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.

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The JOBS Act: SEC Proposes Raising Small Stock Deal Limits

The US Securities and Exchange Commission wants to up by 10 times how much money companies can raise via a simplified public offering. Under their proposal, firms could raise up to $50 million, instead of just $5 million, while giving investors less disclosures than what public companies are obligated to provide. The measure, which has just been issued for public comment, is the Jumpstart Our Business Startups Act’s last big requirement.

The JOBS Act was established to assist small business in going public and raising capital. Currently, it lets the SEC preempt states from overseeing Regulation A offerings if only “qualified” buyers are allowed to purchase the the deals or if they are offered via a stock exchange. However, the SEC has to approve the offerings and companies employing the exemption have to get approval by regulators in each state where shares were sold. It is this review by the states of Regulation A deals that reportedly have been a biggest hassle because each state has its own standards for whether to approve offers.

It was Congress and the 2012 Jumpstart Our Business Startups Act that mandated revisions to the Commission’s Regulation A so that investors will want to get behind smaller companies. According to a Government Accountability Office report, in 2011, the number of businesses trying to raise money under the current rule dropped to 19—way down from the 116 businesses that did in 1997. Some said that the requirements were too strict for how much money they were allowed to raise.

With the SEC’s proposal, referred to as “Regulation A-plus,” deals between $5 million and $50 million would be exempt from state oversight but they would have to meet additional regulatory obligations, such as they would have to investors audited financial statements, reports about material events, and semi-yearly and yearly reports. Investors would have a cap on how much stock they could buy, with individual investments limited to not greater than 10% of a person’s net worth or yearly income. Securities could be traded freely.

Deals under $5 million would still have to undergo state review. However, companies could choose to get out of state scrutiny of smaller deals if they submit financial statements that have been audited and contend with the other requirements that larger offerings have to meet.

The SEC’s unanimous vote on this proposal is the third rule that the regulator has brought forward under the JOBS ACT. Previous proposed rules involved one to allow equity crowdfunding and removing the ban on advertising of private stock deals.

The Resolution Law Group is a securities law firm that represents institutional investors and high net worth individuals seeking to pursue their financial losses caused by securities fraud. Contact us today.

The Resolution Law Group: US Hedge Fund Industry is Worried About Tax Implications Under EU Directive

The hedge fund industry in the United States is worried about how managers will be treated under the proposed compensation guidance issued by the U.K. Financial Conduct Authority about the implementation of the E.U. Alternative Investment Fund Managers Directive. The Managed Funds Association is primarily concerned with how tax is dealt with as it pertains to compensation paid to American and other non-EU hedge fund managers.

The Managed Funds Association wrote a letter to the FCA asking that the agency make sure that deferral requirements factor in tax implications for fund manager employees in the jurisdiction of covered employees. The MFA wants remuneration provisions to EU fund managers restricted and not extended to their delegates.

The MFA is worried about practical issues and costs that can occur when the hedge fund regulatory regime and the taxation regime for LLPs and Partnerships in the UK interact. In that country LLPs and Partnerships are treated as tax-transparent, with the result being that partners of partnerships and partnerships of LLPs are taxed to the degree where profits are distributed to them regardless of which one did the distributing. MFA is concerned that because of the deferred remuneration provisions, LLP members and partners could end up with tax liabilities on income that is deferred without corresponding incomes to cover the liabilities.

The association is uneasy about use of the definition of “partner” for a US hedge fund manager that may be owner/managed in the same way as LLPs or UK partnerships but with another legal form. The MFA wants the FCA to modify the definition of partner so that other forms of entity with characteristics that resemble LLPs and partnership are included or that there be a provision anticipating that non-UK fund managers can interpret the relevant provisions and definitions according to the proper legal forms of these fund managers.

The Resolution Law Group is an institutional investment fraud law firmthat works with investors in the US, as well as those abroad with securities claims and lawsuits against firms in this country. We have helped thousands of clients recoup their losses. Contact our hedge fund fraud lawyers today.

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: US Will Likely Arrest Two Ex-JPMorgan Chase Employees Over Trading Losses Related to the London Whale Debacle

The United States Government is expected to announce criminal charges against two ex-JPMorgan Chase & Co. (JPM) employees over allegations that they tried to cover up trading losses last year related to the London Whale fiasco. The ex-employees are Javier Martin-Artajo, the executive who was in charge of supervising the trading strategy, and Julien Grout, a trader that worked under him. Prosecutors also may impose penalties on the investment bank over this matter.

The securities fraud allegations stem from a probe into whether JPMorgan employees at its London offices tried to inflate certain trades’ values on the banks’ books, and charges could be filed over the falsification of documents and the mismarking of books. The criminal probe also has looked at whether the firm’s London traders engaged in the type of market manipulation that let them inflate their own positions’ value.

JPMorgan first revealed the losses at the London office May 2012. The trades were made by Bruno Iksil, dubbed the London Whale because of the vastness of his holdings. The bank would go on to lose over $6.2 billion when the trades failed. Other traders also were purportedly involved. They used derivatives to bet on the health of huge corporations.

Martin-Artajo oversaw Iksil, while Grout helped the latter value his trading book. The bank fired all three men last year, while several senior executives were reassigned or left the bank. CEO Jamie Dimon suffered a 50% pay cut.

Meantime, The FBI and the US Justice Department also have been investigating the trading loss, with prosecutors obtaining Iksil’s help. Reuters says that Iksil will not be charged.

Also, JPMorgan is working on a deal with the SEC for the latter to end its probe into the trading loss. However, according to a source, the agreement still could include allegations of failures to supervise, execute proper controls, share information internally, and other claims, and the firm could be reprimanded and ordered to pay a fine. The New York Times is reporting that the regulator wants the firm to admit wrongdoing, which is a departure from the SEC’s general “neither admit nor deny wrongdoing,” policy. The Commission has been trying to hold firms and their representatives more accountable in certain cases, especially in the wake of concerns that they get off too easily when it comes to financial fraud and other wrongdoings.

All of this comes five months after a Senate subcommittee published a 301-page report accusing the bank of hiding losses, misleading investors, and fooling regulators. In Britain, the Financial Conduct Authority also intends to fine JPMorgan.

Following the London Whale scandal, the bank has reworked its controls. It also began its own probe into the trades, giving over its findings to the Senate and federal authorities.

Last year’s trading loss brouhaha is not the only regulatory matter JPMorgan is dealing with. It is facing inquiries from two European countries, a state regulator, and several federal agencies here. Authorities also are looking at JPMorgan in connection with its mortgage business during the financial crisis and whether there are problems with its debt collection practices.

Please contact The Resolution Law Group if you believe you are the victim of Broker fraud. Our stockbroker fraud law firm represents corporations, financial firms, partnerships, banks, municipalities, retirement plans, school districts, large trusts, charitable organizations, high net worth individuals, and private foundations. Your case assessment with our securities lawyers is free.  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: Financial Firms in the Headlines: UBS Charges Financial Planning Fees, MF Global Customers Seek to Cap Ex-Leaders’ Legal Defense Expenses, Ex-Thompson REIT CFO is Suspended

UBS Wealth Management Customers Now Paying a Fee for Financial Plans
UBS (UBS) Wealth Management Americas is now charging a fee for the financial plans that advisers are customizing for the firm’s clients. According to the head of the wealth management advisor group head Jason Chandler, this new policy wasn’t implemented to up firm revenues, although it has. Rather, it was set up to increase the level of commitment clients have to their plan, which he say is what happens when they have to pay money for one.

To date this year, the company has made $3 million in financial plan fees, up from $1.4 million from last year. The average fee amount is $4,100. Advisers who design the financial plans are getting 50% of the fee that they charge, while 15% of the fees earned from the plans end up in expense accounts for them.

MF Global Customers Seek to Cap Legal Defense Bills of Brokerage Firm’s Former Executives
MF Global Inc. customers want to limit how much the former top executives of the failed brokerage firm pay for their legal defense. In a court filing, attorneys for the customers expressed concern at how quickly the legal costs of Chief Executive Jon Corzine and other former executives are growing.

The MF Global clients are suing about two dozen former managers for their alleged misconduct that they believe caused the broker-dealer’s collapse. Of the $200 million in insurance coverage that the firm has to cover legal judgments, $30 million has gone toward the ex-executives defense and they are asking for another $10 million. The brokerage customers want a $40 million cap placed on the defense costs. They are worried that the more the ex-MF Global executives spend toward defense the less money there will be to go toward their own $300 million shortfall they are facing and they won’t be made whole for the financial losses they sustained.

Ex-Thompson REIT CFO Gets Five-Month Securities Industry Suspension
The Financial Industry Regulatory Authority is suspending Wendy J. Worcester from the securities industry for five months. Worcester was previously chief financial officer of real estate investor Tony Thompson‘s nontraded real estate investment trust, as well as co-chief compliance officer of TNP Securities LLC, which is the brokerage firm controlled by Thompson. The SRO says that Worcester did not perform independent and sufficient due diligence into Thompson’s real estate dealings, including three Thompson National Properties LLC-sponsored private placement offerings. This caused her to allegedly compromise TNP Securities’ independence.

According to FINRA, When Thompson National Properties was in financial trouble in 2009, suffering nearly $25.8 million in losses and a negative net equity of $13.6 million while launching REIT The TNP Strategic Retail Trust Inc., two Thompson private placement note programs would go on to pay old investors with either new investor funds or money from some other part of the business. Worcester is settling the REIT securities case without denying or admitting to the allegations.

Please do not hesitate to email or call the Securities Fraud at 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: Morgan Stanley Unveils Trade Flow Insights Product to Give Brokers Better Sales Data

Morgan Stanley (MS) has a new trade tool to help brokers better understand who is buying and selling what financial products. Trade Flow Insights was recently rolled out to over 16,000 financial advisers.

The tool provides information on leading sales and purchases that have been executed, in addition to asset allocation. Advisers can even filter data to determine which products were the most popular in the last week or month. Client age, asset class, and household assets are just some of the filter categories.

Not only will Trade Flow Insights let representatives know what products are most in demand, but also it will inform them of which financial instruments their coworkers are most successful with. Some brokers are saying that having this type of insight is beneficial, helping them become aware of current trends while causing them to probe more deeply into the investment options out there before making a buy for an investor.

Still, other advisers are concerned that their trades and strategies will no longer become private. Respecting these concerns, Morgan Stanley has designed Trade Flow Insights so that single-day activity won’t be accessible. Activity surrounding a certain investment will only show up when at least 50 advisers have been involved in at least 4,000 client accounts.

The tool could also be beneficial for newer advisers, who may be able to avail from the experiences and knowledge of their more seasoned counterparts.

Securities Fraud
If you suspect that your investment losses are a result of unsuitable recommendations, unauthorized trading, misrepresentations and omissions, inadequate supervision, breach of duty, failure to execute trades, overconcentration, negligence, registration violations, and margin account abuse, you may have grounds for a securities fraud claim or lawsuit. Contact The Resolution Law Group today for a free, no obligation consultation www.TheResolutionlawGroup.com

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