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December 19, 2007

Ronin Capital, Goldman Sachs Execution & Clearing, Penn Mott Securities, and Pearson Capital Management Receive Censures and Fines from NYSE Regulation

New York Stock Regulation Inc. announced its enforcement actions against four trading companies. The regulator says that Ronin Capital, LLC mismarked over 8,300 short orders because of inadequate supervisory procedures and supervision. The company continued to mismark short orders even after the SEC brought the violation to its attention. Ronin Capital was censured by NYSE Arca and ordered to pay $200,000.

NYSE Arca fined Goldman Sachs Execution & Clearing LP (GSEC) $105,000 for failing to adequately supervise business operators and associated persons in a way that guaranteed compliance with odd lot trading order rules.

Pearson Capital Management LLC was censured and fined $5,000 because it failed to meet market maker requirements. Penn Mott Securities was fined $3,200 for similar violations.

NYSE Regulation also announced enforcement action against three people:

*Former UBS Financial Services Inc. Vice President Montague Hasie is permanently barred from the exchange because he refused to testify about events that took place while he was at UBS. Hasie and some of his clients were indicted in a U.S. district court for allegedly misusing shares.

*Former Wedbush Morgan Securities registered representative Matthew Pavich was temporarily barred because of books and records violations.

*Former UBS Financial Services Inc. employee Richard Wendell Babichy is barred for 12 months for failing to report a customer complaint, failing to follow a customer’s instructions, and making or causing to make false entries in his employer’s records and books.

If you have lost money because of the reckless or negligent actions of a stockbroker or anyone else in the securities industry, you have the right to get your investment back. The stockbroker fraud law firm of Shepherd Smith and Edwards can help you. Contact us today for your free consultation.

Related Web Resources:

NYSE Regulation

Ronin Capital LLC

Goldman Sachs Execution & Clearing LP

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Posted In: Goldman Sachs , Pearson Capital Management , Penn Mott Securities , Wedbush Morgan

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July 18, 2007

Wedbush Hit with Nun’s Complaint over CMO’s - May Have More Than Brokers in Common with Brookstreet

Last month, when Brookstreet Securities suffered a flame-out over high risk mortgage investments, its second in command, also the son of its founder, joined Wedbush Morgan and invited Brookstreet brokers to join him at that firm. Some thought it an odd fit, but the firms may have more in common than earlier believed.

Recently, a group on nuns, who claim they were led to believe they were making safe investments, apparently had their funds invested by Wedbush into mortgage-backed CMO securities which were just pools of mobile home loans. They soon lost $1 million, according to a complaint filed by The Sisters of St. Joseph of Carondelet in California against Wedbush Morgan in arbitration through the National Association of Securities Dealers.

Ed Wedbush, president of the firm that handled the nuns' investments, said in an interview that the losses in this and other cases came on the riskier portions of mortgage investments and were the result of "clients being very aggressive and wanting high yields." They should have understood, he said, that "high yield is high risk." (The statement resembles another recently made by Oppenheimer & Company, which claimed an elderly widow “only has herself to blame” for losses in a joint account as her husband lay dying. Oppenheimer was subsequently fined $1 million and ordered to reimburse over a million to the widow by the state of Massachusetts.)

Wedbush has been named in over 40 complaints over CMO products. It was ordered to pay over $1 million to the Narramore Christian Foundation, a nonprofit mental-health organization in Arcadia, Calif. In another case, it was ordered to pay $3.8 million in damages and fees to 22 investors. Wedbush blames these problems on one broker who it says has since the left the firm.

These are among several broker-fraud complaints involving risky mortgage investments that have been filed with regulators and in securities arbitration actions. Some cases involve sub-prime loans while others are in “interest only”, “inverse floaters” and other high-risk, difficult to understand and dificult to price mortgage investments.

Samco Financial Services is another firm accused of defrauding a "novice investor" into investing her funds, which she wanted to be safe, into “inverse floater CMOs.” The complaint states that her $100,000 was wiped out before she even started, since the securities purchased in her account were worth $100,000 less than she even paid for them. The firm gave up its brokerage license last year, according to the NASD.

Just as multi-billion dollar portfolios such as hedge funds, including those managed by Bear Stearns Cos, have been hit hard by losses in sub-prime and other high-risk mortgage securities, so also have smaller institutional portfolios and even individuals' accounts endured losses. Such losses have come through CMO and other mortgage-backed securities, but also through certain partnerships, REITs shares, mutual funds and other investment vehicles.

Shepherd Smith and Edwards represents institutional and individual investors nationwide in claims against members of the securities industry. We have served thousands of victims of misconduct by investment firms and their representatives, including those at Brookstreet and at Wedbush Morgan. To learn whether our firm can assist you, contact us to arrange a free consultation with one of our attorneys.

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Posted In: Brookstreet , Mortgage Backed Securities , Wedbush Morgan

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July 9, 2007

Some Brookstreet Brokers Become Wedbush Morgan Brokers

As we reported in June: Brookstreet Securities Corp. reported severe problems with CMO securities and soon announced its closing. Scott Brooks (son of Stan Brooks, founder of Brookstreet) left for Wedbush Morgan Securities Inc. of Los Angeles, inviting Brookstreet's representatives to join him.

Brookstreet operated using independent contractors almost exclusively and Wedbush reportedly plans to sign the Brookstreet representatives to similar agreements. Wedbush Morgan had about 40 independent contractor reps of 260 total brokers, said Ed Wedbush, that firm's CEO. About 100 of the 650 Brookstreet brokers have so-far followed Scott Brooks, according to Ed Wedbush. "We're recruiting, like other firms, some of their brokers and bond traders,” he said.

Many Brookstreet reps don't know much about Wedbush, said Larry Papike, a San Diego-based recruiter, “So I think brokers really started looking around for other solutions,” he said. Securities America Inc. and J.P. Turner & Co. have picked up a number of Brookstreet reps, Mr. Papike said.

Shepherd Smith and Edwards represents clients that are the victims of securities fraud. If you have lost money because of misconduct by someone in the securities industry, hiring an experienced law firm can increase the chances of recovering your losses. Contact Shepherd Smith and Edwards today.

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Posted In: Brookstreet , Wedbush Morgan

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