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The Morning Risk Report: Scotiabank Fined More Than $127 Million for Price Manipulation, False Statements
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Scotiabank says it set aside money for the fines in earlier quarters. PHOTO: CHRIS WATTIE/REUTERS
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Good morning. The Bank of Nova Scotia agreed to pay more than $127 million to settle civil and criminal allegations in connection with its role in what authorities described as a massive price-manipulation scheme, Risk & Compliance Journal’s Dylan Tokar reports.
The fine is the result of multiple agreements reached Wednesday with the U.S. Justice Department and the U.S. Commodity Futures Trading Commission. The settlements stem in part from thousands of manipulative orders for precious metals futures contracts placed on U.S. exchanges over an eight-year period by four traders at the bank, known as Scotiabank, the agencies said.
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The settlements also resolve claims by the CFTC that Scotiabank made false statements and incomplete disclosures about alleged price manipulation by its traders in connection with a prior investigation by the derivatives market regulator. Scotiabank also agreed to resolve further claims by the CFTC related to its conduct as a swap dealer. Under the agreements with both agencies, the bank will be required to retain an independent compliance monitor for three years.
The price-manipulation scheme was compounded by several compliance failures, federal prosecutors said. In one case, in 2013, one of the traders involved in the unlawful trading contacted a compliance officer to seek clarification on the CFTC’s guidance on disruptive trading practices, they said. The trader’s email detailed how the trader was engaging in problematic activity by placing groups of one-contract orders on one side of the market to facilitate execution on the other, prosecutors said. The compliance officer forwarded the note to a colleague but made no effort to investigate the trader’s practices, they said.
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From Risk & Compliance Journal
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Guilty Plea Entered in PdVSA Corruption Investigation
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A former procurement officer at a Petróleos de Venezuela SA subsidiary has pleaded guilty to an alleged role in a bribery scheme, and a former Citgo manager has been indicted on money-laundering charges, in the latest developments in a sprawling U.S. probe into alleged corruption at Venezuela’s state-owned energy company. At least 27 people have been charged in cases related to the investigation and most have pleaded guilty, according to the U.S. Justice Department.
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Bank of America paid $25 million in fines last year to settle the DOJ investigation. PHOTO: JEENAH MOON/BLOOMBERG NEWS
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A 2019 letter from lawyers for Bank of America Corp. to fraud section prosecutors at the U.S. Justice Department could disrupt the government’s efforts to prosecute former traders on charges related to manipulating prices for precious metals.
The former traders, who are expected to stand trial next year, said in a filing in Chicago federal court that the letter is potentially exculpatory and alleged the Justice Department withheld it for months until Bank of America was about to disclose it to them.
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A federal judge sentenced insurance executive Greg Lindberg to seven years and three months in prison—among the stiffest for white-collar defendants in recent years—for attempting to bribe an insurance commissioner with campaign contributions to secure more favorable regulatory treatment for his insurers.
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The Trump administration’s bid to reimpose United Nations sanctions against Iran risks isolating the U.S. diplomatically while doing little to curb Iran’s access to weapons from Russia and China, analysts and diplomats say.
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Mindful of Russia’s warning against interfering in Belarus, European Union leaders have taken a nuanced approach to the unfolding crisis, preparing sanctions against officials they say are responsible for rigging this month’s presidential election and violently dispersing protesters, while emphasizing that only Belarusians can resolve the turmoil there.
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A media company linked to former Trump political adviser Steve Bannon and exiled Chinese businessman Guo Wengui raised more than $300 million in a private offering this spring that is being investigated by federal and state authorities, say people familiar with the matter.
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Uber and Lyft have said they may suspend their ride-hailing operations in California, escalating a high-stakes battle with their home state over how their drivers should be classified.
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The effect of the new national-security law China imposed on Hong Kong is extending beyond the territory to American colleges. Classes at some elite universities will carry a warning label this fall: This course may cover material considered politically sensitive by China. And schools are weighing measures to try to shield students and faculty from prosecution by Chinese authorities.
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Citigroup widened its effort to claw back money it wired to Revlon lenders, suing more investment firms that say they don’t believe a major financial institution sent them portions of a $900 million payment by mistake. The bank said it wrongly sent $127.3 million to HPS Investment Partners LLC and $109.7 million to Symphony Asset Management LLC and wants a New York federal court to force them to return the money.
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A Covid-19 testing station at Berlin’s main railway station on Tuesday. Germany’s Robert Koch Institute reported 1,510 new infections for Tuesday. PHOTO: MAJA HITIJ/GETTY IMAGES
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Coronavirus infections are surging again across much of Europe and governments are racing to prevent a full-fledged second wave of the pandemic—without resorting to the kind of broad lockdowns that devastated their economies in the spring. Outbreaks are multiplying around vacation hot spots, shopping centers, parties and some workplaces.
Meanwhile, in the U.S., New York Gov. Andrew Cuomo warned of a second wave of coronavirus cases, while officials said they found another uptick in cases in Brooklyn. New York has managed to rein in infections even as it has reopened much of its economy, a feat officials have attributed to widespread testing and slow, phased resumptions of businesses and social gatherings. The statewide rate of positive test results has hovered below 1% for 12 straight days.
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The tire company presented its employees with a list of acceptable and unacceptable slogans to be worn at work. PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS
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President Trump called for a boycott of Goodyear Tire & Rubber Co. in response to reports the company showed a slide to workers prohibiting the wearing of politically affiliated slogans, such as “Make America Great Again” apparel.
Throughout his presidency, Mr. Trump has taken to Twitter frequently to criticize companies. His remarks have sometimes surprised executives, leaving them scrambling to respond to potentially brand-damaging comments intended to influence customers.
The divisiveness of the coming election has created difficulties for businesses looking to regulate political expression in the workplace. Other companies also have had to wrestle with thorny questions related to what types of political speech are appropriate in work settings and when to limit the use of certain phrases or slogans among employees.
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Facebook said it is removing and will limit the spread of accounts that celebrate or suggest violence, including those associated with QAnon as part of a crackdown on the extremist conspiracy theory that has thrived on the company’s platforms in recent years.
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Some e-commerce sellers have experienced delivery delays on packages shipped through the U.S. Postal Service. PHOTO: PATRICK T. FALLON/BLOOMBERG NEWS
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U.S. Postal Service package-delivery delays are causing headaches for e-commerce sellers and prompting digital marketplace eBay Inc. to look for alternatives as heavy online demand taxes domestic parcel networks.
EBay said in a blog post last week that the USPS “continues to be strained” and that the company is “working on other affordable, more reliable delivery options for sellers.”
The problems began in the early weeks of the pandemic, when the Postal Service was coping with staffing problems due to coronavirus outbreaks and a surge of packages as more people shopped online. The issues have continued through the summer.
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