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(Bloomberg) -- Oppenheimer Holdings Inc. will pay $20 million to settle U.S. regulatory claims that it improperly sold billions of shares of penny stocks on behalf of customers.
Oppenheimer admitted that it failed to report red flags that its client Gibraltar Global Securities, a Bahamas-based firm, was carrying out the transactions without being registered in the U.S., the Securities and Exchange Commission said in a statement. The firm acknowledged additional sales of penny stocks for a different customer that resulted in about $588,400 in commissions, according to the SEC.
In a statement, Oppenheimer said it was pleased to resolve the claims, which involve activity from “years ago.”
The SEC in April 2013 sued Gibraltar, saying the firm had been operating illegally in the U.S. since 2008. Gibraltar is fighting the claims in Manhattan federal court.
The settlements made public Tuesday call for Oppenheimer to pay $10 million to settle the SEC case and another $10 million to resolve related violations with the Treasury Department.
Jennifer Shasky Calvery, director of the Treasury Department’s Financial Crimes Enforcement Network, said Oppenheimer faced stiffer penalties because it was a repeat offender. Oppenheimer paid $2.8 million in 2005 over anti-money laundering violations.
The SEC said its investigation is continuing.
Europe Financial Transaction Tax Gets New Push From 10 Countries
A group of 10 euro-area countries renewed their joint effort to implement a tax on financial transactions after talks collapsed last month.
Finance ministers from Austria, Belgium, Estonia, France, Germany, Italy, Portugal, Slovakia, Slovenia and Spain made a joint statement after meetings in Brussels.
Differences over taxation of derivatives and the cost- efficiency of the tax in smaller countries caused talks to break down late last year. The group, which wants the levy to apply as widely as possible, is now asking the European Commission for technical advice.
Saxo Faces Lawsuits for Repricing Franc Trades Retroactively
Saxo Bank A/S says it’s bracing itself for lawsuits from some clients who are unhappy with its efforts to have them cover losses on their Swiss franc accounts after the bank repriced trades retroactively.
The Danish bank set a Jan. 23 deadline for clients to respond to its estimates of how much they’d lost trading francs using borrowed funds. Saxo said talks with institutional and retail customers will probably take “a couple of months.” The bank estimated its own losses may be as high as $107 million.
Steen Blaafalk, Saxo’s chief financial officer and head of risk management, said Jan. 26 in a phone interview that legal challenges are “not unlikely.”
Since the Swiss National Bank’s shock decision on Jan. 15 to abandon its euro peg, Saxo has raised its margin requirements not only on the franc but also on most major currencies in an effort to reflect what Blaafalk said is a return to “extreme volatility” across markets.
The bank confirmed Tuesday in Denmark that it repriced franc trades on Jan. 15, citing “very limited liquidity” at the time the trades were executed. Saxo told clients at 11 p.m. Copenhagen time on that day it was doing so, according to spokesman Kasper Elbjoern.
Censeo Asset Management, based in Vienna, said in a press release Tuesday that it “can’t recognize the lawfulness of this measure” and it will help its clients challenge Saxo’s repricing if a review shows the action is “questionable under Austrian law.” The company offered clients a Saxo-brokered franc product.
Saxo is now urging clients to gird for more market disruptions as bond purchases by the European Central Bank distort asset prices and as Greece prepares to renegotiate its bailout terms.
--With assistance from Dave Michaels in Washington, Frances Schwartzkopff in Copenhagen, Mark Deen in Paris and Rebecca Christie in Brussels.
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