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SEC Charges Broker with Inflating Assets and Exaggerating Returns

Dawn J. Bennett, founder of Bennett Group Financial Services in Washington D.C. and host of the radio show, “Financial Myth Busting,” has been busted by the Securities and Exchange Commission (SEC). The reason? She allegedly inflated her firm’s assets under management by as much as five times the actual amount, and exaggerating investment returns. Inflated Assets Under Management The SEC says that Bennett claimed to have more than $2 billion in assets, but the most money that Bennett Group ever managed was $407 million. In addition, the SEC complaint says that Bennett lauded the firm’s highly profitable investment returns. She allegedly claimed that...

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Squelching ‘Cockroach’ Brokers

The Financial Industry Regulatory Authority Inc. (FINRA) recently barred 10 brokers for moving from one problem securities firm to another while committing securities violations. This practice is called cockroaching. Broker Misconduct Barbara L. Desiderio, president of the now defunct New York City-based broker-dealer, Global Arena Capital Corp., was barred from the brokerage industry. Regulators claim that Desiderio and five of the firm’s brokers used misleading sales pitches, churning of accounts and other abuses. Two branch managers at Global Arena were barred from serving in a principal capacity, and two others brokers were barred for failing to cooperate with FINRA's investigation. According to a FINRA...

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FINRA Orders Morgan Stanley to Pay $2.4M for Excessive Trading

Here we go again. Responding to the latest round of claims against former Morgan Stanley broker Steven Mark Wyatt, a Financial Industry Regulatory Authority Inc. (FINRA) arbitration panel recently ordered Morgan Stanley to pay at least $2.4 million for unauthorized and excessive trading in the stock market during and after the 2008 financial crisis. Back in 2012, Wyatt was let go from the Ridgeland, Miss., Morgan Stanley brokerage office. But his actions continue to be the subject of cases against the brokerage firm. Excessive Trading A group of physicians and their family members were awarded the $2.4 million judgment after accusing Wyatt of...

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Tom Buck Now Disbarred

Indiana’s top-selling financial advisor from Carmel, Tom Buck, has been barred from working in the securities industry for alleged misconduct that included unauthorized trading for his clients without the clients, or his employer, Merrill Lynch’s, permission. Buck, a former senior vice president of investments at Merrill Lynch, who had been honored numerous times over the years for being one of the top-producing brokers in Indiana, agreed to the disbarment in a consent order he signed last week with the federal Financial Industry Regulatory Authority (FINRA). The FINRA consent decree states that Buck, starting at least since 2009, “pursued unethical and improper business...

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Do Federal Motor Carrier Safety Regulations Help Build a Case?

The Federal Motor Carrier Safety Regulations (FMCSRs) can help truck accident victims and their attorneys build stronger cases against trucking companies. Beyond the basic rules of the road like obeying speed limits, using proper turn signals and stopping at lights or stops signs, FMCSRs provide guidelines for both inspection and operation of a tractor trailer. FMCSR § 396.13 addresses the inspection of a commercial motor vehicle ensuring that it is in safe operating condition. The regulation requires that the driver be satisfied the motor vehicle is in safe operating condition, review the last driver inspection report and sign the report if defects or deficiencies were reported verifying repairs...

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Ponzi Scheme Lands Minnesota Adviser 25 Years in Prison

Former financial adviser, Sean M. Meadows, has been sentenced to 25 years in prison for fraud. A St Paul, Minn., U.S. District Court judge handed down the sentence recently in the case in which Meadows pleaded guilty to diverting $10 million for business and personal expenses, including gambling and adult entertainment. As part of the initial indictment, Meadows was ordered to forfeit properties tied to the scheme, including a boat and expensive watches. Ponzi Scheme According to Investment News, Meadows collected some $13 million through his registered investment adviser, Meadows Financial Group, from around 2007 to 2014. Meadows told his clients that he would invest...

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Broker Busted for Trying to Inherit $1.8 Million from Alzheimer’s Client

The Financial Industry Regulatory Authority Inc. (FINRA) filed a complaint against Arizona broker, John Waszolek, for allegedly attempting to inherit $1.8 million from a client with Alzheimer’s disease. Broker Took Unfair Advantage FINRA says that in 2009, John Waszolek, who was at UBS Wealth Management at the time, "took unfair advantage" of an 81-year-old client by having her assign him as beneficiary for her trust — even though he knew she "lacked testamentary capacity" and was "completely unable to protect herself from exploitation." The client, a widow who lived alone in Arizona, had been Waszolek’s client since 1982. Until 2007, he would only...

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Robert W. Baird & Co. Fined $17.8 Million for Unfair Competition

The asset and wealth management firm Robert W. Baird & Co. along with 20 of its employees have been fined $17.8 million plus interest, with the money awarded to Gleacher & Co., a dissolved investment firm, for alleged unfair competition and solicitation. The order, among other claims related to employees who left Gleacher for Baird, was imposed by a Financial Industry Regulatory Authority Inc. (FINRA) arbitration panel. Gleacher, which dissolved in 2014, is now solely winding down its operations. Unfair Competition and Solicitation Five of the 20 Baird employees have been ordered to pay at least $50,000 plus interest, and the firm has been...

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Boston Adviser Investigated for Losing $12 Million of Clients’ Money

Hans Peter Black, founder of Boston-based Interinvest Corp., has been charged by the Securities and Exchange Commission (SEC) for defrauding investors and losing up to $12 million of the $17 million of clients’ money invested in Canadian penny stock companies in which he had undisclosed financial stakes. Penny stocks are low-priced, small-cap stocks which usually cost under $5. Conflict of Interest In a complaint filed in Federal court in Boston, the SEC alleged that Black served on the boards of the four companies in which he put his clients’ investments. A separate entity Black controls received $1.7 million, which Black contends represent reimbursement...

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Morgan Stanley and Scottrade, Inc. Fined $950,000 by FINRA

As reported by Law360, Morgan Stanley and Scottrade Inc. must pay $950,000 to the Financial Industry Regulatory Authority for failing to monitor wire transfers of customer funds to third-party accounts. Morgan Stanley was fined $650,000, while Scottrade was fined $300,000. Both firms neither admitted nor denied the charges, but consented to the entry of FINRA’s findings. From October 2008 through June 2013, three Morgan Stanley representatives in two branches transferred $494,000 from 13 customer accounts to their personal accounts or to banks holding their mortgages, FINRA reported. The regulator said that those representatives created fraudulent wire transfer orders and branch checks....

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