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FINRA Issues Investor Alert Regarding High-Yield CDs

Yesterday, FINRA issued a new investor alert entitled High-Yield CDs: Red Flags That Signal A Scam. The alert warns investors to be careful when looking at promotions lauding certificates of deposit that guarantee interest rates that are substantially higher than current averages. Pitches could come in various guises, but one particular case involved potential email fraud. The pitch seemed to come from a large American bank that was purportedly promoting a CD offered by an international banking partner. The pitch offered a CD with a 15% yield and contained instructions on how to wire funds at a time when most CDs at American banks and credit unions were offering barely over 1% for a comparable term. FINRA further warns that fraudsters are trying to take advantage of historically low yields on traditional bank products and investor desire for high yields by enticing them with fraudulent CDs that guarantee safety and double-digit returns. FINRA's new investor alert provides several warning signs [...]

By |May 29th, 2014|Press Releases & News|
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FINRA Fines Morgan Stanley Smith Barney LLC

FINRA announced recently that it fined Morgan Stanley Smith Barney LLC $5 million for supervisory failures pertaining to the solicitation of retail customers to invest in IPOs, such as Facebook and Yelp, without satisfactory procedures and training to ensure that its sales staff distinguished between indications of interest and conditional offers in their solicitations. Indications of interest result in the purchase of shares only if they are reconfirmed by the investors after the registration date is effective. Conditional offers, on the other hand, may become binding after effectiveness of the registration if the investor does not act to revoke the conditional offer before the firm accepts it. In February 2012, Morgan Stanley Smith Barney adopted policies and procedures that used the two terms, indications of interest and conditional offers, interchangeably regardless of whether reconfirmation was required prior to execution. Further, it did not offer training to its financial advisers to clarify the policy. Therefore, the staff as well as customers [...]

By |May 20th, 2014|Press Releases & News|
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New FINRA Rule Aimed At Limiting Self-Trading

FINRA announced recently that the SEC has approved a rule change designed to limit self-trading. FINRA Rule 5210 will require firms to have policies and procedures implemented that are reasonably designed to review their trading activity for, and prevent, a pattern or practice of self-trades resulting from orders originating from a single, or related, algorithm or trading desk. FINRA will announce the effective date of this rule soon. The rule should significantly increase FINRA's ability to deter self-trading that serves to disrupt the marketplace, despite not involving fraudulent or manipulative intent. Self-trades consist of transactions in a security resulting from the unintentional interaction of orders beginning at the same firm that do not involve a change in the beneficial ownership of the security. Self-trades that are made by single or related algorithms or trading desks increase concerns because this kind of trading may not reflect accurate trading interest, especially if there is a pattern or practice of these kinds of [...]

By |May 16th, 2014|Uncategorized|
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Oppenheimer Conceals Evidence In Fraud Case

A couple from Long Island who lost over $5 million in a scheme perpetrated by Mark C. Hotton, at stock broker who worked for Oppenheimer and Company. Mr. Hotton became infamous after he defrauded producers of the Broadway play “Rebecca” by collecting commissions and fees for organizing financing with an investor that never existed. He pleaded guilty to money laundering and two counts of fraud last summer and will be sentenced on May 9th. While working at his Oppenheimer branch, Hotton was accused of stealing millions of dollars from his clients. Louis and Donna Pitch, a couple from Long Island filed a claim with the Financial Industry Regulatory Authority (FINRA) against Mr. Hotton and Oppenheimer in December 2009. Before the hearing began Mr. Hotton filed bankruptcy leaving Oppenheimer as the sole respondent. The arbitration panel ruled that the couple could only recover half of their losses after Oppenheimer argued over the course of 69 hearings that it properly supervised Hotton [...]

By |May 7th, 2014|Press Releases & News|
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