Corporate & Securities Law

Ponzi Scheme Operator Brad Eisner Gets Probation

Posted on September 21, 2010
Justice was blind recently when it came to sentencing a broker who defrauded investors out of more than $66 million. New York broker Bradley D. Eisner received five years? probation for his role in a Ponzi scheme that convinced investors they were putting money in a foreign-exchange market when, in reality, the funds were being [...

Behringer Harvard REIT I A Blow To Investors

Posted on September 14, 2010
Behringer Harvard REIT I, which raised $2.9 billion from its 2003 launch to the end of its final offering in December 2008, has reduced its share value as of May 17 to $4.25, plus cut its annualized dividend rate to 1%, according to a regulatory filing...

Behringer Harvard, Other REITs = Financial Disaster For Many Investors

Posted on September 13, 2010
Highly leveraged REITs like Behringer Harvard REIT I, Inland Western Retail Real Estate Trust and others have produced hundreds of thousands of dollars in losses for investors in the past year. As non-traded REITs, the products are not listed on an exchange; they also come with high commissions and fees...

Lehman?s Funds of Funds Accounting Under Scrutiny

Posted on September 10, 2010
The Security and Exchange Commission?s investigation into the collapse of Lehman Brothers Holdings is gaining momentum and, specifically, into the accounting practices that the company allegedly used to give the appearance of a robust financial picture...

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Scrutiny Over Retained Asset Accounts Rages On

Posted on August 31, 2010
Retained asset accounts (RAA) are in the regulatory hot seat, with critics of the vehicles calling on life insurance companies to improve disclosure policies and beef up transparency of the products to clients. RAAs are interest-bearing accounts used by life insurers to hold death benefits of beneficiaries...

Retained Asset Accounts: Buyer Beware?

Posted on August 27, 2010
Retained asset accounts are facing growing scrutiny, with regulators calling into question the disclosure policies of insurance companies that market and sell the products to clients. In July, New York Attorney General Andrew Cuomo opened a fraud investigation into retained asset accounts, with subsequent probes announced by Georgia and New York insurance departments...

Montana Sues Securities America Over Medical Capital Investments

Posted on August 25, 2010
Securities America has once again caught the attention of securities regulators over risky sales in Medical Capital Holdings. This time, Montana?s State Securities Commission is suing Securities America. In January, Massachusetts Secretary of State William Galvin filed the first lawsuit against Securities America, accusing the broker/dealer of failing to reveal key information about failed private placements [...

Judge Not Ready To Sign Off On Citigroup/SEC Settlement

Posted on August 20, 2010
When Citigroup eked a $75 million settlement deal in July with the Securities and Exchange Commission (SEC) over claims it misled investors by failing to disclose $40 billion in risky mortgage-related holdings, many people thought Citigroup got off far too easy...

Former ING Broker Rhonda Breard Sentenced

Posted on August 20, 2010
Former ING Financial broker Rhonda Breard is trading her swanky professional suits for prison garb. After pilfering clients out of $12 million, a federal judge has sentenced Breard to six years and eight months in prison. The former chief executive officer of Breard and Associates Wealth Management in Kirkland was initially charged on March 10 to [...

N.J. SEC Fraud Case: More States To Follow?

Posted on August 19, 2010
In its first securities fraud case against a state, the Securities and Exchange Commission (SEC) has accused the state of New Jersey of misleading investors by hiding the underfunding of its two biggest pension plans. The situation in New Jersey is far from isolated, and many legal analysts believe similar lawsuits against other states will [...

State Insurance Regulators Issue Alert On Retained-Asset Accounts

Posted on August 18, 2010
Retained-asset accounts - a product that allows insurers to profit from beneficiary death benefits by placing the funds in interest-bearing accounts - have become the new tainted investment of the day. Just days after the Federal Deposit Insurance Corporation announced that life insurers should disclose more information about retained-asset accounts to their customers, the National Association [...

Investigation Launched Into Prudential Over Death Benefit Allocations

Posted on August 18, 2010
Accusations over how life insurers allocate death benefits have resulted in a formal investigation by Rep. Edolphus Towns into Prudential Financial. Towns opened the investigation following allegations that Prudential didn?t automatically deliver a lump-sum check to families of deceased soldiers, but instead deposited that money into its own general fund...

Risky Interest-Rate Swaps Spell Trouble For Denver Schools

Posted on August 11, 2010
Under the advice of JPMorgan Chase, high-risk interest-rate swaps have produced a mountain of debt for the Denver Public School system. The intent of the deal was for Denver schools to raise $750 million to refinance old debt and fully fund its pension system...

Interest-Rate Swaps Dig Municipalities Deeper Into Debt

Posted on August 07, 2010
Interest-rate swaps have become synonymous with toxic investments for a growing number of states, cities and towns across America. States and local governments initially turned to the exotic financial instruments as a way to boost their budgets. Instead, many have found themselves pushed to the brink financially and forced to cut basic services like public [...

Retained Asset Accounts Garner Attention From Regulators, NY Attorney General

Posted on August 06, 2010
Investigations into retained asset accounts are heating up from regulators and New York Attorney General Andrew M. Cuomo. At issue is how insurance carriers report and maintain the death-benefit proceeds held in the accounts. According to an Aug. 4 story by Investment News, regulators are discussing the possibility of requiring carriers to break out details [...

Securities America Gets New Leader; Medical Capital Lawsuits Remain

Posted on August 03, 2010
Embattled broker/dealer Securities America has a new leader at the helm: Jim Nagengast. One of his first assignments as the new CEO: Dealing with the problems that Securities America brokers created when they unloaded Medical Capital private placements on investors from 2003 to 2008...

A Closer Look At New England Securities

Posted on July 26, 2010
Martin Wegener, a former financial representative for New England Securities, is accused of fleecing investors out of millions of dollars through an elaborate investment scam. The Securities and Exchange Commission (SEC) filed fraud charges against Wegener on June 14, 2010, accusing the one-time broker of scamming investors out of at least $6...

Fannie Mae, Freddie Mac Preferred Shares A Disaster For Main Street

Posted on July 21, 2010
Investors who purchased preferred shares of Fannie Mae and Freddie Mac stock continue to lament their decision. In 2007 and 2008, investment firms like UBS, Morgan Stanley, Citigroup, Merrill Lynch and others sold billions of dollars in various series of preferred stock issued by the two mortgage giants...

Goldman Sachs Fraud Case Update

Posted on July 20, 2010
The admission of guilt came on July 15 as Goldman Sachs settled civil fraud charges with the Securities and Exchange Commission (SEC) over its marketing of a collateralized debt obligations (CDO) package known as Abacus 2007-ACI. In settling the matter, Goldman agreed to pay a $550 million fine...

Stock Broker Fraud Case Involving Martin Wegener Offers Lesson For Investors

Posted on July 17, 2010
The alleged stock broker fraud case involving Martin Wegener offers insight into what investors can do to avoid becoming victims of investment scams. On June 14, the Securities and Exchange Commission (SEC) charged Wegener and his companies - Wealth Resources, Inc...

Goldman Sachs Fraud Case Update

Posted on July 16, 2010
The admission of guilt came on July 15 as Goldman Sachs settled civil fraud charges with the Securities and Exchange Commission (SEC) over its marketing of a collateralized debt obligations (CDO) package known as Abacus 2007-ACI. In settling the matter, Goldman agreed to pay a $550 million fine...

Morgan Keegan Scorecard: Investors Win 5 Of 6 Recent Claims

Posted on July 15, 2010
In May and June, investors prevailed in five out of six arbitration claims against Memphis brokerage firm Morgan Keegan. Meanwhile, hundreds of additional individual arbitration claims await decisions from the Financial Industry Regulatory Authority (FINRA)...

Stockbroker Fraud Prompts Expansion Of FINRA?s BrokerCheck

Posted on July 15, 2010
An influx of stockbroker fraud lawsuits and regulatory investigations has prompted the Financial Industry Regulatory Authority (FINRA) to significantly expand the information it provides through its BrokerCheck Web site. Specifically, FINRA plans to increase the number of customer complaints reported publicly, make certain information about brokers available on a permanent basis, and extend the public disclosure [...

Martin Wegener Fraud Investigation

Posted on July 13, 2010
Grand Rapids, stockbroker Martin Wegener, New England Securities, is the subject of a civil injunction action filed June 14 by the Securities and Exchange Commission (SEC). According to the complaint, Wegener defrauded investors of at least $6.4 million from March 2007 to March 2010...

Provident Royalties Becomes A Black Mark For Broker/Dealers

Posted on July 12, 2010
Private-placement sales in Provident Royalties LLC have come back to haunt many once-successful broker/dealers. The Securities and Exchange Commission (SEC) charged Provident with civil fraud last summer, accusing the company and various top executives of operating a $485 million Ponzi scheme allegedly involving phony oil and gas securities...

FINRA Fines Double In 2009

Posted on July 10, 2010
Suitability, misrepresentation and issues involving variable annuities and mutual funds topped the list of enforcement actions levied by the Financial Industry Regulatory Authority (FINRA) in 2009. In total, the regulator imposed $50 million in fines and resolved 1,090 disciplinary actions...

Provident Royalties Private Placements Bury 12 Broker/Dealers

Posted on July 05, 2010
At least 12 broker/dealers that sold private placements issued by Provident Royalties LLC are now either out of business or no longer sanctioned by the Financial Industry Regulatory Authority (FINRA). As reported June 30 by Investment News, the 12 firms in question sold $56...

Group Of Broker/Dealers Face Lawsuit Over Provident Royalties Private Placements

Posted on June 30, 2010
Forty-nine broker/dealers have been named in a lawsuit involving sales of Provident Royalties private placements. The lawsuit, which was filed June 21 by the trustee now overseeing Provident - Milo H. Segner Jr. - charges the broker/dealers of failing to uphold their fiduciary obligations when selling a series of Provident Royalties LLC private placements...

Another Broker/Dealer Goes Out Of Business

Posted on June 29, 2010
Weighed down by sales in Medical Capital Holdings and other failed private placement deals, more broker/dealers are closing their doors. At least nine B-Ds have gone out of business this year. In 2005, 5,111 broker-dealers were registered with the Financial Industry Regulatory Authority (FINRA); today, the number of firms has declined by 8...

Tough Times Ahead For Small Broker/Dealers

Posted on June 28, 2010
GunnAllen Financial. Cullum & Burks Securities. Okoboji Financial Services. Jesup & Lamont Securities. All are independent broker/dealers that have either faced net-capital violations or been shut down by regulators after their capital levels were deemed too inadequate to continue doing business...

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