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SEC, FINRA Fine Merrill Lynch

Following on the heels of Merrill Lynch's agreement yesterday to pay $415 million to settle claims made by the SEC, the commission and FINRA fined the firm an additional $15 million in another action brought by the SEC and a third brought by FINRA. In an announcement yesterday, the SEC stated that Merrill Lynch agreed to pay a $10 million penalty to settle claims that it made misleading statements in materials provided to retail investors for structured notes linked to a proprietary volatility index. These materials highlighted the commissions that were charged and the annual fee. However, they failed to disclose a quarterly cost of 1.5% that was tied to the value of the volatility index. The notes were issued by Bank of America. Merrill Lynch had "principal responsibility for drafting and reviewing the retail pricing supplements," the SEC said. FINRA stated that it also fined the firm $5 million for “negligent disclosure failures” in the sale of [...]

By |June 24th, 2016|FINRA, SEC|
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TX Bars Adviser For Fraudulent Sales

James Poe, a Forth Worth, Texas-based adviser and president of Jim Poe & Associates, Inc. has been barred by Texas state securities regulators from acting as an investment adviser representative and broker in the state for fraudulent practices pertaining to the sale of life settlements. Poe got undisclosed payments from another firm he owned, International Alternatives PR, which consulted on selection of the life insurance policies and represented fraudulent business activity, said a March 18 order from the Texas State Securities Board. The board also claimed Poe got ten percent commissions for the product sales from 2011 to 2015, despite the fact that he was not registered as an agent of the firm, a violations of the state's securities laws. With regard to life settlements, investors typically purchase an undesired life insurance policy, continuing to pay the seller's policy premiums and in the end collecting the death benefit when the insured person dies. The seller receives an amount [...]

By |March 23rd, 2016|Fraud, Press Releases & News|
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Morgan Stanley Subject Of Arbitration Filed By NC Couple

Two North Carolina investors have filed an arbitration claim with FINRA against Morgan Stanley  over unsuitable investments involving the firm’s Cushing MLP High Income Exchange Traded Note. The married couple, who are retirees in their sixties, are accusing the brokerage firm of common law fraud, negligence, breach of fiduciary duty, negligent supervision, and failure to adequately disclose the risks associated with their investment. The Claimants assert that they have lost of $100,000. According to them, the Morgan Stanley broker invested about $150,000 of their money in the Exchange Traded Note, which is connected to master limited partnerships with shipping and energy assets. According to their attorneys, the couple did not understand the extent of the risks involved in that they could potentially lose their principal. Rather, Claimants were told they would make money. The Cushing MLP High Income Exchange Traded Note seeks to give investors cash upon maturity or early repurchase, as well as variable coupon payments every quarter (depending [...]

By |March 14th, 2016|FINRA, Fraud, Press Releases & News|
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Most Common Investment Adviser Violations

Six investment adviser violations make up roughly 60% of all deficiencies the SEC's staff find when they investigate adviser offices, according to Renee Esfandiary, assistant director of the SEC's Office of Compliance, Inspections and Examinations. The investment adviser violations include: Compliance Rule Violations include not have written policies and procedures to ensure firm operations adhere to all adviser regulations, not following the firm’s own policies and procedures, or not having a chief compliance officer responsible for administering them. Disclosure Violations can occur when advisers fail to update their registration form ADV timely, file it with incorrect information, or do not provide clients or prospective clients with certain information at required times. Fiduciary Duty Investment adviser violations occur a when an adviser fails to act in a client's best interest, such as using client assets for an adviser’s own benefit or for the benefit of another client. This can constitute fraud. Part of this responsibility requires advisers to disclose any conflicts of interest. [...]

By |February 29th, 2016|Fraud, Press Releases & News, SEC|
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