Articles Tagged with 2014

James Parker Scullin recently entered into a Letter of Acceptance, Waiver and Consent (AWC) with the Financial Industry Regulatory Authority (FINRA). Scullin is accused of placing an unauthorized trade in a customer’s account. This is against securities rules and regulations. At the time, Scullin was registered with UBS. On September 12, 2014, he placed a trade in the amount of over $5,000,000 without informing the two individuals with authority to place trades in the account or seeking their authorization. When asked about the trade, Scullin then denied it. For this, he was suspended from the industry for nine months and fined $15,000. If you suffered losses with James Parker Scullin, you may be able to recover them by suing UBS in the FINRA arbitration process. We sue firms such as UBS on a contingency fee basis for investors.

Scullin was registered with Moseley Securities Corp from October 1986 until March 1998, and UBS in Coral Gables, Florida from June 2011 until November 2014. He is not currently registered with any firm. He has one pending customer dispute against him.

Fidelity Management Trust Co. has been accused of breaching its ERISA fiduciary duties for allegedly receiving unreasonable compensation through its brokerage window feature and a kickback scheme with an investment advice company. Fidelity allegedly selected mutual funds with higher expense ratios for the plan brokerage window that allowed the investment firm to rake in “significant amounts” in revenue-sharing payments in violation of the Employee Retirement Income Security Act. The lawsuit was filed in the U.S. District Court for the District of Massachusetts by participants in the Delta Air Lines Inc. retirement plan. As of 2014, the plan had approximately $7.5 billion in assets, of which more than $2.8 billion were invested through Fidelity’s brokerage window. The participants paid Fidelity enormous fees simply for obtaining access to mutual funds that were already established on Fidelity’s platform. It was also alleged that Fidelity earned unreasonable compensation by engaging in a kickback scheme with Financial Engines Advisors or to participants, according to the complaint.

Customers of Raymond James can sue the firm for investment losses sustained through activities like unsuitable investment recommendations, fraud, churning, conversion or theft and other related actions.  A common claim against Raymond James made in FINRA arbitration actions deals with the firms supervision, or lack thereof, of the financial advisor who engaged in the wrongful conduct.  In these cases, what the firm did, or didnt do, is absolutely crucial.

The Financial Industry Regulatory Authority (FINRA) announced yesterday that it fined Raymond James & Associates and Raymond James Financial Services, Inc. $17 million for widespread failures related to the firms’ anti-money laundering programs. Both firms were accused of failing to establish and implement adequate anti-money laundering procedures, which resulted in the firms’ failure to properly prevent or detect, investigate, and report suspicious activity for several years. Raymond James and Associates’ Compliance Officer, Linda L. Busby, was also fined $25,000 and suspended for three months.

Between 2006 and 2014, both companies’ growth was not matched by the growth in their compliance systems and processes. This was because they were forced to rely on written procedures and systems across different departments to detect suspicious activity. The end result was that certain “red flags” of potentially suspicious activity went undetected or inadequately investigated. Raymond James Financial Services Inc. was sanctioned in 2012 for inadequate anti-money laundering procedures, and as part of that program, had agreed to review its program and procedures, and certify that they were reasonably designed to achieve compliance.

A former investment advisor, Michael Donnelly, was sentenced to 99 months in prison after running a scam that defrauded elderly and unsophisticated clients out of $2 million. Donnelly allegedly spent the money on car payments, private school tuition for his children and other personal expenses. The civil charges were settled with the Securities and Exchange Commission (SEC) last October and Donnelly agreed to pay back the $2 million he stole. He had been banned for a lifetime from the securities industry previously. A federal judge in Philadelphia then sentenced him to 99 months in prison to be followed by three years of supervised release after accepting his guilty plea to one count of wire fraud and one count of securities fraud. Donnelly had been president of Coastal Investment Advisors of Wilmington, Delaware, and Coastal Equities, an affiliated broker-dealer during the period of the fraud. He also held top roles at the RIAs Donnelly Steen & Company and Donnelly Advisors Group. He siphoned elderly client funds and then issued bogus account statements and trade confirmations to cover the theft. He allegedly ran the scheme from November 2007 until 2014. The complaint against him also claimed he made presentations before elderly investors, promising them that he could net them better interest rates than what banks were paying.

The Securities and Exchange Commission (SEC) recently fined Royal Alliance Securities Inc., SagePoint Financial Inc., and FSC Securities Corp, all three independent broker-dealers operating under the umbrella of the AIG Advisor Group, to the tune of $7.5 million. The SEC also ordered the broker-dealers to pay restitution of $2 million to clients for persistent failures to use lower-cost mutual funds in clients’ advisory accounts. All three broker-dealers were accused of “breaches of fiduciary duty and multiple compliance failures, and from at least 2012 until 2014, the three broker-dealers invested advisory clients in mutual fund share classes with 12b-1 fees instead of lower-fee share classes of the same funds that were available without 12b-1 fees.” The fees are annual marketing fees paid to advisers that are supposed to be earmarked for the adviser’s ongoing service and education. According to an order, approximately $2 million in lower-fee share classes should have been available to investors. The three firms also allegedly failed to disclose the conflict of interest due to a financial incentive to place clients with non-retirement accounts in higher-fee mutual fund share classes. The SEC also stated that during the relevant period, the three firms failed to devote sufficient resources to their compliance infrastructure to support their investment advisory business, and, as a result, several compliance failures at the advisor group firms in their fee-based advisory businesses contributed to the violations.

Stoltmann Law Offices is investigating Aequitas Capital and its affiliates and is interested in speaking to investors who may have invested money in the company. The firm managed $1.67 billion in assets last year, up from $250 million in 2011. The firm raised money from investors and allegedly used it to invest in various alternative investments, including student loans and unpaid hospital bills. The company recently provided an update to investors that indicated that it was having liquidity challenges and had engaged in restructuring. In 2013, Western Property Holdings LLC sued Aequitas Capital Management Inc. over a claim of alleged breach of duty. In 2014, a federal judge ordered Aequitas to set aside $2.5 million ahead of a trial in a civil lawsuit relating to commissions on a portfolio of student loans. Also in 2014, Aequitas was forced to answer questions about its link to embattled Corinthian Colleges Inc. Aequitas also offered Reg D private placements, which tend to be highly risky, illiquid, high-commission investments. Brokerage firms who recommended these investments may be liable for investment losses because they unsuitably recommended them. Please call us today to find out your options.

Currently, the Securities and Exchange Commission (SEC) requires registered financial institutions, including broker-dealers, investment companies and investment advisers, to adopt written policies and procedures reasonably designed to ensure the security and confidentiality of customer information and records. In the past few years, the commission has grown increasingly focused on cybersecurity compliance. Today, investment firms and the like face the daily threat of a data breach or other cybersecurity event, such as hacking, phishing, spamming, bot-networking operating and the use of spyware and malware and other criminal activities. In 2016, the SEC’s cybersecurity compliance will “reflect certain practices and products that the Office of Compliance Inspections and Examinations perceives to present potentially heightened risk to investors and/or the integrity of the U.S. capital markets. In April, 2014, the SEC announced a series of examinations to identify and assess cybersecurity risks and preparedness in the securities industry. In February 2015, the Financial Industry Regulatory Authority (FINRA) released their own “Report on Cybersecurity Practices.” In September 2015, the SEC launched a second initiative to examine the cybersecurity compliance and controls in place at broker-dealers and investment advisory firms. Its concern came from public reports that had identified cybersecurity breaches related to weaknesses in basic data controls at firms.

The Financial Industry Regulatory Authority (FINRA) ordered Louisville-based money management firm Hilliard Lyons, to pay more than $500,000 as part of a financial industry fine and repayment plan to bilked investors. It will pay $175,000 and refund $328,491 to customers who were billed for excessive sales charges between 2009 and 2014. The firm agreed earlier this month to the findings and punishment in a Letter of Acceptance, Waiver and Consent (AWC). In it, they were accused of “failing to apply sales charge discounts” toward the purchase of so-called unit investment trusts (UITs) by an unspecified number of buyers. FINRA stated that mostly discounts are applied when investors do “rollovers” or “exchanges” within their trusts. UITs consist of a relatively fixed portfolio of securities deposited in a trust and sold in units to the public. They typically contain stocks and bonds and generate capital appreciation or dividend income, or both, over a specified term. Four months ago, the U.S. Securities and Exchange Commission (SEC) fined the firm $420,000 for “offering and selling municipal securities on the basis of materially misleading disclosure documents.”

ccording to a Financial Industry Regulatory Authority (FINRA) Award, Morgan Stanley was accused of breach of fiduciary duty, wrongful conduct, constructive fraud, fraud by misrepresentation and omission, breach of written contract, failure to supervise and violation of state and federal securities laws. It was alleged that a Morgan Stanley agent ran a ponzi scheme, took personal loans and recommended unsuitable investments, including the Jackson National Life annuity. For this, Morgan Stanley was ordered to pay compensatory damages in the amount of $150,000 and $510,000, punitive damages in the amount of $37,500 and $127,500, and interest of $187,000 at the rate of 5% per annum accruing from May 20, 2014 through the date of payment on the award of $187,500.

Stoltmann Law Offices is investigating Michael Squellati, who was discharged from UBS Financial in 2014. He was allegedly told by branch management not to transact a particular security, and he did anyway. The transaction was a duly-authorized client trade. He also allegedly misrepresented material facts related to an investment, breached fiduciary duty, committed fraud and converted funds in connection with a hedge fund investment. In 2001, Squellati was also discharged from Prudential Securities following allegations that he traded without authorization and marked “solicited” trades as “unsolicited.”

According to his Financial Industry Regulatory Authority (FINRA) Broker Check report, Michael Squellati was registered with Prudential Securities in New York, New York from October 1997 until May 2008, Bear, Stearns & Co. in Los Angeles, California from May 2001 until May 2008 and UBS in Century City, California from May 2008 until December 2014. He is currently registered with Oppenheimer & Co. in Los Angeles, California and has been since January 2015. He has two customer disputes against him. If you lost money with Squellati, you may be able to sue his former firm, UBS, in the FINRA arbitration forum. Please call our securities law firm in Chicago for a free consultation with an attorney to find out how.

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