Articles Tagged with Exchange Commission

The Securities and Exchange Commission and its Chair, Mary Jo White, announced a new program for reducing “undue” risk in the $63 trillion asset management business on Thursday. The industry is comprised of 11,000 investment advisors and more than 10,000 mutual funds registered. Assets under management for most of the largest firms have doubled since 2004. White unveiled a three-part plan for increasing oversight of the industry and reducing “undue” risk to investors. “We are now embarking on a new period of regulatory change, driven by long-term trends in the industry and the lessons of the financial crisis,” White said. The SEC will improve data to determine risk levels and the requirements will be expanded and updated. It will also ensure that registered funds can identify and address risks to newer investment products such as exchange traded funds (ETFs) and derivatives. Finally, the SEC will make sure that brokerage firms have a plan for moving client assets to safety, in case of another financial crisis.

William Wells, who pleaded guilty on securities wire fraud charges earlier this year, was sentenced Tuesday in Manhattan federal court to 46 months in prison. Wells, formerly of Manhattan and New Jersey, was ordered to pay restitution as well, in a yet-to-be-determined amount, forfeit the proceeds of his scheme and undergo three years of supervised release, according to a press release issued by the US Attorney for the Southern District of New York. Wells used his company, investment firm Promitor Capital LLC, to defraud more than 30 investors out of $1.5 million. The investors included his family, friends and colleagues. He convinced them to invest with him by telling them he had consistently achieved positive returns in the stock market. He then used their money to pay for credit card bills, car payments and private school tuition. Wells was charged after an investigation led by the office’s Securities and Commodities Fraud Task Force, with assistance from the Federal Bureau of Investigation and the US Securities and Exchange Commission.

The Securities and Exchange Commission’s (SEC) Atlanta office is conducting an inquiry into Global Ministries Foundation and the 2011 sale of $12 million worth of bonds to purchase the Warren and Tulane apartments. The apartments are allegedly infested with roaches and caked with sewage. The ministry owns two municipal bond financed low-income apartment complexes. The trustee, Bank of New York Mellon Corp, sued Global Ministries in May and won the appointment of a receiver after the bonds defaulted. Two months earlier, in March, the U.S. Department of Housing and Urban Development cut off rent subsidies for more than 1,000 residents that backed the bonds and relocated them because of health and safety violations. Subsequently, the bonds defaulted.

Richard Hamlet, a Baptist minister, ran GMF, which built a 10,500 unit low-rent real estate empire with money raised in the municipal-bond market. In 2011, GMF issued $12 million in bonds through Memphis Health, Educational and Housing Facility Board, to finance the purchase of Warrant and Tulane in an area where as many as 40 percent of the families live in poverty. The SEC has since told the receiver to preserve documents created on or after June 1st, 2010, concerning the bond issue.

A U.S. Court of Appeals denied Raymond Lucia Sr.’s petition to review and vacate an SEC decision. Lucia was a former investment adviser and talk show radio host who was barred from the industry last year by the SEC. The court stated “In view of the Securities and Exchange Commission’s findings that Mr. Lucia repeatedly and recklessly engaged in egregious conduct without regard to his fiduciary duty to his clients, petitioners fail to show that the commission’s sanction was unwarranted as a matter of policy without justification in fact, or that it failed to consider adequately his evidence of mitigation. According, we deny the petition for review.” His failure to win an appeal is a setback for other advisors who have been challenging the SEC’s use of administrative law judges to handle disciplinary cases. Mr. Lucia wants to have cases such as these heard in federal court, where they claim they have more rights than in administrative proceedings. Last September, the SEC voted to uphold a decision by an in-house judge from 2013 to punish Lucia for misleading investors about the efficacy of his “buckets of money” approach to building retirement assets. The SEC said Mr. Lucia used inflation rates to “back-test” the strategy that did not reflect historical rates of inflation for the time periods to which he referred. At the time, Mr. Lucia was barred from the industry and he and his firm were ordered to pay a total of $300,000 in fines.

JSG Capital Investments, a San Francisco hedge fund, has been accused of defrauding investors out of millions of dollars, with its CEO and a colleague having spent the money at strip clubs, casinos and sporting events. The U.S. Securities and Exchange Commission claims JSG Capital took close to $9.3 million in a ponzi scheme. The men reportedly sold fake pre-IPO shares of Uber, Airbnb and Alibaba, before transferring the money to their own personal accounts. Jason Gill, the CEO and founder, along with Javier Carlos Rios, allegedly defrauded 200 investors out of their money, taking new money and paying it to old investors. They used companies such as Airbnb, and Uber Technologies to entice investors, promising them that they would invest their money this way. Both men have been charged with conspiracy to commit wire fraud and wire fraud, according to the Department of Justice. Of the $9.3 million they are accused of raising, they are said to have stolen in excess of $5.5 million. Gill and Rios allegedly transferred less than 1% of investor funds to JSG Entity brokerage accounts and no pre-IPO company shares were ever purchased.

Did you lose money with Daniel and Matthew Rivera of Robbins Lane Properties? If so, please call our securities law offices in Chicago at 312-332-4200 for a free consultation with one of our securities attorneys. We may be able to help you bring a claim against them and sue Robbins Lane Properties in the Financial Industry Regulatory Authority (FINRA) arbitration forum on a contingency fee basis. We only make money if you recover yours.

According to a complaint filed in the District Court of New Jersey, the Securities and Exchange Commission alleged that Daniel and Matthew Rivera, brothers, engaged in a fraudulent ponzi scheme in which they falsely promised investors they would share profits of their real estate venture, Robbins Lane, the redeveloped and sold properties. Robbins Lane was a sham, with no employees and no operations, and the brothers misappropriated funds for their personal benefit. Many of the investors they scammed were elderly and unsophisticated and their money went to pay for the Rivera brothers’ family college tuition and homes, sporting events and different businesses, among other things. Approximately $2.7 million was fraudulently obtained from 30 investors.

Brokers have a responsibility treat investors fairly, which includes obligations such as making only suitable investments for the client. In order to make a suitable recommendation the broker must meet certain requirements. First, there must be reasonable basis for the recommendation the product or security based upon the broker’s investigation and due diligence into the investment’s properties including its benefits, risks, tax consequences, and other relevant factors. Second, the broker then must match the investment as being appropriate for the customer’s specific investment needs and objectives such as the client’s retirement status, long or short term goals, age, disability, income needs, or any other relevant factor.

Miguel Ortiz was named a respondent in a Financial Industry Regulatory Authority (FINRA) complaint, alleging that he defrauded customers by making false and misleading statements and omitting material information in a joint brokerage account he convinced his customers to fund. Before that, the customers in question had allegedly lost almost $210,000, when 80% of their account was lost. Ortiz had the customers invest in his company, which was not registered with the U.S. Securities and Exchange Commission or FINRA or any other regulatory agency. He allegedly told the customers, based in Venezuela, he was providing investment management services, when, in fact, his company was not authorized to legally be an investment services company.

Ortiz also allegedly failed to inform the customers that their accounts were declining in value, and he made up account statements to send to them that falsely inflated the true value of their investments. The statements also indicated that the customers owned assets that did not exist. Ortiz allegedly promised to give the customers a check for the misappropriated funds, but never did.

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