Posts Tagged ‘FINRA’

FINRA Fines Firms for Failing to Deliver Prospectuses

January 21st, 2013
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On January 2, the Financial Industry Regulatory Authority announced fines totaling over $700,000  against five companies for failure in delivering prospectuses for mutual funds to clients.  The FINRA fines were implemented against LPL Financial, State Farm Management Corp., Scottrade Inc., T. Rowe Price Investment Services, Inc., and Deutsche Bank Securities, Inc.

By law, securities companies are required to deliver prospectuses to their clients so that the clients have an opportunity to review the investment portfolios and past performances of the funds.

The sanctions are the result of a FINRA review period from January 2009 through June 2011. LPL, who over that time period was required to deliver 3.4 million prospectuses to clients, blamed the problem on its brokers but admitted that there were no procedures in place to make sure the documents had been delivered.

FINRA alleged that State Farm, who was responsible for delivering 154,129 prospectuses, also failed due to inadequate supervision of its brokers.

As is the norm in these types of settlements, none of the firms involved admitted guilt in any of FINRA findings.  Of the five firms involved, only LPL released a statement.  Spokesman Betsy Weinberger said that LPL has instituted an automatic prospectus delivery program which she claims would assure that prospectuses are delivered in a timely manner.  None of the other firms released a statement.

At the Carlson Law Firm, we have experienced investment recovery lawyers to help investors when they have been harmed by the deceptive practices of the securities industry.  If you believe you have suffered financial losses through negligence or willful misconduct, contact us online or call (619) 544-9300.

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Posted in Investment Fraud | Comments (0)

FINRA System Open to Investment Adviser Disputes

November 16th, 2012

English: Wall Street sign on Wall Street

On Thursday, November 1st, 2012, FINRA Dispute Resolution issued guidance to attorneys who represent investors and those who represent non-FINRA investment advisers as to the availability of the arbitration and mediation services of the FINRA forum to resolve their disputes.

FINRA, The Wall Street funded watchdog, has long acted as the arbitration system in which investors and securities brokerages could, and were often forced by contract, to settle their legal disputes.  However, until now, whether that system was open to registered investment advisers and individual investors was dubious and unclear.

Despite the fact that using FINRA arbitration might be more cost effective than going to court, most investment advisers are opposed to the changes.   David Tittsworth, executive director of the Investment Adviser Association questioned the ruling, noting that there are few registered investment adviser account agreements requiring clients to forgo court and instead arbitrate any disputes.

Those favoring the changes say that using FINRA will be more cost effective than going through the expensive process of court and that for those investment adviser contracts which currently require arbitration, FINRA offers a much better financial deal than other arbitration services.

While the guidance provides some clarity as to how lawyers and investors can proceed, one thing to note is that FINRA does not regulate investment advisers.  Therefore, FINRA can only do so much.  Even with a ruling that goes against an investment adviser, unlike rulings against brokers, FINRA lacks the authority to suspend the adviser for failure to pay.

Carlson Law Firm is reviewing potential claims against investment advisers.  To speak with an attorney regarding your, please call Carlson Law Firm 619-544-9300 for a free consultation.

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Posted in Securities Arbitration | Comments (0)

Merrill Lynch Defrauded Stockbroker Employees out of Deferred Compensation – Over 10 Million Awarded

June 1st, 2012

$10.2 awarded to former ML brokers; More lawsuits to follow

Two former Merrill Lynch (ML) stockbrokers have been awarded a total of $10.2 million by a Financial Industry Regulatory Authority (FINRA) arbitration panel in their suit against the firm for deferred compensation fraud.

Rubbish Art - Bank of America Merrill Lynch London

In a written report, the panel found ML guilty of breach of contract, negligence, fraud, and “intentional misconduct” in its handling of deferred compensation settlements.

The FINRA panel awarded Tamara Smolchek $4.3 million in compensatory damages plus $3.5 million in punitive damages. Meri Ramazio was awarded $875,000 in compensation for her losses and an additional $1.5 million in damages.

ML is appealing the decision.

More lawsuits in the offing

Approximately 3,000 stockbrokers left ML after the company was acquired by Bank of America in November 2008.  Not a single broker received vesting rights—despite ML’s deferred-compensation policy, which states that employees who leave the company for “good reason” are eligible for rights to the money in their tax-deferred accounts.

Needless to say, many more former ML brokers are now seeking compensation through the court system.

If you are a broker who was denied deferred compensation by Bank of America/ Merrill Lynch, contact the securities fraud attorney Daniel Carlson at Carlson Law today for a free consultation 619-544-9300.

Carlson Law Firm Website http://www.securities-fraud-attorney-san-diego.com/

 

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Posted in Negligent Misrepresentation | Comments (0)

Boogie Investment Group to Call It Quits

March 15th, 2012

The Financial Industry Regulatory Authority (FINRA) recently received a withdrawal request from Boogie Investment Group, a small brokerage house that sold failed Provident Royalties private placements to its investors. Of the 52 brokerage houses that sold Provident private placements, Boogie Investment is the eleventh to call it quits this year.

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Private placements amounting to roughly $410K were sold by Boogie, whose revenues dropped from 1.2M three years ago to $422K this last fiscal year. But reduced earnings aren’t the only reason Boogie is exiting the brokerage business. The company has been hard hit by securities litigation. The firm is not only fighting a class action suit comprised of investors to whom they sold Provident private placements, but it’s also contending with a suit filed by those who bought Provident Shale Royalties products. Moreover, Boogie is combating other lawsuits that are unrelated to its sale of Provident Royalties private placements.

FINRA has forcefully dealt with brokerage firms as well individual brokers who sold private placements, alleging that they failed in their due diligence, both in investigating the placements and in assessing their suitability for their clients.

Other defunct brokers who sold Provident Royalties private placements include Workman Securities, Investlinc Securities/Meadowbrook, WFP Securities, Okoboji Financial, Matheson Securities, United Equity, CapWest, Private Asset Group Inc., Community Banker Securities LLC, E-Planning Securities Inc., Empire Financial, GunnAllen Financial and Barron Moore.

Have you incurred investment loss due to broker misconduct? Contact a stockbroker fraud lawyer in San Diego. It may be possible for you to recoup some or all of your losses. For a free consultation, contact Daniel Carlson, Esq. at Carlson Law 619-544-9300.

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Posted in Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law | Comments (0)

FINRA REACTS TO SEC CHARGES THAT IT MISHANDLED DOCUMENTS

December 7th, 2011
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According to the October 11 issue of Investment News, the Securities and Exchange Commission (SEC) has filed a complaint against the Financial Industry Regulatory Authority (FINRA), alleging that requested staff meeting minutes were altered by a FINRA director before they were delivered to the SEC in August 2008. The alterations, according to the SEC, rendered the meeting notes incorrect and incomplete.

Although FINRA currently serves as a self-regulatory organization (SRO) for stockbrokers, it has recently aspired to assuming that role for financial advisors, too. Given the SEC’s complaint, however, those aspirations are in jeopardy.

Ironically, it was FINRA, not the SEC, that first brought the problem of the tampered documents to light. After reporting the problem to the SEC, FINRA appointed a new director in its Kansas office where the tampering occurred. The SRO has also updated its protocols for the handling of documents and instituted extensive ethics training for its employees.

But for the SEC, these measures aren’t enough. The commission has ordered that FINRA hire an independent consultant to review the SRO’s training and in-house procedures, and to make recommendations for improvement. The goal? Ensuring that in future the SEC consistently receives reliable and accurate paperwork from FINRA.

Within 30 days of receiving the consultant’s findings and recommendations, FINRA’s board must either implement the suggestions for improvement or protest them. Alternatives to any recommendations that FINRA finds impractical or cumbersome must then be determined and agreed upon by both the board and the consulting agent.

In settling the charges made against it by the SEC, FINRA is neither denying nor admitting them. As an SRO that ensures the compliance of brokers with SEC regulations, however, FINRA recognizes that its own employees must comply with any and all requests made by the SEC.

At Carlson Law, our securities fraud attorneys represent those who have suffered financial loss due to stockbroker misconduct. To learn more about issues in finance today that may affect your wellbeing, check out other blogs at Carlson Law.

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Posted in Securities Law, Uncategorized | Comments (0)

Principal Protected Notes, Lehman Brothers and UBS Financial Services Arbitrations

June 14th, 2011
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A recent class action suit against Lehman Brothers as well as an enforcement proceeding against UBS Financial Services by New Hampshire has encouraged investors to hire investment recovery litigators and pursue claims against firms selling Lehman Brothers principal protected notes in an attempt to recoup their financial losses. According to New Hampshire’s claim, UBS engaged in broker malpractice by failing to disclose the risky nature of principal protected notes (PPNs). As a result, New Hampshire investors lost 2.5 million.
Principal Protected Notes
Principal protected notes (PPNs) are structured investments that have been around for years. Like all structured investments, PPNs connect CDs and fixed income notes to the performance of currencies, commodities, equities and/or other assets. Structures investment products are legitimate investments, and principal protected notes are a legitimate form of them.
Structured investments may have partial or full principal protection. Some pay a variable sum at their maturity. Others pay by coupons that are connected to a particular index or security. Given their risk and return reports, structured investments in general are appropriate for the portfolios of many investors.
In short, they are unsecured promissory notes connect to referenced securities, and as such they are not without risks. Unfortunately, according to claimants, investment firms committed broker malpractice by marketing these products to customers as safe investment alternatives.
Marketing of PPNs to Retail Investors
Beginning in 2005, PPNs became a particularly popular type of structured investment for retail customers. Noting their increased sales to non-institutional customers, the Financial Industry Regulatory Authority (FINRA) expressed concern that brokers were committing a breach of fiduciary duty by marketing principal protected notes to retail customers as “conservative” investments with “predictable current income.” In fact, the agency issued a notice to brokerage firms in September of 2005 that clear guidance regarding the risks involved in these financial products should be given to retail customers.
PPNs, Lehman Brothers & Bankruptcy
When PPNs mature, investors typically receive a return on the principal from the borrower. In this case, the borrower was Lehman Brothers. Unfortunately for investors, when Lehman Brothers filed for bankruptcy, even the principal on these notes became unprotected. Lehman’s PPN obligations on the notes were unsecured–and behind secured notes in the creditor bankruptcy line up.
The Case Against Lehman Brothers
Unsurprisingly, investors are now seeking to recover their financial losses. Although the specific allegations of claimants vary, all assert that Lehman Brothers, selling brokerages like UBS Financial Services and others, committed broker malpractice by falsely marketing PPNs as conservative investment product alternatives.
Specifically, claimants allege, these PPN products were depicted as 100 percent principal protected if investors held them to maturity.
Brokers also presented the PPNs as principal protected if the indices underlying them held their value. Furthermore, firms and brokers did not warn customers of the risks involved in investing in PPNs, nor did they warn them about what would happen if the underlying backer of the notes, Lehman Brothers, defaulted. Customers were also not made aware of the Lehman Brothers’ decline and that its fall could affect their investment’s value, making it in effect worthless.
It’s also been alleged that firms continued to push PPNs after Bear Stearns collapse, a failure which should have been a clear indicator or “red flag” of the risks involved in investing in banks that hold large numbers of subprime mortgages. It’s also been alleged that firms pushed PPNs on retail customers at a time when they themselves were reducing their PPN holdings. The accuracy or falsity of these claims has yet to be determined. But if firms did indeed recommend PPNs while reducing their own holdings, litigators are likely to claim broker fraud rather than simply failure to disclose.
Did your financial advisor mislead you into investing in PPNs, causing you to suffer financial loss as a result? If so, you need the advice of an investment recovery counsel. Contact Carlson Law in San Diego at 619-544-9300 today for a free consultation.

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Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation, Stock Fraud, Stock Loss | Comments (2)

FINRA CEO Says Brokers Must “Push and Pull” for Private Placement Information

June 6th, 2011

Often, investment advisors, stockbrokers and brokerages who unsuitably push Reg. D Private Placements on investors claim that any financial losses investors subsequently experience occur despite their due diligence. However, these private investments pay high fees that can induce some financial professionals to look the other way, focusing on the fifteen percent fee rather than the best interests of their clients in recommending these high-risk investments without the required due diligence having been performed. With the smell of large commissions and enormous fees in the air, it’s probably easy for brokers to rationalize away all of the drawbacks, risks, and any lack of appropriate due diligence for private placement investments.

Luckily for investors the Financial Industry Regulatory Authority (FINRA) has decided to come down hard on the sales of Reg. D Private Placements. At a yearly meeting of the agency, FINRA CEO and Chair Richard Ketchum explained that in the future brokers who promote and sell private placements must “push and pull” for the necessary due diligence information in order to avoid liability and assure that they’re making sound investment recommendations for their clients. That means doing a lot more than reading basic investment documents and attending “canned” meetings if questions needed to be asked.

At Carlson Law we pursue brokerage firms and financial professionals who recommend inappropriate, high-risk private placements to clients. For elderly investors, conservative investors, and those with a net worth of less than $1 million or a yearly income of less than $200,000, private placements may be per se inappropriate investments. If you’ve suffered financial loss due to stockbroker malpractice, contact Carlson Law in San Diego today at 619-544-9300.

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Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation, Stock Fraud, Stock Loss | Comments (2)

Justice for Morgan Keegan Investors an Ongoing Struggle

May 23rd, 2011
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Morgan Keegan & Company, Inc., a financial services division of Regions Financial Corporation, has been the subject of numerous regulatory investigations in the last few years.

Originally founded by Allen B. Morgan, Jr., James Keegan and two other businessmen in 1969, Morgan Keegan didn’t grow on a large scale until the 1980s when it began acquiring other brokerage houses, beginning with the Mississippi-based Geary & Patterson. By 1990, it had purchased a total of four investment houses, and it was hungry for more. From 1992 to 1997, it bought seven additional firms as well as a sports agency, Athletic Resource Management.

Morgan Keegan itself was purchased in 2001 by Regions Financial. Regions incorporated its brokerage unit into the firm, creating a division specializing in asset management, investment banking and securities brokerage.

In April 2011, the Financial Industry Regulatory Authority (FINRA) as well as various state regulatory agencies and the Securities and Exchange Commission (SEC) filed civil suits against Morgan Keegan.
According to many investor complaints filed with FINRA, State and SEC suits and investigations, from 2004 to 2007, the company marketed Select Intermediate Bond Funds and Select High Income Funds as low-risk securities to investors who had requested safe, short-term corporate commercial paper investments. Furthermore, Morgan Keegan did not inform clients that most of their assets (over 50 percent) were invested in sub-prime, illiquid, untested investment structures, such as mortgage-backed securities and collateralized debt obligations (CDOs).

When the mortgage market collapsed in 2007, investors lost big. According to the SEC, the company and two of its top execs, Thomas Weller and James Kelsoe, purposely hid the plummeting value of their risky investments through 262 so-called “price adjustments.”

The result of Morgan Keegan’s blatantly behavior was predictably catastrophic for their clients. Thousands of investors, hoping to recoup their financial loss, have filed or will file arbitration claims against Morgan Keegan with FINRA.

Unfortunately, although regulators unanimously agree that Morgan Keegan committed acts of egregious fraud that financially harmed clients, investor claimants in FINRA proceedings, generally individual or family trust investors, have thus far experienced very mixed success in recovering their losses. Why? They’ve consistently been denied access to documents necessary to their cases by FINRA arbitration panels.

Despite the fact that Morgan Keegan has publically admitted it’s been the subject of multiple regulatory investigations, the thousands and thousands of documents relating to these investigations have been denied to claimants and their counsel because many arbitrators have refused to order that Morgan Keegan produce this potentially damning paperwork. Consequently, time and time again, arbitration panels have rendered decisions on claims without having all the relevant facts.

Clearly, this must change if investors are to receive just compensation for their financial loss. And with persistent, long-term petitioning by defrauded investors and their lawyers, no doubt it will change.

If you feel you have been a victim of investment fraud or negligence, contact Carlson Law in San Diego. Carlson Law specializes in investment recovery litigation and arbitration. Call 619-544-9300 now for a free consultation.

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Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation, Stock Fraud, Stock Loss | Comments (2)

Citigroup Must Pay Claimants $54M in Damages in MAT/ASTA Investment Fund FINRA Arbitration

May 17th, 2011

In April 2011, Citigroup Global Markets, Inc. was ordered by a Financial Industry Regulatory Authority (FINRA) panel to pay damages of more than $54M for its misconduct in managing and promoting a wide range of investment products, including MAT/ASTA municipal bond hedge funds.

The three claimants will receive 100 percent of the compensatory damages they sought, which total $34,058,948, as well as 8 percent interest and $17,000,000 in punitive damages. Furthermore, Citigroup must pay claimants’ attorney fees, expert witness fees, hearing session fees and the nonrefundable portion of the claimants’ filing fee.

The settlement process focused on the company’s poor handling of MAT/ASTA municipal arbitrage funds, including MAT Two, MAT Three and MAT Five; MAT Finance; ASTA Three and ASTA Five; and ASTA Finance. Without regard to their high-risk nature, the funds were promoted as alternatives to municipal bond portfolios. Furthermore, Citibank falsely characterized them as having strong risk-control features. FINRA found that Citibank not only falsely marketed MAT/ASTA funds, but that it also seriously mismanaged them.

If you believe that Citigroup Global Markets mishandled your investments but have yet to file a claim, don’t delay. Contact an experienced investment recovery lawyer in San Diego at Carlson Law today. It may not be too late to recoup your financial loss and stand up for your rights as an investor.

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Posted in Broker Fraud, Fiduciary Duty Breach, Investment Fraud, Negligent Misrepresentation, Securities Arbitration, Securities Fraud, Securities Law, Securities Litigation, Stock Fraud, Stock Loss | Comments (4)

FINRA Fines Wells Fargo for Slow Delivery of Prospectuses

May 17th, 2011

According to a May 5, 2011 Investment News article, Wells Fargo took as many as 153 days to deliver prospectuses to more than 900,000 clients who purchased mutual funds in 2009. (Securities law requires that prospectuses be delivered to purchasers within three days of the buy.) For dragging their feet, the company has been fined $1M by the Financial Industry Regulatory Authority (FINRA).

Wells Fargo also allegedly failed to take action to remedy the situation after learning that up to 9 percent of its customers had not received prospectuses within the requisite three days.

FINRA enforcement chief Brad Bennett stressed the importance of prospectuses to customers, as they contain important data regarding a fund’s costs, plans, performance history and risks. By failing to deliver prospectuses in a timely manner, said Bennett, Well Fargo deprived its customers of key information.

According to the article, Wells Fargo further broke FINRA rules by failing to report client complaints. Neither did the company disclose all arbitration claims that involved its representatives within the required 30 days.

Were you one of Wells Fargo’s more than 900,000 unlucky customers? If you suffered financial loss as a result of the company’s misconduct, contact an investment recovery attorney at Carlson Law.

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Posted in Fiduciary Duty Breach, Negligent Misrepresentation, Securities Arbitration, Securities Law, Stock Loss | Comments (2)