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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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SEC Eyeing Advisers’ Share Class Conflicts Of Interest

By Jody Godoy of Law360.com The U.S. Securities and Exchange Commission told financial advisers on Wednesday that it will start probing whether they are improperly pushing more expensive types of mutual fund or college saving plan shares without disclosing the fees they receive. The initiative launched by the SEC's Office of Compliance Inspections and Examinations will have investigators looking at advisers' books and records to make sure that, where an adviser is also a broker, the adviser is not receiving undisclosed benefits by recommending certain share classes. The examination will also assess whether the adviser has in place proper disclosure protocols and...

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Department of Labor Rolls Out New Rules for Financial Advisers: What They Mean for Reporters

by Jennifer Backer The Donald W. Reynolds National Center of Business Journalism Despite a shift towards more transparency in the financial planning industry, many investors still aren’t sure what they are paying their financial advisers, USA Today reported. But new rules the Department of Labor rolled out earlier this month are designed to clear things up for investors. The long-awaited and debated fiduciary rule requires that investment advisers put their clients’ interests before their own when it comes to fees and investment choices. The new rules are designed to clarify how much advisers are paid, who they work for, and how they get...

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Investment Branch of Fidelity Sued for Fiduciary Breach

Individuals that contribute to a Delta Air Lines Inc. 401(k) plan have sued sections of Fidelity Investments, on the claim of wrongdoing in the firm’s record keeping role. According to its latest Form 5500, the Delta Family-Care Savings Plan had approximately $7.8 billion in assets. The participants in this investment fund are seeking a class-action status and allege that Fidelity hired Financial Engines to provide investment advice and to collect a piece of the action. The complaint stated, “In order to be included as the investment advice service provider on Fidelity’s (record-keeping) platform, Financial Engines agreed to pay – and is paying – Fidelity a significant percentage of the fees it collects from...

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