Caldwell International Securities Gets $2M Fine to Settle Churning Allegations
The Financial Industry Regulatory Authority has imposed a $2M fine on Caldwell International Securities Corp. It is fining Greg Caldwell, who is the principal of the financial firm, $50K. He is now barred from serving as a principal in the securities industry.
FINRA contends that supervisory failures is what allowed Caldwell International Securities’ brokers to allegedly engage in churning. This involves a trader taking part in excessive trading to make the most in commissions possible. The self-regulatory organization said that the firm’s failures caused fifteen clients to pay over $1M in commissions and fees on investment recommendations that were not appropriate for them.
FINRA believes the firm grew too fast and that this was one of the reasons its inadequate supervisory system was purportedly inadequate. The SRO said that it was this lack of proper supervision that made it possible for advisors to make unsuitable investment recommendations.
The regulator said that even after customers complained, Caldwell and other senior employees did not remedy this matter. In 2015, ex-Caldwell registered representative Richard Adams was barred by FINRA. The regulator claimed that Adams made $57K in commissions while clients sustained $3K in losses because of overtrading that took place in two customer accounts.
Alabama Attorney is Accused of Defrauding Professional Athletes, Other Investors Of Over $6M
The U.S. Securities and Exchange Commission is charging Donald Watkins and his companies with fraud. According to the regulator, the Alabama lawyer and his Masada Resource Group LLC and Watkins Pencour LLC bilked investors, including professional athletes, out of more than $6M in supposed waste-to-energy ventures.
The SEC complaint said that the defendants made the false claim that an international waste treatment company was considering acquiring Watkins’ two companies and their affiliated companies in a multi-billion dollar deal. In reality, said the regulator, Waste Management Inc. only had a brief first meeting with the defendants in 2012. This was over a year after the defendants started telling investors that talks were moving forward and an acquisition was going to happen.
Investors who were targeted included professional basketball and football players. They were allegedly told that some of their money would go toward funding Masada Ventures and Masada and that they would get a percentage of the profits. Instead, a significant chunk of the money went toward Watkins’ personal spending and expenses and debts related to Masada.
Green Technology Company is Accused of Investor Fraud
The SEC claims that Enviro Board Corporation, a green technology company, and two of its executives bilked investors when raising about $6M from them. The Commission said that the company and its co-CEOs/chairmen William Peiffer and Glenn Campbell used financial projections with no basis and misleading statements to predict company earnings of $18M – $95M annually. The investors had put their money in a venture that was supposed to make building materials that were environmentally friendly.
Enviro Board told them that its green materials had been used previously in commercial and construction projects even though they never developed a mill that was commercially viable to make the goods. They also claimed that they had obtained $161M in financing from a vendor, which was actually an entity set up by Peiffer. The entity didn’t have the means to issue that type of loan.
The two men and salesperson Joshua Mosshart are accused of paying themselves about $2.6M from investors’ money. The SEC is charging Mosshart with unregistered securities sales and working as an unregistered broker.
Caldwell International Securities will pay $2 million in settlement over churning, Finra says, InvestmentNews, August 30, 2016