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SEC Updates List of Firms Using Inaccurate Information to Solicit Investors

SEC has announced that it updated its list of unregistered entities that use misleading information to solicit primarily non-U.S. investors, adding 23 soliciting entities, eight impersonators of genuine firms, and seven bogus regulators.

Source https://www.sec.gov/news/press-release/2020-200 The Securities and Exchange Commission has announced that it updated its list of unregistered entities that use misleading information to solicit primarily non-U.S. investors, adding 23 soliciting entities, eight impersonators of genuine firms, and seven bogus regulators. The SEC's list of soliciting entities that have been the subject of investor complaints, known as the Public Alert: Unregistered Soliciting Entities (PAUSE) list (https://www.sec.gov/enforce/public-alerts), enables investors to better inform themselves and avoid being a victim of fraud. The latest additions are firms that SEC staff found were providing inaccurate information about their affiliation, location, or registration. Under U.S. securities laws, firms that solicit investors generally are required to register...

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SEC Requires Brokers to Act in Their Clients’ Best Interests

The new SEC rule that requires broker-dealers who make recommendations to their customers to act in their clients’ “best interest” takes effect on June 30, 2020.

By Scott L. Starr June 8, 2020 The new Securities and Exchange Commission (SEC) rule that requires broker-dealers who make recommendations to their customers to act in their clients’ “best interest” takes effect on June 30, 2020.  This is a significant change in the way stockbrokers have historically done their business. The old rule was that brokers need only make “suitable” recommendations to their clients.  Starting June 30, the brokers must at all times act in their clients’ best interests.  That new best interest rule will require the brokers to make complete disclosures about the investments they are recommending. For example, starting June...

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FINRA Sanctions Five Wall Street Firms $1.4 Million For Failure to Properly Monitor Minor Accounts

Five large brokerage firms have been fined $1.4 million by FINRA for failing to reasonably supervise custodial accounts.

Five large brokerage firms have been fined $1.4 million by FINRA for failing to reasonably supervise custodial accounts. The sanctioned firms were Citigroup Global Markets Inc.; J.P. Morgan Securities LLC; LPL Financial LLC; Morgan Stanley Smith Barney LLC; and, Merrill Lynch, Pierce, Fenner & Smith Incorporated. The companies paid a combined $1.4 million to settle the matter and agreed to review their policies, systems, and procedures to ensure their account supervision is in compliance with FINRA rules. The firms neither denied nor admitted to the charges. FINRA said it sanctioned the firms for failing to supervise Uniform Transfer to Minors Act (UTMA)...

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Private Placements 101

A private placement, also sometimes known as an unregistered offering, is a way for companies to raise money from investors without having to conduct a public offering. 

Sources: U.S. Securities and Exchange Commission, Indiana Secretary of State What is a private placement? A private placement, also sometimes known as an unregistered offering, is a way for companies to raise money from investors without having to conduct a public offering.  Many of the companies that raise money this way are privately held startups.  Private placements are not subject to some of the disclosure requirements and other regulations that public offering are. Who can invest? Generally, private placements are restricted to accredited investors.  Accredited investors are individuals who meet one of two criteria:  they earned more than $200,000 (or $300,00 together with a...

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Former Indianapolis payroll exec pleads guilty in $9.4M fraud scheme

An Indianapolis man who operated a downtown payroll services business pleaded guilty to federal charges Friday after admitting to conducting a fraud scheme that cost his clients and Internal Revenue Service more than $9.4 million, the U.S. Attorney’s Office announced.

By Indianapolis Business Journal Staff An Indianapolis man who operated a downtown payroll services business pleaded guilty to federal charges Friday after admitting to conducting a fraud scheme that cost his clients and Internal Revenue Service more than $9.4 million, the U.S. Attorney’s Office announced. David Downey, 50, who ran Time Payroll from 2009 to 2017, faces a possible prison sentence of six years, plus fines of up to $750,000. He also could be ordered to pay restitution to his clients and the IRS. U.S. District Judge Catherine Perry scheduled sentencing for Dec. 13. Downey, who had clients in Indiana, Illinois, Kentucky and...

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Indiana family files lawsuit against e-cigarette manufacturer

Indiana family files lawsuit against e-cigarette manufacturer

By Sandra Chapman of WTHR 13 in Indianapolis A Carmel, Indiana family is taking on one of the largest e-cigarette manufacturers in the country. In a federal lawsuit filed in Indiana, Tom McCullogh said high levels of nicotine and youth-centered marketing caused his son to become addicted and is behind a growing crisis in central Indiana. In the 18-page lawsuit, McCollough said his son began "juuling" at the age of 15 and quickly became addicted to Juul e-cigarette products. According to the lawsuit, Juul creates flavors to appeal to teens and has had a marked effect on underage vapers. In addition, the suit alleges...

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Bishop Timothy L. Doherty’s statement on Father David Hasser

Bishop Timothy L. Doherty’s statement on Father David Hasser

NOTE: Andrew Miller is a partner at Starr Austen & Miller LLP. Mr. Miller’s client received a $225,000 settlement paid by the Diocese of Lafayette-in-Indiana to resolve her claims of sexual assault and harassment by Fr. David Hasser, a Diocesan priest and its Director of Vocations. Mr. Miller was able to negotiate the settlement with the Diocese of Lafayette-in-Indiana prior to filing a lawsuit. As an additional condition of settlement, Mr. Miller and his client insisted that the Diocese publicly acknowledge Fr. Hasser’s conduct and also that it retract its prior statement announcing Fr. Hasser’s departure from his position as...

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Indiana Secretary of State Fines LPL Financial (Linsco Private Ledger) $450,000 for Failing to Supervise Its Indiana Brokers

Indiana Secretary of State Fines LPL Financial (Linsco Private Ledger) $450,000 for Failing to Supervise Its Indiana Brokers

Written by Scott L. Starr December 3, 2018 The securities industry is designed so that the first line of defense against fraud is the requirement that a brokerage firm must police its own brokers. A principal rule in the securities industry is that brokerage firms are required to supervise each of its broker’s offices. LPL Financial has recently agreed to pay a civil penalty of $450,000 for “various deficiencies” related to the supervision of its Indiana brokers, the Indiana Secretary of State’s Office recently reported.  In addition to the payment of this civil penalty, Linsco Private Ledger agreed to conduct a third party...

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SEC issues warning about self-directed IRA fraud

SEC issues warning about self-directed IRA fraud

by ConsumerAffairs.com As hand-wringing over dwindling pension trust funds and economic security continues to grow, many people are looking for ways to pump up their nest eggs. One investment angle that many consumers are working are self-directed Individual Retirement Accounts (IRAs). However, the Securities and Exchange Commission (SEC) is raising red flags about the risk vs. reward of that and other investment paths. A self-directed IRA is an IRA held by a custodian that allows investment in a broader set of assets than permitted by most IRA custodians. There’s a danger zone in that scheme because custodians for self-directed IRAs can abandon most...

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How criminals steal $37 billion a year from America’s elderly

How criminals steal $37 billion a year from America's elderly

By Bloomberg News Marjorie Jones trusted the man who called to tell her she'd won a sweepstakes prize, saying she could collect the winnings once she paid the taxes and fees. After she wired the first payment, he and other callers kept adding conditions to convince her to send more money. As the scheme progressed, Ms. Jones, who was legally blind and lived alone in a two-story house in Moss Bluff, La., depleted her savings, took out a reverse mortgage and cashed in a life insurance policy. She didn't tell her family, not even the sister who lived next door. Scammers often push...

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