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Advisers Could be Mishandling Your Assets, Says SEC

In a recent investor alert, the Securities and Exchange Commission warned that it has found significant deficiencies in the way investment advisers are handling the custody of client assets. The SEC revealed that their recent examinations unearthed custody-related problems in one third of the firms reviewed. Advisers failed to recognize that they control their clients' assets, co-mingled client, proprietary and employee assets and fell short of surprise-exam requirements. Advisers cited by the SEC had to change their custody compliance policies and procedures, modify their business practices or devote more resources to custody issues. SEC Chairman Elisse Walter notes that because safeguarding assets is...

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Sizable Verdict Reaffirms Need for Due Diligence in Selecting Motor Carriers

A recent verdict entered against a transportation broker for negligent hiring should motivate companies to revisit their own company policies regarding the qualification and selection of motor carriers. In 2012, an Oregon jury awarded several million dollars to the family of a man who was killed by a commercial motor vehicle. The verdict in the Linhart v. Heyl Logistics case is significant because it was entered against a transportation broker for negligent hiring, and it included punitive damages. Industry insiders believe this is the first verdict in the country awarding punitive damages against a transportation broker for negligent hiring. It is one...

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Schwab Ruling Favors Broker-dealers, Disserves Average Investors

A Financial Industry Regulatory Authority Inc. hearing panel dismissed two of three counts FINRA brought against Charles Schwab Corp. a year ago in a case involving Schwab's pre-dispute arbitration agreements. According to the panel, the language used in Schwab's customer agreements to prohibit participation in judicial class actions violates FINRA’s rules. However, FINRA may not enforce those rules because they are in conflict with the Federal Arbitration Act. This ruling means brokerage firms can potentially use arbitration agreements like Schwab’s to prohibit customers from participating in class action cases, thereby insulating themselves from liability. The panel found that Schwab violated FINRA’s rules by...

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Older Americans Losing Big in Speculative Investments

Retirement savers across the U.S. are experiencing steep losses of their investments made in complex financial products that until a few years ago were sold only to the most sophisticated investors. The victims are among the millions of Americans whose stock portfolios and mutual funds tanked during the recent financial crisis. These investors are now searching for ways to realize better returns than what’s being offered by bank deposits and government bonds. Many of the alternate products promise higher returns and are ostensibly immune to stock market volatility. Promoted by aggressive investment advisers, these new investments are taking the form of speculative...

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Do Cell Phone Policies Leave Companies Off the Hook?

The recent uptick of distracted driving lawsuits and hefty jury verdicts provides a lesson for companies: have a clear cell phone use policy in place and consider banning all cell phone use by employees using company vehicles. The May 2012 jury verdict in the ChatmanWilson v. Cabral case illustrates the hefty penalties being handed down.  A Texas jury awarded 37-year-old Vanice Chatman-Wilson several million dollars against Coca-Cola.  Chatman-Wilson’s vehicle was struck by a Coca-Cola company station wagon driven by Araceli Vanessa Cabral who was on a business call on her hands-free cell phone – allowed by company policy. Not only did Chatman Wilson...

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SIFMA nudging SEC to implement uniform fiduciary standard of care

T. Timothy Ryan Jr., president and chief executive of SIFMA, told reporters he wants constructive dialogue to begin as soon as possible on this issue to eliminate current uncertainties. One of the most influential Wall Street lobbying organizations, SIFMA listed the fiduciary-duty rule as one of its top three priorities for 2013. According to Schoeff, SIFMA's openness toward a uniform standard has heartened some fiduciary advocates, who said that it shows that Wall Street is amenable to raising the bar for brokers. Schoeff points out that the Dodd-Frank financial reform law gives the SEC the authority to implement a rule that would...

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Starr Austen & Miller Files Suit Against Companies Responsible For Fungal Meningitis Outbreak

Mark S. Fryman, of the Indiana law firm of Starr Austen & Miller, LLP, announced today that the firm, along with the firm of McNeely Stephenson Thopy & Harrold, have commenced a lawsuit against New England Compounding Pharmacy, Inc., d/b/a New England Compounding Center (“NECC”), and two of its closely related companies, as well as these companies officers, in regard to the recent multi-state fungal meningitis outbreak, linked to tainted vials of a contaminated steroid injection which has harmed Plaintiff, Natalie S. Copass. The case is entitled “Natalie S. Copass v. New England Compounding Pharmacy, Inc. d/b/a New England Compounding...

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Fall Protection Equipment Requires Regular Inspection

Deterioration of fall protection is one reason why injuries and deaths from severe falls at work sites go up. Factors include: • Deterioration of equipment with repeated use and exposure. • Equipment is not inspected enough for wear and tear. • No proper training provided. • Wrong equipment is selected for the job and not worn properly. It’s likely that a big percentage of equipment used on job sites throughout North America fails to meet safety standards. For example, shock-absorbing lanyards were voluntarily removed from job sites for safety qualification, and 85 percent of the samples failed standard safety tests using ANSI standards. Lanyards from...

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A Few Simple Ways to Prevent Bad Investments

Investments need to match your goals and tolerance for risk. Brokers are legally responsible for putting you in investments appropriate for your experience, net worth, annual income, investment objectives and other factors. Brokers, however, may abandon their obligations, given a chance to make themselves a profit. For instance, they may tout high-risk investments that are not suitable for older investors, but provide brokers with great commissions. To prevent such investment failures, investors need to be actively involved in determining investment suitability. Some tips from the Philadelphia Securities Commission: • Be completely honest when providing information to determine your investments. Don’t try to impress...

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Fiduciary Liability: CGL Policy Enough or Not?

The Department of Labor and the Securities and Exchange Commission have been considering a change in the definition of “fiduciary” under the Employee Retirement Income Security Act of 1974 (ERISA) and its amendments. In the light of this possible change, an insurance question arises: Who qualifies as a fiduciary and who needs to have fiduciary liability insurance? This question often comes up when agents do exposure reviews with commercial clients and prospects. Firms that provide employee benefits and retirement accounts are accountable for ensuring that employee premiums and investments, along with contributions pledged by the employer, are all dutifully managed and...

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