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: SEC Sanctions Three Investment Advisory Firms for Custody Rule Violations

The SEC has sanctioned registered investment advisory firms Further Lane Asset Management, Knelman Asset Management Group, and GW & Wade with violating the rules that obligate them to fulfill certain standards while keeping custody of the securities or funds of clients. The regulator says that all three firms either did not keep up client assets with the help of a qualified custodian or failed to work with an independent public accountant to perform surprise exams. They also allegedly committed additional federal securities law violations. All three firms have consented to settle the charges against them.

Per the SEC order, although Further Lane Management, which is based in New York, and its CEO Jose Miguel Araiz did keep up custody of hedge fund assets that it managed along with Osprey Group Inc., they did not set up a yearly surprise exam to verify these assets. They also allegedly committed fraud involving fund-of-funds they controlled and other violations.

Araiz, Further Lane Management, and Osprey Group Inc. have consented to pay disgorgement and prejudgment interest of $347,122. Araiz also has to pay a $150,000 penalty and he is suspended from the industry for a year.

As for Massachusetts-based GW & Waid, the firm is accused of not having the right safeguards required of a client funds’ custodian and failing to identify itself as a custodian in public disclosures or to independent auditors. The SEC says that as a result clients were exposed to possible harm, including one customer who was exposed to third party fraud when someone got into an email account pretending to be that client. The scheme wasn’t discovered until three wires totaling $290,000 were transferred to a foreign bank at the imposter’s request. The client has since been reimbursed. GW & Wade has agreed to a cease-and-desist order and a censure. The firm will pay $250,000.

As for Knelman Asset Management Group in Minnesota, the SEC says that the firm and its chief compliance officer/CEO Irving P. Knelman did not subject the assets of a Rancho Partners I, a fund of private equities it had custody of, to yearly surprise exams. Fund members also did not get quarterly account statements from a qualified custodian.

The SEC is contending a number of securities law violations, including improper cash distributions to Rancho members, failure to perform yearly compliance reviews, and not putting put into place (and executing ) controls to protect client assets. Knelman Asset Management Group will pay a $60,000 penalty and Knelman will pay a $75,000 one. He also has agreed to a bar from serving as a chief compliance officer for at least three years.

Failure by a firm to follow custody rules can jeopardize customers’ assets, placing these funds at risk of fraud and/or financial loss. Contact our securities lawyers if you believe firm error or negligence caused your investment losses.

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: The housing market will continue to suffer until it is fixed by the Courts or the Legislature.

When lawyers for the City of Los Angeles filed a lawsuit against Deutsche Bank two years ago, they criticized the world’s fourth-largest bank as among the city’s worst slumlord and sought hundreds of millions of dollars in penalties and restitution.

Despite the fanfare and rhetoric when the case was brought, the city of Los Angeles just announced that it settled with Deutsche Bank for only ten million dollars and that the settlement money was not going to be paid by the bank.

Geoffrey Broderick, the senior partner of the Resolution Law Group, says “Deutsche Bank foreclosed on more than 2,000 homes in metropolitan Los Angeles between 2007 and 2011. Many homes fell into disrepair and crime increased in the neighborhoods where the foreclosures took place. “

Mr. Broderick adds that “The housing market will continue to suffer until it is fixed by the Courts or the Legislature. Somebody has to fix the problem. That is why The Resolution Law Group continues its fight for homeowners. Homeowners cannot expect the problem to fix itself.”

The Resolution Law Group continues to prosecute ground breaking litigation in Federal Court on behalf of homeowners suing lenders and servicers for, among other things, the illegal use of MERS, robo-signing, and intentionally ignoring underwriting standards and encouraging inflated appraisals.

The Resolution Law Group is currently enrolling clients into the pending lawsuit. For further information, visit its website at

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: Many Financial Fraud Victims Don’t See It Coming, Says Survey

According to people who took a survey a report called the Financial Fraud and Fraud Susceptibility in the United States, while most people have been targeted by financial scammers, nearly half of them don’t see it coming. Almost 24,000 adults in the 40 and over age group participated.

Among the survey results:

• Over 80% of respondents had been approached about taking part in what was potentially financial scam.

• 40% were unable to recognize the typical red flag signs of possible fraud.

• Over 40% found the idea of a 100% yearly investment return very attractive.

• 43% liked the idea of investments that were “fully guaranteed.”

• 11% of respondents admitted to losing money when investing in specifics scams, such as e-mail schemes or sales pitches during free lunches, but only 4% admitted to being victimized by financial fraud when they were directly asked about it.

• Just 45% of those that admitted to being a fraud victim told anyone else about it.

• The most common reasons cited for not reporting what happened were a) not knowing who to tell and b) not thinking that telling anyone would help.

• Educated, younger males with high incomes were the ones most likely to risk big in order to possibly achieve high returns.

If you feel you are the victim of FINRA 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: Professional Athletes, Celebrities Often Targeted for Securities Fraud

The Resolution Law Group PChas represented many athletes and other celebrities who lost millions because of improper handling of their investments. While overspending and poor investing are two common causes for these losses, the rich and famous also make easy targets for securities fraud, which is when our securities law firm steps in.

One reason for this is that many professional athletes and other people that have become famous are not prepared or well informed about how to manage their new wealth. This can make them easy prey for irresponsible or purposely negligent financial advisers.

“We listen to complaints daily about the mishandling of investors accounts,” said Geoffrey Broderick of The Resolution Law Group. “Yet, it is surprising even to me that financial firms and advisors would engage in financial wrongdoing that harms high-profile investors. Many ‘financial sociopaths’ have zero thought about others and, apparently, little concern for their own negative notoriety.”

Just recently, 30 NFL players, including wide receiver Terrell Owens, pursued a Florida broker over a casino project that resulted in over $40 million in losses. In February, ex-boxing heavyweight Mike Tyson filed a securities fraud lawsuit against his ex-advisor and financial advisory firm for allegedly pulling out over $300,000 from their accounts, causing him lose millions of dollars in income. In July, Mike Sweeney, the five-time MLB All-Star filed a securities case against UBS Financial Services (UBS) and his ex-broker there claiming he suffered about $7.6 million in losses.
Other Recent Securities Cases Involving Defrauded Pro Athletes (Investment News):
• FINRA awarded $1.46 million to NBA champion Horace Grant against Morgan Keegan & Co. over mortgage-backed securities and funds that lost up to 80% when the subprime market failed. Fund manager James Kelseo consented to pay $500,000 in penalties for allegedly inflating the securities’ value.

• Dozens of athletes, including NBA player Jason Terry and US Olympic soccer player Heather Mitts are suing SunTrust Bank (STI) and William Crafton Jr. over losses they sustained in a number of Ponzi scams.

Green Bay Packers’ Vince Young is embroiled in a securities case with financial adviser Ron Peoples and ex-agent Major Adams II over $5.5 million losses. He is alleging breach of fiduciary duty, unjust enrichment, breach of contract, and usury.

As our securities fraud law firm mentioned earlier, athletes are not the only celebrities to fall victim to negligent or greedy representatives. Actors Kevin Bacon, Kyra Sedgwick, and John Malkovich, film director Steven Spielberg, candidate and former New York governor and current NY City Comptroller Candidate Eliot Spitzer, and Dreamworks CEO Jeffrey Katzenberg are just some of the wealthy people that sustained losses in the Bernard Madoff Ponzi Scam.

Our securities lawyers work with investors that have sustained losses from securities fraud. We have helped thousands of clients recoup their losses sustained due to the negligence or errors of their financial representatives.  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: Judge Approves Creditor Vote on Jefferson County, Alabama’s Bankruptcy Plan

A US judge has paved the path for the creditors of Jefferson County, Alabama to vote on a plan to conclude what is being called the second biggest municipal bankruptcy in US history. Now, the county’s creditors—they are owed $4.2 billion—have until October 7 to vote.

Most of them have already agreed to the negiotiated plan, which would deliver just $1.735 billion to warrant holders of the county’s sewer system that are owed $3.078 billion. A deal has also been reached over non-sewer debt.

It will be up to US Bankruptcy Judge Thomas Bennett to look into a timeline that would wrap up Jefferson County’s bankruptcy. He is the one who approved the vote on the plan. If creditors the plan, it will need to be confirmed during a hearing that would take place in November.

The debt-reduction plan is based on a settlement reached between Jefferson County, and JP Morgan Chase & Co (JPM), hedge funds, and other creditors. The financial firm and the funds hold most of the $3 billion in sewer warrants. The county wants to cancel these and approximately $2 billion of new debt would replace them.

Per the plan, JPMorgan would get back 31% of the $1.22 billion owed to it. Several hedge funds would get over 80% of $872 million. Meantime, Jefferson County would up sewer rates of 7.4% a year for four years, susceptible to an increase if interest rates see one too.

As for warrant holders that are owed over $500 million and not included in the deal, they are allowed to vote either to collect 65 cents/dollar owed or, if they surrender the right to get money from insurers, they could get 80 cents for every dollar. The reductions in sewer warrants would be the first time investors of municipal bond in this country would be compelled to sustain losses on the principal they are owed because of a US bankruptcy case. Jefferson County’s bankruptcy is linked to a sewer refinancing marred by political corruption.

Unlike with corporate bankruptcies, creditors cannot seize or sell the county’s assets in a municipal bankruptcy and a trustee cannot be appointed. Recently, the city of Detroit, Michigan made national headlines when it filed the biggest municipal bankruptcy in the US to date and sought Chapter 9 protection. The city has about $18 billion in liabilities.

Please contact The Resolution Law Group if you believe you are the victim of institutional investor securities 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