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FINRA Bars Two Advisers Following Broker Fraud

FINRA has barred two Buffalo, New York advisers, Timothy S. Dembskyi and Walter F. Grenda, from the securities industry for broker fraud in relation to the sale of a hedge fund, the Prestige Wealth Management Fund, LP. Dembski and Grenda's misconduct occurred while they were employed with Mid Atlantic Capital Corporation. FINRA discovered that Dembski and Grenda made material misrepresentations and omissions to make investors think that the fund was a "growth" fund that would be centered around a computer algorithm that automatically included risk protections and stop-losses to limit losses in the fund. However, in actuality, the fund was a highly speculative investment, the fund's Chief Investment Officer had complete control over investments made, and it was not obligated to follow the computer algorithm. In its last month that it was traded, the fund lost more than eighty percent of its value. Brad Bennett, FINRA's Executive Vice President and Chief of Enforcement, said, "In 2015, FINRA barred nearly 500 [...]

By |February 11th, 2016|FINRA, Fraud, Press Releases & News|
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FINRA Fines Barclays Capital $13.75M

FINRA ordered Barclays Capital, Inc. to pay over $10 million in restitution, including interest, to affected customers for mutual fund-related suitability violations. These suitability violations relate to an array of mutual fund transactions including mutual fund switches. Further, the firm failed to provide applicable breakpoint discounts to particular customers and was censured and fined $3.75 million. Broker-dealers have an obligation to ensure that any recommendation to switch mutual funds be evaluated with regard to the net investment advantage to the investor. FINRA noted that “switching among certain fund types may be difficult to justify if the financial gain or investment objective to be achieved by the switch is undermined by the transaction fees associated with the switch.” FINRA found that from January 2010 through June 2015, Barclays’ supervisory systems were insufficient to prevent unsuitable switching or to meet certain of the firm’s obligations regarding the sale of mutual funds to retail brokerage customers. In particular, the firm incorrectly defined a [...]

By |December 29th, 2015|FINRA, Press Releases & News|
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Canarsie Capital Founder Pleads Guilty To Fraud, Lost $57M In Two Weeks

Owen Li, founder of Canarsie Capital, managed to lose $57 million in only two weeks, leaving his investors with only $200,000 and a letter of apology. Li is now also a convicted felon after admitting that he lied to investors and regulators about his hedge fund's performance. He managed to do all of this before he turned thirty. Li surrendered to U.S. authorities Wednesday and pleaded guilty to a single count of securities fraud and making a false statement, according to Manhattan U.S. Attorney Preet Bharara. Li faces up to twenty years imprisonment. The hedge fund crumbled earlier this year after the firm lost $57 million, nearly all of the money held by its 41 investors from December 31, 2014 to January 16, 2015. According to the prosecution, Li lost roughly $18 million at the beginning of January when he started selling off long equity positions in the fund and eliminated all of its short positions. The resulting unhedged, long [...]

By |December 18th, 2015|Fraud, Press Releases & News, SEC|
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Hedge Fund Manager Who Faked Death Guilty Of Fraud

Mark Malik, a New York hedge fund manager who once feigned his own death to avoid repaying an investor, was found guilty of fraud after a two-week trial in New York state court. Malik was convicted by a jury of all 28 counts, including grand larceny and securities fraud. He will serve up to twenty years in prison. "Our message is clear: if you commit securities fraud in New York, we will bring you to justice,” said New York Attorney General Eric Schneiderman in announcing the guilty verdict. Malik was arrested earlier this year for allegedly stealing more than $800,000 from local and foreign investors. Malik represented himself to investors as an experienced trader with a Harvard degree, according to Schneiderman. However, his previous jobs included working as a traffic agent for the NYPD and waiter/bus boy for Max Brenner in Manhattan's Union Square neighborhood. At trial and against the advice of his lawyer, Malik took the witness stand. Wearing khaki [...]

By |December 7th, 2015|Fraud, Press Releases & News|
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