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Articles Tagged with securities fraud attorney

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iStock-594049560-300x200Atria Wealth Solutions, Inc. is a wealth management holding company with subsidiaries that serve independent finanicial advisors and financial institutions. The company has recently agreed to acquire NEXT Financial Group Inc., an independent broker-dealer based in Houston. NEXT Financial Group serves more than 500 independent advisors with approximately $13 billion assets under administration.

Financial terms for this transaction have not been disclosed. However, it is expected to close during the beginning of 2019 and is subject to customary closing conditions.

Atria will acquire 100% of NEXT and all of its sister companies, NEXT Financial Insurance Services Company and Visionary Asset Management Inc. In taking on these new companies, Atria will serve nearly 2,000 advisors with approximately $64 billion in assets under administration.

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FINRA-Permanently-Bars-Gary-Eugene-Donovan-for-Stock-Manipulation-300x200The SEC obtained a preliminary injunction against two individuals and their companies on October 26, 2018. The fraudulent actions of these individuals resulted in more than $165 million of illegal sales and stock in at least 50 microcap companies.

According to the SEC, U.K. citizen Roger Knox and his Swiss-based company, Wintercap SA, was involved in antifraud and violating federal securities laws. German citizen Michael T. Gastauer and six of his entities were involved in aiding and abetting Knox and Wintercap’s violations of the same provisions. The court had originally entered a temporary restraining order and asset freeze on October 2, 2018.

The SEC’s complaint states that Knox and Wintercap aided microcap securities holders in evading federal securities laws that restrict sales by large shareholders. Knox and Wintercap gave anonymous access to brokerage accounts in order to sell shares in the U.S. market. They also helped sellers conceal the amount of stock they wanted to sell. Gastauer allegedly established several U.S. corporations to aid and abet the fraud, and allowed Knox to use certain bank accounts to distribute the proceeds of his illegal stock sales.

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https://www.silverlaw.com/blog/wp-content/uploads/2017/07/Have-You-Lost-Money-with-Cantone-Research-Inc.-300x199.jpgOn October 25, 2018, the SEC obtained a court order to halt the alleged fraudulent actions of a registered stock broker and his companies.

The complaint by the SEC states that Sean Kelly used his companies, Lion’s Share Financial of East Cobb, Inc., Lion’s Share and Associates, Inc., and Lion Share Tax Services, LLC, to raise $1 million from a variety of investors. There were 12 investors, which included retirees. Kelly promised he would invest their funds into different investment products, but his promise was a lie. Instead of investing their funds into private placements and real estate, he used it on his own personal expenses. He continued to steal their money after receiving a SEC subpoena, and didn’t show up to his scheduled testimony. He used their money to buy Super Bowl tickets, expensive vacations, and also for cash withdrawals. The SEC alleges that Kelly has engaged in this fraud scheme since 2014, when he was still affiliated with Capital Financial Services.

Kelly was a representative of Center Street Securities from August 2017 to October 2018. He worked with Capital Financial Services from August 2012 to August 2017 in Marietta, Georgia. His records show that he filed for bankruptcy twice, in 2009 and in 2014.

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Stockbroker-Misconduct-1-300x150-300x150The 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.”

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https://www.silverlaw.com/blog/wp-content/uploads/2017/07/Broker-Sylvester-King-Jr.-Resigns-from-Wells-Fargo-Advisors-LLC-Concurrent-with-FINRA-Suspension1-300x200.jpgThe National Association of Insurance and Financial Advisors of New York State Inc. (“NAIFA”) filed a lawsuit on November 16 in the New York Supreme Court alleging New York regulation requiring insurance agents and brokers to act in the best interest of their clients when selling life insurance and annuity products is unfair. It is arguing that the state’s Department of Financial Services overstepped its boundaries by promulgating the rule without legislative or constitutional authorization.

The suit also states the insurance sales standard contradicts existing New York insurance law, as it requires insurance sales professionals to prioritize their clients before their firms. Many investors remain confused why insurance agents or financial advisors are not required to act in the clients’ best interest.

Donald Damick, an agent with Nationwide Insurance Companies and past president of NAIFA New York State, has stated that this rule has put him and many other in an impossible situation, as agents are under contractual obligations to act as an agent of the insurer, not of the customer. “I can lose my NYDFS license if I do not follow the state’s insurance statutes, and now I can also face penalties under the regulation’s best-interest standard,” he said.

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Churning-1024x683-300x200The U.S. Securities and Exchange Commission has accused Emil Botvinnik of taking $3.7 million in a fraudulent scheme involving excessive, high-frequency trading. On November 7, 2018, he asked a New York federal judge to toss the suit because he claimed its allegations do not meet the pleading standard for fraud.

The claims against Botvinnik state that he wrongfully used his clients’ accounts while he was employed at Meyers Associates LP. However, Botvinnik denies these claims and he stated that there are no specific allegations that proves his clients were the type of unsophisticated investors who would not benefit from high-frequency trading. He also stated that his clients may only have been simply unaware of the trading strategy and its risks.

The SEC said that from June 2012 until November 2014, Botvinnik solicited five customers to open securities trading accounts for which he claimed he would employ a profitable trading strategy. He then implemented the strategy of frequent, short-term trades that forced significant costs and commissions on the investors. For example, the accounts would have had to reach an annual return of between 31 and 150 percent just to pay off the transaction costs that built up from the trading strategy. This type of trading is frequently referred to as churning.

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When you purchase insurance from a broker, investment advisor or insurance agent, shouldn’t they have your best interests at heart?

Proposed-Fiduciary-Duty-Rule-Poised-to-Pass-Leaves-Brokers-Seething-300x199New York’s Regulation 187 was designed to do just that, and could take effect as early as August of 2019. In it, agents and brokers are required to have the “best interest” of the consumer in mind when offering recommendations for their life insurance policies and annuities. Agents and brokers are not to consider any financial incentives or compensation that they might receive as a result of the financial products they offer while discussing different options for annuities and policies.

While Regulation 187 is intended to supplement New York’s existing consumer protection laws and “fill in the gaps” of regulations, it isn’t being met with resounding applause by Wall Street. According to one trade industry group, a number of issues exist with the new law that can be problematic.

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FINRA recently fined LPL Financial (CRD #6413) for failing to disclose customer complaints and for failures in the firm’s anti-money laundering (AML) program.

David-Levy-of-Titus-Rockefeller-LLC-Permanently-Barred-from-Broker-Activity-After-Long-Career-of-Suspicious-Activity-300x200A misunderstanding with FINRA’s rule caused LPL to ignore dozens of customer complaints. The firm incorrectly failed to file and/or update registered representatives U4 or U5 forms to disclose dozens of reportable customer complaints that should have been filed. These claims requested compensatory damages of $5,000 or more. A representative for FINRA stated, “LPL incorrectly construed this phrase to mean that the firm was not required to report any complaint that did not expressly request compensation, even when the customer alleged a sales practice violation that caused a loss of $5,000 or more, and the complaint, when viewed as a whole, made clear that the customer was seeking compensation.”   LPL has been the subject of multiple customer complaints frequently filed as securities arbitration claims, claiming significant damages.

LPL also failed to file suspicious activity reports related to its AML program. Because of inaccurate guidance in the firm’s internal processes, including a “fraud case chart,” employees failed to investigate unauthorized attempts to access customer accounts. More than 400 “hacking” attempts of customer accounts went unreported.

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After the state of Massachusetts began an investigation into 63 brokers selling private placements into GPB after the company stopped selling them, The SEC and FINRA have followed suit. Both agencies have launched their own investigations into the company and its practices.

The SEC Has Proposed New Regulations for Fiduciaries on silverlaw.comGPB announced in August that they would cease finding new investment money in order to focus on compliance and straightening out their accounting and financial statements for their two biggest funds. The SEC is, according to one executive, interested in seeing how accurate GPB’s disclosures are that were given to investors. The SEC also wants to review fund performances and distribution of the company’s capital to their investors, as well as broker-dealers who sold these private placements to investors.

Launched in 2013, GPB Capital became one of the fastest growing private placement firms selling shares of their funds through independent broker-dealers. Promoting themselves as offerors of alternative investment assets, New York-based GPB uses the business model of “acquiring income-producing private companies,” primarily auto dealerships. The company has raised $1.8 billion of investor funds.

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Petrotech Oil & Gas Inc. (PTOG) is a company based in Bedford, TX, and claims it is involved in petroleum recovery from oil wells that are considered “empty.” Using their own extraction technology with CO2 and N2 called “Gas-Injection EOR” (Enhanced Oil Recovery), Petrotech is able to recover 20% or more than previously thought possible.

The SEC Has Proposed New Regulations for Fiduciaries on silverlaw.comOn February 19, 2014, the company announced that it would also be entering the legal cannabis market in Washington and Colorado, causing their stocks to surge. Petrotech’s deal created subsidiary Legalizepot.us Management Group, Inc. (the site is now a blank page.) LP.US Management was intended to manage the growing companies where cannabis became legal, starting with Washington and Colorado.

On March 14, 2014, the SEC suspended trading for the company “because of questions that have been raised about the accuracy and adequacy of publicly disseminated information concerning, among other things, the company’s operations.” Trading resumed on March 28, 2018. The company was in the process of completing a 2-year audit to comply with SEC reporting standards to achieve full reporting status.

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