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Securities Fraud

Improper Trading Leads to Finra Charges

Finra has charged former broker David Randall Lockey with profiting from improper trading of client accounts for about two years. According to the Finra complaint, Mr. Lockey had engaged in unsuitable short-term trading and switching mutual funds and unit investment trust involving four accounts from May 2012 to March 2014. Lockey was associated with SWS Financial Services. Effects of Unsuitable Trading and How Starr Austen Can Help Mr. Lockey’s activities resulted in his own personal gain, to the tune of $75,730. Three of his four clients accrued a combined loss of $15,699. The fourth client, a retired engineer, benefited from a small...

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How a Favor From a Friend Led To Uncovering a $7 Billion Ponzi Scheme

Financial adviser Andrew Dalmady was doing his friend a favor by reviewing his investments. Unbeknownst to him at the time, he would go on to uncover the second largest ponzi scheme in history. Allen Stanford, a titan in the banking industry and listed in Forbes as one of the richest men in the world, was in big trouble. As Dalmady began to investigate his friend’s investments, he began to grow weary. He started noticing many things that seemed “fishy”. This was just the tip of the monumental iceberg that would sink quickly. How the Ponzi Scheme was Setup Stanford was convicted for...

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The SEC Charges Wells Fargo With Securities Fraud in Connection With Video Game Company

Wells Fargo and the Rhode Island Economic Development Corp. (RIEDC) have been charged by the SEC with fraud, in relation to a bond offering that supported the now extinct video game company 38 Studios. Investigators on the case say that bond investors were unaware that their $50 million pledge would still leave the video game company short of the capital needed to operate. Andrew Ceresney, director of SEC enforcement, stated, “We allege that RIEDC and Wells Fargo knew that 38 Studios needed an additional $25 million to fund the project yet failed to pass that material information along to bond...

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Finra Nixes Broker for Rash Debt Recommendations Regarding Elderly Clients

David Joseph Escarcega was barred from the financial industry following a February 29th disciplinary decision from the Financial Industry Regulatory Authority Inc. He was found guilty for making at least 12 unnecessary recommendations involving debt tools known as debentures, which are used for life insurance policies. Escarcega was also fined $52,270, which was the amount he profited in commissions from his clients. How the Risky Debt Scheme Began CWG Holdings Inc. buys life insurance policies with the goal of profiting more in benefits, once the policyholder eventually dies. It was found that Escarcega sold the debentures issued by CWG between March 2012...

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Broker Accused of Variable Annuity Fraud

A former rep of MetLife and Prudential, Winston Wade Turner, is being investigated for “engaging in a course of deception and other misconduct in connection with sales and exchanges of variable annuities involving numerous customers,” said Finra in a formally filed complaint. Also mentioned in the complaint were other fraudulent allegations. Those include enticing clients to exchange their annuities and other investments, surrendering existing contracts to purchase new variable annuities, and incurring charges that generated additional revenue for Mr. Turner. Turner disguised the unnecessary nature of these purchases from his clients and broker-dealers by slanting the way some income features worked with...

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Investors’ Insider Trading Results in $10 Million Lawsuit for SAC Capital

SAC Capital Advisors LP, agreed to pay $10 million in a lawsuit brought forward by the shareholders of drugmaker Wyeth, who claim they lost money due to insider trading in Wyeth’s stock. The proposed settlement was discussed in federal court in Manhattan, which would result in a class action started after the arrest of previous SAC Capital portfolio manager, Mathew Martoma, for insider trading. How The Insider Trading Began Due to manipulating confidential results of a clinical trial of a new Alzheimer’s drug being developed by Elan Corp and Wyeth, Martoma was convicted of insider trading and sentenced to serve nine years...

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Morgan Stanley Pays $1 Million in Restitution Due To Churning by Ex-Broker

A FINRA arbitration panel awarded Genevieve Lenehan more than $1 million, after sources discovered she was ripped off by former Morgan Stanley broker, Justin Amaral. Ms. Lenehan claimed that her former broker, Mr. Amaral, both churned and reverse-churned her account. Amaral had been the financial adviser to Ms. Lenehan and her husband, who passed away five years ago. When Mr. Lenehan died, Amaral began an investment strategy in which he purchased and sold closed-end funds and initial public offerings to generate fees, according to Lenehan’s attorney Robert Jutras, partner at Sheehan, Schiavoni, Jutras & Magliocchetti. Amaral also moved thousands of shares of...

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Monsato to Pay $80M SEC Penalty

The U.S. Securities and Exchange Commission has found Monsanto Co. in violation of accounting rules and misstating earnings related to its Roundup herbicide, and Monsanto has agreed to pay $80 million in penalties. Without admitting or denying the charges, which include fraud, Monsanto agreed to pay the fine in order to settle allegations that it had insufficient internal controls to account for millions of dollars in rebates that it offered to retailers and distributors. Monsanto ultimately booked considerable revenue, but failed to recognize the costs of the rebate programs on its books. As a result, the company misstated its consolidated earnings...

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FINRA Levies $1 Million Fine Against Fidelity for Fraud

Fidelity Investments accrued $1 million in penalties from FINRA, due to failing to protect clients from a woman posing as a Fidelity broker. Lisa A. Lewis, who identified herself as a Fidelity broker, focused primarily on taking advantage of senior citizens. She garnered personal information from at least nine individuals and proceeded to create accounts in their names, while having all communications about them forwarded to herself. From 2006 to 2013, Lewis stole more than $1 million from her clients, according to FINRA. She pleaded guilty to wire fraud and is currently serving a jail sentence. Lax Supervision by Fidelity Allows...

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$800,000 Stolen in Elaborate Fraud Scheme

Stealing over $800,000 in the process, New York City man Moazzam Ifzal Malik, was ousted as a con man. He claimed to be an uber experienced hedge fund manager while embezzling the funds of up to 17 investors, according to a statement from New York Attorney General Eric Schneiderman. Malik, 33, created several fake hedge funds that he used to filter money from investors for personal use. He has been convicted of 28 criminal charges, with a large amount related to his fictitious hedge funds. How Malik’s Fraud Scheme Worked Malik bragged to potential investors that he possessed over a decade of...

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