Legal Matters

The Financial Industry Regulatory Authority (“FINRA”) has fined and sanctioned SagePoint Financial, Inc. for failing to supervise early rollovers in Unit Investment Trusts (“UITs”). A Unit Investment Trust ("UIT") is a SEC-registered investment company that offers investors shares or "units" in a fixed portfolio of securities in a one-time public offering. A UIT terminates on a specified maturity date, often after 15 or 24 months, at which point the underlying securities are sold and the resulting proceeds are paid to the investors. Generally, a UIT's portfolio is not actively managed between the trust's inception and its maturity date. UITs impose a variety of upfront sales charges. For example, during the Relevant Period, a typical 24-month UIT contained three separate charges: (1) an initial sales charge, which was generally 1% of the purchase price; (2) a deferred sales charge, which was generally up to 2.5% of the offering price; and (3) a creation and development fee ("C&D fee"), which was generally [...]

New Hampshire’s Bureau of Securities Regulation is investigating Merrill Lynch and one of its former top brokers following customer complaints that alleged misconduct which caused losses exceeding $100 million. Former New Hampshire governor Craig Benson is quoted by CNBC as claiming that Merrill Lynch stole from him, alleging losses of more than $50 million and market-adjusted damages of over $100 million. Benson claims that Merrill Lynch broker Charles Kenahan churned his account, i.e., made excessive trades in the account for purposes of generating large commissions. Governor Benson’s friend and long-time business partner Robert Levine already obtained a $40 million settlement from Merrill Lynch following a FINRA arbitration claim which also accused Kenahan of churning, making unsuitable investment recommendations, and misrepresentations. If you or someone you know suffered losses as a customer of Charles Kenahan or Merrill Lynch, you may have a right to recover any losses you have suffered as a result of wrongdoing. For more information, please call the [...]

The United States Attorney’s Office for the Middle District of Tennessee has announced charges against former Raymond James financial advisor Frederick M. Stow, of Franklin, Tennessee. According to the charges, Stow stole $933,500 from two elderly clients including a 98-year-old WWII veteran. According to the charging documents, Stow became a registered representative for the WWII veteran in 1982. The veteran followed Stow to multiple securities firms as Stow changed companies, ultimately becoming Stow’s customer at Raymond James beginning in 2013. According to the complaint, Stow began to place himself in the customer’s personal life, making frequent visits to the customer’s home where he lived alone with full-time nursing care. By October 2015, Stow allegedly began to take funds from the veteran’s account by forging wire transfer authorizations to transfer funds to Stow’s personal bank account. Stow also began selling securities out of the veteran’s IRA and transferred the sales proceeds to Stow’s own bank account, according to the prosecutors. The [...]

The U.S. Securities and Exchange Commission is investigating two Marin County, California investment companies following the unexpected death of their owner, Ken Casey, in May. The investigation into Professional Financial Investors, Inc. ("PFI") and Professional Investors Securities Fund, Inc. ("PISF") is expected to take until at least late August and the companies have suspended all principal and interest payments to their noteholders and halted all new debt financing and investments while the investigation is pending. According to a statement from attorney Eric Sternberger, the companies voluntarily approached the SEC after a review of their business following Mr. Casey’s death and the investigation does not mean the SEC has concluded any violations of law have occurred. Mr. Casey, however, does have a criminal history of fraud and tax evasion, including guilty pleas and an 18-month prison sentence in 1997 for tax evasion, bank fraud, and filing false income tax returns. Casey and the investment companies have previously come under scrutiny over [...]