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Archive for November 2011

Nov/11

16

FINRA Fines JPMorgan Unit $1.7M for Putting Conservative Clients in Unsuitable Investments

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 In a November 15th., 2011, Bloomberg Businessweek article they write that a unit of JPMorgan Chase & Co. was ordered to reimburse investment customers more than $1.9 million and was fined $1.7 million over how it sold unit investment trusts and floating-rate loan funds.

FINRA, the Financial Industry Regulatory Authority announced the settlement on Tuesday after its investigators found that brokers with Chase Investment Services Corp. made purchase recommendations to investors who weren’t suited to the complex investments. The securities industry’s self-regulatory body, FINRA, said that the products were pitched to “unsophisticated customers with little or no investment experience and conservative risk tolerances.”

The Bloomberg article goes on to say that FINRA also faulted Chase’s supervisory procedures to monitor sales of UITs and floating-rate loan funds. Chase did not provide brokers with sufficient training and guidance regarding the risks and suitability of UITs and floating-rate funds.

A UIT is decribed as an investment in baskets of diversified securities which can include high-yield bonds. That category, also known as junk bonds, can earn investors greater returns than investment-grade bonds, but junk bonds also are more volatile, with a higher risk of loss.

The description of floating-rate loan funds are mutual funds that invest in short-term bank loans made to companies whose credit is rated below investment grade. The income that investors receive adjusts with changes in the interest rate that banks charge on the loans.

The Bloomberg article says that Chase brokers made almost 260 unsuitable recommendations to purchase UITs to customers, FINRA said. Those customers suffered losses of about $1.4 million as a result of their purchases.

FINRA said the floating-rate loan funds that Chase sold were subject to significant credit risks, and some were invested in assets that could not easily be sold and converted to cash. Customers suffered losses of nearly $500,000 as a result of Chase’s recommendations, FINRA said.

In concluding the settlement, Chase neither admitted nor denied the findings, but consented to them, FINRA said.

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced losses through JP Morgan Case & Co., or Chase Investment Services Corp., 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

15

Another FINRA Action Taken Against Raymond James, St. Petersburg, FL

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Raymond James & Associates, Inc. (CRD #705, St. Petersburg, Florida)
 
submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured, fined $12,500 and ordered to pay $1,849.33, plus interest, in restitution to investors.
 
Also, without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it failed to execute orders fully and promptly, and in many of these transactions for or with a customer, it failed to use reasonable diligence to ascertain the best inter-dealer market, and failed to buy or sell in such market so that the resultant price to its customer was as favorable as possible under prevailing market conditions. (FINRA Case #2009017657001)
 

This information appeared on FINRA’s website under ‘Disciplinary Actions.’

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced  losses through Raymond James & Associates, Inc., St. Petersburg, 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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Nov/11

15

Raymond James & Associates, St. Petersburg, FL, Censured and Fined by FINRA

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Raymond James & Associates, Inc. (CRD #705, St. Petersburg, Florida) submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $15,000. Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it failed to transmit ROEs ( Return On Equity ) concerning orders to OATS (Order Audit Trail System ) for over two years. (FINRA Case #2009016867701)
 

This information appeared on FINRA’s website under ‘Disciplinary Actions.’

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced a loss through Raymond James & Associates, Inc., St. Petersburg, 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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Nov/11

15

Newbridge Securities, Ft. Lauderdale, FL, Finded by FINRA

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Newbridge Securities Corporation (CRD #104065, Fort Lauderdale, Florida)
 
submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $20,000.
 
Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it failed to provide material information to customers by negligently permitting its registered representatives to sell securities in private placement offerings to customers using private placement memoranda that omitted material facts. (FINRA Case #2010021106101)
 

This information appeared on FINRA’s website under ‘Disciplinary Actions.’

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, 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

15

FINRA Takes Actions Against Brookstone Securities, Inc., of Lakeland FL and Three of It’s Representative

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Brookstone Securities, Inc. (CRD® #13366, Lakeland, Florida), David William Locy (CRD #4682865, Registered Principal, Overland Park, Kansas), Mark Mather Mercier (CRD #1884246, Registered Principal, Lutz, Florida) and Antony Lee Turbeville (CRD #1721014, Registered Principal, Lakeland, Florida)

submitted Offers of Settlement in which the firm was censured and fined $200,000; Locy was fined $10,000 and suspended from association with any FINRA member in any principal capacity for three months, Mercier was fined $5,000 and suspended from association with any FINRA member in any principal capacity for three months, and Turbeville was fined $10,000 and suspended from association with any FINRA member in any principal capacity for three months. Mercier’s fine must be paid either immediately upon his reassociation with a FINRA member firm following his suspension, or prior to the filing of any application or request for relief from any statutory disqualification, whichever is earlier.

Without admitting or denying the allegations, the respondents consented to the described sanctions and to the entry of findings that registered representatives, while associated with the firm, made misrepresentations or omissions of material fact to purchasers of unsecured bridge notes and warrants to purchase common stock of a successor company.

 These findings stated that the registered representatives guaranteed customers that they would receive back their principal investment plus returns, failed to inform investors of any risks associated with the investments and did not discuss the risks outlined in the private placement memorandum (PPM) that could result in them losing their entire investment.

These registered representatives had no reasonable basis for the guarantees given the description of the placement agent’s limited role in the PPM. The findings further stated that the registered representatives provided unwarranted price predictions to customers regarding the future price of common stock for which the warrants would be exchangeable and guaranteed the payment at maturity of promissory notes, which led customers to believe that funds raised by the sale of the anticipated private placement would be held in escrow for redemption of the promissory notes. The findings also stated that the firm, acting through a registered representative, made misrepresentations and/or omissions of material fact to customers in connection with the sale of the private placement of firm units consisting of Class B common stock and warrants to purchase Class A common stock; the PPM stated that the investment was speculative, involving a high degree of risk and was only suitable for persons who could risk losing their entire investment.

These findings also included that the representative represented to customers that he would invest their funds in another private placement and in direct contradiction, invested the funds in the firm private placement.

2 Disciplinary and Other FINRA Actions
 
FINRA found that the representatives recommended and effected the sale of these securities without having a reasonable basis to believe that the transactions were suitable given the customers’ financial circumstances and conditions, and their investment objectives. FINRA also found that the representative recommended customers use margin in their accounts, which was unsuitable given their risk tolerance and investment objectives, and he exercised discretion without prior written authorization in customers’ accounts.
 
Additionally, FINRA determined that the firm, acting through Locy, its chief operating officer (COO) and president, failed to reasonably supervise the registered representative and failed to follow up on “red flags” that should have alerted him to the need to investigate the representative’s sales practices and determine whether trading restrictions, heightened supervision or discipline were warranted.  FINRA found that despite numerous red flags, the firm took no steps to contact customers or place the representative on heightened supervision, although it later placed limits only on the representative’s use of margin. The firm eventually suspended his trading authority after additional large margin calls, and Locy failed to ensure that the representative was making accurate representations and suitable recommendations.
 
Also, FINRA found that Turbeville, the firm’s chief executive officer (CEO), and Locy delegated responsibility to Mercier, the firm’s chief compliance officer (CCO), to conduct due diligence on a company and were aware of red flags regarding its offering but did not take steps to investigate. The findings also stated that the firm, acting through Turbeville, Locy and Mercier, failed to establish, maintain and enforce supervisory procedures reasonably designed to prevent violations of NASD Rule 2310 regarding suitability; under the firm’s written supervisory procedures (WSPs), Mercier was responsible for ensuring the offering complied with due diligence requirements but performed only a superficial review and failed to complete the steps required by the WSPs; Locy never evaluated the company’s financial situation and was unsure if a certified public accountant (CPA) audited the financials, and no one visited the company’s facility.
 
These findings also included that neither Turbeville nor Locy took any steps to ensure Mercier had completed the due diligence process.
FINRA found that Turbeville and Locy created the firm’s deficient supervisory system; the firm’s procedures were inadequate to prevent and detect unsuitable recommendations resulting from excessive trading, excessive use of margin and over-concentration; principals did not review trades or correspondence; and the firm’s new account application process was flawed because a reviewing principal was unable to obtain an accurate picture of customers’ financial status, investment objectives and investment history when reviewing a transaction for suitability. FINRA also found that the firm’s procedures failed to identify specific reports that its compliance department was to review and did not provide guidance on the actions or analysis that should occur in response to the reports; Turbeville and Locy knew, or should have known, of the compliance department’s limited reviews, but neither of them took steps to address the inadequate system.
 
Mercier’s suspension is in effect from October 3, 2011, through January 2, 2012. Locy’s and Turbeville’s suspensions are in effect from October 17, 2011, through January 16, 2012. (FINRA Case #2009017275301)

This information appeared on FINRA’s website under ‘Disciplinary Actions.’

Securities Attorney, Lars Soreide, of Soreide Law, PLLC, has represented clients nationwide. If you or a family member have experienced a loss through Brookstone Securities, Inc., David William Locy, Mark Mather Mercier, or Antony Lee Turbeville, 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

15

Raymond James & Associates, Inc. and Raymond James Financial Services, Inc. Ordered by FINRA to Pay $1.69 Million in Restitution

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Recently, the Financial Industry Regulatory Authority (FINRA) ordered Raymond James & Associates, Inc. (RJA) and Raymond James Financial Services, Inc. (RJFS) to pay restitution of $1.69 million to more than 15,500 investors who were charged unfair and unreasonable commissions on securities transactions. FINRA also fined RJA $225,000 and RJFS $200,000.
 
FINRA found that from Jan. 1, 2006, to Oct. 31, 2010, RJA and RJFS used automated commission schedules for equity transactions that charged more than15,500 customers nearly $1.69 million in excessive commissions on over 27,000 transactions involving, in most instances, low-priced securities. The firms’ supervisory systems were inadequate because the firms established inflated schedules and rates without proper consideration of the factors necessary to determine the fairness of the commissions, including the type of security and the size of the transaction.
 
According to Brad Bennett, FINRA Executive Vice President and Chief of Enforcement,  “Raymond James failed to adequately monitor its supervisory systems and as a result, both Raymond James & Associates and Raymond James Financial Services overcharged thousands of customers on their securities transactions. Broker-dealers must ensure that their automated systems set commission charges that are fair to investors.”
 
FINRA required the firms to revise their automated commission schedules to conform to the requirements of the Fair Prices and Commissions Rule. In addition to requiring RJA and RJFS to repay approximately $1.69 million in overcharges, each firm is required to calculate and repay additional overcharges from Nov. 1, 2010, through the date that each firm revised its schedule.
 
Additionally, in settling these matters, RJA and RJFS neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
 
This information was obtained from FINRA’s website.

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member experienced losses with Raymond James & Associates, Inc. (RJA), or Raymond James Financial Services, Inc. (RJFS), 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

15

FINRA Complaint Filed Against Andrew Arno, West Melbourne FL

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Andrew Paul Arno (CRD #2643104, Registered Representative, West Melbourne, Florida) was named as a respondent in a FINRA complaint alleging that he misused customers’ funds by depositing them into a bank account that he controlled instead of investing them in IRAs as he had represented to the customers and their relatives. The complaint alleges that Arno failed to respond to a FINRA request for information and failed to appear for testimony. (FINRA Case #2010023480801)
 
This information was obtained from FINRA’s website, under ‘Disciplinary Actions.’

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member sustained a loss through broker Andrew Arno, 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

15

Florida Broker, Dale Twardowski, Barred by FINRA

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Dale David Twardowski (CRD #4056379, Registered Principal, Palm Harbor, Florida) submitted an Offer of Settlement in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the allegations, Twardowski consented to the described sanction and to the entry of findings that he failed to respond to FINRA requests for documents and information, and failed to appear for and provide testimony. (FINRA Case #2009020936801)
 
This information was obtained from FINRA’s website, ‘Disciplinary Actions.’

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member sustained a loss through Dale Twardowski, 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

10

U.S. Attorney Charges Massachusetts-Based Hedge Fund Manager with Fraud

Comments off · Posted by Securities Lawyer in FINRA

On the SEC’s website we learn that the Securities and Exchange Commission announced the U.S. Attorney for the District of Massachusetts has charged Andrey C. Hicks of Boston, Mass., in a criminal complaint unsealed on Friday, October 28, 2011. Hicks was charged with committing wire fraud, attempting to commit wire fraud, and aiding and abetting wire fraud, in violation of 18 U.S.C. Sections 1343, 1349, and 2.

The article states that on October 26, 2011, the SEC filed an emergency enforcement action charging Hicks and Locust Offshore Management, LLC, his investment advisory firm, with fraud in connection with misleading prospective investors about their supposed quantitative hedge fund and diverting investor money to the money manager’s personal bank account. The SEC alleges in its complaint that Hicks and his advisory firm made misrepresentations about his education, work experience, and the hedge fund’s auditor, prime broker/custodian, and corporate status when soliciting individuals to invest in the purported hedge fund, called Locust Offshore Fund, Ltd. By making these representations and creating other indicia of legitimacy, the SEC alleged that Hicks may have obtained at least $1.7 million from 10 investors and may have misappropriated at least a portion of these funds for personal expenses. In the Commission’s action, the U.S. District Court in Massachusetts issued a temporary restraining order on October 26 that, among other things, freezes the assets of the money manager, his advisory firm, and the hedge fund. On October 28, 2011, the Court converted the temporary restraining order into a preliminary injunction that will continue the asset freeze and other relief until further order of the Court.

This information was obtained on the SEC’s website.

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member experienced losses with Andrey C. Hicks or Locust Offshore Management, LLC., 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

10

SEC Sets New Record in Enforcement Actions on Advisers– up by nearly a third, B-Ds by 60%

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In an article for InvestmentNews.com, November 9th., 2011, Mark Schoeff Jr. writes that the Securities and Exchange Commission (SEC) engaged in an unprecedented crackdown on investment advisers over the last year, contributing to an overall surge in agency enforcement.

The SEC announced that it filed 146 enforcement actions against investment advisers and investment companies during the 2011 fiscal year, which ended Sept. 30. That number represents a 30% increase over the previous fiscal year and a nearly 200% increase since 2002, when the SEC filed 52 cases. The SEC took 112 enforcement actions against broker-dealers, a 60% boost from fiscal year 2010. Overall, the SEC filed 735 enforcement actions, also a record number. The cases resulted in disgorgements and penalties totaling $2.806 billion writes Schoeff.

The enforcement arm of the SEC can now more effectively pursue nefarious activities involving complex products and practices, such as those that contributed to the financial crisis, the agency asserts.

The InvestmentNews.com article states that the agency credited the increased activity to a reorganization of its Enforcement Division. The overhaul included reforming the tips and complaints process and establishing specialized units that allow the division to operate more like a prosecutor’s office.

“We continue to build an unmatched record of holding wrongdoers accountable and returning money to harmed investors,” SEC Chairman Mary Schapiro said in a statement.

SEC ‘s enforcement results release follows a similar announcement last month by the North American Securities Administrators Association Inc. The group said that state regulators reported a 51% increase in enforcement actions that led to $14.1 billion being returned to investors.

The SEC highlighted three investment adviser and broker dealer cases. One was an action against affiliates of The Charles Schwab Corp. for allegedly misleading investors about mutual funds that were laden with mortgage-backed securities. Another centered on AXA Rosenberg Group LLC and its founder, Barr Rosenberg, who was accused of papering over an error in an asset-management computer model. The third involved Merrill Lynch Pierce Fenner & Smith Inc.’s purportedly misusing customer information for proprietary trading and surreptitiously charging trading fees. The agency said that the Schwab paid more than $118 million to settle, while AXA Rosenberg ponied up $217 million for investor losses as well as a $25 million penalty.

The SEC also took 15 actions against executives involved in the financial crisis during fiscal year 2011. In the last two and a half years, the agency said, it has filed 36 separate actions against 81 defendants resulting in $1.97 billion in disgorgement.

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide. If you or a family member have sustained a loss through financial fraud, 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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