Archive for December 2010
WASHINGTON — On December 17, 2010, FINRA released it’s year in review on the FINRA website. It was listed as follows:
Financial Industry Regulatory Authority (FINRA) significantly expanded and enhanced its investor protection and market regulation capabilities in 2010 in each of the areas central to its investor protection mission, including: market and firm regulation, transparency, registration and disclosure, dispute resolution and investor education. FINRA’s work progressed amid continuing changes sweeping financial markets, ongoing economic challenges and the implementation of a new industry regulatory framework. Highlights of FINRA’s 2010 activity include:
- Expanded its market oversight responsibilities to include 11 new markets, particularly through the NYSE EuroNext group. FINRA is now responsible for surveillance of 80 percent of the trading volume of U.S. equity markets.
- Successfully launched its Office of Fraud Detection and Market Intelligence (OFDMI), including fully staffing the Office of the Whistleblower. In 2010, OFDMI referred more than 500 matters involving potential fraudulent conduct to the SEC or other federal law enforcement agencies for further investigation. These matters involved a wide range of issues, including insider trading, microcap fraud and Ponzi schemes.
- To date, made 244 insider trading referrals to the SEC, the highest in FINRA’s history. The referrals include suspicious trading ahead of material news announcements by hedge funds, institutional investors, private equity firms and retail investors. The Insider Trading Surveillance unit continues to refine its analytics to identify concealed serial insider trading rings.
- Brought 1,173 disciplinary actions and levied fines totaling $41.1 million. FINRA also ordered almost $8 million in restitution to harmed investors. FINRA expelled 14 firms from the securities industry, barred 270 individuals and suspended 407 from association with FINRA-regulated firms.
- Further strengthened the executive leadership team by naming J. Bradley Bennett as the head of FINRA’s Enforcement Division and Samuel H. Gaer as Chief Information Officer, and by promoting Susan Axelrod to lead the organization’s Member Regulatory Sales Practice area.
- Enhanced market transparency by expanding the Trade Reporting and Compliance Engine (TRACE) to include debt issued by federal government agencies, government corporations and government-sponsored enterprises, as well as primary market transactions in eligible debt issues. This expansion represented a 50 percent increase in the number of reportable debt instruments through TRACE. FINRA is currently preparing TRACE for expansion to securitized products, which will add more than 1.2 million asset- and mortgaged-backed securities to the current 45,000 TRACE-eligible securities. The rules for reporting transaction information in securitized products become effective in May 2011.
- Completed the first major expansion of BrokerCheck since 2002. Investors now have more information, including historic complaints, on current brokers and former brokers. Records on former brokers are now available for 10 years (instead of the previous two years) after they leave the securities industry. Records of regulatory actions, criminal convictions, civil judgments and arbitration awards are permanently available. As a result, investors now have access to detailed information about nearly 1.35 million current and former securities brokers, an increase of more than 65 percent. Investors are able to use this information to research the background of former brokers who work in other sectors of the financial services industry or hold other positions of trust.
- The FINRA Investor Education Foundation released the nation’s first Military Financial Capability Survey, which measures the overall financial capabilities of U.S. military personnel and their spouses. The Survey found that the military community was significantly deeper in debt than the general population. As a result of the Survey findings, the Foundation will be launching a new, specialized tool to help military service members and their families with credit management.
- The FINRA Foundation launched an interactive Web resource to display the results of America’s first State-by-State Financial Capability Survey, which surveyed more than 28,000 respondents. The new website, www.usfinancialcapability.org, displays a clickable map of the United States and allows the public, policymakers and researchers to delve into and compare the financial capabilities of Americans in every state and across geographic regions.
When commenting on the year, Richard Ketchum, Chairman and CEO of FINRA, said, “While the regulatory environment continues to evolve, each of the efforts undertaken by FINRA this year contributes to our broader mission to protect investors by making sure the securities industry operates fairly and honestly, both in its dealings with individuals and through the operation of the systems and technologies that underpin today’s markets.”
Mr. Ketchum continued, “The organization has made real progress in enhancing our capabilities to ensure investor protection in a fast-changing marketplace.” Following is a more detailed summary of FINRA’s 2010 accomplishments across its key operational areas:
Market Regulation and Surveillance
In 2010, FINRA began providing regulatory services to 11 new markets. Most notably, FINRA assumed responsibility for the surveillance of NYSE EuroNext’s five markets operated in the U.S. – NYSE equities, NYSE ARCA equities and options and NYSE AMEX equities and options – and extended the regulatory service agreement with NASDAQ OMX. In addition, FINRA began providing services to a second BATS equity exchange and BATS options, NASDAQ OMX PHLX’s equity and options markets, and two equity exchanges operated by Direct Edge. With the addition of these markets, FINRA is now responsible for surveillance of 80 percent of the trading volume in U.S. equity markets and almost 35 percent of the volume in U.S. options markets. In total, FINRA now provides regulatory services to 17 equities and options markets operated by 11 exchanges.
Insider Trading Surveillance unit of the OFDMI has referred 244 matters to the SEC so far in 2010. The referrals include suspicious trading ahead of material news announcements by hedge funds, institutional investors, private equity firms and retail investors. As a result of the combination of NYSE’s and FINRA’s insider trading programs in 2010, FINRA is now responsible for insider trading surveillance for all exchange-listed and OTC equity securities across the U.S., regardless of the platform on which a trade is executed. The combination of NYSE Regulation’s and FINRA’s aggregated trade history and case repositories has created a centralized library of regulatory data that serves as an invaluable investigative tool in uncovering serial insider trading rings.
Fraud Surveillance unit of the OFDMI has also referred 255 matters to the SEC so far in 2010. The referrals include matters involving issuer fraud, pump-and-dump schemes, market manipulation and account intrusions. The consolidation of the NYSE’s and FINRA’s Fraud Surveillance units has also resulted in enhanced surveillance for potential manipulation and issuer fraud occurring across markets.
It was noted that FINRA also brought several significant cases involving trading violations, including:
- The first high-frequency trading case in the U.S. against Trillium Brokerage Services, LLC, fining the firm $2.3 million for repeatedly entering improper “layered,” non-bona fide, market moving orders to create a false appearance of buy- or sell-side pressure.
- Fining Phoenix Derivatives Group, three of its principals and three brokers at other firms $3.6 million for improper communications about customers’ proposed brokerage rate reductions in the wholesale credit default swap (CDS) market; filing a complaint against GFI Securities LLC, four of its former CDS brokers, and a competing CDS broker at another firm for colluding to resist mutual clients’ proposals to lower brokerage rates for CDS trades in 2005 and 2006.
- Bringing 20 cases against firms for improper order entry procedures, including improperly exercising an option after the exercise cut-off time, and finalizing 10 stipulations on behalf of NYSE markets for a range of matters, including failure to supervise and operating an unregistered broker-dealer.
- Expelling a firm, APS Financial, and barring its president for excessive markups and supervisory failures in connection with transactions in high-yield bonds and collateralized mortgage and debt obligations.
Up through November 30, FINRA brought 1,173 disciplinary actions, levied fines totaling $41.1 million and ordered the payment of almost $8 million in restitution to harmed investors. FINRA expelled 14 firms from the securities industry, barred 270 individuals and suspended 407 from association with FINRA-regulated firms.
The sweeps and targeted exams FINRA conducted in 2010 included: Regulation D offerings, placement agents, trading activity fees, direct market access and junk bonds.
In the sweep of retail sales of private placement interests, as well as broker-dealers affiliated with private placement issuers, FINRA focused on firms’ compliance with suitability, supervision and advertising rules, as well as potential instances of fraud and unregistered sales of securities. A number of these investigations led to the filing of private placement/Reg. D actions, including one against Provident Asset Management that resulted in an expulsion of the firm for marketing fraudulent private placements offered by its affiliate, Provident Royalties, that was engaged in a massive Ponzi scheme.
Recently, Enforcement filed a complaint and a request for a temporary cease-and-desist order against Pinnacle Partners and its president, Brian K. Alfaro, to halt an alleged ongoing fraud involving eight private placement offerings in oil and gas joint ventures. Through a “boiler room” from which brokers placed thousands of cold calls, Alfaro and Pinnacle have raised more than $10 million from over 100 investors for offerings that are alleged to materially misrepresent or omit material facts. Additional cases are expected to be filed in the coming year.
Then in its continuing effort to prevent misconduct in the sale of private placements, FINRA will file amendments to expand FINRA’s rule that governs private placements. The proposal seeks to expand disclosure, filing requirements and limitations on the use of offering proceeds to a wider range of private placement offerings.
The collapse of the mortgage-backed securities market gave rise to a number of investigations into the manner in which these securities had been underwritten and sold to investors. Earlier this year, FINRA settled an action against Deutsche Bank Securities in which the firm was found to have negligently misrepresented and underreported the percentages of mortgages that were delinquent in the prospectus supplements of six subprime residential mortgage-backed securities (RMBS) issued in 2006. Deutsche Bank was fined $7.5 million.
FINRA also focused this year on improprieties in the sale of structured products, as evidenced by two cases arising from the sale of reverse convertible notes. Enforcement brought a case against Ferris, Baker Watts LLC, now part of RBC Wealth Management, fining the firm $500,000 and ordering $190,000 restitution for inadequate supervision of sales of reverse convertible notes to retail customers as well as unsuitable sales of reverse convertibles to 57 accounts held by elderly customers who were at least 85 years old or customers with a modest net worth.
FINRA settled a case involving floating rate Collateralized Mortgage Obligations (CMOs) against HSBC Securities (USA) Inc. The firm was fined $375,000 for recommending unsuitable sales of inverse floating rate CMOs to retail customers and for failing to adequately supervise the suitability of the CMO sales and fully explain the risks of an inverse floating rate or other risky CMO investment to its customers.
Regulation of Firms
FINRA has successfully strengthened and increased the scope of its regulation of securities firms, changing the way it deploys resources to monitor and examine firms. It also made progress in transforming its sales practice examination program to be more risk-based. Exams are more targeted to focus on the business lines engaged in by the firms that pose the highest risk to investors. FINRA also added a leverage measure to its alert-monitoring criteria so that it could better understand the risk of firms that are highly levered. Additionally, FINRA continues to monitor material business changes to ensure that firms undergoing significant systems conversions or change of control remain financially strong.
Up through November 30, FINRA had conducted approximately 2,600 cycle examinations and 6,600 cause examinations.
FINRA has continued to increase its collaboration with international regulators to support and improve its oversight of firms with multinational operations, including signing a memorandum of understanding (MoU) with the Australian Securities and Investments Commission (ASIC) in June 2010 and with the United Kingdom’s Financial Services Authority (FSA) in September 2010. Both agreements complement the already existing MoUs FINRA has signed with France’s Autorité des Marches Financiers (AMF) and the Investment Industry Regulatory Organization of Canada (IIROC), and will facilitate the exchange of information on firms and individuals under common supervision, investigate possible cross-border market abuse, collaborate on enforcement matters, and allow further sharing of regulatory techniques, including approaches to risk-based supervision of firms.
FINRA expanded its Trade Reporting and Compliance Engine (TRACE) program to include debt issued by federal government agencies, government corporations and government-sponsored enterprises, as well as primary market transactions in eligible debt issues. This development represents a 50 percent increase in the number of reportable debt instruments through TRACE. FINRA also gained approval from the SEC to collect transactions in securitized products (asset-backed securities, including mortgage-backed securities). Reporting on these products will begin in May 2011.
Registration and Disclosure
November 2010, FINRA expanded BrokerCheck to increase the available records on securities brokers by more than 65 percent. Detailed records, including all historic complaints, are now available on 1.35 million brokers – including nearly 640,000 current and more than 700,000 former brokers. This expansion provides additional information about current brokers and increases the information available to investors on former brokers who may now work in other sectors of the financial services industry or hold other positions of trust. FINRA now discloses criminal proceedings, civil injunctions, customer complaints and records on former brokers whose registrations have terminated within the last 10 years. Final regulatory actions, criminal convictions, civil judgments and arbitration awards are available through BrokerCheck on all current and former brokers, regardless of the date their registration terminated. Investors and others will view over 18 million BrokerCheck records in 2010.
In order to increase investor choice, this year FINRA filed a rule proposal with the SEC that would expand the Public Arbitrator Pilot Program to all investor disputes against any firm and any individual broker. If the rule is approved, no investor would have an industry arbitrator on their case unless they chose one.
In 2010, the three most common issues in cases filed in FINRA’s arbitration forum were breach of fiduciary duty, negligence and misrepresentation. Thus far this year, approximately 5,242 cases were filed in arbitration, a decrease of 21 percent over 2009. To date, 788 cases commenced in mediation, an increase of 51 percent over 2009.
Investor and Financial Education
FINRA continued to focus on expanding its financial education efforts and those of the FINRA Investor Education Foundation in order to provide underserved Americans with the tools and resources to manage their money with greater confidence. During the year:
- The FINRA Foundation expanded the senior investor protection program to eight states – Alabama, Colorado, Florida, Maine, North Carolina, Vermont, Washington and West Virginia – and expanded access to high-quality, freely available financial education resources through public libraries in 32 states that serve a combined population of nearly 25 million.
- The FINRA Foundation’s award-winning documentary, Trick$ of the Trade: Outsmarting Investment Fraud, has aired on more than 95 public television stations in 24 states to date.
The State-by-State Financial Capability Survey echoed several of the findings of the smaller-scale national and military surveys released earlier, finding that:
- More than half of all Americans are living paycheck-to-paycheck. Fifty-five percent of Americans report spending more than or about equal to their household income.
- A significant majority of Americans (60 percent) do not have a “rainy day” fund to cover three months of unanticipated financial emergencies.
- More than one in five Americans (24 percent) have engaged in some form of higher cost non-bank borrowing during the last five years, including taking out a payday loan or getting an advance on a tax refund.
- Americans, on average, were able to correctly answer just three of five questions about fundamental financial concepts.
This information was obtained on FINRA’s website.
Call a Securities arbitration lawyer for a free consultation on how to recover your losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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The Madoff Ponzi scheme happened two years ago this past week. Ponzi schemes are in the news again. The Justice Department announced this week that it had brought criminal and civil cases against more than 500 people for fraud schemes that involved more than $10 billion in losses. The reality is that small-time Ponzi schemes have been coming to light with regularity since the financial crisis began and investors started asking for their money back. That’s a big problem when an investment scheme is built on paying out old investors with money brought in from new ones. According to data compiled by Investment News, a trade publication, schemes involving $9.244 billion in losses have been revealed so far this year.
Last week, a former Denver-area hedge fund manager, Sean Mueller, was convicted of running a scheme that bilked some 65 investors out of $71 million. One of those investors, John Elway, the former Denver Broncos quarterback, lost $15 million.
Small investors who handed over their life savings to Mr. Mueller or other swindlers, will, in all likelihood, not fare well; they will probably never see that money again.
Here is a look at what all investors should consider to keep their money safe.
The people who are most likely to involve you in a swindle are friends and relatives. It has become so common that it now has its own name: affinity fraud.
We have a tendency to trust people we think are like ourselves.
One of the most egregious recent examples of this involved Imperia Invest IBC, whose assets were frozen by the Securities and Exchange Commission in October. According to the S.E.C., Imperia defrauded some 14,000 investors out of $7 million. About $4 million was collected primarily from the deaf.
Another big risk is to associate Ponzi schemes with hedge funds. The reality is that Mr. Madoff and the others who have been caught were not running hedge funds; they were running swindles.
The two most common themes were, “I have a complex strategy that I cannot divulge,” and, ”I have a strategy that supplies double-digit returns year after year.”
Make sure to do your research before investing. The truth is, few people take the time to really do it.
One of the first things to do is a Google search of the accused schemer. Many people do not even do something as simple as a Google search, because someone they know recommended them or uses them as their broker. It’s amazing to see the looks on clients faces when a simple Google search reveals previous complaints.
An investor should first ask the manager of the fund what institutions have invested with him. If the manager has been in the business for decades yet has not secured any institutional investments, that should be a warning sign.
Next, people should consider the manager’s background and ask where he learned how to manage money. Then ask who the manager’s bosses were at those places.
Also, another approach is to make sure that all your investment eggs are not in one basket. One of the easiest things investors could do was insist that a hedge fund use different firms for the three main services it needs: a clearinghouse to buy and sell securities, a custodian to hold the money and an administrator to ensure that the value of the assets is correct. Having one firm do all three can be a recipe for disaster.
If you have been caught up in a ponzi scheme, you may be able to recover your losses. Call a Securities arbitration lawyer for a free consultation on how to recover your losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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Erickson Retirement Communities LLC, a developer of 20 senior living campuses, filed for bankruptcy in October of 2009. Redwood Capital Investments LLC, won an auction to acquire substantially all of its assets. Redwood Capital, based in Maryland, is controlled by Baltimore businessman Jim Davis, who is also chairman and majority owner of privately held staffing company Allegis Group.
Erickson, based in Baltimore, listed more than $1 billion dollars in assets and liabilities in filings in federal bankruptcy court in Dallas. At least 14 related entities also filed for bankruptcy protection. Erickson has retirement communities in Pennsylvania, Texas, Virginia, Massachusetts, Maryland, Michigan, New Jersey, Kansas and Illinois, according to its web site.
On April 18, 2010, the attorneys for Erickson Retirement Communities LLC and its affiliated debtors emerged from bankruptcy after the US Bankruptcy Court for the Northern District of Texas confirmed the debtors’ plan of reorganization and sale to Redwood Capital Investments LLC. The exit from Chapter 11 culminated with Redwood Capital agreeing to purchase all of Erickson’s assets for $365 million after Erickson spent just over six months in the bankruptcy process. The conditions of Redwood Capital’s successful bid required that a consensual plan of reorganization be agreed to by Erickson’s numerous creditors holding in excess of $2 billion of debt no later than April 30, 2010. Erickson’s organization included 20 continuing-care retirement communities that serve more than 23,000 residents throughout 11 states.
“We pursued an aggressive time schedule designed to capitalize on Erickson’s inherent value in the senior living sector and to avoid a deterioration of Erickson’s business. The expedited auction and reorganization allowed the company to preserve value for all stakeholders and protect the residents interest in their living communities,” said John Cusack, Vice-chair of DLA Piper’s Finance practice and Chair of its Real Estate Capital Markets Group. “With financing for the purchase and development of new senior living facilities still generally unavailable to its competitors, Erickson under Redwood Capital’s ownership will find itself in a unique position to grow based on several existing sites that are ready for development and expansion.”
“It’s highly unusual and remarkable that a complex bankruptcy of this scale was completed in such a tight timeframe,” said Thomas Califano, vice chair of DLA Piper’s Restructuring practice. “It was essential that this transaction and reorganization be completed in an expeditious manner to preserve the rights of the residents. The only way this would be done was by aggressively driving the process to a result.”
Jim Davis of Redwood Capital, acknowledged to the Baltimore Sun, that the company must reverse negative perceptions stemming from the financial collapse, especially among seniors who pay $400,000 or more to live in the retirement campuses. He must also continue to contend with an economy and real estate market that haven’t fully recovered.
If your broker or financial institution sold you subordinate notes or investments in Erickson Retirement Communities, LLC, prior to the bankruptcy, you may be able to recover your losses. Call a Securities arbitration lawyer for a free consultation on how to recover your losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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Cease-and-Desist Ordered by FINRA to Halt Ongoing Fraud and Misuse of Funds by Pinnacle Partners and its President Brian Alfaro
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WASHINGTON — On December 3, 2010, FINRA announced that it filed a notice seeking a Temporary Cease and Desist Order (TCDO) against San Antonio-based brokerage Pinnacle Partners Financial Corporation and its President, Brian K. Alfaro. The TCDO would halt allegedly fraudulent and illegal sales activities at the firm relating to eight unregistered private placement offerings selling interests in oil and gas joint ventures. FINRA is seeking the order based on belief that customer harm and depletion of customer assets will likely continue before a formal disciplinary proceeding against Pinnacle and Alfaro can be completed.
FINRA alleges that from August 2008 to the present Alfaro and Pinnacle have operated a “boiler room” in which numerous brokers place thousands of cold calls every week to solicit investments in Alfaro’s oil and gas drilling joint ventures. The operators of the ventures are entities owned or controlled by Alfaro. Through the boiler room Alfaro and Pinnacle have raised more than $10 million from over 100 investors for offerings that are alleged to materially misrepresent or omit material facts. In addition, FINRA charges Alfaro with misusing customer funds by collecting funds from investors for drilling and testing of wells, and then spending those funds for unrelated business and personal expenses.
FINRA has also charged Pinnacle and Alfaro with the sale of unregistered securities; the destruction of documents and the maintenance of inaccurate books and records; and the failure to report numerous customer complaints.
Additionally, FINRA charges that Pinnacle and Alfaro provided investors with investment summaries for eight separate oil and gas offerings that included numerous misrepresentations and omissions including grossly inflated natural gas prices, projected natural gas reserves, estimated gross returns and estimated monthly cash flows.
Under the FINRA rules, a hearing shall be conducted not later than 15 days after service of the notice and filing that initiates the temporary cease and desist proceeding, unless extended, and the Hearing Panel shall issue a decision not later than 10 days after receipt of the hearing transcript. If the temporary cease and desist order is granted, it will generally remain in effect until the underlying disciplinary action against the firm for this misconduct has been resolved. FINRA may seek to suspend or expel a firm for violating a TCDO.
As to the related underlying complaint, under FINRA rules, the individuals and firms named in a complaint can file a response and request a hearing before a FINRA disciplinary panel. Possible sanctions include a fine, an order to pay restitution, censure, suspension, or bar from the securities industry.
This information was obtained from FINRA’s website.
If you feel you have been a victim of these alleged fraudulent schemes of Pinnacle Partners Financial Corporation and Brian Alfaro, call a Securities Arbitration Lawyer for a free consultation on how to recover your losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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Banc of America Securities (BAS) Charged by SEC With Fraud in Connection With Improper Bidding Practices Involving Investment of Proceeds of Municipal Securities
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Washington, D.C., Dec. 7, 2010 — Today, the Securities and Exchange Commission charged Banc of America Securities, LLC (BAS) with securities fraud for its part in an effort to rig bids in connection with the investment of proceeds of municipal securities.
Banc of America Securities, LLC, (BAS) has agreed to pay more than $36 million in disgorgement and interest. BAS and its affiliates have also agreed to pay another $101 million to other federal and state authorities for its conduct.
“This ongoing investigation has helped to expose wide-spread corruption in the municipal reinvestment industry,” said Robert Khuzami, Director of the SEC’s Division of Enforcement. “The conduct was egregious — in return for business, the company repeatedly paid undisclosed gratuitous payments and kickbacks and affirmatively misrepresented that the bidding process was proper.”
The SEC found that the bidding process was not competitive because it was tainted by undisclosed consultations, agreements, or payments and, therefore, could not be used to establish the fair market value of the reinvestment instruments. As a result, these improper bidding practices affected the prices of the reinvestment products and jeopardized the tax-exempt status of the underlying municipal securities, the principal amounts of which totaled billions of dollars.
Also, when investors purchase municipal securities, the municipalities generally invest the proceeds temporarily in reinvestment products before the money is used for the intended purposes. Under relevant IRS regulations, the proceeds of tax-exempt municipal securities must generally be invested at fair market value. The most common way of establishing fair market value is through a competitive bidding process, whereby bidding agents search for the appropriate investment vehicle for a municipality.
In the Commission’s Order, it was stated that certain bidding agents steered business from municipalities to BAS through a variety of mechanisms. In some cases, the agents gave BAS information on competing bids (last looks), and deliberately obtained off-market “courtesy” bids or purposefully non-winning bids so that BAS could win the transaction (set-ups). As a result, BAS won the bids for 88 affected reinvestment instruments, such as guaranteed investment contracts (GICs), repurchase agreements (Repos) and forward purchase agreements (FPAs).
According to the Order, in return, BAS steered business to those bidding agents and submitted courtesy and purposefully non-winning bids upon request. In addition, those bidding agents were at times rewarded with, among other things, undisclosed gratuitous payments and kickbacks. The Commission also found that former officers of BAS participated in, and condoned, these improper bidding practices.
It was also noted that BAS is now known as Merrill Lynch, Pierce, Fenner & Smith Incorporated following a merger.
Elaine C. Greenberg, Chief of the SEC’s Municipal Securities and Public Pensions Unit, added “This conduct threatened the integrity of the municipal marketplace, affecting not only the municipal issuers who were directly defrauded, but also the thousands of investors nationwide who purchased their tax-exempt municipal securities.”
Without admitting or denying the SEC’s findings, BAS consented to the entry of a Commission Order which censures BAS, requires it to cease-and-desist from committing or causing any violations and any future violations of Section 15(c)(1)(A) of the Exchange Act of 1934, and to pay disgorgement plus prejudgment interest totaling $36,096,442 directly to the affected entities.
Noted also was that in determining to accept BAS’ offer, which does not include the imposition of a civil penalty, the Commission considered the cooperation of and remedial actions undertaken by BAS in connection with the Commission’s investigation as well as investigations conducted by other law enforcement agencies. Among other things, BAS self-reported the bidding practices to the Antitrust Division of the Department of Justice.
The Commission also barred Douglas Lee Campbell, a former officer of BAS, from association with any broker, dealer or investment adviser, based upon his guilty plea to a criminal information on Sept. 9, 2010, in United States v. Douglas Lee Campbell (Criminal Action No. 10-cr-803) charging him with two counts of conspiracy and one count of wire fraud. The criminal information charged, among other things, that Campbell engaged in fraudulent misconduct in connection with the competitive bidding process involving the investment of proceeds of tax-exempt municipal bonds. The Commission is not imposing a civil penalty against Campbell based on his cooperation in the Commission’s investigation.
This information was obtained from the SEC’s website. The SEC’s investigation is continuing.
If you feel you are a victim of these alleged fraudulent schemes of Banc of America Securities, LLC, BAS, now known as Merrill Lynch, Pierce, Fenner & Smith Inc., call a Securities Arbitration Lawyer for a free consultation on how to recover your losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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It was noted that FINRA found that the firm failed to provide eligible customers with appropriate discounts on both UIT rollover and breakpoint purchases. FINRA also found that the firm failed to identify and appropriately apply sales charge discounts in certain top-selling UITs and, as a result, the firm overcharged customers in the sample approximately $20,000. FINRA also determined that the firm sold UITs that imposed a deferred sales charge that was generally charged upon redemption if a customer sold a UIT before the deferred sales charges were imposed. Moreover, FINRA found that the firm failed to ensure that its customers’ UIT purchase confirmations included the required language stating that “on selling your shares, you may pay a sales charge. For the charge and other fees, see the prospectus.”
Additionally, FINRA found that the firm misstated on certain UIT confirmations that a sales charge discount had been applied when, in fact, it had not.
(FINRA Case #2008015700901)
This information was obtained from FINRA’s website.
If you feel you have been a victim of these alleged fraudulent schemes of Ryan Beck & Co., or Stifel Nicolause & Co., call a Securities Arbitration Lawyer for a free consultation on how to recover your losses. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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We believe that the credit crisis and total collapse of the sub-prime mortgage market has also led to the collapse of both Fannie Mae and Freddie Mac, two of the nation’s largest issuers of preferred stock. As a result, Wall Street has underwritten much of this debt, nearly $6 billion, to unsuspecting investors.
Most investors were led to believe these stocks were conservative and would provide a steady income through above-average dividends. Investors were also told that the Federal Government would assure that their investments were safe.
In July of 2008, the U.S. Federal Government provided Freddie Mac and Fannie Mae with an unlimited credit line at the U.S. Treasury, and authorized the U.S. Treasury to purchase equity shares in the two entities, if necessary. A little over a month later, in September of 2008, the U.S. Federal Government seized control of Freddie Mac and Fannie Mae in order to avoid a complete financial collapse.
Investors have seen their portfolios and retirement accounts depleted by the collapse of Fannie Mae and Freddie Mac. All brokers have a responsibility to only recommend investments that are in line with their client’s risk tolerance and they should never over expose a client to single investment.
Brokers should have worked with their clients to diversify out of their Fannie Mae and Freddie Mac holdings as it became clear that the subprime mortgage crisis would have effects on these two companies.
If you feel your broker or brokerage failed to protect your portfolio by investing in Fannie Mae or Freddie Mac by putting their interests ahead of yours or because of incompetence or negligence, contact a Securities Arbitration Lawyer for a free consultation on how to recover your losses and hold your broker accountable. To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA the Financial Industry Regulatory Authority.
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