Securities Arbitration Lawyers Blog

FINRA Warns Investors About Utilizing Automated Investment Tools

August 23, 2015 | Silver Law Group

Earlier this year, the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) released an investor alert related to automated investor tools. While these types of tools provide benefits to investors, they also come with certain risks and limitations.

What are the Risks and Benefits?

Automated investment tools have been utilized by financial professionals for several decades. They include, but are not limited to, personal financial planning tools, portfolio selection or asset optimization services, and online investment management programs. Professionals in the financial industry use them to help build and manage the portfolios of customers.

Investors should be Aware of Bond Liquidity

August 22, 2015 | Silver Law Group

Recently, the Financial Industry Regulatory Authority (FINRA) published an alert for investors relating to bond liquidity. For most individuals who have bonds as part of their portfolio of investments, the liquidity of those bonds is not usually an issue that is considered. But, understanding bond liquidity can be important, particularly in times of market volatility.

What is Bond Liquidity?

Liquidity relates to the ease or difficulty of selling an investment with minimal impact on the price. The easier it is to buy and sell an investment, the more liquid it is. The most liquid assets are considered to be similar to cash because their prices maintain relative price stability when sold on the market. Some of the ways liquidity can be decreased is where there is an imbalance between the number of buyers and sellers or price volatility.

Mutual Fund Sales Violations

August 21, 2015 | Silver Law Group

Improper mutual fund switching and failing to provide mutual fund sales breakpoints can constitute violations of the Financial Industry Regulatory Authority (FINRA). These violations can lead to FINRA arbitration claims, which can result in significant damages being assessed against stockbrokers and financial advisors. Further, these violations can lead to financial loss for investors.

Switching and Breakpoint Violations

Mutual funds are an investment made up of funds that are collected from several investors that are used in order to invest in securities such as stocks, bonds, money market instruments, and similar assets. They are operated by money managers who invest the fund’s capital with the goal of producing capital gains for the investors of the funds. Mutual funds provide investment diversity for an investor, without having to purchase stock from several companies.

J. P. Turner Associates Turning Elsewhere After Firm Closure

August 19, 2015 | Silver Law Group

Cetera Financial Group is placing advisers at Summit and other firms

Independent financial adviser network Cetera Financial Group has taken steps toward relocating advisers at J. P. Turner & Co. after making the decision to close the firm. According to Investment News, about 50 percent of its current advisers have been invited to join Summit Brokerage Services Inc. while the remainder are reportedly being redistributed elsewhere among the firms under Cetera’s umbrella.

The firm’s closure may come as little surprise to those who are aware of its reputation. Investment News InvestmentNews reports Pershing LLC did not want to allow J.P. Turner on its platform. Pershing provides “global financial solutions” to advisers and broker-dealers, according to its website.

Douglas William Finlay Jr. Suspended and Fined by FINRA

August 19, 2015 | Silver Law Group

Allegations include falsifying documents

Douglas William Finlay Jr. is facing an 18-month suspension and fine of more than $15,000 to be paid later, according to FINRA.

According to the disciplinary action documents, Finlay allegedly falsified a customer’s forms by claiming her net worth was more than $1.3 million, when in fact it was about $135,000. On the same form, he allegedly claimed the customer’s income was $150,000 when it was actually $70,000. These alleged falsifications resulted in the firm having inaccurate forms and led to another allegation of recommending an unsuitable transaction.

Class Action Suit Against Citigroup Results in $13.5 Million Settlement

August 17, 2015 | Silver Law Group

Bank accused of misleading investors in proprietary alternative investments

A settlement has been reached in a class action against Citigroup, Inc. resulting in a $13.5 million payout by the banking giant. According to Law360, papers filed August 10, 2015 indicate Citigroup allegedly misled investors by allowing them to buy into the bank’s Corporate Special Opportunities fund without disclosing risky debt – debt that resulted in losses over $400 million.

In the October 2012 complaint filed by plaintiffs David Beach and Christopher Kelly, Citigroup is accused of misleading investors about trades made in the debt of ProSeiben, a German media company. According to the suit, Citigroup was to govern the fund, but violated scaling and concentration restrictions on investments.

Fined and Suspended by FINRA: Douglas J. Dannhardt of Prospera Financial Services, Inc.

August 14, 2015 | Silver Law Group

Broker faces $25,000 fine and 9 month suspension for excessive trading

As a broker in the securities industry for over 29 years, Douglas J. Dannhardt recently settled a FINRA disciplinary action relating to allegations of excessive trading in a customer’s account.

According to the FINRA BrokerCheck website, Dannhardt’s first disclosure event was a customer dispute in June 2012 in which the claimants alleged Dannhardt excessively traded within their accounts, made unsuitable investments, breached their contract, breached his fiduciary duty and failed to supervise their interests. The claim was ultimately settled for $300,000.

Firm Focus: Liberty Partners Financial Services, LLC Fined $20,000 by FINRA

August 14, 2015 | Silver Law Group

Firm Fined and Censured for Failure to Report Required Information

According to FINRA’s BrokerCheck website, Liberty Partners Financial Services, LLC of Bakersfield, California, put itself in the FINRA spotlight by failing to properly follow its own written supervisory procedures regarding Order Audit Trail System (OATS) reporting. Without admitting or denying the findings, Liberty Partners Financial Services, LLC has consented to sanctions, including the fine and the imposition of a censure.

To clarify, OATS is a system developed by FINRA to ensure that customer orders are transmitted to the marketplace in a timely manner. The system tracks each order through every stage of its life from receipt to execution or cancellation. Every firm is required to submit daily electronic OATS reports to FINRA. In the case of Liberty Partners Financial Services, the firm failed to transmit required information to OATS from January 29, 2007 through November 16, 2007.

Lawrence LaBine Under Fire for Alleged Unsuitable Recommendations and More

August 13, 2015 | Silver Law Group

Newbridge securities advisor allegedly has conflict of interest between software company and his clients

According to FINRA, Lawrence Michael LaBine is the subject of a disciplinary action pending against him after an alleged conflict of interest leading to several customer disputes.

In his 29 years in the securities industry, LaBine has had 30 disclosures according to FINRA, many of which are related to his alleged relationship with a sinking software company, leading him to make what clients claimed to be inappropriate recommendations.

Miami Broker Phil Donnahue Williamson Charged with Defrauding Retired Teachers

August 12, 2015 | Silver Law Group

Williamson Accused of Spending Investors’ Money on Personal Expenses

These individuals dedicated their lives to improving the lives of others. Some spent their days teaching in the school system. Some spent their days and nights making neighborhoods safer for the community. And they all believed that when they retired, their safe investment choices would allow them a comfortable retirement.

Unfortunately, their investment adviser had other plans for their money.