Category: Investment and Regulatory News

Perhaps in response to large scale fraud of the kind surrounding the private placements of companies like Provident Royalties LLC, on Oct. 5, the Financial Industry Regulatory Authority, or FINRA, filed a new rule proposal with the Securities and Exchange Commission, or SEC. Proposed FINRA Rule 5123 would impose new notice and disclosure requirements on…

Doug Mirabelli, a former catcher for the Boston Red Sox, was awarded more than $1.2 million in arbitration against brokerage firm Merrill Lynch after claiming that the firm sank his money in inappropriate investments and made unsuitable recommendations, according to a Jan. 23 report by Reuters. On Jan. 13, an arbitration panel of the Financial…

An arbitration claim by Lucy and John Mattinen against White Pacific Securites Inc. (WPS), the firm that employed a broker who misappropriated their money, has gone to arbitration after a federal court in San Francisco declined to enjoin the claim in an order issued March 19. The claim includes counts for breach of fiduciary duty,…

Retail investors lucky enough to have never had trouble with stockbrokers, or the broker-dealer firms who employ them, may not be aware that the standard of conduct for these investment professionals is below that of a fiduciary. A fiduciary is obligated to act in the best interest of the person or entity to which the…

On Monday, in North Dallas, Texas, a disgruntled investor paid a visit to his stockbroker and investment advisor’s office, with a 45 caliber weapon, yelling “you lost all my money,” and is alleged to have shot his broker and the broker’s son, before taking his own life. According to the Fort Worth News, Robert Mustard,…

Judges, and not arbitrators, should decide questions relating to the enforceability of a class action waiver in an arbitration clause because such questions present issues of “arbitrability” that are properly decided by courts, an en banc panel of the 3rd U.S. Circuit Court of Appeals has ruled. “An unconscionable challenge to the provisions of an…

The Financial Industry Regulatory Authority, Inc. (FINRA) announced that it filed with the Securities and Exchange Commission (SEC or Commission) a proposed rule to amend the panel composition rule, and related rules, of the Code of Arbitration Procedure for Customer Disputes (Customer Code), to provide customers with the option to choose an all public arbitration…

The Securities and Exchange Commission, as required by the Dodd-Frank financial reform law issued a report to Congress on Friday advocating that any investment professional, stockbrokers and investment advisors providing personalized investment advice to retail customers would have to adhere to a fiduciary standard, including the duty of loyalty, and the duty of care, in…

The Securities and Exchange Commission (SEC) approved Financial Industry Regulatory Authority’s proposed rule change to provide customers in all FINRA arbitrations the option of having an all public panel. In cases with three arbitrators, the arbitration panels have been comprised of two public arbitrators and one arbitrator with a nexus or connection to the securities…

A class action is a form of lawsuit in which a large group of people collectively bring a claim to court or in which a class of defendants is sued. Class action lawsuits offer a number of advantages because they aggregate a large number of individualized claims into one representational lawsuit. As the Securities &…

Edward P. May was sentenced to 16 years in federal prison on Oct. 4 for perpetrating the largest Ponzi scheme in the history of the Eastern District of Michigan, according to a statement released by U.S. Attorney Barbara L. McQuade. The $350 million scheme eventually cost investors more than $49 million, the statement said. May…

We all know money makes the world go round, and it is no surprise that stock brokers will do whatever they can to obtain order flow and execution business from institutional clients. While in substantial part this may be old news, the Securities and Exchange Commission announced the amendment of a cease and desist order…

Viatical Settlements are always ranked by the North American Securities Administrators Association as one of the top ten investment scams of all times. The securities regulators of the various states seem to also agree, and since 1994, have entered no less than 191 cease and desist orders or enforcement proceedings concerning the sale of viatical…

Maybe we should send Newark a list of the other firms. (Ameriprise, Oppenheimer, Merrill Lynch, H&R Block Financial Advisors, Charles Schwab, etc.). I guess after UBS rolled over for New York and Massachusetts, the New Jersey regulators had to work real hard to get UBS to settle with New Jersey, and of course, just like…

Investors suffering losses in the Oppenheimer Rochester Funds may have claims against their stockbrokers or financial advisors for failure to perform due diligence. Last year, investors in the Oppenheimer Rochester National Municipal Bond Fund collectively lost in excess of $5 billion as these shares lost more than 60% of their value. Rochester National Municipals Fund:…

Investors suffering losses in Inverse and Leveraged Exchange Traded Funds may have claims against their stockbrokers or financial advisors for failure to disclose risk or perform due diligence. An Exchange-Traded Fund (ETF) is an investment fund traded on stock exchanges, much like stocks. An ETF holds assets such as stocks or bonds and trades at…

The United States Securities and Exchange Commission announced that Wells Fargo Securities LLC consented to an $11.2 million fine in connection with the sale of collateralized debt obligations (CDOs) in late 2006 and early 2007. The SEC found that Wachovia Capital Markets violated the securities laws by fraudulently charging undisclosed and excessive markups in the…

The Financial Industry Regulatory Authority (FINRA) has suspended Pinnacle Partners Financial Corporation, of San Antonio, TX, and its President, Brian K. Alfaro, for violating FINRA Temporary Cease and Desist Order prohibiting fraud in connection with the sale of certain oil and gas joint interests. FINRA Chief of Enforcement, said, “Brian Alfaro and Pinnacle pose a…

Current shareholders of Rural/Metro who purchased shares before March 28, 2011 may have potential claims against the board of directors of Rural/Metro Corporation (NASDAQ: RURL) concerning possible breaches of fiduciary duty and other violations of law related to the Company’s agreement to be taken private by Warburg Pincus in a transaction valued at approximately $438.2…

A recent study from the University of St. Gallen, in Switzerland, led by forensics expert Pascal Scherrer and Thomas Noll, finds that professional stock traders actually outperform diagnosed psychopaths when it comes to competitive and risk-taking behavior. According to the study’s authors, one contributing factor may be that stockbroker behavior is more reckless and manipulative…

RBC Capital Markets LLC of New York has agreed to pay $30.4 million to settle charges that it sold unsuitable, high-risk investments to five eastern Wisconsin school districts, as well as charges that it inadequately disclosed the risks. The misconduct charges were brought by the Securities and Exchange Commission, or SEC, after RBC marketed and…

The FBI is investigating two former Edward Jones brokers for their alleged role in raising money from clients who invested in a Ponzi scheme. A client brought the matter to Edward Jones’ attention in March of this year, the brokerage firm said. As it followed up, Edward Jones learned that the FBI was in the…

Stockbrokers who go rogue and start to sell risky products promising high returns without the knowledge or approval of their broker-dealer employers are engaging in a practice known as “selling away,” that is a top concern for state securities regulators. Selling away is a common infraction, according to The North American Securities Administrators Association, or…

Bank of America subsidiary Merrill Lynch, Pierce, Fenner & Smith Inc. has been fined $1 million by the Financial Industry Regulatory Authority, or FINRA, for failure to supervise one of its stockbrokers at its branch office in San Antonio, Texas. FINRA announced the fine on Oct. 4. Bruce Edward Hammonds, a registered representative with the…

A federal circuit court has ruled that the Financial Industry Regulatory Authority Inc., or FINRA, cannot collect fines through court judgments, leaving investors to wonder how effective the self-regulatory organization can be as a disciplinary body. The decision from the 2nd U.S. Circuit Court of appeals, entered Oct. 5, stated that FINRA does not have…

UBS Financial Services Inc. has agreed to settle charges brought by the Financial Industry Regulatory Authority, or FINRA, alleging that UBS failed to supervise a stockbroker who stood on both sides of multiple municipal bond trades to and from his customers’ retail accounts. FINRA Imposed $300,000 Fine & censured UBS The stockbroker engaged in the…

Another small broker-dealer has been driven out of the business by litigation costs resulting from the sale of allegedly fraudulent private placements in the oil and gas sectors for Provident Royalties LLC, according to a report from Investment News. Last month, Boogie Investment Group Inc. of Melbourne, Fla., filed a request with the Financial Industry…

Brian Simone, a disgraced lawyer and former stockbroker, has been banned from the securities business after he falsified paperwork and failed to reveal that he had been disbarred in Massachusetts after allegations of forgery, fraud, misappropriation of funds, and misrepresentation. Brian Simone Barred From Association from any FINRA member On Oct. 6, the Financial Industry…

The annual report on enforcement actions to fight securities fraud released this month by the North American Securities Administrators Association, or NASAA, shows that actions pursued by state securities regulators increased by 51 percent in 2010 over the number of actions reported in the previous year. The report also indicates that fraud and unregistered securities…

As a result of the three submissions of altered documents in eight years, the Securities and Exchange Commission, or SEC, has ordered the Financial Industry Regulatory Authority, or FINRA, to hire an independent consultant as a means to improve its document preparation policies and procedures. FINRA was directed to take other remedial measures as well,…

Last week the Financial Services Committee of the U.S. House of Representatives voted on a bipartisan basis to send the Entrepreneur Access to Capital Act to the floor for a vote, and state securities regulators are warning that the bill could lead to rampant fraud if it were to pass. Sponsored by Rep. Patrick McHenry,…

A second defendant has been added to an indictment in the U.S. District Court for the Northern District of Illinois stemming from a Ponzi scheme that fraudulently obtained $105 million in investments from about 400 victims, leading to $34 million in losses. The newly added defendant, Alfred Gerebizza, and his co-defendant Daniel Spitzer allegedly misappropriated…

On Nov. 3, the 2nd U.S. Circuit Court of Appeals partially vacated a judgment of the court below with the result that a married couple from Illinois can pursue suitability and other claims against Ameriprise Financial Services Inc., the defendant below. The married couple, John and Elaine Beland, appealed after the U.S. District Court for…

South Jersey lawyer Michael W. Kwasnik has been indicted for stealing more than $1 million from an elderly woman from Cherry Hill, N.J., who hired him to plan her estate. Kwasnik was indicted on Nov. 4 on a range of criminal charges including theft by unlawful taking and money laundering. A warrant was issued for…

Ratcheting up the drama surrounding a $9.2 million arbitration award levied against Morgan Keegan & Co. Inc. for securities fraud, an expert witness for the plaintiffs has moved to expunge all references to him in an opinion issued by a federal court that vacated the award, and laid waste to the expert’s reputation in the…

Morgan Stanley & Co. Inc., and its subsidiary Morgan Stanley Smith Barney LLC, have been fined $1 million and censured by the Financial Industry Regulatory Authority, or FINRA, for excessive markups and markdowns that were charged to customers on corporate and municipal bond transactions. The firm was also ordered to $371,475 in restitution plus interest…

The Securities and Exchange Commission, or SEC, announced last week that it filed a record 735 enforcement actions in the fiscal year that ended Sept. 30. The enforcement actions often involved highly complex financial products and transactions. They also dealt with market practices, including those related to the 2007 to 2008 financial crisis, according to…

In a curious case of absent oversight, Morgan Stanley Investment Management has been fined $1.5 million by the Securities and Exchange Commission (SEC) for improperly charging a fund it manages for investment advisory services that were never performed. Morgan Stanley Investment Management is a wholly owned subsidiary of Morgan Stanley. From 1996 to 2007, it…

The Securities and Exchange Commission today charged a longtime Bernie Madoff employee with fraud for his role in creating fake trades to facilitate the massive Ponzi scheme. The SEC alleges that David Kugel, who worked at Bernard L. Madoff Investment Securities LLC (BMIS) for nearly four decades, was asked by Madoff to provide the firm’s…

Randall Merk, a former executive for Charles Schwab & Co. Inc., has agreed to pay a civil penalty of $150,000 and be suspended for one-year to settle charges of fraud and misleading investors On Nov. 21, the SEC announced that Merk signed a consent and a proposed final judgment against him without admitting or denying…

Chase Investment Services Corp. has been ordered to reimburse customers $1.92 million for losses they incurred after Chase Investment brokers recommended the customers purchase unsuitable unit investment trusts and floating rate loan funds, the Financial Industry Regulatory Authority (FINRA) announced on Nov. 15. FINRA also censured Chase Investment and fined the firm $1.7 million for…

According to forensic accountant and frequent expert witness Gordon Yale, the billions of dollars in allegedly fraudulent private placements sold to investors resulted partly from broker-dealers’ massive failure to meet their due-diligence responsibilities. Yale is certified public account and principal of Yale & Co. who has worked on more than 50 lawsuits brought by investors…

Eight more broker-dealers and 10 individuals have been sanctioned by the Financial Industry Regulatory Authority, or FINRA, and ordered to pay restitution totaling more than $3.2 million for selling interests in allegedly fraudulent private placements without having a reasonable basis for recommending the securities. FINRA announced its list of firms sanctioned on Nov. 29. The…

In an eloquent opinion that reaffirmed the truth-finding mission of the courts, Judge Jed S. Rakoff rejected the $285 million settlement agreement Citigroup reached with Securities and Exchange Commission, or SEC, to resolve charges that the giant bank had gamed the mortgage bond market. The judge told the parties to prepare for trial on July…

A National Examination Risk Alert was issued on Nov. 30 to inform broker-dealers how to develop effective policies and procedures for branch office inspections as a way to combat broker fraud, unsuitable investments and failures to supervise. Jointly Issued by the FIRNA & the SEC The alert was jointly issued by the Financial Industry Regulatory…

Patricia E. Collantes, the former operations manager at the Palo Alto, Calif., office of Citigroup Global Markets Inc., has been fined and suspended by the Financial Industry Regulatory Authority, or FINRA, for her failure to supervise a sales assistant who misappropriated almost $750,000 from customers. Collantes agreed last month to an $8,000 fine and a…

Wells Fargo Bank, N.A., successor by merger to Wachovia Bank N.A., has agreed to pay $46 million to settle charges brought by the Securities and Exchange Commission that Wachovia fraudulently rigged bids in municipal bond reinvestment transactions in 25 states and Puerto Rico. The payment consists of a $25 million penalty and disgorgement of almost…

Stock market volatility and low interest rates these days have caused more than a few investors to contemplate alternative investments, and one possibility is the Real Estate Investment Trust (REIT). Concern over the clarity of these investments has led the Office of Investor Education and Advocacy of the Securities and Exchange Commission (SEC) and the…

On Jan. 9, an arbitrator for the Financial Industry Regulatory Authority, or FINRA, awarded customers of a brokerage firm compensatory damages of roughly $55,000 for breach of fiduciary duty, negligence and breach of contract in the course of a bond sale. In addition, the customers were awarded almost $15,000 in prejudgment interest. The customers, the…

According to a Jan. 17 piece by former investment banker William D. Cohan, the mandatory arbitration provision buried deep within the documents one must sign to open a brokerage account or get hired by a brokerage firm is a wholesale abdication of legal rights. Author William D. Cohan Cohan, the author of “Money and Power:…

Charles Schwab & Co. violated regulatory rules by requiring customers to sign a contract with a provision waiving their rights to bring class actions against the firm, according to a Schwab Decision Permitting Class Waivers on Feb. 1 Schwab is one of the nation’s largest discount brokerage firms, with more than 340 offices nationwide that…

After the Financial Industry Regulatory Authority, or FINRA, found that Raymond James Financial Services Inc. had charged excessive commissions in about 13,500 customer accounts due to a failure to supervise, the firm agreed to pay more than $750,000 plus interest to the customers, as well as a $200,000 fine. Raymond James also agreed to be…

Shareholders purchasing SRA International (NYSE: SRX) shares prior to April 1, 2011 may have potential claims against the board of directors of the company concerning possible breaches of fiduciary duty and other violations of law related to the company’s merger agreement to be taken private by Providence Equity Partners for $31.25/share in cash or approx….

The Guiliano Law Group, P.C. is investigating claims on behalf of purchasers of Heartware International (NASDAQ: HTWR) between November 15, 2010 and April 15, 2011. HeartWare International, Inc., a medical device company, engages in the design, manufacture, and marketing of medical devices for the treatment of advanced heart failure. On April 15, 2011, HeartWare shares…

A Financial Industry Regulatory Authority Arbitration Panel in the matter of Fahs v Merrill Lynch Pierce Fenner & Smith, Inc., FINRA-DR Arbitration No. 09-06623 awarded a Connecticut man one hundred percent (100%) of his net out-of-pocket compensatory losses, plus interest at the rate of 6% per annum over a period of approximately three years, together…

Wall Street’s most recent synthetic investments, despite the catchy names, offer more risk that your broker is likely to disclose. The retail market for structured notes or equity linked notes, with principal protection has skyrocketed in recent years. Why? Because they are easy to sell to unsuspecting investors, offer high commissions, and have names that…

Many people say “my broker robbed me”, but increasingly and unfortunately, many people actually mean it. There appears to be a growing trend in the misappropriation or conversion of customer funds by stockbrokers from the outright forgery of customer checks or transfers to personal loans and the “opportunity” to invest in non-existent businesses often created…

Your stockbroker may be more than over charging you. Everyone has heard about the hazards of unexpected fees, lurking in complicated payments, squeezing money out of people by deliberately confusing them or through outright dishonesty. FINRA Fines Broker-Dealers Charging Handling Fees The Financial Industry National Regulatory Authority, or FINRA has discovered fee abuses at a…

The Financial Industry Regulatory Authority or FINRA ordered Richard H. Byerly of Chester Springs, Pennsylvania to pay $30,000 in restitution to and was suspended for two years from association with any FINRA member in any capacity for the unauthorized churning of customer accounts belonging to two senior citizens. Although FINRA found that he “exercised discretion,”…

According to the latest figures from the Financial Industry Regulatory Authority (FINRA), through October 2008, investment arbitration claims are up 49% from 2007. In addition, during the first 10 months of 2008, more cases have been already been filed than were filed in all of last year. Most brokerage agreements contain provisions that any disputes…

Current shareholders of TradeStation Group, Inc. (NASDAQ: TRAD) may have potential claims against the board of directors of the company concerning possible breaches of fiduciary duty and other violations of law related to the Company’s entry into an agreement to be acquired by Monex Group, Inc. (Monex) in a transaction valued at approximately $411 million….

Shareholders purchasing 99 Cents Only Stores, Inc. (NYSE: NDN) shares prior to March 11, 2011 may have potential claims against the board of directors of the company concerning possible breaches of fiduciary duty and other violations of law related to the company’s acquisition by Leonard Green & Partners, L.P. to acquire the company in a…

Shareholders of of Tenent Healthcare Corporation may have potential claims related to the company’s acquisition by Community Health Care. According to a complaint filed in the United States District Court for the Northern District of Texas, Tenet seeks to compel Community Health Systems, Inc. to make certain disclosures to its shareholders, and alleged that Community…

Credit Suisse Group AG, Bank of America Corporation, J.P. Morgan Chase & Co., HSBC Holdings plc, Barclays Bank plc, Lloyds Banking Group plc, WestLB AG, UBS AG, Royal Bank of Scotland Group plc, Deutsche Bank AG, The Norinchukin Bank, and Citibank, N.A., have been named in two separate class actions alleging fraud and the manipulation…

The Financial Industry Regulatory Authority (FINRA) launched its new Disciplinary Actions Online database, which provides access to Finra complaints against firms and individual brokers, settlement agreements (known as Letters of Acceptance Waivers and Consent, or AWCs), decisions by Finra hearing panels and National Adjudicatory Council decisions. Previously, the public had to contact FINRA to obtain…

On May 17, 2011, John F. Wasik through Demos, a non-partisan public policy research and advocacy organization, published a Paper, How Safe Are Your Savings? How Complex Derivative Products Imperil Seniors’ Retirement Security. The paper examines what these investments are, how they are sold and what Congress and the SEC need to do to protect…

The Illinois Securities Department has revoked the registration of Thomas N. Cooper and Susan B. Cooper of Senior Financial Strategies Inc., doing business as Pinnacle Investment Advisors. Both of the Coopers wrongfully liquidating customer annuities to fund the purchase of fixed indexed annuities. The Investigation The Illinois Securities Department’s investigation uncovered that between Feb. 26,…

The retail market for structured notes with principal protection has been growing in recent years. While these products often have reassuring names that include some variant of “principal protection,”,”capital guarantee,”,”absolute return,”,”minimum return” or similar terms, they are not risk-free. Any promise to repay some or all of the money you invest will depend on the…

Corporate America controls the U.S. Chamber of Commerce. These are the same people that want tort reform, and to limit the liability and responsibility of corporate America, and everyone else, for polluting the environment, selling defective products, price fixing, financial fraud, and otherwise screwing consumers, every chance they can get away with. So when the…

Reverse Convertible Notes are highly risky investments. Many of these securities have stated coupons, which entice unsophisticated investors, but that are a trap for investors, because stockbrokers and other investment professionals fail to disclose that when the price of the securities to which the reverse convertible note is linked, increase in value the investor’s return…

Morgan Stanley Smith Barney, or more accurately, its predecessor Morgan Stanley & Co., the Morgan Stanley part of the June 2009 joint venture with Morgan Stanley & Co. and the Smith Barney division of Citigroup Global Markets, Inc., is no stranger to e-mail problems. In a Financial Industry Regulatory Authority (FINRA) securities arbitration, we represented…

The Securities and Exchange Commission today charged Stephen A. Colangelo, Jr. a purported investment adviser in New York with defrauding investors who he convinced to invest in his start-up businesses while in reality he was spending their money on illegal drugs and gambling. The SEC Complaint According to the SEC Complaint, From 2009 through 2011,…

Peter C. Bishop, formerly with the Portland Maine offices of Ameriprise Financial and RBC Capital Markets, accepted a one month suspension and fine of $10,000 imposed by the Financial Industry Regulatory Authority for effecting unauthorized transactions in the securities accounts of his customers. FINRA Letter of Acceptance, Waiver & Consent According to the FINRA Letter…

The Public Investors Arbitration Bar Association (PIABA) issued a statement finding FINRA’s proposed new rule which would allow for stockbrokers, who are not named as parties in customers’ arbitration complaints, but whose conduct is the subject of investors’ complaints, to seek removal of the investor’s complaint from the stockbroker’s regulatory record potentially harmful to investors….

Since at least 1987, if you want to sue your stockbroker for investment fraud, the sale of unsuitable or other risky investments, breach of fiduciary duty, or for the sale otherwise defective financial products, including everything from reverse convertible notes to structured products, Real Estate Investment Trusts or even Ponzi schemes, investors are required to…

When your stockbroker sells you a security, whether it be a bond or a stock, you are typically charged a “commission” which is fully disclosed and appears on your confirmation. So for example, you may wish to purchase 200 shares of Apple Computer (AAPL) or an exchange traded stock, and your broker, or brokerage firm…

Real Estate Investment Trusts or REITs are companies, which own and manage income-producing property (e.g.hotels, hospitals, & office buildings) or are involved in real estate financing. REITs are either publically traded, non-exchange traded, or privately traded. REITs provide investors with real estate exposure, but unlike other real estate investments, REITs are often entirely illiquid. REIT…

Everyone thinks that bonds, including U.S. Treasury Bonds are safe investments. Think again. If interest rates, which are at historical lows, rise, the market prices of bonds go down. Longer term bond prices go down real far down, and mutual funds that invest or trade bonds, will get hardest hit, and this has nothing to…

It is OK to steal as long as you do not steal too much to get a greedy lawyer involved. In the good old days, if you stole $100 from 2 million people, or $200 million, although no competent greedy lawyer would be willing to undertake your representation to recover your $100, the class action…

As Justice Louis D. Brandies once said not in a legal opinion, but in a book, “Sunshine is said to be the best disinfectant; Electric light the most efficient policeman,” Brandies, Other People’s Money (1914). The Responsibility of the SEC It is the responsibility of the United States Securities & Exchange Commission to oversee securities…

Nicholas J. Guiliano, Esquire of the Guiliano Law Group, P.C. is scheduled to speak at the Rutgers Law School Camden on April 12, 2013 on the history and practice of federal securities arbitration law, including recent developments in the law, as part of a course entitled Securities Litigation and Enforcement. The Focus of the Lecture…

A federal court for the District Court for the Central District of Illinois entered an injunction against Timothy J.Roth, of Urbana, Illinois, a stockbroker with the NJ based firm Comprehensive Capital Management, Inc. for stealing more than $16 million of his clients’ mutual fund shares, liquidating the shares, and sending the ill-gotten gains to various…

Wall Street Financial Group, Inc. of Fairport, New York appears to operate an “independent” or “franchise” broker-dealer, operating from a series of geographically dispersed branch offices, including an office located in McKeesport, Pennsylvania. A “franchise” office is where the broker pays all the expenses, in consideration for a higher commission pay-out. However, there is no…

Beverly Hills stockbroker, Bambi Holzer, who wrote books, made television appearances and was the stockbroker to the rich and famous, or at least after she was done, the not so rich, has been suspended by the Financial Industry Regulatory Authority or FINRA, for the failure to comply with a $2 million arbitration award. Holtzer’s career,…

The pattern of brokers moving from one problem firm to another, according to a former broker, is sometimes called “cockroaching.” The Wall Street Journal Story On October 4, 2013, the Wall Street Journal wrote a story that more than 5,000 brokers who were still licensed to sell securities earlier this year after working for one…

Investors seeking to recover their damages as a result of the sale of defective or otherwise tainted investment products by Wall Street, since 1987, have been required to bring these claims in a forum sponsored and paid for by the securities industry, the Financial Industry Regulatory Authority or FINRA, formerly known as the National Association…

The Financial Industry Regulatory Authority or FINRA is dedicated to investor protection and market integrity through effective and efficient regulation of the securities industry. FINRA is not part of the government. FINRA is an independent, not-for-profit organization authorized by Congress to protect America’s investors by making sure the securities industry operates fairly and honestly, by…

Reuters announced today that while it did not publicize the change, the Financial Industry Regulatory Authority (FINRA) launched an effort earlier this year to fast-track investigations and disciplinary cases involving risky brokers who may pose the greatest threats to the investing public. According to the article, “Brokers who already have an extensive disciplinary history with…

Last year, a Connecticut based hedge fund, Turnberry Capital Management LP, filed a FINRA arbitration securities claim against SunTrust Banks, Inc. to recover $13 million it lost in 2007 by investing in mortgage backed securities. However, Turnberry Capital Management did not purchase the securities from SunTrust, who manufactured the defective securities, but purchased the securities…

Affinity fraud hit’s a new low. Jody Myung Dunn was accused by the Securities and Exchange Commission, or SEC, of selling $3.45 million in fraudulent investments in a phantom offshore company to the deaf community. Dunn is also deaf. Dunn Solicited Deaf Investors The deaf investors were allegedly solicited via the Internet to sink their…

Between May 2006 and August 2008, Citigroup raised over $71 billion dollars the offerings of bonds, and its preferred stocks, (which are not bonds, as their yields are merely precatory), to investors whom may have otherwise been led to believe were safe, conservative, higher than average yield investments. Citigroup Sold Toxic Securities Linked to Mortgages…

According to FINRA Dispute Resolution Statistics, so far in 2013, only 44% of investors bringing claims against their stockbroker or brokerage firm recover any damages, and on average, even those that win, only recover 50% of their damages. Empirical evidence clearly demonstrates that “Better representation may lead to better outcomes.” The Influence of Arbitrator Background…

If you’ve been watching any commercial television lately, you are well aware that the financial services industry is very busy running expensive ads imploring us to worry about our retirement futures. Open a new account today, they say. They are not wrong that we should be doing something: America is facing a retirement crisis. One…

Will the SEC Listen to Congress or NAASA and act Under Dodd-Frank Wall Street Reform and Consumer Protection Act to prohibit the use of mandatory securities arbitration? On Monday, thirty seven members of Congress wrote to the SEC to end forced FINRA arbitration. In a letter to Chairperson White, they wrote: We write to express…

Banks do not want to be in the banking business. Rather than managing customer deposits, it is much more lucrative and less risky, at least from the bank’s perspective, to solicit customers to purchase securities. CCO Investment Services Corp. CCO Investment Services Corp. is a wholly owned subsidiary of Citizens Financial Group, Inc., which is…

The National Center for Victims of Crime released a report in conjunction with the Financial Industry Regulatory Authority (FINRA) Foundation “Taking Action: An Advocate’s Guide to Assisting Victims of Financial Fraud“ According to a Report issued by the Financial Fraud Research Center, more than 30 million Americans are victims of financial fraud every year with…

Tough economic times call for investors to be wary, as financial professionals are tempted toward riskier behaviors, according to the Financial Industry Regulatory Industry’s (FINRA) 2012 report on regulatory and examination priorities, released Jan. 31. The report first lists a few investment characteristics that demand close attention, and then provides a detailed list of products…

LPL Financial LLC must pay $1.4 million to an elderly couple who claimed they were the victims of fraud in connection with real estate deals. The award was issued by an arbitration panel of the Financial Industry Regulatory Authority (FINRA) on Feb. 10. Heinrich and Araceli Hardt, both 76, bought into real estate deals known…

Lloyd Thomas Mincy Jr., a stockbroker registered with Centaurus Financial Inc., has been fined $20,000 and suspended for nine months for fraudulently misrepresenting the guaranteed rates of return for variable annuities he sold to four customers. From October 2004 through 2008, Mincy materially misrepresented the features of the variable annuities, both verbally and in writing….

State courts must enforce arbitration agreements pursuant to the Federal Arbitration Act (FAA) regardless of public policy concerns or conflicting state laws, the U.S. Supreme Court has held in Marmet Health Care Center Inc. v. Brown, in a per curiam opinion entered Feb. 21. West Virginia’s Supreme Court of Appeals The ruling vacated a decision…

Investment adviser Brenda A. Eschbach has consented to an entry of judgment against her for misappropriating over $3 million in client funds, the Securities and Exchange Commission (SEC) announced on Feb. 15. The SEC Complaint Against Brenda A. Eschbach According to the complaint filed by the SEC in U.S. District Court for the Central District…

Independent/broker-dealer Basis Financial LLC, and its owner and CEO Armen Karapetyan have been charged with defrauding customers of about $1.8 million over a three year span through four private placement offerings involving financially shaky issuers. According to the FINRA Complaint According to a complaint filed by the Financial Industry Regulatory Authority’s (FINRA) Department of Enforcement…

As a colleague once said: “if you put them to sleep, you have to wake them up”. However, a New York state court confirmed an $880,000 arbitration award against Merrill Lynch, Pierce, Fenner & Smith Inc. despite allegations that one of the arbitrators repeatedly fell asleep during the hearings. No Basis to Vacate the Award…

The Department of Enforcement of the Financial Industry Regulatory Authority (FINRA) filed a disciplinary proceeding on March 28 alleging that former broker William Bruce Smith misappropriated $100,000 from a customer. Smith, who worked for FINRA-member Triad Advisors in Shrewsbury, Ma., at the time of the misappropriation, was registered as a general securities representative and principal…

In October 2010, Nicholas J. Guiliano, Esquire of the Guiliano Law Group, P.C. in Philadelphia and Jeffrey Sonn of Sonn & Erez in Ft. Lauderdale, Florida filed nine actions in arbitration before the Financial Industry Regulatory Authority against Royal Alliance, Inc. and several of its former agents, in connection with the sale of the unregistered…

Harold E. Wilson, a former broker with Ameritas Investment Corp., has been permanently barred from the financial industry for engaging in private securities transactions without disclosing this activity to his firm. In addition, Wilson was barred for failing to respond to repeated requests for information on these transactions from the Financial Industry Regulatory Authority (FINRA)….

UBS Financial Services Inc. of Puerto Rico and two of its executives have agreed to settle charges of fraudulent conduct related to mutual funds by paying $26.6 million, to be placed into an account for harmed investors. The fraud consisted of misleading statements made to investors, concealment of a liquidity crisis, and the obscuring of…

The Financial Industry Regulatory Authority (FINRA) has suspended Andrew J. Aragona, a former broker with Newbridge Securities Corp., from associating with any FINRA-registered firm in any capacity for one year for unsuitably recommending that an elderly customer switch variable annuity contracts. Per a default decision entered May 2, Aragona was also fined $15,000, and ordered…

A federal court in California dismissed a complaint filed by Charles Schwab Corp. that tried to block regulators from disciplining the brokerage firm for embedding a clause in its customer account agreements that precludes class-action lawsuits. FINRA Complaint Filed The Financial Industry Regulatory Authority (FINRA) alleged in a complaint filed in February with its Office…

Citigroup Global Markets Inc. has agreed to be censured and to pay a fine of $3.5 million for posting inaccurate data on residential mortgage-backed securities on a website it maintains pursuant to federal regulations. Despite possessing information that the data posted on its website was inaccurate, Citigroup Global did not correct the data it was…

Brookstone Securities Inc. of Lakeland, Fla., was fined $1 million after a hearing panel of the Financial Industry Regulatory Authority (FINRA) found the broker-dealer made fraudulent sales of collateralized mortgage obligations to elderly, unsophisticated investors. Brookstone Hearing Panel Decision Antony L. Turbeville, the firm’s owner and former CEO, and Christopher Kline, one of its brokers,…

Securities Arbitration Is Not An Ideal World On July 16, 2012, Stephen J. Choi, Professor of Law, New York University, Jill E. Fisch, Professor of Law, University of Pennsylvania, and A.C. Pritchard Professor of Law, University of Michigan, released their Draft Paper: THE INFLUENCE OF ARBITRATOR BACKGROUND AND REPRESENTATION ON ARBITRATION OUTCOMES. As stated in…

Recently, an issuer of Exchange Traded Notes (ETNs) ceased issuing new notes of a certain type. This caused the trading price of that ETN to spike by nearly 90 percent. When the issuer resumed issuing the notes of that type, their market price plunged by more than half in two days. To help investors avoid…

The Securities and Exchange Commission announced fraud charges against James M. Donnan, III, and Gregory L, Crabtree for allegedly perpetrating a Ponzi scheme. Donnan resides in Athens, Georgia, and Crabtree resides in Proctorville, Ohio. The complaint also names two of Donnan’s children, Jeffrey Todd Donnan and Tammy L. Donnan, and his son-in-law, Gregory K. Johnson,…

As early as January 2009, financial publications began to warn investors of the risks associated with Inverse and Leveraged Exchange Traded Funds. According to Morninstar, these funds can be “expensive and extremely risky” and may not be appropriate for all investors. Indeed, in May 2009, FINRA’s Enforcement Department’s Strategic Programs Group conducted an inquiry regarding…

The SEC’s Office of Investor Education and Advocacy is issued and Investor Bulletin to help educate investors about lost and stolen securities and the Commission’s Lost and Stolen Securities Program (LSSP), a database for securities certificates reported lost, stolen, missing, or counterfeit. About Lost and Stolen Securities When a security certificate is retired, such as…

Until recently, Clifford Jagodzinski worked at Morgan Stanley Smith Barney as a Complex Risk Officer. Mr. Jagodzinski’s job duties included identifying potential compliance risk issues and enforcing securities law violations. According To The Lawsuit According to a lawsuit filed in federal court, as part of his officicail duties, Mr. Jagodzinski detected that a particular broker,…

Broker-dealers have long offered a range of structured securities to institutions and wealthy individuals. Certain structured securities products have been increasingly marketed to retail investors in recent year. According to a recent report by the United States Securities & Exchange Commission, on Issues Identified in Examinations of Certain Structured Securities Products Sold to Retail Investors,…

SECURITIES ARBITRATION OUTLINE & READING MATERIALS 1. Arbitration — Overview “Equity is justice in that it goes beyond the written law. And it is equitable to prefer arbitration to the law court, for the arbitrator keeps equity in view, whereas the judge looks only to the law, and the reason why arbitrators were appointed was…

The Financial Industry Regulatory Authority (FINRA) found that Sean M. Sheridan, during the course of his association with J.P. Turner & Co., Inc. fraudulently obtained $267,000 from at least eight customers, who also lost approximately $1,040,856 in connection with the short term trading of investment company shares. Until sometime in 2010, Sean F. Sheridan (“Sheridan”)…

CCO Investment Services Corp. is a wholly owned subsidiary of Citizens Financial Group, Inc., which is owned by the Royal Bank of Scotland, and in substantial part, operates from kiosks located in traditional retail bank branch offices of Citizens Bank. Since 2006, CCO has been fined more than $4.9 million by a series of federal…

The Financial Industry Regulatory Association (“FINRA”) maintains a database of customer complaints about individuals licensed by FINRA as registered representatives. The data can be accessed and used by both securities regulators and the investing public to find out about past complaints made by customers of the registered representatives. Customer Complaints Can Be Expunged But records…

UBS Securities LLC was fined $12 million and censured by the Financial Industry Regulatory Authority, or FINRA, for widespread system deficiencies and a failure to supervise that led to tens of millions of improper short sales. The firm violated federal securities laws and FINRA rules at various times from January 2005 through March 2010, with…

A New Jersey investment advisor was sentenced to 14 years in prison recently after pleading guilty to one count of securities fraud and use of manipulative and deceptive devices plus one count of transacting in criminal property. According to Court Documents Sandra Venetis, 60, the founding principal and president of Systematic Financial Associates Inc., a…

An analysis by The New York Times of the Securities and Exchange Commission (SEC) enforcement actions during the past 15 years has found that Wall Street firms have broken anti-fraud laws they had pledged not to breach in at least 51 cases. The New York Times Report These cases involved 19 different firms, according to…

The Financial Industry Regulatory Authority (FINRA) issued a regulatory notice this month that contained the results of a survey of retail broker-dealer firms regarding the use and oversight of senior designations in an effort to better understand their approach to a vulnerable segment of the population. One area of particular focus was the use of…

LPL Financial LLC has been fined $100,000 for failing to supervise Jack Kleck, a broker who sold unsuitably risky investments to clients in their 80s, the Oregon Department of Consumer and Business Services announced on Nov. 22. Boston-based LPL is a broker-dealer licensed by the State of Oregon and responsible for the activities of Jack…

Charles B. Rowley III, a stockbroker with Boston-based Detwiler Fenton & Co., has been sanctioned by the Financial Industry Regulatory Authority, or FINRA, for engaging in churning and unsuitable trading in the accounts of two customers. Letter of Acceptance, Waiver and Consent Charles B. Rowley agreed to pay restitution of roughly $24,000 plus interest to…

The U.S. Supreme Court issued an opinion on Jan. 10 ruling in favor of a credit card company that sought to enforce a mandatory arbitration provision in its agreement with a class of consumers that sued the company for making misleading statements and charging excessive fees. The class of consumers who sued, called respondents in…

Merrill Lynch Pierce Fenner & Smith has been censured and fined $1 million for its failure to arbitrate disputes with its employees over retention bonuses. The fine was part of a settlement with Merrill Lynch announced by the Financial Industry Regulatory Authority (FINRA) on Jan 25. A full-service broker-dealer with its principal offices located in…

Sometimes the moral decay that leads financial professionals to steal from their clients runs deeper than anyone could expect. Robert Bales’ Crimes For instance, the news is out that Robert Bales, the U.S. Army staff sergeant accused of massacring 16 Afghan civilians, was a former stockbroker on the losing end of a 2003 arbitration before…

Brokerage firm Merrill Lynch, Pierce, Fenner & Smith Inc. has agreed to pay $2.8 million to settle charges by the Financial Industry Regulatory Authority (FINRA) that the firm’s failure to supervise led to over-billing. From April 2003 to December 2011, Merrill Lynch charged a total of about $32 million in unwarranted fees to roughly 95,000…

Brokers and financial advisors of JP Morgan Chase have said they were encouraged by the investment bank to favor JP Morgan’s own products even when the product of competitors were less expensive or better-performing, according to a report in the New York Times. Some advisers told the newspaper they felt pressured to recommend proprietary products as…

The Securities and Exchange Commission today announced that a non-profit corporation that offers securities to fund mortgage and construction loans to young Amish families in Ohio will ensure that its investors receive more timely and accurate information under an agreement reached with the SEC. SEC Investigates Amish Helping Fund The SEC investigated the Amish Helping…

The Financial Industry Regulatory Authority (FINRA) has expelled a Texas-based broker dealer from membership for selling $23 million in private placement offerings without having a reasonable basis to believe that the offerings were suitable for its customers. Letter of Acceptance, Waiver and Consent Cambridge Legacy Securities LLC consented to the expulsion as part of a…

The United States Securities & Exchange Commission, as required by Section 917 of the Dodd-Frank Wall Street Reform and Consumer Protection Act issued a report today on Investor Literacy. Retain Investors Lack Knowledge to Prevent Fraud Not surprisingly, the study found that U.S. retail investors lack basic financial literacy and that investors have a weak…

Stockbrokers, or more accurately, their employer brokerage firms are required to report to The Financial Industry Regulatory Authority (FINRA), when their stockbrokers are the subject of customer complaints alleging sales practice violations, criminal actions, bankruptcies, or their conduct forms the basis of an arbitration or civil action by a public customer against the broker or…

The Securities and Exchange Commission today charged four brokers who formerly worked on the cash desk at a New York-based broker-dealer with illegally overcharging customers $18.7 million by using hidden markups and markdowns and secretly keeping portions of profitable customer trades. Four Brokers’ Fraudulent Scheme The SEC alleges that the brokers purported to charge customers…

Nicholas J. Guiliano, Esquire of the Guiliano Law Group will be featured as a Speaker at the 21st Annual Meeting of the Public Investors Arbitration Bar Association this year in Austin, Texas at the Barton Creek Resort and Spa. Discovery Phase of an Arbitration Mr. Guiliano’s presentation will explore the discovery phase of an arbitration…

In 2012, The Office of the Whistle-blower was established to administer the SEC’s whistle-blower program formed in accordance with Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 21F of the Securities Exchange Act of 1934. The Act provides that the SEC shall pay awards to eligible whistle-blowers who voluntarily…

Hairdressor, Marcy Salandra went to her stockbroker’s office at Investors Capital Corporation in McMurray Pennsylvania to withdraw money to buy a house. However, instead of meeting her broker Patricia S. Miller, she was greeted by three FBI agents. Apparently, instead of the $681,944 that her statements showed her Investors Capital Corporation account was worth, the…

Since January 2011, David Lerner Associates, Inc. (David Lerner Associates) has recommended and sold over $300 million of a $2 billion real estate investment trust (REIT) — Apple REIT Ten — without performing adequate due diligence in violation of its suitability obligations. Earlier Apple REITs under the same management inappropriately valued the REITs’ shares at…

The Securities and Exchange Commission today charged former professional baseball player Doug DeCinces and three others with insider trading ahead of a company buyout. The SEC alleges that DeCinces and his associates made more than $1.7 million in illegal profits when Abbott Park, Ill.-based Abbott Laboratories Inc. announced its plan to purchase Advanced Medical Optics…

The Guiliano Law Group. P.C. has announced the filing of securities arbitration claims before the Financial Industry Regulatory Authority (FINRA) on behalf of investors suffering losses in Inverse and Leveraged Exchange Traded Funds or ETFs. Many investors were sold these securities based upon the notion that they could be a long term hedge. Most ETFs track…

If your stockbroker sold you improper, excessively risky investments, or — failed to disclose the riskiness of what appeared as an otherwise conservative investment, and as a result you lost your shirt — then today’s story will be especially relevant. For my readers who are stockbrokers, I’ll tell you right now that I’m going to…

Last week I told you about what happened to Hal and his wife, both 67, retired, and long time readers. From more than a million dollars in their 401K account as of January, 2006, their investments have lost close to $750,000. Why? What Went Wrong? “In our final preparations for retirement, in early 2006 even…