Articles Tagged with UIT

AdobeStock_35532974-1-300x200According to an Order Accepting Offer of Settlement with the Financial Industry Regulatory Authority (FINRA), Berthel, Fisher & Co. allegedly violated securities laws. According to the Order, a former registered representative with the company, Jeffrey Dragon, generated approximately $417,000 in concessions for himself and the firm, at the expense of his customers, by recommending and effecting a pattern of unsuitable short-term trading of unit investment trusts (UITs). Many of the customers were unsophisticated investors, and Dragon recommended that they liquidate UIT positions that they had held for only a few months. FINRA alleged that Dragon’s recommendations were excessive and unsuitable. Furthermore, Dragon allegedly designed his recommendations to prevent his customers’ UIT purchases from qualifying for sales-charge discounts.

According to the settlement, “Berthel Fisher allowed this activity to occur, and profited from it as a direct result of its inadequate system for supervising UIT trading. Throughout the UIT periods, the company’s only regular supervisory review of UIT recommendations and customer activity consisted of manual reviews of daily trade blotters that did not indicate either how long UIT positions had been held before liquidations or the source of funds used to purchase UITs. Thus, Berthel Fisher supervisory system was not reasonably designed to prevent short-term and potentially excessive UIT trading.”

A broker has a duty to only recommend those investments that are suitable for every client, based on their age, net worth, investment objectives and investment sophistication. If he does not, his brokerage firm may be held liable for those losses, on a contingency fee basis, in the FINRA arbitration forum. The brokerage firm has an obligation to reasonably supervise its employees while they are registered there.

Stoltmann Law Offices is investigating Jeffrey Grayson, a registered broker with Wells Fargo Advisors in Florham Park, New Jersey. Allegedly, Grayson misrepresented and recommended an unsuitable unit investment trust (UIT), recommended an unsuitable limited partnership investment, breached fiduciary duty, acted negligently, breached contract and made unsuitable recommendations. These securities are not suitable for all investors, and a broker must take into account a customer’s net worth, age, investment objectives and investment sophistication before recommending or selling a security. If he does not, his brokerage firm, Wells Fargo, may be responsible for money losses. Please call us today for your free consultation with one of our attorneys to discuss how we might be able to help you bring a claim against Wells Fargo for Grayson’s transgressions. The call is free, so please call today. There is no obligation.

Grayson was registered with Gibraltar Securities in Florham Park, New Jersey from April 1981 until September 1999, Tucker Anthony Inc. in Boston, Massachusetts from September 1999 until March 2002, RBC Dain Rauscher in New York, New York from March 2002 until October 2002, JB Hannauer in Parsippany, New Jersey from September 2002 until October 2009 and RBC Capital Markets in Parsippany, New Jersey from October 2009 until April 2011. He is currently registered with Wells Fargo in Florham Park and has been since April 2011. He has five customer disputes against him, one of which is currently pending.

Capitol Securities recently entered into a Letter of Acceptance, Waiver and Consent (AWC) with the Financial Industry Regulatory Authority (FINRA). FINRA fined Capitol Securities $470,000 for supervision, its anti-money laundering program and the alleged unsuitable sales of Reverse Convertible Notes. According to the AWC, from January 1, 2008 until August 31, 2011, a registered representative of Capitol Securities recommended and effected 24 unsuitable purchases of customized Reverse Convertible Notes totaling $4 million in the accounts of eight customers. Capitol Securities also allegedly failed to apply sales charge discounts to eligible Unit Investment Trusts (UITs) and mutual fund purchases. According to the AWC, “Many of the customers were over the age of 60 and had modest or conservative investments objectives and risk profiles. Furthermore, all of the customers’ accounts were heavily concentrated in RCNs, with the amounts of these investments constituting a substantial portion of their net worth. The recommendations were unsuitable given the customers’ risk tolerance, investment objectives, ages and net worth.”

A brokerage firm must supervise its representatives so that they do not recommend unsuitable investments, such as the registered representative with Capitol Securities. We bring claims against firms such as Capitol in the FINRA arbitration forum on a contingency fee basis to recover investment losses for investors. Please call our Chicago-based securities law firm today to speak to an attorney for free about your options.

Did you lose money with Trustmont Financial Group? If so, the attorneys at Stoltmann Law Offices are interested in speaking with you about your losses. Trustmont is a Pennsylvania-based securities brokerage firm and the Financial Industry Regulatory Authority (FINRA) recently brought a regulatory action against it. FINRA accused the firm of failing to retain business-related emails, failing to inspect and register branch offices, failing to supervise its representatives’ use of consolidated reports, failing to supervise the content of a representative’s radio program and failing to properly supervise unit investment trust (UIT) transactions. Trustmont Financial Group agreed to pay a $100,000 fine for these transgressions.

Recently, the Securities and Exchange Commission (SEC) filed a complaint against one of Trustmont’s brokers, Peter Kohli. The SEC alleged that Kohli engaged in securities fraud related to his mutual fund, the DMS Funds. If you suffered losses with Peter Kohli, please call our securities law firm today to speak to an attorney about how you may be able to sue Trustmont Financial Group. Or, if you invested money with the firm, you may be able to bring a claim against it. By calling our Chicago-based securities law firm at 312-332-4200, you will be able to speak to an attorney about your options. Please call today.

The Financial Industry Regulatory Authority (FINRA) recently charged two Boca Raton, Florida firms, Newbridge Securities and Shearson Financial Services, for securities violations that resulted in customers losing money. Newbridge Securities Corp allegedly failed to apply discounts to certain purchases. These discounts were supposed to be applied to sales charges, and as a result, clients paid more than $172,000 in excess charges. This misconduct occurred with unit investment trust (UIT) purchases from May 2009 until April 2014. Newbridge was fined $115,000 and agreed to pay clients back more than $188,000.

Shearson Financial was fined $100,000 by FINRA for allegedly inaccurately marking orders as unsolicited, even when they were solicited. The firm was warned in 2012, that 47 order tickets had been inaccurately marked. FINRA also stated that Shearson maintained inaccurate books and records of 1,873 transactions from June 2013 until October 2015. Please call us today for a free consultation with an attorney if you invested money with Newbridge Securities or Shearson Financial. We may be able to help you bring a claim against the firm for investment losses. We take cases on a contingency fee basis only.

According to a cnbc.com report on Tuesday, the Financial Industry Regulatory Authority (FINRA) has been cracking down on firms related to their sales of unit investment trusts (UITs). UIT Sales What This Means For Investors  UITs are investments in a fixed portfolio of income-producing securities that have a defined maturity date, designed to provide capital appreciation and/or dividend income. FINRA found that Woodbury Financial Services, a brokerage firm in Oakdale, Minnesota, failed to identify and apply sales charge discounts to certain customers’ eligible purchases of UITs. The result was customers paying excess sales charges of $98,937. Woodbury is part of AIG Advisor Group, which is currently being sold by American International Group to Lightyear Capital and PSP Investments as of last month.

Another firm, ProEquities, a brokerage firm in Birmingham, Alabama, owned by Protective Life, was disciplined for similar UIT violations. FINRA claimed that ProEquities “lacked written supervisory procedures to identify UIT transactions eligible for sales charge discounts and lacked a process to assure that such discounts were properly applied. This resulted in excess charges to clients of $109,709. For this, the company was censured and fined $165,000 and ordered to pay $109,709 in restitution to its customers.

The Financial Industry Regulatory Authority (FINRA) cracked down on Next Financial, Key Investment and Stephens for failing to give clients discounts for large purchases of investment products. The three firms were ordered to pay $1.2 million in fines and restitution. They were charged with failing to apply sales charge discounts to certain customers’ eligible purchases of unit investment trusts (UITs) and related supervisory failures, according to the settlements. A UIT is an exchange-traded mutual fund offering a fixed portfolio of securities having a definite life. Each unit typically costs $1,000 and is sold to investors by brokers. They can be resold in the secondary market. They are held to maturity and typically issue redeemable securities or “units,” which means the UIT will buy back an investor’s units at the investor’s request, at their approximate net asset value, according to the Securities and Exchange Commission (SEC). Next Financial was fined $125,000 and ordered to pay restitution of $216,000, Key Investment Services was fined $100,000 and Stephens was fined $235,000 and ordered to pay restitution of $459,000. Next Financial and Key Investment Services failed to give discounts from June May 2009 to April 2014 and Stephens failed to give discounts from June 2010 to May 2015. In October, FINRA ordered 12 firms to pay restitution and fines of $6.7 million for failing to apply sales charge discounts on purchases of UITs and other supervisory related failures, and also fined six broker-dealers for failing to give discounts on large real estate investment trust (REIT) sales.

The Financial Industry Regulatory Authority (FINRA) cracked down on Next Financial, Key Investment and Stephens for failing to give clients discounts for large purchases of investment products. The three firms were ordered to pay $1.2 million in fines and restitution. They were charged with failing to apply sales charge discounts to certain customers’ eligible purchases of unit investment trusts (UITs) and related supervisory failures, according to the settlements. A UIT is an exchange-traded mutual fund offering a fixed portfolio of securities having a definite life. Each unit typically costs $1,000 and is sold to investors by brokers. They can be resold in the secondary market. They are held to maturity and typically issue redeemable securities or “units,” which means the UIT will buy back an investor’s units at the investor’s request, at their approximate net asset value, according to the Securities and Exchange Commission (SEC). Next Financial was fined $125,000 and ordered to pay restitution of $216,000, Key Investment Services was fined $100,000 and Stephens was fined $235,000 and ordered to pay restitution of $459,000. Next Financial and Key Investment Services failed to give discounts from June May 2009 to April 2014 and Stephens failed to give discounts from June 2010 to May 2015. In October, FINRA ordered 12 firms to pay restitution and fines of $6.7 million for failing to apply sales charge discounts on purchases of UITs and other supervisory related failures, and also fined six broker-dealers for failing to give discounts on large real estate investment trust (REIT) sales.

Stoltmann Law Offices is investigating David Michael Miller, a former registered representative with The Huntington Investment Company. According to a Financial Industry Regulatory Authority (FINRA) disciplinary proceeding, Miller recommended that his clients purchase 141 unit investment trusts (UIT) which totaled approximately $5.4 million in 129 customer accounts. The UITs invested were comprised of closed-end funds (CEFs) invested in municipal securities. Many of them used leverage to purchase municipal securities. Miller allegedly failed to conduct reasonable due diligence prior to making these recommendations. A registered representative is required to take into account the investment’s composition, basis for distribution payments, volatility, liquidity, use of leverage and valuation at termination. He is also required to take into account the customer’s age, net worth, portfolio and investment objective before recommending a security. If he does not, his firm can be liable for investment losses because they had a duty to reasonably supervise him.

UITs are investment companies that offer a fixed, unmanaged portfolio, generally of stocks and bonds, as redeemable “units” to investors for a specific period of time. They are designed to provide capital appreciation and/or dividend income. In Miller’s case, he misrepresented to his customers that the UITs could lose value only if bond rates rose or municipalities defaulted, their principal would be returned at trust termination so long as bond rates did not rise and municipalities did not default and any losses from net asset value fluctuation would be less than the interest payments the customers would receive over the life of the trust. He also allegedly told customers that the investments were safe, when they were not.

David Michael Miller was registered with New England Securities in Columbus, Ohio from February 2008 until July 2008 and The Huntington Investment Company in Columbus from July 2008 until August 2013. He has 10 customer disputes against him. He is not licensed within the industry. Please call our securities law offices if you have complaints about David Michael Miller or his former firm, The Huntington Investment Company. The call is free.

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