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Archive for November 2011

Nov/11

30

Due Diligence on Private-Placements Labeled ‘Sloppy’

Comments off · Posted by Securities Lawyer in FINRA

In a November 25, 2011, article in InvestNews.com, Bruce Kelly writes that broker-dealers who sold billions of dollars in allegedly fraudulent private placements failed massively in their due-diligence responsibilities to investors, according to the assessment of forensic accountant and expert witness Gordon Yale, who has worked on more than 50 legal claims brought by investors against broker-dealers stemming from the failed deals. The clients bought private placements issued by DBSI Inc., Medical Capital Financial Corp. and Shale (Provident) Royalties.

The Securities and Exchange Commission, SEC, had charged Medical Capital Financial and Provident Royalties with fraud in 2009; DBSI filed for bankruptcy protection in 2008.

Kelly writes that broker-dealers’ due diligence showed incredible “sloppiness,” according to Mr. Yale, a certified public account and principal of Yale & Co.

“It was basically the same recklessness with which major investment banks conducted their mortgage-backed-securities business, but it was done by middle- or lower-tier firms and [with] a different set of products. You need to understand the underlying business and management’s representations about the performance of that business, and then begin performing due-diligence procedures that are either going to corroborate those representations or not,” Mr. Yale said.

“Another failure was that everyone seemed to rely on the fact that [MedCap] payments had been made in a timely way,” he said.

THEY “PAY TILL THEY DON’T”

“The word was, “They’re paying.’ So what? That’s how all Ponzi schemes work. They pay till they don’t,” said Mr. Yale, who has served as an expert witness for a dozen different plaintiff’s lawyers in lawsuits stemming from more than $100 million in claims. The overwhelming majority were settled, and Mr. Yale testified in only one.

The investor won that claim last year, with an award of $1.2 million in damages and legal fees against Securities America Inc.and an affiliated broker.

The broker-dealers that sold $3.6 billion in MedCap notes, Shale Royalties preferred shares, and DBSI tenant-in-common exchanges, partnerships and notes have said that they performed appropriate due diligence. In several regulatory actions that involved fines or restitution to investors, the B-Ds neither admitted nor denied the findings. Regulators, however, recently have issued fines and sanctions that support Mr. Yale’s assertion.

The InvestmentNews.com article said that in September, for example, the Financial Industry Regulatory Authority Inc. levied a $10,000 fine and a six-month suspension against Brian Boppre, former president of Capital Financial Services Inc. Capital Financial was a leading seller of both Medical Capital Financial and Provident Royalties, and Mr. Boppre “knew of an issuer’s failure to make payments to its investors and was also aware of other indications of the issuer’s problems but approved the offering as a product available for the firm’s brokers to sell to their customers,” according to Finra. Mr. Boppre also “failed to conduct adequate due diligence of the offerings before allowing firm brokers to sell this security,” according to Finra.

WE ARE “SEEING A SHIFT’

One due-diligence executive said that broker-dealers have made some changes in the wake of the private-placement failures and are working more closely with third-party due- diligence analysts. “From an industry standpoint, we’re seeing a shift in trying to bring some standards as it relates to how these deals should be structured,” said Anthony J. Chereso, president of FactRight LLC.

“It’s an absolute necessity. There also needs to be some clarity as to what Finra and the regulators are expecting of the broker-dealers,” Mr. Chereso said. “We need to have the broker-dealers more involved in the process of managing the due diligence.”

“We encourage the broker-dealers to participate in the on-site visits [to companies issuing private placements] with us, to walk along with us in the due-diligence process. That way, they will know firsthand what some of the potential issues are,” said Yale.

After the SEC in July 2009 alleged that Medical Capital and its leading executives had committed fraud, executives with Securities America insisted that they performed “industry-leading” due diligence on private placements that they sold.

“It’s untrue, because basically what Securities America did, I believe, was to rely on management representations made by Medical Capital or rely on third-party due diligence that relied on management representations,” he said.

“Securities America continually enhances its policies and procedures in order to best serve its customers,” said Janine Wertheim, senior vice president and chief marketing officer of Securities America, who didn’t directly address Mr. Yale’s comments.

“One of the problems is that many of the firms relied on third-party due-diligence vendors,” Mr. Yale said.

“They viewed those reports as the end of the process, rather than the beginning. There’s a notice to [Finra] members, 05-48, that basically says you can outsource any function, but you can’t outsource your responsibility for compliance with federal securities laws or regulations,” Mr. Yale said.

“In many instances, the issuer paid those third-party due-diligence providers,” he said. “To believe that due-diligence functions stops with some independent — or purportedly independent — provider is a mistake.”

ACCOUNTANTS

To perform true due diligence, firms must use accountants to dig into the offering documents, Mr. Yale said.

“Why didn’t Securities America impose a third-party, independent CPA firm to verify the results of the [MedCap] loan pool histories? That was supposedly the primary business,” he said. “Or why didn’t they hire a CPA to look at the loan files? That’s state-of-the-art due diligence.”

“That’s what any private-equity firm would do and a whole lot more,” Mr. Yale said. “Neither Securities America nor any other firm whose documents I’ve seen ever did that.”

One third-party due-diligence analyst who wrote reports about Medical Capital Financial was “almost wringing his hands over Medical Capital investments in health-care-related businesses, particularly owner-occupied real estate,” Mr. Yale said.

The analyst, whom Mr. Yale declined to identify, “stated in his reports that this was not their expertise. The next-most-obvious question is: What did the financial statement say about those investments, and how are they performing?” he asked.

“So you need to go look at the investments that are disclosed in the footnotes to the financial statements, and you see a bunch of them are delinquent. Where was the follow-up?” Mr. Yale said as written by Bruce Kelly for InvestmentNews.com.

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced losses with these or other stockbrokers/brokerages, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Nov/11

29

Next Financial Group, Inc., Ordered to Pay $2M to Clients Over Provident Royalties Private Placements

Comments off · Posted by Securities Lawyer in FINRA

In a November 28, 2011 article for InvestmentNews.com, Bruce Kelly writes that Next Financial Group, Inc. has agreed to pay $2 million in restitution to clients who bought oil and natural gas private placements of Provident Royalties LLC, which the Securities and Exchange Commission in 2009 accused of fraud.

In a Financial Industry Regulatory Authority Inc. letter of acceptance, waiver and consent, Next Financial sold $20 million of three separate Provident private placements from July 2008 to January 2009. Over that time, the firm’s due diligence was lacking, according to the Finra.

“Despite the fact that Next received a specific fee related to the due diligence that was purportedly performed in connection with each offering, beyond reviewing the private-placement memorandum for the offerings, [Steven Nelson, vice president of investment products and services] did not perform adequate due diligence on the [Provident] offerings,” according to the AWC, which was finalized last month.

Next Financial reported $136.1 million in gross revenue last year and has 866 affiliated reps and advisers, writes Kelly.

Next Financial and Mr. Nelson’s due diligence on Provident fell short in several areas, according to Finra. Mr. Nelson “did not travel to Provident’s headquarters in Texas to conduct due diligence on three separate offerings,” according to the AWC. He also “did not see any financial information regarding Provident Royalties, other than the information contained in the private-placement memorandum. Further, once [Mr.] Nelson had concluded that Next could sell [the three offerings], he did not conduct adequate continuing due diligence.”

The InvestmentNews.com article adds that outside due-diligence reports highlighted a number of red flags of the Provident offerings, and Mr. Nelson “should have scrutinized each of the [Provident] offerings, given the purported high rate of returns,” according to the AWC.

Next Fincancial’s $2 million in restitution to investors is part of a larger case brought by the receiver for Provident in federal court in Dallas. While at least 20 broker-dealers that sold Provident private placements have shut down or declared bankruptcy, others, now including Next Financial, have had the funds to pay the claims and remain open for business. About 50 broker-dealers in total sold Provident, which raised $485 million from 7,700 investors from 2006 to 2009.

Finra censured and fined Next $50,000, and fined Mr. Nelson $10,000 and suspended him as a principal for six months. Next Financial also failed to supervise adequately a registered rep’s sale of fraudulent life settlement products from 2007 to 2009, according to the AWC. The rep, who was not identified, sold $3.5 million in life settlement contracts to 35 clients.

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced losses with Next Financial Group, Inc., call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Nov/11

29

LPL Financial Fined for ‘Oversights’ Involving Elderly Clients

Comments off · Posted by Securities Lawyer in FINRA

In a November 23, 2011, article in FA Magazine, Karen DeMasters writes that LPL Financial has been fined $100,000 for failing to properly oversee one of its brokers in Oregon who sold risky investments to people, many of them elderly and without the mental capacity to make investment decisions.

It was reported that the Oregon Division of Financial and Corporate Securities says LPL Financial, a division of LPL Investment Holdings Inc., has since improved it oversight procedures.

This fine stemmed from the actions of Jack Kleck, branch manager for LPL Financial in La Grande, Ore., who sold investments in high-risk oil and gas partnerships to nearly three dozen Oregon residents. Many of the investors were elderly and the investments were not suitable for the clientele, given their age and investment objectives, the division says.

The Oregon division found LPL Financial violated securities laws, including failing to diligently supervise the actions of its broker and failing to ensure company policies and procedures were enforced.

Jack Kleck’s securities license was revoked in 2007, barring him from doing business in Oregon, and a subsequent investigation led to the fine against LPL, says Melanie Mesaros, division spokeswoman. Kleck was fined $30,000. Many of Kleck’s clients were in their seventies and eighties and some were not capable, due to poor health, of making sound investment decisions, the division says.

“This case underscores the importance of investing with individuals and firms licensed by the state of Oregon,” says David Tatman, division administrator. “The state examines licensed brokerage firms and the division will take appropriate action against firms that do not comply with the law.”

DeMasters writes that LPL has taken numerous steps to improve its compliance and supervisory practices, the Oregon division says. The company has increased the number of employees devoted to compliance and supervision related functions, increased
its pre-sale review of transactions and enhanced branch office examinations.

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced losses with LPL Financial or Jack Kleck, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Nov/11

18

Laidlaw & Co. Miami Broker Accused of Elder Abuse

Comments off · Posted by Securities Lawyer in FINRA

An article appeared in the About.com Guide, written by Julie Garber regarding a Miami broker and elder abuse.  She wrote that recently a Miami news station reported on the elder abuse case of Josephine Troisi, age 93, and her sister, Mary Teris, age 95. A few years ago the sisters, who live together in Hollywood, Florida, hired 48-year old Cynthia Franke, a financial advisor with Laidlaw & Co., and 46 year-old Tyrone Javellana, a CPA and officer of a company named the Estate Planning Group, to assist the sisters with their finances. But last year Troisi’s 69-year old son, John Troisi, contacted Hollywood police when he noticed unusual activity in his mother’s checking account that was tied to Laidlaw & Co., the Estate Planning Group, and both Franke and Javellana personally.

Garber writes that after several months of digging, Hollywood police found that not only had thousand of dollars been transferred from Troisi and Teris to Franke, Javellana, and their respective companies, but John Troisi had been replaced by Javellana in a Power of Attorney and Franke had been named as a beneficiary of a trust that had been set up by Teris. When asked why she named Franke as a beneficiary of her trust, Teris said that she didn’t understand the “full implications” of doing so and it was not what she wanted.

According to Hollywood Police Lt. Scott Pardon, “What both [Franke and Javellana] did was use their relationship as a stockbroker and accountant to gain their trust. They began drawing off their account to enrich themselves without the victims permission.” Franke and Javellana have been charged with elderly exploitation.

Laidlaw allegedly failed to supervise Cynthia ‘Cinder’ Franke properly, allowing Franke to abuse elder investors. Brokers also are prohibited from recommending securities that are unsuitable for the investor. Unsuitable investments can include those securities that involve more risk than the customer is willing or able to withstand, as in this case.

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced losses with broker Cynthia ‘Cinder’ Franke of Laidlaw & Company, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

 

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Nov/11

18

Jefferson County’s Bankruptcy Is A Blow to Birmingham

Comments off · Posted by Securities Lawyer in FINRA

In a Nov. 11, 2011 article from Bloomberg, we learn that  Birmingham, Alabama, once, the most prominent industrial center in the Southeast has been on a long losing streak that just got longer.

Daimler AG opened a Mercedes-Benz factory in Vance, in 1997,one county west of the state’s biggest city. Honda Motor Co. put a plant to the east, Toyota Motor Corp. to the north and Hyundai Motor Co. to the south. Birmingham lost its minor-league baseball team to a suburb in 1987, and the Iron Bowl football game in 2000. Plans for an entertainment district foundered. The city’s population plummeted almost 13 percent since 2000, even as the state grew.

The Bloomberg article goes on to say that Birmingham is also the seat of Jefferson County, which filed the largest municipal bankruptcy in U.S. history under the burden of more than $3 billion of sewer-system debt. The so- called Magic City may need a big trick to persuade residents and businesses that its days of losing are over.

“I hate that we filed for bankruptcy — it’s that whole continuation-of-a-stigma thing,” Steve Mitchell, a 52-year-old Alabama native who works in health-care banking, said at a downtown food court. “There’s this negative connotation, and we’ll be viewed that way.” Birmingham was once a manufacturing center.

Over the ensuing years, its steel-making industry withered and its housing and infrastructure decayed. In 2010, the city had a population of 212,237, down 12.8 percent since 2000, according to the U.S. Census Bureau. Jefferson County, which encompasses 33 municipalities, had 658,460 people.

The slide to bankruptcy began in 1996, when the county was forced to rebuild its sewer system after pollution was found spewing into rivers. Risky derivative financing for the project backfired beginning in early 2008, leading the county to become one of the biggest casualties of Wall Street’s credit crisis. Birmingham’s mayor said he knows he must pull his city out of Jefferson County’s shadow.

“We are a separate entity,” Mayor William Bell, a former county commissioner who took office in January 2010, told reporters yesterday. Birmingham’s “financial status is very sound. We have more than enough money to carry out our day-to- day operations.”

Birmingham, with 4,160 employees and a $371 million general-fund budget for 2011, carries Moody’s Investors Service’s third-highest bond rating at Aa2.

Jefferson County’s bonds are rated 14 levels lower: Caa1, below investment grade.

Jefferson County’s revenue in the fiscal year that ended in September totaled $152.5 million, down from $207.2 million the previous year. The county has cut about 450 positions since June to bring the workforce to 2,687 employees. More cuts are coming next month, Commission President David Carrington has said.

Mayor Bell said he’ll meet with heads of businesses beginning next week to clarify the city’s financial standing and to distance it from the bankrupt county.

Birmingham’s companies have struggled along with the region. City-based firms compose almost 90 percent of the Bloomberg Economic Evaluation of States’ Alabama stock index based on market capitalization. So far this year, the index has fallen about 24 percent, compared with about 1 percent for the Standard & Poor’s 500.

Residents are torn as to what bankruptcy will mean.

“It’s a sad day for Birmingham and for Jefferson County,” said Sophia Faulk, owner of Sophia’s Deli and Catering across the street from the county’s offices. “I’ve never seen people so unhappy.”

Hilson of the Business Alliance said the city, which has weathered so much, will outlast this storm.

“All of the positive attributes of the community in time will overshadow what has happened and is happening now, but that’s going to take some time,” he said. “It’s certainly not going to be an overnight fix.”

Bond problems

A deal with the county’s creditors in September,  including JPMorgan Chase, saw lenders agree to forgive about $1bn in debt, with the county refinancing another $2bn, and a series of sewer rate increases.

The negotiations ended some $140m short as terms of the deal shifted, increasing the repayment amount from $2.05bn to $2.19bn.

Jefferson’s mounting debt issues were brought on by a combination of increasing interest rates on bonds, turbulency in the derivatives market and corruption among local government officials.

At least 21 people, including four former county commissioners, have been convicted or pleaded guilty to corruption-related charges in connection with the sewer’s construction and bond financing, according to Bloomberg News.

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced losses with  Jefferson County Bonds, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Nov/11

18

E*Trade Value Falls Most in S&P 500 After Rejecting Sale of Company

Comments off · Posted by Securities Lawyer in FINRA

In a Bloomberg article from Nov. 11, 2011 they write that E*Trade Financial Corp., the fourth- largest U.S. online brokerage by client assets, dropped the most in the Standard & Poor’s 500 Index after the board rejected putting the company up for sale.

It was reported that E*Trade declined 3.6 percent to $9.14 at 11:58 a.m. New York time on Nov. 11th. Before then, the shares dropped 41 percent in 2011, more than its bigger rivals Charles Schwab Corp. and TD Ameritrade Holding Corp.

“A strong desire to sell was never present at E*Trade and if any offers were in fact on thetable, they were not compelling enough to change that fact,” Patrick O’Shaughnessy, a Chicago-based analyst at Raymond James & Associates Inc., said in a report today. “In our view, the pool of potential buyers is and always has been relatively small.”

The brokerage hired Morgan Stanley in July to explore a sale and then replaced the bank with Goldman Sachs Group Inc. E*Trade, based in New York, initiated the review following a request by Citadel LLC, its biggest shareholder, to address “catastrophic losses” that have driven the shares down 96 percent since 2007. Citadel injected $2.55 billion in cash into E*Trade that year to help the company survive mortgage losses.

The board concluded that “the continued execution of the company’s business plan is currently the best alternative for increasing stockholder value,” E*Trade said in a statement Nov. 9th.

No Meeting

Devon Spurgeon, a spokeswoman for Citadel, declined to comment on E*Trade’s announcement. Ken Griffin’s Chicago-based hedge fund asked E*Trade on July 20 to arrange a meeting for shareholders to vote on items such as hiring an investment bank and removing two directors. E*Trade, which fired Morgan Stanley in August after Citadel challenged the hiring process, rejected hosting a meeting, and instead began the strategic review.

The company has posted more than $3 billion of losses related to bad mortgages following the collapse of the subprime market. Griffin joined the board in June 2009, two years after Citadel invested in the online brokerage. The hedge fund cut its stake to less than 10 percent this year.

E*Trade is “basically saying they haven’t been able to reach an agreement with a peer,” Sachin Shah, a Jersey City, New Jersey-based merger arbitrage strategist at Tullett Prebon Plc, said in a telephone interview yesterday. “Now the question is: What is Citadel going to do?”

The article says that Charles Schwab and TD Ameritrade were the most likely buyers, Raymond James and Sandler O’Neill & Partners LP said in July. Acquiring E*Trade would require a buyer to take on the company’s “legacy loan portfolio,” which should be valued about $1.3 billion less than than the figure on E*Trade’s financial statements, O’Shaughnessy said today.

‘Significant Writedown’

“This would necessitate a significant writedown, potentially leading to a corresponding need to raise capital, which could in turn severely dampen the price any potential buyer would be willing to pay,” he wrote today.

Charles Schwab Chief Executive Officer Walt Bettinger said on Oct. 26 that he wasn’t willing to buy corporations with “balance sheet challenges,” without naming any companies.

Bloomberg reports that in the online brokerage business, E*Trade has been reporting growth. The company’s revenue-generating trades climbed to 164,715 per day on average last quarter, up 11 percent from the previous three months and 30 percent higher than a year ago. E*Trade added $2.1 billion in net new client assets in the quarter ending Sept. 30, an increase from both the second quarter’s $1.1 billion and the third quarter of 2010, when $700 million in client assets were added.

“They’re continuing with their fundamental game plan and it’s difficult to find a buyer,” Brian Bedell, a New York-based analyst with ISI Group Inc., said in a telephone interview yesterday. “The best thing for E*Trade is to continue to execute its plan, largely because the company continues to show reasonably good growth metrics.”

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced losses with an online brokerage, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Nov/11

17

Ongoing Investigations

Comments off · Posted by Securities Lawyer in FINRA

Soreide Law Group, PLLC, is currently investigating claims on behalf of investors in the following firms regarding stock/securities losses:

Laidlaw & Company, with locations throughout the United States and the UK,

First Midwest Securities, Inc. (FMSI) established in Wisconsin in 1989, FMSI has since relocated to Bloomington, Illinois,

Obsidian Financial Group, with offices in New York and New Jersey, and 

Triad Advisors, Inc., of Georgia.

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced losses with Laidlaw & Company, First Midwest Securities, Obsidian Financial Group,  or Triad Advisors, Inc., call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Nov/11

17

Did You Invest in Foresee Strategies Insurance Funds?

Comments off · Posted by Securities Lawyer in FINRA

Soreide Law Group, PLLC is currently investigating potential claims related to the Foresee Strategies Insurance Funds 3(c)(1) and 3(c)(7), which were offered via an annuity issued by Sun Life Financial and sold to investors by SagePoint Financial, Inc. and other securities brokerage firms.

Foresee Strategies Insurance Funds were part of the SALI Multi-Series Funds 3(c)(1) and 3(c)(7), L.P. The general partner of the Foresee Strategies Funds was SALI Fund Partners, LLC, and the Investment Manager was SALI Fund Management, LLC. 

On May 5, 2010, the Foresee Strategies Insurance Funds were closed after experiencing tremendous losses due to options trading on the S&P 500. Investors could have suffered losses of up to 100% of their investment.

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced losses through Foresee Strategies Insurance Funds, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Nov/11

17

Have you Experienced Losses with Joseph Fedorko, of Laidlaw & Company, Stamford, CT?

Comments off · Posted by Securities Lawyer in FINRA

Soreide Law Group, PLLC,  is currently investigating claims against Laidlaw & Company stock broker, Joseph Fedorko, Stamford, CT.  Joseph Fedorko, listed as “managing director” of Laidlaw & Company’s Stamford, CT, branch, has eight customer complaints on his record with three more pending complaints.  Joseph Fedorko has been with Laidlaw & Company since May, 2009.

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced losses through Laidlaw & Company, or broker Joseph Fedorko of Stamford, CT, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

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Nov/11

17

FINRA Fines Broward Brokerage and Censures Two Brokers

Comments off · Posted by Securities Lawyer in FINRA

In a November 16th., 2011, Sun-Sentinnel article, Donna Gehrke-White writes that a Ft. Lauderdale brokerage was fined $20,000, a Plantation broker was suspended for two years and a Coral Springs man was barred from working with any brokerage, according to November’s report on disciplinary action taken by FINRA, the private regulatory agency that oversee securities companies.

Newbridge Securities Corp. was censured and fined $20,000 by the Financial Industry Regulation Authority (FINRA) for failing to provide proper information to clients. Newbridge negligently permitted staff “to sell securities in private placement offerings to customers” without providing necessary facts, FINRA said. Newbridge consented to FINRA’s sanctions without admitting or denying its findings.

Frank A. Gutta of Plantation, agreed to a two-year suspension by FINRA without admitting or denying its findings. FINRA said he started a corporation to collect money to finance investments in various small businesses. Gutta ran the corporation for more than four years without telling the brokerage where he worked, according to FINRA. Gutta ended up selling $2.9 million in promissory notes for the company that he set up. His clients included customers from his employer, the brokerage. But it “did not sponsor or approve the promissory notes,” FINRA said.

The article states that FINRA also found Gutta recommended the promissory notes to a client “without having a reasonable basis to believe the investment was suitable for her; the customer invested a total of $235,000 in notes, which was inconsistent with her stated investment objective and risk tolerance.”  His suspension started Sept. 19 and is in effect until Sept. 18, 2013.

Michael Jefferson Harper, of Coral Springs was barred from working at a brokerage because he failed to respond in a timely manner to FINRA requests for information and failed to testify as the agency requested.

The SEC,  U.S. Securities and Exchange Commission, has empowered FINRA to police brokerages and brokers and to sanction companies that violate the regulator’s rules of doing business.

 

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced a loss through Newbridge Securities Corporation of Ft. Lauderdale, FL, Frank A. Gutta, Plantation, FL, or Michael J. Harper, Coral Springs, FL, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses. To speak with an attorney, call 888-760-6552, or visit www.securitieslawyer.com.

Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.

 

 

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