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Investors Lose $11.7 Million In Risky Hedge Fund Through Lincoln Financial

According to a FINRA Letter of Acceptance, Waiver and Consent ("AWC"), between about October 2008 and April 2009, registered representatives in two of Lincoln Financial Advisors Corporation (“LFA”) branch offices allegedly recommended that customers invest in a hedge fund offered as a sub-account to a private placement variable annuity (the ”PPVA”). The Hedge Fund engaged in a complex options trading strategy, including trading uncovered options. LFA approved the PPVA and the Hedge Fund, after it was added as a sub-account by the PPVA sponsor, for investment by the LFA’s customers. According to the AWC, based on recommendations of the Firm’s registered representatives, 25 of the Firm’s customers invested a total of approximately $11.7 million in the Hedge Fund. In 2010, the Hedge Fund was shut down. Although the Hedge Fund allegedly engaged in a complicated options trading strategy that differed significantly from traditional investments and even other alternative investments, LFA also allegedly failed to provide adequate training or guidance to [...]

By |September 24th, 2015|FINRA, Press Releases & News|
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FINRA Sanctions Ten Former Global Arena Representatives

During a 2014 onsite exam, FINRA found numerous securities violations at Global Arena Capital Corp., including misleading sales pitches, customer account churning, as well as other business misconduct. The regulatory authority has banned seven former registered representatives from the industry, suspended an eighth, and barred two former branch managers from serving in a principal capacity. FINRA's sanctions are part of the agency's continuing effort to track groups of brokers that move from one risky firm to another. Seven of the ten people sanctioned had switched from HFP Capital Markets LLC, a firm which FINRA later expelled, to Global Arena Capital Corp., which opened a branch in October 2013 to register a number of brokers who had been discharged by HFP. As HFP did, Global Arena's new branch's business model included cold-calling customers, including the elderly, to make solicited recommendations of securities. "FINRA carefully monitors broker migration particularly with respect to brokers that move in groups from an expelled or high-risk [...]

By |September 23rd, 2015|FINRA, Fraud, Press Releases & News|
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FINRA August 2015 Disciplinary Actions: Part III

Edward D. Jones & Co., L.P. of St. Louis, Missouri submitted a letter of acceptance, waiver, and consent that censured the firm and fined it $10,000. FINRA found that it failed to report the right trade execution time for transactions in TRACE-eligible securitized products to TRACE and failed to show the right execution time on the memoranda of brokerage orders. Julian Luis Alfonso of Miami, Florida submitted a letter of acceptance, waiver, and consent that barred him from being associated with any FINRA member in any principal or supervisory capacity for a month and mandated to requalify by exam as a Financial and Operations Principal ("FINOP") before doing so. As a result of his financial status, Alfonso was not given a monetary fine. FINRA found that Alfonso failed to enforce his member firm's written supervisory procedures pertaining to financial controls as well as books and records. As a result, the firm had several incorrect entries in its books and records. [...]

By |September 17th, 2015|FINRA, Press Releases & News|
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SEC Warns Brokerages To Monitor Sales Of Risky Products

The SEC alerted brokerages that they need to monitor the sales of risky complex investments to retail clients better. The agency stated that after analyzing 26,600 transactions amounting to $1.25 billion of structured securities products showed a large number of occasions when investments were inappropriate for the buyers. Currently, brokers are held to a suitability standard, meaning they can only sell products that meet a client's objectives and risk tolerance. “In these examinations, staff observed not only indications that the examined firms' suitability controls may be weak, but also significant weaknesses in supervision and implementation of internal suitability and supervisory procedures across branches of the same firm,” the alert issued by the SEC states. “The risk alert is intended to raise awareness of these types of weaknesses in order for registrants to consider them in their own compliance programs.” The SEC investigated ten branch offices of broker-dealers. In four branches of one firm, the agency found $96 million of structured-product sales [...]

By |August 26th, 2015|Press Releases & News, SEC|
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