Securities Arbitration Lawyers Blog

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:

Massachusetts-based Broker Jeffrey B. Pierce Permanently Barred by FINRA

October 23, 2015 | Silver Law Group

Massachusetts-based Broker Jeffrey B. Pierce Permanently Barred by FINRA on silverlaw.com

Allegations include conversion of funds from non-securities customer account

After thirteen years in the securities industry, Jeffrey Pierce has been permanently barred from practicing in the securities industry in any capacity. During his career, Pierce accumulated eleven disclosure events, including regulatory events, a criminal event, customer disputes and two employer terminations.

The most recent complaint, according to FINRA’s BrokerCheck report, alleges that Pierce circumvented the procedures of his member firm in order to conceal unsuitable annuity replacement transactions.

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?

Rainmaker Securities Sanctioned by Regulators for Multiple Violations

October 19, 2015 | Silver Law Group

Rainmaker Securities Sanctioned by Regulators for Multiple Violations on silverlaw.com

President Glen Anderson sanctioned along with Rainmaker Brokerage Firm

With six branches and 34 registered persons, Rainmaker Securities, LLC is in hot water with both FINRA and the SEC. Its president, Glen Anderson, is also included in the sanctions brought against the firm, according to official FINRA documents. The allegations include failure to devote appropriate time, attention and resources to supervision of its financial advisors, among other allegations.

Rainmaker Securities was registered with FINRA in 2005, and Anderson joined the brokerage firm as President in 2010. Rainmaker is approved to conduct business in the origination and sale of private placements. It is alleged that between June 2011 and September 2014, the firm—under Anderson’s direction—consistently violated FINRA rules that required the firm to:

UBS to Pay FINRA Claimants $3M in Puerto Rico Muni Bond Case

October 18, 2015 | Silver Law Group

FINRA arbitration panel finds bank liable in alleged fraud claim

As Puerto Rico’s financial struggles continue, a FINRA arbitration panel awarded three claimants $3M in an alleged fraud claim against UBS Financial Services in early September.

According to Law360.com, the claimants alleged that the bank committed fraud relating to closed-end funds and muni bonds, and how the bank used those investments as collateral to borrow funds through lines of credit. Included in the complaint were allegations of breach of fiduciary duty, negligence and breach of contract against UBS.