Daniel J. Ocasio from the DJO Law Group Identifies Red Flags of SEC Fraud that You Should Be Aware Of

WASHINGTON, July 28, 2021 /PRNewswire/ -- The U.S. Security Exchange Commission (SEC) plays a crucial role in protecting investors from fraudulent activity. Unfortunately, there are individuals and organizations who act in opposition to SEC regulations for monetary or positional gain. If you work in the financial industry, these tips will be a valuable resource in understanding SEC rules and regulations, the type of fraud and red flags currently taking place in the industry, and how you can play an important role in bringing justice to these fraudulent situations. Spotting SEC fraud internally can be a long, arduous process, but we are here to assist you every step of the way. Have you seen this fraudulent activity take place at your company? Below are examples of notorious fraud cases that are similar in nature.

Daniel J. Ocasio, SEC fraud attorney, shares his thoughts, "when investors put their money in the hands of Wall Street, they should be able to do so with the understanding that they're entering into a transparent agreement based on trust. However, broker-dealers sometimes misuse cash or fail to disclose complete and important information, which puts customer securities at risk."

An example of this occurred in June 2016. Merrill Lynch was ordered to pay $415 million to settle charges of misusing customer cash to generate profits. To summarize, Merrill Lynch violated the Customer Protection Rule by using customer cash that should have been kept in the reserve account to engage in complex trades. While that resulted in billions of dollars in revenue from 2009 to 2012 for Merrill Lynch, it would have also resulted in a shortfall for customers if those trades failed. Merrill Lynch also failed to hold fully-paid customer securities in a lien-free account to protect them in the event of the firm collapsing.

"Private funds are also subject to compliance regulations around properly showing the value of securities in funds. When fund managers fail to comply, they can undervalue securities and sell them for a profit when they want. To combat this, fund managers are required to prove information about valuation and pricing vendors" (Daniel J. Ocasio).

For example, in June 2019, the SEC announced that Deer Park Road Management Company, LP agreed to pay $5 million in settlements, with their Chief Investment Officer paying an additional $250,000 penalty. The case against them included failures to have policies and procedures that addressed risk, along with providing inaccurate information to a pricing vendor. That allowed them to mark assets up gradually rather than marking them to market as required.

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About the DJO Whistleblower Law Group
Daniel J. Ocasio created his law firm with a mission to assist individuals in reporting fraudulent activity. Comprised of a highly experienced team of whistleblower experts, lawyers, and even former whistleblowers, our team has investigated and participated in some of the largest and most groundbreaking whistleblower cases.

SOURCE Daniel J. Ocasio Whistleblower Law Group