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TAG | SEC

Feb/13

8

FBI, SEC and FINRA Investigating Tommy Belesis’ Firm, John Thomas Financial

Comments off · Posted by Securities Lawyer in FINRA

In an article, Feb. 7, 2013, in the New York Post, it was reported that (broker-dealer owner), Anastasios “Tommy” Belesis’ firm, John Thomas Financial, is being investigated by the FBI, the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority Inc. (FINRA).

Mr. Belesis has made many media appearances on cable business/financial shows.

According to FINRA’s BrokerCheck, S.W. Bach & Co. fired him in 2005 for “inaccurate representation of identity to customer.” In 2001, a client sued him and a firm for $750,000 for churning and a FINRA arbitration panel later awarded the client $259,000. Mr. Belesis and firms he’s worked for have settled two other FINRA arbitration claims for nearly $100,000. Belesis paid $46,000 as his share of the settlements.

John Thomas’ FINRA record shows failures to disclose fees to clients about transaction charges. Arkansas Securities Department fined John Thomas $25,000 last year for allegedly not disclosing to clients handling fees for stock orders. The Connecticut Banking Department fined the firm $20,000 over similar failures on fee disclosures, and FINRA fined it $275,000 for “postage and handling” violations.

If you have been a client of Anastasios “Tommy” Belesis, and/or his firm, John Thomas Financial, and experienced financial losses call a securities lawyer at (888) 760-6552 or visit http://www.securitieslawyer.com.

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Jan/13

29

FINRA’s BrokerCheck May Soon Be Linked to Firm Websites

Comments off · Posted by Securities Lawyer in FINRA

The Financial Industry Regulatory Authority Inc., also known as FINRA, is proposing a new rule that would allow investors to access information about a financial advisor’s business and disciplinary history directly from the firm’s web page.

FINRA filed a regulatory notice in the Jan. 25 edition of the Federal Register. FINRA said the rule would require its broker-dealer members to include “a prominent description of and link to BrokerCheck on their websites, social-media pages and any comparable Internet presence.”

BrokerCheck contains information on brokers, including professional background, the type of practice they run and whether they have been disciplined by FINRA or other regulators. Under the new proposal, a broker or firm’s website would have a direct link to the broker’s or firm’s specific BrokerCheck page. Investors would be able to click and go right to those pages.

“FINRA believes that the proposed rule change would increase investor awareness and use of BrokerCheck, thereby helping investors make informed choices about the individuals and firms with which they conduct business,” the Federal Register notice stated.

This proposal responds to a January, 2011 study by the Securities and Exchange Commission (SEC), mandated by the Dodd-Frank financial reform law, that examined ways to increase investor access to BrokerCheck.

This proposal follows a recent FINRA proposal to make brokers disclose their compensation incentives when they move from one firm to another. This comes at a time when there is much confusion about how investment advisors and brokers can use websites, blogs and social media.

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, who represents clients nationwide before FINRA. For a free consultation with an attorney on how to potentially recover your losses, call 888-760-6552, or visit our website at: http://www.securitieslawyer.com.

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Dec/12

17

FINRA Broadens Suitability Rule

Comments off · Posted by Securities Lawyer in FINRA

FINRA, the Financial Industry Regulatory Authority, has eased up on a controversial interpretation of its new suitability rule in a move that is bound to make the industry happy writes Dan Jamieson in a recent artilce in InvestmentNews.com.

The new guidance issued December 10th., 2012, FINRA backtracked from an earlier interpretation of the rule, which said that people who were not customers, and investment strategies that did not involve securities, were covered under the suitability rule. But in the Regulatory Notice 12-55, Finra now says the rule applies only to customers who open an account or buy a product for which the brokerage firm receives compensation. Also, the new notice says the suitability rule does not apply to recommendations of non-security products made as part of an individual broker’s outside business activity writes Jamieson.

However, a firm’s “suitability analysis also must be informed by a general understanding of the non-security component of the recommended investment strategy,” FINRA said in it’s notice.

For example, independent registered representatives often sell insurance and engage in investment advisory activities outside of their broker-dealers, which brokerage firms must approve of and track under FINRA’s outside-business-activity rules. FINRA also said that its new suitability rule would generally not create a continuing duty to monitor an investment or strategy.

The InvestmentNews.com article adds that the new guidance was welcomed by industry lawyers, who have complained that the earlier guidance, issued in May, caught the industry by surprise.

FINRA spokeswoman Nancy Condon wrote that the self-regulator wanted to clarify “issues relating to who is considered a ‘customer’ and provide greater detail on what investment strategies are covered.”

Securities Lawyer, Lars Soreide, of Soreide Law Group, represents clients nationwide before FINRA. If you or a loved one have sustained investment losses due to your stock broker or financial advisor’s recommendations, call for a free consultation on how to potentially recover your losses through a FINRA arbitration. To speak with an attorney call 888-760-6552, or visit our website at: http://www.securitieslawyer.com.

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Dec/12

13

$42 Million Ponzi-Like Scheme Shut Down by SEC

Comments off · Posted by Securities Lawyer in FINRA

The Securities and Exchange Commission (SEC) announced that it obtained an emergency court order to halt an alleged Ponzi-like scheme operated by Small Business Capital Corp. and its principal Mark Feathers, who raised $42 million by selling securities issued by Investors Prime Fund LLC and SBC Portfolio Fund LLC – two mortgage investment funds they controlled.

The SEC alleges that over 400 investors were promised that profits from mortgage investments would yield annual returns of 7.5 percent or more. When in fact, Feathers operated a Ponzi-like scheme by paying returns to investors that came partly from fund profits and partly from other investors.

“Feathers raised millions from investors by promising high returns,” said John McCoy, Associate Regional Director of the SEC’s Los Angeles Office. “The returns turned out to be too good to be true and were funded in part with new investors’ money.”

In the SEC article they allege that from 2009 to early 2012, Feathers improperly transferred more than $6 million from the funds to Small Business Capital to pay its expenses, including substantial payments to Feathers.

Additionally, the SEC alleges that investors were not told that in February and March 2012, the defendants caused one fund to sell mortgages to the other fund at an inflated price, thus generating a “profit” for the selling fund so it could pay Small Business Capital management fees of more than $575,000. The SEC charged Feathers and Small Business Capital for Small Business Capital’s effecting transactions in the funds’ securities without being registered as a broker-dealer with the SEC.

If your broker recommended you invest in this product, call and speak to an attorney at Soreide Law Group for a free consultation on how to potentially recover your investment losses. Call 888-760-6552, or visit our website at: http://www.securitieslawyer.com.

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Dec/12

13

SEC Charges in Oil Drilling Scam by South Floridian Joseph Hilton/Yurkin

Comments off · Posted by Securities Lawyer in FINRA

The Securities and Exchange Commission (SEC) recently announced that it has obtained an emergency court order to freeze the assets of a South Florida man who has been charged with fraudulently offering investments in oil drilling projects in an article posted on the SEC’s website.

The SEC’s complaint, unsealed in federal court in West Palm Beach, Fla., alleges that Joseph Hilton made numerous misrepresentations to investors while selling limited partnership units in two oil drilling projects earlier this year through his firm Pacific Northwestern Energy LLC. Hilton falsely told potential investors that Pacific acquired its wells from Exxon Mobil Corp., and he overstated Pacific’s experience in the oil and gas industry and the historical accomplishments of its drillers. Hilton raised approximately $789,000 from investors. The SEC’s action froze the assets of Hilton, Pacific, and the two limited partnerships — Rock Castle Drilling Fund LP and Rock Castle Drilling Fund II LP. Hilton’s securities offerings were not registered with the SEC as required under the federal securities laws.

In the SEC’s complaint, there were allegations against Hilton, Pacific, and another company that was controlled by Hilton called New Horizon Publishing Inc. Through Pacific and New Horizon, Hilton sold $2.5 million worth of investments in oil drilling projects sponsored by United States Energy Corp. while deceiving investors about his identity, the anticipated returns on the investments, the amount of oil being produced by U.S. Energy’s wells, and the existence of natural gas wells.

The SEC’s complaint adds that Hilton changed his name from Joseph Yurkin late last year following a final judgment for fraud in a previous SEC enforcement action against him for securities offerings he made through another company he worked for — Homeland Communications Corp.

It was reported that the SEC is seeking disgorgement of ill-gotten gains plus prejudgment interest, financial penalties, and permanent injunctions against Hilton and his entities.

If you or a family member were sold oil and gas offerings by Joseph Hilton (aka Joseph Yurkin) or any of the above companies, and experienced financial losses, contact an attorney at Soreide Law Group for a free consultation on how to recover your investment losses. To speak with an attorney, call 888-760-6552, or visit http://www.securitieslawyer.com.

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Nov/12

27

FINRA Improves ‘BrokerCheck’ Capabilities

Comments off · Posted by Securities Lawyer in FINRA

FINRA, the Financial Industry Regulatory Authority announced that it has added features to BrokerCheck to help users more easily access broker-dealer and investment adviser information. Many of the changes implemented by FINRA address recommendations made in a January, 2011. study by the Securities and Exchange Commission (SEC) reported FINRA in an article on their website.

BrokerCheck users now have:

1. Centralized access to licensing and registration information on current and former brokers and brokerage firms, and investment adviser representatives and investment adviser firms;

2. The ability to search for and locate a financial services professional based on main office and branch locations, and the ability to conduct ZIP code radius searches (in increments of 5, 15 or 25 miles); and

3. Access to expanded educational content available on BrokerCheck, including new help icons that clarify commonly referenced terms throughout the system and within BrokerCheck reports.

FINRA Executive Vice President, Derek Linden, of Registration and Disclosure, said, “BrokerCheck is the go-to source for investors to find up-to-date accurate information about their broker or potential brokers. FINRA is constantly looking for new ways to make BrokerCheck easier to use and to make the information more accessible to investors.”

BrokerCheck is available to the public at no charge on FINRA’s website, www.finra.org/brokercheck.

Securities Attorney, Lars Soreide, of Soreide Law Group, PLLC, has represented clients nationwide before FINRA. If you have sustained investment losses due to your stock broker or financial advisor’s recommendations call for a free consultation on how to potentially recover your losses. To speak with an attorney call: 888-760-6552, or visit our website at: http://www.securitieslawyer.com.

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Oct/12

22

FINRA Reports on ‘Recommending Unsuitable Transactions to Customers’

Comments off · Posted by Securities Lawyer in FINRA

FINRA publishes a quarterly review to provide firms with a sampling of recent
disciplinary actions involving misconduct by registered representatives. The sample includes settled matters and decisions in litigated cases (National Adjudicatory Council (NAC) decisions and SEC decisions in FINRA cases). These summaries call attention to, and remind registered representatives and member firms of, specific conduct that violates FINRA rules and may result in disciplinary action.

“Recommending Unsuitable Transactions to a Customer”

Recently, FINRA settled a matter involving a registered representative who recommended an unsuitable transaction to a customer. When the customer became the registered representative’s client, she was a 53-year-old widow who worked as an administrative assistant. Her annual salary was approximately $55,000, she owned a home mortgage free and valued at approximately $500,000, and she had an investment portfolio valued at approximately $160,000 in retirement accounts and $100,000 in certificates of deposit. The customer told the registered representative that she intended to retire at age 60 with a pension and Social Security benefits. The registered representative prepared two proposed investment plans for the customer. One plan involved the customer taking a mortgage on her home, and the other did not. According to the registered representative’s recommendations, the customer would earn more money if she mortgaged her home and invested the proceeds.

On the registered representative’s recommendation, the customer mortgaged her home. The representative referred the customer to an affiliate of his member firm to obtain a mortgage, assisted the customer in completing the paperwork for obtaining a mortgage and received a referral fee of $1,225 The customer obtained a fixed-rate loan in the amount of $315,000 at 6.125 percent per year with a 30-year term and monthly payments of approximately $1,900. Because closing costs were financed in the loan, the proceeds of the loan were somewhat less than $311,000.

The representative recommended that the customer invest $300,000 of the proceeds in a variable annuity and further recommended certain fund allocations for the annuity. The representative received a commission of $4,725 on the annuity purchase. At the time of the recommendations, the registered representative knew that the customer would have to mortgage her home to act in accordance with his recommendations, and that she could not pay the monthly mortgage payments without using her other investment assets.

FINRA found that the representative did not have reasonable basis for recommending that the customer mortgage her primary residence to invest $300,000 in a variable annuity, given that the customer intended to retire in seven years, had limited income, expected an equally limited retirement income and would have insufficient monthly income to make the mortgage payments.

In conclusion, FINRA found that the registered representative’s conduct violated NASD Rules 2110‡ (ethical standards) and 2310# (recommendations to customers), and IM-2310-2#.

Also, FINRA fined the representative $5,000 and suspended him in all capacities for 10 business days.
(This Ends the FINRA Article.)

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, represents clients nationwide. For a free consultation on how to potentially recover your financial losses call: 888-760-6552, or you may visit our website and complete the online form at: http://www.securitieslawyer.com.

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Oct/12

18

FINRA Report on Misappropriating Customers Funds

Comments off · Posted by Securities Lawyer in FINRA

FINRA publishes this quarterly review to provide firms with a sampling of recent disciplinary actions involving misconduct by registered representatives. This sample includes settled matters and decisions in litigated cases (National Adjudicatory Council (NAC) decisions and SEC decisions in FINRA cases). These summaries call attention to, and remind registered representatives and member firms of, specific conduct that violates FINRA rules and may result in disciplinary action.

The following was published on FINRA’s website, October, 2012

“Fraudulently Misappropriating Customer Funds”

FINRA settled a matter involving a registered representative who misled two
customers to convince them to transfer approximately $100,000, which the registered representative subsequently misappropriated. The registered representative fraudulently misrepresented to one customer that he would use the customer’s money to purchase corporate bonds.

In response, the customer transferred $47,000 from his brokerage account to the registered representative. This registered representative deposited the
funds into his personal bank account, used the money for personal expenses and never purchased the corporate bonds.

The registered representative indicated to a second customer that he would use the customer’s funds to purchase a certificate of deposit (CD). The customer transferred approximately $53,000 to the registered representative
for the purchase. The registered representative deposited the funds into his personal bank account and used the money to cover personal expenses. He did not purchase the CD.

FINRA found that the representative’s conduct violated Section 10(b) of the Exchange Act (fraud); Exchange Act Rule 10b-5 (fraud); NASD Rules 2120** (fraud), 2330(a)† (customers’ securities or funds) and 2110‡ (ethical standards), and FINRA Rules 2150(a) (improper use of customer funds) and 2010 (ethical standards).

Because of the registered representative’s violations, FINRA barred him from associating with any firm in any capacity.
(This ends the FINRA article.)

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, represents clients nationwide. For a free consultation on how to potentially recover your losses call: 888-760-6552, or you may visit our website and complete the online form at: http://www.securitieslawyer.com.

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Oct/12

18

Connecticut Broker, Stephen Blankenship, Charged by SEC for Stealing Investor Funds

Comments off · Posted by Securities Lawyer in FINRA

The Securities and Exchange Commission (SEC) charged Stephen B. Blankenship, of New Fairfield, Connecticut, and Deer Hill Financial Group, LLC, a Connecticut limited liability company under Blankenship’s control, with a scheme to defraud investors. The SEC’s Complaint alleges that, from at least 2002 through November 2011, Blankenship misappropriated at least $600,000 from at least 12 brokerage customers by falsely representing that he would invest their funds in securities through defendant Deer Hill.

The SEC alleges that until November 2011, Blankenship was a registered representative of Vanderbilt Securities, LLC, a registered broker-dealer based in Melville, New York. Blankenship lied to his brokerage customers and in many instances, lured customers to withdraw money from their brokerage accounts with promises that they could obtain a greater rate of return by investing through Deer Hill, according to the complaint. The complaint also alleges that Blankenship assured his customers that he would invest their money in established securities such as publicly traded mutual funds. When customers requested account statements, Blankenship provided the customers with fictitious statements from Deer Hill that falsely represented that Blankenship had invested their money in a variety of investments.

Blankenship never invested the customers’ money, according to the SEC’s Complaint. Blankenship used the customers’ money instead for personal expenses, business expenses and to make Ponzi-like payments to other customers who requested a return of all or part of their investment.

If you’ve experienced financial losses due to your investments with Stephen Blankenship or another broker/dealer, call Soreide Law Group for a free consultation on how to potentially recover your losses at: 888-760-6552, or you may visit our website and complete the online form at: http://www.securitieslawyer.com.

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Oct/12

15

FINRA Warns of Sharing Commissions with Unregistered Individuals and Providing False Information to Firms

Comments off · Posted by Securities Lawyer in FINRA

(FINRA publishes a quarterly review to provide firms with a sampling of recent disciplinary actions involving misconduct by registered representatives. This sample includes settled matters and decisions in litigated cases (National Adjudicatory Council (NAC) decisions and SEC decisions in FINRA cases). These summaries call attention to, and remind registered representatives and member firms of, specific conduct that violates FINRA rules and may result in disciplinary action.)

This information appeared on FINRA’s website, October, 2012.

Sharing Commissions With an Unregistered Individual and Providing False Information to Firm

FINRA settled a matter involving a registered representative who shared commissions with an unregistered person who operated a business out of the same office space, and misled his member firm as to whether any other businesses operated out of the branch office location.

This unregistered individual had been associated with a member firm and worked with the registered representative in years prior. He had attempted to associate with the registered representative’s firm, but the firm was unwilling to allow him to associate because of his disciplinary history. During a period of 16 months, the unregistered person conducted research and provided the registered representative with stock recommendations that the registered representative relayed to his own customers. In exchange for the stock recommendations, the registered representative paid the unregistered person approximately 40 percent of his brokerage commissions, totaling approximately $255,000, without disclosing the commission payment arrangement to the member firm. FINRA found that that the representative’s conduct violated NASD Rule 2420 (dealing with non-members) and FINRA Rule 2010 (ethical standards).

FINRA found that during this period, the registered representative also submitted a false and misleading compliance questionnaire to his member firm. On the questionnaire, the registered representative denied that any other businesses were located in the branch office when, in fact, the unregistered individual operated his business out of the same office. By signing and submitting an incorrect compliance questionnaire to the member firm, the registered representative caused the firm’s books and records to be incorrect, and he concealed from the firm that the person it previously had rejected for association was in fact working out of firm office space. FINRA concluded that the registered representative’s actions violated NASD Conduct Rule 3110* (books and records) and FINRA Rule 2010 (ethical standards). In light of these violations, FINRA suspended the representative in all capacities for one year and fined him $20,000.
(This ends the FINRA article.)

Securities Lawyer, Lars K. Soreide, of Soreide Law Group, PLLC, represents clients nationwide. For a free consultation on how to potentially recover your financial losses call: 888-760-6552, or you may visit our website and complete the online form at: http://www.securitieslawyer.com.

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