Posts Tagged ‘SEC’

High Frequency Trading Securities Fraud Class Action Filed Against “Flash Boys” Exchanges and Major Brokerages

May 22nd, 2014
English: A view from the Member's Gallery insi...

English: A view from the Member’s Gallery inside the NYSE (Photo credit: Wikipedia)

Many large brokerages, high speed trading firms, and U.S. stock exchanges were named as defendants in a securities fraud class action lawsuit filed by Providence, Rhode Island on April 18, 2014.  The Defendants in the high frequency trading securities fraud class action are accused of various types of conduct, including insider trading and manipulating trading within the U.S. securities markets.  The manipulation is alleged to have been achieved via high frequency trading based upon access to market information not available to the general investing public and other illegal conduct.

A few of the defendants targeted in the lawsuit include NASDAQ Stock Market, LLC, New York Stock Exchange LLC, Chicago Board Options Exchange Inc., BATS Global Markets, Inc. stock exchanges, a number of large brokerage firms, including Citigroup, Inc., Goldman Sachs Group, Inc., Morgan Stanley & Co. LLC and a number of high speed trading firms or “Flash Trading” firms.

Investors who purchased stock in the United States are being represented in a securities fraud class action.  The transactions at issue in the class complaint occurred from April of 2009 forward.  The complaint alleges the Defendants’ actions resulted in billions of dollars in damages to the investor class.  The securities fraud misconduct alleged against the class defendants includes:  contemporaneous trading, front-running, spoofing, and rebate arbitrage.  The lawsuit further explains that using certain devices and manipulations, the defendants were able to pursue false schemes and fraudulent courses of business that were intended to defraud investors who were trading securities.

Securities regulators, including the S.E.C., Justice Department and Commodities Exchange Commission are reviewing the high frequency trading industry independently of the Providence Class action filing last month.

The Providence high frequency trading class action and the ongoing regulator investigations into the high frequency trading industries potential for fraud and market manipulation will hopefully further uncover and bring to light trading and market practices by large market players that at best involve questionable conduct.  Securities regulators should act quickly to investigate and protect the general investing public from any questionable or illegal conduct by the trading and investment industry.

With billions of dollars in losses alleged and allegations of billions of dollars in gains by the Defendants, can a Hollywood movie be far off?   Stay tuned.

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Ray Lucia San Diego Investment Advisor charged by SEC – Buckets of Money?

September 14th, 2012

The Securities and Exchange Commission today accused local San Diego radio talk show host and bestselling author Ray Lucia of misleading potential investors in regards to his investment strategy called “Buckets of Money.”

Seal of the U.S. Securities and Exchange Commi...

Seal of the U.S. Securities and Exchange Commission. (Photo credit: Wikipedia)

The SEC alleges that Lucia misled potential investors when he told them that his method had been “back-checked” using historical data from past bear markets and that the investors money would be safe and grow.  According to the SEC, the investment program failed to account for fees and included artificially lowered inflation rates.   When historically accurate rates of inflation were used, a 1973 investor would have run out of money by 1989, the SEC said, a far cry from the return claimed by Lucia.

The SEC said Lucia and his company “have admitted during the SEC’s investigation that the only testing that actually performed were some calculations that Lucia made in the 1990’s – copies of which no longer exist – and two two-page spreadsheets.”  Lucia was aware that using the undervalued inflation rate would “make the results look more favorable for the Buckets of Money Strategy,” according to the SEC.

In addition to barring Lucia from making misleading claims, the SEC’s Order instituting Administrative and Cease-and-Desist Proceedings seeks financial penalties and “other remedial actions.”

Lucia quickly posted a passionate defense to the SEC allegations on his website on Wednesday afternoon, stressing that the investigation was a civil matter and not a criminal case and that it involved something he had not used in over two years.  “I want to assure you that I intend to vigorously defend this absolutely meritless lawsuit and will seek an early trial,” said Lucia.

Despite the allegations, Lucia’s website is promoting a seminar to be held at The Hilton San Diego Resort & Spa on September 22nd, which will be co-hosted by actor and financial columnist Ben Stein, and former San Diego Mayor and current talk show host Roger Hedgecock.

Carlson Law Firm is reviewing potential claims against Ray Lucia and his affiliates.  To speak with an attorney regarding your, please call Carlson Law Firm 619-544-9300  for a free consultation.

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McClellan Offers $1 M Settlement in Deloitte Insider Trading Case

February 7th, 2012

Annabel McClellan, the wife of Arnold McClellan, who was formerly the head of Deloitte Tax LP’s Mergers and Acquisitions, has settled a lawsuit

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alleging that she provided confidential information regarding mergers to family members.  If the judge accepts Annabel’s $1M settlement, the Securities and Exchange Commission (SEC) has agreed to drop comparable charges against her husband.

According to the Commission, Annabel gave confidential insider information to her sister, Miranda Sanders, and Miranda’s husband James, on at least seven occasions. The Sanders used the information to make trades that earned them millions of dollars. The SEC claims that James Sanders, who is the proprietor of a financial firm, not only used the tips for his own advantage but also to the benefit of his partners and customers, who also made millions. The SEC further alleges that James took positions with companies in the U.S. that Annabel told him were targeted for acquisition. According to Annabel, her husband was unaware that she was providing confidential information to her sister and brother-in-law.

By settling the lawsuit, Annabel is neither admitting nor denying the charges against her. However, she has pled guilty to lying to the SEC during their investigation of the insider trading scam.

Annabel and Arnold McClellan were first charged by the SEC in 2010 after investigations were conducted simultaneously by the SEC, the Department of Justice (DOJ), the Federal Bureau of Investigation (FBI), and the Financial Services Authority (FSA).

Insider trading is breach of fiduciary duty on the part of a financial officer.
As such, it negatively affects the stock market in various ways. Most obviously, it hurts investor confidence. When a company’s confidential information is used for the benefit of a few, it may also harm the company, ultimately causing financial loss. When insider trader occurs, who is held responsible for this breach of trust? All of the parties involved. That includes the individual who passes the tip along and the person who receives it, as well as anyone who trades based upon illegally obtained insider information.

Are you are aware of an insider trading situation that has been detrimental to your financial welfare? If you feel that you are, contact a securities litigation attorney immediately. For a free consultation, contact security lawyer Dan Carlson of Carlson Law in San Diego today.

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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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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)