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State regulators reveal top enforcement targets and the price they pay

Agencies brought more cases against registered advisers than unregistered entities, and certain products featured in many of them By Mark Schoeff Jr. of For the first time since they've been keeping enforcement statistics, state regulators last year brought more cases against registered financial advisers than against unregistered entities. In its 2015 enforcement report, the North American Securities Administrators Association said 812 registered advisers were named as respondents in cases, compared to 791 unregistered individuals and firms. Overall, state regulators opened 4,487 investigations last year and took 2,074 enforcement actions, according to the report, which was released at the NASAA annual conference in...

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Charlestown, Indiana man pleads guilty in securities fraud case

Richard Collins ordered to pay $250,000, sentenced to prison By Elizabeth Depompei of A Charlestown man was ordered to pay $250,000 in restitution after pleading guilty in a securities fraud case Monday. Richard Collins was president of R.C. Vision Quest in Jeffersonville, where he reportedly sold unregistered securities without being licensed to do so, a violation of the Indiana Uniform Securities Act. According to a July news release from the Indiana Secretary of State, Collins made cold calls to investors in North Carolina and Virginia and promised them high returns for investing. Collins reportedly advertised his business as being religion-based and all of...

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Indiana awards whistleblower $95K with more whistleblowers likely in financial advice sector

Earlier this month, Indiana announced its first whistleblower award, giving $95,000 to a former JP Morgan official who helped the state's regulators make an advice-related case against the firm that resulted in a $950,000 settlement. The informant showed how the firm failed to make proper disclosures to clients about proprietary funds in discretionary accounts. The whistleblower exposed JP Morgan for putting its interests before its clients. Federal and state securities regulators are relying more on firm insiders to uncover wrongdoing. As a result, the investment advice sector may find itself more vulnerable to whistleblowing. The Securities and Exchange Commission has been awarding...

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SEC Wants Firms To Watch Reps With Troubled Pasts

By Carmen Germaine of The U.S. Securities and Exchange Commission announced Monday that it is launching exams to test the compliance oversight and controls of investment advisers that hire individuals with a disciplinary history. The SEC’s Office of Compliance Inspections and Examinations released a risk alert Monday saying the office’s staff will soon start conducting examinations of investment advisers registered with the SEC that employ or contract with individuals who have a history of disciplinary events in order to assess how firms supervise higher-risk individuals. “Such individuals may present an increased risk of future misconduct, and thus can present harm to clients,”...

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2 Firms To Pay SEC Fines Over Wrap Fee Compliance Failures

By Carmen Germaine of James & Associates and Robert W. Baird & Co. agreed Thursday to pay a fine to the U.S. Securities and Exchange Commission over claims they failed to ensure clients enrolled in programs with a single annual fee weren’t being overcharged commissions for certain trades. The two firms both agreed to pay civil penalties without admitting or denying the SEC’s allegations that they failed to ensure clients in their “wrap fee” programs, who are charged a single annual fee for bundled investment advisory and trade execution services, weren’t being charged unsuitable commissions on trades made with broker-dealers outside...

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Day Traders Think They Can Win in Online Ponzi Schemes

Software makers and speculators help to keep $47 million a year flowing through a world of fraudulent investment schemes. By Eduardo Thomson and Janan Hanna of It’s the financial equivalent of a game of chicken: Put money into a likely Ponzi scheme, get paid for a while, and then try to get out before the collapse. That’s how some people seem to be using online “high-yield investment programs,” or HYIPs. The sites promise ludicrous returns—the equivalent of 1,000 percent or more annually—based on vague investment plans involving, say, bitcoin or currency trading. In reality, many are just passing money from new investors...

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SEC Says Advisers Must Report Clients’ Derivatives Risk

By Jody Godoy of Law360, New York (August 25, 2016, 5:11 PM ET) -- The U.S. Securities and Exchange Commission said on Thursday investment advisers must disclose more about assets held in separately managed accounts, including their level of exposure to derivatives, cementing rules industry stakeholders previously worried could expose trading strategies. The regulator announced final changes to a reporting form called Form ADV requiring advisers to report aggregate data on SMAs, including their exposure to derivatives and borrowings, and on other aspects of the advisers' businesses. The SEC also tightened certain record-keeping requirements under the Investment Advisers Act. Advisers will have...

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Adviser Who Targeted Elderly In Ponzi Scheme Gets 5 Years

By Diana Novak Jones of A financial adviser convicted of running an 8-year, $4.2 million Ponzi scheme was sentenced to five years in prison Thursday after several of her victims spoke about how she selected elderly and ill people to defraud. In addition to the prison sentence, Delores Mosier was ordered to pay nearly $3 million in restitution to her victims, which included friends who had known her for decades and elderly people she met more recently. Mosier convinced them to invest their retirement savings with her in something she called Chicago Anticipatory Notes — but the money ended up deposited...

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ADM Accused in Trial of Directing Grain Sales Ponzi Scheme

By Bloomberg News A Missouri grain dealer who stole tens of millions of dollars from farmers may turn out to be their best ally as they try to recoup losses from corn giant Archer-Daniels-Midland Co. ADM began trial Tuesday in St. Louis with farmers claiming the woman couldn’t have ripped them off without help from the world’s biggest corn processor. From behind bars, where she is serving a nine-years sentence, the dealer’s testimony is set to bolster the farmers’ effort to get back more than just the mere fraction of their losses they’ve recovered from her. An unfavorable verdict for ADM could taint...

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Texas Oil Co. Owner Arrested For Running Ponzi Scheme

By Daniel Siegal of The Texas-based proprietor of an oil and gas exploration company has been arrested by federal authorities on charges of mail fraud for luring investors to sink $2.6 million into an oil and gas investment program that was actually a Ponzi scheme, authorities announced Friday. James VanBlaricum of Colleyville, Texas, was arrested on Wednesday by U.S. Postal Inspectors on a federal criminal complaint charging him with mail fraud, the U.S. Department of Justice said Friday. The 77-year-old VanBlaricum is accused of using his Signal Oil and Gas Co., incorporated in 2000, as a fraudulent investment scheme, offering an investment...

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