May 23, 2016

Emotions Make Older Investors More Vulnerable to Fraud, Says FINRA/Stanford/AARP Study

According to research, some financial fraudsters may try to manipulate investors by getting them to feel strong emotions so that they will hand over their money, and older investors are the ones who most vulnerable to this type of manipulation. Research was conducted and funded by the FINRA Investor Education Foundation, the AARP Fraud Watch Network, and Stanford University psychologists. They said that inducing certain emotions in older individuals may make them more likely to purchase items that were falsely advertised.

The team studied adults in the 65- 85 age group and adults in the 30-40 age group. They sought to find out whether inciting anger or excitement in either demographic made them more susceptible to fraud.

According to their findings, feeling excitement or anger enhanced an older investor’s desire to buy in investment item as opposed to when there was no emotional arousal. Furthermore, the emotional state felt by an older adult did not have to be positive or negative for him/her to become more vulnerable to fraud. As AARP Fraud Watch Network Dr. Shadel stated, whether a fraudster is trying to get an older investor excited about making a lot of money or angry about past or future financial losses, either approach, when used to get them to make a purchase, proved just as impactful. The elderly investor's rational thinking becomes suspended in the process.

The research found that in younger adults, experiencing strong feelings of excitement or anger did not appear to be a factor in whether or not they would make a purchase. This suggests that heightened feelings do not increase the younger group’s susceptibility to fraud.

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May 5, 2016

MetLife Securities Ordered to Pay $25M FINRA Sanction Related to Variable Annuities

The Financial Industry Regulatory Authority said that MetLife Securities Inc. (MSI) would pay a $20M fine as well as $5M to customers for negligent and material misrepresentations that it purportedly made related to variable annuity replacement applications. According to the self-regulatory organization, these alleged omissions and misrepresentations were on tens of thousands of applications, and they made each replacement variable annuity seem of greater benefit to the customer despite the fact that the variable annuities that were recommended were usually more costly than the ones that the customers already owned. MetLife Securities made at least $152M in gross dealer commissions over six years through its variable annuity replacement business.

Based on a sample of transactions that were randomly examined, FINRA said that from ’09 through ’14, MetLife Securities omitted or misrepresented at least one material fact connected to the guarantees and costs of existing variable annuity contracts in 72% of the 35,500 replacement applications that it approved. Among the alleged misrepresentations:

· Existing variable were costing customers more than the variable annuities they were recommending, when the opposite was true.

· Customers were not told that the variable annuity replacements promised to them would lessen or get rid of key features that their current variable annuity possessed.

· In disclosures, the value of customers’ existing death benefits was understated.

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April 27, 2016

Broker News: J.P. Morgan Firms to Pay $1M Fine, FINRA Bans Broker For Money Laundering, and Former Maine Broker Gets 3-Years in Prison for Fraud

Two J.P. Morgan Firms Fined over Deficiencies
J.P. Morgan Securities and J.P. Morgan Clearing Corp. have been fined $775K and $250K respectively for several deficiencies. J.P. Morgan Securities is a broker-dealer of the bank JPMorgan Chase (JPM). .J.P. Morgan Clearing is the custodian, clearing, lending, and settlement arm of the bank. The fines were imposed by FINRA.

According to the self-regulatory organization, the firms committed a number of breaches that violated FINRA and SEC rules. The alleged violations by the brokerage firm mostly affect clients of J.P. Morgan Private Bank and JPMS Heritage Private Client Services, which are two JPMS Global Wealth Management businesses.

From 9/07 to 2014, JPMS purportedly did not send letters to clients confirming modifications to their investment goals within 30 days of the changes. JPMS also allegedly did not collect and check the outside brokerage account statements of nearly 2,000 representatives from ’12 – ’13. Morgan Clearing Corp. is accused of, from ’11-’13, not sending out yearly privacy notices to hundreds of thousands of account holders at the broker-dealers where it provides clearing and custody.


Broker Banned by FINRA for Money Laundering
The Financial Industry Regulatory Authority said that it is barring James Van Doren. The broker was sentenced to 15 months behind bars for a money laundering scam.

According to FINRA, Van Doren took part in unethical behavior by helping to make it possible for a childhood friend and business associate to avoid certain legal duties. The former broker invested in a number of real estate deals with the friend’s company and helped conceal assets when the company couldn’t fulfill its duties.

He also accepted $244K from the friend to hide the assets that his creditors were looking for. He eventually returned most of the funds to the friend while keeping some for financial losses he sustained.

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April 26, 2016

Judge Dismisses Scottsdale Capital Advisor’s Lawsuit Challenging FINRA’s Enforcement Authority

U.S. District Judge Deborah K. Chasanow has dismissed Scottsdale Capital Advisors’ securities case claiming that the Financial Industry Regulatory Authority did not have legal authority to enforce securities laws. The self-regulatory organization had filed an administrative case against the financial firm, accusing it of selling unregistered penny stock shares.

In March, Scottsdale filed its complaint, contending that the claims brought by the regulator came out of violations of the Securities Act of 1933, which it believes that the Securities and Exchange Commission, and not FINRA, has purview over when it comes to enforcing it the act. However, Scottsdale also said that both the SEC and FINRA did not have the “realm of expertise” to make a ruling in the SRO’s case against it.

Judge Chasanow dismissed Scottsdale’s lawsuit citing lack of subject matter jurisdiction. She said that the allegations brought by FINRA as they pertain to the penny stock trades should not be in heard in federal court.

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April 15, 2016

Broker Violations & FINRA: PNC Investments to Pay $225K for Overcharging for Mutual Funds and Stifel Nicolaus is Fined $750K For Not Following Reserve Requirements

The Financial Industry Regulatory Authority has announced that PNC Investments will pay nearly $225K in restitution for charging retirement clients too much for mutual fund investments. According to the regulator, the brokerage firm did not apply waivers for investors in certain Class A share mutual funds even though there was a waiver for front-end charges for eligible customers.

Instead, said FINRA, PNC Investments sold Class A shares customers with a front-end load or other shares that had a back-end load and higher fees and expenses, some of which were charged on an ongoing basis. Because of this, certain customers were charged excessive fees and paid them.

FINRA said that PNC Investments charged 121 customer accounts in excess of $191,740 for mutual funds—although the actual amount, with interest, was closer to $224,750. PNC will pay restitution to eligible investors.

The brokerage firm self-reported the overcharges after reviewing its own conduct last year to assess whether it was issuing the sales waiver to those that were eligible. FINRA said that the broker-dealer experienced lapses in supervision, did not keep up written policies and procedures that were adequate, and failed to help advisers assess when to waive the sales charges.

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April 6, 2016

Securities Fraud: Ex-SWS Financial Services Broker Faces Improper Trading Charges, Ex-Fox Commentator Settles Penny Stock Scam Case, and Former Investment Adviser Gets 7-Years in Prison

FINRA Accuses Ex-Broker of Unsuitable Trading Involving Mutual Funds
David Randall Lockey, a former broker, is facing Financial Industry Regulatory Authority charges for allegedly engaging in improper trading of customer accounts while associated with SWS Financial Services Inc. He is no longer with that firm, now called the Hilltop Securities Independent Network. According to the regulator, Lockey took part in “unsuitable short-term trading and switching” involving unit investment trusts and mutual funds in four accounts between ’12 and ’14.

Lockey purportedly made about $75,730 for himself and the firm while engaging in improper trading. Meantime, three of the four customers whose accounts he used sustained losses of $15,699. The fourth customer made a gain of almost $5,000.

FINRA said Lockey has not been registered with any broker-dealer since 2014.


Ex-TV Commentator Settles Penny Stock Fraud Charges with the SEC
The U.S. Securities and Exchange Commission is charging former FOX commentator Tobin Smith with fraud. According to the regulator, Smith, who is also a market analyst, and his NBT Group fraudulently promoted a penny stock to investors.

The SEC said that both Smith and his firm received payments to prepare and distribute e-mails, articles, blogs, and other communication promoting IceWEB Inc. stock. They purportedly failed to fully disclose they were receiving the compensation.

The investors were not made aware of that part of what Smith and NBT were paid was linked to a sustained rise in the data storage company’s share price. The Commission said that marketing materials the investors received included misleading and false statements put there to artificially up the share price and trading volume of IceWEB stock. For example, payment for promotional efforts was $300K and IceWEB stock. NBT could also make over $250K if marketing campaigns proved successful.

Continue reading "Securities Fraud: Ex-SWS Financial Services Broker Faces Improper Trading Charges, Ex-Fox Commentator Settles Penny Stock Scam Case, and Former Investment Adviser Gets 7-Years in Prison" »

March 24, 2016

Elder Investors: Morgan Stanley Must Pay Home Shopping Network’s Estate Over $34M, Broker Accused of Making Over $1.7M From Churning at Craig Scott Capital, and $10M Ponzi Scam Involving Jamaican Businesses Targets Older Investors

FINRA Panel Awards Estate Over $34M from Morgan Stanley in the Wake of Churning Allegations
A Financial Industry Regulatory Authority arbitration panel awarded the estate of Home Shopping Network Roy M. Speer over $34M in its case against Morgan Stanley (MS). The panel ruled that the firm, branch manager Terry McCoy, and broker Ami Forte were jointly liable for breach of fiduciary duty, negligence, unauthorized trading, constructive fraud, unjust enrichment, and negligent supervision. The alleged negligence would have occurred from 1/09 to 6/12 and involved investments in the financial services and banking sectors.

According to Mrs. Speer’s lawyer, in six of Mr. Speer’s accounts, about 12,000 transactions took place, most of them involving municipal bond trading and corporate trading. Many of these trades were unauthorized.

The arbitrators awarded $32.8M in compensatory damages to Speer’s widow, Lynnda Speer, and $1.5M for the costs involved in the arbitration process. The panel said that Morgan Stanley violated a law in Florida that prohibits the exploitation of vulnerable adults. Mr. Speer had dementia. Forte, who was his broker, is said to have been in a relationship with him.


Former Craig Scott Capital Broker Accused of Elder Financial Fraud
FINRA is accusing broker Edward Beyn of making over $1.7M in commissions and fees by engaging in excessive trading in client accounts while he was a registered representative at Craig Scott Capital. He is now with Rothschild Liberman. Beyn is accused of churning nine accounts of six customers, all of them over the age of 60, from 3/12 through 5/15. They all sustained losses.

Continue reading "Elder Investors: Morgan Stanley Must Pay Home Shopping Network’s Estate Over $34M, Broker Accused of Making Over $1.7M From Churning at Craig Scott Capital, and $10M Ponzi Scam Involving Jamaican Businesses Targets Older Investors" »

March 8, 2016

North Carolina Retiree Couple Files FINRA Arbitration Case Against Morgan Stanley Over Energy Investment

Two North Carolina investors have filed an arbitration claim with FINRA against Morgan Stanley (MS) over unsuitable investments involving the financial firm’s Cushing MLP High Income Exchange Traded Note. The married couple, who are retirees in their sixties, are accusing the brokerage firm of:


· Common law fraud

· Negligence

· Breach of fiduciary duty

· Negligent supervision

· Failure to adequately disclose the risks


In a phone interview with InvestmentNews, the claimants said that they have lost over $100K. According to the couple, a Morgan Stanley broker invested about $150,000 of their money in the Morgan Stanley Cushing MLP High Income ETN, which is an exchange traded note connected to master limited partnerships with shipping and energy assets. Their legal team said that the couple did not understand the extent of the risks involved in that they could potentially lose their principal. This was a loss they could not afford. Instead, the claimants were purportedly told that their investment would make them money.

The Cushing MLP High Income Exchange Traded Note seeks to give investors cash upon maturity or early repurchase, as well as variable coupon payments every quarter (depending on how the underlying index, performs). The claimants’ broker fraud lawyers believe that Morgan Stanley recommended the exchange traded note to investors who were seeking to make money but may not have understood or been fully apprised of all the risks.

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March 3, 2016

Ex-MetLife, Prudential Broker Accused of Deceptive Conduct Involving Variable Annuity Sales

The Financial Industry Regulatory Authority is accusing Winston Wade Turner, a former registered representative with Pruco Securities Inc. and MetLife Securities Inc., of misconduct related to the exchanges and sales of variable annuities. Turner allegedly persuaded clients to exchange certain investments, including variable annuities, which compelled them to surrender existing contracts to pay for the purchase of new variable annuities. In certain situations, this led to surrender charges for the client and additional commissions for Turner.

The regulator contends that Turner concealed the transactions’ unsuitable nature from brokerage firms and his clients. He allegedly did this by falsifying documents and misrepresenting how certain income features on the annuity contracts functioned. FINRA claims that Turner hid the nature of the VA transactions from his firm by managing to get around the additional documentation and supervisory examination mandated for the exchanges. He also sometimes would recommend to clients that they put proceeds from the contract surrenders into their bank accounts first—as opposed to a direct annuity to annuity transfer—and then use those funds to purchase new variable annuities.

Turner is accused of falsifying VA applications, documents related to VA exchanges, and customer information forms. He purportedly forged customer signatures and used his own e-mail address, misrepresenting it as the address of customers so that he would receive their account notifications instead.

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March 2, 2016

FiNRA Bars Chicago-Based Broker For Market Manipulation

The Financial Industry Regulatory Authority has barred broker George Johnson from the industry. The regulator is accusing him of market manipulation involving the artificial inflation of a penny stock’s value. FINRA claims that Newport Coast Securities, which is the last firm where Johnson worked, let its brokers engaging in churning.

According to the self-regulatory organization, over eight days in May 2012, Johnson, while working for Meyers Associates, told customers to buy stocks of iceWEB at prices that were artificially inflated. He also suggested that certain clients sell their shares to match trades between clients.

FINRA said that Johnson manipulated stock to get business from the issuer, which agreed to compensate him for a future private offering. He purportedly worked with a stock promoter to increase iceWEB’s share price to the point that certain warrants could be exercised.

Johnson also has been accused of involvement in a second penny stock fraud and he purportedly has tried to cover up different state securities violations. He has a history of regulatory actions and customer disputes going as far back to 1994. Johnson previously worked for H.J. Meyers & Co. and Jesup & Lamont Securities, two firms that have since been expelled. Meyers Associates also has been linked to a number of regulatory probes.

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February 24, 2016

Raymond James Must Pay Investor $795K

In a Financial Industry Regulatory Authority arbitration case, Raymond James Financial Services Inc. (RJF) has been ordered to pay David B. Silipigno $593,540 plus 3 years and 9 months of interest. That’s an award of about $795,000. According to Silipigno’s attorney, the securities arbitration case involved an RIA who may not have not licensed with FINRA but worked out of the Raymond James independent contractor branch office.

The attorney said that such a work configuration may cause problems in that a non-registered adviser could effectively become a defacto employee of a brokerage firm. OnWallStreet.com names the broker involved as Karen Powell, who has been affiliated with Raymond James since 1999.

Silipingo, in his claim, asserted a number of causes of action, including common law fraud, breach of fiduciary duty, beach of contract, suitability, churning, failure to supervise, and violations of Rule 10b-5 of the Securities Exchange Act violation and The Florida Securities Investor Protection Act. Raymond James continues to deny the allegations. The arbitration panel denied the firm’s request to have Powell’s CRD expunged in this matter.

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February 20, 2016

FINRA Says Investors Should Consider the Risks Before Investing in SBLOCs

The Financial Industry Regulatory Authority and the Securities and Exchange Commission’s’ Office of Investor Education and Advocacy has issued an investor alert recommending that investors get to know the risks before deciding to invest in securities-backed lines of credit, also known as SBLOCs. Although SBLOCs can be a major revenue for securities firms, there is the chance of increased losses, especially during times of market volatility.

SBLOCs
Securities-backed lines of credit are loans that let an investor borrow money using securities that are kept in an investment account as collateral. An SBLOC allows an investor make interest-only payments each month and loans stay outstanding until they are repaid.

SBLOCs are frequently marketed as a low-cost, easy way to gain access to additional money without having to liquidate securities even as an investor borrows against assets in an investment portfolio. However, they come with certain risks, including unintended tax consequences and the possibility that an investor might have to sell his/her holdings, which could affect long-term investment goals.

SBLOCs are similar to home equity credit lines except that they involve securities as collateral rather than the home. An investor is allowed to repay part or all of the outstanding principal at any time and then borrow again in the future.

An SBLOC is a non-purpose loan. This means that the investor is not allowed to use the proceeds to buy or trade securities. However, money from an SBLOC can be utilized to finance almost anything you want, including home renovations, education expenses, or personal travel.

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February 17, 2016

Securities Fraud: SEC Charges Unregistered California Man with Fraud, FINRA Bars Two Brokers, Second Scam Lands Man in Jail Again

SEC Files Charges in $1.9M Broker Scam
A California man is facing Securities and Exchange Commission charges. The regulator is accusing Gregory Ruehle of fraudulently selling purported stock in a medical device company and keeping investors’ money. The unregistered broker purportedly raised about $1.9M from over 100 investors but did not transfer or deliver the securities that they purchased to them. Meantime, Ruehle is said to have used the funds to cover his personal spending and pay off gambling debts.

According to the SEC, Ruehle began bilking investors in 2012. He allegedly misrepresented to investors in Minnesota and California that he would sell them securities that he owned in ICB International Inc., for which he was a former consultant.

Instead, said the regulator, Ruehle sold investors more securities than what he owned and he failed to tell them that the securities that belonged to him were not transferrable. Ruehle is accused of generating fake documents that he claimed came from the company and issuing bogus company stock certificates to investors, along with a letter that falsely stated that the stock had been transferred to them.

The SEC wants permanent injunction, disgorgement, prejudgment interest, and penalties against Ruehle. The unregistered broker is also now the subject of criminal charges in a parallel case that was brought by U.S. Attorney’s Office for the Southern District of California.


FINRA Bars Two Men for Hedge Fund Fraud
In other broker news, the Financial Industry Regulatory Authority has announced that it is barring brokers Walter F. Grenda and Timothy S. Dembski from the securities industry. The industry bar is for fraud involving the sale of the Prestige Wealth Management Fund, LP, which is a hedge fund.

Continue reading " Securities Fraud: SEC Charges Unregistered California Man with Fraud, FINRA Bars Two Brokers, Second Scam Lands Man in Jail Again" »

February 15, 2016

FINRA Warns Investors About High-Yield CDs

The Financial Industry Regulatory Authority has put out a new investor alert warning about advertisements that are marketing higher-than-average CD yields. The self-regulatory authority says that some of the ads might be an attempt to get investors to buy a much more much more expensive investment, such as a fixed or equity-indexed annuity, that is not risk free. Often, the alternative investments are insurance products.

FINRA warned that with most CD promotions that are marketing ploys, an investor would be required to go to an office or talk to a salesperson, who may try to convince the prospective buyer to purchase an alternative product that is not a CD. Typically, the minimum purchase amount is high, such as $25K. Such ploys would also tout a “bonus”—a sum the salesperson would pay you plus the average percentage yield of the CD. FINRA warns that this bonus is actually an incentive to get you to hear the pitch for the more complex product. Meantime, the seller may be earning a high commission for making the sale.

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February 6, 2016

FINRA Cases: Firms To Pay $1.2M Over UIT Sales, Broker Charged for Lying to a Native American Tribe, and Morgan Stanley Ordered to Pay Clients $825K

Brokerage Firms to Pay $1.2M for Not Applying UIT Discounts
The Financial Industry Regulatory Authority has charged Next Financial Group Inc., Stephens Inc., and Key Investment Services with failing to grant sales charge discounts when certain customers that were buying unit investment trusts were eligible for the reduced rates. The three broker-dealers are also face charges for inadequate supervision. The self-regulatory organization is ordering the three firms to pay $1.2M in restitution and fines. The FINRA settlements stated that Stephens did not give the discounts from 1/10 to 5/15 and the other two firms did not give them from 5/09 to 4/14.

Unit Investment Trusts
A UIT is a fund that combines a fixed portfolio of income-producing securities that are bought and held to maturity and an actively managed fund. These funds usually issue securities, also known as units that are redeemable—meaning that the UIT will repurchase the units from an investor at the approximate net asset value.

FINRA has been looking into whether firms are giving clients that are entitled to purchase discounts the reduced rates. Last year, the SRO ordered a number of firms to pay $6.7M in restitutions and fines for not giving discounts to clients when selling them UITs.


Broker Accused of Fraud, Targeting Native American Tribe
Broker Gopi Krishna Vungarala is facing FINRA charges for lying to a Native American Tribe about the $11M in commissions they paid him when he sold the tribe $190M of business development companies (BDCs) and nontraded REITS. The SRO said that from 6/11 to 1/15 Vungarala, who was the tribe’s treasury investment manager and registered representative, lied to the tribe about investments he recommended to them.

Continue reading " FINRA Cases: Firms To Pay $1.2M Over UIT Sales, Broker Charged for Lying to a Native American Tribe, and Morgan Stanley Ordered to Pay Clients $825K " »

January 27, 2016

Ameriprise Must Pay Woman’s Estate Over $2M For Broker Fraud

A Financial Industry Arbitration panel says that Ameriprise Financial (AMP) must pay over $2M to the estate of Glenny B. White for losses related to fraud committed by an ex-firm broker. The executor of White’s estate claims that Ameriprise Financial Services did not properly supervise former broker Jeffrey Davis.

In 2014, Davis admitted to stealing money from White and other clients. White was his client for almost ten years before she found out in 2013 that he was stealing funds from her. She died at the age of 91 in 2014.

Davis has since been fired from Ameriprise, and FINRA barred him from the brokerage industry. Last year, he was sentenced to over four years in prison after pleading guilty to wire fraud and admitting to stealing almost $200K from clients.

On Finra’s BrokerCheck report about Davis, it is noted that in at least two cases involving Ameriprise clients the firm had reported to the regulator that their funds were misappropriated.

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January 4, 2016

FINRA Bars Ex-National Securities Broker Zachary Bader Over Investor Fraud Allegations

The Financial Industry Regulatory Authority is permanently barring former National Securities broker Zachary Bader from the securities industry in the wake of allegations filed by numerous investors. Bader, who was let go from the National Securities Corporation, also was previously registered with Craig Scott Capital and Brookstone Securities. According to BrokerCheck, five customer complaints and two regulatory sanctions have been brought against him.

Bader is accused of excessive trading, making unsuitable investment recommendations to at least 21 customers by advising them to put their money in the iPath S&P 500 VIX Short Term Futures ETN (VXX), showing reckless disregard of clients’ interests, improper due diligence, breach of fiduciary duty, churning, providing inadequate investment advice, and breach of contract.


iPath S&P 500 VIX Short Term (VXX)
The iPath S&P 500 VIX Short Term is an exchange-traded note. Many ETNs are only appropriate for short-term trading and/or institutional investors. For example, the VXX exposes investors to returns of certain futures contracts on the VIX Index and it is considered a bearish investment. It is not appropriate for certain equity positions. The VXX comes with very specific risks and over time will lose value as futures contracts on the VIX Index go down too.


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December 24, 2015

Cantor Fitzgerald to Pay $7.3M Over Microcap Sales

The Financial Industry Regulatory Authority (FINRA) is ordering Cantor Fitzgerald to pay $7.3 million for selling billions of unregistered microcap shares in 2011 and 2012. The firm is also facing sanctions for not having the proper supervisory /anti-money laundering programs in place to identify suspect activity or red flags related to microcap activity.

According to the self-regulatory organization, the Cantor Fitzgerald’s supervisory system was not designed in a reasonable enough manner to fulfill its obligation to assess whether the microcap securities it was liquidating for clients were SEC-registered or, if not, then were subject to a registration exemption. FINRA said that after Cantor Fitzgerald decided to broaden its microcap liquidity business in 2011, it did not make sure its supervisory system had a meaningful and reasonable way to determine whether the sales of these securities occurred in compliance with the law. Also, said the regulator, the firm did not provide proper guidance and training about how or when to look into whether a sale was exempt from SEC registration, and supervisors were not given the tools that they needed to identify when red flags were an indicator of unregistered, illegal distributions.

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December 3, 2015

SEC Approves Change to FINRA's BrokerCheck On When to Publish Firings

The Securities and Exchange Commission has approved the Financial Industry Regulatory Authority’s plan to shorten the waiting period for when certain information reported on Form U5 can be released on BrokerCheck.com from 15 days to three days. This includes information about broker firings. The modification will go into effect on December 12.

Brokerage firms use Form U5 to give notice of when a broker has been let go. This notification is published on BrokerCheck, which is a public database that includes background information about registered brokers, as well whether any of them have a disciplinary history and what that may be.

The 15 days was so that brokers could have time to explain why they were fired. FINRA, however, has now decided that it is important to notify the public of such terminations sooner than that so that the investors who are thinking hiring these brokers receive this employment history right away. The self-regulatory organization says that it believes three business days still gives a broker a chance to comment on his/her firing.

BrokerCheck.com is an excellent resource for looking up information about a broker and his/her history. It’s important as an investor that you do your due diligence when considering whether to have someone handle your investments and finances. You can also get information about a broker from the Central Registration Depository, which is a computerized database. Another way to find out about a broker is to call your state securities regulator and request access to his/her registration, disciplinary, and employment information. You can get information about how to reach your state regulator through the North American Securities Administrators Association’s website.

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November 18, 2015

Securities Fraud Cases: Wedbush to Pay $813K Over Investment Fraud Allegations, SEC Files Pump-and-Dump Charges in Marley Coffee Case, and CFTC Accuses IB Capital of Soliciting $50M for Forex Trading While Unregistered

Wedbush to Pay Trusts, Family Members Over $813,000
A Financial Industry Regulatory Authority Panel says that Wedbush securities and investment advisor Kevin Thomas Scarpelli must jointly and severally pay several investors over $813,000 to resolve allegations of professional negligence and failure to supervise related to investments made in Natural Resources USA Corp. The respondents denied the allegations and asked that the claims be thrown own.

After considering the pleadings, evidence, and testimony, the panel decided that Wedbush and Scarpelli must pay claimants: Mary L. Riscornia TTEE nearly $263,000, Jennifer Tiscornia over $252,313, Nicolas E. Toussaint over $55,300, Nicolas E. Toussaint TTEE over $1800, Michael J. Nicolai over $18,4000, Michael Nicolai TTEE over $156,221, Jeffrey M. Nicolai over $22,154, Katherine M. Nicolai over $22,000 and Alexandria P. Nicolai over $22,000 in damages, interest, legal fees, and costs. The FINRA panel denied Scarpelli's request to have his record expunged of this securities case.


SEC Files Charges in $78M Pump-and-Dump Scam Involving Jammin’ Java Stock, Marley Trademark
The Securities and Exchange Commission is accusing ex-Jammin’ Java CEO Shane Whittle of masterminding a $78 million pump-and-dump scam involving the company’s shares. Jammin’ Java operates Marley Coffee, which uses the late reggae legend Bob Marley’s trademark to sell products.

According to the regulator, Whittle used a reverse merger to—in secret—get control of millions of Jammin’ Java shares, which he then spread to offshore entities under the control of Michael Sun, Wayne Weaver, and René Berlinger. The shares were dumped on the public after their price rose in the wake of bogus promotional campaigns. Whittle purportedly hid the scam by making misleading omissions and statements in reports submitted to the SEC.

Continue reading "Securities Fraud Cases: Wedbush to Pay $813K Over Investment Fraud Allegations, SEC Files Pump-and-Dump Charges in Marley Coffee Case, and CFTC Accuses IB Capital of Soliciting $50M for Forex Trading While Unregistered " »