Thursday, April 13, 2017

SEC News - Fraud and Boiler Room Scheme

SEC Charges Pastor With Defrauding Retirees
The SEC announced fraud charges and an emergency asset freeze obtained against a Michigan-based pastor accused of exploiting church members, retirees, and laid-off auto workers who were misled to believe they were investing in a successful real estate business.

SEC Halts Fraud Targeting Seniors
An emergency asset freeze and temporary restraining order have been announced against a Chicago-based investment adviser and his financial management company accused of scamming elderly investors out of millions of dollars.

SEC Halts Boiler Room Scheme Involving State Lottery Tickets
A Florida-based company, its CEO, and its top sales agent now face charges for conducting a boiler room scheme that solicits investments in a business purportedly facilitating online and cell phone sales of lottery tickets in various states.

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, April 12, 2017

FINRA Requests Comment on FINRA Rules Impacting Capital Formation

The ability of small and large businesses to raise capital efficiently is critical to job creation and economic growth. Broker-dealers play a vital role in helping businesses raise capital through the securities markets, and as a self-regulatory organization (SRO) for broker-dealers, FINRA has a variety of rules, operations and administrative processes that address their capitalraising activities.

FINRA recently announced a new initiative—called FINRA360—to evaluate various aspects of its operations and programs to identify opportunities to more effectively further its mission. As part of this initiative, FINRA is requesting comment on the effectiveness and efficiency of its rules, operations and administrative processes governing broker-dealer activities related to the capital-raising process and their impact on capital formation.

Regulatory Notice 17-14 |

Looking for information on private placements and raising capital? Read our Introduction to Private Placements at

Wells Fargo Wins Bank Arbitrations? Maybe not

The LA Times published this article, based on a study that we can't find.

Admittedly I haven't seen the study, and am only commenting on the article. If anyone has a link to the actual study, I would love to review it.

One more caveat - I don't know anything about these Wells Fargo arbitrations, but I do know something about consumer arbitrations - having represented investors and financial firms in well over 600 such arbitrations over the years.

While the article references a 35% "win" rate for customers, it overlooks the fact that 55% of the arbitrations settled - presumably the customer received a settlement that was satisfactory to him or her.

And, since the article says that the customers won in 35% of the other cases, that indicates that customers received awards or settlements in 70% of the cases that were brought.

The fact is that many customers represent themselves because an attorney won't take the case, and some cases are bad cases. Customers don't lose all of their cases because the process is bad, some, like in court, lose because their claims are bad.

And, the fact that Wells Fargo was awarded damages in some of those cases indicates to me at least, that these weren't all customer claims against the bank - some of them had to be the bank collecting money it was owed by customers.

I am not defending Wells Fargo here - what they did is outrageous - but that is not cause for attacking the arbitration process.
Here's why Wells Fargo forces its customers into arbitration: It wins most of the time 

Mark Astarita is a securities attorney who has represented parties in over 600 securities arbitrations and countless SEC and FINRA proceedings, across the country for 30 years. He is a partner in the law firm of Sallah Astarita & Cox and can be contacted at

Tuesday, April 11, 2017

FINRA Statistics, Feb. 2017: The Pullback Continues

An excellent analysis of the most recent FINRA Arbitration statistics from the Securities Arbitration Commentator.

With a rising market for the past 8 years, it is not a surprise that there have only been 305 new customer cases filed at FINRA during January and February.

Follow the link for the analysis, or review FINRA Arbitration Statistics at FINRA's site.

FINRA Statistics, Feb. 2017: The Pullback Continues

Mark Astarita has been representing customers, brokers and firms across the country in securities arbitration and regulatory matters for 30 years. To learn if he can help you with your securities law issue, call 212-509-6544 or email him at You can also visit his site - New York Securities Lawyer and his firm's site - Sallah Astarita & Cox, LLC.

Tuesday, April 4, 2017

2017 Securities Dispute Resolution Triathlon

The Hugh L. Carey Center for Dispute Resolution at St. John’s School of Law and the Financial Industry Regulatory Authority (FINRA) invite you to participate in the ninth annual Securities Dispute Resolution Triathlon, a competition of competence in the dispute resolution field.

Details are available at Indisputably - 2017 Securities Dispute Resolution Triathlon

Monday, April 3, 2017

DoL Rule Under Attack. But from Where?

Today's quiz. Who said this last week?
I have a very nuanced view of the DoL fiduciary duty rule: I think it is a terrible, horrible, no-good, very bad rule. For me that rule was never ever about investor protection. 
To me, that rule, it was about one thing and it was about enabling trial lawyers to increase profits.
So, who said it? No, not the head of an investment bank but rather the head of the SEC! Chairman Piwowar is certainly turning the SEC around - first looking to do away with private placement restrictions and now coming out strong against the DoL's fiduciary rule.

He is correct on the first comment. It is a terrible rule, which does more damage to brokers and investors than any perceived benefit, and we will all be better off if the administration manages to do away with it. The securities industry has enough rules and regulations, and brokers and advisers, in practice,  are already fiduciaries to their customers, The rule itself was a quagmire, and would have adverse effects throughout the industry, and would remove investment choices from investors across the country.

I don't know about the second comment, I don't think that customer lawyers have enough influence to get the Department of Labor to do anything. FINRA, maybe. The federal government? Doubtful.

'SEC chair rips into DoL fiduciary rule

Securities Class Action Settlements: Dollars, Numbers Are Up

The trends in securities class actions are up. The number of cases filed last year was up as previously reported. The number of settlements in 2016 was up. The amount of those settlements was up. The number of mega settlements was up.

These and other trends are detailed in the latest report from Cornerstone Research, Securities Class Action Settlements – 2016 Review and Analysis.  See the SEC Actions blog, linked below, for the details and links to the report.

In summary, the trends in securities class action settlements are evidenced by key statistics. The largest settlement in 2016 was $1.575 billion compared to $982.8 million the prior year. The minimum settlement in 2016 was $0.9 million compared to $0.4 the prior year. Similarly, the average settlement amount increased to $70.5 million in 2016 from $38.4 million the year before. And, the number of settlements in 2016 increased to 85 compared to 80 the prior year.

Securities Class Action Settlements: Dollars, Numbers Are Up

Thursday, March 23, 2017

SEC News - Insider Trading, Manipulating Accounting Systems, Fraud

Auditor Charged With Insider Trading on Client’s Nonpublic Information
An auditor based in the Silicon Valley has agreed to settle charges that he traded on inside information about a client on the verge of a merger.

Executives Charged With Manipulating Company's Accounting Systems to Steal Money
Two former executives at a credit card processing company have been charged with masterminding a fraudulent scheme to steal millions of dollars through phony expense reimbursements, inflated invoices, and other improper accounting tactics.

SEC Charges Marijuana-Related Company and Executives With Touting Bogus Revenues
A California-based company and its founder are facing charges for falsely touting “record” revenue numbers to investors and claiming to be a leader in the marijuana industry while some of its earnings came from sham transactions with a secret affiliate.

Mexico-Based Homebuilder Charged in $3.3 Billion Accounting Fraud
Mexico-based homebuilding company Desarrolladora Homex S.A.B. de C.V. has agreed to settle charges that it reported fake sales of more than 100,000 homes to boost revenues in its financial statements during a three-year period.

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, March 22, 2017

Indecision Hampers SEC

President Donald J. Trump's unpredictability may extend to his appointment of Securities and Exchange Commissioner members, financial industry government relations officials said on Tuesday.

Traditionally, the SEC's five commissioners are split 3-2, with the majority representing the party in power in the White House. But Mr. Trump, who has nominated political independent Jay Clayton for SEC chairman, may switch things up.