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SEC Fines Accountants Over Missed Red Flags In Securities Fraud Case

CPA Firm Grant Thornton, LLP and two of its partners were recently sanctioned by the U.S. Securities and Exchange Commission over claims that they missed red flags when inspecting two publicly traded companies that were the focus of SEC enforcement actions due to accounting violations and other issues. An admission of wrongdoing from Grant Thornton, and a $3 million fine, was part of the settlement. In addition, Grant Thornton had to disgorge more than $1.5 million in audit fees and prejudgment interest. Two managing partners for Grant Thornton’s Wisconsin practice settled with the SEC – Melissa Koeppel and Jeffrey Robinson. Neither admitted...

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Starr Austen and Miller is Investigating Auto Service Agency’s Direct Mail Solicitation Practices

Starr Austen & Miller is investigating Auto Service Agency’s direct mail advertising practices for possible statutory violations. Auto Service Agency, based in St. Peters, Missouri, offers vehicle owners service contracts and is not affiliated with any vehicle manufacturer or individual dealer. If you’ve received a direct mail solicitation from Auto Service Agency, listing your vehicle’s make, model and year, please contact Andrew Miller....

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Former JP Morgan Adviser Guilty of $20M Client Theft

In a New York federal court, a former JPMorgan Chase & Co. investment adviser has plead guilty to stealing over $20 million from clients. In addition, he has admitted to squandering funds on unprofitable trades and personal expenses. Michael Oppenheim, 49, plead guilty to embezzlement and securities fraud on November 5, 2015. He also agreed to hand over $22.4 million in forfeiture. Oppenheim faces between 8 to 10 years in prison. He may not appeal any sentence within or below that range. Charged in a criminal complaint earlier this year, Oppenheim has been in home detention – his movements monitored by a GPS...

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SEC Identifies Lack of Compliance Programs

Investment adviser firms’ growing use of outside chief compliance officers has prompted the U.S. Securities and Exchange Commission to identify several that are not effectively implementing compliance programs. The Office of Compliance Inspections and Examinations has detailed the results of over a dozen examinations conducted by the SEC of investment advisers and investment companies’ CCOs. While some were found to be generally effective in administering compliance programs, others failed to ensure that the advisers adhered to compliance policies, as well as other issues. A risk alert issued by the OCIE cautioned funds and advisers with outsourced CCOs to make certain that...

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Fidelity Charged with Unethical Behavior

Generating fees for the firm and unregistered advisers has been deemed unethical behavior by the commonwealth of Massachusetts. According to a statement from the secretary of commonwealth, William Galvin, at least 13 unregistered Massachusetts investment advisers used Fidelity’s broker-dealer platform. Gavin said, “Fidelity served as a haven from regulatory oversight as it ignored blatant unregistered investment advisory activity.” Fidelity has issued a public statement defending itself. Adam Banker, a Fidelity spokesman said, “We do not believe that Fidelity has violated any laws or regulations in connections with this matter. We look forward to reviewing the details of this matter and addressing them...

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SEC Hammers Down on Securities Fraud, Records Highest Fines in 2015

The Securities and Exchange Commission targeted multiple types of fraudulent behavior this year as it filed a record high of enforcement actions and fines against individuals and companies, said the agency. The agency obtained $4.2 billion in penalties, resulting in a 7% increase from the previous fiscal year 2014. Kohlberg Kravis Robert & Co. took a massive blow, as the SEC levied actions against them for improperly allocating $17 million in “broken deal” expenses. Also, Edward D. Jones & Co. was penalized for pricing fraud in municipal securities. SEC Provides Transparency in Securities Fraud Cases The agency has been more focused on enforcement, led...

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Adviser Access to Outside Accounts of Clients Forces SEC Hand

The Securities and Exchange Commission (SEC) is cracking down on advisers who can access their clients’ employer sponsored retirement accounts. Managing director of Graydon Compliance Solutions, Kevin Woodard, has declared that the agency will closely monitor scenarios in which clients have given their advisers usernames and passwords for financial accounts that are not managed by their adviser. At the National Association of Personal Financial Advisors fall conference in Indianapolis, Woodard said, “If you can’t prove you can’t steal from it, you should say you have custody.” Potential for Adviser Abuse The multibillion dollar rip off by Bernie Madoff, who maintained control of...

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$18M to FINRA by 5 Firms for Overcharging Funds

Five broker-dealers have been ordered by the Financial Industry Regulatory Authority to pay more than $18 million in restitution for overcharging charities and retirement funds on mutual fund sales. Among the broker-dealers are Edward D. Jones & Co. LP and Stifel Nicolaus & Co. Inc. The firms failed to waive sales charges on the mutual funds. To date, FINRA has collected $55 million in restitution to return to 75,000 eligible accounts. “These actions are further evidence of our commitment to pursue substantial restitution for adversely affected mutual fund investors who were not afforded the full benefit of available sales charge waivers,” says...

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Settlement of Puerto Rico Investor Claims Costs UBS $2.9 Million

UBS AG, a Swiss global financial services company, was ordered by the Financial Industry Regulatory Authority Inc. (FINRA) to pay about $2.9 million to two investors in Puerto Rico closed-end municipal bond funds. A closed-end fund is a publicly traded investment company that raises a fixed amount of capital through an initial public offering (IPO). The fund is then structured, listed and traded like a stock on a stock exchange. Misrepresentations of Closed-end Funds Ana Teresa Lopez-Gonzales and Andres Ricardo Gomez received about $2.4 million in damages and about $480,000 for attorney’s fees, according to a FINRA filing. Lopez-Gonzales and Gomez were part of...

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Brokers Plead Guilty in Post-It-Note-Eating Insider Trading Case

In scenes reminiscent of a spy movie, a Brooklyn, New York, mortgage broker showed secret tips written on Post-it notes to a former Morgan Stanley broker, then swallowed the notes. True story! Insider Trading Frank Tamayo pleaded guilty in September 2014 for his role as the middleman in the insider trading case. Tamayo repeatedly met with former Morgan Stanley broker Vladimir Eydelman near the large clock inside the main concourse at New York City’s Grand Central Station to share the stolen data. Eydelman recently admitted guilt in a federal court in Trenton, N.J. Tamayo obtained the stolen information from his law school friend...

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