Articles Tagged with settlement

According to a recent New York Times article entitled “Morgan Stanley Neglected Warnings on Broker,” Steve Wyatt, a Morgan Stanley broker in Ridgeland, Mississippi, was accused of trading account erratically. He was also accused of improperly managing tens of millions of dollars in client money. Mr. Wyatt was with the company for five years, finally being terminated in 2012, after two years of investigation against him. Former clients claim they lost about half their money with him, or around $50 million. This past week, the Mississippi secretary of state said in a settlement with Morgan Stanley that it had “failed to reasonably supervise” Mr. Wyatt. The settlement subsequently barred Mr. Wyatt and his immediate supervisor from the securities industry for life and Morgan Stanley was forced to create a $4.2 million fund to reimburse clients for their losses. So far, in its cases, Morgan Stanley has had to pay about $3 million. Allegedly, Mr. Wyatt raised so much concern that Morgan Stanley supervisors stopped him from trading in his personal accounts, yet, the firm allowed him to continue to trade money he managed for clients.

In his first year at Morgan Stanley, Wyatt put his client’s money into only two stocks, BlackBerry and Valence, a batter maker that later went bankrupt. Four clients saw their stocks fall more than 60 percent. He also allegedly bought 60 percent of the outstanding shares in a small Israeli computer cable company, RiT, for his clients. The heavy concentration in a single stock was problematic. He was terminated by he firm when evidence showed he had been using a personal email address to push clients to buy investments that he held in his own private accounts. Morgan Stanley can be liable for investment losses because of Mr. Wyatt, or another broker’s failure to take into account client’s best interests. We sue firms such as Morgan Stanley in the arbitration process for clients who have lost money, and we do so on a contingency fee basis only, so we only make money if you recover yours. Please call us today to discuss your options. The call is free.

The Securities and Exchange Commission (SEC) announced yesterday that State Street Bank and Trust Company has agreed to pay $382.4 million in a global settlement for misleading mutual funds and other custody clients by applying hidden markups to foreign currency exchange trades. The SEC found that State Street realized substantial revenues by misleading custody clients about Indirect FX (foreign currency exchange trading), telling some clients that it guaranteed the most competitive rates available. State Street instead set prices largely driven by predetermined, uniform markups and made no effort to obtain the best possible prices for these clients. State Street agreed to pay $167.4 million in disgorgement and penalties to the SEC, a $155 million penalty to the Department of Justice and at least $60 million to ERISA plan clients in an agreement with the Department of Labor.

The SEC will issue its order instituting the settled administrative proceeding only after a federal court approves State Street’s proposed settlement with private plaintiffs in pending securities class action lawsuits concerning its price of foreign currency exchange trades. State Street agreed to admit certain findings in the SEC’s order. The SEC’s Division of Enforcement Director, Andrew J. Ceresney stated: “State Street misled custody clients about how it priced their trades and tucked its hidden markups into a corner where they were unlikely to notice. Financial institutions cannot mislead the customers about their trading costs.” State Street will be required to pay $75 million in disgorgement plus $17.4 million in interest to harmed clients as well as a $75 million penalty.

Robert W. Baird & Co. was ordered to pay $2.1 million in restitution to 1,400 customers for overcharges related to mutual fund fees, according to a settlement disclosed yesterday with the Financial Industry Regulatory Authority (FINRA). Baird discovered the overcharges made to customers in May 2015 and reported to FINRA that it believed the customers had not received sales charge waivers for which they were eligible. The customers in question were retirement accounts and charitable groups. The firm failed to “reasonably supervise” the application of sales charge waivers for mutual fund sales to certain customers, relying on its financial advisors to determine whether the sales charges applied. The problem started in July 2009.

The Securities and Exchange Commission (SEC) recently forced Morgan Stanley Smith Barney to pay $1 million in a settlement that marked a turning point in the agency’s focus on cybersecurity issues, an area that the agency has proclaimed a top enforcement priority in recent years. The settlement addressed various cybersecurity deficiencies that led to the misappropriation of sensitive data for approximately 730,000 customer accounts. Morgan Stanley violated the “Safeguards Rule.” Adopted in June 2000, the rule requires registered broker-dealers, investment companies and investment advisers to (1) adopt written policies and procedures that address administrative, technical and physical safeguards reasonably designed to insure the security and confidentiality of customer records and information, (2) protect against anticipated threats or hazards to the security or integrity of customer records and information and (3) protect against unauthorized access to or use of customer records or information that could result in substantial harm or inconvenience to any customer.

The SEC found that MSSB failed to implement sufficient safeguards to protect customer information. MSSB lacked reasonably designed and operating authorization modules restricting employee access to only customer data for which the employee had a legitimate business need, failed sufficiently to audit and/or test module effectiveness and did not adequately monitor and analyze employee access to, and use of, information portals. Because of this, a financial advisor, Galen Marsh, was able to access sensitive personally identifiable information relating to the customers of other financial advisors, including their account balances, securities holdings and other personal information. The information he obtained was then offered for sale on at least three sites. This settlement is the first significant enforcement action undertaken by the SEC since it began prodding financial firms to shore up their cybersecurity defenses five years ago.

The Texas securities regulator John Morgan, ordered SoBell Corp, a Mississippi-based firm, to stop selling investments in pension benefits in its “Pension Income Stream Program” in Texas. Many of the targets in these pension income streams are veterans or disabled people; those people who receive monthly distributions of money following service in the military or settlements from personal injury lawsuits. They are approached by salespeople offering them a lump sum to buy the rights to some or all of the payments they would otherwise receive in the future. After acquiring these rights, these pension purchasing or structured settlement companies (factoring companies) turn around and sell the income streams to retail investors, often through a financial advisor or insurance agent. These include pension loans, pension income programs, mirrored pensions, factored structured settlements or secondary-market annuities.

SoBell executed agreements with the recipients of pension benefits to sell their income stream to investors for at least $35,000 to more than $1 million, offering annual returns of seven to eight percent. Allegedly, SoBell and its owner, Andrew Gamber, were accused of fraud by selling unregistered securities while making “misleading and deceiving” statements to investors, according to the Texas securities regulator. Also, Mr. Gamber also allegedly failed to disclose sanctions that state securities regulators imposed against him from 2013 until 2014 in Arkansas, Pennsylvania, California and New Mexico. The emergency cease and desist order for SoBell and Gamber was issued last week. These pension streams can be extremely risky for investors.

Barclays and Credit Suisse have settled federal and state charges that they misled investors in their dark pools, and Barclays admitted it broke the law. The firms must pay a combined total of $154.3 million. Both are alleged to have misled investors in the dark pools, saying they would be protected from predatory high-frequency trading tactics. Dark pools are private exchanges or forums for trading securities, unlike stock exchanges, they are not accessible by the investing public and are known for their lack of transparency. Barclays is to pay $70 million split evenly between the Securities and Exchange Commission (SEC) and New York state. Credit Suisse will pay a $60 million fine split between the regulators, plus an additional $24 million in disgorgement to the SEC for executing 117 million illegal sub-penny orders out of its dark pool known as “Crossfinder.”Credit Suisse will neither admit nor deny the allegations as part of the settlement.

The Securities and Exchange Commission (SEC) yesterday charged Goldman Sachs $15 million to settle charges that its securities lending practices violated federal regulations. According to the SEC Order, customers frequently ask broker-dealers such as Goldman to locate stock in order to short sell it. Granting that, means that the firm has borrowed, arranged to borrow, or reasonably believes it could borrow the security in order to complete the short sale. The SEC found that Goldman violated securities laws by not providing locates to customers where it had not performed an adequate review of the securities to be located. They also were inaccurately recorded in a firm log. Andrew J. Ceresney, Director of the SEC’s Enforcement Division stated, “The requirement that firms locate securities before effecting short sales is an important safeguard against illegal short selling. Goldman Sachs failed to meet its obligations by allowing customers to engage in short selling without determining whether the securities could reasonably be borrowed at settlement.” The SEC questioned the firm’s lending practices during an investigation in 2013. If you suffered losses with Goldman Sachs, you may be able to recover your losses. Please call our Chicago-based securities law offices to speak to an attorney for free about your options.

According to a settlement proposal sent to the federal court yesterday, Barclays has agreed to pay $384 million, HSBC $285 million and RBS $255 million to settle forex manipulation suits. The claims stated that the banks manipulated the global foreign exchange market, and were part of a series of settlements that charged a total of nine global financial institutions in the alleged manipulation of the $6 trillion foreign exchange market. The settlement claims have added up to $2 billion. Similar class action lawsuits in London, Europe and other U.S. cases could follow.

The Blackstone Group (NYSE:BX) agreed to pay $39 million to settle charges that the Securities and Exchange Commission (SEC) brought against them. The SEC charges were related to the disclosure failures by Blackstone’s three private equity fund advisers. $29 million of the total settlement will go to the affected fund investors. Blackstone Management Partners, Blackstone Management Partners III and Blackstone Management Partners IV did not provide investors with enough information regarding the benefits obtained from accelerated monitoring fees and discounts on legal fees. They also failed to disclose adequately the acceleration of monitoring fees paid by fund-owned portfolio companies prior to its sale or initial public offering (IPO). The value of the fund decreased because of the payments to the companies themselves. The companies also failed to implement adequately supervised policies and procedures. Blackstone was in breach of its fiduciary duty.

If you invested money with Blackstone, please call our securities law firm at 312-332-4200 for a free consultation with an attorney. There is no obligation. We take cases on a contingency fee basis.

LPL Financial reached a settlement with state regulators on Wednesday and will be prepared to pay a $1.43 million fine. This comes after the sale of nontraded real estate investment trusts (REITs) the brokerage firm sold from January 1st, 2008 until December 31st, 2013. A North American Securities Administration Association task force found LPL agents violated minimum net worth, income and concentration standards set by product issuers, state concentration limits and the firm’s internal guidelines when selling the REITs. LPL did not provide adequate supervision of the transactions. LPL on Wednesday also reached an agreement with Massachusetts Attorney General Maura Healey to pay $1.8 million in fines for unsuitable sales of leveraged exchange-traded funds (ETFs) to 200 investors in the state. LPL also reached a similar settlement with the Delaware Department of Justice on Tuesday regarding leveraged ETFs. The firm will pay a $50,000 administrative fine and set up a $150,000 investor-restitution fund.

If you invested money with LPL Financial, you may be able to bring a claim against them to recover money losses. Please call our securities law firm in Chicago, Illinois to speak to an attorney. We sue firms such as LPL to recover money for investors. The call is free with no obligation, and we only take cases on a contingency fee basis so we don’t make money unless you recover.

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