Corporate & Securities Law

Advisers Urged To Seek Legal Counsel To Negotiate Protections Associated With The Current 330% Trailing 12 Recruiting Packages Offered By Merrill Lynch And Morgan Stanley Smith Barney

Posted on November 20, 2009
As wirehouses fight to keep brokers from moving to the independent channels, warring wirehouses are adding fuel to the fire. Morgan Stanley Smith Barney LLC and Merrill Lynch are going toe-to-toe by offering top reps a recruiting package of up...

SNSFE Investigates John Leonard, High Net Worth Strategies And Workman Securities Corp.

Posted on November 18, 2009
Lawyers at SNSFE have commenced an investigation into the activities of John M. Leonard who has done business as High Net Worth Securities located in Illinois and Florida. Mr. Leonard formerly was associated with Workman Securities Corp. Specifically, SNSFE is...

SEC Chairman's Speech Highlights Key Securities Initiatives And Reforms

Posted on November 12, 2009
SEC Chairman Mary Schapiro's recent speech to the securities industry, entitled, "The Road to Investor Confidence," certainly was not designed to win over friends from Wall Street. Prefacing her remarks by blaming Wall Street for the "recent crisis" (it didn't...

SNSFE Investigates 2010 Glide Path Exchange-Traded Funds (ETFs) As Well As Inverse And Leveraged ETFs For Failure To Disclose Risks

Posted on November 09, 2009
SNSFE is investigating exchange-traded funds, known as ETFs. Both the regulators and class action lawyers are paying close attention to that category of exchange-traded funds that are known as leveraged or inverse. These funds made heavy bets either on the...

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FINRA Fines Scottrade $600,000 For Inadequate Surveillance System

Posted on November 06, 2009
The Financial Industry Regulatory Authority fined Scottrade $600,000 for failing to have adequate anti-money laundering procedures in place to detect and report suspicious transactions. In a statement, FINRA noted that as an online brokerage executing more than 150,000 trades daily,...

Stifel Financial Starting RIA Custody Business

Posted on November 05, 2009
Stifel Financial Corp., which has been expanding its Stifel Nicolaus & Co. retail-brokerage business, is about to make a push into serving registered investment advisers. The firm has hired a veteran from Merrill Lynch and Pershing to run its Century...

Schwab And Fidelity Cut Prices And Fees For Investment Advisers

Posted on October 29, 2009
Schwab Adviser Services is eliminating fees on a database that helps advisers sell and buy other firms, a move that's part of a broader effort to enhance its business consulting services for independents. In addition to eliminating fees tied to...

Non-Traded REITs May Hurt Independent Broker-Dealers That Were The Biggest Sellers To Investors

Posted on October 27, 2009
The real estate boom and bust is hanging over many independent broker-dealers and their financial advisers as the market for non-traded REITs soured this year. According to an InvestmentNews article, investing largely in commercial real estate, many of the largest...

Risks Of Reg D Deals Such As Provident Royalties And Medical Capital Worry Securities Regulators And Others As Deals Implode

Posted on October 23, 2009
Risky Reg D deals worry state regulators according to a recent InvestmentNews article. The collapse of two high-risk private placement deals over the summer has shed light on the process by which broker-dealers bring these deals to market. Many are...

Monetary Fine Illustrates Securities Regulator's Concern For Privacy Of Customer Information

Posted on October 19, 2009
The Securities and Exchange Commission (SEC) recently fined a broker-dealer and investment adviser $100,000 for failing to protect the privacy of customer information. Let's examine what went wrong and how customers at the firm, Commonwealth Equity Services, LLP d/b/a Commonwealth...

Transition And Succession Planning Frequently Desired But Seldom Implemented According To Recent Survey

Posted on October 15, 2009
Although financial advisers think that succession planning is important, many also believe that they aren't getting enough help preparing for that transition, according to a new survey conducted by Mathew Greenwald & Associates for John Hancock Financial group...

Morgan Keegan's Abusive Sales Of Auction Rate Securities Prompt SEC Complaint

Posted on October 09, 2009
Recently, the Securities and Exchange Commission (SEC) filed a federal lawsuit against Morgan Keegan & Company, Inc., alleging widespread sales practices violations in connection with its underwriting, marketing and sale of auction rate securities ("ARS")...

SNSFE Investigates Illegality of Promissory Note Acceleration Clauses When Reps Leave Firms

Posted on October 06, 2009
Attorneys at SNSFE are investigating whether promissory note acceleration clauses violate state laws against penalties imposed when changing jobs. Those reps who have left the industry and are subject to collection lawsuits on promissory notes should feel free to contact...

Frank Bluestein And GunnAllen Financial Investigated By SNSFE In the Wake Of SEC Ponzi Scheme Allegations

Posted on September 29, 2009
Attorneys at SNSFE have launched an investigation into the relationship between Ponzi scheme operator Frank Bluestein of Michigan and his last brokerage firm, GunnAllen Financial. In the news, the SEC charged Detroit-area stock broker Frank Bluestein with fraud, alleging that...

SNSFE Assists In Transitions As $800 Billion In Client Assets Projected To Change Firms In 2009

Posted on September 25, 2009
$800 billion in client assets is predicted to change firms in 2009. Due to large numbers of financial advisors switching employers during these topsy-turvy times, $800 billion in client assets will likely change firms this year, according to Cerulli Associates...

Interesting Trends In Adviser Registrations And Assets Under Management According To The SEC

Posted on September 25, 2009
Andrew Donohue, the Director of the Division of Investment Management, recently spoke before the 9th Annual IA Compliance Fall Conference. Among other interesting comments, he discussed the pressures he sees on advisers. They're coming from several different areas...

SEC Expresses Concern Over Lack Of Risk Management When Using Derivative Instruments

Posted on September 25, 2009
Andrew Donohue, Director, Division of Investment Management of the SEC, recently spoke to the 9th Annual IA Compliance Fall Conference. He made a number of interesting remarks, including those related to sophisticated products. He stated many investment mandates have sought...

SEC Details Its Post-Madoff Reforms

Posted on September 21, 2009
The Securities and Exchange Commission (SEC) recently highlighted what it has been doing to avoid another Bernard Madoff fraudulent scheme. While the public awaits a report from the SEC's Office of the Inspector General, determining why the SEC failed to...

SNSFE Investigates Non-Listed REITs Such As Inland American Real Estate Trust As Being Unsuitable For Most Investors

Posted on September 18, 2009
Attorneys at SNSFE have begun to investigate non-listed REITs, including Inland American Real Estate Trust, Piedmont/Wells, Inland, Behringer, Harvard, Cole, Desert Capital, Dividend Capital, Grubb & Ellis, Whitestone, and KBS. SNSFE is investigating whether these were high risk, expensive, illiquid...

AIG Advisor Group Reps (Royal Alliance, FSC and SagePoint Financial) May Be Heading Out The Door As SNSFE Negotiates Such Transition Deals

Posted on September 15, 2009
InvestmentNews is reporting of a bonus plan that's stirring the pot at AIG's adviser unit. After a year in which the three broker-dealers of AIG Advisor Group - Royal Alliance Associates, FSC Securities and SagePoint Financial - were put up...

Reps With Promissory Note Claims Defenses And Counterclaims Should Be Aware Of Their Options Under Newly Revised FINRA Arbitration Procedures

Posted on September 08, 2009
FINRA has just amended its rules regarding disposition of promissory note claims that are filed in arbitration. According to a FINRA release, FINRA is amending its Code of Arbitration Procedure for Industry Disputes to establish new procedures for administering cases...

What's Next Following The SEC's Open Letter To Brokerage Firm CEOs Relating to Recruiting Practices, Payment Of Up-Front Bonuses And Enhanced Commissions?

Posted on September 02, 2009
Chairman Mary Schapiro of the SEC recently sent an open letter to chief executive officers of broker-dealer firms. Broker-dealer firms need to be wondering, "What's this about?" The letter, written August 31, 2009 and available on the SEC's website, states...

Following SEC's Halting Of $77 Million Offering Fraud By Medical Capital, SNSFE Launches Investigation Of Brokerage Firms That Introduced Investors To Medical Capital

Posted on August 21, 2009
SNSFE lawyers are investigating whether brokers inappropriately referred investors to Medical Capital Corporation following what it calls a $77 million offering fraud. On August 3, the Securities and Exchange Commission obtained an emergency court order halting the $77 million offering...

SNSFE Seeks Information As It Brings Claims Against Morgan Keegan For Fraud In The Marketing And Sale Of Auction Rate Securities As Alleged By The SEC

Posted on August 19, 2009
SNSFE attorneys are investigating Morgan Keegan & Company following SEC charges that the firm committed fraud in the marketing and sale of auction rate securities to customers. The SEC indeed has filed a complaint in the U.S. District Court for...

Beware Of CDOs Of Loans, The First Of Which Is Coming To Market By Morgan Stanley

Posted on August 14, 2009
Morgan Stanley plans to repackage a downgraded collateralized debt obligation backed by leveraged loans into new securities with AAA ratings in the first transaction of its kind. Morgan Stanley is selling $87 million of securities that it expects to receive...

Beware Of CDOs Of Loans, The First Of Which Is Coming To Market By Morgan Stanley

Posted on August 11, 2009
Morgan Stanley plans to repackage a downgraded collateralized debt obligation backed by leveraged loans into new securities with AAA ratings in the first transaction of its kind. Morgan Stanley is selling $87 million of securities that it expects to receive...

Securities Regulator Takes Sweeping Action To Protect Municipal Bond Investors

Posted on August 03, 2009
FINRA (the Financial Industry Regulatory Authority) has launched a "comprehensive initiative" to protect municipal bond investors. Among other things, FINRA is conducting "sweeps" of financial services firms and has published investor alerts and on-line tools in an effort to inform...

Rydex, Direxion And ProShares Subject To Regulators' Probe As To Sales Practices For Leveraged ETFs

Posted on July 30, 2009
The Massachusetts Secretary of State is investigating the sales practices of leveraged exchange-traded funds, or ETFs. William Galvin is looking into the sales materials of Rydex Investments, Direxion Funds and ProShares. Galvin is assessing what these firms tell brokers to...

SNSFE Investigates Gregory Bell And Lancelot Management As The SEC Files Fraud Charges Alleging A $2 Billion Feeder Fraud

Posted on July 22, 2009
The SEC announced fraud charges and an asset freeze against a Highland Park, IL-based hedge fund manager and his firm for facilitating a multi-billion dollar Ponzi scheme operated by Minnesota businessman Thomas Petters. The SEC's complaint, filed in U...

Securities Regulator Issues Warning Relating To Leveraged And Inverse ETFs

Posted on July 20, 2009
FINRA (the Financial Industry Regulatory Authority) has warned financial services firms that non-traditional exchange-traded funds (ETFs) are unsuitable for retail investors who plan to hold them for more than one day (a trading session), particularly in volatile markets...

Ameriprise Financial Nailed In Fraudulent Scheme To Obtain And To Conceal Undisclosed Compensation For Selling REITs To Customers

Posted on July 15, 2009
The SEC announced an enforcement action against Minneapolis-based broker-dealer Ameriprise Financial Services, for receiving millions of dollars in undisclosed compensation as a condition for offering and selling certain real estate investment trusts (REITs) to its brokerage customers...

Ameriprise Financial Nailed In Fraudulent Scheme To Obtain And To Conceal Undisclosed Compensation For Selling REITs To Customers

Posted on July 13, 2009
The SEC announced an enforcement action against Minneapolis-based broker-dealer Ameriprise Financial Services, for receiving millions of dollars in undisclosed compensation as a condition for offering and selling certain real estate investment trusts (REITs) to its brokerage customers...

SNSFE Investigates Gregory Bell And Lancelot Management As The SEC Files Fraud Charges Alleging A $2 Billion Feeder Fraud

Posted on July 13, 2009
The SEC announced fraud charges and an asset freeze against a Highland Park, IL-based hedge fund manager and his firm for facilitating a multi-billion dollar Ponzi scheme operated by Minnesota businessman Thomas Petters. The SEC's complaint, filed in U...

SNSFE Investigating Provident Royalties Fraud And Brokerage Firms That Sold Those Securities As SEC Obtains Asset Freeze

Posted on July 08, 2009
SNSFE attorneys are investigating Provident Royalties, LLC after the Securities and Exchange Commission obtained an emergency asset freeze. The SEC alleges a $485 million offering fraud and Ponzi scheme orchestrated by three Dallas businessmen through Provident Royalties...

SEC Informs State Street Bank And Trust Co. That It Could Face Charges For Securities Violations Tied To Investments In Sub-Prime Mortgages

Posted on July 01, 2009
State Street Corp. disclosed on Monday in a regulatory filing that the Securities and Exchange Commission could bring civil charges against its main subsidiary for possible securities violations tied to past investments in subprime mortgages. State Street Bank and Trust...

SNSFE Investigating Michael Regan And Regan & Company Of Massachusetts Following SEC Ponzi Scheme Fraud Charges

Posted on June 26, 2009
SEC charges Massachusetts-based money manager in multi-million dollar Ponzi scheme. The SEC alleges that Michael Regan and his firm Regan & Company fraudulently obtained at least $15.9 million from dozens of investors nationwide by selling securities in his now defunct...

SEC Chairman Mary Schapiro Outlines Improvements To Investor Protection And Market Integrity

Posted on June 16, 2009
Chairman Mary Schapiro recently testified before the Senate Subcommittee on Financial Services and General Government on the ways in which the Securities and Exchange Commission (SEC) is seeking to restore investor confidence. Her remarks come at a time when both...

SNSFE Continuing To Investigate As New Hampshire Securities Regulator Sues UBS Over Sales Of Principal Protected Notes

Posted on June 12, 2009
The New Hampshire Bureau of Securities Regulation has filed a Cease and Desist order against UBS Financial Services alleging unfair sales practices and unsatisfactory supervisory procedures and for recommending unsuitable investments to more than 40 New Hampshire investors...

A Primer On CFP Board's Ethical Standards And Enforcement Process

Posted on June 08, 2009
Recently I had the pleasure of participating in a panel discussion before an audience of financial planners to address customer complaint issues. One of my co-panelists, Michael P. Shaw, CFP Board?s Managing Director of Professional Review and Legal, discussed CFP...

SNSFE Investigates James Putnam And Wealth Management LLC Of Wisconsin Following Charges Of Fraud And Kickbacks Filed By The SEC

Posted on June 01, 2009
A past NAPFA President has been charged in a kickback scheme. A former president of the National Association of Personal Financial Advisors has been charged with taking kickbacks from unregistered investment pools in which his Wisconsin advisory firm placed $102...

FINRA Proposes Significant Changes To Suitability And Know-Your-Customer Rules

Posted on May 22, 2009
Recently, securities regulators proposed to revise the Suitability and Know Your Customer obligations. In Regulatory Notice 09-25, FINRA is proposing to add a great deal more to Suitability and Know Your Customer obligations. Specifically, under the revised Rules: A member...

SEC's Sanction Against Royal Alliance For Failure To Detect Adviser's Ponzi Scheme Provides Valuable Lessons To Investors And Advisers

Posted on May 18, 2009
The SEC (Securities and Exchange Commission) has censured Royal Alliance Associates, Inc. and fined it $500,000 due to its failure to supervise one of its former advisers, David McMillan. From at least January 1999 until December 2004, McMillan was able...

Morgan Keegan Faces Possible SEC Action Over Its Failure To Disclose Risks Associated With Auction-Rate Securities

Posted on May 15, 2009
Regions Financial may face SEC charges. The U.S. Securities and Exchange Commission may launch a civil proceeding against the Morgan Keegan & Co. brokerage unit of Regions Financial Corp. In its quarterly report filed with the SEC, Regions said the...

SEC Charges Attorneys And Others In Connection With Issuing Bogus Rule 144 Opinion Letters As Part Of A Legal Opinion Mill

Posted on May 11, 2009
The Securities and Exchange Commission has charged attorneys for fraudulent legal opinions used by promoters in Pump-and-Dump scheme: The SEC alleges that attorneys Albert Rasch, Jr. and Kathleen Novinger together with Sandra Masino and her company 144 Opinions, Inc...

SEC's Mary Schapiro Finds Target Date Funds' Returns Troubling And Outlines SEC's Response To The Problem

Posted on May 08, 2009
Recently, SEC Chairman Mary Schapiro addressed the Mutual Fund Directors Forum Ninth Annual Policy Conference. Ms. Schapiro commented that investor confidence has been deeply shaken, and that restoration of investor confidence is an essential element to moving the nation's economy...

SNSFE Investigates Reserve Primary Fund As SEC Files Fraud Action Against The Fund And Its Officers For Providing Misleading Information

Posted on May 06, 2009
The Securities and Exchange Commission has charged operators of the Reserve Primary Fund with fraud. The Reserve Primary Fund "broke the buck" on Sept. 16, 2008, when its net asset value fell below $1 per share, meaning investors in the...

Texas Instruments Joins Other Institutional Investors In Suing Investment Banks Over Auction-Rate Securities Purchases

Posted on April 29, 2009
Texas Instruments has sued Citigroup, Morgan Stanley and Bank of New York Mellon Corp. for selling it $524 million in auction-rate securities which the company says it cannot liquidate. The auction-rate securities market, once valued at $330 billion, collapsed in...

SNSFE Investigates The SEC's Sanctioning Of Hennessee Group For Its Failure To Conduct Adequate Due Diligence, To Monitor And To Otherwise Protect Clients From The Bayou Fraud

Posted on April 24, 2009
The Securities and Exchange Commission has announced that it has charged New York-based investment adviser Hennessee Group and its principal Charles Gradante with securities law violations for failing to perform their advertised review and analysis before recommending that their clients...

Fifth Third Securities Fined And Must Offer Restitution To Customers Who Bought Or Exchanged Variable Annuities

Posted on April 22, 2009
The Financial Industry Regulatory Authority announced that it has fined Fifth Third Securities $1.75 million for a series of violations related to variable annuity sales and exchanges. FINRA found that Fifth Third Securities made 250 unsuitable sales and exchanges to...

Wachovia Stops Offering Profit-FormulaTransition Deals And For All Recruits Now Factors In Trailing 3-Month Production

Posted on April 20, 2009
Wachovia has stopped offering profit-formula deals and has tightened up on recruiting offers according to an InvstmentNews article published last week. Wachovia Securities last month stopped offering recruitment packages to potential recruits to its profit-formula platform...

Investment Advisers Put On Notice Of Current SEC Compliance Concerns

Posted on April 16, 2009
Recently, Lori Richards of the Securities Exchange Commission notified investment advisers of the SEC's current compliance concerns. In a speech entitled, "Compliance in Today's Environment: Step Up to the Challenge," the director of the SEC's Office of Compliance Inspections and...

SNSFE Investigating Claims of Fidelity Brokers That They Were Pressured To Sell Proprietary Products And Pressured Not To Disclose The Conflict To Customers

Posted on April 14, 2009
Dozens of brokers serving Fidelity Brokerage Services' most affluent clients left the firm last year, claiming they were handcuffed by a requirement that they obtain certified financial planner certification while being prohibited from disclosing that part of their bonus compensation...

SNSFE Continues Its Investigation Of Fisher Investments' Asset Allocation Decisions For Clients

Posted on April 06, 2009
Fisher Investments has proclaimed that there is a difference. One difference between it and other advisory firms is what it calls Dynamic Asset Allocation. "We strive to protect your assets in a bear market. If we predict a bull market,...

Merrill Lynch Socked With $39.8 Million Arbitration Award

Posted on April 01, 2009
Merrill Lynch has been socked with a $39.8 million arbitration ruling. In one of the single largest securities arbitration awards ever, Merrill Lynch & Co. has been ordered to pay $39.8 million to a group affiliated with the Freemasons. The...

Regulator Penalizes Morgan Stanley For Imprudent Retirement Advice Given To Eastman Kodak And Xerox Corporation Early Retirees

Posted on March 31, 2009
Recently, Morgan Stanley was fined $3 million and ordered to pay more than $4.2 million in restitution to 90 retirees, to resolve charges that its supervisory system failed to detect and prevent brokers from persuading Eastman Kodak Company and Xerox...

SNSFE Investigates The Nutmeg Group And The Gouldings

Posted on March 27, 2009
Shaheen, Novoselsky, Staat, Filipowski & Eccleston is investigating the Chicago area investment adviser, The Nutmeg Group, for defrauding clients. The SEC has charged The Nutmeg Group, owner and managing member Randall Goulding, and chief compliance officer David Goulding for misappropriating...

SNSFE Continues To Investigate Oppenheimer Champion Income And High Yield Funds As Class Action Filing Deadline Approaches

Posted on March 23, 2009
Attorneys at SNSFE continue to investigate the Oppenheimer Champion Income Fund as well as the Oppenheimer High Yield Fund. Already, class actions have been filed, as well as arbitration actions. Investors who seek to recover money should note that there...

FINRA's Online "Risk Meter" And "Scam Meter" Tools Are Worthwhile

Posted on March 20, 2009
FINRA (the Financial Industry Regulatory Authority) has a response to what seems to be almost daily revelations of investment fraud and investment scams around the globe. The response is a set of online tools aptly named the "Risk Meter" and...

Private Equity Investments Potentially Offer Attractive Returns But With Notable Risks

Posted on March 13, 2009
A recent study by three researchers at the Center for International Securities and Derivatives Markets (CISDM) at the University of Massachusetts Amherst examines the advantages and disadvantages of private equity investing. In announcing their findings, Mr...

SNSFE Cautions Against Transitioning Reps Relying Upon Edward Jones' Oral Promise That It Would Not Seek To Enforce Its Written Covenants Not To Compete

Posted on March 10, 2009
For Edward Jones, wirehouse shrinkage spells opportunity. That's according to an InvestmentNews article. Reflecting the deep changes that the current slump has brought to the securities industry, wirehouse brokers are starting to look to Edward Jones for shelter from the...

SNSFE Attorneys Assisting Advisers Transition As Smith Barney Loses Advisers And Assets Pending Morgan Stanley Merger

Posted on March 10, 2009
Smith Barney bleeds as it prepares for merger with Morgan Stanley according to InvestmentNews magazine. Smith Barney is losing brokers and advisers by the score and assets by the billions as it prepares for its new role as the junior...

SNSFE's Continued Investigation Of Principal Protected Note Investments Turns To Firms Such As Neuberger Berman

Posted on March 05, 2009

SNSFE Investigating Astounding Failure Of Highly Paid Institutional Consulting Firms To Detect 12-Year $500 Million Fraud By Paul Greenwood, Stephen Walsh, WG Trading And Westridge Capital Management

Posted on February 27, 2009

SNSFE Investigating Claims Of Equity Overconcentration And Inappropriate Losses At Fisher Investments

Posted on February 26, 2009
Attorneys at SNSFE have begun to investigate Fisher Investments, the largest independent investment advisory firm in the country. Claims have arisen that Fisher Investments overallocated investors' money in to stocks as well as underallocated investors' money in fixed-income and cash...

SNSFE Fielding Inquiries As Wells Fargo Will Pay No Retention Bonus For Wachovia Reps

Posted on February 23, 2009
On Friday, February 20th, it was announced that Wachovia Securities' brokers will not be getting a retention bonus from Wells Fargo. In a conference call that day, Wachovia Securities' chief executive Danny Ludeman said the deal was off, and he...

SNSFE Continues To Probe Investment Entities That Referred Investors to Thomas Petters, In Custody Charged With Crimes

Posted on February 23, 2009
Attorneys at SNSFE continue to investigate and field investor questions regarding Tom Petters. Petters' business entities are in receivership and bankruptcy as the result of a government investigation into allegations of a massive investment fraud that Petters denies existed...

SNSFE Fielding Inquiries Regarding Eight Shocking Mutual Fund Losses In The Past 12 Months

Posted on February 20, 2009
MorningstarAdvisor has published "Eight Shocking Losses of the Past 12 Months" by Russel Kinnel, and it's worth revisiting. December finished on a note of optimism, but January was a return to the markets grinding lower amid grim economic news. A...

SNSFE Investigating Fraudulent $8 Billion CD Investment Program Perpetrated By Robert Allen Stanford and His Affiliated Companies

Posted on February 18, 2009
The Securities and Exchange Commission has charged Robert Allen Stanford and three of his companies for orchestrating a fraudulent, multi-billion dollar investment scheme centering on an $8 billion CD program. Stanford's companies include Antiguan-based Stanford International Bank, Houston-based broker-dealer and...

Lower-Producing Wirehouse Refugees May Find Home In Transitioning To Regional And Independent Firms

Posted on February 18, 2009
Recently, Investment News ran an article entitled, "Low-producers to exit wirehouses - Pay cuts likely to force thousands out the door." According to the author, Dan Jamieson: There will be a large migration of low producers from the wirehouses this....

Tips To Weather Tough Financial Times

Posted on February 13, 2009
FINRA (the Financial Industry Regulatory Authority) has published, "Weathering Tough Financial Times: 9 Tips for 2009." It is a helpful roadmap for saving, investing, and taking some precautionary measures to weather the tough times. Let's examine the regulator's tips...

Financial Advisers In Employment Transition: A Primer On The Protocol

Posted on February 03, 2009
In 2004, three financial services firms devised a way to ease the transition of financial advisers from one firm to another. The three firms - Citigroup Global Markets (Smith Barney), Merrill Lynch, and UBS Financial Services - signed an agreement...

SEC Details Its Actions To Protect Investors And The Markets During The Credit Crisis

Posted on January 20, 2009
In the midst of the current turmoil in the credit markets, the Securities and Exchange Commission (SEC) has published a lengthy list of accomplishments (with helpful links) to protect investors and the markets. The SEC divides its accomplishments into three...

Securities Regulator Issues Timely Guidance Regarding Cash Alternatives And High Yield Securities

Posted on January 14, 2009
Investors have searched for high yield securities as well as "cash equivalents" that will protect their principal. Financial services firms have responded, but in too many instances have mischaracterized the benefits and the risks of both kinds of investments...

UBS' Sale Of Structured Notes Promising Protection Of Principal Falls Far Short; Investors Must Be On Guard

Posted on January 07, 2009
In a market that has witnessed sales of so-called ?structured notes? quadruple in the last four years, no firm is closer to the eye of a major storm than UBS. That's because UBS has sold about $1 billion of these...

7th Circuit Court Of Appeals Cautions Institutional Funds To Retain Securities Lawyers To Monitor And To Collect From Class Action Lawsuits Involving Securities That They Have Owned

Posted on December 22, 2008
A U.S. Court of Appeals sent a strong message earlier this year to institutional investors that they are expected to have procedures and policies in place to monitor securities class actions in which they have a financial interest and viable...

SNSFE Investigating Oppenheimer Champion Income Fund And Oppenheimer Conservative Investor Fund After Steep Losses

Posted on December 17, 2008
SNSFE is investigating two Oppenheimer funds that have suffered steep losses this year. The Oppenheimer Champion Income Fund is down 82% this year, and the Oppenheimer Conservative Investor Fund, which had 4% of its assets in the Champion Income fund,...

Delray Beach Police & Firefighters Pension System Sues Citigroup And Smith Barney Asset Management For Improper Monitoring, Evaluation And Management

Posted on December 16, 2008
'Delray Beach Police & Firefighters Pension System estimated that it sustained at least $9 million in investment damages over alleged fiduciary breaches in the consulting work done by a Citigroup Global Markets unit, according to the lawsuit filed by the...

SNSFE Investigates Entities That Sold Investors Bernard Madoff's Investment Funds, Including Tremont Capital Management and Greenwich Advisors, In View of Epic Ponzi Scheme Alleged By SEC

Posted on December 15, 2008
A top broker has been accused of a $50 billion fraud. Bernard Madoff, a former chairman of the Nasdaq Stock Market and a force in Wall Street trading for nearly 50 years, was arrested by federal agents Thursday, a day...

Changes To Expungement Rule Seek To Better Protect Customers' And Regulators' Right To Access Complaint Information

Posted on December 05, 2008
Recently, the Securities and Exchange Commission (SEC) approved rule changes that the Financial Industry Regulatory Authority (FINRA) had proposed to better protect customers' and regulators' ability to access complaint records of financial advisers. Let's examine these important rule changes...

FINRA Investor Arbitration Statistics Reveal 49% Increase In Claims Filed

Posted on December 02, 2008
FINRA, the Financial Industry Regulatory Authority, has revealed its Dispute Resolution Statistics through October 2008. As expected, the statistics show a surge in arbitration claims filed through October compared to October 2007. Notably, FINRA has experienced a 49% increase in...

Recruitment Deals Slim Down But Still Are About 230% For Million Dollar Producers

Posted on November 20, 2008
Although the press is reporting that recruitment deals are slimming down, they're still very large. Recall that only a couple of years ago, there were 100% of trailing 12 month commission deals being made. That has now changed. We've reached...

Merrill Lynch Brokers' November 14th D-Day In Deciding Whether Or Not To Sign On With Bank Of America Is Just The Beginning Of The Transition Analysis

Posted on November 14, 2008
November 14, 2008. That's D-Day for Merrill Lynch brokers who need to decide whether or not to sign on with Bank of America. It's not surprising that more than 90% of Merrill Lynch brokers have decided to stay on with...

Investor Protection Priorities Of Securities Regulators Revealed In Continuing Education Topics

Posted on November 13, 2008
The Securities Industry/Regulatory Council on Continuing Education (the ?CE Council?) recently published its Firm Element Advisory to ?highlight current regulatory and sales practice issues? for financial services firms to consider incorporating into their continuing education programs for financial advisers...

SEC Sanctions Against Brokerage Firm CEO Underscores Requirement To Supervise Reasonbly

Posted on November 06, 2008
Recently the SEC (Securities and Exchange Commission) instituted settled administrative proceedings against Stephen Moynahan (SEC Rel.No. 34-58689). Moynahan was the former president and CEO of Dolphin & Bradbury, Incorporated, formerly a registered broker-dealer...

SEC Sanctions Against Brokerage Firm CEO Underscores Requirement To Supervise Reasonably

Posted on November 06, 2008
Recently the SEC (Securities and Exchange Commission) instituted settled administrative proceedings against Stephen Moynahan (SEC Rel.No. 34-58689). Moynahan was the former president and CEO of Dolphin & Bradbury, Incorporated, formerly a registered broker-dealer...

Details Of Merrill Lynch Retention Package May Mean Attrition For Some Reps

Posted on October 31, 2008
Investment News has reported that top Merrill Lynch reps have been shown the money, but that attrition package may drive out low producers. According to Investment News, in the middle of gut-wrenching times for the stock market, top-producers at Merrill...

Warnings About Derivatives Implosion Made In 1992

Posted on October 31, 2008
Derivatives. Did the implosion of these financial products come as a surprise? Or should Wall Street have known it all along? That's the question Institutional Investor addresses in this month's issue. In "Did II Say That?" from September 1992, the...

SNSFE Investigates Lehman Brothers' Principal Protection Notes

Posted on October 23, 2008
According to Bloomberg.com, Lehman Brothers' "100% principal protection" means pennies for notes. A brochure pitching $1.84 million of notes sold by Lehman Brothers Holdings in August, a month before the firm filed for bankruptcy, promised, "100 percent principal protection...

SNSFE Continues To Investigate Complaints Against Reserve Management Funds

Posted on October 22, 2008
Massachusetts securities regulators have begun to probe complaints against Reserve Management Company, the New York asset manager that shook investors in September with news of a money-market fund loss. The office of Massachusetts Secretary of the Commonwealth William Galvin has...

SNSFE Helping AIG Financial Advisors, FSC Securities and Royal Alliance Reps in Transitioning to Other Financial Services Firms In View of Announced Sales of Units

Posted on October 21, 2008
AIG Advisor Group is assiduously trying to convince financial advisers to stay in their seats while the firm's parent - American International Group Inc. of New York - attempts to find a buyer for three broker-dealers. Last Monday, during a...

Regulators Offer Guidance To Improve Policies And Procedures To Protect Senior Investors

Posted on October 08, 2008
State and federal securities regulators, along with FINRA (the Financial Industry Regulatory Authority), recently emphasized that the protection of senior investors is "a top priority." The regulators have issued a report, entitled, "Protecting Senior Investors: Compliance, Supervisory and Other Practices...

Regulator's First Enforcement Action Relating To Mortgage-Backed Securities Is Just The Beginning

Posted on September 30, 2008
The recent enforcement action by FINRA (the Financial Industry Regulatory Authority) against two brokers from a now defunct small brokerage firm normally might have come and gone with little fanfare. But this action, which FINRA itself headlined, ?First Enforcement Action...

SNSFE Investigating Funds And Other Investment Vehicles That Heavily Invested In Beaten-Down Fannie, Freddie, Lehman, AIG And Merrill

Posted on September 26, 2008
Investors owning shares in mutual funds ought to know what their exposure is to Fannie and Freddie. According to MorningstarAdvisor report published recently, the top firms holding Fannie and Freddie are Fidelity Select Home, Touchstone, Morgan Stanley Financial Services and...

SNSFE Investigating Losses At Reserve Primary Fund

Posted on September 25, 2008
Attorneys at SNSFE are investigating the Reserve Primary Fund. According to Wall Street Journal reports, more than a year before the Reserve Primary Fund "broke the buck" with losses that spread chaos through the financial system last week, the fund....

Any Takers?

Posted on September 24, 2008
Friends, I want to take more risk in my law practice. After all, risk is good; the higher the risk, the higher the reward. But, I fear that I may fail. That's too bad, because the more risk I take,...

Regulator Provides Guidance For Weathering Tough Financial Times

Posted on September 09, 2008
FINRA (the Financial Industry Regulatory Authority) has issued guidance to Americans who may feel pressured to make poor financial decisions in order to raise cash to meet short-term needs. Entitled, "Weathering Tough Financial Times - The Long-term Costs of Quick...

UBS Securities Continues To Face Problems Subsequent To The ARS Settlement Announcement With Attorney General Cuomo

Posted on August 21, 2008
Subsequent to the filing of the New York Attorney General's complaint against UBS Securities, UBS Securities reached a settlement with Attorney General Cuomo. In this settlement, UBS has agreed to return over $11 billion to investors across New York state...

New York Attorney General's Complaint Against UBS Securities Seeking Relief For Auction Rate Securities Purchasers Nationwide

Posted on August 20, 2008
Following on the heels of a similar complaint filed by Massachusetts securities regulators, New York Attorney General Cuomo?s complaint against UBS Securities and UBS Financial Services (?UBS? collectively) alleges that UBS deceived its customers, its own financial advisors and the...

SEC Charges Chicago Firm Wextrust Capital With Fraud

Posted on August 15, 2008
Two owners of a private equity firm that claimed to be profiting from investments ranging from real estate to diamond mines were arrested and charged with robbing more than $100 million from investors, many of them Orthodox Jews. In a...

Ameriprise To Buy H&R Block Financial Advisory Unit

Posted on August 14, 2008
Ameriprise Financial, the wealth management firm spun off by American Express, will buy H&R Block's financial advisory service for $315 million to expand in Florida, Texas and California. Ameriprise expects the transaction to be completed within six months and start...

SEC Charges Chicago Firm Wextrust Capital With Fraud

Posted on August 14, 2008
Two owners of a private equity firm that claimed to be profiting from investments ranging from real estate to diamond mines were arrested and charged with robbing more than $100 million from investors, many of them Orthodox Jews. In a...

Special Alert: UBS Agrees To A BuyBack To Settle ARS Claims On The Heals Of Citigroup And Merrill Lynch Settlements

Posted on August 08, 2008
According to news sources, UBS has agreed to a $19.4 billion buyback to settle charges it misled investors to buy risky bonds says the Massachusetts Secretary of State's office. The agreement has been reached between UBS Financial Services Inc. and...

Special Alert to Citigroup Retail Investors Holding Illiquid Auction-Rate Securities

Posted on August 07, 2008
New York Attorney General Cuomo announced today a landmark settlement with Citigroup to recover billions in auction-rate securities for investors nationwide. According to the press release issued today, Citigroup has agreed to buy back, no later than November 5, 2008,...

Securities Regulator Proposes To Improve The Accuracy Of Communications Regarding Variable Insurance Products

Posted on August 07, 2008
FINRA (the Financial Industry Regulatory Authority) has filed Regulatory Notice 08-39 for public comment. Among other things, FINRA proposes to improve the manner in which variable insurance products are advertised, particularly with regard to guarantees and riders, performance illustrations and...

Massachusetts Securities Regulator Sues Merrill Lynch Over Auction-Rate Securities As SNSFE Continues To Counsel Investors

Posted on August 04, 2008
The Massachusetts securities regulator has accused Merrill Lynch of defrauding auction-rate investors. According to Bloomberg: Massachusetts Secretary of State William Galvin accused Merrill Lynch & Co. of fraud, claiming the investment bank sold auction-rate securities to investors while misleading them...

Morningstar Alerts Investors To 7 Bear Market Horror Story Mutual Funds

Posted on July 31, 2008
In a recent Morningstar article, author Russel Kinnel discusses seven mutual fund bear-market horror stories. He briefly mentions the hard-hit Legg Mason Value Fund LMVTX, as well as Schwab YieldPlus SWYPX and Regions Morgan Keegan, as those stories have been...

New York Attorney General's Complaint Against UBS Concerning Auction-Rate Securities Is the Second Of Two Bazooka Blasts Destroying Whatever Credibility UBS Has Left

Posted on July 24, 2008
New York Attorney General Cuomo?s complaint against UBS is the second of two (so far) bazooka blasts destroying whatever credibility UBS has left among its retail and institutional customers, its own financial advisers, and the issuers of auction-rate securities (ARS)...

Survey Shows That Corporate Purchasers Of Auction-Rate Securities State That Dealer Support Of Auctions Either Was Implied Or Expressly Stated, Despite Ultimate Demise Of Auction Markets

Posted on July 24, 2008
Recently, the Financial Times discussed an interesting aspect of the auction-rate securities debacle. In an article entitled, "Auction-Rate Securities 'Implied Support', Joanna Chung discussed what investors thought they were buying. She stated: The vast majority of investors in some of...

SEC Proposes Changing The Rules To Better Protect Purchasers Of Equity Indexed Annuities

Posted on July 17, 2008
Recently, The Securities and Exchange Commission (SEC) published for public comment its proposed new rule aimed at protecting investors, especially senior investors, against the abuses associated with the marketing and sale of equity indexed annuities...

Regulator's Complaint Against UBS Securities Exposes Significant Conflicts Of Interest And Omissions In The Sale Of Auction-Rate Securities

Posted on July 09, 2008
On June 26th, Massachusetts securities regulators sued UBS Securities and UBS Financial Services for their role in the auction-rate securities ("ARS") debacle that has plagued not only UBS but several other financial services firms. In addition to other relief, the...

Criminal Prosecutors Investigate Two Former Credit Suisse Brokers For Misleading Investors In Auction-Rate Securities

Posted on July 09, 2008
Federal prosecutors, ramping up criminal probes stemming from the credit crunch, are investigating whether two former Credit Suisse Group brokers lied to investors about how they placed their money into short-term securities. At issue is the $330 billion market for...

Securities Regulator Highlights Examination Priorities To Protect Investors

Posted on July 08, 2008
FINRA (the Financial Industry Regulatory Authority) has issued its publication, ?Improving Examination Results? to highlight ?examination priorities?. Many of the examination priorities relate to investor protection issues, including guidance regarding the recommendation of, and required risk disclosures for, purchases of...

SEC Proposes To Broaden Investor Protection For Those Being Sold Equity Indexed Annuities

Posted on July 03, 2008
The Securities and Exchange Commission has published for public comment a proposed new rule that would protect seniors and other investors from fraudulent and abusive practices in the sale of equity indexed annuities. Equity indexed annuities are often sold to...

SEC, FBI And SNSFE Step Up Investigations Relating To Subprime-Mortgage Crisis

Posted on July 03, 2008
The SEC's docket of probes stemming from the subprime-mortgage crisis has grown at least 40 percent since January amid mounting investor losses and the collapse of Bear Stearns. The SEC has more than 50 open inquiries relating to the credit-market...

SNSFE Investigates Evergreen Ultra Short Opportunities Fund

Posted on July 02, 2008
SNSFE is investigating mutual fund losses sustained in the Evergreen Ultra Short Opportunities Fund. SNSFE is investigating Wachovia's solicitation of thousands of investors to invest in the firm's proprietary bond funds. These funds were sold as Class A,B,C, and I...

UBS Schemed To Defaud Unsuspecting Investors So As To Unload Its Auction-Rate Securities Inventory, According To Complaint Filed By Massachusetts Securities Regulator

Posted on July 01, 2008
UBS e-mails show conflicts with auction-rate clients. UBS was attempting to liquidate an $11 billion "albatross" of auction-rate bonds by selling the debt to individual investors as the market for the securities started to collapse, according to company e-mails...

SNSFE Investigates ERISA Claims Versus Lehman Brothers For Imprudent Investments In Company Stock For Lehman Brothers' Employees

Posted on June 27, 2008
SNSFE attorneys are investigating potential claims against Lehman Brothers Holding (NYSE: LEH) for violations of ERISA. The investigation involves investments in the Lehman Brothers Savings Plan and whether Lehman Brothers and other administrators of the Plan might have breached their...

SEC Faults Next Financial Group For Violating Privacy Laws In Helping Financial Advisers Transition To Firm

Posted on June 26, 2008
Next Financial Group has been ordered by an SEC administrative-law judge to pay a $125,000 penalty as well as cease and desist from any recruiting tactics that violate privacy laws -- known in the industry as Reg S-P. In his...

SEC Reveals Information To Help Financial Services Firms Survive A Compliance Examination

Posted on June 25, 2008
In a recent speech entitled, "Frequently-Asked Questions About SEC Examinations", Lori Richards, Director of the SEC's Office of Compliance Inspections and Examinations, shared helpful information for financial services firms. Ms. Richards answered the following questions: will my firm be examined;...

SNSFE Continues To Investigate Bear Stearns High Grade Structured Credit Strategies Hedge Funds, As Portfolio Managers Indicted For Fraud And Conspiracy

Posted on June 24, 2008
The Securities and Exchange Commission has charged two former Bear Stearns Asset Management portfolio managers for fraudulently misleading investors about the financial state of the firm's two largest hedge funds and their exposure to subprime mortgage-backed securities before the collapse...

SEC Adds Fraud Charges Against Executives At Sentinel Management Group

Posted on June 24, 2008
The Securities and Exchange Commission has announced that is has charged two former Sentinel Management Group executives, Eric Bloom and Charles Mosley, for their roles in devising and carrying out a fraud that has resulted in several hundred million dollars...

FINRA Steps In To Caution Firms Not To Thwart Customers' Efforts To Liquidate Their Auction-Rate Securities

Posted on June 19, 2008
FINRA, the Financial Industry Regulatory Authority, should be given credit for stepping in to prevent a practice that was reported in Bloomberg.coma few weeks ago. In that article, Bank of America, UBS, AG, Wachovia Corp. and at least four dozen...

SNSFE Investigates Fidelity Ultra-Short Bond Fund

Posted on June 19, 2008
A class action lawsuit has been filed in the United States District Court for the District of Massachusetts on behalf of purchasers of the Fidelity Ultra-Short Bond Fund who purchased the fund between June 6, 2005 and June 5, 2008....

Schwab May Settle YieldPlus Mutual Fund Class-Action Litigation

Posted on June 16, 2008
Charles Schwab may pay about $260 million to win public-relations points by settling investors' claims over losses in a bond fund with subprime holdings. The San Francisco-based company is accused in eight proposed class-action suits of misleading investors by describing...

SEC Investigates The Falcon Strategies LLC Hedge Fund Redemption Offer By Citigroup

Posted on June 16, 2008
Citigroup, the biggest U.S. bank by assets, has said that the Securities and Exchange Commission has requested records relating to the firm's hedge funds as part of an informal inquiry. Citigroup disclosed the review in a document filed May 28...

Documents Show UBS Knew About Risks Of Auction-Rate Securities But Cautioned Only Some Of Its Clients As Other Clients Purchased Auction-Rate Securities

Posted on June 13, 2008
The latest news in the auction-rate securities debacle is that UBS Financial Services might have known as early as December that a segment of the municipal bond business was in trouble, but the Wall Street firm kept selling the investments...

SNSFE Continuing Its Investigation Of Harbor Financial Services And James Kleinkopf Of Mobile, AL

Posted on June 13, 2008
SNSFE securities attorneys are continuing their investigation of Harbor Financial Services and its registered representative, James Kleinkopf of Mobile, Alabama for excessive trading and unsuitable investments in the account of at least one elderly person...

Securities Regulator Urges Great Caution In Using 401(k) Debit Cards

Posted on June 10, 2008
Many Americans tap into their retirement savings before they retire, potentially harming their efforts to provide for a financially secure future according to a recent Investor Alert issued by FINRA. With the advent of a recent product, the 401(k) debit...

Auction-Rate Securities Failures Due In Part To Lack Of DisclosureThat Financial Services Firms Sometimes Have Had To Intervene In Auctions Just To Prop Up Auctions According To SEC Official

Posted on June 10, 2008
The collapse of the roughly $330 billion auction-rate securities market this year was fueled by a lack of transparency and may have been avoided if investors had a comprehensive source for disclosures that showed the extent to which successful auctions...

SEC Reveals ?Top 10? Compliance Issues for Investment Advisers

Posted on June 03, 2008
Recently, the Securities and Exchange Commission (SEC) revealed its current examination priorities for investment advisers. Speaking before the 10th Annual IA Compliance Best Practices Summit, Lori Richards, Director of the SEC?s Office of Compliance Inspections and Examinations, detailed the ?Top...

SEC Reveals ???Top 10??? Compliance Issues for Investment Advisers

Posted on June 03, 2008
Recently, the Securities and Exchange Commission (SEC) revealed its current examination priorities for investment advisers. Speaking before the 10th Annual IA Compliance Best Practices Summit, Lori Richards, Director of the SEC???s Office of Compliance Inspections and Examinations, detailed the ???Top...

SNSFE Investigates LPL Broker Stephen Walker For Failed Aspen Exploration Investments

Posted on May 30, 2008
Lawyers at SNSFE are investigating financial adviser Stephen Walker of Rock Island, Illinois. Walker, who has been temporarily banned from selling investment securities in the state, used to be an investment adviser for Linsco Private Ledger. He maintained an office...

More Bad News For Auction-Rate Securities Market

Posted on May 30, 2008
There has been more bad news in the auction-rate securities market. First, according to a study of earnings reports conducted by securities-valuation firm Pluris Valuation Advisors LLC, 402 public companies disclosed that they held variations of auction-rate securities...

J.P. Morgan Analyst Paints Bleak Picture For Investors In Student Loan Auction-Rate Securities

Posted on May 29, 2008
News continues to be most bleak for those who were sold student loan auction-rate securities. Last month, a research report issued by J.P. Morgan credit analyst Alex Roever said, "We think it is highly unlikely SLARS issuers will call or...

300 Companies Struggling Over Auction-Rate Securities With One-Half Of Them So Far Reporting Losses Totaling $1.8 Billion

Posted on May 28, 2008
Auction-rate securities woes continue. More than 300 companies are struggling to value auction-rate bonds after dealers battered by subprime-related losses abandoned the $330 billion market in February. About half of the companies reported losses totaling $1...

SNSFE Investigating Massive Fraud Perpetrated By American Elder Group, John Tencza, Michael E. Kelly and Others

Posted on May 27, 2008
The Securities and Exchange Commission has convinced a District Court for the Northern District of Illinois to enter an order permanently enjoining John Tencza, of Meridian, Idaho and formerly of Scottsdale, Arizona, as well as American Elder Group, L...

Investors Beware As Bank Of America And RBC Dain Rauscher Added To The List Of Firms Sued In Class Actions Over Auction-Rate Securities

Posted on May 23, 2008
Previously, we've cautioned investors to monitor class actions because they may be unsuitable for most investors who have invested several thousands of dollars in those investments. We've added a few names to the list since our last publication. Bank of...

SNSFE Investigating Wachovia's Firing Of Its Financial Specialists At Banks Over Customer Checking Accounts

Posted on May 23, 2008
SNSFE is investigating claims of financial specialists who Wachovia Bank fired recently. Acting on a tip, SNSFE has learned that Wachovia Bank fired employees after they had given customers what Wachovia had offered to them for free, mainly -- accounts...

Plug Power Sues UBS As Auction-Rate Securities Woes, Failed Auctions And Big Discounts On Redemptions Continue

Posted on May 22, 2008
Auction-rate securities continue to trouble investors. According to Bloomberg data, failures in the auction-rate preferred share market, which are sold by mutual funds, and debt sold by student loan providers, continue to run at about a 99 percent failure rate...

SNSFE Issues Warning To Investors Who May Be Trapped In A Class Action Relating To Schwab YieldPlus Fund Select Shares And Schwab YieldPlus Investor Shares

Posted on May 22, 2008
SNSFE is issuing a warning to investors to beware of a pending class action concerning Schwab YieldPlus Fund Select Shares and the Schwab YieldPlus Investor Shares. SNSFE is investigating those funds and the investigation centers on the allegations that Charles...

J.P. Morgan Analyst Paints Bleak Picture For Investors In Student Loan Auction-Rate Securities

Posted on May 22, 2008
News continues to be most bleak for those who were sold student loan auction-rate securities. Last month, a research report issued by J.P. Morgan credit analyst Alex Roever said, "We think it is highly unlikely SLARS issuers will call or...

SNSFE Investigating Massachusetts Hedge Fund River Stream And Its Manager Michael Regan

Posted on May 20, 2008
SNSFE is investigating a Massachusetts hedge fund manager. Massachusetts' top securities regulator, William Galvin, on Monday charged a hedge fund manager, who had promised to earn as much as 20 percent for his clients, with improperly soliciting investors...

SNSFE Investigating Implosion Of Bear Stearns High Grade Structured Credit Strategies Fund And Its Managers

Posted on May 20, 2008
Lawyers at SNSFE are investigating the Bear Stearns High Grade Structured Credit Strategies Fund, as well as Ralph Cioffi, Jr. and Matthew Tannin. Bear Stearns recently disclosed that the events leading up to the demise of the Bear Stearns High...

Posted on May 20, 2008

SNSFE Investigating Wachovia's Firing Of Its Financial Specialists At Banks Over Customer Checking Accounts

Posted on May 20, 2008
SNSFE is investigating claims of financial specialists who Wachovia Bank fired recently. Acting on a tip, SNSFE has learned that Wachovia Bank fired employees after they had given customers what Wachovia had offered to them for free, mainly -- accounts...

SNSFE Investigating Massive Fraud Perpetrated By American Elder Group, John Tencza, Michael E. Kelly and Others

Posted on May 20, 2008
The Securities and Exchange Commission has convinced a District Court for the Northern District of Illinois to enter an order permanently enjoining John Tencza, of Meridian, Idaho and formerly of Scottsdale, Arizona, as well as American Elder Group, L...

Key Guidance On Hedge Fund Investing

Posted on May 16, 2008
On Tuesday, May 13th, I presented Key Guidance On Hedge Fund Investing, a webinar highlighting important information contained in the "Report of the Investors' Committee to the President's Working Group on Financial Markets, Principles and Best Practices for Hedge Fund...

Investors Should Avoid Exchange-Traded Notes

Posted on May 15, 2008
Investors need to avoid exchange-traded notes according to columnist John Waggoner of USA Today. It's good advice. Wall Street has created a new generation of investments, called exchange-traded notes, or ETNs, and they go by names such as BOXES, LUNARS,...

Citigroup's Settlement Offer To Falcon And ASTA/MAT Investors May Not Be Sufficient

Posted on May 15, 2008
Recently, the Wall Street Journal ran an article focusing on Citigroup's push on hedge funds known as Falcon and ASTA/MAT. The losses by these two hedge funds are the latest examples of the credit crunch hammering retail, or individual, investors...

Investor Angst, Regulatory Probes And Litigation Intensify Over Auction Rate Securities

Posted on May 15, 2008
Investor angst concerning auction rate securities (ARS) continues, and indeed has worsened over the last few months. In May 2008, the New York Times reported that $300 billion worth of investors? funds were ?still locked up? and that 70% of...

Securities Regulator Cautions Investors To Avoid Funds Investing In Catastrophe Bonds Or Other Event-Linked Securities

Posted on May 12, 2008
The Financial Industry Regulatory Authority (FINRA) has issued an Investor Alert warning investors about the risks of speculating on natural disasters with event-linked securities, such as catastrophe bonds or "cat bonds." Cat bonds offer high yields but can quickly lose...

Regulators' Inquiries As Well As Auction-Rate Fire-Sale Discounts Increase Amid Renewed Allegations Of Collusion, Especially In the Area Of Student Loan Auction-Rates

Posted on May 06, 2008
Concerns about investor abuse in auction-rate securities continues. New York Attorney General Mr. Cuomo is joined now by at least a dozen different authorities at the state and national level investigating aspects of the $330 billion auction-rate securities market...

Managers Replaced at Poorly-Performing Regions Morgan Keegan Funds; SNSFE Continues to Investigate

Posted on May 02, 2008
The nation's two worst-performing bond-focused mutual funds over the past year are booting their in-house management in favor of outsiders. Morgan Asset Management Inc., a unit of Regions Financial Corp., announced that it had been replaced to oversee these two...

SNSFE Investigates Claims That Brokerage Firm Employees In 401(k) Plans And Other Qualified Plans Were Not Advised Of The Risk Of Owning Company Stock In Light Of Subprime And CDO Exposure

Posted on May 02, 2008
Employee plaintiffs are lining up to sue the major brokerage firms over losses in company stock. A number of proposed class actions have been filed against Citigroup, Merrill Lynch and Morgan Stanley. According to the lawsuits, the companies made inadequate...

Securities Regulator Issues Warning Regarding Investors? Use of Reverse Mortgages

Posted on May 02, 2008
For many individuals, their largest asset is their home, and it is their most precious source of retirement security. Unfortunately, over the years financial advisers have convinced homeowners that they should tap into their home equity to purchase investments...

Hedge Funds, Such As Peloton Partners, Sailfish Multistrategy Fund, Tisbury Capital, Drake Capital And Polygon, Continue To Collapse

Posted on May 01, 2008
According to top industry executives, there will be more hedge fund collapses this year as many managers struggle to borrow the money they need to trade with and face investors disappointed by recent losses. "Some funds simply will not do...

SNSFE Warns That Class Actions May Not Be The Best Recourse For Purchasers Of Auction Rate Securities

Posted on April 30, 2008
News of auction-rate securities class actions being filed has concerned many securities lawyers that investors may be choosing the wrong path to pursue recovery. While sometimes some class actions are sensible for some investors, oftentimes they are not...

Schwab's YieldPlus Ultra-Short Bond Funds Continue To Suffer Along With Fidelity And State Street Global Advisors Bond Funds And Are Unlikely To Rebound

Posted on April 29, 2008
Schwab YieldPlus Fund Select Shares and Schwab YieldPlus Fund Investor Shares now are subject to an investor arbitration claim filed at FINRA. Regarding the ultra-short bond fund Shwab YieldPlus, Morningstar states that the fund's sizeable loss in recent months is...

Schwab Reportedly Offering To Settle Loss Claims Of YieldPlus Fund Investors

Posted on April 28, 2008
Charles Schwab's YieldPlus mutual funds are in the news again. This time, it is reported by attorneys that Schwab has called clients who have filed arbitration actions as well as others associated with a class action lawsuit against the company...

Edwards D. Jones Broker Awarded Damages For Emotional Distress Arising From Employment

Posted on April 25, 2008
An arbitration panel has held Edward D. Jones accountable for emotional distress inflicted upon one of its registered representatives and has awarded that former rep over $141,000 plus legal expenses. Edward D. Jones, which is widely regarded as one of...

Securities Regulator Issues Tips to Protect Financial Information

Posted on April 25, 2008
FINRA (the Financial Industry Regulatory Authority) has published, ?Keeping Your Account Secure: Tips for Protecting Your Financial Information." According to FINRA, identity theft has advanced well beyond ?dumpster diving? to recover discarded account statements or other records that have not...

SNSFE Announces Intention to Maintain Library of Auction-Rate Securities Materials As SEC And State Securities Regulators Continue to Investigate Possible Investor Abuse

Posted on April 23, 2008
Auction-rate securities continue to be in the news. Recently, the Securities and Exchange Commission announced that it was seeking information on auction-rate debt sales. According to Lori Richards, head of the SEC's Office of Compliance Inspections and Examinations, "We are...

SNSFE Investigating Citigroup's ASTA And MAT Hedge Funds As Brokers And Their Clients Considering Bolting From Citigroup

Posted on April 18, 2008
According to a recent BusinessWeek article, Citigroup, its clients and its brokers, are in the midst of several hedge fund flameouts and Citigroup is scrambling to hold on to both investors and brokers who are considering bolting from the firm....

Regulators Increase Investigations Of Auction Rate Securities As Individual Investors Might Have Been Suckered Into Buying So That Heavyweights Could Bail Out

Posted on April 17, 2008
Regulator inquiries are intensifying over auction-rate securities. This week Goldman Sachs disclosed that it has received requests for information from various governmental agencies and self-regulatory organizations relating to auction products and the recent failure of such auctions...

New Handbook Outlines Prudent Practices For Fiduciary Advisers

Posted on April 15, 2008
The Financial Planning Association (FPA) has published a handbook containing practice guidelines for "Fiduciary Advisers" as that term is defined in the Pension Protection Act of 2006. The FPA states that the handbook "represents a standard of excellence for fiduciary...

ARS Woes Continue As Companies Join In Lawsuits To Recover Damages And Liquidate Securities

Posted on April 15, 2008
Auction-rate securities continue to be in the news. To date, most of the suits against broker-dealers that sold ARS have been brought by individual investors. But two companies, Miami-based Astar Air Cargo and Dallas-based MetroPCS Comunications, have each filed claims...

SEC Charges Five Former San Diego Officials With Securities Fraud For Inadequate Municipal Securities Disclosures

Posted on April 10, 2008
The SEC has filed securities fraud charges against five former San Diego city officials who played key roles in the city's inadequate municipal securities disclosures in 2002 and 2003. The SEC charged the former officials for failing to disclose to...

Bond Funds, Especially Those Invested In Mortgage-Backed Securities, Continue To Suffer Significant Losses

Posted on April 09, 2008
If gyrating stock mutual funds haven't been enough to make investors queasy, many bond funds have swooned, too. A fifth of all investment grade U.S. taxable bond funds tracked by Morningstar are in the red. Bonds are supposed to be...

Auction Rate Securities Present A "Hotel California" Nightmare For Investors

Posted on April 04, 2008
Investors have discovered Wall Street?s version of the Hotel California: they have ?checked in? to an investment that they cannot leave. Since mid-February, a significant number of auctions (70% according to Thestreet.com) in ?auction rate securities? have failed, leaving the...

SNSFE Investigating Morgan Stanley (Multi-Financial and NEXT Financial) Brokers John Mullins and Kathleen Mullins of New Jersey

Posted on April 01, 2008
Attorneys at SNSFE are investigating a broker who misappropriated almost $400,000 from a 97-year-old widow and her charitable foundation. According to FINRA, the Financial Industry Regulatory Authority, it has charged registered representative John Edward Mullins, of Margate, NJ, with misappropriating...

SNSFE Investigating Harbor Financial Services And James Kleinkopf Of Mobile, Alabama

Posted on March 28, 2008
Attorneys at SNSFE are investigating Harbor Financial Services and its registered representative, James Kleinkopf of Mobile, Alabama. The investigation revolves around excessive trading and unsuitable investments in the account of at least one elderly person...

SNSFE Investigating Complaints Regarding Auction Rate Securities, Liquidity Concerns And Inappropriate Margin Loans

Posted on March 24, 2008
Attorneys at SNSFE are investigating abuses in auction rate securities as disgruntled investors cannot cash out of these investments. Auction rate securities, or ARS, are long-term municipal bonds, corporate bonds or preferred stocks that are traded at auctions that set...

SNSFE Investigating Abuses With Reverse Mortgages In Light Of FINRA Investor Alert

Posted on March 21, 2008
Attorneys at SNSFE are investigating the suitability of reverse mortgages for senior investors. FINRA, the Financial Industry Regulatory Authority has issued an Investor Alert urging homeowners over the age of 60 to carefully weigh all of their options before tapping...

Some Firms Not Honoring Their Obligation To Return Money To VRDN Investors, And SNSFE Is Investigating

Posted on March 11, 2008
Financial Week has reported that money funds are dumping variable-rate notes that banks must honor. The latest securities acronym to hit a snag are VRDNs. The $380 billion market for variable rate demand notes has seen them dumped en masse...

SNSFE Investigating London-Based Hedge Fund CSO Partners

Posted on February 27, 2008
SNSFE is investigating the London-based fund CSO Partners after Citigroup has suspended investor withdrawals from it. This $500 million credit hedge fund has lost 10 percent since November and the manager has resigned. Investor redemptions have been suspended so that...

SNSFE Investigating London-Based Hedge Fund CSO Partners

Posted on February 26, 2008
SNSFE is investigating the London-based fund CSO Partners after Citigroup has suspended investor withdrawals from it. This $500 million credit hedge fund has lost 10 percent since November and the manager has resigned. Investor redemptions have been suspended so that...

SNSFE Continuing To Investigate Illinois Resident Robert Loffredi, Raymond Financial Group And Linsco Private Ledger After SEC Bars Loffredi From Securities Industry

Posted on February 26, 2008
In connection with its continuing investigation of Hinsdale, Illinois-based adviser Robert Loffredi, SNSFE reports that on February 22, the Securities and Exchange Commission issued an Order Instituting Administrative Proceedings against Robert Loffredi...

Lancer Group Hedge Fund Manager Michael Lauer And Others Indicted For Fraud And Conspiracy

Posted on February 25, 2008
Former Lancer Group hedge fund manager Michael Lauer and four others who defrauded hedge fund investors of more than $200 million have been indicted on conspiracy and wire fraud charges, the U.S. Justice Department has reported. "Lauer was named in...

SNSFE Investigating Former A.G. Edwards Broker Luis Cespedes For Selling Unsuitable Investments Following NYSE's 10 Year Suspension

Posted on February 18, 2008
Attorneys at SNSFE are investigating a broker who has been barred for 10 years by the New York Stock Exchange. The New York Stock Exchange announced last week that it had banned Luis Miguel Cespedes who worked for A.G. Edwards...

SNSFE Investigating Broker Miah And Square Mile Securities For High Pressure Sales Tactics

Posted on February 15, 2008
The Financial Services Authority of Britain has banned a stockbroker for life after he abused the trust of some of his clients. The stockbroker sold high-risk stocks to unwitting customers, including two retirees over the age of 80. He's been...

Securities Regulator Provides Guidance Regarding The Review And Supervision Of Electronic Communications

Posted on February 13, 2008
FINRA (the Financial Industry Regulatory Authority) has issued Regulatory Notice 07-59 relating to electronic communications, such as email, instant messaging, text messaging, weblogs and podcasting, which financial services firms and their employees may use to conduct business...

Securities Regulator Provides Guidance Regarding The Review And Supervision Of Electronic Communications

Posted on February 12, 2008
FINRA (the Financial Industry Regulatory Authority) has issued Regulatory Notice 07-59 relating to electronic communications, such as email, instant messaging, text messaging, weblogs and podcasting, which financial services firms and their employees may use to conduct business...

SNSFE, As Well As A Host Of State And Federal Authorities, Probe Subprime Mortgage-Related Investments And Related Conduct

Posted on February 08, 2008
Attorneys at SNSFE continue to investigate investment losses related to subprime mortgage investments. But the probe is widening in a criminal and civil sense. In today's news, there is a listing of a sampling of investigations of financial firms over...

SNSFE Investigating Relationship Between Wood River Endwave Stock And Various Brokerage Firms Including UBS Dain Rauscher, Fidelity, And Stifel, Nicolaus

Posted on February 06, 2008
It appears that numerous brokerage firms across the country held Endwave Corporation stock through the Wood River Limited Partnership offerings. Wood River and John Whittier are the subject of a pending Southern District of New York bankruptcy action...

AARP Warns Seniors Of Reverse Mortgages; SNSFE Investigating

Posted on January 30, 2008
The American Association of Retired Persons (AARP) has warned seniors of reverse mortgages. Reverse mortgages can carry high costs -- as much as 7% of a home's value. They also have been subject to abusive marketing practices. AARP urges seniors...

SEC Files Hedge Fund Fraud Charges Against Former UBS Financial Broker Justin Paperny In Connection With GLT Venture Fund, L.P.

Posted on January 25, 2008
On January 14th, the Securities and Exchange Commission filed settled charges against Justin Paperny, a former broker at UBS Financial Services for his role in a hedge fund fraud. The SEC alleged that Paperny participated in a fraudulent offering of....

Exercise Caution In Purchasing Structured Investments, The Latest Hot Product From Wall Street

Posted on January 22, 2008
Two seminars that I recently attended both shared the common element of having a speaker discuss the virtues of "structured investments", or "structured products" as they sometimes are called. A financial publication recently ran a story entitled, "The Next Big...

Qualified Pension Plan Participants Should Look Forward To Receiving Specific Investment Advice

Posted on January 17, 2008
The Pension Protection Act of 2006 (the "PPA") should benefit plan participants (and beneficiaries) by providing participant education. Under the PPA, qualified "Fiduciary Advisers" will help plan participants navigate through their investment selection and allocation decisions...

Securities Regulator Probes Sale Of CMO (Collateralized Mortgage Obligation) Investments To Retail Investors

Posted on January 14, 2008
Securities regulators have asked several brokerage firms for information about the marketing and sale of mortgage-related products, specifically those sold to individual investors. These collateralized mortgage obligations are pools of residential home mortgages...

SEC's Rand Corporation Report Confirms Investor Confusion Over Differences Between Brokerage Services And Investment Advisory Services

Posted on January 07, 2008
The Securities and Exchange Commission has published on its website the long-awaited Rand Corporation report that was to examine differences between brokerage firms and investment advisory firms, and whether or not consumers were confused. The 219 page report indeed states,...

SNSFE Investigating Robert Lane, Wealth Pools International Inc., And Recruit For Wealth Inc. For Fraudulent Global Pyramid Scheme

Posted on December 19, 2007
The Securities and Exchange Commission has halted a fraudulent global pyramid scheme praying on the Hispanic community. The SEC announced that in early December it filed an emergency action against Robert Lane, Wealth Pools International, Inc., and Recruit for Wealth,...

SNSFE Continues Probe Of Edward May and E-M Management Co. As SEC Files Fraud Charges For $250 Million Fraud

Posted on December 11, 2007
Edward May and E-M Management Co. are back in the news. The Securities and Exchange Commission filed charges stemming from a $250 million offering fraud that involved phony Las Vegas casino and resort telecommunications deals and victimized as many as...

Securities Regulator Makes Protection Of Senior/Retiree Investors A High Priority

Posted on December 05, 2007
Senior investors, as well as Baby Boomers who are retired or who are approaching retirement, should take some comfort from a recent notice to financial services firms, Regulatory Notice 07-43. The Financial Industry Regulatory Authority (FINRA) states that the purpose...

Protecting Yourself In Bull And Bear Markets

Posted on November 21, 2007
Ronald M. Amato, an associate attorney in the securities group at SNSFE, presented the webinar, "Protecting Yourself In Bull And Bear Markets: What Investors, Their Accountants and Advisors Should Know About Investment Product Suitability and Investment Abuse" in November 2006...

The Court's Rejection Of The Broker-Dealer Exemption Rule (The So-Called "Merrill-Lynch Rule")

Posted on November 16, 2007
On July 11, 2007, SNSFE securities associate attorney Ronald M. Amato presented a webinar for investors and financial advisers on the implications of the U.S. Court of Appeals D.C. Circuit Court's decision to vacate SEC Rule 202(a)(11). In his 30-minute...

The Top 10 Current Compliance Issues For Investment Advisers

Posted on November 13, 2007
This 30-minute recorded presentation from a recent webinar by SNSFE securities associate attorney Christopher J. Moyen covers the basics of what we identify to be the top 10 current compliance issues facing investment advisers today. Play the webinar or listen...

SNSFE Investigating Donald Overbey Of Illinois And Ameriprise Financial For Fraudulent Investments And Failure To Supervise

Posted on November 13, 2007
Attorneys at SNSFE are investigating Donald Overbey who was at one point an Ameriprise financial adviser based in Illinois. Mr. Overbey already has had his Illinois license revoked and is prohibited from serving as an investment adviser in Illinois. He...

Brokerage Firms Continue To Run Afoul Of Longstanding Requirements For Fee-Based Accounts

Posted on November 09, 2007
Fee-based accounts have existed for more than a decade as an alternative to paying commissions for buying and selling securities. They have been popular and profitable, but soon will become subject to more stringent regulatory requirements as a result of...