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Articles Tagged with SEC Investigation

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Wedbush Securities, Inc. (CRD # 877) is a financial services and investment firm based out of Los Angeles, California. Wedbush currently has three pending regulatory actions against the firm.

One such action was initiated by the Securities & Exchange Commission in March 2018. The SEC alleges that Wedbush failed to reasonably supervise one of its registered representatives who engaged in manipulative trading for several years. The SEC also alleges that the firm learned of the representative’s activity, but did not have the systems in place to properly investigate it. Specifically, the firm received an email detailing the representative’s role in the fraudulent activity and was aware of multiple customer complaints brought against her, among other red flags alerting Wedbush to her conduct.

The New York Stock Exchange also has a pending action against Wedbush initiated in 2017. The NYSE claims that Wedbush failed to supervise the trading activities of its president. FINRA rules require member firms to create and maintain a system “that is reasonably designed to achieve compliance with applicable securities laws and regulations.” FINRA also requires that its members refrain from engaging in fraudulent or deceptive practices with their customers.

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Wedbush Securities is facing discipline from the SEC, NYSE, and FINRA for a manipulative trading scheme involving its founder, Edward Wedbush. According to a recent article by InvestmentNews.com, however, all three agencies were well aware of problems within Wedbush for many years, but handed down no real, meaningful punishment to the firm. This allowed Mr. Wedbush to continue his scheme for years, hurting many investors along the way.

The complaint filed by the NYSE details a history of Wedbush’s run-ins with the three agencies. In 2015, Wedbush was fined by both the SEC and NYSE for “extensive and widespread supervisory deficiencies,” among other things. Before 2015, the firm “was fined over $2,000,000 by regulators in more than a dozen separate actions involving supervisory failures.”

The NYSE and FINRA’s Department of Market Regulation also conducted an investigation of Wedbush concerning violations of supervisory obligations, books and records keeping, trade mismarking, and other issues. FINRA then referred the investigation to its Legal Section of FINRA Market Regulation; NYSE finally took over the investigation in 2016. This extensive regulatory history shows that all three agencies were on notice of Wedbush’s repeated supervisory failures.

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How the SEC Plans to Tackle Fraud and Protect Retail Investors from Unnecessary Risk on silverlaw.comCEO and President of Woodbridge Group of Companies (“Woodbridge Group”) Robert Shapiro is allegedly invoking his Fifth Amendment right to remain silent after the SEC has made repeated requests for documents from him and Woodbridge Group.

The SEC’s Subpoena for Documents Against Woodbridge Group

The SEC first launched an investigation into Woodbridge Group in November 2016.  The SEC was looking into the “offer and sale of unregistered securities, the sale of securities by unregistered brokers and the commission of fraud in connection with the offer, purchases and sale of securities.”

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What is the Senior Safe Act? on silverlaw.comRafael Santiago (CRD# 2494647) of New York, New York firm Primary Capital, LLC (CRD# 127921) is under investigation after being barred from the securities industry in April 2016.

Santiago, according to his Financial Industry Regulatory Authority (“FINRA”) BrokerCheck report was barred by FINRA after he failed to respond to FINRA’s request for information.  Besides that misconduct disclosure on his FINRA BrokerCheck report, he has two other misconduct disclosures.

Santiago has a FINRA arbitration complaint pending where the claimant alleges $495,000 in losses.  The complaint, filed in September 2015, according to the BrokerCheck report involve the notorious VGTel stock and Santiago’s involvement with VGTel promotion.

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Jason Galanis pled guilty to charges that he convinced an Oglala Sioux tribal entity to issue $63 million in tribal bonds, having associates peddle those bonds on unsuspecting investors and collecting the proceeds of the sale.

Our attorneys opened an investigation into the matter and Burnham Securities, Inc.’s (CRD# 22549) alleged role in the scheme last year.

In May 2016, the Securities and Exchange Commission (“SEC”) filed a complaint against a host of individuals, including notorious securities fraudsters Jason Galanis and his father John Galanis for defrauding investors in sham Native American tribal bonds.

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On February 18, 2016, the FBI raided the headquarters of UDF, the manager of a family of real estate investment trusts (“REITs”) and other funds, sending shares of UDF’s largest fund, United Development Funding IV (“UDF IV”), tumbling 54% before NASDAQ halted trading, according to InvestmentNews.

The FBI raid is the most recent negative activity for the troubled fund manager. In November 2015, UDF’s auditor, Whitley Penn disclosed he would no longer be auditing UDF’s financial statements and UDF board member William Kahane resigned.  A few weeks later in December 2015, Kyle Bass and his firm Hayman Capital Management, posted a report and letter alleging UDF was managed “like a Ponzi scheme.”  UDF responded to the reports, saying that it had been under SEC investigation since April 2014.

On February 5, 2016, Bass and his firm set up the website https://udfexposed.com/ in order to further substantiate his allegations. Additionally, Bass revealed that he had a significant short position in UDF.

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Boca Raton Oppenheimer Employees Settle SEC Investigation by silverlaw.comEach faces a one-year suspension for alleged unregistered sale of penny stocks

On Thursday, the Securities and Exchange Commission announced settlements in the cases of three Oppenheimer & Co. employees in Boca Raton, Florida. Scott A. Eisler, Arthur M. Lewis and Robert Okin allegedly were involved in the unregistered sale of more than 2.5 billion shares of penny stocks for a customer in 2009 and 2010.

The investigation alleges that Eisler should have conducted an inquiry into the customer’s trading activity, as it raised red flags that could point to illegal activity. According to the SEC, the proceeds from these transactions amounted to about $12 million, with Oppenheimer making more than $588,000 in commissions.

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