbitrage that should not have been occurring.
This is the second action against a depositary bank and sixth action against a bank or broker resulting from the SEC’s ongoing investigation into abusive ADR pre-release practices. Information about ADRs is available in an SEC Investor Bulletin.
Without admitting or denying the SEC’s findings, Citibank agreed to pay more than $20.9 million in disgorgement of ill-gotten gains plus $4.2 million in prejudgment interest and a $13.5 million penalty for a total of more than $38.7 million. The SEC’s order acknowledged Citibank’s remedial acts and cooperation in the investigation.
Source: SEC.gov
Nov 7, 2018 | Shareholder & Investor Protection
On November 7, 2018, the Securities and Exchange Commission announced that ITG Inc. and its affiliate, AlterNet Securities Inc., have agreed to pay $12 million to settle charges arising from ITG’s misstatements and omissions about the operation of the firm’s dark pool, POSIT, and ITG’s failure to establish adequate safeguards and procedures to protect POSIT subscribers’ confidential trading information.
The SEC’s order found that despite assuring subscribers that it would maintain the confidentiality of their trading information, ITG improperly disclosed the confidential dark pool trading information of firm clients. For example, from 2010 to 2015, ITG sent daily Top 100 Reports for the prior day’s trading activity. The reports identified the top 100 stocks for which certain orders were submitted to POSIT and the top 100 stocks for which certain orders were executed. ITG informed some high frequency trading firms that they could use these Top 100 Reports to identify “potential unsatisfied liquidity needs” in the dark pool, despite assuring subscribers that ITG would not signal their trading intentions.
According to the SEC’s order, ITG misleadingly omitted important structural features of the dark pool. From 2010 to mid-2014, ITG split the dark pool into two separate pools, which prevented certain orders in the two pools from interacting with one another. ITG failed to disclose the separate pools, which had different performance and fill rates, despite specific questions from subscribers about whether ITG “tiered” or segmented the dark pool in any way. The SEC’s order also found that from mid-2014 to late 2016, ITG failed to disclose that the firm applied a “speedbump” to slow down interactions involving orders from certain high frequency trading firms.
According to the SEC, without admitting or denying the findings, ITG and AlterNet consented to the entry of the SEC’s order finding that they violated the antifraud provisions of the securities laws as well as the rules governing the requirements for dark pools. The SEC’s order directed that ITG and AlterNet cease and desist from committing or causing any future violations of those provisions, censures ITG and AlterNet, and orders them to pay the $12 million penalty.
The charges are in addition to charges filed in August 2015 against ITG and AlterNet for operating an undisclosed proprietary trading desk that used confidential customer trading information to trade in the POSIT dark pool.
Source: SEC.gov
Nov 6, 2018 | Consumer Protection, Employment & Technology Archive
On November 2, 2018, the Federal Trade Commission reported that at the request of the FTC, a federal judge temporarily shut down a Florida-based operation that, allegedly, collected more than $100 million by preying on Americans in search of health insurance, selling worthless plans that left tens of thousands of people uninsured. According to the FTC, many of these consumers have incurred substantial medical expenses and have been left with thousands of dollars in unpaid medical bills.
A federal court temporarily halted the operation pending resolution of the case, and the FTC is seeking to permanently stop the defendants’ practices and return money to consumers.
In a complaint filed in federal court against Simple Health Plans LLC, the company’s owner, Steven J. Dorfman, and five other entities, the FTC alleged that the defendants misled people to think they were buying comprehensive health insurance that would cover preexisting medical conditions, prescription drugs, primary and specialty care treatment, inpatient and emergency hospital care, surgical procedures, and medical and laboratory testing.
According to the FTC, consumers who enrolled reported paying as much as $500 per month for what was actually a medical discount program or extremely limited benefit program that did not deliver the promised benefits and effectively left consumers uninsured, the FTC alleged.
According to the FTC’s complaint, the defendants behind Simple Health lured consumers through a network of deceptive lead generation websites that claimed to provide information about comprehensive health insurance. On the websites, the defendants falsely held themselves out as experts on and providers of government-sponsored health insurance policies, such as those offered under Medicare and the Affordable Care Act. In many cases, the sites also misleadingly featured the logos of the AARP or well-known insurance carriers, such as Blue Cross Blue Shield plans, when in fact the defendants were not affiliated with such entities.
For example, one of the websites, www.trumpcarequotes.com, deceptively claimed to offer “Health Insurance for Smart People” from “the Nation’s Leading Carriers” at “Low Affordable Premiums” with “Prescription Drug Coverage.” Another Simple Health website, www.simplemedicareplans.com, promoted “Medicare Health Plans for Your Needs and Budget.”
According to the FTC’s complaint, consumers who submitted their contact information to one of the defendants’ websites or called one of the toll-free phone numbers on the sites ended up on the phone with telemarketers working for the defendants. The telemarketers often falsely identified themselves as insurance agents licensed in the consumer’s state.
The defendants’ telemarketers led consumers to believe that for a one-time enrollment fee, ranging from approximately $60 to $175, and a monthly payment, ranging from approximately $40 to $500, Simple Health could provide them with a “PPO” health insurance plan that was comprehensive and widely accepted by doctors in the consumers’ geographical areas, the FTC alleged. In many cases, they promised that the plans would have no copays or deductibles.
Those who enrolled subsequently learned that the plans they had purchased from Simple Health were not comprehensive health insurance and do not provide the promised coverage and benefits. A typical plan provides no coverage for preexisting medical conditions or prescription medications, pays only $50 toward physician visits—capped at three visits per year—and covers a maximum of $100 per day for hospitalization. The maximum benefit a consumer could realize from the plan is $3,200 per person, per year, and only if that person were hospitalized for 30 days.
The FTC alleged that as a result, tens of thousands of consumers who thought they had purchased comprehensive health insurance found themselves uninsured, some saddled with substantial medical expenses that they assumed would be covered by the purported health insurance they had obtained from Simple Health.
On top of that, because the defendants’ limited benefit plans and discount memberships do not qualify as health insurance under the Affordable Care Act, some people who enrolled were subject to a fee imposed on those who can afford health insurance, but choose not to buy it, the FTC alleged.
The defendants, according to the FTC, have been charged with violating the FTC Act and the agency’s Telemarketing Sales Rule. The defendants named in the complaint are Steven J. Dorfman, Simple Health Plans LLC, Health Benefits One LLC, Health Center Management LLC, Innovative Customer Care LLC, Simple Insurance Leads LLC, and Senior Benefits One LLC.
Source: FTC.gov
Oct 26, 2018 | Consumer Protection, Employment & Technology Archive
Kehoe Law Firm, P.C. is making consumers aware that on October 25, 2018, a class action complaint was filed against Wells Fargo Bank, N.A. (“Wells Fargo”) for alleged violations of the Telephone Consumer Protection Act (“TCPA”). Wells Fargo, allegedly, “placed tens of thousands of harassing calls to wrong parties-people with no ongoing business relationship with Wells Fargo and who owe no debt.”
According to the class action complaint, Wells Fargo “engaged in this ongoing practice of contacting Plaintiff and proposed Class Members on their cellular telephones without their express consent,” and “nonetheless continued to make automated calls,” despite a June 2008 citation issued against Wells Fargo by the FCC for TCPA violations. The complaint stated that
[n]otwithstanding these prior violations of the TCPA, the FCC’s citation, and the prior class action lawsuits and settlements, Wells Fargo violated the TCPA by contacting Plaintiff and proposed Class Members on their cellular telephones by using “an artificial or prerecorded voice” . . . and/or via an “automatic telephone dialing system,” . . . without their prior express consent within the meaning of the TCPA.
Allegedly, in 2016, Wells Fargo started to place calls to the cellular telephone of the Plaintiff from telephone numbers (800) 289-8019, (248) 728-2304, and (888) 804-5037. When telephone numbers (800) 289-8019 and (888) 804-5037 were dialed, recorded messages identifying Wells Fargo played, according to the complaint. The calls to the Plaintiff’s cell phone “were intended for a recipient other than Plaintiff,” and the Plaintiff tried to get Wells Fargo to cease making calls to her cellular telephone number. Additionally, the Plaintiff, according to the class action complaint, was never a Wells Fargo customer and never had a business relationship with Wells Fargo.
The lawsuit seeks to enjoin Wells Fargo from continuing to make calls to the Plaintiff’s and other class members’ cellular telephone numbers without their prior express consent, as well as statutory damages.
Do You Believe You Are a Victim of Illegal Robocalls, Text Messages, “Junk” Faxes or Telemarketing Sales Calls?
If you have received illegal robocalls, text messages, “junk” faxes or telemarketing sales calls, you may be able to recover at least $500 for each illegal call, text or fax you received and, possibly, as much as $1,500 for each illegal call, text message or facsimile that was made either willfully or knowingly in violation of the Telephone Consumer Protection Act.
To help evaluate your potential legal claims under the Telephone Consumer Protection Act, please complete KLF’s confidential Robocall Questionnaire or, if you prefer to speak with an attorney, please complete the form above on the right, e-mail [email protected] or contact Michael Yarnoff, Esq., [email protected], (215) 792-6676, Ext. 804, for a free, no-obligation evaluation of your potential legal rights.
Oct 26, 2018 | Consumer Protection, Employment & Technology Archive
Kehoe Law Firm, P.C. is making consumers aware that on October 16, 2018, a class action lawsuit was filed against Lyft, Inc. in United States District Court, Northern District of California, “ . . . for legal and equitable remedies resulting from the [alleged] illegal actions of Lyft, Inc. in negligently, knowingly, or willfully transmitting unsolicited, autodialed SMS or MMS text messages, en masse, to Plaintiff’s cellular device and the cellular devices of numerous other individuals across the country, in violation of the Telephone Consumer Protection Act . . . .”
Allegedly, Plaintiff’s cellular telephone “received unsolicited text messages from Lyft through Lyft’s ‘Concierge’ program,” without having provided express consent. According to the complaint:
. . . in 2016, Lyft started shifting part of its marketing budget to its “Concierge” program to gain access to new customers. The “Concierge” program obtains cellphone numbers from the customers of third-party entities without the cellphone subscribers’ consent. Lyft then contacts the cellphone subscribers via text message even though the persons never agreed to having their cellphone numbers shared with Lyft nor did they agree to receive any text messages from Lyft.
Lyft’s “Concierge” program is especially nefarious because Lyft does not inform the persons that they are receiving the text message as part of Lyft’s “Concierge” Program, nor does Lyft give the persons the ability to opt out of receiving text messages from Lyft.
Do You Believe You Are a Victim of Illegal Robocalls, Text Messages, “Junk” Faxes or Telemarketing Sales Calls?
If you have received illegal robocalls, text messages, “junk” faxes or telemarketing sales calls, you may be able to recover at least $500 for each illegal call, text or fax you received and, possibly, as much as $1,500 for each illegal call, text message or facsimile that was made either willfully or knowingly in violation of the Telephone Consumer Protection Act.
To help evaluate your potential legal claims under the Telephone Consumer Protection Act, please complete KLF’s confidential Robocall Questionnaire or, if you prefer to speak with an attorney, please complete the form above on the right, e-mail [email protected] or contact Michael Yarnoff, Esq., [email protected], (215) 792-6676, Ext. 804, for a free, no-obligation evaluation of your potential legal rights.
