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FINRA Bars Broker Bernard McGee

FINRA barred broker Bernard McGee and ordered him to pay about $250,000 in penalties for fraudulent annuity recommendations he made to an elderly customer. According to FINRA, he surrendered four variable annuity policies owned by the 71 year old customer valued at roughly $500,000 and used the money to purchase a charitable gift annuity from a company that was later discovered to be a fraud. McGee allegedly made material misrepresentations to persuade the client to surrender the variable annuities, which made up approximately fifty percent of her net worth, and buy the charitable gift annuity by misrepresenting to her that she was facing a large tax liability, which the new annuity would offset. McGee also failed to disclose to his client that he would receive a ten percent commission of about $50,000 upon the purchase of the charitable gift annuity from the company 54Freedom, says FINRA. The client incurred about $36,000 in surrender charges. Because of the [...]

By |July 20th, 2016|FINRA, Fraud, Press Releases & News|
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FINRA Elects John Brennan As New Chairman

The FINRA Board of Governors elected John Brennan as its new chairman last week. Brennan, an ex-chief executive and currently chairman emeritus and senior adviser at Vanguard Group, will start his new role on August 15. Robert W. Cook, an ex-division director at the SEC, will start as chief executive of FINRA around the same time. The moves come as the result of Rich G. Ketchum retiring this summer as chairman and chief executive of the regulatory authority. At the FINRA annual conference in May, Brennan was questioned by investor advocates about whether FINRA can effectively police brokers. He called industry oversight “fabulous.” “The idea that self-regulation doesn't work is specious in my view,” said John Brennan. “I know we've made progress in terms of investor protection, market integrity because of the engagement of the industry.” He also responded to critics who claim that brokers do not have enough say in the organization's decisions, stating "Members have a loud voice." [...]

By |July 18th, 2016|FINRA, Press Releases & News|
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Welliver Pleads Guilty To Securities Fraud

David Blaine Welliver, whose career as a financial advisor began in the early 1990s with a $400 classified ad promoting his one-man office, ended that career by recently pleading guilty to a charge of securities fraud in a St. Paul, Minnesota federal courtroom. He is looking at up to five years in prison. The former advisor is the great-grandson of Val J. Rothschild, who co-founded St. Paul's oldest mortgage banking and real estate sales company over 130 years ago. Welliver's career issues started many years ago when he was promoted at Technimar Industries Inc. of Houston. The company wanted to build a $35 million plant outside of Grand Rapids, Minnesota to produce a composite building product called Stonite under license with an Italian company. The Minneapolis police and fire pension put millions into the project on Welliver's advice, unaware that he was also a fundraiser for the company. Technimar collapsed without ever producing any Stonite. The Minneapolis Police Relief [...]

By |July 15th, 2016|Fraud, Press Releases & News, SEC|
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SEC Fines Firm $300K For Failing To Disclose Fees

The SEC fined RiverFront Investment Group of Richmond, Virginia $300,000 for charging clients additional fees beyond their wrap program for investment management. The firm agreed to the penalty without admitting or denying the allegations. The Commission censured the firm as well. This case was the result of the SEC prioritizing wrap account examinations previously this year. It is investigating whether advisers are acting in the best interests of their clients in these increasingly popular products. The SEC accused RiverFront of failing to disclose to investors the frequency with which it would trade in their accounts through a broker-dealer who was not the wrap program sponsor, which created transaction costs in addition to the wrap fee. Between 2008 and mid-2009, RiverFront used its designated broker-dealer but allegedly started a large amount of "trading away" (using other brokers) in late 2009. RiverFront claims it was trying to find the best execution prices. According to the SEC, RiverFront did [...]

By |July 14th, 2016|Press Releases & News, SEC|
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