According to news stories, biotechnology incubator Fortress Biotech Inc. raised $240 million by using its own brokerage firm, National Securities Corporation, to sell investments to thousands of investors, according to an investigation by Reuters. The company is alleged to have employed analysts who were bullish on their own companies without adequately disclosing this conflict of interest. Continue reading ›
For years, financial advisers have walked a fine line when receiving financial inheritances from their clients. Unfortunately, the line between an adviser’s professional obligations and their personal interests is very easily blurred—a reality that leads to complicated fraud and ethics violations.
In this blog post, we’ll look into the legal issues associated with financial inheritances from clients by financial advisers, potential solutions to the problem, and how a group of bipartisan lawmakers are taking action and calling to the Financial Industry Regulatory Authority (FINRA) for reform. Continue reading ›
Has a broker or financial advisor asked to be a beneficiary in your will? Financial advisors should not be participating in a client’s estate.
Senators Catherine Cortez Masto, (D-Nev.), Mike Rounds, (R.-S.D.), Tina Smith, (D-Minn.) and Chris Van Hollen, (D-Md.) recently sent a formal letter to FINRA requesting that the agency draft and enact new regulations for both advisors and firms prohibiting them from receiving these types of inheritances, and requiring any inheritances to be forfeited. It also requests that the representatives and/or firms pay large fines, and restrict individuals from serving as financial advisors and representatives in the future. Current regulations allow brokers and financial representatives to accept inheritances from their clients. However, many brokerage firms prohibit the practice. Continue reading ›
The Massachusetts Securities Division has charged Cape Cod investment advisor Francis Weller, Jr. (CRD#: 4852071) and his company, Weller Asset Management, with violating their fiduciary duty to act in their clients’ best interest and failing to disclose conflicts of interest.
Weller and his company had an arrangement since 2009 with Missouri-based broker-dealer Stifel, Nicolaus & Company. One of its local representatives overcharged his Weller Asset clients and utilized Stifel’s resources. Continue reading ›
The Securities Industry and Financial Markets Association has stated that in 2019, it plans to keep pressure on state officials who consider following Nevada in imposing a higher standard of care on broker-dealers. Leaders of the organization said that after praising a federal proposal that has been in the making for decades, SIFMA is committed to heading off state efforts that could overlap with the proposal, known as the Regulation Best Interest.
For years, the industry has disagreed about how to ensure that broker-dealers and investment advisers act in their clients’ best interests when recommending investments. In April, the U.S. Securities and Exchange Commission introduced Regulation BI, which is a proposal that would put checks on brokers and advisers.
“We would hope that states will pause, let the SEC act and then figure out how that’s going to protect their constituents within their states,” SIFMA’s president and CEO, Kenneth Bentsen said. “It is an issue of high interest to us and something we’ve been very involved in.”
Karl Ronald Foust, Jr. (CRD #1010291) is a formerly registered broker and investment advisor who was last registered with H.D. Vest Investment Services (CRD #13686) of Boca Raton, FL. His previous employers include Gunnallen Financial, Inc. (CRD #17609) of Delray Beach, FL, Thomas James Associates, Inc. (CRD #15609) and Apple Financial Corporation (CRD #10375). No current employment information is available. He has been in the industry since 1981.
Foust currently has seven disclosures on his record, all customer disputes, one of which was closed without action. These customer disputes were all filed in the period between June 2017 and July 2018.
All of these disputes (including the closed case) are currently listed as “pending.” The common thread through each of these claims is Foust’s recommendations of the client’s investments in Wimbledon Health Partners, LLC, and failing to disclose his own involvement with the firm, a conflict of interest. Payments promised were not made to clients, and total damages of these claims comes to $1,198483.34.
What the new code of conduct rule entails and how it could affect elderly investors
Up until earlier this year, the Department of Labor had a rule in effect for fiduciaries that specified that they couldn’t earn commissions unless the advice they offered was in the best interests of their clients. In addition, the rule mandated that they could only earn reasonable compensation and must be transparent about this compensation as well as the products they sell.
Former broker James Albert Pettit (CRD #733916), formerly of Ameriprise Financial Services, Inc. (CRD #6363), was barred by FINRA on 3/26/2018. This is the result of failing to comply with an arbitration award, and providing proof of the compliance. The bar is indefinite, and in all capacities until the award is paid.
Pettit is the subject of two FINRA regulatory actions and one by the state of Connecticut.
Pettit’s former employers include:
Recently there has been a trend in fraud surrounding various types of pensions. Since individuals can receive extensive incomes annually through various form of pensions, this has attracted misconduct by financial advisors and others frequently in the form of high fees and undisclosed conflicts of interest. It is important for individuals to be aware of the various forms of pension fraud that are occurring in the marketplace today. If you suspect that you have been a victim of any of the pension frauds listed below, it is important to speak with an attorney to see your potential rights of recovery.
Employer Pension Frauds
Employers can commit pension fraud in many different ways. There can be fundamental misrepresentations made about if they have funded pensions, miscalculation of employees’ pension benefits can occur, and they can mismanage pension investments that cause detrimental losses to pension funds. One of the more severe kinds of employer pension fraud that has occurred is when the employer borrows funds from employees’ pension funds to cover losses in the company’s business.
Wells Fargo has disclosed a federal investigation into sales practice violations in customer 401(k)s after a whistleblower cited sales problems in customer accounts.
Multiple potential violations are disclosed including improper referrals, excessive fees and undisclosed conflicts of interest. In the current bull market, many investors did not appreciate the fees being charged as their accounts were profitable and fees can be difficult to calculate.
Silver Law Group represents institutional and retail investors in claims for portfolio mismanagement, stockbroker misconduct and investment fraud. If you believe your portfolio was mismanaged, excessively traded or your financial advisor purchased esoteric or high cost alternative investments, call us to discuss your legal rights toll-free (800) 975-4345 or e-mail at SSilver@silverlaw.com.