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State regulators reveal top enforcement targets and the price they pay

Agencies brought more cases against registered advisers than unregistered entities, and certain products featured in many of them By Mark Schoeff Jr. of investmentnews.com For the first time since they've been keeping enforcement statistics, state regulators last year brought more cases against registered financial advisers than against unregistered entities. In its 2015 enforcement report, the North American Securities Administrators Association said 812 registered advisers were named as respondents in cases, compared to 791 unregistered individuals and firms. Overall, state regulators opened 4,487 investigations last year and took 2,074 enforcement actions, according to the report, which was released at the NASAA annual conference in...

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Charlestown, Indiana man pleads guilty in securities fraud case

Richard Collins ordered to pay $250,000, sentenced to prison By Elizabeth Depompei of newsandtribune.com A Charlestown man was ordered to pay $250,000 in restitution after pleading guilty in a securities fraud case Monday. Richard Collins was president of R.C. Vision Quest in Jeffersonville, where he reportedly sold unregistered securities without being licensed to do so, a violation of the Indiana Uniform Securities Act. According to a July news release from the Indiana Secretary of State, Collins made cold calls to investors in North Carolina and Virginia and promised them high returns for investing. Collins reportedly advertised his business as being religion-based and all of...

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Indiana awards whistleblower $95K with more whistleblowers likely in financial advice sector

Earlier this month, Indiana announced its first whistleblower award, giving $95,000 to a former JP Morgan official who helped the state's regulators make an advice-related case against the firm that resulted in a $950,000 settlement. The informant showed how the firm failed to make proper disclosures to clients about proprietary funds in discretionary accounts. The whistleblower exposed JP Morgan for putting its interests before its clients. Federal and state securities regulators are relying more on firm insiders to uncover wrongdoing. As a result, the investment advice sector may find itself more vulnerable to whistleblowing. The Securities and Exchange Commission has been awarding...

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Day Traders Think They Can Win in Online Ponzi Schemes

Software makers and speculators help to keep $47 million a year flowing through a world of fraudulent investment schemes. By Eduardo Thomson and Janan Hanna of Bloomberg.com It’s the financial equivalent of a game of chicken: Put money into a likely Ponzi scheme, get paid for a while, and then try to get out before the collapse. That’s how some people seem to be using online “high-yield investment programs,” or HYIPs. The sites promise ludicrous returns—the equivalent of 1,000 percent or more annually—based on vague investment plans involving, say, bitcoin or currency trading. In reality, many are just passing money from new investors...

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ADM Accused in Trial of Directing Grain Sales Ponzi Scheme

By Bloomberg News A Missouri grain dealer who stole tens of millions of dollars from farmers may turn out to be their best ally as they try to recoup losses from corn giant Archer-Daniels-Midland Co. ADM began trial Tuesday in St. Louis with farmers claiming the woman couldn’t have ripped them off without help from the world’s biggest corn processor. From behind bars, where she is serving a nine-years sentence, the dealer’s testimony is set to bolster the farmers’ effort to get back more than just the mere fraction of their losses they’ve recovered from her. An unfavorable verdict for ADM could taint...

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Finra fines UBS $250,000 for overcharging mutual-fund customers

The firm allegedly failed to provide about 2,700 customers waivers tied to upfront sale charges InvestmentNews.com By Christine Idzelis A unit of UBS Group AG will pay a $250,000 fine to settle charges that it failed to waive certain fees for eligible mutual-fund customers, according to the Financial Industry Regulatory Authority Inc. The brokerage firm charged customers an excess of $277,636 to invest in mutual funds from September 2009 to June 2013, according to a settlement notice that Finra accepted Monday. The alleged supervisory failures were tied to so-called reinstatement rights that allow investors to avoid front-end sales charges. “We are pleased to have resolved...

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Attorney: Locals Invested $750K in Reported Scam

More than 20 shareholders from Cass, Pulaski spark local lawyer’s investigation PharosTribune.com By Mitchell Kirk More than 20 people from Cass and Pulaski counties contributed about $750,000 to a former Logansport man facing federal charges of defrauding investors, according to a local attorney. Larry Westby, 64, Vanderbilt, Michigan, faces charges of mail fraud, money laundering and fraud in the offer and sale of securities. The FBI, IRS and Indiana Secretary of State's office accuse the former Logansport resident of scamming investors out of more than $985,000. Westby started a company called LMW Inc. he based in Indianapolis with the reported objective of selling respiratory...

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Former Eagle player defrauds football coaches, others out of $6 million

SEC complaint alleges Merrill Robertson Jr. and partner promised 20% and took client funds InvestmentNews.com By Liz Skinner Former Philadelphia Eagle Merrill Robertson Jr. defrauded his former coaches and other investors out of about $6 million, the Securities and Exchange Commission alleged in a complaint filed on Wednesday. Mr. Robertson, Sherman Vaughn Jr., and the company they owned together called Cavalier Union Investments, raised more than $10 million from investors who were told their money would go towards diversified holdings, the complaint filed in federal court in Richmond, Va., said. However, nearly $6 million was used to pay for personal expenses of Mr. Robertson and...

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Finra panel orders adviser to pay $333,000 to Morgan Stanley

Louis D. Dworsky was found in breach of promissory notes when he left the brokerage firm InvestmentNews.com By Christine Idzelis A former broker for Morgan Stanley must pay the wirehouse $333,000 in damages for failing to pay back money he owed when leaving the firm in 2013, according to the Financial Industry Regulatory Authority Inc. Morgan Stanley will recoup money tied to four promissory notes issued to Louis D. Dworsky in 2007, 2008 and 2009, according to a Finra dispute resolution document released on Monday. Promissory notes are a form of compensation that brokers receive from their employer. Mr. Dworsky now works at Zermatt Wealth...

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Former Merrill Edge adviser accused of misleading customers

Finra said the adviser misled five IRA customers and then did not give an honest account of his actions InvestmentNews.com By Tanvi Acharya The Financial Industry Regulatory Authority Inc. accused former Merrill Lynch adviser of allegedly misleading five clients with individual retirement accounts at the firm by providing incorrect information while making recommendations. Landon L. Williams, who is currently not registered as a Finra member, also “made false statements about what he discussed with and disclosed to the customer” in his notes, according to the complaint filed Thursday. Mr. Williams was an adviser at Merrill Lynch Edge Advisory Center, which serves customers with $250,000 or...

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