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FINRA SANCTIONS FIFTH THIRD SECURITIES, INC. OVER VARIABLE ANNUITY EXCHANGES

The Financial Industry Regulatory Authority (“FINRA”) has announced a fine of $4 million and required an additional $2 million in restitutionary damages from Fifth Third Securities, Inc. for its failures to consider and accurately describe the costs and benefits of variable annuity exchanges, and for recommending variable annuity exchanges without a reasonable basis to believe the exchanges were suitable. According to the FINRA release, Fifth Third’s principals approved approximately 92 percent of the variable annuity exchange applications submitted to them for review, even though such exchanges are complex investments with costs that may outweigh the potential benefits of the transaction. In a random sample of Fifth Third’s variable annuity exchanges from 2013 to 2015, FINRA found that Fifth Third had misstated or omitted at least one material fact related to the costs or benefits of the exchange in approximately 77 percent of the reviewed transactions. Variable annuities are complex investments that are high-cost vehicles with a handful of narrow benefits [...]

By |May 8th, 2018|SEC|
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Barclays To Pay $97M To Customers

Barclays Capital has reached a settlement with the SEC to refund over $97 million in advisory and mutual fund fees to customers the firm allegedly overcharged. The firm also agreed to set up a fund to repay advisory fees to the overcharged customers, the SEC said. This fund will consist of $49.8 million in disgorgement plus $13.8 million in interest, plus a $30 million penalty. Barclays with also refund $3.5 million to advisory clients who invested in third-party investment managers and investment strategies that underperformed while not being monitored. Money will additionally go to brokerage clients who were swayed toward more expensive mutual fund share classes. The SEC's order states that two Barclays' advisory programs charged fees to over two thousand customers for due diligence and monitoring of third-party investment managers and investment strategies when these services were not really being performed as purported. The SEC stated that Barclays additionally acquired extra mutual fund sales charges or fees from sixty-three brokerage clients [...]

By |May 18th, 2017|SEC|
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Demitrios Hallas Accused By SEC Of Selling Unsuitable Investments

The SEC accused former broker Demitrios Hallas with trading leveraged Exchange Traded Funds (ETFs) and Exchange Traded Notes (ETNs) in clients' accounts and swindling $170,000 from one of his clients. The Commission claims he trade one hundred seventy-nine daily leveraged ETFs and ETNs in client accounts from September 2014 to October 2015, creating $128,000 in fees and commissions. At the same time, his clients lost around $150,000. It also states that he used the swindled cash to pay for rent, restaurant tabs, credit card bills, and student loan payments. The complaint alleges that Hallas systematically disregarded his client's objectives and continued to trade in high risk investments that were not consistent with their goals or risk tolerances. The complaint also states that the customers were unsophisticated, having little to no investing experience and modest assets. One such client entrusted Demitrios Hallas with his retirement from working as a baker, taxi driver and garbage truck driver. A second was a retired [...]

By |April 26th, 2017|SEC|
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Robert Tricarico Sentenced To 3.5 Years In Prison For Client Theft

Robert Tricarico, a former LPL broker, pleaded guilty to stealing $1.2 million from a client by a federal court in Hartford, Connecticut and was sentenced to forty-one (41) months in jail. The Court also ordered him to pay restitution. Tricarico started his career as a broker in 1992 and spent ten years with Merrill Lynch. He was most recently registered with LPL. He worked for LPL for three years prior to being barred from the industry by FINRA in April 2015. According to document filed with the Court and in-person testimony, between January 2010 and June 2013, Robert Tricarico was a financial advisor for an elderly and infirmed victim who had substantial assets. He allegedly took over $1.1 million from the client by writing a number of checks to himself or for his benefit without the client's permission, according to the SEC, who has also barred him from the industry. Additionally, Tricarico liquidated the client's coin collection and took checks [...]

By |April 13th, 2017|Fraud, FINRA, SEC|
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