The Resolution Law Group: FINRA Considers System That Would ‘Red Flag’ Customer Accounts at Brokerage Firms

The Financial Industry Regulatory Authority is looking at a system that would let the SRO run analytics on the customers accounts at brokerage firms that would allow it to identify “red flags” involving business and sales misconduct involving branches, firms, and registered representatives. The agency is now seeking comments for its proposal for the Comprehensive Automatic Risk Data System (CARDS).

Upon implementation of CARDS, clearing firms and self-clearing firms would regularly turn in, in standardized, automated format, specific data about customer accounts and the customers accounts of each member account that they clear for. This would allow FINRA to conduct analytics so it can identify excessive commissions, churning, markups, pump and dump scamps, and mutual fund switches. The information would also be used to examine broker-dealers.

FINRA says it wants to be able to find the risks and red flags earlier. According to a notice from the SRO, the agency says that this type of automated reporting would get rid of some of the one-off reporting that brokerage firms now have to engage in. This would also let FINRA compare broker-dealers and identify trends and patterns in the industry.

CARDS is part of FINRA’s efforts, since the 2008 financial crisis, to go from depending on individual financial firm exams to surveillance that is broader and occurs on an ongoing basis. The SRO says it conducted a successful trial of CARDS earlier in 2013. 300 introducing firms were involved.

To make CARDS a working reality, brokers might have to gather historical data. Meantime, clearing firms would need to construct a system that would let them turn in the information and oversee data transmission. FINRA CEO and Chairman Robert Ketchum said that the purpose of CARDS isn’t to “replace the compliance officer.” He said the SRO wants to be able to swiftly place attention on firms and their branches where there may be a “concentration in assets that are more likely to be hit.”

The Resolution Law Group works with institutional investors and high net worth individual investors to get back their money that they lost due to securities fraud. Contact our broker fraud law firm today.

The Resolution Law Group: US Supreme Court Hears Oral Argument on the Impact of SLUSA on the Stanford Ponzi Scams

The US Supreme Court has just listened to oral argument about how the Fifth Circuit appeals court interprets the breadth of the Securities Litigation Uniform Standards Act’s (SLUSA), which precludes the majority of state class action cases involving plaintiffs claiming misrepresentations related to the buying or selling of a security that it covers. The case stems from Allen Stanford’s $7B Ponzi scam, in which one of his banks put out certificates of deposit that were supposedly safe, liquid investments when, in reality, the investments did not exist. The bank used money from new CD sales to issue redemption payments and interest on older CDs.

Following the discovery of the Stanford securities shame, two sets of investors filed securities fraud cases in Louisiana court against several Stanford companies and employees contending law had been violated. The defendants got the cases sent to federal court.

The securities lawsuits were then sent to the Northern District of Texas, which threw out the fraud lawsuits on the grounds that SLUSA precluded them. That court said that the CDs weren’t covered but that the investors had alleged misrepresentations having to do with securities that were covered. The Stanford bank had claimed it invested in securities that were issued by multinational companies and solid governments and led investors to think investments SLUSA-covered securities at least partially backed the CDs. he Fifth Circuit then reversed that decision.

Now, the US Supreme Court must determine whether the class action securities cases can move forward despite SLUSA preclusion of “covered class actions” involving a private party claiming there has been a misrepresentation/omission of a material fact related to the selling or buying of a covered security.

Our Ponzi fraud lawyers represent clients that have suffered losses from Ponzi scams and other financial schemes, including elder financial fraud, affinity schemes, pump-and-dump scams, and others. Shepherd Smith Edwards and Kantas, LTD LLP represents institutional and individual investors.

The Resolution Law Group: New California Appellate case published on August 8, 2013, “Glaski v. Bank of America”, holds that a homeowner can challenge his lender’s right to foreclose by showing that the Deed of Trust never made it into the securitized trust until after the trust’s closing date.

A new California Appellate case published on August 8, 2013, “Glaski v. Bank of America”, holds that a homeowner can challenge his lender’s right to foreclose by showing that the Deed of Trust never made it into the securitized trust until after the trust’s closing date. This is the case in most loans made in the last 12 years. If the bank foreclosed we should be able to get the homeowner money damages and/or the house back. Or a lawsuit could be filed and a court ruling obtained preventing the court from foreclosing.Recently enacted Sections 2924(a)(6) and 2924.19 of California Civil Code provide the same relief to homeowners.

It is highly suggested that homeowners take this window of opportunity to get relief before the banks get Congress to close this door with national legislation.  If you feel you are the victim of Mortgage Fraud, please do not hesitate to email or call the The Resolution Law Group (203) 542-7275 for a confidential, no obligation consultation.

 

The Resolution Law Group: New York Subpoenas 22 Digital-Currency Companies and Investors Over Bitcoin

he New York State Department of Financial Services has subpoenaed a number of investors and digital-currency companies to better understand the Bitcoin (XBT) arena. Letters were sent to key players requesting information about consumer protections, money laundering controls, pitch books, source funding and investments strategies. Among the subpoenaed are Bitcoin exchanges and processors, major investors, and others, including ZipZap, Google Ventures, Winklevoss Capital Management, and Tribeca Venture Partners.

NYSDFS superintendent Benjamin Lawsky says that the financial regulator believes it is essential that there be proper regulatory standards for virtual currencies that will benefit the industry in the long run. The department wants to unearth illegal activities and ensure that the money of Bitcoin companies customers’ are safe. (Consumers have reportedly been complaining about the speed that virtual currency transactions are being processed.) When there is no other primary regulator NYSFDFS is allowed to establish regulation.

It is important to note that just because a subpoenaed was issued does not mean that any criminal activity occurred.

Bitcoin has been getting quite a bit of federal attention lately. The IRS has been urged to ensure that people pay taxes on Bitcoin, the Securities and Exchange Commission contends that Bitcoin is money and that those that use the virtual currency to run Ponzi scams should end up behind bars, the US Treasury Department has put out guidance for those that transmit Bitcoin money, and recently, a federal judge ruled that Bitcoin is actual money in a Commission case over an alleged Texas Ponzi scam purportedly involving 700,000 Bitcoin. Also, Federal Bureau of Investigation is aware that the currency is proving useful for illicit ventures. The agency and the US Senate Committee that supervises the Department of Homeland Security are both investigating the currency.

Meantime, letters were sent to a number of federal regulatory bodies, including the Commodities Futures Trading Commission, the Justice Department, Homeland Security, the Federal Reserve, the Treasury Department, the SEC, and the Office of Management and Budget over Bitcoin. The Washington Post says that Congress could play a key role in setting up federal rules that would preempt state laws, which would help Bitcoin startups know what rules they need to abide by. That said, policy makers at the state level also are looking more closely at this virtual currency.

Bitcoin
This virtual currency lets users trade goods for online credits. There is no central bank that acts as issuer. Instead, Bitcoins can be generated online via a process referred to as mining.

If you feel you are the victim of Bank Fraud, please do not hesitate to email or call the The Resolution Law Group (203) 542-7275 for a confidential, no obligation consultation.

The Resolution Law Group: Investors Claim They Lost $300M in Ohio Ponzi Fraud Lawsuit

In Ohio, investors are suing Glen Galemmo for allegedly running a Ponzi scam. The securities fraud lawsuit claims that approximately 100 to 200 investors lost more than $300 million. Galemmo is now named in two complaints related to these claims. His wife, Kristine Galemmo, is also being sued, as are his business partner Edward Blackledge and numerous investment funds, LLC, and companies. Plaintiffs are grouped as the Galemmo Victims Fund I and II.

The Cincinnati money manager ran Galemmo Investment Group, Queen City Investment Fund, and other entities for over a year. However, last month, he sent out a mass email to investors explaining that Queen City Investments, which he owns, was stopping operations. He told them not to come to the building because they would not be let in and that his lawyer had told him to avoid contact with them. He said that their inquiries should go through the IRS.

According to the complaint, Galemmo claimed to have over $20 million in assets under management. When the S & P 500 was declining between ’06 and ’11 he purportedly said that he’d made earning returns of 432% by investing in individual stock.

The plaintiffs say that if Galemmo’s return numbers had been accurate, then his compensation should have been over $60 million yet he wasn’t even able to pay small tax bills. They say that documents never indicated dividend income payments and filings didn’t state how much of the fund investors held.

Galemmo previously explained his strategy in a media interview with the Cincinnati Business Courier in 2001 as concentrating on stock that were undervalued but showed “potential for runups” and he allegedly told customers that he would purchase low, sell high, and respond fast to changes in the market. He also purportedly hid the Ponzi Scam via a number of actions, including having different brokers invest assets so it would be hard to get a grasp of his holdings or the performance of investments.

Most of the victims are from Cincinnati. They contend that as part of the Ohio Ponzi scam, Galemmo paid some investors’ money to pay earlier investors and that the money manager and his associates bilked them.

They are alleging misrepresentations and omissions, the making of false statements, failure to disclose material facts, failure to exercise reasonable care, breach of fiduciary duty, failure to invest funds in the manner purported, using funds for unapproved purposes, violating the Ohio Revised Code’s Chapter 1707, and other allegations. They want damages and a declaration by the court that laws were violated, a temporary restraining order of the defendants’ funds, and well as preliminary and permanent injunction.

If you suspect that you were the victim of stockbroker fraud, contact our Ponzi fraud lawyers today and ask for your free case assessment. Please do not hesitate to email or call the The Resolution Law Group (203) 542-7275 for a confidential, no obligation consultation.

The Resolution Law Group: Court Says SLUSA Precludes JPMorgan Mutual Fund Practices, Provident Royalties Ex-Executives to Pay $2.3M, & Two Securities America Advisers Are Rehired

SLUSA Precludes JPMorgan Securities Allegations Involving Mutual Fund Sales
As preempted by the Securities Litigation Uniform Standards Act, the U.S. District Court for the Northern District of Illinois dismissed what would have been a would-be state law class action against JPMorgan Securities LLC (JPM) and related entities over mutual-fund sales practices that allegedly maximized defendants’ revenues at cost to fund investors. Per the securities lawsuit, financial advisers were pressured and given incentives to sell the defendants’ proprietary mutual funds rather than ones run by third parties, placing their own financial interests before those of clients. The would-be class includes advisory clients from 2008 through that paid management fees and had assets in the defendants’ proprietary funds.

The defendants sought to have the case dismissed, contending that the claims alleging fraud related to the buying and selling of securities are precluded by SLUSA. The district court concurred, with Judge John Darrah noting that although the complaint presented state law claims involving breaches of fiduciary duty and contract, the allegations’ substance describes a fraudulent scam to sell securities.

Provident Royalties’ Former Executives to Pay $2.3M, Get Prison Time
Earlier this month, four ex-Provident Royalties executives that were involved in the firm’s infamous $500M oil and gas Ponzi scam, received their jail sentences. They also will have to pay $2.3 million in restitution. The men had pled guilty earlier to conspiracy to commit mail fraud over the financial scheme.

Now, Brendan Coughlin and Henry Harrison must serve 21 months in federal prison, while Paul Melbye will serve 18 months. W. Mark Miller is going to prison for six months with another six in home confinement. (Miller was Provident’s CEO and then president, while the other three men founded and ran the firm. Another co-founder, Joseph Blimeline, is already sentenced to 12 years behind bars.)

Prosecutors contend that investors lost their money because of the way Blimeline handled investor capital and that the other three co-founders attempted to conceal his actions or reveal to investors how much trouble the firm was in, allowing them to bring in another $2.3 million. Many broker-dealers that sold Provident Royalties private placements ended up going out of business as a result of their involvement with the sales.

Two Financial Advisors Resume Working at Securities America
Seven years after leaving Securities America Inc., financial advisers Mark Slattery and Shannon Casey are back. The two of them founded CaseSlattery Wealth Partners and they went on to spend more than 10 years at the independent brokerage firm before taking their business to SII Investment Inc. in 2006. Slattery has made clear that they didn’t leave because of anything to do with Securities America but more because they felt like they needed to switch brokerage firms after leaving American National Bank’s investment department, which they ran, and setting up their own advisory firm.

The return of Slattery, who started his career with LPL Financial Holdings Inc. (LPLA) and whose firm oversees $130 million in client assets, is good for Securities America, which took a huge hit a couple of years back because of its sale of private placements that went awry. After that, a lot of financial advisers left. It wasn’t until Ladenburg Thalmann & Co. Inc. (LTS) went on to buy Securities America from Ameriprise Financial (AMP) that the negative buzz around the brokerage firm stopped. Per the end of this year’s first quarter, Securities America was managing $16 billion in client assets and 1,729 advisers.

The Resolution Law Group represents institutional and individual investors that have sustained losses due to Securities Fraud.

If you feel you are the victim of Securities Fraud, please do not hesitate to email or call the The Resolution Law Group (203) 542-7275 for a confidential, no obligation consultation.

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud

The Resolution Law Group: No one is too big to jail, Wall Street cop says

No company or individual is too big for prosecution and anyone who thinks they are is making a grave mistake, U.S. Attorney Preet Bharara said.

In his capacity running the Southern District in New York, Bharara’s jurisdiction extends over Wall Street and the malfeasance and corruption cases that develop there.

While he is known for a dry wit and quick quips, he turned serious during a discussion Wednesday at the Delivering Alpha conference presented by CNBC and Institutional Investor.

“I don’t think anyone is too big to indict, no one is too big to jail,” Bharara said. “There’s enough moral hazard in the industry. If you give people a blank check and tell them they have a get-out-of-jail-free card because of their size…that’s a very dangerous thing.”

The office has been involved recently in some high-profile cases, particularly the insider-trading probe involving hedge fund SAC Capital, which is run by Stephen A. Cohen.

While he wouldn’t address any cases specifically, Bharara said the best thing anyone can do when they cross paths with his office is cooperate.

“It’s not a laughing matter and it’s not a joking matter,” he said. “You should take it very seriously. The smartest thing you could think about doing at the moment is think about how forthcoming you’re going to be and how cooperative you should be.”

He did, though, have time to toss a few barbs.

On his way over to the conference, at the Pierre Hotel in Manhattan, he said he had some subpoenas with him but ran into “like six corrupt politicians” on the way.

More seriously, though, he cautioned against “armchair quarterbacks” and those in the press who try to read tea leaves and discern the office’s intentions.

And he pledged that the office would not simply seek fines for continued bad behavior.

“If you’re an institution that has on multiple occasions committed misconduct and the first time you get fined and the second time you get fined and the third time you get a fine, at some point you have to be held responsible in a more serious way,” he said. “Otherwise, you don’t get the message.”

If you feel you are the victim of Bank Fraud, please do not hesitate to email or call the The Resolution Law Group (203) 542-7275 for a confidential, no obligation consultation.

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud