October 16, 2014

Ex-Ameriprise Adviser Pleads Guilty To Nearly $1M Fraud

SusanWalker, an ex investment adviser with Ameriprise Financial Inc. (AMP), has pleaded guilty to bilking two dozen clients of $980,000. She stole the funds from clients between ’08 and ’13, using the money to cover her own spending, including costly vacations.

Walker is accused of setting up investment accounts under several customers’ names but without their consent. She took money from clients’ retirement and brokerage accounts, placed the funds into the accounts under her control, and took out the funds to spend as she pleased. Ameriprise has paid back the customers that were harmed.

The firm fired Walker and her mother Barbara Stark in early 2013. Stark is not charged in this criminal case.

In a separate but related order seeking civil damages, Walker is accused of making unsuitable investment recommendations to customers and taking client money to pay for her own expenses, including her certification with the Certified Financial Planner Board of Standards Inc.

The board suspended Walker certification last year after finding out that the Financial Industry Regulatory Authority barred her (and Stark) for not providing documents in the wake of allegations that client funds were misappropriated. The board permanently revoked Walker's certification this year.

The securities fraud was discovered two years ago during an inquiry by the Minnesota Attorney General's Office into an unrelated settlement involving annuity sales. The office discovered withdrawals had been made from a number of annuities products without the knowledge of the owners.

Securities Fraud
It is the investors that suffers most when a financial representative engages in fraud, especially when that individual has chosen to purposely steal funds from clients. At Shepherd Smith Edwards and Kantas, LTD LLP, our securities fraud lawyers are here to help our clients get their money back. We help elderly seniors, married couples, young professionals, high net worth individuals, institutional clients, and other investors seeking tor recover their losses.

Even if the government or prosecutors are pursuing a case against a fraudster, it is important that you have an experienced investment fraud lawyer representing your interests and fighting for the recovery of your stolen funds. Over the years, we have helped thousands of investors get their money back. You should contact our securities law firm right away and ask for your free case assessment.

Reporting a securities fraud not only benefits you but it could prevent others from becoming victims as well. Unfortunately, until an unethical investment adviser or broker is exposed, their financial schemes can continue to cause harm. Even when the fraud is discovered, the financial representative may keep perpetuating a scam. Fraudsters have even known to move to another firm where they go on to bilk more clients. Contact us online or call (800) 259-9010.

Ex-Ameriprise adviser pleads guilty to stealing nearly $1 million, InvestmentNews, October 16, 2014

Former Ameriprise adviser from Plymouth admits to swindling $1 million from clients, Star Tribune, October 18, 2014


More Blog Posts:
LPL Financial Fires Texas Branch Manager Over Selling Away Claims, Settles with Senior Investors in Massachusetts for $541,000 Over Faulty Variable Annuity Switches, Stockbroker Fraud Blog, October 15, 2014

Barclays to Pay $20M To Settle Libor Manipulation, Institutional Investor Securities Blog, October 14, 2014

UBS is Fined $3.6M, Plus Must Pay $1.7M in Restitution Over Closed-End Mutual Fund Sales, Stockbroker Fraud Blog, October 14, 2014

October 8, 2014

Securities Fraud: Ex-Ameriprise Adviser to Pay $3M for Ponzi Scam, Four Insurance Agents Allegedly Defrauded Senior Investors, and Trading in Nine Penny Stocks is Suspended

Former Ameriprise Adviser Ordered to Jail, Must Pay $3M Restitution
Oscar Donald Overbey Jr., an ex-Ameriprise Financial Services (AMP) financial adviser, must pay back the $3 million he allegedly stole from investors while operating a Ponzi scam. The 47-year-old has been sentenced to three and a half years behind bars.

Court documents say that from 1996 into 2007, Overbey stole about $4 million of client funds that he was supposed to invest. Instead, the money was used to pay earlier investors, cover his personal expenses, and pay off his gambling debts.

In July 2012, Overbey was indicted. He pleaded guilty to wire fraud felony charges last year. Overbey reportedly told a doctor that many of his brokerage clients were fellow gamblers.

The Financial Industry Regulatory Authority barred him from the industry in 2007. Ameriprise fired him. It has since paid back the clients that were affected by Overbey’s fraud.

Insurance Agents Face SEC Charges Alleging Elder Financial Fraud
The U.S. Securities and Exchange Commission is charging four insurance agents over their involvement in a multi-million dollar securities fraud that targeted senior investors. The elder financial fraud charges come almost a year after the regulator filed charges against Gary C. Snisky for orchestrating the scheme and bringing in insurance agents to solicit investors.

The financial scam raised about $4.3 million over 18 months. Now, the SEC is going after insurance agents Kenneth C. Meissner, Mark S. Tomich, James Doug Scott, and David C. Sorrells for soliciting funds even though they weren’t registered as a broker-dealer with the Commission.

The fraud primarily targeted annuity holders that were retired. The insurance agents sold interests in Arete LLC, which Snisky controlled. Investors were purportedly told that their money would be used to buy discounted agency bonds that were backed by the government. Instead, Snisky misappropriated about $2.8 million of their money.

Microcrap Fraud Probe Leads to Trading Suspension in Nine Penny Stocks
The SEC has suspended trading in nine penny stocks. The move is an effort to battle microcap fraud. The affected companies include Xumanii International Holdings Corp., All Grade Mining Inc., Solar Thin Films Inc., Global Green Inc., Bluforest Inc., mLight Tech Inc., DHS Holding Co., Inova Technology Inc., and Essential Innovations Technology Corp.

The SEC can elect to suspend trading in a stock if it believes that doing so is necessary to protect investors and the public. The regulator typically cannot announce in advance that a suspension is in the works because this could hinder its investigative efforts.

Ex-Ameriprise adviser gets jail time for using client money to pay gambling debts, Investment News, October 7, 2014

SEC Charges Four Insurance Agents in Securities Fraud Targeting Elderly Investors, SEC, September 26, 2014

Penny Stocks Trading Suspension Order, SEC (PDF)


More Blog Posts:

FINRA Bars Former Raymond James Adviser for Elder Financial Fraud, Charges SWS Over Variable Annuity Supervision, Stockbroker Fraud Blog, October 7, 2014

Former Axa Advisors Broker Faces SEC Charges Over Alleged $1.5M Ponzi Scam, Stockbroker Fraud Blog, September 30, 2014

Shareholder’s $40B Class Action Securities Lawsuit Over AIG Bailout Goes to Trial, Institutional Investor Securities Blog, September 29, 2014

May 22, 2013

Ameriprise Financial, Securities America, & Three Other Brokerage Firms Reach $9.6M Non-Traded REIT Securities Settlement with Massachusetts Financial Regulator

Secretary of the Commonwealth of Massachusetts William Galvin announced today that the state has reached a $9.6M securities settlement with five independent brokerage dealers—Ameriprise Financial Services Inc. (AMP), Commonwealth Financial Network, Lincoln Financial Advisors Corp., Royal Alliance Associates Inc., & Securities America Inc.—over the allegedly inappropriate sale of nontraded real estate investment trusts to investors. $8.6M of this is restitution to them.

Galvin says that the investigation, which was triggered by complaints from customers, led to the discovery of a “pattern of impropriety” in the sale of these securities by independent broker-dealers where supervision has been hard to “maintain.” As part of the nontraded REIT settlement, Ameriprise will pay $2.6 in restitution and a $400K fine, Securities America will pay $778K in restitution and a $150K fine, Royal Alliance will pay $59K in restitution and a $25K fine, Commonwealth Financial Network will pay a $2.1M restitution and a $300K fine, and Lincoln Financial will pay a $504K restitution and a $100K fine.

The non-traded REIT agreement with these independent brokerage firms comes just three months after Galvin settled a similar securities fraud case with LPL Financial Holdings Inc. accusing that financial firm of inadequately supervising their brokers tasked with selling the financial instruments. LPL Financial agreed to pay $2.5M in restitution and a $500K administrative fee over seven nontraded REITs that were sold.

The state of Massachusetts contends that some sales allegedly violated state regulations that don’t allow over 10% of an investor’s worth to be held in specific securities, while others purportedly violated the requirements for liquid net worth of investors that are established in prospectuses. Firm employees and brokers tasked with looking over the transactions were not only allegedly inadequately supervised, but also they lacked the necessary education about nontraded REIT transactions. This week, a spokesperson for Secretary Galvin announced that the financial firm has agreed to pay another $2.6 million in restitution.

Shepherd Smith Edwards and Kantas, LTD LLP’s REIT attorneys, represent individual and institutional investors throughout the United States.

Five IBDs in $7M settlement over nontraded-REIT sales, Investment News, May 22, 2013


LPL to pay up to $2.5 million to settle Massachusetts REIT charges, Reuters, February 6, 2013


More Blog Posts:
SEC Submits Request for Data on Whether to Make Brokers & Investment Advisers Abide by Uniform Fiduciary Standard, Stockbroker Fraud Blog, April 4, 2013

Goldman Sachs Execution and Clearing Must Pay $20.5M Arbitration Award in Bayou Ponzi Scam, Upholds 2nd Circuit, Institutional Investor Securities Blog, July 14, 2012

March 4, 2013

Ameriprise Fined $750,000 for Inadequate Supervision of Wire Transfer Requests

The Financial Industry Regulatory Authority has fined Ameriprise Financial Services Inc. and American Enterprise Investment Services Inc. $750,000 for failing to properly supervise wire-transfer requests and customer fund transmissions to third parties. Also, the SRO has barred Jennifer Guelinas, an ex-Ameriprise broker, for allegedly forging the signatures of two clients on wire-transfer requests and moving about $790,000 to her bank accounts. Ameriprise is an American Financial Inc. (AMP) unit.

FINRA said that Ameriprise had gone on to pay full restitution to its clients and that it was the latter’s affiliate clearing firm, American Enterprise Investment Services, that failed to put in supervisory systems for monitoring funds when they were transferred from client accounts to third parties. The SRO contends, however, that it was Ameriprise that did not detect that Guelinas wrongful actions even though there were a number of red flags. For example, she turned in three requests to send funds from a client’s account to bank account that appeared to belong to her. Amerirpise went ahead and put through the forged requests and moved the funds without asking questions. A third wire-transfer request by Guelinas also went through, says FINRA, but this time Ameriprise caught the wrongdoing before she could get to the money.

Amerirpise says that the since these incidents, which occurred several years ago, the financial firm has improved its related procedures, policies, and technology. By settling, Ameriprise and American Enterprise Investment Services are not admitting to or denying the securities allegations.

Failure to Supervise
Written supervisory procedures must be implemented correctly and effectively at every brokerage firm. Failure to supervise can more easily allow broker fraud to occur undetected, potentially causing serious losses for investors. Not only can broker-dealers be liable for stockbroker fraud but even if the broker isn’t found liable the firm can still be considered financially accountable.

Last year, Guelinas pleaded guilty to the criminal charge of wire fraud. Prosecutors had accused her of transferring over $800 from a client’s account to her own account and using a forged signature to make the transaction happen. While the crime she committed is punishable by 20 years behind bars, in the wake of her plea deal she stood to face 12 months in prison.

If you have been the victim of securities fraud, you could be entitled to financial recovery. Your securities case would be separate from any criminal proceeding and the outcome of the two would be unrelated, meaning even if the person that defrauded you was not charged or found/pleaded guilty, you could still obtain damages. Your chances of recovery, and of getting back as much of your loss as possible, goes up when you work with an experienced investment fraud law firm.

Former Valpo financial adviser admits stealing $800,000 of client's money, Chesterton Tribune, May 8, 2012

Finra Fines Ameriprise, Clearing Unit $750,000 For Lack of Supervision, Wall Street Journal, March 4, 2013


More Blog Posts:
Morgan Stanley, Citigroup, Wells Fargo, and UBS to Pay $9.1M Over Leveraged and Inverse ETFs, Stockbroker Fraud Blog, May 3, 2012

Principals of Global Arena Capital Corp. and Berthel, Fisher & Company Financial Services, Inc. Settle FINRA Securities Allegations, Stockbroker Fraud Blog, April 6, 2012

SEC Needs to File Securities Fraud Lawsuits Sooner, Rules the US Supreme Court, Institutional Investor Securities Blog, February 28, 2013

March 29, 2012

Ameriprise Financial Sued by Employees Over Allegedly Excessive 401(K) Costs

In a civil case that is still underway, a number of Ameriprise Financial Inc. workers are suing their employer for what they claim was $20 million in excessive costs that resulted because the company put their 401(k) contribution in proprietary funds. The complaint, filed in September in the U.S. District Court in Minnesota last September, has been seeking class action status.

The 401k plan under dispute was launched in 2005 and the class action securities lawsuit is looking to represent everyone that the plan has employed since then. Over 10,000 members may qualify to become part of the class. The group is led by several former and current Ameriprise plan participants.

Also named as defendants in this civil suit are Ameriprise’s 401(k) investment committees and employee benefits administration. According to the plaintiffs, the defendants violated their fiduciary obligation to the retirement plan, which included investments involving mutual funds and target date funds from RiverSource Investment LLC (an Ameriprise subsidiary that is now called Columbia Management Investment Advisers LLC). The plaintiffs say that about $500 million in plan assets went into Ameriprise Trust Co. and RiverSource yearly.

The plaintiffs claim that the investment that their money went into resulted in fees generated for Ameriprise Trust, RiverSource, and its affiliates. The Ameriprise workers say that the plan suffered over $10 million in losses due to excessive fees and expenses. They also believe that RiverSource was behind in their benchmarks, suffered outflows in the billions of dollars in 2006 and 2005, and was given poor ratings by Morningstar Inc.

The plaintiffs believe that defendants selected the more costly funds with the poorer performance stories to create revenue for ATC and RiverSource and that this also benefited Ameriprise. They say that Ameriprise violated its fiduciary duty, under the Employee Retirement Income Security Act of 1974, to the retirement fund.

The plaintiffs are seeking disgorgement of all revenues, restitution, and all the money that was lost. They want the court to make sure the plan’s losses are paid back and participants are placed in the position they would have been in if only the plan had been administered correctly.

401K Plan Lawsuits
There are fiduciaries and owners of businesses that could find themselves in legal hot waters in the wake of the Department of Labor regulations that now require that the hidden, excessive fees in 401(k) plans be disclosed. Unbeknownst to participants, these fees have been reducing retirement plan balances. Also, the government is now pushing for full disclosure of all fees and wants retirement plan offerings to be provided to employees at the lowest costs possible.

There have ben other employees of other companies that have also filed their 401(k) fees class action lawsuits. For example, just last December, Walmart settled a $13.5 million class action complaint with its employees. The lawsuit blamed the company and Bank of America's Merrill Lynch unit for passing along expenses and high fees that were unreasonable to some two million workers.

Ameriprise workers sue over company's own 401(k) funds, Investment News, September 29, 2011

Ameriprise workers seek class-action suit on 401(k), Star Tribune, September 29, 2011


More Blog Posts:

Ameriprise to Sell Securities America Even as it Finalizes Securities Settlement with Investors of Medical Capital Holdings and Provident Royalties Private Placements, Stockbroker Fraud Blog, April 26, 2011

Ameriprise Broker Arrested for Defrauding Investors - Clients Say He Cashed Checks Made Out to Ameriprise, Stockbroker Fraud Blog, July 7, 2007

Bank of America to Pay $335M to Countrywide Financial Corp. Borrowers Over Allegedly Discriminating Lending Practices, Stockbroker Fraud Blog, December 21, 2011

Continue reading "Ameriprise Financial Sued by Employees Over Allegedly Excessive 401(K) Costs" »

April 26, 2011

Ameriprise to Sell Securities America Even as it Finalizes Securities Settlement with Investors of Medical Capital Holdings and Provident Royalties Private Placements

In its first quarter earnings report, Ameriprise Financial (NYSE: AMP) says it intends to sell Securities America. The news comes while the financial firm is still in the process of finalizing its securities fraud settlement with investors accusing the brokerage unit of selling allegedly fraudulent private placements of Medical Capital Holdings and Provident Royalties.

Investors sustained about $400 million in losses after taking part in Medical Capital Holdings-sponsored debt sales and shale gas investments with Provident Royalties. Although originally Securities America had about $400 million in outstanding obligations, the proposed settlement is worth $150 million. The independent broker-dealer unit is accused of failing to do proper due diligence on millions of dollars in investments that it sold, which later proved to be worthless.

Investors who filed securities arbitration cases against Securities America will receive $70 million. Those who are seeking to get back their losses through a class action securities lawsuit will get $80 million. The financial firm could be facing over $300 million more in arbitration claims over the fraudulent placements.

There is speculation over why Ameriprise's decision to sell comes now. Does this mean that the financial firm has other issues of concern, beside the securities allegations, with Securities America? The sale may also mean that Ameriprise has decided to focus on its core business.

Per the earnings report, Securities America entered into the settlement agreements last month. This has resulted in a $118 million pre-tax charge for Ameriprise during 2011's first quarter, as well as the $40 million pretax charge it incurred during last year’s fourth quarter.

Related Web Resources:
Securities America Agrees To Settlement With Investors-Sources, The Wall Street Journal, April 13, 2011

Ameriprise profit up, selling Securities America, AP/Bloomberg Businessweek, April 25, 2011

Ameriprise profit up, selling Securities America, Bloomberg Business Week, April 25, 2011


More Blog Posts:
Texas Securities Fraud: Three FINRA Cases Against Securities America Over Sale of Private Placements Halted, Stockbroker Fraud Blog, February 22, 2011

Securities America Inc. to Pay $1.2M in Compensatory and Punitive Damages Over Allegedly Fraudulent Medical Capital Notes, Stockbroker Fraud Blog, January 6, 2011

Securities America & Ameriprise Financial Inc. Sued For Selling Allegedly Faulty Private Settlements, Stockbroker Fraud Blog, November 10, 2009


Continue reading "Ameriprise to Sell Securities America Even as it Finalizes Securities Settlement with Investors of Medical Capital Holdings and Provident Royalties Private Placements" »

March 4, 2011

Ameriprise Financial Inc. to Pay $27M to Settle Securities Lawsuits of Securities America Clients Bilked in Ponzi Scams

To settle securities fraud complaints by investors that bought private placements in Provident Royalties and Medical Capital through its independent-brokerage unit Securities America, Ameriprise Financial Inc. will pay $27 million. It was just two weeks ago that Securities America agreed to pay $21 million to settle the same class of approximately 2,000 investors who lost about $300 million through Ponzi scams. Unfortunately, private placements, which should be restricted to rich “accredited “ investors, were offered to a wider range of investors that likely did not fully understand the risks involved.

In its annual report, Ameriprise revealed that Securities America clients sustained nearly $400 million in financial losses from the private placements. The financial planning and wealth management firm has about $40 million in reserves. Aside from the class action lawsuits, Securities America and Ameriprise face lawsuits in Massachusetts and a “significant” number of individual securities claims in arbitration.

To avail of the class-action settlements, an investor would have to drop his/her arbitration case. However, as the proposed settlements are greater than Securities America’s “net worth,” claimants may not get all of the money that they are owed. According to Shepherd Smith Edwards and Kantas Founder and Securities Fraud Lawyer William Shepherd, “With the class legal fees and expenses not yet revealed, this is—at best—nine cents on the dollar for the victims. This would actually be a bit better than most securities class action cases, in which the average paid to victims is closer to seven percent of their losses. Our firm represents securities fraud victims one at a time. These are investors who have losses substantial enough to support their own case. While they have to ‘opt-out’ of the class action in order to file their individual claims, gambling 7% of losses to seek a far higher recovery is often a wise decision.”

Related Web Resources:
Ameriprise settles investor suit for $27 million: lawyer, Reuters, March 3, 2011

Lawsuits suck air out of Securities America's cash cushion, Investment News, March 1, 2011

Texas Securities Fraud: Three FINRA Cases Against Securities America Over Sale of Private Placements Halted, Stockbroker Fraud Blog, February 22, 2011

Securities America Inc. to Pay $1.2M in Compensatory and Punitive Damages Over Allegedly Fraudulent Medical Capital Notes, Stockbroker Fraud Blog, January 6, 2011


Continue reading "Ameriprise Financial Inc. to Pay $27M to Settle Securities Lawsuits of Securities America Clients Bilked in Ponzi Scams" »

February 22, 2011

Texas Securities Fraud: Three FINRA Cases Against Securities America Over Sale of Private Placements Halted

In what Investment News is describing as a legal victory for Securities America, a federal judge in Dallas has placed a restraining order on three upcoming FINRA arbitration claims against the broker-dealer and its brokers. The cases will be combined with two class action. This will likely limit Securities’ America’s liability. Ameriprise Financial Inc. owns this brokerage firm.

In the U.S. District Court for the Northern District of Texas, Judge W. Royal Furgeson, Jr. ordered the broker-dealer to set up a $21 million settlement fund for investors. The Texas securities fraud claims involve the allegedly bogus sale of private placement notes from Provident Royalties LLC and Medical Capital Holdings Inc.

A number of plaintiff’s attorneys have expressed dismay at Furgeson’s decision because they are worried that their clients won’t get as much from a class action case. Furgeson, however, says that combining the cases protects the financial recovery for all investors and not just those with FINRA arbitration claims.

Per court documents, Securities America sold approximately $18 million of Provident shares and $700 million of Medical Capital notes. Some 20,000 investors purchased the Medical Capital notes from independent broker-dealers and approximately $2.2 billion was raised from the private placements. Unfortunately, many of the medical receivables believed to be underlying the notes never existed.

Dozens of claimants, including the securities divisions of Massachusetts and Montana, have filed securities claims against Securities America. The financial firm, however, maintains that it did not engage in any wrongdoing when it sold the MediCap notes.

Related Web Resources:
Securities America scores huge victory in Reg D case, Investment News, February 18, 2011

More Stockbroker Fraud Blog Posts:
Securities America Inc. to Pay $1.2M in Compensatory and Punitive Damages Over Allegedly Fraudulent Medical Capital Notes, Stockbroker Fraud Blog, January 6, 2011

FINRA Fines H & R Block Financial Advisors (Now Ameriprise Advisor Services) over Sales of Reverse Convertible Notes (RCN), Stockbroker Fraud Blog, February 17, 2010

Securities America & Ameriprise Financial Inc. Sued For Selling Allegedly Faulty Private Settlements, Stockbroker Fraud Blog, November 10, 2009

Continue reading "Texas Securities Fraud: Three FINRA Cases Against Securities America Over Sale of Private Placements Halted" »

January 6, 2011

Securities America Inc. to Pay $1.2M in Compensatory and Punitive Damages Over Allegedly Fraudulent Medical Capital Notes

A Financial Industry Regulatory Authority arbitration panel has ordered Securities America Inc. and broker Randall Ray Talbott to pay an investor nearly $1.2 million in damages over the sale of allegedly fraudulent Medical Capital notes. Claimant Josephine Wayman had charged the respondents with a number of actions, including securities fraud, deceit, breach of fiduciary duty, industry rules violation, financial elder abuse, and negligence. Ameriprise Financial Inc. owns Securities America.

The award includes $734,000 in compensatory damages, $250,000 in punitive damages, and $171,000 in expert witness and legal fees. Punitive damages are not common in FINRA arbitration awards.

Dozens of other claimants are pursuing securities claims against Securities America over the sale of private placements prior to the financial collapse in 2008. The securities divisions of Montana and Massachusetts are among those suing the broker-dealer. Meantime, Securities America has said that Medical Capital Holdings Inc., which issued the private placements, is the one that should be held liable for investors’ financial losses.

From 2003 to 2008, dozens of independent broker dealers sold private Medical Capital notes, with Securities America considered the biggest seller at nearly $700 million. The private placements raised $2.2 billion. Unfortunately, many of the medical receivables that were supposed to be underlying the notes were in fact non-existent. Medical Capital has been accused of running a Ponzi-like scam and using newer investors’ funds to pay promised returns to older investors. Securities America has said that it did not act inappropriately when selling the MedCap notes.

Medical Capital is bankrupt and $1.1 billion of investors’ funds are gone. In 2009, the Securities and Exchange Commission charged Medical Capital with securities fraud.

Related Web Resources:
Securities America and Rep to Pay Over $1 Million in FINRA Fraud Case, AdvisorOne, January 5, 2011

Arbitrators hit Securities America, rep with $1.2 million in damages, legal fees over MedCap, Investment News, January 3, 2011

Financial Industry Regulatory Authority

Securities America

Continue reading "Securities America Inc. to Pay $1.2M in Compensatory and Punitive Damages Over Allegedly Fraudulent Medical Capital Notes " »

February 17, 2010

FINRA Fines H & R Block Financial Advisors (Now Ameriprise Advisor Services) over Sales of Reverse Convertible Notes (RCN)

The Financial Industry Regulatory Authority (FINRA) has fined H&R Block Financial Advisors (now Ameriprise Advisor Services) $200,000 for failing to put in place the proper system to supervise its reverse convertible notes (RCN) sales to retail clients. FINRA also suspended H & R broker Andrew MacGill for 15 days while ordering him to pay a $10,000 fine and $2,023 in disgorgement for making unsuitable RNC sales to a retired couple. MacGill recommended that they invest close to 40% of their total liquid net worth in RCNs. Meantime, H & R Block has been ordered to pay the couple $75,000 in restitution for their financial losses. Without denying or admitting to the charges, the brokerage firm and MacGill consented to the finding’s entry.

According to FINRA, between January 2004 and December 2007, H&R Block sold RCNs without a system of procedures in place to properly monitor whether possible over-concentrations in RCNs were taking place in customer accounts. FINRA says that the brokerage firm relied on an automated surveillance system to monitor client accounts and review securities transactions for unsuitability but that the system was not set up to monitor RCN placement in customer accounts or RCN transactions. This caused H & R Block to miss signs of when there were potentially unsuitable levels of RCN in client accounts. Furthermore, FINRA says that the firm failed to provide guidance to its supervisors regarding the assessment of suitability standards related to their agents' recommendation of RCNs to the firm’s clients.

This is FINRA’s first enforcement action over RCN sales.

Reverse Convertible Notes
Reverse convertible notes offer a high coupon in return for the risk of getting shares valued at under the initial principal. Richard Ketchum, FINRA chief executive and chairman, has noted that it is not recommended for a client to place a significant chunk of one’s life savings into these kind of high risk, complex investments.

FINRA has issued Notice to Members 10-09 cautioning the entire brokerage community about their sales practice obligations to the investing public when it comes to RCNs and other risky “Complex Investment Vehicles.”

If you think you might have sustained investment losses because of unsuitable reverse convertible notes, contact our securities fraud law firm immediately.

Related Web Resources:
Regulator fines H&R Block $200K for poor controls, MarketWatch, February 16, 2010

Regulatory Notice 10-09, FINRA

FINRA Fines H&R Block Financial Advisors $200,000 for Inadequate Supervision of Reverse Convertible Notes Sales, FINRA/Business Wire, February 16, 2010

November 10, 2009

Securities America & Ameriprise Financial Inc. Sued For Selling Allegedly Faulty Private Settlements

A securities fraud lawsuit filed in federal court is suing Securities America and parent company Ameriprise Financial Inc. for selling allegedly faulty private placement offerings even after W. Thomas Cross, a Securities America executive, expressed concerns that the sales could result in a “panicked run on the bank.” The lawsuit’s plaintiff, Florida resident Ilene Grossbard, invested $112,000 in Medical Capital’s fifth deal in March and April. The complaint may become a class action lawsuit.

According to the complaint, Securities America advisers was still selling Medical Capital securities in the form of notes worth hundreds of millions of dollars in October of last year. Securities America, however, is discounting the claim that the company’ advisers continued selling the Med Cap notes even after Cross voiced his concerns.

Last July, the SEC charged Medical Capital Holdings with securities fraud over the sale of $77 million in private securities as notes. Now, a court receiver is questioning the worth of the medical receivables' holding company. The company has raised $2.2 billion from investors.

The securities fraud lawsuit says that not only did Securities America promote, distribute, and sell the securities for Med Cap, Medical Provider Funding Corp. VI.’s sixth offering (despite Cross’s bleak assessments) while continuing to sell from an earlier offering, but also the investment firm allegedly failed to warn clients about the potential risks associated with the Med Cap notes.

Our stockbroker fraud law firm is representing other investors with similar claims against Securities America. Contact Shepherd Smith Edwards & Kantas LTD LLP today.

Related Web Resources:
Despite warnings, Securities America advisers hawked private placements, new suit claims, Investment News, October 5, 2009

Private Placements, Investopedia

July 12, 2009

Ameriprise Must Pay $17 Million for REIT Fraud

The US Securities and Exchange Commission says Ameriprise Financial Services has consented to pay $17.3 million to settle allegations that it received millions of dollars in undisclosed compensation in exchange for selling certain REITs (real estate investment trusts) to its brokerage customers.

The SEC says Ameriprise demanded and got “revenue sharing” payments to sell the REITs but neglected to disclose it was receiving the payments. The SEC is also accusing Ameriprise of violating a number of federal securities laws when it sold over $100 million in unregistered shares involving one specific REIT.

SEC Enforcement Director Robert Khumazi says the broker-dealer’s clients were not told that brokers had incentives to sell the REITs. He stressed the importance of investors being able to rely on unbiased advice from financial advisers.

The SEC charges come from REITs sales that took place between 2000 and May 2004. CNL Holdings Group, Inc. and W.P. Carey & Co. LLC created, advised, and managed the REITs named in the proceedings.

By agreeing to settle, Ameriprise is not admitting to or denying wrongdoing.

Shepherd Smith Edwards & Kantas LTD LLP represents Ameriprise investors with securities fraud cases against the broker-dealer. Stockbroker fraud attorney and firm founder William Shepherd says “Our law firm handles claims of all types for investors nationwide who lost in accounts at Ameriprise and other financial firms. Over 90% of our clients recover all or part of their losses. It is sad that many investors choose not to seek recovery from investment firms that commit fraud or and other wrongdoing. We offer a free consultation and most of our clients advance no fees or costs but instead pay these out of their recovery.”

Related Web Resources:
Ameriprise Pays $17.3M To Settle SEC Charges, Wall Street Journal, July 10, 2009

REITs, Investopedia


Continue reading "Ameriprise Must Pay $17 Million for REIT Fraud" »

December 11, 2008

Do Broker-Dealers Hire Brokers Already Suspected of Securities Fraud?

Even though regulators are calling on broker-dealers to employ stricter hiring standards when it comes to screening brokers who have already gotten in trouble for alleged broker misconduct, many firms continue to hire these suspect workers. It doesn’t help that broker-dealers have a tendency to not reveal key details when a registered representative leaves the company under suspect circumstances in order limit the firm's liability from potential investor lawsuits and arbitration claims.

For example, in 2003, Jeffrey Southard was working for American Express Financial Advisers (now Ameriprise Financial Inc.) when he was accused of selling unregistered securities and combining client funds with his own money. At the time, Southard accused American Express Financial Advisors of falsely accusing him of misdeeds and acting unprofessionally by violating his personal confidentiality. He left the firm to join Gunn-Allen Financial Inc. In July 2008, GunnAllen fired him.

Last month, the New Jersey Bureau of Securities accused the former GunnAllen broker of stealing $1.3 million from 16 senior investors. The state regulators also barred Southard from the securities business and ordered him to pay $50,000 in restitution.

The New Jersey regulators say American Express Financial Advisors failed to properly disclose to clients the problems that could have arisen from working with Southard. The regulators’ order also accuses Southard of misleading his clients. Many of them switched to GunAllen when he left American Express Financial Advisors after he told them that he was leaving was to pursue better opportunities. The New Jersey regulators say that while working with GunnAllen, Southard continued to engage in broker misconduct by selling fake bonds as tax-free investments.

Opinions among industry members are mixed about whether broker-dealers are doing enough to weed out broker candidates with already questionable performance records.

Related Web Resources:

Busted brokers continue bilking clients at new firms, Investment News, December 7, 2008

Ex-GunnAllen broker bilked $1.3M from seniors, Investment News,

Continue reading "Do Broker-Dealers Hire Brokers Already Suspected of Securities Fraud?" »

September 24, 2008

Former LPL Financial and Ameriprise Representative Charged with Theft and Fraud of Persons He Met through Church and Little League

A former LPL Financial and Ameriprise representative has been charged with 14 counts of theft and one count of fraud—all charged as felony crimes—after he allegedly stole $5 million from over 20 people he was acquainted with through Little League and church. James J. Buchanan was indicted last May at Maricopa County Superior Court in Arizona.

Buchanan was affiliated with Ameriprise Financial before joining LPL in 2006. The alleged theft and fraud incidents occurred between 2001 and April 2006 when LPL fired him.

Investigators say that there have been a number of victims and unknown damages as a result of the theft and fraud crimes. Buchanan allegedly convinced a number of elderly investors to let him handle their life savings for them, while presenting himself as a certified financial planner.

Court documents portray the former adviser as committing affinity fraud, which involves fraud inflicted upon members belonging to a specific group or community. He was considered an honest Christian and was a church board member.

In March, one victim told police that she had been defrauded $200,000 and that Buchanan had asked her not to report him. The former adviser also is accused of stealing $1 million from the Christ Life Church of Tempe, Ariz. Another alleged victim, a retired cop, says Buchanan promised him returns on his investment and convinced him to retire early.

Elderly investors are often the target of investment scams. There are remedies available that could allow you to recover your losses.

Related Web Resources:

Ex-LPL adviser charged with fraud, theft, Investment News, May 30, 2008

Affinity Fraud: How To Avoid Investment Scams That Target Groups, SEC

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April 14, 2008

Ameriprise Settles Lawsuit Alleging That Six of Its Financial Advisers Forged Customer Signatures

Ameriprise Financial says it will pay $3.8 million to settle a lawsuit with New Hampshire regulators accusing six of the company’s financial advisers of forging the signatures of at least 96 customers.

The signatures were allegedly forged to make it seem that certain financial plans had been delivered when in fact they had not been sent. The New Hampshire regulators say that the advisers did this to make it appear is if their sales numbers were higher than their actual figures.

Out of the settlement, $333,948 will reimburse investors and $250,000 will cover legal and investigation expenses.

New Hampshire says that Ameriprise failed to report the forgeries that took place from the company’s Portsmouth office. Advisers allegedly used the code phrase that they were ‘taking a 10-minute trip to Kennebunkport' to indicate that they were going to forge papers.

By agreeing to settle, Ameriprise is not admitting to or denying the allegations. The company has disciplined three of the six advisers and let go of two others. The sixth adviser resigned during the probe.

Ameriprise says that it has put new preventive procedures in place, such as requiring original client signatures and taking aggressive action if violations occur again.

The investment fraud law firm of Shepherd Smith and Edwards is dedicated to helping investor fraud victims across the US recover their losses. Contact Shepherd Smith and Edwards today and ask for your free consultation.


Related Web Resources:

Ameriprise settles New Hampshire forgery case, Reuters, April 9, 2008

Ameriprise Settles Forgery Case, The Wall Street Journal, April 10, 2008

Ameriprise Financial Inc.

New Hampshire Securities Regulation

January 24, 2008

Deutsche Bank Trust Company, Goldman Sachs Group, and Bank of America Corporation are Among the 21 Lenders Named in Cleveland, Ohio Lawsuit

The city of Cleveland, Ohio is suing 21 financial institutions for hundreds of millions of dollars in damages caused by subprime lending and securitization. The defendants named in the lawsuit are:

• Deutsche Bank Trust Company
• Ameriquest Mortgage Company
• Bank of America Corporation
• The Bear Stearns Companies
• Citigroup, Inc.
• Countrywide Financial Corp.
• Credit Suisse (USA)
• Fremont General Corporation
• GMAC-RFC
• Goldman Sachs Group
• Greenwich Capital Markets, Inc.
• HSBC Holdings, PLC
• Indymac Bancorp., Inc.
• J.P. Morgan Chase Co.
• Lehman Brothers Holdings, Inc.
• Merrill Lynch & Co., Inc.
• Morgan Stanley
• Novastar Financial Inc.
• Option One Mortgage Corporation
• Washington Mutual Inc.
• Wells Fargo & Co.

The city of Cleveland says that the defendants issued loans to people who would never have been able to pay them back and that the foreclosures were inevitable. The lawsuit says that not only did the financial institutions issue loans to ill-qualified borrowers, but they securitized the loans and used the profits to fund more subprime mortgages, make more money, and secure more borrowers.

In the past two years, Cleveland has experienced over 7,000 foreclosures. Entire city blocks have been vacated and violent crime and arson incidents have increased. 1,000 abandoned homes have been torn down. Cleveland is calling the “propagation of subprime mortgages… and the corresponding foreclosures... a public nuisance as defined by Ohio common law.

As a result, the city of Cleveland’s population was 444,000 last year—way down from its nearly one million residents in 1950. The decrease in population size has negatively affected the city’s budget.

The stockbroker law firm of Shepherd Smith and Edwards represents investors who have lost money due to the misconduct or negligent actions of broker-dealers and other financial institutions. Contact Shepherd Smith and Edwards today and one of our stockbroker fraud lawyers will be happy to offer you a free consultation.

Related Web Resources:

Cleveland Sues 21 Lenders Over Subprime Mortgages, Herald-Tribune, January 12, 2008

Read the Complaint (PDF)

October 25, 2007

Ameriprise Financial Again Charged With Fraud

Ameriprise Financial Services, Inc. has been charged by The New Hampshire Bureau of Securities Regulation of forging and tampering with documents. The complaint also alleges that the firm failed to deliver nearly 500 financial plans, conducted unapproved sales contests and intentionally limited compliance oversight.

Furthermore, Minneapolis-based Ameriprise was accused of failing to adequately release fraudulent activities to the New Hampshire Bureau while it was under supervision of an independent consultant, which was mandated under an earlier action against the firm.

The New Hampshire securities regulator said that the latest action against the company, which maintains about 30 offices in the state, could result in penalties and client restitution of up to $10 million.

In 2005, Ameriprise, formerly known as American Express Financial Advisors, settled with the New Hampshire Bureau of Securities Regulation for $7.4 million on charges related to illegal incentives, conflicts of interest and lack of disclosure to clients, the largest in that state’s history. As a further sanction, the firm was required to hire an independent consultant to monitor its activities.

Shepherd Smith and Edwards represents institutional and individual investors nationwide in claims against securities firms. We have represented investors in more than 1,000 securities cases, including against Amerirpise Financial and its predecessors. To learn whether we may be able to assist you with a claim contact us to arrange a free consultation with one of our attorneys.

July 10, 2007

Ameriprise Broker Arrested for Defrauding Investors - Clients Say He Cashed Checks Made Out to Ameriprise.

Authorities in Knoxville have arrested an Ameriprise Financial Services broker who is accused of defrauding Tennessee residents. The charges include theft and forgery. At least five alleged victims have come forward claiming losses of almost $1 million. A client in another state claims damages of more than a million dollars and detectives are seeking to learn of more victims.

Delbert Forster Blount III worked out of an Ameriprise office in Knoxville and another in Morristown, Tennessee. It is reported that Blount received checks from clients made out to his firm but deposited these into his personal account rather than his clients' investment accounts.

According to the latest disclosures made by Ameriprise, fifteen complaints have been lodged against Blount by his clients alleging damages totaling more than $2.5 million. Many of those complaining are reported to have provided Ameriprise with copies of cancelled checks made out to the investment firm which were instead deposited into an account opened by Blount.

The disclosure records indicate that, after working for a year at a Nissan dealership in Aleda, Tennessee and a year at John Hancock Financial Services, Blount then joined American Express Financial Advisors in 1998. In 2005, American Express sold that firm and it was then renamed Ameriprise Financial Services.

Shepherd Smith and Edwards represents individuals and institutions with claims against investment firms. If you or your firm are the victim of misconduct by members of the securities industry, hiring an experienced law firm can increase your chances of recovery. Contact us to arrange a free consultation with one of our attorneys.

Related Web Resources:

Knox County Tennessee Sheriff Victims' Alert

Additional Information about Ameriprise Financial Service


January 3, 2007

NASD Arbitration Panel Says Ameriprise’s Securities America Must Pay Retired American Airline Pilots Up To $9.3 Million

An arbitration panel for the NASD says that Ameriprise’s Securities America must pay up to $9.3 million to three retired American Airlines pilots who are accusing a broker of spending their retirement savings on mutual funds that had high fees and trading costs. A spin off from American Express Co., Amerprise Financial offers clients financial planning and advice. Securities America is an Ameriprise Financial Inc. subsidiary.

In an NASD ruling, broker Robert P. Gormly, Jr. and Securities America are both being held liable for $2.4 million in lawyer’s fees and $3.9 million in damages. In addition, Securities America must also pay $3 million in punitive damages.

According to the American Airlines pilots, Gormly (who had been affiliated with Securities America in Texas) had initially purchased products from the American mutual funds group, liquidated the funds between 1998 and 2003, and then directed the pilots’ money into more aggressive Rydex funds that he traded on a nearly daily basis.

This ruling was the second significant arbitration award in 2006 to Ameriprise clients who say that the company’s brokers negatively spent their clients’ retirement funds on inappropriate investments. Just last September, Ameriprise agreed to settle a case by 32 former Exxon Mobile Corp. employees for $16.3 million—$13.8 million in restitution and $2.5 million for failing to properly supervise the broker involved. Ameriprise also agreed to hire a consultant who would review the way the company marketed investment recommendations to retired workers. In its ruling, the NASD said that a broker persuaded Exxon employees to retire early by cashing out company-sponsored investment plans and reinvesting the funds with Securities America. Even though there were investment losses, the broker said he could win the retired investors returns between 11.5% and 18%.

There are two more arbitration claims pending against Gormly and Securities America that were filed by airline pilots. Hearings for one of those cases will begin in January.

The NASD is the largest private-sector regulator of financial services. Every securities firm in the United States must register with the NASD. Over 663,535 stockbrokers and registered representatives and more than 5,100 brokerage firms fall under the NASD’s jurisdiction. Among its many responsibilities, the NASD writes rules governing the behavior of securities companies, examines firms and brokers for compliance, and makes rulings and enforces actions anytime the rules it has created are broken. NASD’s arbitration hearings are the main forum on Wall Street for clients to file their complaints against brokerage firms and stockbrokers.

At Shepherd Smith Edwards & Kantas LTD LLP, Our primary goal is to represent investors who have lost their savings and retirement when their brokerage accounts were mishandled. Our firm has represented thousands of clients nationwide who were victims of misrepresentations, commission churning, unsuitable investments, unauthorized transactions, execution failures, excessive mark-ups, disappearing funds, botched transfers, web-broker outages, "selling away" from firms, unregistered brokers, unregistered securities, improper margin liquidations, broker bribes, fraudulent research, "boiler room" sales practices, and other wrongful acts. If you would like to speak with one of our attorneys for a free consultation, contact Shepherd, Smith, and Edwards today.

Ameriprise Unit Must Pay Retired Pilots $9.3 Million, Bloomberg.com, December 27, 2006


Related Web Resource:

Rules and Regulations, NASD

Securities America