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.

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The Resolution Law Group: LPL Financial Places Independent Reps Under Supervision

LPL Financial Inc. (LPLA) is no longer allowing independent representatives to supervise themselves and will impose a fee increase on some 2,200 one-person shops. These changes are among the firm’s steps to restructure oversight and compliance. With over 13,000 registered investment advisers and financial representatives, LPL is the biggest independent-contractor brokerage firm.

The reps that opt to have LPL Financial home office supervise them will pay a fee hike of $4,800 in 2015. Reps with one-adviser shops can also choose to have an existing office of supervisory jurisdiction (OSJ) that is qualified to supervise them, which cost them another 5% on production. They would pay 4% – 30% of gross fees and commissions. Those that pay the most would get more service.

These changes come right before the Financial Industry Regulatory Authority will enact its consolidated supervision rule 3110 that will mandate that firms provide an on-site supervisory structure for single-person OSJs that would employ designated senior principals. Generally, industry regulators have been wary of these solo OSJs because of insufficient oversight over the investment product recommendations that representatives make to clients. LPL spokesperson Betsy Weinberger says these modifications are the latest in the broker-dealer’s efforts to enact better compliance oversight and ensure company success and growth.

In May, LPL was fined $7.5 million by FINRA for email violations. Earlier this year, the firm agreed to settle an REIT case filed by Massachusetts Secretary of the Commonwealth William F. Galvin by paying $2.2 in restitution and a $500,000 fine. The regulator accused LPL Financial Holdings of not properly reviewing the sale of nontraded real estate investment trusts and violating state rules that cap investors’ buys to 10% of their net worth. The sale of shares from at least seven nontraded REITs between 2006 and 2009 were involved.

The state’s regulator would go on to increase that amount to $4.8 million to be paid back to investors, upping the total penalty to $5.3 million after the sales of the nontraded real estate investment trusts from a broader period—1/1/2005 to 2/13—were taken into account.

If you feel you are the victim of Broker 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: Bank of America’s mortgaging servicing unit systematically lied to homeowners, fraudulently denied loan modifications, and paid their staff bonuses for deliberately pushing people into foreclosure.

Bank of America’s mortgaging servicing unit systematically lied to homeowners, fraudulently denied loan modifications, and paid their staff bonuses for deliberately pushing people into foreclosure.

That isn’t “news” worthy of a press release. Anyone paying attention already knows all of this to be true.

The news is that six former Bank of America employees submitted sworn affidavits in a civil lawsuit pending in Federal Court in Massachusetts that confirmed that Bank of America engaged in deceptive practices to string along homeowners.

Geoffrey Broderick, the senior partner of the Resolution Law Group says, “We continue hear these types of stories every day about homeowners who have been frustrated by the process of trying to negotiate a loan modification.” Broderick added, “The sworn affidavits confirm what we already knew. Perhaps, now, Bank of America will be held accountable for its shameful conduct.”

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 www.TheResolutionLawGroup.com

The Resolution Law Group: UBS, Morgan Stanley, Merrill Lynch, and Other Brokerage Firms Subpoenaed by Massachusetts Securities Regulator in Probe of Complex Investments Sold to Seniors

William Galvin, the Massachusetts Secretary of the Commonwealth, is subpoenaing 15 brokerage firms in its probe into complex products that were sold to older investors. Morgan Stanley (MS), LPL Financial (LPLA), Merrill Lynch (MER), UBS AG (UBS), Bank of America Corp. (BAC), Fidelity Investments, Wells Fargo & Co. (WFC), Charles Schwab Corp (SCHW), & TD Ameritrade (AMTD) are among the broker-dealers that received notices from the state. The subpoenas are seeking information about investments that were sold to Massachusetts seniors, as well as data about the firms’ compliance, supervision, and training.

Galvin noted that when such investments are sold to inexperienced investors, this creates potential “accidents waiting to happen.” He is among a number of regulators that have expressed worry about how many complex products are being marketed to unsophisticated investors that want higher returns during this era of low interest rates. These financial instruments tend to be among brokers’ favorites because they garner higher commissions.

Already, Galvin has brought in over $11 million in fines from brokerage firms that sold illiquid real estate investment trusts to investors in Massachusetts. This type of REIT is hard to sell when a customer wants out. Galvin said that it was during that probe his staff discovered there were a lot of brokers, who were not only inadequately supervised, but also they were selling complex financial instruments that went beyond even their comprehension. The Massachusetts’s regulator office will continue to look into REITs, in addition into oil and gas partnerships, structured products, and private placement deals.

There was a time when such investments were only for sophisticated investors with an at least $1 million net worth. Now, in the wake of the financial crisis, complex financial instruments have been available to more people, including a lot of older Americans who want to offset losses that their retirement portfolios sustained when the economy tanked.

Senior Investors
It is important for seniors to note that not all investments are suitable for them and their needs. Unfortunately, older investors make easy targets for investment fraud, in part because they tend to have large nest eggs for retirement, and, also, because some of them may have lost the ability to discern when they are being taken advantage of.

Sometimes senior investors are the target of an actual securities scam. On other occasions, they were unfortunate enough to work with a financial adviser that, out of ignorance or hoping to make a bigger commission, persuaded them to get involved in financial products that came with risks that were greater than what their funds could handle/or and incompatible with their investment goals.

At The Resolution Law Group, we help older investors of elder fraud recoup their losses.  If you feel you are the victim of Elder 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: Citigroup Settles $3.5B MBS Lawsuit with FHFA, JPMorgan Unit Fined $4.64M, Court Won’t Dismiss USB Whistleblower’s Action, & Ex-Goldman Sachs Executive to Pay $100K Over Pay-To-Play Scam

Citigroup (C) Settle $3.5B securities lawsuit Over MBS Sold to Freddie Mac, Fannie Mae
Citigroup has settled the $3.5 billion mortgage-backed securities filed with the Federal Housing Finance Agency. The MBS were sold to Freddie Mac and Fannie Mae and both sustained resulting losses. This is the second of 18 securities fraud cases involving FHFA suing banks last year over more than $200B in MBS losses by Fannie and Freddie. The lawsuit is FHFA v. Citigroup.

J.P. Morgan International Bank Ltd. Slapped with $4.64M Fine by UK Regulator
The UK Financial Conduct Authority says that JPMorgan unit (JPM) J.P. Morgan International Bank Ltd. must pay a $4.64 million fine for controls failures and systems involving its retail investment advice and portfolio investment services. Per the agency, financial firms that don’t maintain the proper records not only put their clients at risk of getting involved inappropriate investments, but also they don’t have a way to determine whether the proper advice was given. Fortunately, investors were not harmed despite the risk exposure.

The UK regulator says the problems went on for two years. Among the problems identified: outdated files, insufficient key client data, inadequate record system, inadequate suitability reports, and insufficient communication with clients about suitability. FCA says that it wasn’t until after it identified the problems and notified the JP Morgan unit about them that the necessary modifications were made.

Whistleblower’s Retaliation Action Against UBS Securities Can Go Ahead, Says Court
A district court judge made the decision not to dismiss ex-UBS Securities LLC (UBS) senior strategist Trevor Murray’s retaliatory action against his former employer. Murray was allegedly fired after he told his managers about possible securities law violations.

He contends that he was let go because he refused to write reports about UBS’s commercial MBS that were “more favorable to the financial firm.” Murray sued, arguing that the action violated the Dodd-Frank Act’s whistleblower protection provisions. UBS then tried arguing that Murray wasn’t a whistleblower because he didn’t tell the SEC about the alleged violation, but the judge said that a whistleblower is allowed to report alleged violations to governmental authorities and persons other than the regulator.
Former Goldman Sachs VP Consents to Pay $100K Payment SEC Pay-to-Play Action
Neil M. M. Morrison, an ex-Goldman Sachs & Co. (GS) vice president, will pay $100,000 to resolve an SEC action accusing him of taking part in an alleged pay-to-play scheme involving former Massachusetts state Treasurer Timothy Cahill’s gubernatorial campaign. The Commission said that he solicited the state’s underwriting business while “engaged” in Cahill’s campaign and that his use of the financial firm’s resources and work time are considered campaign contributions. By settling, Morrison is not admitting or denying the allegations.

Meantime, Goldman will pay approximately $12 million to settle the related proceedings against it, as well as $4.5 million to Massachusetts Attorney General Martha Coakley. Even though the firm wasn’t allowed to take part in municipal underwriting business for two years after Morrison’s alleged violations, the SEC says that Goldman still took part in 30 underwriting contracts with issuers in the state and made about $7.5 million in fees.

If you suspect that you are the victim of Securities Fraud, do not hesitate to email or call please contact The Resolution Law Group at (203) 542-7275 for a confidential, no obligation consultation. Our attorneys are here to help institutional investors recoup losses that are a result of a financial scam or negligence.

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: SEC Charges Ex-LPL Financial Adviser With Defrauding Investors of $2M

Blake Richards, a former LPL Financial LLC adviser, is now facing Securities and Exchange Commission charges for allegedly defrauding investors and misappropriating about $2 million from at least seven customers. Most of the funds that were misappropriated were life insurance proceeds from dead spouses and retirement funds. Last week, the regulator filed an emergency action asking a judge for a temporary restraining order, which was granted. Now, Richard’s assets have been frozen.

Per the SEC, Richards told investors to write checks to BMO Investments and Blake Richards Investments, which he controlled. They expected that he would put their money in variable annuities, fixed income assets, and common stock. Instead, contends the agency, none of these investments were ever executed and Richards allegedly took the money and used it for his personal spending.

The Commission is accusing Richards of violating the antifraud provisions of the Securities Act of 1933, the Securities Exchange Act of 1934, and Rule 10b-5 thereunder. The SEC is also alleging Investment Advisers Act of 1940 and the Advisers Act violations.

The complaint refers to Richards as a marginal broker at LPL Financial. Noting that his production at the firm has been “virtually nonexistent” in the last few years, SEC says that his case is one involving “selling away,” with the broker using activities outside the firm to bilk clients. (Richards even allegedly brought pain medication to the husband of one client during a snowstorm to build trust).

Richards’ other misconduct allegedly included:

• Giving an investor a bogus statement on what was supposed to be LPL letterhead.
• Making a false statement to an investor that the latter had funds in a Jackson Life Insurance product.
• Giving an investor a business card that designated him as an AAMS. Richards is not an Accredited Asset Management Specialist.
• Making a false statement to LPL that he cleared investors’ funds via Goldman Sachs & Co.

An LPL spokesperson says that Richards was reported to the financial firm by another firm adviser. The brokerage firm fired the following day reported him to FINRA, the SEC, the FBI, and other authorities.

This is just one more indicator of allegedly poor supervision involving LPL Financial, which was not named in the complaint against Richards. Just last week, the financial firm was ordered to pay $7.5 million for nearly three dozen e-mail system failures. Also, Massachusetts regulators announced that instead of paying investors $2.2 million in restitution over the improper sale of nontraded real estate investment trusts, it would have to pay $4.8 million.

If you are an LPL investor who has suffered losses that you suspect may be a result of errors or negligence on the part of the firm or one of its brokers, please contact our securities fraud law firm right away. 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

Ameriprise Financial, Securities America, & Three Other Brokerage Firms Reach $9.6M Non-Traded REIT Securities Settlement with Massachusetts Financial Regulator

Secretary of the Commonwealth of Massachusetts William Galvin announced today that the state has reached a $9.6M securities settlement with five independent brokerage dealers—Ameriprise Financial Services Inc. (AMP), Commonwealth Financial Network, Lincoln Financial Advisors Corp., Royal Alliance Associates Inc., & Securities America Inc.—over the allegedly inappropriate sale of nontraded real estate investment trusts to investors. $8.6M of this is restitution to them.

Galvin says that the investigation, which was triggered by complaints from customers, led to the discovery of a “pattern of impropriety” in the sale of these securities by independent broker-dealers where supervision has been hard to “maintain.” As part of the nontraded REIT settlement, Ameriprise will pay $2.6 in restitution and a $400K fine, Securities America will pay $778K in restitution and a $150K fine, Royal Alliance will pay $59K in restitution and a $25K fine, Commonwealth Financial Network will pay a $2.1M restitution and a $300K fine, and Lincoln Financial will pay a $504K restitution and a $100K fine.

The non-traded REIT agreement with these independent brokerage firms comes just three months after Galvin settled a similar securities fraud case with LPL Financial Holdings Inc. accusing that financial firm of inadequately supervising their brokers tasked with selling the financial instruments. LPL Financial agreed to pay $2.5M in restitution and a $500K administrative fee over seven nontraded REITs that were sold.

The state of Massachusetts contends that some sales allegedly violated state regulations that don’t allow over 10% of an investor’s worth to be held in specific securities, while others purportedly violated the requirements for liquid net worth of investors that are established in prospectuses. Firm employees and brokers tasked with looking over the transactions were not only allegedly inadequately supervised, but also they lacked the necessary education about nontraded REIT transactions. This week, a spokesperson for Secretary Galvin announced that the financial firm has agreed to pay another $2.6 million in restitution.

If you, your family, friends, neighbors or associates have been subjected to Securities Fraud, please contact The Resolution Law Group at (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