Legal Matters

A federal jury in Chicago, IL has entered a guilty verdict against Shawn Baldwin, a former owner of various investment firms in the  Chicago area, on charges that he swindled at least fifteen investors and lenders out of a collective $10 million from 2006 until 2017. According to the trial evidence, Mr. Baldwin obtained funds from various individual investors and corporate lenders using false claims that compliance officers and professional advisors were affiliated with his firms when no such relationships actually existed. Baldwin also deceived investors and lenders by misrepresenting and minimizing the serious disciplinary actions taken against him by regulators, according to the U.S. Attorney’s Office, and attempted to conceal his fraudulent scheme by giving his victims bogus account statements that misrepresented the value of their funds. He also reassured his investors by falsely claiming that he was developing lucrative new business deals that would lead to profits from initial public offerings when in fact he could not pay back [...]

The Financial Industry Regulatory Authority (“FINRA”) has suspended Middleton, Massachusetts broker Bruce C. Worthington from the securities industry in all capacities following allegations that he misappropriated investor funds. The Massachusetts Securities Division filed an Administrative Complaint against Worthington on February 21, 2019, alleging that between 2006 and 2018 Worthington (while a registered representative at Commonwealth Financial Network), diverted funds from the account of a retiree by falsely representing that the investor’s funds were being placed in legitimate alternative investments. Instead, according to the allegations, Worthington diverted $97,054.59 of the customers’ funds for his own personal use and benefit. Making matters worse, the complaint states that Worthington created false documents to convince the investor what his diverted funds were invested in laddered bonds and a structured note. He also produced another statement showing that the investor’s funds were held in a separate account away from Commonwealth and had increased in value to $113,439.00. The Massachusetts Securities Division found that no such [...]

The Financial Industry Regulatory Authority (“FINRA”) has barred broker Floyd Powell, of Albertville, Alabama, from the securities industry based on findings that he engaged in undisclosed and unapproved private securities transactions in violation of FINRA Rule 3280. FINRA found that from July 2016 through December 2017, Floyd, while registered through MetLife Securities, Inc. and MML Investors Services, LLC, solicited investors to make nearly $3.5 million in private investments by purchasing promissory notes related to the Woodbridge Group of Companies, a purported real estate investment fund which turned out to be a massive Ponzi scheme. Powell sold these notes to 13 investors, 11 of whom were customers of MML or MSI. The sales earned Powell $103,598 in commissions, yet Powell did not provide notice to or obtain approval from MML or MSI prior to participating in these private transactions. Powell’s conduct was found to be in violation of FINRA rules 3280 and 2010, which prohibit “selling away” (i.e., the sale of [...]

The Financial Industry Regulatory Authority (“FINRA”) has made findings against Kestra Financial Services, LLC of Austin, Texas and censured and fined the firm for overcharging mutual fund investors and for its supervisory failures which allowed the overcharging to occur. FINRA found that from July 1, 2009 to February 22, 2018, Kestra overcharged certain retirement plan and charitable organization customers that were eligible to purchase Class A mutual fund shares without a front-end sales charge. Rather than selling these customers the Class A shares without a front-end sales charge, Kestra either sold them Class A shares with a front-end sales charge or sold them Class B or C shares with back-end sales charges and higher ongoing fees and expenses. FINRA likewise found that Kestra failed to establish and maintain a supervisory system and supervisory procedures reasonably designed to ensure that Kestra did not overcharge its mutual fund customers. As a result of those failures, Kestra was found in violation of FINRA’s [...]