Executive Recruiter Mindy Diamond finds that compliant advisors, with $100 million in assets under management, are in the driver's seat in the recruiting scene.
We represent advisors across the country, insuring that they are in fact compliant, and working on the best possible deal to get out of their current firm, and into the new firm.
Thinking of a move? Give us a call - 221-509-6544.
For more information - Why Advisors Have Leverage | Financial Planning
--- The attorneys at Sallah Astarita & Cox have experience in all aspect of broker-dealer compliance, employment and litigation. Our clients include individual financial professionals, and firms of all sizes, nationwide. For more information call 212-509-6544 or send an email.
Wednesday, November 26, 2014
Tuesday, November 25, 2014
Citigroup Global Markets Fined for Equity Research Supervision Failures
public research to clients and sales and trading staff.
According to the press release during this period, Citigroup issued approximately 100 internal warnings concerning communications by equity research analysts. However, when Citigroup detected violations involving selective dissemination and client communications, there were lengthy delays before the firm disciplined the research analysts and the disciplinary measures lacked the severity necessary to deter repeat violations of Citigroup policiesFor more information - FINRA Fines Citigroup Global Markets Inc. $15 Million for Supervisory Failures Related to Equity Research and Involvement in IPO Roadshows | Business Wire
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Monday, November 24, 2014
SEC Press Releases - Accusation of Pump and Dump, Day Trading Scheme, Insider Trading, False Press Releases and more
Three Penny Stock Promoters Behind Pump-and-Dump Schemes
Three penny stock promoters have been charged with conducting pump-and-dump schemes involving stocks they were touting in their supposedly independent newsletters.
Two former employees in the Dubai office of a U.S.-based defense contractor have been sanctioned for violating the Foreign Corrupt Practices Act (FCPA) by taking government officials in Saudi Arabia on a “world tour” to help secure business for the company. The two employees later falsified records in an attempt to hide their misconduct.
An unregistered broker living outside Tampa, Fla., has been charged with stealing investor funds as part of a fraudulent day trading scheme.
Insider trading charges have been announced against a then-CEO and a close friend he provided with confidential details about his New Jersey-based company’s nonpublic merger discussions that enabled the friend to make $164,260 in trading profits after it was sold to a private equity firm.
Father-and-son executives at a New Jersey-based penny stock company have been charged for issuing false and misleading press releases while secretly selling thousands of their own stock shares into the market. They agreed to pay nearly $325,000 and accept officer-and-director bars to settle the SEC’s charges.
Friday, November 21, 2014
Five Ways Fraudsters Trick Investors
"People fall for fraud because fraudsters are that good with special effects. It seems that real,"Michael Hendon, a representative from the Commodity Futures Trading Commission.
At a recent securities law summit, government representatives reviewed some of the tricks that dupe investors out of their money.
Forewarned is forearmed.
For more information - 5 ways fraudsters trick investors - Nov. 20, 2014
--- 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 and representation of investors, financial professionals and investment firms, nationwide. For more information call 212-509-6544 or send an email.
Thursday, November 20, 2014
Let Us Know - Ebola Related Scams
While there have been a significant number of deaths from Ebola, the "outbreak" seemed to be largely a news story scam, at least in the United States.
It is therefore hard to believe that a serious investor would even consider an investment in an Ebola treatment/cure/vaccine. But apparently that is not the case.
FINRA has released an "investor alert" regarding Ebola related scams. FINRA advises "[i]f you are considering investing in a company that purports to develop products or services relating to Ebola, be aware that fraudsters often attempt to take advantage of the news as a hook for investment schemes touting “the latest growth industry” whether it be oil and gas, virtual currency, or marijuana."
Be on the lookout for such scams, and if you come across one, please let us know.
For more information - Investor Alert: Investment Scams Involving Ebola-Related Companies
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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, nationwide. For more information call 212-509-6544 or send an email.
Press Releases: Charges for Investment Scheme on Social Media, and Broker Charged in Offering Fraud
India-Based Operators Charged for High-Yield Investment Scheme Using Social Media
Charges have been announced against two India-based operators of an alleged high-yield investment scheme seeking to exploit investors through pervasive social media pitches on Facebook, YouTube, and Twitter.
The owner of a Maryland-based real estate company has been charged with conducting an offering fraud and spending investor money on such personal expenses as his mortgage, country club dues, and season tickets to the Baltimore Ravens.
Monday, November 17, 2014
Important SEC Press Releases
California-Based Bio-Rad Laboratories Charged With FCPA Violations
A clinical diagnostic and life science research company based in California has been charged with violating the Foreign Corrupt Practices Act (FCPA) when its subsidiaries made improper payments to foreign officials in Russia, Vietnam, and Thailand in order to win business.
13 firms have been sanctioned for violating a rule primarily designed to protect retail investors in the municipal securities market.
A pair of Canadian citizens have been charged with conducting an international microcap fraud scheme by stockpiling shares in a coal mining company and funding a multi-million dollar promotional campaign to hype the stock while simultaneously dumping their shares and routing the proceeds through offshore accounts.
Enforcement actions have been announced against 10 companies for failing to make the required disclosures about financing deals and other unregistered sales that diluted their stock.
Fraud charges have been brought against the City of Allen Park, Mich., and two former city leaders in connection with a municipal bond offering to support a movie studio project within the city.
An attorney in Orange County, Calif., and two men in Massachusetts have been charged for operating a pump-and-dump scheme that defrauded investors in a Boston-based ticket brokering business.
Monday, November 10, 2014
Judge Rakoff Questions the SEC's Overuse of Administrative Proceeding
Judge Jed Rakoff, of the Southern District of New York, is a frequent critic of the Securities and Exchange Commission. Last week he gave the keynote address at the Practicing Law Institute's Securities Regulation Conference.
Judge Rakoff shared his concerns about the increased use of administrative proceedings by the SEC, concerns that myself, and other practicing attorneys have voiced in recent months. See, SEC's Use of Administrative Hearings Under Fire, The SEC's Use of the Rocket Docket is Challenged and At the SEC, a question of Home Court Edge.
The address, titled "Is the SEC Becoming a Law Unto Itself" starts with an explanation of how we got to this place, where an administrative agency can sue anyone, internally, before its own judges, under its own rules, without a jury, or a constitutionally appointed judge. According to Judge Rakoff, this change has come about almost entirely at the request of the S.E.C., usually by tacking the provisions authorizing such expansion onto one or another statute enacted in the wake of a financial scandal.
There are serious, and undisputed problems with the SEC administrative proceedings. First, the SEC appoints, chooses, and pays the administrative law judge who hears and decides the case. Now, there is no doubt that these officers are diligent, honest and hard working. That is not the point. The point is that for all of their honesty and hard work, they have ruled nearly 100% of the time in favor of the SEC. That is a simple fact.
Judge Rakoff makes an excellent point, that is a bit less personal for our readers, but what should be of interest to everyone. The use of these administrative hearings is hindering the development of the securities laws. This is the same problem that has been created by mandatory arbitration - there are less cases in court, less judicial decisions by judges who are appointed pursuant to our constitutional mandate, in a constitutionally acceptable, and often very public manner.
What this means is that whatever law is developed is going to be developed by SEC administrative judges, not federal court judges who are independent, and whose decisions are easily reviewed by the courts.
At Judge Rakoff points out - whatever one might say about the SEC's quasi-judicial functions, the continued use of administrative judges instead of the federal courts is not going to lead to balanced, careful and impartial interpretations, as would result of those cases were brought in federal court.
Read my article, the Rocket Docket article and Judge Rakoff's speech for the details of all that is wrong with this system.
Judge Rakoff's speech is available at https://securitiesdiary.files.wordpress.com/2014/11/rakoff-pli-speech.pdf
--- 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 and representation of investors, financial professionals and investment firms, nationwide. For more information call 212-509-6544 or send an email.
Judge Rakoff shared his concerns about the increased use of administrative proceedings by the SEC, concerns that myself, and other practicing attorneys have voiced in recent months. See, SEC's Use of Administrative Hearings Under Fire, The SEC's Use of the Rocket Docket is Challenged and At the SEC, a question of Home Court Edge.
The address, titled "Is the SEC Becoming a Law Unto Itself" starts with an explanation of how we got to this place, where an administrative agency can sue anyone, internally, before its own judges, under its own rules, without a jury, or a constitutionally appointed judge. According to Judge Rakoff, this change has come about almost entirely at the request of the S.E.C., usually by tacking the provisions authorizing such expansion onto one or another statute enacted in the wake of a financial scandal.
There are serious, and undisputed problems with the SEC administrative proceedings. First, the SEC appoints, chooses, and pays the administrative law judge who hears and decides the case. Now, there is no doubt that these officers are diligent, honest and hard working. That is not the point. The point is that for all of their honesty and hard work, they have ruled nearly 100% of the time in favor of the SEC. That is a simple fact.
Judge Rakoff makes an excellent point, that is a bit less personal for our readers, but what should be of interest to everyone. The use of these administrative hearings is hindering the development of the securities laws. This is the same problem that has been created by mandatory arbitration - there are less cases in court, less judicial decisions by judges who are appointed pursuant to our constitutional mandate, in a constitutionally acceptable, and often very public manner.
What this means is that whatever law is developed is going to be developed by SEC administrative judges, not federal court judges who are independent, and whose decisions are easily reviewed by the courts.
At Judge Rakoff points out - whatever one might say about the SEC's quasi-judicial functions, the continued use of administrative judges instead of the federal courts is not going to lead to balanced, careful and impartial interpretations, as would result of those cases were brought in federal court.
Read my article, the Rocket Docket article and Judge Rakoff's speech for the details of all that is wrong with this system.
Judge Rakoff's speech is available at https://securitiesdiary.files.wordpress.com/2014/11/rakoff-pli-speech.pdf
--- 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 and representation of investors, financial professionals and investment firms, nationwide. For more information call 212-509-6544 or send an email.
Wednesday, November 5, 2014
New Confidentiality Requirement in Customer Discovery and Settlement Agreements
Experienced securities law attorneys know that it is a violation of FINRA rules to include a confidentiality provision in a settlement agreement with a customer that prohibits the customer from discussing the case with a regulator. While we do incorporate confidentiality provisions into our settlement agreements, we are careful to exclude discussions with regulators.
FINRA has now released Regulatory Notice 14-40, which contains something of a trap for the unsuspecting firm, and imposing a new requirement in discovery confidentiality agreements. And they have done it all without following the rule making requirements set by Congress.
In its notice FINRA says that it is simply reminding firms of the violation of FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade) to include confidentiality that prohibit or restrict a customer or any other person from communicating with the Securities and Exchange Commission (SEC), FINRA, or any federal or state regulatory authority regarding a possible securities law violation.
Given the fact that most General Counsels and Compliance Officers are inundated with notices and paperwork, most might stop at the executive summary. However, the Notice makes a substantive change in how these agreements are handled, and includes a requirement that discovery confidentiality agreements must be modified.
The Notice now requires that confidentiality provisions in settlement agreements should be written to expressly authorize, without restriction or condition, a customer or other person to initiate direct communications with, or respond to any inquiry from, FINRA or other regulatory authorities.
FINRA had never required an express authorization in a settlement agreement, but rather simply an exclusion. from the confidentiality provisions.
FINRA has offered the following an example of an acceptable confidentiality provision in a settlement agreement:
FINRA has now decided to insert itself in the discovery process and this notice includes a requirement that discovery confidentiality agreements and orders cannot include FINRA or other regulators. FINRA has once again decided that it knows better than its own arbitrators, and that it is going to violate the property rights and constitutional rights of its own members, once again.
Much of what is produced in discovery is confidential. Information regarding other customers is often included. Federal and state law, as well as Regulation S-P prevent the disclosure of such information, without a confidentiality order. Once FINRA mandates that it, the SEC, and the 52 other securities regulators are excepted from the confidentiality provision, they have introduced a huge hole in the protections afforded to customers and third parties by federal and state law.
In addition, some discovery material is proprietary. Compliance manuals, which cost tens of thousands of dollars to prepare and maintain are proprietary. Many surveillance tools are proprietary and confidential - and the public disclosure of such information - such as the parameters which trigger an exception report, could materially harm a firm's ability to detect wrongful conduct.
By forcing an exemption for regulators, FINRA has opened a door to unfettered disclosure of proprietary information. When we deal with FINRA Staff in a regulatory examination, and produce such material, we can rely on the process, and the integrity of the Staff, to protect the confidentiality of that information.
Once you allow customers to send these documents to any person at any regulatory body, the firm has lost control of its proprietary information and the confidentiality of that information is gone, causing material harm to the firm. In addition, this Regulatory Notice allows customers, and their attorneys, to freely distribute information regarding other customer to any regulatory body, for any reason, or no reason.
These new requirements will cause a violation of federal and state law, as well as a violation of the constitutional rights of the parties. It also violates the rule making requirements that Congress set forth in the Exchange Act, and circumvents the entire purpose of the amendment to FINRA Rule 12300(g)(1) as a customer can now take the documents he obtained in discovery and simply forward them, unredacted to any regulatory office he chooses.
FINRA needs to correct this, and needs to do so immediately.
FINRA has now released Regulatory Notice 14-40, which contains something of a trap for the unsuspecting firm, and imposing a new requirement in discovery confidentiality agreements. And they have done it all without following the rule making requirements set by Congress.
In its notice FINRA says that it is simply reminding firms of the violation of FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade) to include confidentiality that prohibit or restrict a customer or any other person from communicating with the Securities and Exchange Commission (SEC), FINRA, or any federal or state regulatory authority regarding a possible securities law violation.
Given the fact that most General Counsels and Compliance Officers are inundated with notices and paperwork, most might stop at the executive summary. However, the Notice makes a substantive change in how these agreements are handled, and includes a requirement that discovery confidentiality agreements must be modified.
Settlement Agreements
FINRA had never required an express authorization in a settlement agreement, but rather simply an exclusion. from the confidentiality provisions.
FINRA has offered the following an example of an acceptable confidentiality provision in a settlement agreement:
While some will argue that this is not a dramatic change, many view this as forcing firms to encourage customers to contact regulators.Any non-disclosure provision in this agreement does not prohibit or restrict you (or your attorney) from initiating communications directly with, or responding to any inquiry from, or providing testimony before, the SEC, FINRA, any other self-regulatory organization or any other state or federal regulatory authority, regarding thissettlement or its underlying facts or circumstances.
Discovery Agreements
Much of what is produced in discovery is confidential. Information regarding other customers is often included. Federal and state law, as well as Regulation S-P prevent the disclosure of such information, without a confidentiality order. Once FINRA mandates that it, the SEC, and the 52 other securities regulators are excepted from the confidentiality provision, they have introduced a huge hole in the protections afforded to customers and third parties by federal and state law.
In addition, some discovery material is proprietary. Compliance manuals, which cost tens of thousands of dollars to prepare and maintain are proprietary. Many surveillance tools are proprietary and confidential - and the public disclosure of such information - such as the parameters which trigger an exception report, could materially harm a firm's ability to detect wrongful conduct.
By forcing an exemption for regulators, FINRA has opened a door to unfettered disclosure of proprietary information. When we deal with FINRA Staff in a regulatory examination, and produce such material, we can rely on the process, and the integrity of the Staff, to protect the confidentiality of that information.
Once you allow customers to send these documents to any person at any regulatory body, the firm has lost control of its proprietary information and the confidentiality of that information is gone, causing material harm to the firm. In addition, this Regulatory Notice allows customers, and their attorneys, to freely distribute information regarding other customer to any regulatory body, for any reason, or no reason.
These new requirements will cause a violation of federal and state law, as well as a violation of the constitutional rights of the parties. It also violates the rule making requirements that Congress set forth in the Exchange Act, and circumvents the entire purpose of the amendment to FINRA Rule 12300(g)(1) as a customer can now take the documents he obtained in discovery and simply forward them, unredacted to any regulatory office he chooses.
FINRA needs to correct this, and needs to do so immediately.
Tuesday, November 4, 2014
Firms Sanctioned for Investor Protection Rule Violations in Puerto Rico Bonds
All municipal bond offerings include a “minimum denomination” that establishes the smallest amount of the bonds that a dealer firm is allowed to sell an investor in a single transaction. This minimum helps to protect investors and municipal issuers often set high minimum denomination amounts for so-called “junk bonds” that have a higher default risk that may make the investments inappropriate for retail investors.
Because retail investors tend to purchase securities in smaller amounts, this minimum denomination standard helps ensure that dealer firms sell high-risk securities only to investors who are capable of making sizeable investments and more prepared to bear the higher risk.
In its surveillance of trading in the municipal bond market, the SEC Enforcement Division’s Municipal Securities and Public Pensions Unit detected improper sales below a $100,000 minimum denomination set in a $3.5 billion offering of junk bonds by the Commonwealth of Puerto Rico earlier this year. The SEC’s subsequent investigation identified a total of 66 occasions when dealer firms sold the Puerto Rico bonds to investors in amounts below $100,000.
The agency instituted administrative proceedings against the firms behind those improper sales: Charles Schwab & Co., Hapoalim Securities USA, Interactive Brokers LLC, Investment Professionals Inc., J.P. Morgan Securities, Lebenthal & Co., National Securities Corporation, Oppenheimer & Co., Riedl First Securities Co. of Kansas, Stifel Nicolaus & Co., TD Ameritrade, UBS Financial Services, and Wedbush Securities.
For more information, see the SEC press release and order -SEC Sanctions 13 Firms for Improper Sales of Puerto Rico Junk Bonds - or call our office if you have been an investor in Puerto Rico municipal bonds. Our office is representing a number of investors in Puerto Rico with claims for losses in municipal bonds. Our attorneys at Sallah Astarita & Cox include veteran securities litigators and former SEC Enforcement Attorneys. We have decades of experience in securities litigation matters, inc nationwide. For more information call 212-509-6544 or send an email.
Because retail investors tend to purchase securities in smaller amounts, this minimum denomination standard helps ensure that dealer firms sell high-risk securities only to investors who are capable of making sizeable investments and more prepared to bear the higher risk.
In its surveillance of trading in the municipal bond market, the SEC Enforcement Division’s Municipal Securities and Public Pensions Unit detected improper sales below a $100,000 minimum denomination set in a $3.5 billion offering of junk bonds by the Commonwealth of Puerto Rico earlier this year. The SEC’s subsequent investigation identified a total of 66 occasions when dealer firms sold the Puerto Rico bonds to investors in amounts below $100,000.
The agency instituted administrative proceedings against the firms behind those improper sales: Charles Schwab & Co., Hapoalim Securities USA, Interactive Brokers LLC, Investment Professionals Inc., J.P. Morgan Securities, Lebenthal & Co., National Securities Corporation, Oppenheimer & Co., Riedl First Securities Co. of Kansas, Stifel Nicolaus & Co., TD Ameritrade, UBS Financial Services, and Wedbush Securities.
For more information, see the SEC press release and order -SEC Sanctions 13 Firms for Improper Sales of Puerto Rico Junk Bonds - or call our office if you have been an investor in Puerto Rico municipal bonds. Our office is representing a number of investors in Puerto Rico with claims for losses in municipal bonds. Our attorneys at Sallah Astarita & Cox include veteran securities litigators and former SEC Enforcement Attorneys. We have decades of experience in securities litigation matters, inc nationwide. For more information call 212-509-6544 or send an email.
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