Former Stifel, Nicolaus Broker is Accused of Variable Annuity Violations
The Financial Industry Regulatory Authority has suspended an ex-Stifel, Nicolaus (SF) broker for four months over variable annuity transactions that he purportedly inappropriately recommended to certain investors. At the time of the alleged variable annuity fraud, James Keith Cox worked with Sterne, Agee & Leach. Stifel Financial later acquired that firm.
According to the regulator, Cox recommended a number of VA transactions even though there was no reasonable grounds for thinking they were appropriate for the investors. In addition to the suspension, Cox will disgorge the $25,460 he was paid in commissions.
FINRA Bars California Man From Industry Over $100M in Undisclosed EB-5 Investment Sales
A FINRA hearing panels has barred a California-based registered representative for taking part in private securities transactions involving $100M in EB-5 Investments that he failed to disclose to his employer financial firm. Jim Seol sold the EB-5 investments through his business Western Regional Center Incorporated.
Under FINRA rules and the policies of the member firm, Seol is required to not only disclose outside business activities but also get approval before conducting them. However, Seol contended that he did not think that the firm’s policies, which do not allow for outside securities transactions, applied to the solicitations he made through his company because he did not consider the limited partnership interests that he sold to be securities.
Seol founded his company in 2011 to promote US investments to investors abroad through the federal government’s EB-5 program. The program gives wealthy foreign investors a way to get a US visa in return for investing in projects that establish jobs in the United States.
By late 2013, the investment offering, which was in a solar energy power plant in California. was fully subscribed. 200 investors contributed $500K, arriving at the $100M total. Meantime, Seol’s company made $735K/year in management fees.
However, according to the FINRA hearing panel,on multiple occasions from ’12 to ’14, Seoul purposely hid his activities with Western Regional Incorporated from the financial firm employing him, including lying to both a supervisor and a compliance examiner when he told them that he was not engaged in any external business activities or “outside employment.” The panel determined that the limited partnership interests that Seol sold were, in fact, external securities transactions.
SEC Bars Ex-Investment Advisor Following Alleged Fiduciary Breaches Involving Senior Investors
The US Securities and Exchange Commission has barred Laurence Isaac Balter of Oracle Investment Research for multiple alleged breaches of fiduciary duty, as well as anti-fraud provision violations, involving financial advice he gave to elderly clients. The ex-registered investment adviser and fund manager, who managed over 100 accounts while at the firm, also must pay $550K.
Balter was the manager of the Oracle Mutual Fund. Most of his advisor clients were individual investors, a lot of whom were retired, close to retirement, or over the age of 60. Many of his investors did not have a lot of investment experience. The SEC said that Balter’s clients experienced significant harm as a result of his alleged onvestment adviser fraud.
The former investment adviser employed a buy-and-hold strategy for the majority of his clients, investing them mostly in the Oracle Mutual Fund and in large cap securities. Clients were usually charged at least a 1.5% yearly fee of assets under management. According to the regulator, Balter fraudulently allocated trades that were profitable to his accounts, falsely told clients who invested in the Oracle Mutual Fund that they wouldn’t be paying both fund management fees and advisory fees, and made trades that did not meet investment limitations.
Securities Fraud Cases
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The FINRA Hearing Panel Decision in the Case Against Seol (PDF)
Finra fines former Sterne Agee rep for VA violations, InvestmentNews, June 7, 2017 T
SEC Bars, Fines Advisor for Multiple Fiduciary Breaches, ThinkAdvisor, June 6, 2017