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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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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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Old Memories Resurface in Scam

Multiple investors were cheated out of $131 million by buying stock in a worthless LED lighting distributor, by another former Stratton Oakmont broker. You all know about the old story involving the Long Island boiler room where investors got rich on scams. “Wolf of Wall Street” made this firm famous along with its infamous founder Jordan Belfort. Christopher Castaldo, a former Stratton Oakmont broker was charged with helping investors believe a company named ForceField Energy Inc. was worth multi millions. In actuality, it had “essentially no business operations and very little revenue, making the stock worthless,” according to Attorney Robert Capers statement. How the Scam was Ran The ringleader...

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Variable Annuity Penalty Costs Record $25 Million

The Financial Industry Regulatory Authority (FINRA) levied a record $25 million penalty against MetLife Inc., who agreed to settle a bevy of abuses tied directly to variable annuities. $5 million of that fine, is due to be paid to customers for negligent misrepresentation and omissions, according to Finra statement. MetLife, the largest U.S. life insurer has neither accepted responsibility nor denied any wrongdoing. Finra’s chief of enforcement Brad Bennett, stated “Variable annuities are complex and expensive products that are routinely pitched to vulnerable investors as a key component of their retirement planning. Firms engaging in this business must ensure that the information on the costs and benefits of...

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Money Laundering Scheme Ends With Finra Ban

James Van Doren was barred by Finra for deceiving creditors who were trying to recoup assets from a friend’s business. Van Doren, who was sentenced to 15 months in prison from related charges, was found guilty of laundering by helping a childhood friend conceal assets when financial agreements were not met. Laundering Scheme Unveiled Finra stated that Van Doren was given $30,000 in cash in a briefcase and a total of $732,000 over the course of three separate payments to help conceal debt money owed to creditors. He later on returned most of money while keeping some to help offset a few financial losses he incurred. Charges by...

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Jump In Securities Class Action Settlements

Cornerstone Research has reported that a total of $3 billion worth of securities class-action settlements occurred in 2015, involving 80 cases – a 184 percent increase over the previous year. Last year there were eight “mega settlements” – cases with a value at $100 million or more – compared with only one in 2014. In 2015, there were more cases featuring very high estimated damages. Average estimated damages rose 151 percent from 2014. The average settlement increased in size from $17 million in 2014 to $37.9 million in 2015. The proportion of securities class action settlements involving financial sector firms was lower...

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You May Have Rights Under the Indiana Securities Act

In Indiana, companies and individuals offering and selling securities or investment advice must comply with the Indiana Securities Act, Indiana Code § 23-19-1 et seq. (the “Act”). The Indiana Securities Act, and the Indiana case law interpreting the Act, allows private litigants – typically the purchasers of securities or investment advice – to sue for damages. These damages include, but are not limited to, a return of the purchase price, interest at the rate of eight percent per year on the amount of the purchase price, attorney’s fees, and other litigation expenses. Claims under the Indiana Securities Act are typically based...

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Puerto Rican Bond Losses Result In UBS Paying For Damages

The Financial Industry Regulation Authority Inc has ordered that the UBS Group must pay more than $470,000 to three investors who claimed damages, due their accounts being over saturated with Puerto Rico bonds that plummeted in value. While filing claims in October of 2014, Carlos Merced, Ramon Velez Garcia, and Obdulio Ramos sought as much as $570,243 in damages, alleging negligence and fraud. UBS spokesman Gregg Rosenberg stated, “Although the arbitrators awarded less than the full damages the claimants requested, UBS is disappointed with the decision to award any damages, with which we respectfully disagree.” How The Damages Came About The Swiss bank’s...

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