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In an article from InvestmentNews.com, June 7, 2011, Bruce Kelly writes that the litigation stemming from a series of oil and gas private placements that failed two years ago have now ensnared a giant in the clearing and custody business, National Financial Services LLC, a unit of Fidelity Investments.

The trustee overseeing the liquidation of assets of Provident Royalties LLC, which the Securities and Exchange Commission charged with fraud in 2009, last month requested that a federal judge in Dallas issue a subpoena to National Financial. In the court filing, the trustee wants access to retirement account documents of clients of four broker-dealers that sold preferred stock of Provident and used National Financial as a clearing firm.

Bruce Kelly writes that dozens of broker-dealers sold the Provident offerings from September 2006 to January 2009, raising $485 million. Regarding National Financial records, the trustee wants documents of 579 clients who bought $39.1 million of Provident from four firms: J.P. Turner & Co. LLC, Milkie/Ferguson Investments Inc.,National Securities Corp. and Securities America, Inc.

A spokesman for National Financial, said the firm typically does not comment on matters involving its correspondent clearing, broker-dealer clients. Clearing firms do not sell securities but rather hold them for broker-dealers and their clients.

The InvestmentNews.com article goes on to say that calling Provident a “massive Ponzi scheme,” the trustee claimed that the “trustee is entitled to information concerning the relationship between the broker-dealers and their respective clearing houses, and how those funds were transferred, paid for and accounted for by the clearing houses,” the court filing stated.

“As custodial fiduciary, [National Financial] should have agreements with the various broker-dealers they did business with and records for every dollar that went through their controlled account,” according to the filing.

Last year the trustee sued dozens of broker-dealers to claw back revenue and commissions from the sale of Provident.

If you feel you have been an alleged victim of these or other broker-dealers and were sold Provident Royalties private placements, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com.

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

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The following is a list of the Broker-dealers that sold Provident Royalties private placements.

 

 

 

Firm name   Total sales   Total commission paid to BD  
Advisory Group Equity Services Ltd. $110,000 $70,650
AFA Financial Group LLC $2,455,000 $456,150
  $585,000 $66,650
Asset Management Strategies LLC $220,000 $2,250
Ausdal Financial Partners Inc. $100,000 $2,250
Barron Moore Inc. $250,000 $96,750
Boogie Investment Group Inc. $410,000 $110,150
Brookstone Securities Inc. $460,000 $76,500
Callaway Financial Services Inc. - $22,500
Calton & Associates Inc. $300,000 $40,750
Capital Financial Services Inc. $33,655,000 $5,510,725
CapWest Securities Inc. $21,745,000 $3,058,700
Chester Harris & Co. $340,000 $297,500
Community Bankers Securities LLC $2,780,000 $355,950
Crescent Securities Group - $9,375
David Harris & Co. Inc. $850,000 $94,000
DeWaay Financial Network LLC $850,000 $134,525
Eagle One Investments LLC $360,000 $42,500
Empire Financial Group Inc. $2,750,000 $234,200
Empire Securities Corp. $205,000 -
E-Planning.com Securities Inc. $3,765,000 $483,925
First Allied Securities Inc. $380,000 $11,250
Gk Securities LLC $50,000 -
Grant Bettingen Inc. $215,000 $19,350
GunnAllen Financial Inc. $22,255,000 -
Harrison Douglas Inc. $1,830,000 $569,900
Independent Financial Group $495,000 -
INVEST Financial Corp. $100,000 -
Investlinc Securities LLC $2,095,000 $183,275
Investors Capital Corp. $3,400,000 $427,975
J.P. Turner & Co. LLC $11,600,000 -
Jesup & Lamont Securities Corp. $100,000 $13,500
Kaiser & Co. $100,000 $160,650
Lighthouse Capital Corp. $250,000 $33,750
Main Street Securities LLC $205,000 $45,450
Matheson Securities LLC $100,000 $37,800
Milkie Ferguson Investments Inc. $4,145,000 $480,350
Morrow Wealth Management $30,000 -
National Securities Corp. $3,665,000 $437,250
Newbridge Securities Corp. $25,000 $15,750
NEXT Financial Group Inc. $33,485,000 $3,190,200
Okoboji Financial Services Inc, $21,910,000 $2,261,225
Private Asset Group Inc. $2,015,000 $204,150
Provident Asset Management $50,000 -
QA3 Financial Corp. $32,585,000 $6,974,450
Questar Capital Corp. $250,000 $24,125
Securian Financial Services Inc. $50,000 -
Securities America Inc. $17,995,000 $3,723,475
Securities Network LLC $215,000 $89,550
SII Investments Inc. $100,000 -
Sterling Enterprises Group Inc. $100,000 $13,000
Summit Brokerage Services Inc. $560,000 $81,000
Unaffiliated Broker-Dealer $150,000 -
United Equity Securities LLC $660,000 $173,200
United Securities Alliance Inc. $550,000 $401,850
Waterford Investor Services Inc. - $2,250
Wedbush Morgan Securities Inc. $325,000 -
WestPark Capital Inc. $785,000 $114,250
WFP Securities Corp. $6,755,000 $1,286,775
Williams Financial Group Inc. $175,000 -
Workman Securities Corp. $9,045,000 $1,239,025
  $250,990,000 $33,380,775

 

 

Source: U.S. Bankruptcy court filings, Northern District of Texas, case # 09-33886

If you feel you have been an alleged victim of these broker-dealers and were sold Provident Royalties private placements, call a Securities Arbitration Lawyer for a free consultation on how to potentially recover your losses.  To speak with an attorney, call 888-760-6552, or visit www.stockmarketlawsuit.com. Soreide Law Group, PLLC., representing investors nationwide before FINRA  the Financial Industry Regulatory Authority.

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Yesterday, Bruce Kelly’s article from InvestmentNews stated that National Securities Corp. is the latest broker-dealer to face disciplinary action from Finra over the sale of private placements gone bust.

According to National Securities’ profile on Finra’s BrokerCheck system, the firm received a Wells notice last month from the Financial Industry Regulatory Authority Inc. A Wells notice indicates that the regulator intends to bring an enforcement action against an individual or a firm.

Kelly goes on to say that National Securities reps sold investors about $3.7 million of notes issued by Provident Royalties LLC, according to the latter’s bankruptcy court filings. The Regulation D offering from Provident involved a series of oil and gas private placements that the Securities and Exchange Commission in 2009 claimed were fraudulent,Mark Roth, the firm’s general counsel for National Holdings Corp., the parent of National Securities, did not return phone calls Tuesday seeking comment.

In the Investment News article they say that National Securities received the Wells notice regarding violations of product suitability rules, e-mail supervision rules, and standards of commercial honor and principles-of-trade rules, according to the BrokerCheck report. The product mentioned in the report was a “private placement.”

The Finra officials have made broker-dealers’ sale of private placements that failed during the market collapse their No. 1 enforcement priority this year.

Broker-dealers have begun to feel the pinch. Workman Securities Corp. this month reached an agreement with Finra to pay $700,000 for partial restitution to more than a dozen clients who had sued the firm over investments in Medical Capital Holdings Inc. and Provident Royalties. Like Provident, the SEC charged Medical Capital with fraud in 2009.

In a meeting of brokerage executives this month in Phoenix, James Shorris, executive vice president and executive director of enforcement with Finra, said Reg D private placements and non-traded real estate investment trusts are listed as the first and second areas of focus for Finra, respectively.

If you feel you have been a victim of the alleged broker-dealer private placement fraudulent schemes of  the brokerages listed above , National Securities Corp., Medical Capital Holdings, Workman’s Securities Corp.,or Provident Royalties,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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