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Securities Fraud

JPMorgan Settlement With Indiana Draws Interest of Other States

by Neil Weinberg, Bloomberg.com JPMorgan Chase & Co. has reached a settlement with Indiana regulators related to its asset management business, and now other states are expressing interest in how Indiana built its case. JPMorgan agreed on July 28 to pay $950,000 to settle claims by the Indiana secretary of state that the bank failed to disclose conflicts of interest to wealthy clients. Andrew Lang, a spokesman for Secretary of State Connie Lawson, said the settlement prompted officials from other states to ask how Indiana had pursued its claim. He wouldn’t identify the states. “Investors have the right to know all the facts...

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$21 Million Dollar Ponzi Scheme Exposed

Patrick E. Churchville, a Rhode Island investment adviser has pleaded guilty to running a massive $21 million ponzi scheme. Churchville used approximately $2.5 million of investor funds to purchase a home in Barrington, Rhode Island. Since the purchase of the home, he has failed to pay almost $1 million in personal federal income taxes, according to a statement from the U.S. Attorney’s Office. Churchville will plead guilty to one count of tax fraud and five counts of wire fraud, according to the statement. He is also a defendant in a civil case brought forth by the SEC in May 2015. Ponzi Scheme...

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Finra Bans Turner for Misrepresentation

Winston Wade Turner was banned by Finra for making unsuitable variable annuity recommendations while working for MetLife and Prudential Financial. It was revealed that Turner deceived his clients by neglecting specific material facts about their current variable annuities. In some cases, Turner suggested to his clients they sell their other investments in order to fund the purchase of variable annuities he recommended. It is a known fact that exchanging any annuity should be highly monitored, due to their relatively high commissions. In August of 2015, Turner was terminated by Prudential for his deceptive sales practices. In the July 8 Finra document...

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Bill Passed to Help Protect Elder’s Against Financial Abuse

Legislation was finally approved by the House of Representatives to help protect advisers from liability when attempting to stop the exploit of senior citizens. The document ensures advisers who report the abuse to the appropriate regulators or law enforcement, will not held liable for violation of privacy laws. In addition, the bill addresses specified training for advisers to undergo which will help them identify elder financial abuse. The vote on the house floor came shortly after the unanimous approval last month in the House Financial Services Committee. Sen. Susan Collins, R-Maine, wrote the legislation and urged state securities regulators to support...

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Banned Broker Ordered to Pay $4 Million Penalty

The SEC has banned Dawn J. Bennett, founder of Bennett Financial Group in Washington, DC, for using false performance documents to obtain wealthy clients. She is ordered to pay more than $4 million in fines and disgorgement. A civil penalty of $600,000 and a $2.9 million fine were handed down by Administrative Law Judge James Grimes. Morvillo LLP, the attorneys who represent Ms. Bennett stated she has no comment at this time regarding the ruling. Morvillo LLP has 21 days to appeal Grimes’s 48 page ruling. Bennett refused to attend this function as part of “unorthodox legal strategy.” The ruling focused...

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Broker Pleads Guilty To Role In $131M Investment Scheme

By Matthew Guarnaccia of Law360.com A securities broker pled guilty in New York federal court on Wednesday to securities fraud in relation to a scheme that bilked investors of lighting company ForceField Energy Inc. out of approximately $131 million, the U.S. Department of Justice said in a statement. Staten Island resident Naveed Khan, 33, admitted to participating in a scheme to artificially control the price and volume of ForceField shares. He faces up to 20 years in prison and may be required to pay restitution, criminal forfeiture and a fine. The DOJ indicted Khan and several others in May, alleging that between late...

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Beware of Ponzi Schemes!

There presently is a trial going on in California involving a woman who was among hundreds of investors who claimed that a Metropolitan Life Insurance agent tricked them into buying unregistered securities as part of 200 million dollar Ponzi scheme. The victim in that case is a 75 year old widow. A couple of years ago our office handled a very similar case here in Indiana involving a life insurance agent. In that case the agent convinced his clients to give him large sums of money to invest in a “retirement savings plan”. The fraudster then took the money and lived...

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‘Mini-Madoff’ Associate Gets 6.5 Years For Ponzi Scheme

By Suevon Lee for Law360.com A former New York investment broker was sentenced to six-and-a-half years in prison by a New York federal judge Friday for her role in a $370 million Ponzi scheme that led to $150 million in losses for 3,800 investors, the U.S. Department of Justice said. Diane Kaylor, who was convicted in April 2015 of securities fraud, conspiracy, mail fraud and wire fraud after a month-long jury trial, was also ordered to pay $179 million in restitution during her sentencing by U.S. District Judge Denis R. Hurley in Central Islip, New York. The 40-year-old Kaylor was one of four...

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Why Plaintiffs Firms Will Love DOL’s New Fiduciary Rules

By Carmen Germaine of Law360.com The U.S. Department of Labor’s fiduciary rules give more power to retirement savers, experts said, providing investors and their attorneys an important new tool to bring claims when they suspect their broker-dealer doesn’t have their best interests at heart. “As night follows the day, there will be more litigation,” Skadden Arps Slate Meagher & Flom LLP partner Seth Schwartz said of the new rules, which require financial professionals advising retirement accounts to act in their client’s interest when recommending investment products. Experts said that the regulation’s requirement that brokers enter a contract with clients affirming they will uphold...

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DOL Fiduciary Rule Can Save Investors $190B, Court Told

By Jimmy Hoover of Law360.com The U.S. Department of Labor's new fiduciary rule for retirement investment advisers will save consumers anywhere from $95 billion to $189 billion over the next decade by reducing industry-pervasive conflicts of interest, the agency told a D.C. federal court Friday, denying the rule goes too far. In a lengthy cross-motion for summary judgment, the department extolled the virtues of its new regulation extending new standards to several categories of investment advisers who previously enjoyed more-relaxed obligations to look after the clients' bottom line. The brief comes in response to The National Association For Fixed Annuities' request for...

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