Legal Matters

The Financial Industry Regulatory Authority (“FINRA”) has fined and sanctioned Oppenheimer & Co., Inc. for failing to supervise short-term trading in Unit Investment Trusts (“UITs”). A Unit Investment Trust ("UIT") is an 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 [...]

The Financial Industry Regulatory Authority (“FINRA”) has barred former NYLIFE Securities broker Cristina Sabengsy based on FINRA’s findings that Sabengsy forged the signatures of two of her customers to facilitate unauthorized insurance transactions and obtain the commissions on those transactions. The forgeries occurred in 2017, while Sabengsy was employed in NYLIFE Securities’ Deerfield, Illinois branch office. FINRA found that Sabengsy forged a customer’s signature on two documents related to the purchase of a variable annuity policy; the customer was unaware of and did not authorize the purchase. Likewise, Sabengsy forged another customer’s signature to convert a term life insurance policy to a whole life insurance policy. FINRA uncovered Sabengsy forgeries on at least 10 other documents while she was associated with NYLIFE Securities. FINRA found that these were instances in which Sabengsy forged documents in order to advance receipt of commissions. FINRA found Sabengsy’s conduct to be in violation of FINRA’s Rule 2010, which requires brokerage firms and stockbrokers to [...]

Investors in Benefit Street Partners Realty Trust, Inc., formerly known as Realty Finance Trust, may have a right to recover their investment losses if their Benefit Street investment was recommended to them by a financial adviser who misrepresented the investment or made a recommendation that did not suit the investors’ risk tolerance. Benefit Street is a real estate investment trust (“REIT”) that holds itself out as originating and managing a diverse portfolio of commercial real estate debt investments. Benefit Street was originally offered to investors at an initial public offering for $25 per share. The share price has fallen precipitously since, with a December 31, 2017 assignation of value by the Company’s board of $19.17 per share, falling to an estimated net asset value of $18.75 per share by September 2018. In September of this year, the Company issued $8.2 million of common stock at $16.71 per share. A REIT is a type of investment vehicle that functions as a [...]

The Securities and Exchange Commission (“SEC”) has imposed a permanent ban against Securities America Advisors, Inc. representative Ronald James Roach, of Securities America Advisors’ Walnut Creek, California office. The SEC’s ban follows a court action in which the SEC alleged that Roach and co-conspirator Joseph Bayliss engaged in fraudulent securities offerings and a massive Ponzi scheme that raked in over $910 million in investor funds. The scheme involved touting investments opportunities in solar energy companies in the business of making, leasing, and operating mobile solar generators. In reality, thousands of the purportedly profitable generators were never made or put into use and, in classic Ponzi scheme fashion, the vast majority of revenue to investors came from other investors’ money, not from lease payments related to the generators. The SEC found that Roach prepared false financial statements reporting that the business had significant revenue from leases, used his accounting firm to lend authenticity to the reporting, and in some cases provided [...]