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

By Jimmy Hoover of 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 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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The SEC and Finra Tighten Their Grip on Money Laundering Violations

Regulators are clamping down on money laundering violations among brokerdealers in firms of all sizes, regardless if they have the proper compliance resources or not. Brokerdealers of small and medium sized firms should brace themselves for increasing regulations involving their compliance practices. No more are Finra and the SEC targeting just the larger companies. Nick Fera, chief executive officer of Firm58 stated, “They’re getting more aggressive about things and it’s harder to operate a business in this environment.” Recent Money Laundering Violations and Why E.S. Financial Services based in Miami, agreed to a $1 million fine for charges of violating antimoney laundering rules. The SEC fined New...

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Massachusetts Looks to Hammer Shady Brokers

The top 241 firms in Massachusetts with an above average number of reps with misconduct reports on their records are being audited. Secretary of the Commonwealth, William Galvin has requested the firms hand over their hiring information. The letter being sent out, commonly referred to as a “sweep”, is to help the governing body understand brokerdealer hiring policies and procedures. According to Galvin, the goal is to rid the commonwealth of the bad apples. He stated, “We need and expect the brokerdealer community to assist us by aggressively policing and monitoring their own workforce. This sweep is intended to establish how the industry is meeting this critical investor protection responsibility...

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SEC Bans Broker For Fraud in Tobacco Scheme

Lee Weiss, a Massachusetts resident, was banned from the brokerage and investment industry for a fraud scheme revolving around tobacco. He claimed a French company could reduce the harmful effects of tobacco smoking, according to the SEC . Mr. Weiss and his firm Family Endowment Partners LLC , will pay approximately $8.4 million in fines back to the investors who he stole from. According to the SEC litigation announcement, they also have been ordered to pay $1.5 million in civil penalty. How the Fraud Scheme Worked The SEC alleged that from 2010 to 2012, Weiss and his firm fraudulently advised clients to invest more than $40 million in...

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Ex-Stockbroker Gets Decade In Prison For Fake CD Scheme

By Alex Wolf of Law360, New York (June 24, 2016, 8:34 PM ET) -- A former stockbroker who pled guilty to fraud charges for bilking investors through fake certificates of deposit was ordered by a Pennsylvania federal court on Thursday to pay over $3 million in restitution and serve a 10-and-a-half-year sentence, according to the U.S. Securities and Exchange Commission. Malcolm Segal, who in February pled guilty to running a fraudulent scheme that stole more than $3.2 million from clients by selling fake CDs, faced up to 20 years in prison for committing mail and wire fraud. Segal, a resident of both...

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Ex-MedCap Prez Gets 10 Years For $50M Investor Fraud

By Kurt Orzeck Law360, Los Angeles (June 15, 2016, 6:44 PM ET) -- A California federal judge has sentenced Medical Capital Holdings Inc.'s ex-president to serve more than 10 years in prison and pay nearly $40 million for allegedly operating a $50 million Ponzi scheme that defrauded hundreds of investors, federal prosecutors said Wednesday. U.S. District Judge David O. Carter on Monday issued a judgment ordering Joseph J. Lampariello, 62 — who also served as chief operating officer of the medical financial services company — to 10 years and one month in federal prison, as well as three years of supervised release. MedCap's...

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Financial Adviser Charged with Fraud

The Securities and Exchange Commission (SEC) charged broker Louis Martin Blazer III with fraud, for stealing money from multiple professional athletes claiming to invest in movie projects. In all, Blazer defrauded five clients for approximately $2.35 million to help finance two films, “Sibling” and “Mafia the Movie,” stated the SEC. In one instance, Blazer allegedly stole $500,000 from the account of an athlete after he refused to invest in the projects. The client discovered the wrongdoing and threatened with a lawsuit. In a ponzi­like fashion, Blazer stole the money from one client to repay another client. Fraud Never Pays in the Long Run A statement from the SEC’s...

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