Monday, May 22, 2017

ETFs Vs. Index Funds: Quantifying The Differences

ETFs Vs. Index Funds: Quantifying The Differences:

Exchange-traded funds (ETFs) have become increasingly popular since its inception in 1993. But despite investor's love affair with ETFs, a closer look shows that index funds are still the top choice for the majority of retail index investors. Here we will look at the reasons why ETFs have become so popular and analyze whether they make sense - from a cost, size and time-horizon standpoint - as an alternative to index funds

The Hits Keep Coming - Scammer Makes Fake Filing and Sells His Calls

The SEC filed fraud charges against a Virginia-based mechanical engineer accused of scheming to manipulate the price of Fitbit stock by making a phony regulatory filing.

According to the SEC’s complaint, Robert W. Murray purchased Fitbit call options just minutes before a fake tender offer that he orchestrated was filed on the SEC’s EDGAR system purporting that a company named ABM Capital LTD sought to acquire Fitbit’s outstanding shares at a substantial premium.  Fitbit’s stock price temporarily spiked when the tender offer became publicly available on Nov. 10, 2016, and Murray sold all of his options for a profit of approximately $3,100.

The SEC alleges that Murray created an email account under the name of someone he found on the internet, and the email account was used to gain access to the EDGAR system.  Murray then allegedly listed that person as the CFO of ABM Capital and used a business address associated with that person in the fake filing.

The SEC also alleges that Murray attempted to conceal his identity and actual location at the time of the filing after conducting research into prior SEC cases that highlighted the IP addresses the false filers used to submit forms on EDGAR.

According to the SEC’s complaint, it appeared as though the system was being accessed from a different state by using an IP address registered to a company located in Napa, California. | SEC Charges Fake Filer With Manipulating Fitbit Stock

Wednesday, May 17, 2017

SEC News - Fraud, Accounting Failures, and Whistleblower Award

SEC Charges EB-5 Operator With Securities Fraud
An Idaho man has agreed to pay back several million dollars he siphoned away for personal use rather than investing it as promised to create U.S. jobs through the EB-5 Immigrant Investor Program.

Executives Charged in Connection With Accounting Failures at Government Contractor
The SEC has charged two former executives at a government contractor that was the subject of an SEC enforcement action earlier this year and paid a $1.6 million penalty for accounting failures.

Broker Charged With Defrauding Customers
A former broker has been charged with knowingly or recklessly trading unsuitable investment products in the accounts of five customers and misappropriating more than $170,000 from one of those customers.

SEC Awards Nearly $4 Million to Whistleblower
Nearly $4 million is being awarded to a whistleblower who tipped the agency with detailed and specific information about serious misconduct and provided additional assistance during the ensuing investigation, including industry-specific knowledge and expertise.

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.

Tuesday, May 16, 2017

Congress Still Trading On Non-Public Information?

"Even a looming scandal wouldn’t deter some of Congress’ most eager stock traders."

This article from Politico details the outrageous trading patterns of some members of Congress, who despite the STOCK Act, continue to trade in the securities of companies who are the influenced by their investigations and legislation.

The Stop Trading On Congressional Knowledge Act became law in 2012 and was designed to prohibit members of Congress and employees of Congress from using nonpublic information derived from their official positions for personal benefit, and for other purposes.

While the Act was put into law after a growing public concern over members of Congress trading on the equivalent of inside information if the Executive Branch doesn't enforce the law, what good is it? Apparently, with a wink and a nod, or with no one caring to look, insider trading is still running rampant in Congress, with our Congressmen getting richer by violating the law.

Read the Politico article for the details.

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