The Securities and Exchange Commission announced charges against 15 broker-dealers and one affiliated investment adviser for widespread and longstanding failures by the firms and their employees to maintain and preserve electronic communications.
The firms admitted the facts set forth in their respective SEC orders, acknowledged that their conduct violated recordkeeping provisions of the federal securities laws, agreed to pay combined penalties of more than $1.1 billion, and have begun implementing improvements to their compliance policies and procedures to settle these matters.
“Finance, ultimately, depends on trust. By failing to honor their recordkeeping and books-and-records obligations, the market participants we have charged today have failed to maintain that trust,” said SEC Chair Gary Gensler.
The SEC staff’s investigation uncovered pervasive off-channel communications. The firms cooperated with the investigation by gathering communications from the personal devices of a sample of the firms’ personnel. These personnel included senior and junior investment bankers and debt and equity traders.
From January 2018 through September 2021, the firms’ employees routinely communicated about business matters using text messaging applications on their personal devices. The firms did not maintain or preserve the substantial majority of these off-channel communications, in violation of the federal securities laws.
By failing to maintain and preserve required records relating to their businesses, the firms’ actions likely deprived the Commission of these off-channel communications in various Commission investigations. The failings occurred across all of the 16 firms and involved employees at multiple levels of authority, including supervisors and senior executives.
The following eight firms (and five affiliates) have agreed to pay penalties of $125 million each:
Barclays Capital Inc.;
BofA Securities Inc. together with Merrill Lynch, Pierce, Fenner & Smith Inc.;
Citigroup Global Markets Inc.;
Credit Suisse Securities (USA) LLC;
Deutsche Bank Securities Inc. together with DWS Distributors Inc. and DWS Investment Management Americas, Inc.;
Goldman Sachs & Co. LLC;
Morgan Stanley & Co. LLC together with Morgan Stanley Smith Barney LLC; and
UBS Securities LLC together with UBS Financial Services Inc.
The following two firms have agreed to pay penalties of $50 million each:
Jefferies LLC; and
Nomura Securities International, Inc.
Cantor Fitzgerald & Co. has agreed to pay a $10 million penalty.
Each of the 15 broker-dealers was charged with violating certain recordkeeping provisions of the Securities Exchange Act of 1934 and with failing reasonably to supervise with a view to preventing and detecting those violations. DWS Investment Management Americas, Inc., the investment adviser, was charged with violating certain recordkeeping provisions of the Investment Advisers of 1940 and with failing reasonably to supervise with a view to preventing and detecting those violations.
In addition to the significant financial penalties, each of the firms was ordered to cease and desist from future violations of the relevant recordkeeping provisions and were censured.
The firms also agreed to retain compliance consultants to, among other things, conduct comprehensive reviews of their policies and procedures relating to the retention of electronic communications found on personal devices and their respective frameworks for addressing non-compliance by their employees with those policies and procedures.
Investors will be looking to find managers that combine a positive track record with robust on-the-ground research teams to create attractive investment cases, Cerulli adds.
Net new flows into passive emerging market products have remained positive so far this year, despite risk-off sentiment and the high level of outflows from other segments of the European fund market. Emerging market index funds gathered $1.84 billion in 1H 2022, after collecting a record $15.11 billion last year. Emerging market ETFs achieved registered net sales of $7.46 billion as of June 2022, compared to $11.91 billion in 2021 and €10.6 billion the previous year.
“Appetite for emerging market exposure in Europe continues to vary by market,” says Fabrizio Zumbo, director of research at Cerulli. “More than half of the providers we surveyed expect the U.K. to be the primary driver of future demand for emerging market ETFs, followed by Switzerland and Germany.”
Nearly half (46%) of the ETF issuers across Europe believe that Asia represents the most attractive opportunity in emerging markets when it comes to gathering new client assets and 94% of index fund providers agreed. Two-thirds (66%) of ETF issuers believe that clients will increase their allocations to China over the next 12 to 24 months. Expectations are more muted in the index fund space, perhaps because fewer China-specific products are currently available than in the ETF space.
Almost two in five (39%) ETF issuer respondents expect China to be the number-one source of client demand over the next 12 to 24 months when it comes to emerging market investing. More than one in five (21%) expect India to attract local investment interest.
“Although the outlook for passive emerging market products is generally positive, many market participants warn that the current macroeconomic and geopolitical picture is deterring client investment in the space—at least in the short term,” adds Zumbo. “Others remain concerned about the environmental, social, and governance credentials of emerging markets in the medium term.”
Almost two-thirds (63%) of the ETF issuers Cerulli surveyed said that changes to indices will be a key catalyst for greater investment in emerging market assets. Addressing the current lack of investment may require action on the part of index providers such as MSCI.
The Florida International Bankers Association (FIBA) is a non-profit professional association founded in 1979. The main focus of FIBA members is international finance, international correspondent banking and wealth management or private banking services for non-residents.
FIBA has long been recognised by regulators for its knowledge and expertise in Anti Money Laundering (AML) compliance and its excellent courses. FIBA has been providing anti-money laundering training for more than two decades, including its Annual Conference and FIBA AMLCA and CPAML certifications in partnership with Florida International University (FIU). FIBA will soon be organising two new courses for which you can register with a $200 discount code provided by Funds Society (FS200).
CPAML Certification (25/26th October)
The CPAML is an advanced level certification designed to expand the knowledge of professionals, officers, directors, or managers of any organization, with respect to the prevention of money laundering and financing of terrorism (AML / CFT).
The program is developed with a risk-based approach to identify potential risks, design an effective control system, investigate suspicious cases, and how to use these processes to best evaluate the effectiveness of internal controls.
The online course is an interactive option design for participants interested in completing the certification at their own pace. Through open discussions and activities, participants will have the opportunity to actively engage with the instructor and classmates to discuss the assigned materials.
October 25-26: Students will attend the CPAML course via Zoom videoconference
October 28: Students will work on their assignments and submit their workbooks before 5:00 PM EST
November 24: Final exam deadline – must be completed via Canvas before 11:59 PM EST
Participants who pass the final exam with an 81% or higher will earn the CPAML certificate. This certificate is valid for 2 years with 20 AML Continuing Education credits.
The registration fees are $1595 USD for non-members; $1395 USD for FIBA members; and $1195 USD for Government. Funds Society readers can access an exclusive discount with the code FS200.
AMLCA Certification (From 17th November)
The internationally recognized AMLCA Certification (Anti-Money Laundering Certified Associate) is designed for intermediate-level compliance officers in both financial and non-financial sectors. The in-depth curriculum is based on best practices and international standards regarding the origin, practices, and development of regulations in money laundering, terrorism financing, and the proliferation of weapons of mass destruction.
The next edition will start in 17th November. The online course is an interactive option design for participants interested in completing the certification at their own pace. Through open forums and discussions, participants will have the opportunity to actively engaged with the instructor and classmates to discuss the assigned materials. Participants will have 90 days to complete the reading materials, PowerPoint narratives, 23 practice quizzes and the final certification exam.
The final certification exam consist of 100 multiple choice questions that must be completed within 1 hour and 45 minutes. Participants must pass the exam with a 75% or higher mark to receive the prestigious FIBA AMLCA Certification.
The registration fees are $1395 USD for non-members; $1195 USD for FIBA members; and $995 USD for Government. Funds Society readers can access an exclusive discount with the code FS200.
Private bank and bank trust executives are actively implementing inorganic growth strategies, namely mergers and acquisitions (M&A) and advisor recruitment, to achieve scale in an increasingly competitive wealth management environment, according to The Cerulli Report—U.S. Private Banks & Trust Companies 2022.
Firms that can offer a wide range of services (i.e., planning, trust, banking) and a strong advisor platform will be able to compete more efficiently to serve their clients’ needs,
Cerulli’s research finds more than two-thirds (68%) of private bank and bank trust executives are considering M&A opportunities to grow and adapt their businesses. Among these firms, 62% are considering acquiring and integrating a smaller firm from their channel, while 38% are considering merging with a peer of equivalent size.
M&A activity is being driven by the desire to achieve greater economies of scale, according to 75% of bank executives.
“Adding more scale not only allows firms to reduce redundancies and improve margins, but also increases the capability of a firm to deepen existing relationships with clients,” says Chayce Horton, research analyst. “As technology and service demands grow among consumers, more scaled and integrated firms will be able to provide seamless, comprehensive, and cost-competitive financial services experiences for their clients.”
Bank trust executives are also working to expand advisor headcount—53% indicate they are actively recruiting advisors and teams from other firms. Historically, the bank channel has not been a significant beneficiary of advisor migration. More than two-thirds (68%) of advisors in the bank and trust company channel have only ever worked within that channel—only 17% previously worked at a wirehouse while just 7% have experience at a hybrid or independent registered investment advisor (RIA).
However, as banks look to create scaled and integrated organizations, one of the major goals is to be viewed as a competitive platform for advisors in motion. “Firms that have adequate operational scale with a wide breadth of services and a strong advisor platform can hope to be attractive landing spots for advisors who are dissatisfied with restrictions of very large institutions but do not want to bear the burdens of a fully independent operating model,” says Horton. “Reaching a ‘Goldilocks’ zone where effective integration is attainable, but scale is not cumbersome, is a balance that most firms in the bank and trust space can strike,” he concludes.
Julius Baer is pleased to announce it has become a strategic investor and business partner of GROW Investment Group. With this partnership, Julius Baer takes a first step into onshore China and at the same time, GROW’s clients will gain access to Julius Baer’s global investment expertise.
GROW is a China-based domestic asset management company, established and led by an award-winning team of senior investment professionals with a proven, top-performing track record and a strong history of building innovative and market-leading investment and distribution platforms. Its mission is to be a world-class, next generation asset management firm with a focus on China.
Backed with a low double digit million US dollar equity investment by Julius Baer into GROW, the partners will jointly establish a distribution network so that GROW’s domestic clients will gain access to selected Julius Baer offerings via Qualified Domestic Limited Partnership products and Julius Baer’s global clients will gain access to local investment expertise and assets via Qualified Foreign Institutional Investor products of a renowned and trusted Chinese partner.
Commenting on the partnership, David Shick, Head of Greater China at Julius Baer, said: “We are delighted to participate in the evolution of onshore wealth management in China through such an unprecedented partnership. We are convinced that the opportunities in the sector in China are bright, and we are looking forward to gaining visibility and bringing our best-in-class solutions and expertise to Chinese clients. The cooperation between GROW and Julius Baer will undoubtedly create value for these clients and support our growth plans for this important market.”
William Ma, Global CIO of GROW, added: “We are honoured to welcome one of the most prestigious global wealth management firms as a strategic investor. This agreement with Julius Baer reflects their confidence in us and is testament to our best-in-class asset management capabilities and access to our onshore China network. I believe there are significant untapped opportunities for us in onshore China and look forward to growing our business together with Julius Baer.”
The global, unconventional venture fund TheVentureCity has launched a free tool to measure the healthy growth of any startup: Growth Scanner. The custom analysis gives startups invaluable insight into the true health of their product, through the lens of the VC organization’s experienced team of data scientists and investors, according the firm information.
Built by founders, for founders, TheVentureCity’s own data team crunches startups’ numbers to break down the crucial metrics needed to scale long-term.
Startups taking advantage of Growth Scanner first upload at least 6 months of data relating to users’ historical actions on their product to the platform. Those numbers are then transformed into a comprehensive, custom analysis of key metrics, benchmarks, strengths and weaknesses – all in a sharable, canvas-style dashboard with numbers and charts to help you visually tell your story to investors and stakeholders.
Moreover, every startup gets at least a 30-minute call in which TheVentureCity’s data experts will provide context and answer any questions. Also unlike similar products on the market, TheVentureCity’s Growth Scanner does not require startups to instrument their data, simply using the historical data they have already captured. The data is not shared with third parties.
“Most young startups do not have a data science team, nor much support when deciding how to get the most out of their data,” says Laura González-Estéfani, Founder and CEO of TheVentureCity. “They might only focus on revenue and number of users at investor meetings, which can be exaggerated or bought, while ignoring statistics on user engagement and retention – which are the true signals that reveal the potential for hyper growth.”
Growth Scanner focuses on key metrics like retention/churn, engagement, and growth accounting, using tactics derived from the original Facebook growth team. TheVentureCity uses this data to assess the strength of a startup’s product-market fit, and give founders a better understanding of their product growth levers and benchmark within their industry so they can reach smart business decisions. They are also the statistics investors are most interested in hearing about.
After building products in the early days of Facebook, WhatsApp and eBay, TheVentureCity’s international team came together to seek out high-potential startups regardless of zip code or time zone. Five years and over 100 investments later, these VCs know that to scale sustainably, startups must harness data instrumentation and analysis. As it analyzed countless startups’ transactional and usage data logs, TheVentureCity put together their own extensive data stack to train its data analytics technology.
Among TheVentureCity’s core beliefs is that VCs should not only give capital away but wisdom, and they decided to do so by democratizing data-driven advice for founders, regardless of whether or not they were in their portfolio. That is why it opened up its analytics technology up to all startups in the form of Growth Scanner. While this is a novel launch for the VC industry, it is just another step in TheVentureCity’s dedication to driving a more sustainable, data-driven approach among startups.
Morgan Stanley Private Wealth Management announced the hiring of Edoardo Castelli in Miami from J.P. Morgan.
“Please join me in welcoming Edoardo Castelli to the Morgan Stanley Private Wealth Management Branch in Miami!,” posted Dalia Botero, Executive Director, Branch Manager of Morgan Stanley Private Wealth Management in the Florida.
The advisor with more than 12 years in the Miami industry started as a Private Bank Analyst for Brazilian clients at J.P. Morgan in 2010, then moved to Associate Banker until 2016, according to his LinkedIn profile.
After a brief stint at Brightstar Corp. he returned to J.P. Morgan where he was a Client Advisor until September of this year, according to his BrokerCheck records.
“Edoardo built a successful career at JP Morgan Private bank for over a decade before moving to Morgan Stanley PWM,” Botero commented in his posting.
Castelli has a BBA and Finance from the University of Miami Herbert Business School.
BNY Mellon will present an alternative approach with its Global Real Return Fund strategy at the VIII Funds Society Investment Summit.
“The BNY Mellon Global Real Return Fund is a flagship fund offering investors an unconstrained, multi-asset liquid alternative approach to markets, consisting of a flexible, dynamic and transparent portfolio of predominantly direct and liquid investments,” the firm says.
During the event, to be held October 5-7 at the PGA National Resort in Palm Beach, Carlos Rodríguez, Head of Portfolio Specialist & Intermediary Relations Group, Americas at Newton, will give evidence of how the portfolio “achieves lower volatility and reduced correlation to equity markets.”
This objective is achieved by investing in two components. Firstly, a return-seeking core and secondly, a stabilizing layer, according the firm’s information.
“An active, dynamic and flexible portfolio designed to maximize returns in favorable markets while preserving capital in turbulent times,” concludes the BNY Mellon presentation.
Carlos Rodriguez
Rodríguez leads a team of portfolio specialist who are responsible for representing Newton’s investment team in North America. His responsibilities include working with our distribution partner BNY Mellon and other financial intermediaries. Rodríguez works closely with our investment teams in London and regularly joins investment team meetings. As a Senior Portfolio Specialist, he represents our core strategies to investors in the US, Canada, and Latin America.
U.S. short term bonds may be one of the outlets in the face of market volatility, according to the “Consider Short Duration” presentation to be led by Amundi at the VIII Funds Society Investment Summit in Palm Beach.
According to Amundi, “It has been a volatile year for bond investors, with stubbornly high inflation and rising interest rates. Investors looking to weather the uncertainty may turn to short-duration bonds, which tend to be less sensitive to interest rate movements than longer debt instruments.”
During the event, which will be held October 5-7 at the PGA National Resort in Palm Beach, Amundi will present its Amundi Funds Pioneer US Short Term Bond strategy.
” In particular, Amundi Funds Pioneer US Short Term Bond’s floating rate focus can be used within a laddered approach to liquidity to bridge the gap between cash and core fixed income,” says the description of the strategy that will be presented by Meredith Birdsall, CFA, Senior Vice President, and Client Portfolio Manager for the Amundi US.
Birdsall is a Senior Vice President, and Client Portfolio Manager for the Amundi US Fixed Income team. In that capacity, she meets with prospects and clients to discuss the firm’s economic and market outlook, as well as Amundi US’s fixed income strategies. She has been involved in the investment industry for over thirty years.
Sales team: Roberto Gonzalez, Regional Vice President for the US Offshore business and Felix Canela is a Hybrid Wholesaler – US Offshore at Amundi US.
Roberto González
Roberto González is a Regional Vice President with Amundi Asset Management US, and covers Texas, Arizona, south of California and other relationships in Miami. These relationships include: Wirehouses, Banks, and Independent broker/dealers. Roberto provides financial strategies and market updates to help clients to achieve their financial goals. He is passionate about cultivating long-term customer value, he is bilingual English and Spanish, and conversant in Portuguese.
González has more than 25 years of sales experience. Prior to joining Amundi Asset Management US in 2018, he worked in different capacities for Legg Mason for 14 years. Prior to that, he was at Franklin Templeton for two years, in Latin America and the US.
He earned his MBA in 1996 from University of Florida, and prior a bachelor’s degree from Universidad Metropolitana, Caracas, Venezuela.
Felix Canela
In this role, he supports the international business with strong client and sales relationship management skills.
He serves as an international client and relationship manager with over nine years of experience working with Latin America Pension Funds (AFPs) US Offshore Accounts and
Mexican Pension Companies (Afores). Canela is experienced in the area of offshore mutual fund services, focusing on marketing, retail and institutional sales and operations with an emphasis on project management.
He holds a BS in Finance and Accounting from the University of Massachusetts.
U.S. food supply chains are still struggling due to labor shortages, weather and trade disruptions, says a report from ING bank.
According to ING, food manufacturers will be looking for a balance between quick fixes and structural solutions to increase resilience. Economic headwinds could ease pressure, but also cast uncertainty over investments.
For U.S. food and beverage manufacturers, many disruptions in their supply chains began with the pandemic. In terms of consumption patterns, the impact of the initial COVID-19 has clearly subsided.
Food spending has recovered to normal levels and now accounts for 52% of all food and beverage spending. However, demand remains dynamic, as food inflation tightens household finances and leads some consumers to switch from premium products to cheaper offerings. This forces food manufacturers to review aspects such as product ranges, production volumes and marketing.
In addition, food processors have to deal with many other issues. Supplier delays are commonplace for many companies, and labor shortages are one of the biggest problems on the supply side.
“Labor shortages range from truck drivers to warehouse workers to factory personnel to stockers to restaurant staff. This situation is exacerbated by the fact that absenteeism due to illness remains higher than before the pandemic,” asserts the research.
There are currently two job openings in the United States for every unemployed American. In addition, trade suffered setbacks and input prices soared.
“For U.S. manufacturers, elevated price levels for raw materials and non-food inputs, such as packaging, energy and fuel, are the result of strong domestic demand and overseas developments,” ING’s experts say.
Increased port delays have caused additional difficulties for food producers in the past two years, as they affected import flows of foreign ingredients and commodities (such as coffee and cocoa) and export flows of U.S. products. Increased lead times have also made it more difficult to obtain the equipment, parts and packaging materials needed to keep production lines running.
“Although the United States is not particularly dependent on agricultural products from the Black Sea region, the impact of the war on world prices had an impact on the country’s grain and vegetable oil buyers,” the report says.
Some of the causes of supply chain disruptions may be receding, but the impact on the food industry is far from disappearing, experts assert.
It will be a trade-off between what companies want to do and what they can do, because creating a more resilient supply chain comes at a cost. While these costs may be harder to bear in times of input cost inflation, the costs of production line stoppages and empty shelves could be even higher, experts estimate.
To read the full report you can access the following link.
