Securities Arbitration

Have You Suffered Financial Losses with Bruce Sabourin?

July 20, 2015 | Silver Law Group

Formerly of Cetera Advisors, you may not be the only one who has suffered.

Investment broker Bruce Michael Sabourin (CRD #2556826), most recently with Cetera Advisors, once again has a FINRA reported disclosure. Sabourin is now permanently barred from acting as a broker or otherwise associating with firms that sell securities to the public. According to the April 2015 FINRA Disciplinary and Other FINRA Actions Report, Sabourin was suspended as of February 23, 2015 for allegedly failing to provide information or keep information current according to FINRA rules.

What exactly is FINRA, you ask? Good question. It is the Financial Industry Regulatory Authority. All brokers and investment firms must agree to abide by FINRA rules. It’s the watchdog you want keeping an eye on investment players to make sure everyone is playing by the same rules. When someone isn’t, FINRA steps in.

Alex Makarovsky Recently Sanctioned by FINRA

July 16, 2015 | Silver Law Group

In the news again.

According to the FINRA website, Alex Makarovsky is once again in the hot seat for allegedly violating FINRA By-Laws and SEC rules. Makarovsky was most recently registered with Blackbook Capital, LLC.

Let’s go back a few years to build some context on his history. In 2010, while associated with Avenir Financial Group, Makarovsky allegedly made unauthorized trades in a client’s account. As a result, Makarovsky’s State of Indiana license was suspended for five years. In addition he and his firm had to pay a civil penalty and restitution to two customers.

Michael McGregor Suspended for 45 Days, Fined $5000

July 15, 2015 | Silver Law Group

Currently employed by and registered with Blackbook Capital, LLC

Since 1997, Michael Anthony McGregor has been registered with FINRA as a General Securities Representative (GSR). Through the years, McGregor has been subject to judgments and liens that have not been properly reported. By not reporting them, Michael McGregor is in violation of FINRA’s By-Laws and now he’s facing FINRA sanctions.

In March 2015, Michael McGregor was handed a 45-day suspension and fined $5,000 by FINRA for allegedly failing to amend and timely amend his FINRA registration to reflect unsatisfied judgments and liens he received. Without admitting or denying the findings, McGregor consented to the sanctions and to the entry of the findings.

Silver Law Group Files Securities Arbitration Case Against Dawson James

May 29, 2015 | Silver Law Group

The Silver Law Group has filed a securities arbitration claim before the Financial Industry Regulatory Authority (“FINRA”) on behalf of a family and a family business from South America alleging, among other things, that Dawson James failed to properly supervise one of its registered representatives, permitted an unsuitable investment strategy to be utilized and permitted the family’s investment accounts to be excessively traded for the purposes of generating huge commissions for itself and its registered representatives while wiping out most of their customers’ investment capital in a very short period of time.

Excessive trading or “churning,” as it is known in the industry, is the act of a broker who excessively and needlessly engages in trading in a client’s account primarily to generate commissions for the broker on each trade without regard for the client’s financial well-being. Churning is an illegal and unethical practice that violates SEC rules and securities laws.

Dawson James Securities markets itself as a full service investment firm specializing in complex healthcare, biotechnology, technology, and clean-tech sectors. Headquartered in Boca Raton, Florida, the firm has been in operation since 2002. Dawson James has been the subject of several regulatory investigations, some which resulted in disciplinary actions by regulators. For example, FINRA recently censured and fined Dawson James $75,000 for failing to provide adequate supervisory procedures. FINRA found that during the review period the firm failed to investigate numerous “red flags” relating to the activities of one registered representative. Dawson James also failed to enforce its written supervisory procedures which specified that all electronic correspondence is reviewed on a daily basis. The firm has also been the subject of several customer FINRA arbitration claims.

Scott Silver Presents “How to Win an Alternative Investment Case” at the 2014 American Association of Justice Annual Convention

August 1, 2014 | Silver Law Group

Scott Silver, Managing Partner of Silver Law Group, is the current co-chair of the Securities and Financial Fraud group of the American Association of Justice (“AAJ”). On July 28, 2014, during the 2014 AAJ Annual Convention in Baltimore, Maryland, Scott gave a well-received presentation titled “How to Win an Alternative Investment Case.” AAJ, also known as the Association of Trial Lawyers of America, is the world’s largest trial bar and promotes justice and fairness for injured persons and safeguards victims’ rights.

The theme of the presentation focused on the rise of Alternative Investment or Product cases over the last several years. Driven by its desire to replace commissions lost as investors realize stocks and bonds can be traded at discount firms for less than ten dollars a trade, Wall Street has introduced many new Alternatives to investors. However, many of the new, complex Alternatives can be riddled with fees, conflicts of interest, and are frequently more speculative than marketed by the firms. Several recent FINRA arbitration claims focus on products which lose substantially all of their value in a short time. FINRA has seen a rise in arbitration claims where multiple investors all seek damages relating to the same Alternative Investments or Product and where one or more of the asserted claims center around allegations regarding the widespread mismarketing or defective development of a specific investment.

Alternative Investments which have been the subject of recent FINRA claims include:

Silver Law Group Represents 93 year old Victim of Elder Financial Abuse

July 3, 2014 | Silver Law Group

According to the Sun Sentinel, the Palm Beach County Sheriff’s Office has charged Sultaine Valcius of Boynton Beach with fraud after taking $1.4 million from a 93 year-old man that hired her as a medical aide.

The Sun Sentinel reports Sultaine Valcius, 48, is charged with organized scheme to defraud for taking the money from her employer for at least five years. Ms. Valcius requested the money for various reasons, including, nursing school tuition, purchasing a home as an investment property, repairing a home in Haiti that had been destroyed by an earthquake and for general financial assistance due to her husband purportedly losing his job. However, Ms. Valcius was allegedly never enrolled in school, the house that was purchased was used as the primary residence by Ms. Valcius and her husband was never laid off from the job she claimed he had.

Ms. Valcius convinced the elderly gentleman to write her numerous checks ranging from a couple of hundreds of dollars to tens of thousands of dollars from two of his brokerage accounts maintained at two national broker/dealers. However, even if convicted, it is unlikely that Ms. Valcius will have the adequate resources to repay the victim.

FINRA Fines Merrill Lynch $8 Million and Orders it to Repay Over $89 Million to Retirement Accounts for Overcharging for Mutual Funds

June 18, 2014 | Silver Law Group

The Financial Industry Regulatory Authority (FINRA) announced a fine against Merrill Lynch, Pierce, Fenner & Smith, Inc. for $8 million for charging excessive mutual fund sales charges for retirement accounts. FINRA also ordered Merrill Lynch to pay $24.4 million in restitution to damaged customers on top of $64 million Merrill Lynch has already compensated damaged investors. According to the FINRA decision, mutual funds offer several classes of shares, each with different sales charges and fees and many mutual funds waive their initial charges for retirement accounts. However, Merrill Lynch failed to pass these savings on to the investors.

Merrill Lynch’s retail platform frequently offered such discounts to retirement plan accounts and disclosed those waivers in their prospectuses. However, Merrill Lynch failed to frequently pass these savings on to the investors including retirement accounts. Accordingly, about 41,000 small business retirement plan accounts, and approximately 6,800 charities and 403(b) retirement accounts available to ministers and employees of public schools, either paid sales charges when purchasing Class A shares, or purchased other share classes that unnecessarily subjected them to higher ongoing fees and expenses. Incredibly, in 2006, Merrill Lynch learned its small business retirement plan customers were overpaying, but continued to sell them more costly shares and failed to report the issue to FINRA for more than five years.

If you believe your portfolio was improperly managed or was charged excessive fees or costs, Silver Law Group will analyze your portfolio at no charge. Additionally, if you have questions about your legal rights, or have been the victim of investment fraud, please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or Toll Free at (800) 975-4345.

FINRA Arbitration Panel Orders UBS to Pay $5.3 Million for Misleading a Financial Advisor and his Clients about a Proprietary Product Tied to Lehman Brothers

April 15, 2014 | Silver Law Group

A former UBS broker recently won a FINRA arbitration claim against UBS Financial Services for misleading him and his clients about the risks associated with structured notes tied to Lehman Brothers Holdings, which suffered significant losses in 2008. Silver Law Group primarily represents investors in claims against UBS and other brokerage firms. However, this award deserves attention because it highlights a fundamental flaw in Wall Street’s business model. UBS created a system to use its sales force to sell millions of dollars in Lehman Brothers debt. However, faced with undesirable evidence of Lehman’s financial problems, UBS knowingly chose to not inform its financial advisors or retail clients about the problems. Put differently, this was a “top down” problem because the misconduct was by UBS senior management. We are seeing the same set of facts in claims by investors against UBS in Puerto Rico, where UBS senior management served as the biggest supporters of proprietary UBS bond funds and UBS placed no restrictions on financial advisors or on the concentration levels in a customer’s portfolio.

The FINRA arbitration panel awarded $4 Million in compensatory damages, $1 Million in punitive damages and $335,000 in attorneys’ fees and costs, specifically finding UBS had “deliberately prevented the distribution of material information about Lehman Brothers sinking financial condition and continued to recommend the sale of Lehman Brothers [Notes] despite clear evidence of the company’s rapid decline.” The panel also ordered that the 39 complaints filed against this broker be erased from his record.

The backdrop leading to this award is eerily similar to what is happening today at UBS in Puerto Rico (“UBS-PR”). UBS-PR aggressively pushed the sale of closed-end bond funds (CEFs) involving Puerto Rican debt which were proprietary to UBS. UBS allegedly misled the majority of its brokers and clients concerning the risks associated with CEFs. UBS is also alleged to have withheld negative information about the CEFs from its brokers and its clients, thereby preventing a full understanding of Puerto Rico’s deteriorating economy and the effects that decline would have on the leveraged and illiquid CEFs. Could it be that the majority of UBS-PR brokers who now find themselves facing numerous customer complaints were simply following the instructions given by UBS and doing what they were trained to do—sell UBS recommended products?

FINRA Revises Brokerage Firm’s Supervisory Rules

April 7, 2014 | Silver Law Group

FINRA rules establish the core supervisory system procedures which all broker-dealers must follow to protect investors. A broker-dealer or other FINRA member may be sanctioned by FINRA for violating these rules and an investor may bring a FINRA arbitration claim against a brokerage firm for failing to properly supervise a financial advisor or for failing to have in place a reasonable supervisory system in compliance with these rules. Although the systems may be different from one brokerage firm to another, the FINRA code establishes the minimum systems which must be addressed. FINRA Rule 3110 has been revised to address supervision requirements by all FINRA members. These rules codify rules addressing written supervisory procedures, designation of supervisory principals and customer complaints. The rule was published in FINRA Notice to Members 14-10 and can be viewed on FINRA’s website.

Silver Law Group Urges FINRA to Lift the Stay of all Puerto Rico Arbitration Claims

March 28, 2014 | Silver Law Group

In February 2014, Bond Buyer magazine featured a story about Silver Law Group’s representation of many Puerto Rico investors in FINRA arbitration claims against UBS of Puerto Rico for losses in leveraged bond funds. The article concluded by highlighting Silver Law Group Managing Partner Scott Silver’s concerns that FINRA was not equipped to handle the large number of claims which could easily be anticipated against UBS for selling this complex alternative investment which lost more than 60 percent of its value last fall.

Last week, FINRA finally took public action to address the issue by recognizing the problem and temporarily halting all claims against UBS Puerto Rico while FINRA creates a protocol to administer the cases. Silver Law Group urges FINRA to quickly address these issues and avoid unnecessary delay.

FINRA and the securities industry force investors to arbitrate all disputes with a broker-dealer through an arbitration clause in the customer agreement. However, FINRA arbitration is promoted as a fast, inexpensive process for deciding disputes. Many investors are now frustrated by a system which cannot administratively manage their claims. Investors have suggested, amongst other solutions: