Financial Firms

Ameriprise Financial to Pay $4.5M Over Alleged Failure to Protect Investors

Published on: August 15, 2018 | by Shepherd Smith Edwards & Kantas, LLP

In a settlement reached with the US Securities and Exchange Commission, Ameriprise Financial Services (AMP) will pay $4.5M over allegations that it did not protect retail investors from five of their financial representatives, who stole over $1.5M. Three of these individuals had previously pleaded guilty to criminal charges involving investor fraud.

The Commission charged Ameriprise, a registered investment adviser and brokerage firm, with inadequate supervision of the representatives and for not having policies and procedures that were “reasonably designed” enough to stop them from misappropriating clients’ monies.

Ameriprise, despite setting, is not denying or admitting to the regulator’s findings. However, it consented to a censure.

Securities Fraud Allegations Against Former Merrill Lynch/RBC Financial Adviser Could Lead to More Unauthorized Trading and Failure to Supervise Claims

Published on: August 14, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Earlier this year, the US Securities and Exchange Commission barred ex-RBC broker Thomas Buck from the industry. The action came less than four months after the regulator filed a civil case accusing Buck of investor fraud. He allegedly made material misrepresentations and omissions to investment advisory clients and certain customers while he was a Merrill Lynch financial adviser in order to get get paid excess fees and commissions.

As a result, more than 50 customers and clients under Buck ended up paying over $2.5M unnecessarily.

Buck also allegedly did not tell clients that they could have saved money if only they’d opted for a fee-based payment structure instead of the commission model. Meantime, he’d told Merrill Lynch compliance staff on several occasions that the clients knew about the less costly options.

SSEK Investigating Claims Involving Jeff Wilson and Wells Fargo

Published on: July 11, 2018 | by Shepherd Smith Edwards & Kantas, LLP

The securities lawyers with Shepherd, Smith, Edwards, & Kantas LLP (“SSEK”) are investigating claims of investors and clients of Jeffrey Randolph Wilson (“Wilson”) who works with Wells Fargo Clearing Services, LLC (“Wells Fargo”) in Las Cruces, New Mexico. In the last 18 months, at least three of Mr. Wilson’s clients have filed arbitration claims against Wells Fargo claiming that Wilson and/or Wells Fargo acted improperly regarding those clients’ accounts. These customer claims include allegations that Mr. Wilson excessively traded customer accounts, made unsuitable investment recommendations, and exposed the clients to excessive risk.

All brokers are required to make only suitable recommendations to their clients and manage their clients’ investments appropriately. That means that the brokers, like Mr. Wilson, are supposed to consider a client individually and consider that client’s willingness to take risks, age, and other factors – like whether the client is retired – into account when deciding what investments to recommend. Similarly, some investments which might have been appropriate for a client can become inappropriate, or unsuitable, if they are bought and sold too often in a client’s account. Generally, the more frequent the trading in an account, the higher risk the investment strategy.

In the case with Mr. Wilson’s clients, more than one has complained that Mr. Wilson improperly advised them to invest in energy related investments which led to substantial losses. Recently, a FINRA arbitration panel agreed with that allegation, ordering Wells Fargo Advisors to pay a client $357,000 for losses suffered in unsuitable energy and housing based investments, as well as use of margin trading.

Retired Couple Awarded $800,000 in Damages From Oppenheimer & Co., Inc

Published on: June 1, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Lawyers representing a retired couple in a claim against Oppenheimer & Co., Inc. recently obtained an award from a Financial Industry Regulatory Authority (“FINRA”) arbitration panel awarding them $800,000 in damages. The claim was based upon an investment of the couple’s money, including retirement assets, into various energy stocks, including Breitburn Energy Partners, Sandridge Permian Trust, Atlas Resource Partners, and Vanguard National Resources. The arbitration panel found that Oppenheimer was negligent in the treatment of the clients, and awarded $800,000 in damages, $61,5217 in costs, and post-judgement interest.

The broker, Evan Fischer, appears to have moved to Ameriprise Financial Services, Inc., despite the fact he currently has four customer claims against him, including the one recently concluded with this award, which allege various types of mismanagement of client assets. It is unclear whether these other customer complaints involve investments in energy stocks like Breitburn or Sandridge.

Unfortunately, when brokers act improperly with some clients, as Mr. Fischer has been accused of doing by at least four different clients, they often do so with many clients. If you are or were a client of Mr. Fischer and believe you may have been inappropriately invested or otherwise lost money with him, contact the law firm of Shepherd, Smith, Edwards & Kantas LLP for a free, no obligation evaluation of your account to determine if you might have a claim to attempt to recover some or all of your losses. All communications will be kept strictly confidential, and you will not be billed in any way for a consultation.

Securities Cases: Anti-Money Laundering Violation Allegations Lead to $5.3M Fine Against ICFBCFS, Three Houston-Based Healthcare Executives are Accused of Falsifying Financial Information, and Pension Fund Accuses Wells Fargo of Holding Back Rebate Fees

Published on: May 18, 2018 | by Shepherd Smith Edwards & Kantas, LLP

ICFBCFS and Chardan Capital Markets Accused of Anti-Money Laundering

FINRA has fined the Industrial and Commercial Bank of China Financial Services LLC (ICBCFS) $5.3M for “systemic anti-money laundering compliance failures.” The self-regulatory organization contends that when clearing and settling the liquidation of over 33 billion penny stock shares between 1/2013 and 9/2015, the firm did not have in place an anti-money laundering program that was reasonable enough to identify and report possibly suspect transactions, especially when penny stocks were involved. ICBCFS is settling the case without denying or admitting to the self-regulatory authority’s findings. It has, however, consented to an entry of the findings.

ICBCFS also agreed to pay an $860K penalty to settle a US Securities and Exchange Commission case alleging anti-money laundering violations and the failure to report billions of suspect penny stock sales.

Royal Bank of Scotland Settles Mortgage Fraud Case for $4.9B

Published on: May 17, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Once again, Royal Bank of Scotland (RBS) has arrived at yet another securities settlement related to its mortgage practices leading up to the 2008 housing crisis. This time, RBS is getting ready to pay almost $4.9B. The deal, reached with the US Justice Department, must still must be finalized. The DOJ had been investigating allegations that the British bank sold high risk loans between 2005 and 2007.

CNN reports that since the economic crisis, RBS has paid about $28.4B in fines and settlements, including $500M to the state of New York earlier this year to settle allegations of misrepresentations made and deceptive practices used on investors of residential mortgage-backed securities. The bank settled for $5.5B with US Federal Housing Finance Agency last year to resolve allegations that it bundled and sold more than $30B of risky loans to government-sponsored enterprises Freddie Mac and Fannie Mae.

RBS previously reached two settlements with the National Credit Union Administration. One, for $1.1BM in 2016, was over claims that it sold faulty mortgage-backed securities to credit unions. The other, for $129.6M, settled claims tied to alleged losses for corporate credit unions Southwest and Members United bought RMBSs. According to NCUA, RBS made misrepresentations when underwriting and selling the residential mortgage-backed securities.

LPL Financial Agrees to Pay $26M Over Unregistered Securities to State Securities Regulators

Published on: May 4, 2018 | by Shepherd Smith Edwards & Kantas, LLP

In an agreement reached with the North American State Securities Administrators Association, LPL Financial (LPLA) will pay $26M in fines to a number of US states and jurisdictions over unregistered securities sales going back more than a decade. NASAA reports that the settlement comes after a task force was set up last summer to probe LPL’s sales of unregistered, non-exempt securities to clients. Now, LPL will pay $499K to each state securities regulator. It also must buy back certain securities that it sold to investors going as far back as October 2006.

Details of the LPL Settlement for the Sale of Unregistered Securities

Per the settlement, LPL will offer to repurchase securities in the brokerage firm’s accounts that were found to have been unregistered, fixed-income or non-exempt equity securities. Every buyback offer will come with 3% simple interest annually. Requirements were also put in place for investors with “affected securities” that were moved or sold from an LPL account.

Sanctions Against Wedbush Securities in SEC and FINRA Rulings Are Upheld by the 9th Circuit

Published on: April 24, 2018 | by Shepherd Smith Edwards & Kantas, LLP

The United States Court of Appeals for the 9th Circuit has refused to overturn the US Securities and Exchange Commission ruling that Wedbush Securities Inc. engaged in inadequate supervision of its own regulatory compliance. The appeals court also affirmed the suspension of the brokerage firm’s president and principal Edward W. Wedbush.

The SEC’s 2016 finding had sustained a 2014 ruling by the Financial Industry Regulatory Authority’s National Adjudicatory Council, which ordered Wedbush to pay a $350K fine for either not filing, or filing late, dozens of documents regarding complaints and judgments that had been brought against the investment firm and its financial representatives. Finra found that Wedbush Securities violated the bylaws and rules of the NASD, the NYSE, and the self-regulatory organization itself 158 times and was delinquent in submitting the documents at issue over a five-year period, from 1/2005 to 7/2010.

Wedbush and its president had tried to argue before the SEC that FINRA was wrong in finding that the broker-dealer failed to supervise reporting requirements. The brokerage firm also questioned whether the hearing it received before the SRO was a fair one since a FINRA rule did not specifically note suspension as a sanction.

Firm Executives Reportedly Were Aware of Domestic Violence Allegations Against High-Earning Morgan Stanley Broker for Years

Published on: April 11, 2018 | by Shepherd Smith Edwards & Kantas, LLP

According to the New York Times, even though Morgan Stanley (MS) executives have known for years about the domestic violence allegations against Douglas E. Greenberg, who was one of their leading brokers, the firm continued to allow him to stay employed in its wealth management division. However, after the NY Times tried to contact the firm about him, Greenberg was finally suspended, pending review. Now, the media is reporting that Greenberg has been fired. Still, a number of the former-Morgan Stanley broker’s exes have retained their own lawyers in light of the fact that he wasn’t let go until now.

Four women have come forward accusing him of domestic abuse. Court filings indicate that not only did Greenberg’s accusers go to the police seeking protection against the now former Morgan Stanley financial adviser, but also, according to one of the women’s attorneys, the firm was issued a federal subpoena notifying it about at least one of the allegations. Morgan Stanley was also aware that Greenberg was charged for allegedly violating a restraining order.

Still, no action was taken against Greenberg, who belonged Morgan Stanley’s exclusive Chairman’s Club as one of the firm’s highest earning brokers. Ironically, the members of this club are expected to maintain certain standards when it comes to “conduct and compliance.” Greenberg is considered one of the leading wealth managers in Oregon. Firmwide, he was among Morgan Stanley’s top 2% of brokers when it came to bringing in revenue.

Barclays Settles DOJ’s Mortgage-Backed Securities Fraud Case for $2B

Published on: April 1, 2018 | by Shepherd Smith Edwards & Kantas, LLP

Barclays Capital Inc. (BARC) and a number of its affiliates will pay $2B to settle the United States government’s civil case alleging fraud involving the underwriting and issuance of residential mortgage-backed securities. The settlement comes after a three-year probe. The case is US v. Barclays Capital Inc.

The US accused Barclays of taking part in a fraud to sell three dozen residential mortgage-backed securities deals, causing investors to suffer billions of losses. More than $31B of Alt-A and subprime mortgage loans were securitized and over half of these went on to default. The RMBSs were sold leading up to the 2007 financial crisis.

The bank and its affiliates allegedly misled investors about the quality of the loans backing the RMBS deals, including purposely misrepresenting key features of the loans that involved. The British bank, meantime, maintains that it did not mislead investors about the quality of the loans. The government, however, contends that Barclays committed wire fraud, mail fraud, bank fraud, and violated the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.