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Charles Schwab Sued Over Own 401(k) Plan

A participant in the Charles Schwab Corp. 401(k) plan has sued the plan and corporate executives, claiming they violated their duties under the Employee Retirement Income Security Act (ERISA) by offering Schwab funds that were “more expensive than comparable alternatives available in the marketplace.” The suit was filed in United States District Court in San Francisco on January 19, 2017. It claimed that executives breached their fiduciary duties, stating they “imprudently and disloyally larded the plan with unnecessary, expensive and poorly performing investment products and services.” The suit is currently seeking to be certified as a class-action suit.   Plaintiff Christopher Severson, a participant in the SchwabPlan Retirement Savings and Investment Plan, asserted in his complaint that offering Charles Schwab products and services enabled the company to reap “significant fees and profits at the expense of the plan and its participants.” The complaint claims that Schwab included among the plan's investment options certain mutual funds and collective trusts that [...]

By |January 23rd, 2017|Legal Matters, Press Releases & News|
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Henry Al Dean Watson Barred By FINRA

FINRA announced that it barred an ex-Hilliard Lyons broker, Henry Al Dean Watson, who recently settled a customer complaint accusing him of excessive trading and commissions, unauthorized trades, and portfolio mismanagement. Watson broke FINRA rules by failing to appear to give testimony before the regulator.Watson began in the securities business in 1984. He was registered with a number of firms before registering with Hilliard Lyons in January 2012. He worked there until October and is not currently licensed with any other firm.As happens quite regularly, FINRA wanted  Henry Al Dean Watson's testimony in relation to an inquiry about an arbitration claim filed by a customer against him, the settlement stated. Watson failed to appear to provide testimony, thus violating industry rules. He consented to the sanction without admitting or denying the findings.His FINRA BrokerCheck profile states that Watson made no contribution in a $166,500 arbitration award from 2015 in which a client alleged excessive trading and commissions, unauthorized trades and portfolio mismanagement. [...]

By |January 19th, 2017|Broker Check, FINRA, Press Releases & News|
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Richard Gearhart & George McKown Charged With Securities Fraud

Richard Gearhart of Lowell, Indiana and George McKown of Indianapolis, Indiana have been indicted on fraud charges after prosecutors claim they sold securities to investors despite not being registered to do so. The two were charged with conspiracy to commit securities fraud, securities fraud, and wire fraud, said U.S. Attorney David Capp. According to court documents, Gearhart and McKown allegedly sold securities to people who transferred their pensions, annuities, 401(k)s and cash to invest with them, through Asset Preservation Specialists Inc. under the guarantee that their investments would remain safe. Neither Richard Gearhart nor George McKown was registered to sell securities with the U.S. Securities and Exchange Commission or the state of Indiana. Secretary of State Connie Lawson said in a news release that no matter how trustworthy someone seems, potential investors should ensure that person and the person's businesses are registered with the state of Indiana. "Gearhart had all the warning signs of a typical [...]

By |January 16th, 2017|Fraud, Press Releases & News, SEC|
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Morgan Stanley Fined $13M By SEC

The SEC announced today that Morgan Stanley agreed to pay a $13 million fine to resolve allegations that it overbilled investment advisory clients due to coding and other billing system errors. Morgan Stanley also violated the custody rule regarding annual surprise examinations. The firm overcharged over 149,000 advisory clients because it failed to adopt and implement compliance policies and procedures reasonably designed to ensure that clients were billed appropriately in accordance with their advisory agreements, the SEC's order stated. The commission also said Morgan Stanley failed to validate billing rates contained in the firm's billing system against client contracts, fee billing histories, and other documentation. Morgan Stanley acquired over $16 million in excessive fees because of the billing errors that happened between 2002 and 2016, according to the SEC. The firm has repaid this complete amount in addition to interest to injured clients. Morgan Stanley failed to comply with the annual surprise custody examination requirements for two consecutive [...]

By |January 13th, 2017|Legal Matters, Press Releases & News, SEC|
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