In order to determine whether an activity constitutes the unlicensed practice of law, a two part analysis must be made.  First, it must be determined whether the activity is the practice of law.  The second question is whether the practice is authorized.  If an activity is the practice of law but the activity is authorized, the activity is not the unlicensed practice of law and may be engaged in by a nonlawyer.  The Florida Bar v. Moses, 380 So. 2d 412 (Fla. 1980).

The first question which must be addressed in order to determine whether a service or activity constitutes the unlicensed practice of law is to determine whether the activity constitutes the practice of law. In The Florida Bar v. Sperry, 140 So. 2d 587 (Fla. 1962), judg. vacated on other grounds, 373 U.S. 379 (1963) the Court found that setting forth a broad definition of the practice of law was “nigh onto impossible” and instead developed the following test to determine whether an activity is the practice of law:

…if the giving of (the) advice and performance of (the) services affect

important rights of a person under the law, and if the reasonable protection

of the rights and property of those advised and served requires that the

persons giving such advice possess legal skill and a knowledge of the law

greater than that possessed by the average citizen, then the giving of such

advice and the performance of such services by one for another as a course

of conduct constitute the practice of law.

When applying this test it should be kept in mind that “the single most important concern in the Court’s defining and regulating the practice of law is the protection of the public from incompetent, unethical, or irresponsible representation.”  The Florida Bar v. Moses, 380 So. 2d 412, 417 (Fla. 1980).

Although a codified definition does not exist, there is a large body of case law applying the Sperry test to determine whether a specific activity constitutes the unlicensed practice of law.  Therefore, although one cannot go to one particular source such as a dictionary for a definition, in most instances whether an activity constitutes the unlicensed practice of law can be found in case law.

Once it is determined whether an activity is the practice of law, it must be determined whether the Court or another body has authorized a nonlawyer to engage in the activity.  An activity may be authorized by court rule, case law, an administrative rule or a federal rule or statute.

What follows is a summary of what has been held to constitute the unlicensed practice of law in various circumstances.  Any authorized activities are also noted.  (Please note that the following is only a partial list of unlicensed practice of law cases.  There are over 230 reported unlicensed practice of law cases/opinions in Florida.)

1. ACCOUNTANTS  

Generally, it constitutes the unlicensed practice of law for an accountant, whether or not a CPA, to draft corporate documents.  Although the accountant may not draft the documents, the accountant may sell the forms necessary to establish a corporation and complete the forms with information provided in writing by the individual.  The Florida Bar v. Fuentes, 190 So 2d 748 (Fla. 1966); The Florida Bar v. Town,174 So. 2d 395 (Fla. 1965), The general rule and exception applies to all nonlawyers.

A CPA may represent individuals before the IRS in tax matters.  This practice is specifically authorized by 26 C.F.R. § 601.502 and C.F.R. Part 10.  As the activity is authorized by a federal rule, Florida may not enjoin the activity as the unlicensed practice of law.  The Florida Bar v. Sperry, 363 U.S. 379 (1963).

2.  ADMINISTRATIVE PRACTICE

In the Florida Bar v. Moses, 380 So. 2d 412 (Fla. 1980) the Supreme Court of Florida held that the legislature has the constitutional authorization to oust the Court’s responsibility to protect the public from the unlicensed practice of law in administrative proceedings under Article V, Section 1 of the Florida Constitution, and when it does so any “practice of law” conduct becomes in effect, authorized representation.  In other words, the legislature may authorize nonlawyer representation in administrative proceedings.  The activity is still the practice of law, it is merely authorized.  However, in order to do so, the agency must have a properly promulgated rule and the nonlawyer must follow the dictates of the rule.  The authorization is not blanket authority to appear in any proceeding but must be sought on a case-by-case and agency-by-agency basis.

3.  APPEARANCES PRO SE

The general rule is that an individual may appear pro se and represent themselves in court.  Fla. Stat. § 454.18.  This general rule does not apply to probate proceedings or to corporations.  In a probate proceeding, unless the individual attempting to appear pro se is the sole interested party in the matter, the individual must be represented by a member of The Florida Bar.  Rule 5.030, Probate and Guardianship Rules, Falkner v. Blanton, 297 So. 2d 825 (Fla. 1974).  A corporation, as a fictitious entity, may not appear pro se.  Szteinbaum v. Kaes Invecsiones Valores, 476 So. 2d 247 (Fla. 3d DCA 1985).  The general rule that a corporation may not appear pro se does not apply to small claims court as Rule 7.050 of the Small Claims rules specifically allows a corporation to appear pro se.  However, an exception exist for evictions.  In those cases, a corporation may not appear pro se and must be represented by an attorney.  Johnstown Properties Corp. v. Gabriel, 50 Fla. Supp. 138 (Fla Polk Cty. Court 1980).

4.  FEDERAL PRACTICE

Generally speaking, you must be a member of The Florida Bar in order to represent an individual in federal court.  In the area of federal administrative practice, if there is a rule or regulation which allows an attorney admitted in another state or a nonattorney to appear before the agency, Florida cannot enjoin the activity as the unlicensed practice of law.  The Florida Bar v. Sperry, 373 U.S. 379 (1963).  The activity is still the practice of law, it is merely authorized.  Whether the activity is allowed and the extent to which the individual may appear and/or practice will be governed by the rules of that particular agency.  If the agency does not have a rule allowing the practice, any representation would constitute the unlicensed practice of law.  The Fla. Bar re: Advisory Opinion – Nonlawyer Representation in Securities Arbitration, 696 So. 2d 1178 (Fla. 1997).

5.  HOUSE COUNSEL

An attorney licensed in a state other than Florida may work in Florida as Authorized House Counsel for a corporation if the attorney registers pursuant to Chapter 17 of the Rules Regulating The Florida Bar.  The activities which the Authorized House Counsel may perform are limited and do not include going to court.

6.  OUT-OF-STATE ATTORNEYS

An attorney admitted to the practice of law in a state other than Florida may not engage in the general practice of law in Florida or establish a law office in Florida.  An attorney licensed to practice law in a state other than Florida may establish an interstate practice in Florida only if the attorney follows the guidelines of The Florida Bar v. Savitt, 363 So. 2d 559 (Fla. 1978).  An attorney admitted to the practice of law in a state other than Florida may not appear in a Florida court as the representative of a party unless the attorney first seeks permission to appear pro hac vice pursuant to Rule 2.510 of the Florida Rules of Judicial Administration.  (It should be noted that this rule does not allow a resident of Florida to appear pro hac vice.)  Rule 4-5.5 of the Rules Regulating the Florida Bar describes the legal services in an out-of-state attorney can provide in Florida on a temporary basis.

7.  BANKRUPTCY

It constitutes the unlicensed practice of law for a nonlawyer to prepare bankruptcy forms for another.  The Florida Bar v. Catarcio, 709 So. 2d 96 (Fla. 1998).  This includes the petition and any necessary schedules.  However, the nonlawyer may sell blank forms necessary for a bankruptcy and complete the forms with information provided in writing by the individual.  The Florida Bar v. Brumbaugh, 355 So 2d 1186 (Fla. 1978).  It also constitutes the unlicensed practice of law for a nonlawyer to represent someone in bankruptcy court.  The Florida Bar v. Kaufman, 452 So. 2d 526 (Fla. 1984).

8.  DO-IT-YOURSELF LEGAL KITS AND BOOKS

Generally speaking, a nonlawyer may sell legal forms and kits and complete them with information provided in writing by the customer.  Florida Bar v. Brumbaugh, 355 So. 2d 1186 (Fla. 1978).  If the nonlawyer is using a Supreme Court Approved form, the nonlawyer may engage in limited oral communication to elicit the factual information that goes in the blanks of the form.  Rule 10-2.1(a), Rules Regulating The Florida Bar.

Generally speaking, it does not constitute the unlicensed practice of law for a nonlawyer to sell a book that contains general legal information.  New York County Lawyers Association v Dacey, 287 N.Y.S. 2d 422 (N.Y. 1967); 283 N.Y.S.2d 984 (N.Y. App. 1967).  The book may also contain legal forms.

9.  EVICTIONS

It constitutes the unlicensed practice of law for a nonlawyer to represent a third party in an eviction.  Generally speaking, a nonlawyer may not prepare evictions forms for another unless the nonlawyer is merely typing the information provided in writing by the individual or completing a Supreme Court Approved form with the factual information provided by the individual.  An exception exists for property managers.  In The Fla Bar re: Advisory Opinion Nonlawyer Preparation of Landlord Uncontested Evictions, 605 So. 2d 867 (Fla.1992), clarified, 627 So. 2d 485 (Fla.1993) the Court held that a property manager may sign and file complaints for evictions and motions for default in uncontested residential evictions for nonpayment of rent as long as the property manager is using a Supreme Court Approved form.

10.  FEDERAL PATENT PRACTICE

Title 37 C.F.R. §§10.1(1), 10.6, and 10.36 allow an attorney admitted in another state or a registered patent agent to prepare and file patent applications before the Office of Patent and Trademark.  The activity is the practice of law, it is merely authorized by federal regulation.  Therefore, under the dictates of The Florida Bar v. Sperry,  373 U.S. 379 (1963) Florida cannot enjoin the activity as the unlicensed practice of law.  However, the authorization granted by the federal regulations does not extend to actions in state court.  Vista Designs, Inc. v. Silverman, 774 So. 2d 884 (Fla. 4^th. DCA 2001).

11.  FEDERAL TAX PRACTICE

Title 31 C.F.R. § 10 allows attorneys admitted in any state and some nonlawyers to represent individuals before the IRS.  Similar regulations exist for Tax Court.  The activity is the practice of law, it is merely authorized by federal regulation.  Therefore, under the dictates of The Florida Bar v. Sperry, 373 U.S. 379 (1963) Florida cannot enjoin the activity as the unlicensed practice of law.

Federal regulations also allow nonlawyers to prepare federal income tax returns for individuals.  Arguably, this activity is also the practice of law and merely authorized.

12.  GENEALOGISTS/HEIR HUNTERS

While “heir hunting” is generally allowed and would not be considered the practice of law, the heir hunter may not solicit heirs to recover part of the estate or file pleadings to do so.  The Florida Bar v. Heller, 247 So. 2d 434 (Fla. 1971).

13.  HOLDING OUT TO PERFORM LEGAL SERVICES

It constitutes the unlicensed practice of law for a nonlawyer to hold himself out as an attorney either expressly or impliedly.  This would include using the title Esquire (The Fla. Bar v. DeToma, 501 So. 2d. 599 (Fla. 1987)), using the initials J.D. if they are being used to solicit legal services (The Florida Bar v Catarcio, 709 So. 2d 96 (Fla 1998)), using “legal” in the name of your business (The Florida Bar v. Miravalle, 761 So. 2d 1049 (Fla. 2000)), using the title “attorney” or “lawyer” (The Florida Bar v Gordon, 661 So. 2d 295 (Fla. 1995)), and using any other title, such as notario publico, which holds the person out as being able to provide legal services (The Florida Bar v. Borges-Caignet, 321 So. 2d 550 (Fla. 1975)).  It also constitutes the unlicensed practice of law for a corporation to advertise to provide legal services even if the services are being performed by a member of The Florida Bar.  The Florida Bar v. Consolidated Business and Legal Forms, 386 So. 2d 797 (Fla. 1980).  This is due to the fact that a corporation may not practice law.

The Court has also held that it constitutes the unlicensed practice of law for a group of nonlawyers to hold themselves out as a panel of judges capable of granting divorces in Florida.  The Florida Bar v. Gentz, 640 So. 2d 1105 (Fla. 1994).

Rule 10-2.1(c) of the Rules Regulating The Florida Bar defines “nonlawyer” as including members of the bars of other states.  Therefore, the general case law regarding holding out applies to out-of-state attorneys as well.  However, if the attorney is part of a properly constituted interstate practice or is engaging in an authorized activity in Florida, the attorney’s title may appear on letterhead and business cards as long as necessary limiting language is also included.  The Florida Bar v. Kaiser, 397 So. 2d 1132 (Fla. 1981), The Florida Bar v. Savitt, 363 So. 2d 559 (Fla. 1978).

14.  IMMIGRATION

Title 8 C.F.R.  292 permits an attorney admitted in another state to represent individuals before the INS.  This permission does not extend to federal district court.  The activity is the practice of law, it is merely authorized by federal regulation.  Therefore, under the dictates of The Florida Bar v. Sperry, 373 U.S. 379 (1963) Florida cannot enjoin the activity as the unlicensed practice of law.

This authorization does not generally extend to nonlawyers.  (There are some very limited circumstances in which a nonlawyer may represent someone before INS such as on a one case basis for no fee.)  Nonlawyer representation of another in an immigration matter therefore constitutues the unlicensed practice of law.  The Florida Bar v. Matus, 528 So. 2d 895 (Fla. 1988), The Florida Bar v. Becerra, 661 So. 2d 299 (Fla. 1995), The Florida Bar v. Lopez, 231 So. 2d 819 (Fla. 1970).

15.  INDIVIDUAL REPRESENTATION

Generally speaking, a nonlawyer may not represent another in court.  An out-of-state attorney who wishes to represent someone in a Florida court must seek permission to appear pro hac vice in order to do so.  Rule 2.510 Fla.R.Jud.Admin. A nonlawyer may be able to represent another individual in an administrative proceeding if the agency has a properly promulgated rule allowing the activity.  The Florida Bar v. Moses, 380 So. 2d 412 (Fla. 1980).  On a related note, the Court has held that it constitutes the unlicensed practice of law for a nonlawyer to represent an individual in a securities arbitration matter.  The Florida Bar re: Advisory Opinion – Nonlawyer Representation in Securities Arbitration, 696 So. 2d 1178 (Fla.1997).

16.  INSURANCE ADJUSTERS

Florida Statute §626.854 sets forth the definitions and prohibitions on the activities of public adjusters.  Basically, a public adjuster may represent an insured in negotiations with their own insurance company on matters involving property damage.  The public adjuster may not negotiate on matters involving bodily injury or represent the parties in court.  Larson v. Lesser, 106 So 2d 188 (Fla. 1958).

17.  JAILHOUSE LAWYERS

There are several constitutional cases from the United States Supreme Court that deal with the issue of legal assistance to inmates.  From an unlicensed practice of law standpoint, the Code of Federal regulations and the Florida Administrative Code allow limited nonlawyer assistance in parole and probation matters.  However, a nonlawyer may not give an inmate legal advice, draft pleadings for the inmate or represent the inmate in court.  The Florida Bar v. Mills, 410 So. 2d 498 (Fla. 1982).

18.  LAW CLERKS/STUDENTS

A law student or law graduate may not practice law unless certified by the Supreme Court of Florida as a Certified Legal Intern pursuant to Chapter 11 of the Rules Regulating The Florida Bar.  If so certified, the law student or law graduate may represent certain individuals in limited circumstances.

19.  MECHANICS LIENS

The Supreme Court of Florida has held that a nonlawyer may prepare the notice to owner and notice to contractor required by the mechanics lien statute.  The Fla. Bar re: Advisory Opinion – Nonlawyer Preparation of Notice to Owner and Notice to Contractor, 544 So. 2d 1013 (Fla. 1989).  However, a nonlawyer may not prepare liens or give legal advice regarding the statute.  The Fla. Bar re: Advisory Opinion – Activities of Community Association Managers, 681 So. 2d 1119 (Fla. 1996).

20.  PREPARATION OF LEGAL DOCUMENTS

Generally speaking, a nonlawyer may sell forms and complete the form with information provided in writing by the individual.  The Florida Bar v. Brumbaugh, 355 So. 2d 1186 (Fla. 1978). If the nonlawyer is using a form approved by the Supreme Court of Florida, the nonlawyer may engage in limited oral communication to elicit the factual information that goes in the blanks of the form.  Rule 10-2.1 (a), R.Reg.Fla.Bar.  The nonlawyer may not make any changes to the form and may not give advice on possible courses of action.  If the nonlawyer is using a form which has not been approved by the Supreme Court of Florida, the nonlawyer may only type the blanks on the form with information obtained from the individual in writing.  This general rule has been applied in a variety of circumstances including the following:

     a.  BANKRUPTCY

Nonlawyers may only type bankruptcy forms from information provided by the individual in writing; they cannot offer legal advice or help select the forms.  In re: Calzadilla, 151 B.R. 622 (Bkrtcy. S. D. Fla. 1993).

     b.  CORPORATE

A nonlawyer may not prepare corporate documents for another.  This includes the articles of incorporation, the corporate charter and related documents.  The Florida Bar v. Fuentes, 190 So. 2d 748 (Fla. 1966); The Florida Bar v. Keehley, 190 so. 2d 173 (Fla. 1966).

     c.  DIVORCE

The general rule discussed above applies to the family law area.  The forms contained in the family law rules are considered Supreme Court Approved forms.  The nonlawyer may not make any changes to the form and may not give advice on possible courses of action.  If the nonlawyer is using a form which has not been approved by the Supreme Court of Florida, the nonlawyer may only type the blanks on the form with information obtained from the individual in writing.

     d.  INSURANCE DOCUMENTS AND PENSION PLANS

The Supreme Court of Florida has held that a nonlawyer insurance agent may not prepare legal documents, including pension plans.  The Florida Bar v. Turner, 355 So. 2d 766 (Fla. 1978).  However, in the area of pension plans, the Court has held that certain nonlawyers who are authorized to appear before the IRS are allowed to draft certain pension documents, including the plan itself.  The Fla. Bar re: Advisory Opinion – Nonlawyer Preparation of Pension Plans, 571 So. 2d 430 (Fla. 1990).

     e.  PROBATE

The general rule has been applied to the probate area.  The Supreme Court of Florida has held that it constitutes the unlicensed practice of law for a nonlawyer to draft a living trust and related documents for another. The Fla. Bar re: Advisory Opinion Nonlawyer Preparation of Living Trusts, 613 So. 2d 426 (Fla. 1992).  The Court also held that a nonlawyer cannot draft a will for a third party.  The Florida Bar v. Larkin, 298 So. 2d 371 (Fla. 1974).  However, a nonlawyer corporate creditor may file a statement of claim in a probate matter.  Summit Pool Supplies v. Price, 461 So. 2d 272 (Fla. 5^th. DCA 1985).

     f.  REAL PROPERTY (INCLUDING REAL ESTATE LICENSEES & TITLE INSURANCE        COMPANIES)  

In 1950, the Supreme Court of Florida held that a real estate licensee may prepare the contract for sale of real estate but any other documents must be prepared by a member of The Florida Bar.  Keyes Co. v. Dade County Bar Association, 46 So. 2d 605 (Fla.1950).  The drafting of the contract is considered the practice of law, a non-licensee may not draft the contract.  The Court merely carved out an exception for licensees.

The Court later carved out an exception for title insurance companies.  In The Florida Bar v. McPhee, 195 So. 2d 552 (Fla. 1967) the Court held that a title insurance company may conduct the closing and prepare documents incident to the issuance of title insurance only if the company is actually issuing the title insurance.  Again, the activity is the practice of law, it is just authorized in these limited circumstances to these individuals.

As to others, the Court has held that it constitutes the unlicensed practice of law for a nonlawyer to prepare a warranty deed, quitclaim deed, land trusts, leases and mortgage agreements.  The Florida Bar v. Irizarry, 268 So. 2d 377 (Fla. 1972); The Florida Bar v. Hughes, 697 So. 2d 501 (Fla. 1997); The Florida Bar v. Lister, 662 So. 2d 1241 (Fla. 1995); The Florida Bar v. Valdes, 464 So. 2d 1183 (Fla. 1985)(there are 3 Supreme Court Approved leases which nonlawyers may complete with information provided orally by the individual).  However, an authorized agent may bid at a mortgage judicial foreclosure sale.  Heilman v. Suburban Coastal Co., 506 So. 2d 1088 (Fla. 4^th DCA 1987).

21.  SEMINARS ON LEGAL RIGHTS

A nonlawyer may conduct a seminar at which general legal information is given, however, the nonlawyer may not give specific legal advice.  The Florida Bar v. Raymond, James and Associates, Inc., 215 So. 2d 613 (Fla. 1968).  Therefore, while the nonlawyer may give general information, the nonlawyer may not answer specific legal questions.

Know who you are using to perform legal tasks. 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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QA3 Financial Corp., facing bankruptcy and a potential net capital violation, told its 400 brokers late last Friday afternoon it will close in a week.

In an e-mail to its brokers in-boxes about an hour after the close
of the market, Steve Wild, QA3’s owner and CEO, wrote: “In light of the
arbitration award rendered against QA3 on January 14, and the fact that our
errors and omissions carrier has not yet provided coverage set forth in our
policy, we have made the difficult decision to cease conducting business as
a broker-dealer effective as the close of business on February 11.”

 A broker with QA3, who declined to be identified, read
the e-mail to *InvestmentNews.*

The broker said that he had recently been a target of recruiters and was
disappointed about the firm’s closing.

According to a number of industry sources, QA3 has been in discussions with
other independent broker-dealers about a potential sale of the firm’s
assets, but ultimately, a deal failed to materialize.

It was noted that Mr. Wild did not return phone calls on Thursday and Friday to comment about the future of the firm.

QA3, which at its peak did $50 million per year in gross revenue, would be
one of the most substantial independent broker-dealers to exit the business
in the past year.

According to *InvestmentNews*, about two dozen firms last year decided to
shut down or were forced to shut down, facing rising legal costs and a tough
regulatory environment.

Mr. Wild has been one of the most successful entrepreneurs in the
independent-contractor broker-dealer industry. In 1998, he sold Securities
America to American Express in a time when insurance companies were paying
premiums for independent broker-dealers. It is not known how much American
Express paid Mr. Wild for Securities America.

QA3 has been unraveling for quite some time. It was one of the leading sellers of Regulation D private placements in the last decade, and two of those deals, Medical Capital Holdings Inc and Provident Royalties LLC, face fraud charges from the Securities and Exchange Commission.

This firm tried to raise money in 2009, offering Regulation D private
placements notes. According to filings with the SEC, the firm was looking to
sell $3 million in debt to complete acquisitions — but also said it had
raised no money for the deal as of July 2009.

In September, 2010, the firm claimed it faced bankruptcy because of a dispute with
its insurance carrier over the amount of coverage that the independent
broker-dealer has for legal claims stemming from its sale of high-risk
private placements.

QA3 claimed that it has coverage for $7.5 million of legal claims,
damages and expenses stemming from the sale of Reg D offerings. Its carrier,
Catlin Specialty Insurance Co., said that the coverage is capped at $1
million.

Then, in January, 2011, QA3 lost a $1.6 million arbitration award to an elderly
couple who invested in real estate deals that went bust. It appears that
decision was the arbitration award Mr. Wild mentioned in his e-mail to
brokers late on Friday.

The Regulators with the Financial Industry Regulatory Authority Inc. have been
watching the firm’s levels of net capital quite closely as of late, as
losses of securities arbitration claims have to be recorded in a firm’s net
capital calculations. According to its 2009 audited financial report, QA3
had $118,000 of excess net capital at the end of last year.

The firm faces other lawsuits and arbitrations due to different failed
private placements.

If you have been a victim of the alleged fraudulent schemes of  QA3 Financial Corporation, 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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In an article about Florida Viaticals, in “The Florida Bar Journal” by Michael Cavendish, he writes, about 10 years ago, a new cottage industry sprang from the ranks of America’s venture capitalists. Some enterprising person noticed that certain well-to-do, terminal AIDS patients required medical treatment and living expenses after losing their jobs and employer-provided health insurance. Among these were people who were temporarily destitute but with current life insurance policies. Their dilemma was that the policy benefit was needed immediately for medical treatment, experimental cure drugs, or funds to provide a dignified existence, but the benefit funds would not be available until death–when they were no longer needed.

And into this difficult situation strode the venture capitalists, offering the sick insured a viatical settlement, an immediate lump sum cash payment in return for an assignment of the insured’s death benefit. The insured, or viator, was free to spend the cash as desired, and the investor assumed the responsibility of keeping the policy and the premiums current. The transaction seemed simple. The viator received cash when unemployable and uninsurable, and, upon the viator’s death, the investor collected the death benefit and, after subtracting the settlement amount, premiums, and administrative expenses, an attractive return. As the venture capitalists grew in sophistication and medical knowledge, they began to consider other types of terminal disease patients and elderly insureds as potential viators as well.

However, the viatical trade was unregulated, and even unknown in some areas of the country. Bad feelings arose over the industry’s perceived role as investors in the imminent demise of unfortunate, terminally ill, diseased persons. Allegations of insurance fraud arose in some quarters, and privacy concerns exploded as some firms began to take a comprehensive medical and mathematical interest in the gritty details of the health of aviator. Regulation continued to develop even when most people outside of the AIDS community and the fringe of venture capitalism had not heard of the practice of viatical settlements.

Florida, a demographic leader in AIDS patients and a state with a significant elder population, has taken significant steps to investigate and regulate the viatical trade. Florida’s Viatical Settlement Act, revised in 1999 by H.B. 2235, was drafted to regulate the brokers, financiers, and sales agents of the viatical business, and to protect both the viator and the nonprofessional investor from misrepresentations and nondisclosure of the risks of this still-evolving industry. This article examines Florida’s regulation of the young viatical industry and offers suggestions for promoting fair, protective viatical settlement regulations for Florida residents.

Background

The viatical settlements are a 10-year-old investment industry built upon the mature life insurance policies of the old and terminally ill. Viatical investment firms buy life insurance policies at a discount, typically between 20 and 40 percent less than face value. The buyer takes over the payment of premiums from the insured and collects the insured’s death benefit upon the insured’s demise.

Viatical industry reputedly began when opportunistic venture capitalists began purchasing the life policies of endstage AIDS patients at a discount. The industry grew rapidly, brokering $90 million worth of life insurance benefits after its first year of existence. The growth has been geometric. One observer forecasted the viatical settlement market to reach $4 billion per year by this year.

The name viatical derives from the Latin viaticum–roughly translated meaning “provisions for a long journey.” Industry pundits claim that the viaticum was a package of money or food given to Roman soldiers before embarking on a perilous campaign.

How Viaticals Work

Typically, in viatical settlement transactions, the insured (viator) agrees to sell and assign his or her life insurance policy through a broker to an investment firm. The investment firm may then bundle a number of policies together and resell them in fractions to dozens of individual investors, much like a REIT or a mortgage-backed security. The investment firm may also sell an individual policy or a fraction of an individual policy to a single investor, tying that investor’s return directly to the life expectancy of a single viator.

* Benefits to the Viator

The viatical settlements are slowly gaining recognition as an often helpful money management alternative for the very sick and very old, partly because of the favorable tax treatment for viatical settlements laid out in the Health Insurance Portability and Accountability Act of 1996. Viatical settlements are expressly excluded from the terminally ill viator’s gross income for tax purposes because they are technically considered payments rendered by reason of death.

By avoiding the payment of taxes, viators can finance additional medical care and meet living expenses for a longer period. The generous tax treatment, allowing viators to retain 100 percent of their settlement, is predicted to lead to increased life insurance sales, as more healthy individuals learn that they can viaticate their policies in the event of a terminal illness. This tax treatment may change in the future, however, as viatical settlements become more commonplace and greater volumes of money move through them.

* Benefits to the Investor

Investing in viaticals is increasingly commonplace in the United States. An active secondary market for viatical settlements has developed, and most anyone can now invest in viaticals through a network of independent financial planners and life insurance agents. Viaticals have not been labeled as more lucrative, safer, or riskier than traditional debt, equity, and real estate investments, but they are undoubtedly based upon an entirely different calculus than those traditional investments. Viaticals, for instance, are immune to interest rate concerns and economic growth or stagnation. For this reason, some investors may prefer viaticals to traditional modes of investment.

* Expansion of the Market

The viatical investment firms are now branching out beyond AIDS patients and those with terminal diseases. Firms are considering persons with maladies such as cancer and heart disease as a larger potential market. Viatical calculations are based on mortality rates and patient-specific medical diagnoses, so, theoretically, an investment firm could offer a viatical settlement to anyone with an assignable life insurance policy, so long as the firm can reasonably predict the viator’s life expectancy.

Business “key man” policies may become a popular target for viatical investors.Key man policies are sold widely to small and medium-sized businesses which depend upon the knowledge or contacts of an executive or owner to continue to flourish. Sometimes the key man becomes less critical to the business in a financial sense because the aptitudes of other executives or employees have improved or because the key man wishes to retire. Instead of allowing the policy to lapse or converting to an expensive life policy, some businesses may view a lump sum viatical settlement as an effective way to recapture amounts spent on premiums over the years. Again, the prospects of receiving an offer from a viatical investment firm depend largely on the health and age of the insured.

The recent upswing in sales of term life insurance policies can turn even healthy elderly persons into attractive viatical candidates. New growth in viatical investing flows toward wealthy elderly persons with jumbo life policies of a half-million dollars or more. These new jumbo viaticals, sometimes called “high net worth transactions” or “senior settlements,” are touted as a form of estate planning to healthy older individuals who may willingly sacrifice a death benefit which is no longer needed to bear an estate tax burden, or who do not want to continue tying up their cash in high insurance premiums. Caution is called for, however, as the healthy high net worth individual or key man may not qualify for the same favorable tax treatment that HIPAA affords to terminally ill and diseased viators.

Partly in response to the growth of the viatical industry, traditional life insurance companies have been offering accelerated benefit payouts or “living settlements” to certain terminally ill insureds. Accelerated benefit programs are popular with insurers who can cut their death benefit expenses by the amount of the payout reduction. While a handful of insurers will pay a terminally ill insured between 90 and 95 percent of the death benefit, most insurers pay settlements comparable to those offered by viatical investment firms, and many insurance companies have strict criteria for accelerated benefit applicants, usually a life expectancy of between six months and one year, confirmed by the insurer’s experts.

Some employer-sponsored group life policies can be viaticated, although this option is not often disclosed to employees in their benefits manuals. The availability of viatication as an option to terminally ill group life policy holders will depend upon restrictions built into the policy, such as assignability and contestability clauses.

* Policy Concerns

For the viator, privacy has become an issue in viatical settlements. At least one Florida court has questioned whether viators have a continuing right of privacy in their medical records once their health becomes an essential element of a commercial transaction. Florida’s Insurance Code provides that once the viator’s records are held by a licensee, they are subject to review by the Department of Insurance.Whether those records can properly be disclosed to a private third party remains unresolved.

For viatical investors, risk and remorse are two common concerns, one financial and one emotional. First, the experts agree that viaticals are a risky investment. An investor cannot recover his or her investment until the death of the viator, making it problematic for the investor to get to cash when needed. There is a secondary market and the resale of a viatical is possible in theory, but in practice there may be few buyers for a viatical investment which has lost value because the viator has recovered or is outliving the prognosis.

Second, from an emotional standpoint, viaticals are not an appropriate investment for many people. Without mincing words, viatical investors collect when their viator dies. Worse yet, the sooner death occurs, the larger the investor’s return. These feelings can be overcome, and the viatical settlement can operate as a compassionate and humanitarian investment in the case of a truly terminally ill person in dire need of money to pay the rent. To that effect, some viatical investment firms claim that most viators are grateful to receive cash settlements of their life policies. Nevertheless, those who invest in viaticals repeatedly will sooner or later find their nest egg uncomfortably subject to a sick person who exceeds his or her life expectancy, an unthinkable situation for most people that leads some viatical investors to feelings of remorse and thoughts of rescinding the investment contract, which is usually not an option.

While solutions for privacy and remorse are difficult to legislate, in answer to investor and viator education concerns, the National Association of Insurance Commissioners in 1993-94 promulgated a Model Act and a Model Regulation on viatical settlement contracts. Florida’s regulatory scheme for viatical settlements closely resembles the NAIC’s Model Act in many respects.

Florida’s Act

Florida regulates viatical settlements with an eye toward the insured, the ultimate investor, and the middlemen. The Viatical Settlement Act defines the various parties involved in a viatical transaction as follows:

The viator is an insured with a catastrophic or life-threatening illness who enters into a viatical settlement contract.

The viatical settlement broker is one who, on behalf of aviator for a fee or commission, offers or attempts to negotiate viatical settlement contracts between a Florida viator and one or more investment firms, called viatical settlement providers. Brokers typically work closely with viators and collect their commissions from providers after the contract has been executed.

The viatical settlement provider is defined as a person who, in or from Florida, effectuates a viatical settlement contract. Banks, life and health insurers, natural persons who enter into no more than one viatical settlement contract per year, and trusts created to hold viatical contracts are excepted from this definition.Providers are usually the viatical investment firms, progeny of the original venture capitalists, who buy large numbers of life policies and resell them to investors, called viatical settlement purchasers.

The viatical settlement sales agent is a person other than the provider who arranges the purchase, through a viatical settlement purchase agreement, of a life insurance policy or an interest in a life insurance policy. According to representatives at the Florida Department of Insurance, any person referring or soliciting the sale of a viatical investment who collects a fee or commission qualifies to be labeled as a sales agent.

The viatical settlement purchaser is defined as a person, other than a broker or provider, an accredited investor under Rule 501, Regulation D of the Securities Act Rules, or a qualified institutional buyer under Rule 144(a) of the 1933 Securities Act, who gives a sum of money as consideration for a life insurance policy for the purpose of deriving an economic benefit. This typically is the investor or ultimate purchaser.

The act defines a viatical settlement contract as one in which the provider pays compensation or value to the viator in an amount less than the expected death benefit of the subject insurance policy, and the viator in return assigns, transfers, sells, devises, or bequeaths ownership of all or a portion of the subject insurance policy to the provider. The contract can also include a loan secured primarily by a life insurance policy, or a loan secured by the cash value of the policy, excepting loans made by life insurers to insureds under the guidelines of the subject policy.

A viatical settlement purchase agreement is defined as a contract between a purchaser and a party other than the viator to purchase an interest in a life insurance policy. This is usually the investment contract between the purchaser and the provider.

The basic regulatory mechanism of the act is licensure. Brokers, providers, and sales agents are expressly subject to specific licensure requirements. Brokers must submit fingerprints, organizational documents, and sworn biographical statements, and must undergo a background check before receiving a license. Providers also must submit fingerprints and organizational documents and must undergo a background check as a prerequisite to licensure. Additionally, providers must meet a minimum trust deposit requirement of $100,000 with the Department of Insurance. Sales agents must hold valid life insurance agent licenses as defined in [sections] 626.051 of the Florida Insurance Code.

The act provides safeguards for the viators and purchasers who deal with brokers, providers, and sales agents. For example, brokers must disclose to viators the amount of the broker’s compensation and the method used in determining compensation. In addition, providers may not enter into contracts with viators whose policies provide accelerated death benefits in amounts and with prerequisites equal to those offered by the provider, unless the viator’s insurer denies a request to release the accelerated death benefit in writing, or does not respond to such a request within 30 days of receipt. Viators may also rescind a viatical settlement contract within 15 days after receipt of the settlement proceeds, contingent upon return of the proceeds.

The provider must inform the viator of the following: that there are alternatives to viatical settlements, including accelerated death benefits offered by the viator’s insurer; that proceeds of the settlement may be taxable; that proceeds of the settlement could be subject to the claims of creditors; and that the viator’s receipt of the settlement sum could adversely affect the viator’s eligibility for Medicaid or other government benefits.

Moreover, the act provides for the use of independent escrow agents for the simultaneous delivery of contract documents and settlement funds. This last protection reduces much of the viator’s transaction risk and results in orderly, real estate style settlement closings.

For purchasers, the act provides for the following mandatory disclosures to be made by providers and sales agents, among others: that the represented return of the investment is directly tied to the lifespan of one or more insureds; that the projected life span of the insureds is tied to the return, if a return is represented; that the investor shall be responsible for the payment of insurance premiums on the policy, late fees, surrender fees, and other costs, if required by the terms of the viatical contract; that the life expectancy and rate of return are only estimates and cannot be guaranteed; and that the viatical investment should not be considered a liquid purchase, since it is impossible to predict the exact timing of its maturity and the funds may not be available until the death of the insured. Furthermore, providers and sales agents are expressly prohibited from misrepresenting the nature of the viatical transaction, the expected return, or that the return is guaranteed by any government authority, which it is not.

Florida’s Viatical Settlement Act represents an attempt to regulate the viatical trade through strict licensure of brokers, providers, and sales agents, while mandating specific disclosures for the benefit of purchasers and viators. The act is modeled after the NAIC’s model act on viatical settlements and is thus uniform in many respects to viatical regulations in other states. The intended cumulative effect of the act appears to be a baseline standard of public education and protection, a goal somewhat similar to the policy underlying the regulation of investment securities.

This article appeared in the Florida Bar Journal.

If you have lost money on a viatical settlement, 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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Reverse convertible notes offer a high coupon in return for the risk of getting shares valued at under the initial principal. Richard Ketchum, FINRA chief executive and chairman, has noted that it is not recommended for a client to place a significant chunk of one’s life savings into these kind of high risk, complex investments. FINRA has issued Notice to Members 10-09 cautioning the entire brokerage community about their sales practice obligations to the investing public when it comes to RCNs and other risky “Complex Investment Vehicles.”  

Many financial advisors sold structured investments that were pitched as 100% safe and secure.  In reality, these investments were of a high risk and the true risks were not made clear to investors.  Many of the structured products targeted at retail investors were reverse convertibles based upon “blue-chip” and “household-name” stocks that comprise the S&P 500 or the NASDAQ-100 indexes.   Brokers at H&R Block, Ameriprise and Morgan Stanley, Ferris, Baker Watts (acquired previously by RBC Wealth Management) and other firms were heavy sellers of these investments.  FINRA Enforcement has already taken regulatory actions against some of the brokerage firms for selling these notes to unsophisticated, elderly, retired or otherwise conservative investors.    The advantages of the investments were allegedly principal protection, superior risk-adjusted returns and access to hard-to-reach investment sectors.  Unfortunately, these representations were often false.  In reality, these investments had extraordinarily high risks and the true risks were not fully disclosed to investors in violation of the state securities acts.  These investments were unsuitable for many of the clients who purchased them.  Large sums of client assets and/or retirement portfolios were put into these investments.  We feel these were grossly unsuitable and inappropriate investments for many of the people who were sold them and more importantly, the true risks were not made clear.  Some of the sellers of RCNs were large banks and firms like RBS, Citigroup Inc., Barclays PLC and ABN Amro Holding NV. Citigroup brought out new versions linked to name a few, Johnson and Johnson, Apple Inc. and Celgene Corp. paying around 11% over one year. There are also reverse convertibles with stocks like Intel, Pfizer, Hess Corp., Yahoo Inc., Mexico’s Cemex SAB and SanDisk Corp. 

Another major seller of the reverse convertibles was Morgan Stanley Smith Barney and the Revcon notes. Morgan Stanley issued the Morgan Stanley Reverse Convertible Bond on AT&T, Apple (AAPL), Deere & Company (DE), Foster Wheeler (FWLT), Amazon (AMZN), Texas Instruments (TI), AMEX Gold Bugs, Citigroup (C), Consol Energy (CNX), Lehman Brothers (LEH), Range Resources Corporation (RRC), Freeport-McMoRan Copper & Gold, Inc.(“FCX”), Norfolk Southern Corp., Western Union Co. (“WU”), Whole Foods Market Inc. (“WFMI”), Toll Brothers, Western Union (WU), Spiders (SPDR), Ebay, Sunoco (Sun), The Goldman Sachs Group (GS), Valero Energy Group (VLO), Baker Hughes Incorporated (“BHI”),Monsanto Company (“MON”), Southern Copper Corporation (“PCU”), Amylin Pharmaceuticals, Inc.(“AMLN”), National Semiconductor (NSM), Baker Hughes Incorporated (“BHI”), Southern Copper Corporation (“PCU”), Arch Coal, Inc. (“ACI”), Joy Global Inc. (“JOYG”)

Most major brokerage firms were selling structured products and reverse convertibles. H&R Block, UBS, Morgan Stanley Ameriprise, Merrill Lynch and others actively sold them to retail clients.  We feel this will cause arbitration claims and lawsuits to skyrocket in the next 6-12 months.     

 The Financial Industry Regulatory Authority (FINRA) has fined H&R Block Financial Advisors (now Ameriprise Advisor Services) $200,000 for failing to put in place the proper system to supervise its reverse convertible notes (RCN) sales to retail clients as one example. FINRA also suspended H & R broker Andrew MacGill for 15 days while ordering him to pay a $10,000 fine and $2,023 in disgorgement for making unsuitable RNC sales to a retired couple. MacGill recommended that they invest close to 40% of their total liquid net worth in RCNs. Meantime, H & R Block has been ordered to pay the couple $75,000 in restitution for their financial losses. Without denying or admitting to the charges, the brokerage firm and MacGill consented to the finding’s entry. According to FINRA, between January 2004 and December 2007, H&R Block sold RCNs without a system of procedures in place to properly monitor whether possible over-concentrations in RCNs were taking place in customer accounts. FINRA says that the brokerage firm relied on an automated surveillance system to monitor client accounts and review securities transactions for unsuitability but that the system was not set up to monitor RCN placement in customer accounts or RCN transactions. This caused H & R Block to miss signs of when there were potentially unsuitable levels of RCN in client accounts. FINRA says that the firm failed to provide guidance to its supervisors regarding the assessment of suitability standards related to their agents’ recommendation of RCNs to the firm’s clients. This is FINRA’s first enforcement action over RCN sales.

Have been a victim of the sale of risky RCNs by your broker or brokerage?  If so 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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Adam George Meister (CRD # 4354400, Registered Representative, Evans, Georgia) was fined $20,000, suspended from association with any FINRA member in any capacity for 15 months and required to requalify by exam before re-entering the securities industry. The fine is due and payable when and if Meister seeks to re-enter the securities industry. The sanctions were based on findings that Meister engaged in a private securities transaction without his member firm’s prior notification and completed a firm compliance questionnaire stating that he understood he could not sell securities away from the firm and falsely represented that he had not engaged in unapproved transactions. The findings stated that Meister omitted material information in connection with the sale of securities with the intent to deceive or defraud, and failed to provide the customer with a stock certificate or receipt for the full amount of her investment. The findings also stated that the customer complained to Meister’s member firm after the stock issuer ceased operations and liquidated its assets, and the firm settled the customer’s complaint. The findings also included that Meister’s recommendations to the customer were unsuitable in light of her financial situation and investment needs.

This information was found on the FINRA website’s Disciplinary Actions.

If you have been a victim of the alleged fraudulent schemes of Adam George Meister, or a similar situation, 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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Stephen Dee Linge (CRD # 4604676, Registered Representative, Murray, Utah) submitted a Letter of Acceptance, Waiver and Consent in which he was suspended from association with any FINRA member in any capacity for two years. In light of Linge’s financial status, no monetary sanction was imposed. Without admitting or denying the findings, Linge consented to the described sanction and to the entry of findings that he participated in private securities transactions through the sales of securities totaling approximately $395,000 in the form of promissory notes issued by a company, to which he referred firm customers and received monetary compensation from the company’s affiliate for his referrals. The findings stated that Linge failed and neglected to give written notice to his firm of his intention to engage in such activities, and the firm never authorized Linge to engage in such activities. The findings also stated that Linge engaged in business activity outside the scope of his association with his firm for which he received monetary compensation, and failed to provide the firm with prompt written notice of this outside business activity. The findings also included that Linge received compensation totaling $15,600 as a result of the above-mentioned outside business activities and private securities transactions.

This information was found on the FINRA website’s Disciplinary Actions.

If you have been a victim of the alleged fraudulent schemes of Stephen Dee Linge, or a similar situation, 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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Kevin Bradley Martin (CRD # 1704674, Registered Principal, El Dorado Hills, California) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $20,000 and suspended from association with any FINRA member in any principal capacity for six months. Without admitting or denying the findings, Martin consented to the described sanctions and to the entry of findings that he was supervisor of his member firm’s sales and trading operations and direct supervisor of a registered representative who effected pre-arranged and fictitious trades in collateralized mortgage obligations through the firm’s proprietary trading account. The findings stated that the transactions appeared to terminate the firm’s ownership of the securities and to generate profits for the firm and the trader, but they were sham transactions because the firm remained the beneficial owner of the securities and the purported transaction profits concealed actual and substantial losses. The findings also stated that the registered representative was able to accomplish and maintain his scheme because Martin reviewed his activity on a daily basis rather than in a manner that would evidence trading patterns over time and expose the firm’s losses and risk. The findings also included that Martin was responsible for the firm’s overall compliance with applicable laws, rules and regulations and for implementing the firm’s supervisory policies, practices and procedures, and Martin failed to supervise the registered representative in a manner reasonably designed to achieve compliance with applicable laws, rules and regulations. FINRA found that Martin failed to cause the firm to preserve electronic communications.

This information was found on the FINRA website’s Disciplinary Actions.

If you have been a victim of the alleged fraudulent schemes of Kevin Bradley Martin, or a similar situation, 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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Lisa Renee Mello (CRD # 1465948, Registered Principal, Lafayette, California) submitted a Letter of Acceptance, Waiver and Consent in which she was fined $8,000 and suspended from association with any FINRA member in a Financial and Operations Principal (FINOP) capacity for six months. Without admitting or denying the findings, Mello consented to the described sanctions and to the entry of findings that she served as her member firm’s FINOP and was responsible for monitoring the firm’s financial condition to determine whether its net capital was sufficient to conduct a securities business. The findings stated that one of the firm’s registered representatives effected trades in collateralized mortgage obligations (CMOs) through the firm’s proprietary trading account. The findings also stated that the transactions appeared to remove beneficial ownership of the CMOs from the firm, but they were sham transactions because the securities remained in the firm’s inventory. The findings included that the registered representative was able to accomplish and maintain his scheme because Mello and others at the firm reviewed his activity on a daily basis rather than in a manner that would evidence trading patterns over time and expose the firm’s losses and risk.
FINRA found that as a result of the registered representative’s activity and the firm’s method of monitoring it, the firm conducted a securities business on multiple days while failing to maintain its required minimum net capital and, because Mello failed to discern the true effect of the registered representative’s trading on the firm’s net capital, she allowed the firm to conduct a securities business on multiple occasions while in violation of SEC Exchange Act Rule 15c3-1.

This information was found on the FINRA website’s Disciplinary Actions.

If you have been a victim of the alleged fraudulent schemes of Lisa Renee Mello, or a similar situation, 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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Matthew Norman O’Brien (CRD # 4655082, Registered Representative, West Branch, Michigan) submitted a Letter of Acceptance, Waiver and Consent in which he was barred from association with any FINRA member in any capacity. Without admitting or denying the findings, O’Brien consented to the described sanction and to the entry of findings that he signed the name of a customer of his member firm on a Letter of Authorization form and then used the form to effect a transfer of $3,000 from the customer’s brokerage account to O’Brien’s personal bank account without the customer’s knowledge or approval. The findings stated that O’Brien borrowed $13,000 from the customer, who was not related to O’Brien and contrary to his member firm’s written procedures prohibiting its registered persons from entering into lending agreements with customers unless the customer was an immediate family member. The findings also stated that O’Brien executed a trade in the customer’s account without the customer’s knowledge or consent. The findings also included that O’Brien failed to respond to FINRA requests for information and documents.

This information was found on the FINRA website’s Disciplinary Actions.

If you have been a victim of the alleged fraudulent schemes of Matthew Norman O’Brien, or a similar situation, 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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Michael Scott Silva (CRD # 3056607, Registered Supervisor, Petaluma, California) submitted a Letter of Acceptance, Waiver and Consent in which he was fined $5,000 and suspended from association with any FINRA member in any capacity for 10 business days. Without admitting or denying the findings, Silva consented to the described sanctions and to the entry of findings that he recommended that a customer invest approximately $140,000 in a principal-protected note (PPN) and caused the purchase of the PPN in the customer’s account without having reasonable grounds for believing that the recommendation was suitable for the customer in light of the customer’s annual income and total net worth. The findings stated that the PPN issuer filed for bankruptcy protection and defaulted on the PPN, resulting in the PPN’s value dropping precipitously, and the customer ultimately sold the PPN for approximately $8,800.

This information is available on the FINRA website’s Disciplinary Actions.

If you have been a victim of the alleged fraudulent schemes of Michel Scott Silva, or a similar situation, 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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