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Citigroup Advisory Unit Fined $18.3M

Citigroup will pay $18.3 million to settle charges made by the SEC claiming that it overcharged its investment advisory clients. According to the SEC, Citigroup overbilled about 60,000 advisory clients by about $18 million. The commission also said that Citigroup was not able to find about 83,000 client contracts that were executed from 1990 to 2012 and charged $3.2 million in fees to clients whose contracts Citigroup could not locate. According to its deal with the SEC, the company was censured and will pay $3.2 million in disgorgement, $800,000 in interest, and a penalty of $14.3 million. It will further cease overbilling, create new advisory agreements with those customers whose contracts were lost, and place a link to the SEC's order on its website. “Advisory clients have every expectation that the fees charged by their financial adviser reflect the negotiated rate,” Andrew Calamari, director of the SEC's New York office, stated. “Citigroup failed to take the necessary precautions to ensure [...]

By |January 31st, 2017|Press Releases & News, SEC|
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Michael J. Breton Banned For Cherry Picking Trades

Michael J. Breton, a Massachusetts investment adviser who the SEC accused of securities fraud, has agreed to be banned from the industry after the SEC discovered he was operating an illicit cherry-picking stock scheme. The commission filed suit against Breton and his firm, Strategic Capital Management, in federal district court in Massachusetts. claiming that they bilked customers out of about $1.3 million. Between 2011 and July 2012, Michael J. Breton made trades via a master brokerage account and then allocated profitable trades to himself while putting non-profitable trades into client accounts, according to the SEC. Breton further entered a plea agreement to a charge of securities fraud brought by the Justice Department and to pay a forfeiture of $1.3 million. The U.S. Attorney's Office has agreed to recommend a sentence of no greater than three years in prison. The Justice Department asserts that Breton bought stock in exchange traded companies just prior to their earnings announcements and then allocated the [...]

By |January 26th, 2017|Fraud, Legal Matters, Press Releases & News, SEC|
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Buffer Annuities: Why Regulators Are Seeing Complaints

Regulators are beginning to shift their attention toward buffer annuities, a new kind of variable annuity. These annuities are extremely complicated and utilize structured products, rather than mutual funds, in the sub-account as the underlying investment. Donald Lopezi, Senior Vice President and Regional Director of FINRA's western region, has noted that the regulator has started to see complaints regarding these annuities. “I spent some time with my team trying to see how this thing works,” Lopzi stated. “It's very complicated. I can't speak nationally but we are starting to see some complaints on those products in the west region.” He further noted, “We have some individuals who really understand [variable annuities] and they were struggling with this. You have to wonder, does the firm understand it? Does the rep?” Buffer annuities got their name because they are contracts that use structured products to buffer clients' account values against downside losses. They started to gain traction among financial advisors about three [...]

By |January 25th, 2017|FINRA, Legal Matters, Press Releases & News|
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FINRA January 2017 Disciplinary Actions

FINRA takes disciplinary actions against firms and individuals for violations of FINRA rules; federal securities laws, rules, and regulations; and the rules of the Municipal Securities Rulemaking Board. Below are a number of penalties announced by the regulator in January 2017. If you have been a victim of any of the below behavior, you may have legal recourse. Please contact attorney Richard Frankowski today at 888-741-7503 for a free consultation. FINRA censured and fined VFG Securities, Inc. of Culver City, California $50,000, $10,000 of which is joint and several with Jason Bryce Vanclef. According to FINRA, the firm and Vanclef distributed and listed for sale online Vanclef's self-published book, which contained, false, exaggerated, unwarranted, or misleading statements, and omitted material facts or qualifications where the omissions caused the communication to be misleading. The findings also state they provided customers with misleading personalized recommendation spreadsheets. Advisors Clearing Network, Inc. of Pasadena, California was also censured and fined $50,000. FINRA found that it [...]

By |January 24th, 2017|Broker Check, FINRA, Fraud, Legal Matters, Press Releases & News, SEC|
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