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Securities Fraud

Adviser Gets 9 Years in Prison for Diverting Investment Funds

Self-styled “Financial Coach” also must pay $3.6 million in restitution for fraud Bryan C. Binkholder, a St. Louis-area financial adviser, was sentenced to nine years in prison and ordered to pay more than $3.6 million in restitution to clients who participated in a real-estate investment program Binkholder used to pay personal expenses and salaries. According to prosecutors, Binkholder used YouTube videos, a talk-radio show and books to hoodwink his clients. He also acted as a bank for real-estate developers looking to purchase, renovate and re-sell homes. However, Binkholder made only a small amount of these loans. Instead, he used the money -- millions...

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FINRA Toughens its Sanctions on Suitability Violations

The self-regulator suggests barring offenders, expelling more firms, uping suspensions to two years The Financial Industry Regulatory Authority Inc. is tightening the screws on its disciplinary responses to violations of the suitability standard by brokers. As part of its Sanction Guidelines, which provide suggestions for the National Adjudicatory Council, the committee that oversees disciplinary proceedings, the self-regulator has increased its suggested suspensions from one year to two for brokers making unsuitable recommendations. It also strongly advises possible barring of brokers and expelling of firms for fraudulent activity. The guidelines are set in place to protect investors from a broker's failure to comply with...

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Morgan Stanley Sued for $170M by Home Shopping Founder’s Widow

Lynnda L. Speer, the widow of cable shopping pioneer Roy M. Speer and the personal representative of Mr. Speer's estate, is suing Morgan Stanley Wealth Management plus an adviser and branch manager for more than $170 million. The suit was filed under the Financial Industry Regulatory Authority Inc.'s (FINRA) arbitration forum, and was disclosed in Morgan Stanley’s annual financial report filed with the SEC in March. Alleged broker misconduct Ms. Speer claims that the firm, branch manager Terry McCoy, and adviser Ami Forte in the Palm Harbor, Fla., branch engaged in excessive trading, unauthorized use of discretion, negligent supervision, unjust enrichment and abuse...

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It Just Got Easier to Sue Over 401(k) Plans

Individuals who have retirement investments in a company 401(k) plan may now have more success filing a suit against the company for infractions such as breach of fiduciary duty. Recently, the United States Supreme Court unanimously ruled in favor of participants in employee retirement plans, in which the participants object to the companies’ investment decisions that negatively affect their retirement portfolios. Mutual funds with excessive fees In the case -- Tibble v. Edison International, 13-550 -- current and former employees of the energy company Edison International argued that the company did not act in their best interests by choosing mutual funds with higher...

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Wells Fargo Broker Banned for Undisclosed Business Interests

Aaron Parthemer, a Wells Fargo adviser, has been barred by the Financial Industry Regulatory Authority Inc. (FINRA) for engaging in a number of undisclosed businesses, including running a dance club in South Beach, Fla., plus running an Internet branding startup and a tequila marketing operation. Undisclosed loans and business involvements FINRA alleges that Parthemer managed operations at the club, and loaned just under $400,000 to three professional athletes who were owners at the club. The loans were to pay for operating expenses at the club, but they violated Wells Fargo’s policy against brokers lending money to clients. James Sallah, an attorney representing Parthemer,...

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FINRA Focusing on Protecting Elderly Investors

While brokers and investment advisers are targeting older clients to build their book of business, regulators are attempting to protect graying investors. Misrepresentation of company strength Recently, the Financial Industry Regulatory Authority Inc. (FINRA) filed a cease-and-desist order against Avenir Financial Group for sales of equity in the firm. FINRA claims Avenir lied about the health of the firm and raised more than $730,000 over three years in sales mostly to elderly investors. Avenir registered representative, Cesar Rodriguez, was also barred for personal use of $77,000 in investor funds. Toll-free FINRA Securities Helpline The filing against Avenir comes just over a week after FINRA set...

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Starr Austen Helped Secure Huge Recovery for Fraud Victims

In a better-than-average outcome, more than 90 investors who lost $9.7 million in a securities fraud debacle will recover a very substantial percentage of their losses. The investors had put money in a hedge fund, Samex Capital Partners, run by a Fishers, Ind., hedge fund manager Keenan Hauke. The court appointed William Wendling, Senior Partner with Campbell Kyle Proffitt in Carmel, Ind., to act as receiver. Wendling then hired Starr Austen & Miller to act as lead securities litigation counsel because of their experience in representing victims of securities fraud. Broker misconduct In 2012, Hauke pleaded guilty to securities fraud and was...

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Investor Awarded $1.3 Million in Churning and Breach of Fiduciary Duty Case

A three-person Financial Industry Regulation Authority Inc. (FINRA) panel awarded Mississippi investor Tracy Noble Gilbert $1.29 million in compensatory damages and $250,000 in attorneys' fees over the handling of her finances by a former broker for Stifel Nicolaus & Co. Inc. Churning and breach of fiduciary duty Gilbert accused her former father-in-law, Lanis Dale Noble, then with Stifel, of churning and breach of fiduciary duty, among other charges, in the case filed in August 2012. The case involves buying on margin, and Nobel purchasing variable annuities from SunLife, ManuLife, and Friedman Billings Ramsey real estate investment trust. Buying on margin involves borrowing money...

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SEC Panel Recommends Single Database to Run Background Checks

magine being able to get information about any financial professional in the United States by visiting one web site. Investor protection To make it easier for investors to track securities violations by advisers and brokers, the Securities and Exchange Commission (SEC) Investor Advisory Committee (IAC) pitched the idea that the SEC work with other federal and state financial regulators to develop a single website to house disciplinary information about investment advisers, brokers and other financial professionals. The committee also recommended that a single portal be provided for investors to access information in SEC and Financial Industry Regulatory Authority Inc. (FINRA) databases. Anne Sheehan, director...

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Make Sure You Discuss Wealth Transfer With Your Adviser

If your financial adviser has never broached the subject of passing on your assets to the next generation, you have lots of company. A J.D. Power 2015 U.S. Full Service Investor Satisfaction Study finds that only 42 percent of investors say their advisers have asked them what will happen to their money when they die. The report finds that 71 percent of investors tell their advisers who they have named as beneficiaries, and are willing to discuss passing their assets on to them. Missed wealth transfer opportunities Discussing the passing of wealth to the next generation gives investors a golden opportunity to retain...

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