All Releases

SEC Settles with UBS Over Losses in the Willow Fund, a UBS Proprietary Alternative Investment

October 28, 2015 | Silver Law Group

UBS has agreed to pay $17.5 million to settle charges from the U.S. Securities and Exchange Commission that the UBS Willow Fund changed its investment strategy focused on distressed debt without informing investors and subsequently lost over 80% of its value. However, investors have lost millions of dollars which has not been recovered. UBS Willow Management LLC and UBS Fund Advisor LLC agreed to be censured and some of the funds will be returned to investors for restitution. However, most investors will only receive a de minimis amount of their entire loss. Some investors have already pursued securities arbitration claims against UBS for allegedly misrepresenting the fund.

According to the SEC, UBS Willow Management, made investments in the UBS Willow Fund from 2000 through 2008 that were consistent with a strategy described in its offering and marketing materials, which was based on the debt increasing in value.

Problems with the fund began in 2008 when UBS Willow Management shifted the fund’s investments to include large quantities of credit default swaps, a bet that the value of the related debt would decline, without adequately disclosing the shift in investment strategy, the SEC claimed.

NFP Advisor Services, LLC Censured and Fined $500,000 by FINRA

October 27, 2015 | Silver Law Group

NFP Advisor Services, LLC Censured and Fined $500,000 by FINRA on sillverlaw.com

Allegations include failure to supervise registered representatives, among others

Austin, Texas-based NFP Advisor Services, LLC has been censured and fined $500,000 according to their FINRA BrokerCheck report. As a FINRA member firm since 1997, the censure and fine follow allegations of failure to abide by several regulatory obligations related to its supervision of registered representatives.

According to the firm’s FINRA Letter of Acceptance, Waiver and Consent (AWC), the firm allegedly failed to commit the necessary time, attention, and resources to several critical regulatory obligations related to its supervision of registered representatives, including the failure to supervise the private securities transactions of 79 representatives.

Indiana-based Broker Thomas Joseph Buck Permanently Barred by FINRA

October 26, 2015 | Silver Law Group

Indiana-based Broker Thomas Joseph Buck Permanently Barred by FINRA on silverlaw.com

Allegations include misrepresentation and other misconduct

Thomas Joseph Buck’s 33-year career in the securities industry, beginning with Merrill Lynch, Pierce, Fenner & Smith, Inc (Merrill Lynch) in December 1981 is now over. According to the Financial Industry Regulatory Authority (FINRA) Department of Enforcement document filed on July 24, 2015, Buck allegedly engaged in misrepresentations and other misconduct while handling client accounts.

According to the filing, beginning in at least 2009, Buck engaged in unethical and improper business practices that increased his status as a top-producing broker. It is alleged that Buck placed customer assets in commission-based accounts that resulted in higher commission-earnings on his part, even though Buck knew customers would have paid less to maintain fee-based accounts. In addition, Buck allegedly not only misled customers in the relative costs associated with these accounts, he exercised discretion in customer accounts without written or oral authorization and made unauthorized trades in certain customer accounts.

Legal Investigations Follow SEC Risk Alert Regarding Oil & Gas Investments

October 24, 2015 | Silver Law Group

Legal Investigations Follow SEC Risk Alert Regarding Oil & Gas Investments on silverlaw.com

Bank-issued structured notes under scrutiny after sustained losses over a 2 year period

A risk alert issued in August by the Securities and Exchange Commission (SEC) has prompted legal investigations into potential claims by investors. In its alert, the SEC announced it had analyzed 26,600 structured product transactions that equaled $1.25 billion, finding numerous instances where investments were made that were unsuitable for investors’ objectives and needs.

In addition, the SEC found that the brokerage firms involved followed weak and insufficient supervisory procedures, especially in their supervision of sales of structured products. Of interest in the legal investigation are structured notes linked to oil and gas prices issued by the following firms, among others:

New Rule to Protect Investors Has Brokers Upset

October 23, 2015 | Silver Law Group

New Rule to Protect Investors Has Brokers Upset on silverlaw.com

Wronged investors feel otherwise about ending abuse by brokers

There’s a new rule being proposed by the Labor Department that will help protect average investors from brokers who don’t always act in their customer’s best interest. This rule, five years in the making, has the brokerage industry concerned that Wall Street will be governed by a fiduciary standard.

While many brokers do put their customers’ best interests first, the new rule could make a difference in protecting the average investor from those who don’t. According to a recent article in the New York Times, “under current standards, brokers only have to recommend suitable investments, a requirement that permits them, for example, to recommend a more expensive fund that pays a higher commission even when an identically performing, cheaper fund would have been the better choice.”

Five Arizona Residents Charged By SEC for Stealing From Investors

October 22, 2015 | Silver Law Group

According to one accused, they “robbed Peter to pay Paul” while living the high life

Living the high life has come to an end for five Arizona who were charged with stealing millions from investors by the SEC. According to the SEC release on September 11, the participants allegedly used stolen funds to make car payments, buy clothes and fund travel and entertainment at luxury resorts, casinos and strip clubs.

It is alleged that the five individuals—Jason Mogler, James Hinkeldey, Casimer Polanchek, Brian Buckley and James Stevens—raised close to $18 million from 225 investors who believed the group was acquiring and developing beachfront property in Mexico, as well as operating recycling facilities and purchasing foreclosed residential properties for resale. They told investors they were buying promissory notes from licensed brokers, however, none of the accused were registered with the SEC to solicit investments, according to Michele Wein Layne, Director of the SEC’s Los Angeles Regional Office.

Proposed Fiduciary Duty Rule Poised to Pass, Leaves Brokers Seething

October 20, 2015 | Silver Law Group

New Department of Labor rule looks to protect investors from over-zealous brokers

In an effort to protect investors from conflicted investment advice, the Department of Labor is seeking to instate a new fiduciary duty rule that has left many independent brokers-dealers chafing in their suits.

What is a fiduciary duty?

Broker Bradley Drude Suspended and Fined due to Undisclosed Conflict of Interest

October 17, 2015 | Silver Law Group

Drude’s failure to disclose details surrounding fraud of elder investor drives FINRA action

In response to allegations surrounding his relationship with an elderly investor, Louisiana-based broker Bradley Drude agreed to an Offer of Settlement to FINRA in which he was assessed a deferred fine of $25,000 and suspended from association with any FINRA member in any capacity for six months, according to the FINRA Disciplinary Action report.

It is alleged that Drude failed to disclose that an elderly client had named him as executor and beneficiary in her will and granted him general power of attorney. It is also alleged that he typed a new will for the client naming himself as such and drove the client to a notary’s office to have her sign it—all without the involvement or assistance of the client’s attorney. The estate was valued at approximately $3 million. When the client requested a change to the will, it is alleged that Drude prepared a codicil to the will, but did not drive the client to the notary to have it notarized, knowing it would be invalid without notarization.

Philip Grasso Jr. Barred by FINRA Due to Allegations of Elder Fraud

October 16, 2015 | Silver Law Group

Broker misconduct results in “substantial harm’ to elderly customers

Philip Leonard Grasso Jr.’s 18-year career in the securities industry is now over due to allegations of elder fraud, where he purportedly misused funds, willfully misrepresented material facts and failed to complete on-the-record testimony requested by FINRA.

According to the FINRA Disciplinary Action, Philip Grasso has been permanently barred from association with any FINRA member in any capacity as of May 2015. There are three causes of action included in the findings.

Broker Justin Amaral Permanently Barred from Securities Industry

October 15, 2015 | Silver Law Group

Failure to provide on-the-record testimony to FINRA results in disciplinary action

After termination from employment with Morgan Stanley in 2014 following allegations surrounding his status as an executor and beneficiary in a client’s estate and his use of discretion in several client accounts, broker Justin Amaral has been permanently barred from the securities industry by FINRA.

According to Amaral’s BrokerCheck record, as of June 2015 the Boston-based broker’s 12 years in the securities industry has ended as a result of his failure to appear for an on-the-record testimony requested by FINRA during the course of an investigation. The requested testimony may be related to the reasons Morgan Stanley terminated Amaral’s employment.