On Tuesday the SEC charged multinational banking conglomerate Banco Espirito Santo S.A. (BES), based in Lisbon, Portugal, with violations of the broker-dealer and investment adviser registration provisions and the securities transaction registration provisions of the federal securities laws.
The SEC's enforcement action finds that between 2004 and 2009 BES offered brokerage services and investment advice to approximately 3,800 U.S.-resident customers and clients who were primarily Portuguese immigrants. However, during this time, BES was not registered with the SEC as a broker-dealer or investment adviser, and it offered and sold securities to its U.S. customers and clients without the intermediation of a registered broker-dealer. None of these securities transactions was registered and many of the securities offerings did not qualify for an exemption from registration.
Sanjay Wadhwa, Associate Director of the SEC's New York Regional Office, said, "Foreign entities seeking to provide financial or securities-related services in the U.S. must familiarize themselves with the statutory and regulatory framework in this arena. A failure to do so, as was the case here, can be a costly misstep."
BES agreed to settle the SEC's charges and pay nearly $7 million in disgorgement, prejudgment interest and penalties.
SEC Charges Major Portuguese Bank for Violating Registration Provisions of U.S. Securities Laws