January 7, 2015

FINRA Orders Pershing to Pay $3M Fine for Customer Protection Rule Violations

The Financial Industry Regulatory Authority Inc. says that Pershing, a Bank of New York Mellon Corp. (BK) unit, must pay $3 million for violations involving the Customer Protection Rule. According to the self-regulatory organization, for about nine months between ’10 and ’11, the clearing firm did not put aside the money needed for a reserve account, per FINRA’s deposit requirements.

The SRO said that deficiencies, from $4 million to $220 million, came from Pershing’s “misinterpretation” of aspects of the rule, as well as inadequate supervision over the way the firm calculated what needed to be put in reserve. Also, over a certain time period, Pershing did not promptly get or keep up physical possession or control of certain customers’ margin securities. This resulted in nearly four dozen new control or possession deficits, while significantly raising the number of existing control or possession deficits.

The Customer Protection Rule mandates that brokerage firms maintain custody of customer cash and securities in order to comply with the following requirements: keep a cash reserve or qualified securities in a bank account that has at least the equivalent value of the net cash the broker-dealer owes customers, as well as obtain and keep up control or physical possession over customers’ excess and fully paid margin securities.

FINRA enforcement chief Brad Bennett said that because of Pershing’s purported failure to set up systems to “vet procedural changes” that could impact certain types of positions, customers’ assets were placed at risk. The SRO discovered the alleged deficiencies while conducting an examination on site in 2011. The firm has since improved its controls. While Pershing agreed to the sanctions it has not denied or admitted to the findings.

Contact our securities lawyers today if you suspect that your investment losses are because of securities fraud or related negligence.

FINRA Fines Pershing LLC $3 Million for Customer Protection Rule Violations and Supervisory Failures, FINRA, December 29, 2014

FINRA Rules, FINRA


More Blog Posts:

NASAA Wants Life Partners Held Accountable for Texas Securities Act Violations, Stockbroker Fraud Blog, December 28, 2014

Standard & Poor’s on the Verge of Civil Settlement Over Real-Estate Bond Ratings, Reports WSJ, Institutional Investor Securities Blog, December 29, 2014

Credit Suisse Ordered to Face $10B Mortgage-Backed Securities Fraud Lawsuit by NY AG, Institutional Investor Securities Blog, December 26, 2014

January 6, 2015

FINRA Releases Priorities for 2015, Gets SEC Approval for Background Check Rule

The Securities and Exchange Commission has approved a Financial Industry Regulatory Authority proposal mandating that broker-dealers conduct more rigorous background checks on new hires. Per the new rule, brokerage firms must implement written procedures for confirming the completeness and accuracy of a broker’s registration data on a Form U4.

Firms will have to search “reasonably available public records” of both new hires and new registrants within 30 days of a U4’s submission to FINRA.

In other FINRA news, the self-regulatory organization has just released its exam and regulatory priorities for 2015. The regulator stated that the majority of compliance problems could be worked out if only broker-dealers always acted in their clients’ best interests. The statement was a significant one, considering that brokers are currently just obligated to make sure that they investments they recommend are suitable for clients.

Among the recurring challenges noted by the SRO:
• Failure to place customers’ interests first, including giving poor advice and recommending inappropriate investments.

• Firm cultures that put short-term profits or rapid growth over establishing the proper controls and creating an environment where high ethical standards are expected. FINRA recommends intolerance for both poor practices that may cause harm, as well as bad actors.

• A lack of strong supervision and inadequate risk management at certain firms

• Product complexity, opaque markets, poor sales training

• Conflicts of interest

FINRA’s Focus Areas in 2015 will include:
Sales practices, including requiring registered representatives and firms to conduct due diligence, make good suitability decisions, and explain products risks so that retail investors can understand them. FINRA is pressing firms to properly train registered representatives about product features, valuation, pricing, and suitability. It is also reminding them to stay abreast of changing market circumstances.

Interest-Rate Sensitive Fixed Income Securities: The SRO remains worried about how unusually low interest rates could possibly harm investors with products that may be easily impacted by said rates.

Variable Annuities: FINRA will evaluate compensation structures to see if there are any improper incentives for generating the sales of these instruments. The regulator is taking a focused interest in L share annuities, which come with higher costs and shorter surrender periods.

Alternative mutual funds: The SRO is worried that both customers and registered representatives do not fully understand how the funds will react to various market conditions.

Non-traded REITS: FINRA continues to be concerned about illiquidity, valuation difficulties, and high fees.
FINRA also will work with examiners and firms to make sure that its new supervision rules are implemented properly. FINRA Rules 3170, 3150, 3120, and 3110 went into effect at the start of December.

You can click here to see what else FINRA and its examiners are focusing on in 2015.

Our securities fraud law firm helps investors get their losses back. Contact Shepherd Smith Edwards and Kantas, LTD LLP today.

SEC approves Finra background check rule, InvestmentNews, January 5, 2015

More Blog Posts:
Beneficiaries of Puerto Rico Trust File Securities Fraud Lawsuit Seeking Over $4.5M From UBS Financial Services, Stockbroker Fraud Blog, January 5, 2015

Morgan Stanley Fires Wealth Management Group Employee For Stealing Client Data, Institutional Investor Securities Blog, January 5, 2015

NASAA Wants Life Partners Held Accountable for Texas Securities Act Violations, Stockbroker Fraud Blog, December 28, 2014

December 29, 2014

Financial Firm News: NH Regulator Fines Merrill Lynch $400K for Telemarketing Compliance Shortfalls, Court Orders Vasquez Global Investments to Pay More Than $1.3M for Commodity Pool Fraud, and FINRA Sanctions Monex Securities Inc.

New Hampshire Says Merrill Lynch Must Pay $400,000 For Not Complying with Telemarketing Rules

Bank of America (BAC) Merrill Lynch has consented to pay $400,000 to resolve claims made by the New Hampshire Bureau of Securities Regulation accusing the firm of improperly soliciting business when it called people who were on do-not-call lists and were not clients. As part of the deal, Merrill Lynch will improve its telemarketing procedures and policies. A spokesperson for the brokerage firm says it has already enhanced internal controls to avoid making inappropriate calls moving forward.

According to the regulator, not only did the broker-dealer fail to fully comprehend how to comply with the state’s rules for telemarketing but also the firm did not reasonably supervise its agents’ telemarketing activities in New Hampshire.


Vasquez Global Investments to Pay Over $1.3M For Bilking Participants in Commodity Pool
A federal judge has ordered Edwin Arden and his Vasquez Global Investments, LLC to pay over $1.3 million for running a commodity pool fraud. Per the order, issued by the U.S. District Court for the Western District of North Carolina, both Vasquez and VGI must pay over $330,000 in restitution and a monetary penalty of $994,668. They also must contend with permanent solicitation, trading, and registration bans. The order is the result of a U.S. Commodity Futures Trading Commission complaint issued earlier this year charging both Vasquez and his firm with solicitation fraud, misappropriation, and making false statements related to the Vasquez pool, which is an unregistered commodity trading pool.

The court order states that beginning in August 2011, Vasquez bilked and deceived at least 19 participants that had collectively invested over 580K in the Vasquez pool. He purportedly told prospective participants that he had a successful track record as a trader and investing in the pool was not high risk.

The order said that of the money Vasquez solicited from participants, VGI lost $65,374 when trading commodity futures and misappropriated $331,556 by using the money to cover the company’s operating costs and Vasquez’s personal spending. Still, Vasquez purportedly chose not to disclose the misappropriation and trading losses and sent pool participants bogus statements about the value of their pool shares and their “profitability.”


Monex Securities Inc. Ordered by FINRA to Pay $1.3M Sanction for Inadequate Supervision
FINRA has sanctioned Monex Securities Inc. and is ordering the firm to pay $1.1 million in disgorgement of commissions and interest that foreign individuals who were not registered with the regulator obtained when selling the securities for the firm. The self-regulatory organization fined Monex $175,000 for not registering the individuals, as well as for related supervisory deficiencies that took place for more than two years.

FINRA said that Monex Chief Compliance Officer and President Jorge Martin Ramos Landero executed an agreement for the firm with its parent company in Mexico that allowed employees to conduct securities business for Monex. The individuals were paid compensation for their work, which included collecting client data for opening accounts, transmitting orders, and making investment recommendations. However, these persons were not registered with FINRA.

Under the regulator’s rules, an associated individuals who works in the securities business or investment banking has to be registered with the SRO under the right registration category. This person must also pass a qualification exam.

Shepherd Smith Edwards and Kantas, LTD LLP is a securities fraud law firm.


Merrill to pay $400,000 over telemarketing compliance shortfall, Investment News, December 30, 2014

FINRA Sanctions Monex Securities Inc. $1.3 Million for Failing to Register and Supervise Foreign Personnel, FINRA, December 30, 2014

Federal Court Orders North Carolina Resident Edwin A. Vasquez and His Company, Vasquez Global Investments, LLC, to Pay over $1.3 Million for Commodity Pool Fraud, CFTC, December 30, 2014


More Blog Posts:
NASAA Wants Life Partners Held Accountable for Texas Securities Act Violations, Stockbroker Fraud Blog, December 28, 2014

OppenheimerFunds Increases Its Exposure to Puerto Rico Debt Despite Downgrade by Moody’s, S & P, and Fitch to Junk Status, Stockbroker Fraud Blog, February 14, 2014

Ex-Oppenheimer Fund Manager to Pay $100K To Settle Private Equity Fund Fraud Charges, Institutional Investor Securities Blog, January 25, 2014

December 23, 2014

FINRA Orders Wells Fargo Units to Pay $1.5M For Anti-Money Laundering-Related Lapses

The Financial Industry Regulatory Authority is ordering Wells Fargo Advisors Financial Network (WFAFN) and Wells Fargo Advisors (WFA) to collectively pay $1.5M for anti-money laundering (AML) failures. According to the self-regulatory organization, the two brokerage firms did not comply with a main component of the anti-money laundering compliance program when it did not require some 220,000 new customer accounts to go through an identify verification process. The failures purportedly occurred from 2003 to 2012.

The AML compliance program mandates that brokerage firms set up and keep up a written Customer Identification Program that lets them confirm the identity of every customer setting up an account. The broker-dealer should use the CIP to get and verify a minimum amount of identifying data before opening a new customer account. The firms must also keep records of the verification process and let customers know that data is being gathered to confirm their identities.

FINRA said that the firms had a CIP system but it was deficient because of the electronic systems involved. Of the 220,000 new accounts that never had to undergo customer identify verification, some 120,000 of them were closed by the time the problem was identified.

By settling, Wells Fargo Advisors and Wells Fargo Financial Advisors, which are both Wells Fargo units, are not denying or admitting to the charges. They are, however, consenting to the entry of findings.

In other Wells Fargo-related news, homeowners suing mortgage companies that belonged to Wachovia won a $54.8 million verdict in their class action securities case over excessive fees. Wells Fargo acquired Wachovia in 2008.

The plaintiffs are borrowers with mortgages that were serviced or belonged to HomeEq serving or the lender, the now-defunct The Money Store. Homeowners have been trying to get back around $29 million for alleged excessive charges plus interest. Joseph Mazzei, the lead plaintiff claimed that both entities continued to charge late fees each month to borrowers even after mortgages went into default.

A jury said that the mortgage companies were liable for late fees. Wells Fargo never owned either The Money Store or Home Eq. Wells Fargo owned the latter, while the former, which belonged to First Union, later came under Wachovia’s fold.

FINRA Fines Wells Fargo Advisors and Wells Fargo Advisors Financial Network $1.5 Million for Anti-Money Laundering Failures, FINRA, December 18, 2014

Wells Fargo faces payout after $54.8 mln loan fee verdict, Reuters, December 19, 2014


More Blog Posts:
FINRA Bars Ex-Wells Fargo Broker From Industry For Allegedly Bilking Customers, Expels HFP Capital Markets LLC for Securities Fraud, Stockbroker Fraud Blog, September 19, 2014

Wells Fargo Sued Over Allegedly Biased Lending in Chicago, Institutional Investor Securities Blog, November 28, 2014

Wells Fargo to Pay $5M Over Inadequate Controls, Altered Documents, Institutional Investor Securities Blog, October 21, 2014

December 16, 2014

FINRA Orders Merrill Lynch to Pay $2.4M in Fine, Restitution for Hundreds of Securities Transactions That Violated Fair Price Guidelines

FINRA is ordering Bank of America’s (BAC) Merrill Lynch to pay a $1.9M fine for violating fair price guidelines over seven hundred times during a two-year period. The financial firm also must pay restitution of over $540K to customers that were affected.

According to the self-regulatory organization, Merrill’s credit trading desk purchased MLC notes from retail customers at up to 61.5% under the market price. General Motors had issued the notes prior to its bankruptcy. MLC Notes stands for Motors Liquidation Company Senior Notes.

Out of 716 transactions, 510 of them involved notes bought at markdowns that were greater than 10%. The desk would then sell the notes to brokers at market cost.

Issuing a statement, FINRA EVP and market regulation head Thomas Gira said that the SRO expects firms to abide by their duties to customers in regards to fair pricing. Gira said Merrill Lynch’s markdowns of the MLC Notes were not acceptable.

FINRA says the firm lacked a proper supervisory system that could identify this kind of violation. It is accusing the firm of failing to perform assessments of the credit desk after trades were made.

Merrill Lynch is settling without denying or admitting to the securities charges. It has, however, consented to an entry of the regulator’s findings.

As part of the agreement, over the next year and a half, Merrill Lynch will provide reports related to the credit desk’s supervisory system and its effectiveness. The firm says that it has since enhanced its supervisory efforts and taken disciplinary action.

FINRA Fines Merrill Lynch $1.9 Million and Orders Restitution of $540,000 for Fair Pricing and Supervisory Violations Related to Purchases of Distressed Securities, FINRA, December 16, 2014

Reliance Financial Advisors, Owners Face SEC Fraud Charges Involving Hedge Fund, Stockbroker Fraud Blog, December 15, 2015

Morgan Stanley Fined $4M by the SEC for Market Access Rule Violation, Institutional Investor Securities Blog, December 12, 2014

Madoff Ponzi Scam Victims Recover Over $10 Billion, Institutional Investor Securities Blog, December 5, 2014

December 5, 2014

CFTC, FINRA, and SEC Fight Investor Fraud Together

The Commodity Futures Trading Commission has launched CFTC SmartCheck. The site gives consumers information about financial fraud. It links to The Securities and Exchange Commission’s EDGAR product registration database and the Financial Industry Regulatory Authority’s BrokerCheck system, as well as to the National Futures Association. For the first time the three regulators are joining forces to combat investor fraud. The site makes checking the backgrounds of brokers and investment advisers more localized.

This year, the CFTC spent around $4.2 million in consumer protection and has an even bigger budget for next year. Under the Dodd-Frank Act, the CFTC was given authority to establish a consumer protection fund that covers whistleblower office and education initiatives.

Last month, the North American Securities Administrators Association announced that in 2013 state securities regulators increased the number of formal enforcement actions they initiated against licensed broker-dealer sales representatives, as well as firms and individuals that didn’t have a license. The states reported 810 actions against unlicensed firms or individuals, which is 34% more than the year before. There was an 89% rise in actions against (357) licensed broker-dealer agents between the same time period.

Also, between ’12 and ’13:

• Enforcement actions against licensed investment adviser representatives went up 11% to 176 from 158.

• The number of enforcement actions against investment adviser firms went down 4% from 174 to 181.

While efforts by regulators to combat fraud is important, if you are an investor that has sustained losses from securities fraud committed by a registered or unregistered financial firm or representative, your best chances of recovering your funds is to work with an experience securities lawyer.

Commodity Futures Trading Commission teams up with SEC and Finra to combat investor fraud, Investment News, November 19, 2014

CFTC SmartCheck

EDGAR

NASAA Enforcement Report (PDF)

FINRA BrokerCheck

National Futures Association


More Blog Posts:
Judge Orders Texas-Based Life Partners Holdings Inc., Two Executives to Pay $46.9M Over Securities Filings, Stockbroker Fraud Blog, December 3, 2014

Madoff Ponzi Scam Victims Recover Over $10 Billion, Institutional Investor Fraud Blog, December 5, 2014

SEC Files Charges Against Former Broker-Dealer Owner Over Fraudulent Stock Sales, Stockbroker Fraud Blog, December 2, 2014

November 11, 2014

Survey by FINRA Shows Investors Want More Regulatory Protections

According to a Financial Industry Regulatory Authority-released survey of investors, 92% of participants believe that there needs to be a regulatory “cop” to protect investors. 94% said that regulators should use the latest technology and tools on the job. The survey is intended to evaluate how investors feel about regulatory protections.

1,000 investors participated in the survey. Overall, said the self-regulatory organization, investors were in strong agreement that regulation and investor protections are key. The majority of investors also said that it is important that regulators detect when customers are sold unsuitable securities, if brokers are making trades to their benefit rather than that of investors, and when firms are taking risks that could hurt customers. 74% of those surveyed said they are in support of additional regulatory protections against broker misconduct.

The Survey was conducted over several days last month. Respondents came from a nationally distributed online panel. They had to meet certain criteria: U.S. citizen, at least 21 years of age, with primary or shared responsibility in their home for investment choices, and at least $10,000 in securities investments.

According to InvestmentNews, Securities and Exchange Commission Chairman Mary Jo White is preparing to disclose what she thinks is the best way for the regulator to enhance investment-advice standards for brokers. At the yearly Securities Industry and Financial Markets Association meeting this week, White said that the SEC has not yet decided on whether to enhance the standard of care.

It’s been over four years now that the SEC has been debating on whether to propose a rule that would create a uniform fiduciary duty for retail investment advice. Such a rule would obligate brokers to act in their clients’ best interests—much like the fiduciary duty of investment advisers to their clients.

The Dodd-Frank Act gave the Commission the authority to put forth new regulation about fiduciary duty. The opposition by two of its commission members to such a rule is just one of the reasons the regulator has not yet acted on this authority. There are five members on the SEC Commission.

Meantime, SIFMA, at the same conference where White spoke, has voiced its opposition to the re-release of a proposed Department of Labor regulation that would extend fiduciary duties to advisers who sell individual retirement accounts. The DOL has said the rule would protect investors from advisers that had conflicts of interest.

However, ex-SIFMA chairman Jim Rosenthal said that the rule would only let IRAs be held in managed accounts that charge investors fees according to assets under management, while curtailing having them offered in brokerage accounts that charge investors on a per trade transaction basis. He believes this will keep brokers from servicing accounts that are small.

Our broker fraud lawyers and investment adviser fraud attorneys are her to help investors recoup their financial losses.


FINRA Investor Survey Reveals Strong Support for Additional Regulatory Protections, FINRA, November 6, 2014

The Survey (PDF)

SEC Chair Mary Jo White close to revealing her position on fiduciary duty, Investment News, November 10, 2014

U.S. Department of Labor

More Blog Posts:
SEC Files Charges in Massachusetts Pump-And-Dump Scam, International Microcap Fraud, and Issues Investor Alert, Stockbroker Fraud Blog, November 7, 2014


BlackRock Buys Part of UBS Puerto Rico’s Mutual Fund Operations, Say Sources, Stockbroker Fraud Blog, November 4, 2014

Detroit Suburb Charged with Muni Bond Fraud, Institutional Investor Securities Blog, November 6, 2014

November 10, 2014

Two Former Merrill Lynch Brokers Contend with Unauthorized Trading Claims

According to the Financial Industry Regulatory Authority (FINRA), Ameriprise Financial (AMP) broker Lorene Fairbanks, formerly with Merrill Lynch. Pierce, Fenner & Smith Incorporated, was recently sanctioned over allegations that she effected over 57 discretionary transactions for several customers without getting the required written authorization from the clients or the approval of the firm. Fairbanks also allegedly mismarked over 50 order tickets, noting them as “unsolicited” when they were “solicited” orders. Brokers are not allowed to exercise discretionary authority in a client account without written authorization.

The Ohio broker was registered with Merrill Lynch from 8/06 to 3/12. The firm fired Fairbanks in February 2012 for purportedly taking discretion in client accounts and mismarking customer orders. She has been associated with Ameriprise since June 2012. There also have reportedly been other customer complaints accusing Fairbanks of excessive trading and unsuitable trading.

Also sanctioned by FINRA for allegations of unauthorized trading is George Zaki, another ex-Merrill Lynch broker. The self-regulatory organization contends that Zaki implemented or executed about 3,600 trades in some 80 accounts without written customer authorization between 6/10 and 8/12.

Zaki was let go by Merrill Lynch in October 2012. The firm said the termination was because of conduct related to exercising discretion in client accounts that were not discretionary. FINRA rules prohibits a registered representative from exercising discretionary power in the account of a customer without that client’s prior written permission and firm acceptance of the account.

After Zaki was terminated from Merrill Lynch, he was registered with Barclays (BARC) Capital Inc. until earlier this year.

Our broker fraud lawyers represent investors in the U.S., as well as those headquartered abroad with claims against brokerage firms in the country.

BrokerCheck, FINRA


More Blog Posts:
FINRA May Expel Ex-Broker For $6M Hedge Fund, Stockbroker Fraud Blog, July 15, 2014

SEC Stops Fraudulent Bond Offering by Chicago Suburb, Institutional Investor Securities Blog, June 25, 2014

AIG Advisor Group, Securities America, LPL Financial, Cambridge, And Even Schorsch’s Broker-Dealer Stops Selling His REITs, Institutional Investor Securities Blog, November 7, 2014

October 6, 2014

FINRA Bars Former Raymond James Adviser for Elder Financial Fraud, Charges SWS Over Variable Annuity Supervision

The Financial Industry Regulatory Authority has barred Jo Ellen Fischer, an independent financial adviser with Raymond James Services Inc. (RJF), for purportedly stealing nearly $1 million from a 95-year-old client. At the time, Fisher worked for Peoples Bancorp.

According to the self-regulatory organization, from July to December 2013, Fisher converted $924,750 from the elderly customer’s trust without permission. She did this by moving funds and securities into a brokerage account under her daughter’s name. Fisher then liquidated securities and used the money to cover her personal spending, including two Rolexes, motor vehicles, a 2-carat diamond ring, and other expenses.

FINRA says that Fisher claimed that the elderly client was her daughter’s godfather and he wanted her to have the money when she was older. The SRO, however, contends that Fisher falsified documents regarding this matter. She has agreed to the bar without denying or admitting to the findings alleging elder financial fraud.

Raymond James, which terminated Fisher's registration earlier this year, is cooperating with investigators. The financial firm has filed its own action against her in federal court to get back the money she purportedly took. Raymond James has already paid back the investor.

In other FINRA-related news, the SRO is charging SWS Financial Services with approving variable annuity applications without conducting principal review to make sure they were suitable. The agency’s enforcement department claims that from 9/09 to 5/11 the firm did not have the required supervisory systems and written procedures in place for VA transactions.

SWS is accused of not conducting adequate supervisory reviews of variable annuity deals, failing to register principal reviews of VAs prior to turning the applications over to the insurer, not setting up and documenting a training plan for supervisory review of VA deals, and failing to establish surveillance procedures that could identify VA exchanges that were not appropriate.

FINRA says that during the time of these violations, variable annuity sales comprised up to 20% of the firm’s total revenue. It wants disciplinary action, including monetary sanctions, as well as an order mandating that SWS pay for the proceeding costs.

Finra Bars Ex-Raymond James Adviser Over Alleged Account Theft, The Wall Street Journal, October 3, 2014

Finra charges SWS with improper supervision of VA transactions, Investment News, October 2, 2014


More Blog Posts:

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

DOJ’s Fund for Madoff Victims Has Received 51,700 Claims Worth $40B, Institutional Investor Securities Blog, May 14, 2014

Resource Horizons Group’s Future Hangs in Balance Following $4M FINRA Arbitration Award, Stockbroker Fraud Blog, September 25, 2014

September 29, 2014

SEC Approves FINRA Arbitration Fees, SRO Proposes Rule For CARDS

The U.S. Securities and Exchange Commission has approved a Financial Industry Regulatory Authority Inc. proposal to up the pay for arbitrators. The rule change will increase how much it will cost to file securities arbitration claims, as well as processing fees, surcharge, and hearing session fees for bigger cases.

The changes would only impact claims involving over $250,000, with fees per hearing session going up by $100 to $300 depending on how big the claim. Filing fees would go up 10% to 25%, again depending on the claim’s size.

FINRA has not upped its fees since 1999. Under the proposed rule, arbitrators of these larger cases would get paid $300 for every hearing session, while the chairman would get another $125 a day. With the proposal, the self-regulatory organization would be bringing in $4 million to $5.6 million annually.

For the most part, the securities industry has supported the proposal, which should hopefully improve the quality of the arbitration process at FINRA. The regulator said arbitrators have regularly complained about how much they were paid, even skipping or postponing their duties when other opportunities that paid more arose. The SRO is hoping the new fees will enhance its arbitration recruiting efforts.

Also, FINRA has just issued new guidelines for a proposed computerized method to keep track of transactions and balances in brokerage accounts. The system, known as CARDS, for the Comprehensive Automated Risk Data System, is supposed to allow the regulator to identify and quickly deal with suspect activity and high-risk areas that it can’t easily detect under its current programs for examination and surveillance.

CARDS would go into effect via two stages. The first one would mandate that clearing and carrying firms periodically turn in automated, standardized data about their records and books related to securities accounts, including those that they clear. Stage two would require fully disclosed introducing firms to turn in specific data elements that are account profile-related to FINRA. Customers’ personally identifiable information would not be included among this information.

CARDS will ultimately speed up the detection process via automation. With this system, the regulator hopes to be able to run computerized analytic checks at the over 4,000 broker-dealers it oversees. Some have expressed worry that CARDS and similar systems could make it easy for data thieves to access information about what investors are holding.

Commentators have until December 1 to chime in. The CARDS proposal is an update of an initial proposal that FINRA put out last year.

The regulator says that CARDS will cost between $8 million to $12 million over three years to develop its systems and technology. Costs to certain brokers to develop the system could run from $390K to $8.33 million. Brokers had expressed worry that the new system could be too expensive for them.

SEC signs off on Finra arbitration fee increases, Investment News, September 30, 2014

FINRA Solicits Comment on Proposed Rule to Implement CARDS, FINRA, September 30, 2014


MORE BLOG POSTS:
SEC News: Regulator to Review Rule Change on New Hire Background Checks, Prepares Mutual Fund Regulations, and is Defendant of Oxfam America Lawsuit, Institutional Investor Securities Blog, September 20, 2014

FINRA Bars Ex-Wells Fargo Broker From Industry For Allegedly Bilking Customers, Expels HFP Capital Markets LLC for Securities Fraud, Stockbroker Fraud Blog, September 19, 2014

FINRA Fines Minneapolis Broker-Dealer $1M for Inadequate Supervision of Penny Stocks, Stockbroker Fraud Blog, September 13, 2014

September 19, 2014

FINRA Bars Ex-Wells Fargo Broker From Industry For Allegedly Bilking Customers, Expels HFP Capital Markets LLC for Securities Fraud

The Financial Industry Regulatory Authority has barred a former Wells Fargo (WFC) registered representative from the brokerage industry. According to the self-regulatory organization, Ane S. Plate, who previously worked with Wells Fargo Advisors Financial Network in Florida, allegedly made fifteen unauthorized trades in a joint brokerage account of two customers between October 2013 and April 2014. The transactions resulted in $176,080 of cash proceeds, of which Plate is accused of pocketing $132,358.

The former Wells Fargo broker is also accused of setting up bi-weekly transfers from the brokerage account to a bank account that was in the name of one of her relatives. She then allegedly moved $7,700 to that account between December 2013 and May 2014.

Plate, who was working with Wachovia Securities when Wells Fargo acquired that firm, has since been fired after the latter discovered the purported theft. FINRA’s BrokerCheck reports that the customers that were harmed were fully reimbursed for the amount taken from them.

Plate, who settled the FINRA charges, is not denying or admitting to the allegations. She has, however, consented to an entry of the regulator’s findings.

FINRA also recently expelled a financial firm from FINRA membership, this for the purportedly fraudulent sale of about $3 million of senior secured zero-coupon notes. HFP Capital Markets LLC will now have to pay $2,980,000 plus interest in customer restitution.

The financial firm is accused of selling private offerings of the notes to customers while knowingly leaving out or misrepresenting material facts in the offering and sales. The SRO says the notes were misrepresented as collateralized by certain barrels of leftover mining materials that were valuable enough to secure an investment, when the ore concentrate was actually worthless.

FINRA is also accusing HFP Capital Markets of not disclosing material facts about the management and ownership of the issuer and about the way the proceeds from the offering were utilized. The firm also purportedly disregarded red flags and did not conduct sufficient due diligence on the individuals involved, the offering, or the third parties that were presented as critical strategic partners.

Some customers recovered their money in the form of replacement transactions after complaining to the firm, but everyone else lost their funds. Now, HFP Capital Markets is settling without denying or admitting to the findings.

FINRA also recently censured Felix Investments LLC, which is based in New Jersey, for sending misleading, unwarranted, and exaggerated claims or statements to potential investors of a fund via email. The communications purportedly did not note the possible risks or provide comprehensive descriptions of the fund.

Now, Felix Investments has to submit all retail communications, per FINRA Rule 2210’s definition, with the agency at least 10 days before use and pay a $300,000 fine. The firm’s principal, Susan Mindlin Diamond, must pay a $10,000 fine and serve a four-month suspension. Meantime financial representative Frank Gregory Mazzola, who is accused of sending the emails, is barred from associating with any FINRA member.

Other FINRA findings against Felix Investments and Diamond include inadequate supervision of Mazzola, even after an AWC was put out against him, and failure to put into place a written anti-money laundering program to keep Felix in compliance with the Bank Secrecy Act and other regulations.

Felix Investments, Mazzola, and Diamond settled with FINRA without denying or admitting to the findings.

Former Wells Fargo Advisor Barred From Brokerage Industry, Bank Investment Consultant

FINRA Enforcement: HFP Capital Markets Expelled From FINRA for Note Fraud, ThinkAdvisor, September 5, 2014

FINRA


More Blog Posts:
FINRA Fines Minneapolis Broker-Dealer $1M for Inadequate Supervision of Penny Stocks, Stockbroker Fraud Blog, September 13, 2014

Deutsche Bank, Wells Fargo, Citigroup Sued by Pimco and Blackrock Over Trustee Roles Involving Mortgage Bonds, Institutional Investor Securities Blog, July 3, 2014

FINRA Headlines: SRO Considers Revised Broker Bonus Plan, To Discuss Potential Dark Pool Rules, May Instigate Civil Action Against Wells Fargo, &Warns Investors About Frontier Markets, Institutional Investor Securities Blog, September 12, 2014

September 13, 2014

FINRA Fines Minneapolis Broker-Dealer $1M for Inadequate Supervision of Penny Stocks

The Financial Industry Regulatory Authority has issued an enforcement action charging Feltl & Company for not notifying certain customers of the suitability and risks involving certain penny-stock transactions, as well as for failing to issue customer account statements showing each penny stock’s market value. The brokerage firm is based in Minneapolis, Minnesota.

FINRA claims that the firm failed to properly document transactions for securities that temporarily may not have fulfilled the definition of a penny stock and did not properly track penny-stock transactions involving securities that didn’t make a market.

Feltl made a market in nearly twenty penny stocks. The brokerage firm made $2.1 million from at least 2,450 customer transactions that were solicited in 15 penny stocks between 2008 and 2012. The SRO says it isn’t clear how much the firm made from selling penny stocks that it didn’t keep track of but that revenue from this would have been substantial.

Felt is settling the securities charges without denying or admitting to the claims. It said that after February 2012 it stopped recommending penny stocks and now doesn’t make a market in any penny stock. Customers, however, can trade in penny stocks if they are the ones that initiate the transaction.

Penny Stocks
These securities trade under $5 a share. Small companies that have low revenue are the ones that usually put them out. Penny stocks may be high risk because it can be hard to track the companies’ future value and business potential and these stocks don’t trade as often as liquid stocks that are traded on exchanges. Penny stocks are not a suitable investment for everyone.

Our penny stock fraud lawyers represent investors wanting to recoup their losses. Contact Shepherd Smith Edwards and Kantas, LTD LLP today.

Finra Fines Brokerage $1M Over Penny-Stock Deals, WSJ, September 3, 2014

Penny Stock Rules, SEC.gov


More Blog Posts:
SEC Files Charges in Penny Stock Scams, Stockbroker Fraud Blog, May 27, 2014

SEC Files Charges in $4.5M Houston-Based Pump-and-Dump Scam, Stockbroker Fraud Blog, August 18, 2014

Securities Lawsuit Accuses Deutsche Bank, JPMorgan Chase, Credit Suisse, and Other Banks of Manipulating ISDAfix, Institutional Investor Securities Blog, September 4, 2014

August 27, 2014

Citigroup Global Markets Fined $1.85M By FINRA, Must Pay $638K Restitution Over Non-Convertible Preferred Securities Transaction Valuations

The Financial Industry Regulatory Authority says that Citigroup Global Markets Inc. (C) will pay a fine of $1.85 million for not providing best execution in about 22,000 customer transactions of non-convertible preferred securities, as well as for supervisory deficiencies that went on for over three years. Affected customers are to get over $638,000 plus interest.

A firm and its registered persons have to exercise reasonable diligence to make sure that the sale/buying price the customer pays is the most favorable one under market conditions at that time. FINRA says that instead a Citigroup trading desk used a pricing methodology for the securities that failed to properly factor in the securities’ National Best Bid and Offer. Because of this, contends the self-regulatory organization, over 14,800 customer transactions were priced inferior to the NBBO. The SRO also claims that because Citigroup’s BondsDirect system for order execution used a faulty pricing logic, over 7,200 customers transactions were priced at less than NBBO.

FINRA says that Citigroup’s written supervisory procedures and supervisory system related to best execution in these securities were lacking. It claims that the firm did not review customer transactions for the securities at issue, which were either executed manually by the trading desk or on BondsDirect. Such an assessment could have ensured compliance with Citigroup’s best execution duties. (FINRA noted that it had sent the firm inquiry letters about the reviews.)

Citigroup is consenting to the entry of the SRO’s findings. It isn’t, however, denying or agreeing with FINRA’s claims.

FINRA Fines Citigroup Global Markets Inc. $1.85 Million and Orders Restitution of $638,000 for Best Execution and Supervisory Violations in Non-Convertible Preferred Securities Transactions, FINRA, August 26, 2014

Citigroup to Pay $2.5 Million for Pricing Flaws of Markets Unit, The Wall Street Journal, August 26, 2014


More Blog Posts:
Citigroup’s LavaFlow to Pay $5M to SEC For Not Protecting Subscriber Data in ATS, Stockbroker Fraud Blog, July 28, 2014

Judge Rakoff Approves Citigroup’s $285M Mortgage Securities Fraud Deal with the SEC, Institutional Investor Securities Blog, August 5, 2014

Citigroup Settles Mortgage-Backed Securities Probe with DOJ for $7 Billion, Institutional Investor Securities Blog, July 14, 2014

August 22, 2014

Securities Regulations News: SEC Looks to Delay Principal Trading Rules, FINRA Adds More Time to REIT Price Changes and 2nd Circuit Says Dodd-Frank’s Whistleblower Protections Don’t Apply Overseas

SEC Wants To Extend Temporary Rule Letting Dually-Registered Advisers Get Principal Trading Consent

For the third time in four years, The Securities and Exchange Commission wants to extend a temporary rule that makes it easier for investment advisers that are also registered as brokers to sell from the proprietary accounts of their firms. The regulator issued for comment its proposal that would move the interim’s rule expiration date to the end of 2016 instead of the end of 2014.

Under the temporary rule, dually registered advisers can either get verbal consent for principal trades on a transaction basis or give written prospective disclosure and authorization, in addition to yearly reports to the clients. With principal trades, a brokerage firm uses its own securities in the transaction.

The Investment Advisers Act of 1940 mandates that advisers get written disclosure and consent prior to every principal trade. This is supposed to prevent possible conflicts of interest when a firm trades from its proprietary account. By extending the interim rule, the regulator wants more time to think about whether there should be a separate rule that would enhance the standards of brokers when it comes to offering investment advice.


FINRA Gives SEC More Time to Act On REIT Price Notification Rule
The Financial Industry Regulatory has extended the deadline for when the SEC must act on its proposed change to Rule 2340, about real estate investment trust price notifications, to until October 17. This is the second extension the self-regulatory organization has given to the Commission over this matter this year.

Last month, FINRA requested that the SEC allow independent brokerage-firms and nontraded real estate investment trust sponsors 18 months to get used to new guidelines that would require them to provide investors with a better idea of the costs involved in buying nontraded REIT shares and other direct placement programs/private placements.

Under the proposed rule change, which would apply to the account statements of brokerage firm clients, the per-share value of a nontraded REIT would not longer be listed at the common price of $10. Instead, the various commissions and fees that dealer mangers and brokers get would have to be factored. This would lower the amount of each private placement’s share price on an account statement. If the SEC decides to follow FINRA’s recommendation, investors with illiquid investments won't see this information on their account statements until April 2016.


Appeals Court Agrees that Dodd-Frank’s Anti-Retaliation Provision Only Apply Domestically
The US Court of Appeals 2nd Circuit held that Dodd-Frank’s anti-retaliation provisions do not apply overseas. The ruling upholds a lower-court decision that granted Siemens' motion to dismiss a lawsuit brought by a former compliance officer at its China offices. The ex-employee, Meng-Lin Liu, said he was retaliated against after reporting alleged wrongdoing at the company.

Under the 2010 Dodd-Frank Act, companies are not allowed to take action against certain whistleblowers. However, the whistleblower provisions don’t stipulate whether these protections extend abroad.

Citing a U.S. Supreme Court ruling, the appeals court affirmed that they only apply in the United States. It noted that Liu, his employer, and the entities involved in any of the alleged acts were foreigners located overseas and that these actions would have occurred outside the country.

Liu turned in a whistleblower tip to the SEC after leaving the company. Like the district court, however, the Second Circuit did not delve into whether or not Liu's failure to qualify for whistleblower protection was because he didn't file this information with the Commission until after he was let go by Siemens China.

Finra tacks on more time to REIT pricing change, Investment News, August 14, 2014

SEC seeks to delay principal trading rule for two years, MorningStar, August 13, 2014

Ruling Leaves Cloud on Whistleblowers, The Wall Street Journal, August 18, 2014

FINRA Rules


More Blog Posts:
SEC Examines Municipal Advisers and Alternative Mutual Funds, Reviews “Wrap-Fee” Accounts, Stockbroker Fraud Blog, August 20, 2014

FINRA Investor Alert Warns About Scams Touting Ebola Cure and Other Viral Disease Stock Schemes
, Stockbroker Fraud Blog, August 19, 2014

Lehman Brothers' Unsecured Creditors to Get $4.6B Payout, Institutional Investor Securities Blog, August 21, 2014

August 19, 2014

FINRA Investor Alert Warns About Scams Touting Ebola Cure and Other Viral Disease Stock Schemes

The Financial Industry Regulatory Authority has put out an investor alert warning against buying stocks in companies claiming to combat viral diseases. The self-regulatory organization says it knows of several possible schemes involving stock promotions employing tactics such as pump-and-dump scams to inflate share prices. The scammers will then sell their shares at a profit while leaving investors with shares that have lost their value.

Intensified news coverage of the recent Ebola and Middle East Respiratory Syndrome outbreak will likely have attracted the attention of stock scammers wanting to take advantage of people’s fears. To avoid falling victim to a viral disease stock scam, FINRA is offering several tips, including:

• Be wary of promotional materials, correspondence, and press releases from senders you don’t know. Watch out for communications that say little about the risks involved while only touting the positives. Getting a barrage of information about the same stock opportunities can also be a red flag.

• Make sure to know who is behind a company you are thinking of investing in. Do your research. Think twice if company officials have past criminal records or you hear anything negative in the news. Be on the look out for fake business addresses and phone numbers.

• A lot of stock pump-and-dump scams don’t trade on the NYSE or other registered national securities exchanges. Instead, you can find them on OTC quotations platforms or alternative trading systems.

• Find out whether the company submitted an SEC filing. Compare the information there with what’s provided in promotional materials and other communications you’ve received. Watch out for solicitations to get you to invest in products that are still being developed or if there are losses on balance sheets.

• Watch out if a company keeps changing its name or business focus.

• Make sure you read the fine print and be wary when name-dropping is used to gain investor confidence or boost legitimacy.

Shepherd Smith Edwards and Kantas, LTD LLP is a securities fraud law firm. Contact our fraud lawyers today to request your free case consultation.

Viral Disease Stock Scams: Don’t Let Them Infect Your Portfolio, FINRA

Investment scammers busy pumping Ebola stocks amid panic, NY Post, August 14, 2014


More Blog Posts:
SEC Files Charges in $4.5M Houston-Based Pump-and-Dump Scam, Stockbroker Fraud Blog, August 18, 2014

SEC Charges Linkbrokers Derivatives in $18M Securities Fraud, Institutional Investor Securities Blog, August 18, 2014

UBS Wealth, OppenheimerFunds Take Financial Hit From Puerto Rico Muni Bonds, Stockbroker Fraud Blog, August 15, 2014

July 31, 2014

SEC Signs Off On FINRA Rule Restricting Expungement Of Customer Complaints

The U.S. Securities and Exchange Commission (“SEC”) has approved a Financial Industry Regulatory Authority (“FINRA”) rule that could make it tougher for brokers to expunge customer complaints from their records in settled arbitration cases. Rule 2081 bars brokers from making settlements with customers contingent upon the customer’s consent to not oppose the expungement of the dispute from the public record of the broker.

A record of arbitration complaints filed against brokers is kept as a part of the CRD system. The CRD system contains data about registered representatives and members, including their registration, employment, and personal histories. It also includes disclosure information pertaining to civil judiciary, disciplinary, and regulatory actions, criminal matters, and data about customer disputes and complaints.

The public can access this data through FINRA’s BrokerCheck website. Brokers can have a customer dispute erased from the CRD system and BrokerCheck only through a court order that confirms there has been an arbitration award that recommends such relief.

According to Investment News, a Public Investors Arbitration Bar Association-released study demonstrated that from 2007 to 2009, expungement requests were approved in 89% of settled cases resulting in settlements or awards. From May 2009 through 2011 that figure rose to 96.9%.

Arbitrators are told to inquire as to whether expungement was part of the terms of a settlement. Usually, when such a condition exists between parties it is never put in writing.

The purpose of the new FINRA rule is to make sure that full and reliable customer dispute data remains available to the public, brokerage firms, and regulators. Still, the SEC feels that there is more the self-regulatory organization should do.

In addition to approving the rule change, the SEC is calling on the SRO to review its expungement procedures and rules and figure out whether additional rulemaking is needed to make sure that expungement only occurs in exceptional situations.

Our FINRA arbitration lawyers represent investors in recouping their losses. Contact Shepherd Smith Edwards and Kantas, LTD LLP today.

SEC approves Finra rule limiting expungement, InvestmentNews, July 23, 2014

SEC Approves FINRA Rule to Prohibit Conditioning Settlements on Expungement, FINRA, July 23, 2014

Public Investors Arbitration Bar Association

More Blog Posts:
FINRA Sees 10% Rise in Arbitration Cases, Puerto Rico Bond Claims A Factor, Stockbroker Fraud Blog, April 27, 2014

FINRA Seeks to Limit Definition of Public Arbitrator, Stockbroker Fraud Blog, February 11, 2014

Lawyers, Investor Advocates Want to Know More About SEC Supervision Of FINRA’s Arbitrator Selections, Institutional Investor Securities Blog, December 2, 2013

July 17, 2014

FINRA Wants To Delay Implementing Rule Impacting Nontraded REIT Customers' Statements

The Financial Industry Regulatory Authority wants the Securities and Exchange Commission to grant a delay in the implementation of proposed changes to rule 2340, which impacts customer account statements. The self-regulatory organization had originally asked for the modifications to go into effect six months after the SEC approves the rule change. Now, FINRA wants to give nontraded REIT sponsors and brokerage firms 18 months to adjust to the revised guidelines.

Nontraded REITs are currently not required to show an estimated per-share valuation until 18 months after the sponsors cease to raise funds. Under the proposed rule change, broker-dealer client account statements would eliminate the existing practice of listing at $10 the value, for every share, of a nontraded REIT. This is usually the price that registered representatives sell them at.

The rule change would factor the different commissions and fees that dealer managers and brokers get. It would lower the price per share for every private placement or nontraded REIT found on the account statement of a customer.

Also, trusts would have to show what the valuation is per-share within three to six months. At that point investors would see a below $10/share valuation.

Also, broker-dealer and representative commissions would be able to subtract 12% for the original investment, as well as offering and organizational costs, off a client’s original investment so that an REIT’s estimated sold value would be reduced to $8.80/share price.

The rule that FINRA wants to implement provides two methodologies for broker-dealers to apply after an estimated value is considered reliable: The first method is the independent valuation and can be used at any time. The net investment methodology may be applied for up to two years under certain conditions.

Investors of non-traded real estate investment trusts often find their original investment eroded when the real estate investment trusts give back capital as distributions and dividends to investors. The proposed rule would give investors a better understanding of the costs in buying nontraded REITS shares.

Our non-traded REIT lawyers represent investors who have suffered losses in real estate investment trusts and non-traded REITs that were caused by securities fraud, including the inappropriate solicitation and marketing of these investments. Maybe your broker did not apprise you of the risks or costs involved. Or, perhaps they promoted REITs or Nontraded REITs to you as suitable for your investment goals even though your portfolio was never going to be able to handle the risks.

At Shepherd Smith Edwards and Kantas, LTD LLP, we help investors recoup their REIT fraud losses. Contact our real estate investment trust firm today and ask for you free case consultation. We have helped thousands of investors get their money back.

Finra asks for delay in implementing rule affecting nontraded REIT customer statements, Investment News, July 15, 2015

FINRA Rules


More Blog Posts:
Natural Blue Resources Inc. & Microcap Stock Scammers Accused of Hiding Previous Violations, Stockbroker Fraud Blog, July 16, 2014

FINRA May Expel Ex-Broker For $6M Hedge Fund, Stockbroker Fraud Blog, July 15, 2014

Barclays and Deutsche Bank Under Scrutiny Over Barrier Options Transactions, Institutional Investor Securities Blog, July 17, 2014

July 15, 2014

FINRA May Expel Ex-Broker For $6M Hedge Fund

Dean Mustaphalli, an ex-Sterne Agee Financial Services Inc. broker, could be barred from the industry over allegations that he ran a $6 million hedge fund on the side. According to the Financial Industry Regulatory Authority Inc., Mustaphalli founded and got commissions from Mustaphalli Capital Partners in 2011 but did not tell his brokerage-firm.

Already, Mustaphalli has been named in at least two arbitration claims. He ran the hedge fund through Mustaphalli Advisory Group. It is not known time whether any of the 25 investors he solicited were Sterne Agee clients. Over a four-month period, he was paid about $41,800 in management fees.

Mustaphalli was fired from Sterne Agee in 2011. After he was let go, he purportedly kept soliciting clients for his hedge fund through the investment adviser.

FINRA rule 3040 lets brokers run hedge funds but this must be completely disclosed, approved by, and overseen by the member firm. If a FINRA hearing panel discovers that Mustaphalli withheld information he could also be subject to action for not making sure the hedge fund was properly disclosed.

The self-regulatory organization says that Mustaphalli failed to provide the documents it asked for that would let the regulator know the identities of the hedge fund clients, as well as bank account statements documenting the funds moving in and out of the hedge fund.

Mustaphalli is also under investigation by FINRA for allegedly making variable annuities transactions that were not suitable when he worked at Citigroup Global Markets Inc. (C) He denies those claims.

If you suspect your losses are because of hedge fund fraud, contact Shepherd Smith Edwards and Kantas, LTD LLP today.

Former Sterne Agee broker accused of running $6M hedge fund side business, July 14, 2014

Ex-Sterne Agee broker faces expulsion over $6 million hedge fund, Investment News, July 11, 2014

Conduct Rules, FINRA

More Blog Posts:
SEC Accuses California School District of Misleading Municipal Bond Investors, Stockbroker Blog Fraud, July 11, 2014

SEC Stops Fraudulent Bond Offering by Chicago Suburb, Institutional Investor Securities Blog, June 25, 2014

NY Hedge Fund Adviser Faces SEC Charges Over Conflicted Transactions and Whistleblower Retaliation, Institutional Investor Securities Blog, June 16, 2014

June 7, 2014

FINRA Headlines: SRO Fines Goldman Sachs, Merrill Lynch, and Barclays Capital $1M Each & Makes Dark Pool Data Available

FINRA Fines Merrill Lynch, Goldman, and Barclays Capital $1M Each Over Blue Sheet Data

The Financial Industry Regulatory Authority has issued a censure that fines Goldman Sachs & Co. (GS), Merrill Lynch, Pierce Fenner & Smith Inc., and Barclays Capital Inc. $1 million each. The firms are accused of not submitting accurate and complete data about trades conducted by them and their customers to the SRO and other regulators. This information is known as “blue sheet” data. Firms are legally required to give regulators this information upon request.

Blue sheets give regulators specific information about trades, including the name of a security, the price, the day it was traded, who was involved, and the size of transaction. This information is helpful to identify anomalies in trading and look into possible market manipulations.

The three firms, which all have a prior history of submitting inaccurate blue sheet data, settled the charges without denying or admitting to the allegations. Meantime, FINRA has also put out a complaint against Wedbush Inc. also over submitting inaccurate blue sheet information. That case, however, has not been adjudicated yet.


FINRA Gives the Public Access to Dark Pool Data
To enhance market transparency and boost investor confidence, this week FINRA started providing data about the activity levels in all of the different alternative trading systems. This includes information pertaining to dark pools.

Currently, ATSs are involved in a significant chunk of OTC trading in exchange-listed equities located in the US. Although trades in ATSs have been available in real time to professionals and investors via securities information processors, they are not typically attributed to specific dark pools.

The newly available data should allow the public to see how many shares were traded each week in each dark pool. The information can be found on FINRA’s website and is free.

Meantime, as our stockbroker fraud law firm reported in another blog post, the Securities and Exchange Commission is also seeking to make dark pool venues more transparent.

Shepherd Smith Edwards and Kantas, LTD LLP represents investors in arbitration and in court. Contact us to find out whether you have reason to pursue a securities claim. Your consultation with one of our FINRA arbitration lawyers is free.


FINRA Fines Barclays Capital, Goldman Sachs and Merrill Lynch $1 Million Each for Submitting Inaccurate Blue Sheet Data, FINRA, June 4, 2014

FINRA Makes Dark Pool Data Available Free to the Investing Public, FINRA, June 2, 2014

User Agreement, ATS Transparency Data, FINRA


More Blog Posts:
Bank of America Could Settle Mortgage Probes for $12B, Institutional Investor Securities Blog, June 7, 2014

SEC Charges Chicago Investment Advisory Founder With Real Estate Investment Fraud
, Institutional Investor Securities Blog, June 11, 2014

In Alleged $400M Texas Securities Fraud, Medical Device Maker Pays Over $30M Settlement, Stockbroker Fraud Blog, January 13, 2014

May 5, 2014

FINRA Panel Tells Ameriprise to Pay Elderly Couple $1.7M Over Unsuitable Real Estate Investments

A Financial Industry Arbitration panel says that Ameriprise Financial Services Inc. (AMP) must pay $1.17M to two senior investors for getting them involved in investments that failed. The panel said that the financial firm acted inappropriately when it advised Albertus Niehuis Jr., 82, and his wife Andrea, to put $1.03M into high-risk tenant-in-common investments involving hotels and office complexes six years ago. They are retired school teachers.

One of the investments failed. The other two lost significant value. Despite the ruling, the financial firm insists that it gave the Niehuises the appropriate investment advice and it stands behind the recommendations.

In 2012, ThinkAdvisor.com said that the number of senior investors is expected to reach 89 million in 2050. Currently, there are close to 40 million Americans belonging to the age 65 and over group. Unfortunately, elder financial fraud continues to be a serious problem.

Just recently, broker Michael Zuno Zuniga received a 5-year prison term and was told to pay $1.2 million for taking part in a Ponzi scam that targeted seniors living in the Los Angeles, California area. He was charged with 57 felony counts and accused of bilking at least 18 investors, most of them Latinos, of about $1.5 million. Zuniga reportedly solicited his victims in their homes.

Financial firms and their representatives know that older investors sometimes can’t afford to take on as much risk as younger investors. It is the broker’s job to make sure that they make the appropriate investment recommendations to protect their clients’ money.

Many elderly investors will not be bringing in more income and they will need the money they do have to take care of them for the rest of their lives. Huge investment losses can be devastating, possibly making it hard for them to get the proper medical and nursing care they might need later in life.

At Shepherd Smith Edwards and Kantas, LTD LLP, we are here to help senior investors get their fraud losses back. Contact our senior investor fraud lawyers today.

Finra panel orders Ameriprise to pay couple $1.17 million, InvestmentNews, May 5, 2014

Best Practices for Working with Senior Investors, Think Advisor

Broker sentenced for $1.5 million Ponzi scam targeting Latino seniors, IFAWebnews.com, April 29, 2014


More Blog Posts:
SEC Files Fraud Charges Against American Pension Services and Its Founder Over $22M Investor Losses, Stockbroker Fraud Blog, April 30, 2014

Elder Financial Fraud: One Out of Five Seniors Victimized, Reports WSJ, Stockbroker Fraud Blog, January 20, 2014

The Brokerage Industry Responds to FINRA’s Broker Compensation Proposal
, Institutional Investor Securities Blog, April 4, 2014