Three news to start your week: July 15
Fifth Third Bank to pay $5 million to settle auto insurance allegations
(The Washington Post)
Fifth Third Bank has agreed to pay millions of dollars to settle allegations that it forced customers with auto loans to purchase unnecessary car insurance policies. These duplicative policies increased the customers' monthly payments, leading to vehicle repossession cases because the customers could not afford to pay the inflated bills.
According to court documents, the Consumer Financial Protection Bureau (CFPB) revealed that the Ohio-based bank improperly applied around 37,000 insurance policies between 2011 and 2019. Consequently, the agency has ordered the bank to pay a $5 million penalty and compensate the affected customers, although the exact amount is unspecified.
Rohit Chopra, the Director of CFPB, stated that the bank engaged in illegal practices by burdening auto loan bills with excessive charges. Tragically, approximately 1,000 families lost their vehicles due to repossession as a direct result of this unfair treatment.
Crypto Exchange Bitmex Pleads Guilty to AML failures
(Bitcoin.com News)
The US Department of Justice (DOJ) has made a significant announcement regarding Bitmex, stating that the company has pleaded guilty to "violating the Bank Secrecy Act by willfully failing to establish, implement, and maintain an adequate anti-money laundering (AML) program."
US Attorney Damian Williams provided further insight, revealing that Bitmex's founders have openly admitted in federal court that the company operated without a meaningful AML program. This admission highlights the grave issue of the crypto platform transforming into a hub for large-scale money laundering and sanctions evasion activities, thus posing a severe threat to the financial system's integrity.
Bitmex, established in 2014 by Arthur Hayes, Benjamin Delo, and Samuel Reed, is a prominent cryptocurrency exchange and derivatives trading platform. Given its significant presence in the United States, the company was obligated to register with the Commodity Futures Trading Commission (CFTC) and maintain an effective AML program. Unfortunately, it fell short of fulfilling these requirements, merely requesting an email address for access and neglecting essential "know your customer" (KYC) protocols, as highlighted by the Justice Department.
Archegos' Bill Hwang Convicted of Fraud, Market Manipulation
(Bloomberg)
Founder of Archegos Capital Management Bill Hwang has been found guilty of criminal charges related to his firm's collapse in 2021. This marks the end of a two-month trial that held the attention of Wall Street. The jury delivered the verdicts against Hwang and his co-defendant, former Archegos chief financial officer Patrick Halligan, in a federal court in Manhattan. Just the day before, the panel had begun deliberating.
The convictions were for defrauding Archegos counterparties, such as Credit Suisse Group AG and UBS Group AG, through deceptive practices regarding the firm's trading activity and the risks involved in its portfolio. Hwang, in addition, was found guilty of manipulating several stocks, including the former ViacomCBS, although he was acquitted for one of the stocks. Both men were also convicted of participating in a racketeering conspiracy. Each count carries a maximum sentence of 20 years in prison.
