Securities Arbitration Lawyers Blog

How the SEC Plans to Tackle Fraud and Protect Retail Investors from Unnecessary Risk

March 20, 2017 | Silver Law Group

How the SEC Plans to Tackle Fraud and Protect Retail Investors from Unnecessary Risk on silverlaw.com

The agency plans to get tougher on brokers and firms throughout 2017

The SEC’s Office of Compliance Inspections and Examinations (OCIE) has a new series of goals for 2017. The agency’s department, which is responsible for examining brokers, firms, and financial products to prevent fraudulent activities, identify risks, and inform government policies, has consulted employees throughout the organization to determine its direction for the new year.

Throughout this process, the SEC has focused on three main points of analysis: researching risks for retail investors, looking at risks for retired and elderly investors, and examining overall market risks.

FINRA Fines and Suspends Waterford, Connecticut Broker William Stephen Smith

March 16, 2017 | Silver Law Group

Allegations include non-disclosure, false statements, and being named executor of an elderly client’s estate

William Stephen Smith, a broker with nearly 30 years of professional experience, was fined $10,000 and suspended for three months by the Financial Industry Regulatory Authority (FINRA). It’s reported that Smith didn’t disclose that he had served as the executor of a client’s estate, and that he received compensation for doing so while working at National Planning Corp. in Waterford, CT.

Smith’s firm has procedures in place requiring that their registered brokers disclose any outside business activities prior to engaging in them. In addition, the firm prohibits their representatives from acting as executors for client estates. In annual compliance questionnaires, Smith is reported to have lied, stating that he had notified his firm about his outside activities and that he wasn’t named as a beneficiary to any accounts.

FINRA Suspends and Fines Broker Jeffrey Jacobson

March 16, 2017 | Silver Law Group

Jacobson was sanctioned for failing to supervise a broker who is accused of executing unsuitable investments for elderly clients

The Financial Industry Regulatory Authority (FINRA) suspended Minnesota broker Jeffrey Jacobson for 15 days ending on December 12th, 2016 and fined him $7,500. Jacobson is alleged to have failed to adequately supervise a representative of his firm who initiated hundreds of trades for his elderly customers without contacting them. The representative is also reported to have unsuitably recommended transactions to those customers, including a variety of short-term trades in corporate and municipal bonds. Churning of municipal bonds is a particular problem, because the costs of bond trading are not transparent.

As a supervisor, Jacobson is alleged to have ignored warning signs of these unsuitable transactions, including unusually high trading activity in client accounts.

Former NYLife Securities LLC Broker Amr Aboulmagd Is Permanently Barred from Acting as a Broker

March 15, 2017 | Silver Law Group

Former NYLife Securities LLC Broker Amr Aboulmagd Is Permanently Barred from Acting as a Broker on silverlaw.com

He allegedly misrepresented information regarding both fixed and variable annuities to customers who suffered financial losses as a result

While the Financial Industry Regulatory Authority (FINRA) permanently barred former NYLife Securities LLC broker Amr Mostafa Aboulmagd in October 2016, additional complaints continue to be filed against him.

With a total of four customer disputes lodged against him, Aboulmagd was barred by FINRA due to his failure to appear for on-the-record testimony requested by the regulatory body in connection to an investigation into allegations of misrepresentation and making unsuitable recommendations to customers regarding switches from a fixed annuity to a variable annuity.

Summit Equities Broker Rembert McNeer is Given a 1-Year Suspension from FINRA

March 15, 2017 | Silver Law Group

Summit Equities Broker Rembert McNeer is Given a 1-Year Suspension from FINRA on silverlaww.com

The Parsippany, New Jersey broker was also hit with a $10,000 fine

Up until recently, Rembert McNeer had a clean record with the Financial Industry Regulatory Authority (FINRA). A broker for over 30 years, McNeer worked for three firms: E.F. Hutton & Company Inc.; G.A. Michele, Inc. in New York City; and Summit Equities, Inc. located in Parsippany, NJ.

But in October of 2016, FINRA found that McNeer failed to supervise the private securities transactions of one of his representatives. McNeer was the representative’s immediate supervisor, as well as the member firm’s chief compliance officer.

Catalyst Hedged Futures Strategy Fund (HFXIX) Under Investigation Over Recent Drop in Value and Misclassification

March 15, 2017 | Silver Law Group

Silver Law Group is investigating Catalyst Capital Advisors LLC (CRD# 139895/ SEC# 801-66886) (“Catalyst”) and one of its mutual funds, Catalyst Hedged Futures Strategy Fund Class I (“HFXIX”) after the fund lost approximately 30 percent of its value in the span of three months.

HFXIX is a fund that seeks to provide positive returns in all market conditions with low volatility and low correlation to the equity markets by investing in option strategies on equity index futures contracts, according to the fund’s fact sheet. The fund primarily invests in long and short call and put options on U.S. Stock Index Futures contracts, and lists the primary reason for investing as capital appreciation and preservation.

The fund has performed well relative to other managed futures funds, which fell 2.8 percent. But according to an InvestmentNews report, the fund is actually an options writing fund, which opens up arguments of misclassification against Catalyst.

Douglas Wayne Studer : Elder Financial Fraud Alert

March 14, 2017 | Silver Law Group

An alleged inheritance of a client’s condo led to the Florida broker’s downfall

In 2001, Douglas Studer started working for Prime Capital Services, Inc. in Port Richey, Florida, which began his 15-year career. That career ended in September of 2016 after an investigation by the Financial Industry Regulatory Authority (FINRA). FINRA found that Studer had violated his firm’s policy by being named in a client’s estate documents to inherit the client’s waterfront condominium.

Studer didn’t admit or deny the allegations against him, but he did agree to the sanctions, which make him ineligible to act as a broker or have anything to do with firms that sell securities to the public.

FINRA Tips for Spotting and Preventing Elder Financial Abuse

March 14, 2017 | Silver Law Group

FINRA Tips for Spotting and Preventing Elder Financial Abuse

Elder financial abuse is a subject that has increasingly drawn scrutiny by regulatory bodies. The Financial Industry Regulatory Authority (“FINRA”) and the Securities Exchange Commission (the “SEC”) have published numerous investor alerts, regulatory guidance, and primers on the elder financial abuse. FINRA has even hosted panels to educate elderly investors and financial representatives on how to combat elder financial abuse. Our firm has launched a website targeting elder financial abuse as well at www.elderfinanci alfraudattorneys.com.

Most recently, as part of FINRA’s 2017 Regulatory and Examination Priorities Letter, the regulatory body announced its focus on senior investors. Among other things, FINRA will focus on the suitability of speculative and/or complex investment products recommended to elderly investors. But a big question for most elderly individuals and their loved ones is how they can avoid elder financial abuse in the first place. An SEC guide for seniors to protect themselves from elder financial abuse lists the following among other items to protect elderly investors:

Meyers Associates Changes Name to Windsor Street Capital

March 14, 2017 | Silver Law Group

Meyers Associates, L.P. changed its name in 2016 from “Meyers Associates, L.P.” to “Windsor Street Capital, LP.”

Under the moniker Meyers Associates (CRD# 34171), the firm was known for hiring brokers whose FINRA BrokerCheck reports were riddled with disclosures. According to an InvestmentNews report in 2014, Meyers Associates “stands out as a haven for registered representatives with black marks on their employment histories.”

According to that InvestmentNews report, about 12% of registered securities professionals have some type of disclosure event on their records. The percentage of registered representatives with disclosure events at Meyers Associates was five times higher than the industry average. Additionally, according to the report, of the 63% of the firm’s brokers with disclosure on their BrokerCheck reports, the average amount of disclosures was 4.5 per broker.

Cetera Brokerage Firm Investors Capital Corp Fined $1.1 Million Over Sales of Unit Investment Trusts

March 14, 2017 | Silver Law Group

Cetera Brokerage Firm Investors Capital Corp Fined $1.1 Million Over Sales of Unit Investment Trusts

Silver Law Group is investigating investor claims against Cetera Financial Group-owned Investors Capital Corp. (CRD# 30613) after FINRA fined the firm and ordered it to pay restitution of over $1.1 million for allegations of short-term trading of unit investment trusts (“UITs”).

According to the Acceptance, Waiver & Consent (“AWC”) Investors Capital Corp. (“Investors Capital”) and FINRA entered into in October 2016, FINRA found that Investors Capital recommended unsuitable short-term trading of UITs and Steepener Notes (“Steepener Notes”) in 74 customer accounts. Additionally, Investors Capital failed to apply sales charge discounts to certain customers’ purchases of UITs, according to the AWC. The misconduct occurred between June 2010 and September 2015.