Friday, January 13, 2017

SEC News - Fraudulent EB-5 Offerings, Hackers, and FCPA Charges

Seal of the U.S. Securities and Exchange Commi...

Businessman Settles Charges of Fraudulent EB-5 Offering
A Florida-based businessman has agreed to settle charges that he misused investor funds intended to create U.S. jobs through the EB-5 Immigrant Investor Program.

SEC Charges Lawyer With Stealing Investor Money in EB-5 Offerings
A California-based attorney has been charged with defrauding investors seeking to participate in the EB-5 immigrant investor program, stealing their money to buy a yacht and prop up his other businesses.

Chinese Traders Charged With Trading on Hacked Nonpublic Information Stolen From Two Law Firms
Three Chinese traders have been charged with fraudulently trading on hacked nonpublic market-moving information stolen from two prominent New York-based law firms, racking up almost $3 million in illegal profits. The SEC also is seeking an asset freeze that prevents the traders from cashing in on their illicit gains. The enforcement action marks the first time the SEC has charged hacking into a law firm’s computer network.

Teva Pharmaceutical Paying $519 Million to Settle FCPA Charges
Teva Pharmaceutical Industries Limited has agreed to pay more than $519 million to settle parallel civil and criminal charges that it violated the Foreign Corrupt Practices Act by paying bribes to foreign government officials in Russia, Ukraine, and Mexico.


The attorneys at Sallah Astarita & Cox include veteran securities litigators and former SEC Enforcement Attorneys. We have decades of experience in securities litigation matters, including the defense of enforcement actions. We represent investors, financial professionals and investment firms, nationwide. For more information call 212-509-6544 or send an email.

Wednesday, January 4, 2017

Jay Clayton said to be top contender for Trump’s SEC chief - MarketWatch

Jay Clayton said to be top contender for Trump’s SEC chief - MarketWatch:



"Wall Street lawyer Jay Clayton has emerged as the leading candidate to be chairman of the Securities and Exchange Commission and could be announced as the nominee as soon as Wednesday, according to an official working with the transition team of President-elect Donald Trump."


Tuesday, January 3, 2017

Fired $1M adviser wins $417K case against Southwest Securities for wrongful termination

A broker who generated $1 million in annual revenue won a $417,000 case against her former employer, Southwest Securities, for wrongful termination from a FINRA arbitration panel.



According to the OWS article, the broker was contacted for an audit by a state regulator. The broker reached out to the firm for assistance, and the firm did not provide any meaningful assistance to her. A week after the broker asked for assistance, that did not occur, the firm fired the broker for failing to cooperate....with the audit!



A pretty outrageous series of events, and while there may be a question as to how much "assistance" the firm is required to provide, the firm does have an obligation to work with the broker in comply with an audit. Failing to provide that assistance, and then firing the broker for not cooperating with the audit, smells of a termination having more to do with stealing the broker's clients than anything else.



The Panel ordered a reformation of the brokers U-5, and $417,000 in damages, but according to the article, the broker lost her entire book of clients and sought $2.4 million in damages.



I don't know what her actual damages were, but I see this result far too often in my representation of brokers and advisers. The damage award is nice, and the expungement is great, but the damages occurred years ago, the broker lost all of her practice, and suffered with the dirty CRD report for an extended period of time.



Brokers need to get experienced securities counsel involved when these types of issues arise. Waiting until the damage is done can result in a recovery, but a proactive posture may lessen those damages, if not to eliminate them entirely.





Fired $1M adviser wins $417K case against Southwest Securities for wrongful termination

Tuesday, December 13, 2016

Thursday, December 8, 2016

SEC News - Misleading Investors, Whistleblower Award, Insider Trading


PIMCO Settles Charges of Misleading Investors About ETF Performance
Investment management firm Pacific Investment Management Company (PIMCO) agreed to retain an independent compliance consultant and pay nearly $20 million to settle charges that it misled investors about the performance of one its first actively managed exchange-traded funds (ETFs) and failed to accurately value certain fund securities.

SEC Charges Asset Management Fund and Manager
The SEC announced fraud charges and an asset freeze against Miami Beach-based asset management company Onix Capital LLC and owner Alberto Chang-Rajii, a Chilean national who fled the U.S. earlier this year.

United Settles Charges in Case of Flight Route to Benefit Public Official
The SEC announced that the parent company of United Airlines has agreed to pay $2.4 million to settle charges in a case where shareholders wound up footing the bill so a public official could get more convenient flights.

SEC Awards $3.5 Million to Whistleblower
A whistleblower has been awarded approximately $3.5 million for coming forward with information that led to an SEC enforcement action.

IT Specialist Settles Charges of Insider Trading on Hacked Nonpublic Information
Insider trading charges have been announced against a San Francisco-based information technology specialist who allegedly hacked senior executives at online travel company Expedia and illegally traded on company secrets.

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The attorneys at Sallah Astarita & Cox include veteran securities litigators and former SEC Enforcement Attorneys. We have decades of experience in securities litigation matters, including the defense of enforcement actions. We represent investors, financial professionals and investment firms, nationwide. For more information call 212-509-6544 or send an email.

Saturday, December 3, 2016

FINRA Increases Public Arbitrator Selection List

It is always good news when FINRA allows more choice in the arbitrator selection process. Ever since FINRA changed its rules to virtually eliminate every securities attorney in the country from serving as an arbitrator in a customer case, arbitrator selection has become more difficult.



However, last week the SEC approved FINRA rule amendments to increase the number of arbitrators on the public arbitrator list that FINRA sends to parties during the arbitration panel selection process from 10 to 15 and to increase the number of permitted strikes to that list from 4 to 6.



Source: FINRA to Increase Number of Public Arbitrators:

Wednesday, November 30, 2016

Don't Overstate Your Book!

Today's lesson - do not overstate your book when changing firms.

While that seems to make sense, apparently it escapes some folks that if you tell your prospective employer that you have $700,000 in annual revenue, and you have zero, they are going to catch on to your lie soon enough, and they are going to be upset.

A FINRA arbitration panel recently ordered a broker to pay Jeffrey Matthews Financial Group $260,000 after the broker failed to appear at the arbitration hearing. The arbitration decision does not provide any details, but Investment News has the back story.

Apparently Jeffrey Matthews Financial Group was not happy when it learned that it's recent hire, who claimed to have $700,000 in revenue in his book, did not bring in a single client to the firm, and the firm decided that the $700,000 representation was not true. The firm sued for $200,000, which was the bonus they gave the broker, and although the broker filed an answer, he did not appear at the hearing.

The arbitration panel awarded the firm $260,000.

There is an unanswered questions however - how did the BD not verify the trailing 12? Simple process to do so, and because it did not, it was out $200,000, paid its attorneys to bring the claim, and now has to attempt to enforce the award against the broker.

A little more time in the hiring process might have avoided all of his.

Finra panel: Broker owes former employer $260,000 after allegedly overstating book of business


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Sallah Astarita & Cox is a national law firm representing brokers and investors across the country in securities litigation and regulatory matters. Visit the firm at their website, call 212-509-6544 or email them to see if they can help you with your securities law matter.