Compliance & Ethics

Morgan Stanley is reportedly in negotiations to settle a prolonged U.S. investigation into its handling of private stock sales. The bank may pay between $500 million and $1 billion to resolve the matter, according to sources familiar with the situation. As part of the potential settlement with the Department of Justice and the U.S. Securities and Exchange Commission (SEC), the bank may agree to strengthen its internal controls. However, it is unlikely to plead guilty to any crime, and individuals are not expected to face criminal charges.

Nostrum Laboratories Inc. and its CEO, Nirmal Mulye, Ph.D., have agreed to a settlement of up to $50 million to resolve allegations that they violated the False Claims Act by knowingly underpaying Medicaid rebates for Nostrum's drug Nitrofurantoin Oral Suspension (Nitro OS). The settlement, which includes a minimum payment of $3,825,000, is contingent on certain financial conditions.

The Financial Action Task Force (FATF), the international watchdog focused on combating financial crime, has announced the addition of Bulgaria to its "grey list." This designation indicates that the country is subject to enhanced scrutiny for money laundering and terrorism financing risks. Meanwhile, four other jurisdictions—Albania, the Cayman Islands, Jordan, and Panama—have been removed from the grey list after meeting specific FATF recommendations.

The Securities and Exchange Commission (SEC) has brought charges against Austin-based software firm SolarWinds Corporation and its Chief Information Security Officer (CISO), Timothy G. Brown, alleging fraud and internal control deficiencies related to known cybersecurity risks. The complaint states that SolarWinds and Brown deceived investors from their initial public offering in October 2018 through the announcement of a major cyberattack called "SUNBURST" in December 2020. SolarWinds is accused of inflating its cybersecurity practices while downplaying or not disclosing existing risks.

The Autorité des marchés financiers (AMF) and the United States Commodity Futures Trading Commission (CFTC) have signed a Memorandum of Understanding (MOU). The MOU aims to facilitate the supervision and oversight of regulated firms that operate across the United States and France.

The Commodity Futures Trading Commission (CFTC) and 30 state securities regulatory agencies affiliated with the North American Securities Administrators Association (NASAA) have jointly announced the entry of a consent order in the U.S. District Court for the Central District of California against Safeguard Metals LLC and Jeffrey Ikahn (formerly Jeffrey Santulan a/k/a Jeffrey Hill). The order finds them liable for orchestrating a nationwide fraudulent scheme, valued at $68 million, involving the sale of overpriced silver coins to elderly and retirement-aged individuals.

In a move that highlights the importance of accurate disclosures in the financial industry, the U.S. Securities and Exchange Commission (SEC) has charged BlackRock Advisors, LLC, an investment adviser, with failing to provide precise information regarding investments in the entertainment industry within a publicly traded fund under its guidance. To settle these charges, BlackRock has agreed to pay a substantial $2.5 million penalty.