McGinn Smith and National Financial Services, LLC
In April 2010, both the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) filed lawsuits against McGinn Smith and its principals, alleging that from 2003 through April 2010, McGinn Smith committed an ongoing fraud against over 900 investors. The suits allege that McGinn Smith lured its customers into these investments with the understanding that McGinn Smith made its money on each transaction from the difference between the cost of the investment and its rate of return. However, instead of putting customer money into investments generally referred to as Income Notes, McGinn Smith fraudulently transferred investor money into entities it owned or controlled. The transfers were not disclosed to investors, in offering materials and private placement memoranda, as an activity in which the Income Note issuers could engage.
McGinn Smith used National Financial Services, LLC, a Fidelity company, as its clearing firm since 2005. Most McGinn Smith clients were required to maintain an account with NFS to invest in the McGinn Smith investments. NFS provided significant clearing and back office operations for McGinn Smith.
Silver Law Group is representing many customers with losses in these investments in claims against NFS for negligence and other claims and are attempting to recover their investment losses in FINRA arbitration.
For more information regarding this investigation, please contact Silver Law Group for a free consultation.