Legal Matters

NYLIFE Securities LLC has been censured and fined by the Financial Industry Regulatory Authority (“FINRA”). According to FINRA’s findings of fact, NYLIFE failed to take reasonable steps to review its brokers' short-term trades of Class A mutual funds, costing customers approximately $175,000 in unnecessary charges. NYLIFE is a registered broker-dealer and a wholly-owned subsidiary of New York Life Insurance Company; it claims to provide investors with "world-class brokerage services" and a "wide variety of investment options." Clients are able to purchase Class A mutual fund shares through NYLIFE. NYLIFE's Duties The primary job of an investment firm  is to understand the investor's needs and recommend investments that are suitable for those needs. Registered representatives must use due diligence to understand the investor's expectations, how much they can afford to invest, and how much the investor can safely risk. Registered representatives owe a duty of care to their clients to ensure that they have accurately and appropriately assessed a client's goal [...]

On October 28, 2021, the Securities and Exchange Commission (SEC) charged Kenneth Welsh with stealing approximately $3 million from his clients. Welsh allegedly used the money to buy gold coins and other precious metals in addition to transferring money to his family's credit card accounts. Welsh is thirty-one years old and lives in River Edge, New Jersey. He was a registered broker-dealer representative and investment advisor representative of Wells Fargo Clearing Services, LLC, from September 2012 until June 2021. Welsh was terminated after the company discovered his alleged misconduct. The SEC reports that Welsh stole at least $2.86 million by abusing his power as an investment representative and broker-dealer representative. In these roles, Welsh managed advisory accounts and brokerage accounts. From January 2016 until January 2021, Welsh allegedly used more than a hundred fraudulent Automated Clearing House transactions to transfer funds from his clients' accounts to family credit cards. The credit card accounts were in his wife's and parents' names, [...]

The SEC has filed an emergency action to stop an alleged decade-long Ponzi scheme perpetrated by John Woods. The report claims that Woods raised more than $110 million from over 400 investors. The investors bought membership units in Horizon, an entity controlled by Woods. According to the report, the investors consisted of many elderly retirees who were misled to believe the Horizon investment would pay a fixed rate of return and offer a penalty-free principal return. Woods has been the majority owner and in control of Southport Capital (“Southport”) since 2008. Woods’ ownership of Southport was not disclosed to the broker-dealer and investment adviser firm, of which he was a registered representative. In 2016, the firm asked Woods to resign after becoming concerned that Woods was involved in undisclosed outside business activity. Additionally, Woods has been the registered agent of Horizon Private Equity, III, LLC (“Horizon”) since it was formed in 2007. Horizon is not registered with the SEC, and [...]

Yellowstone Capital, LLC was ordered to pay $9.8 million to settle a Federal Trade Commission complaint alleging the company made unauthorized withdrawals and deceived consumers about the amount of financing offered and requirements of financing. Yellowstone Capital, LLC (“Yellowstone”) is a New York based company founded by Yitzhak Stern. Jeffrey Reece is the President of Yellowstone. The FTC named Stern, Reece, and Yellowstone as defendants in its complaint. Yellowstone advertised and offered merchant cash advances to small business consumers that needed immediate funds. Merchant cash advances typically provide money to businesses in exchange for a larger amount repaid through automatic daily payments. FTC alleged that Yellowstone and its owners misled consumers and routinely made additional unauthorized withdrawals. Yellowstone reportedly misrepresented its requirements while marketing its merchant cash advances. Many advertisements claimed Yellowstone does not require collateral or a personal guarantee. However, according to the FTC complaint, Yellowstone did require the business owners to sign a personal guarantee, holding them [...]