State Regulators
Virginia Financial Fraud Task Force
As set out in this Washington Post article, federal prosecutors in Virginia have set up the Virginia Financial and Securities Fraud Task Force. This task force is comprised of members of the FBI, the Postal Inspection Service, the Securities and Exchange Commission, the Commodities Futures Trading Commission and the Virginia State Corporation Commission.
As set out in the story, the task force’s efforts have already resulted in multiple criminal convictions. A criminal conviction, however, does not always recoup losses for investors wronged by financial fraud. If you are the victim of a financial crime in which the salesperson or others involved in the scheme were registered to sell securities through a FINRA brokerage firm, you may be able to seek recovery of your losses through FINRA’s arbitration system. Please contact Greco & Greco for a free consultation with one of our lawyers.
Posted by Greco & Greco on 11/02 at 04:35 PM
Arbitration •
Brokerage Firms •
FINRA •
Ponzi Scheme •
SEC •
Securities Fraud •
State Regulators •
Virginia •
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Fredericksburg Virginia Registered Rep Indicted
As set out in this Fredericksburg.com article, John Robert Graves, a former FBI agent, was indicted on charges of defrauding Virginia investors out of $1,300,000. According to the indictment filed in U.S. District Court in Richmond (Case 3:11CR246), Mr. Graves used funds obtained from investors to buy personal real estate, to pay personal expenses and credit cards, to pay himself cash, and to pay back prior investors.
Mr. Graves operated Brooke Point Management in Spotsylvania County since 2003 which provided financial planning, insurance sales, estate planning, and investment advice to customers. According to FINRA’s Brokercheck report, Mr. Graves had been a registered securities salesperson since 1998 with various firms including, Harrison Douglas, Community Bankers Securities, Fintegra, Questar Capital Corporation, Pacific West Securities, and H. Beck. The Brokercheck report also discloses multiple pending arbitration claims alleging fraud, negligence, breach of fiduciary duty, and unsuitable investments regarding private placements, limited partnerships and REITs.
If you wish to discuss a potential securities fraud claim with one of our attorneys, please contact us here for a free consultation.
Posted by Greco & Greco on 10/13 at 02:35 PM
Arbitration •
Brokerage Firms •
Community Bankers Securities •
H. Beck •
Pacific West Securities •
Questar Capital Corporation •
Ponzi Scheme •
Private Placements •
Securities Fraud •
State Regulators •
Virginia •
Suitability •
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SEC Fraud Charges Regarding The Nutmeg Group LLC
As set out in the SEC Complaint which can be found here, the SEC filed civil fraud claims in Illinois against The Nutmeg Group, LLC, Randall Goulding, and others. The SEC alleges in its Complaint that Nutmeg was an investment adviser to 15 funds which invested fund assets in private investments in public equity (PIPE) transactions. As a basis for its fraud claims, the SEC alleges in the Complaint that Nutmeg “improperly commingled investor and fund assets,” “misappropriated over $4 million in fund assets,” “failed to maintain the required books and records,” and “overstated the performances of its Funds to investors.” (paragraphs 2 and 3 of SEC Complaint).
This article from tampabay.com discusses the recruitment of investors for The Nutmeg Group investments by an individual (Harvey Altholtz) from the Sarasota, Florida area. Here is a cease and desist Order from the Colorado Securities Commissioner relating to Altholtz and Wealth Strategy Partners.
Greco & Greco have recently filed a FINRA arbitration on behalf of investors who were sold investments in Nutmeg Group funds by a FINRA registered representative (securities salesperson). All FINRA registered representatives are required to be registered with a FINRA firm (Broker-Dealer). FINRA firms have legal responsibilities to supervise their registered representatives, and further may be found liable for the wrongful actions of their agents. Examples of legal grounds for liability of Broker-Dealers in these situations include:
a) under tort and agency law, principals can be found liable for the acts of their agents even if they are entirely innocent and have received no benefit from the transaction;
b) a broker’s Broker-Dealer can also be found liable as a “control person” of that broker under state and federal securities laws; and
c) claims can be pursued in arbitration based on violations of FINRA rules including Rules related to supervision, suitability, and outside business activities.
If you were sold investments in Nutmeg Group funds by a FINRA registered representative, and you would like to discuss legal options with an attorney, please contact Greco & Greco for a free consultation with one of our lawyers.
Posted by Greco & Greco on 06/08 at 04:05 PM
Arbitration •
Brokerage Firms •
Intersecurities •
Transamerica Financial Advisors •
Ponzi Scheme •
Private Placements •
SEC •
State Regulators •
Colorado •
Florida •
Suitability •
Unregistered Securities •
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QUEEN SHOALS INVESTMENT FRAUD
According to this Western District of North Carolina Department of Justice release, Sidney Hanson of Charlotte, North Carolina pleaded guilty in July, 2009 to securities fraud, mail fraud, and money laundering in relation to an investment scheme known as Queen Shoals. The SEC has also filed a Complaint related to the investment scheme.
The SEC states in the above Complaint that the Hansons and their sales force sold almost $33 million in “private loan agreements” to investors around the country. The investments were allegedly to be placed in a diversified portfolio” of precious metals, foreign currency and treasury notes, generating high returns while remaining safe in non-depletion accounts. In reality according to the SEC, the investment funds were invested “in a number of very risky private investment opportunities” and funds from new investors were used to pay off old investors.
Investors who were sold Queen Shoals investments by their stockbrokers, investment advisers, retirement specialists, or financial planners may have claims to be brought against related firms based on securities fraud, suitability, failure to do due diligence, misrepresentations and omissions, and other legal grounds. Greco & Greco is currently investigating sales by FINRA registered parties in Virginia - please contact us for a free consultation if you believe you may have a claim.
Posted by Greco & Greco on 11/25 at 02:57 PM
Arbitration •
Brokerage Firms •
FINRA •
Ponzi Scheme •
Retirement •
SEC •
State Regulators •
North Carolina •
Suitability •
Unregistered Securities •
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Businesses left out of Auction Rate Securities Settlements?
As discussed in this Bloomberg article, the settlements reached by regulators regarding auction rate securities sales with many of the large brokerage firms fail to help medium to large businesses who were also sold ARS. Although the required buyouts in the settlements with UBS, JPMorgan Chase, Morgan Stanley, and Wachovia Corp. reached $35 billion, this amount only approximates 18% of the $200 billion estimated to be still outstanding.
Although the settlements call for the firms to use their best efforts to help institutional investors stuck with the frozen ARS, they fall short of requiring a buyback. This situation may force mid-sized to large companies to seek redress on their own through the arbitration or court system. Please contact Greco & Greco if your business is holding frozen ARS as a result of fraudulent sales practices of a brokerage firm.
Posted by Greco & Greco on 08/22 at 03:58 PM
Arbitration •
Auction Rate Securities (ARS) •
Brokerage Firms •
Citigroup •
J.P. Morgan •
Merrill Lynch •
Morgan Keegan •
UBS •
Wachovia •
State Regulators •
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UBS Charged With Fraud in Auction Rate Securities Sales
The State of Massachusetts filed a Complaint today against UBS claiming UBS engaged in fraud and dishonest and unethical conduct with regard to its sales of Auction Rate Securities (ARS). Link to Complaint and Exhibits. In a 101 page Complaint, Massachusetts references voluminous emails it obtained from UBS supporting its claims, and further charges UBS with books and records violations for failures to produce additional documents.
The Complaint describes UBS’s “all-out” effort to market ARS, and especially “troubled student loan-backed auction rate certificates,” to offset increasing inventory from corporate investors who were selling the ARS due to concerns about the market. Despite awareness of serious problems with the market, UBS was initiating conference calls in August 2007 with its financial advisors to encourage the sale of ARS to retail clients and “unload this paper.”
The Complaint further describes the incredible conflicts of interest surrounding the market: “by setting up a situation where it was actively controlling whether auctions would clear and what rate they would clear at, UBS had (unbeknownst to its customers) set up a situation which put it in a fundamentally conflicted role between its desire to keep its underwriting clients happy with the promise of low financing costs and its “moral obligation” to retail customers to keep the auctions it had set up afloat.”
If you are an investor stuck with Auction Rate Securities, and you would like a free consultation to discuss your legal options with an attorney, please contact Greco & Greco.
Posted by Greco & Greco on 06/26 at 03:54 PM
Auction Rate Securities (ARS) •
Brokerage Firms •
UBS •
State Regulators •
Massachusetts •
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Auction Rate Securities Failures
Auction Rate Securities and Auction Rate Preferred Securities (ARS) are securities made up of long term bonds or preferred stock with variable interest rates and yields. The yields are periodically reset through Dutch auctions. ARS are often marketed and sold by a single dealer with the only resale market being through a successful auction. Problems have arisen in recent months as a result of the failures of the auctions, leaving investors in the lurch and unable to redeem the security. As set out in this SmartMoney article, ARS have been marketed as a safe, liquid alternative to money market funds. Investors believing they had their money in a safe liquid investment are understandably concerned by the failures in the marketplace for these securities, and our firm has been monitoring the situation closely and discussing the matter with concerned individuals and businesses. Misrepresentations and omissions in the sale of a security can form the basis for a claim for securities fraud as well as other legal claims for recovery of damages.
As recently as 2006, the SEC censured 15 of the largest brokerage firms for sales and auctions of Auction Rate Securities. As stated by the SEC in its press release, “since the firms were under no obligation to guarantee against a failed auction, investors may not have been aware of the liquidity and credit risks associated with certain securities.” The SEC further stated that “the firms violated Section 17(a)(2) of the Securities Act of 1933, which prohibits material misstatements and omissions in any offer or sale of securities.” The fifteen firms which were censured were Bear, Stearns & Co., Inc., Citigroup Global Markets, Inc., Goldman Sachs & Co., J.P. Morgan Securities, Inc., Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co. Incorporated/ Morgan Stanley DW Inc., RBC Dain Rauscher Inc., A.G. Edwards & Sons, Inc., Morgan Keegan & Company, Inc., Piper Jaffray & Co., SunTrust Capital Markets Inc., Wachovia Capital Markets, LLC, and Banc of America Securities LLC. Read the SEC Order here.
UBS appears to be the first firm to actually begin lowering the values of auction rate securities on its customers’ statements, as reported by many news sources on March 29 including this Reuters article. Citing a Wall Street Journal article, Reuters reported that the markdowns could exceed 20 percent for some customers. Additional concessions from other firms may be forthcoming as the first quarter of 2008 ends.
State Regulators, including Massachusetts, have also begun investigations of the auction rate securities market with Massachusetts reportedly issuing subpoenas to UBS, Merrill Lynch, and Bank of America.
The Financial Industry Regulatory Authority (FINRA) released an Investor Alert on March 31, 2008 regarding auction rate securities which purports to set out various options for investors stuck with these products. FINRA, which claims to be a “trusted advocate for investors,” notably fails to mention contacting an attorney or filing an arbitration claim as options. If you are an investor who was sold Auction Rate Securities, and you would like to discuss your legal options with an attorney, please Contact Greco & Greco.
Link to Securities-Lawyers.net Auction Rate Securities page.
Posted by Greco & Greco on 03/03 at 05:42 PM
Auction Rate Securities (ARS) •
Bonds •
Brokerage Firms •
A.G. Edwards •
Banc of America •
Bear Stearns •
Citigroup •
Deutsche Bank •
Ferris Baker Watts •
Lehman Brothers •
Merrill Lynch •
Morgan Keegan •
Morgan Stanley •
Piper Jaffray •
RBC Dain Rauscher •
Suntrust •
UBS •
Wachovia •
FINRA •
State Regulators •
Massachusetts •
Suitability •
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New York subpoenas firms in mortgage fraud probe
Reuters has reported here that the state of New York has subpoenaed three large Wall Street banks (Merrill Lynch, Bear Stearns, and Deutsche Bank) pursuant to a probe related to the creation of mortgage-backed securities. The New York probe reportedly is looking into how mortgages were packaged together by Wall Street to create securities sold to investors and the banks’ relationship with credit-rating firms.
Posted by Greco & Greco on 01/11 at 04:36 PM
Brokerage Firms •
Bear Stearns •
Deutsche Bank •
Merrill Lynch •
CMOs / CDOs •
State Regulators •
New York •
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News from SEC’s Senior Summit
The SEC reported at its 2nd Annual Senior Summit that it was working on codifying suitability rules as they apply to recommendations for the purchase of securities by stock brokers, and further clarifying sales practice principals for investment professionals. If properly crafted, additional guidance in these areas should help prevent abuse of investors as well as provide additional tools for attorneys representing investors who have been abused by their stock brokers.
The SEC, FINRA, and state regulators also reported the results of their “free lunch” sweep of seminars targeted as seniors. The findings included 59% of the brokerage firms involved failing to properly supervise the seminars, and 23% of the seminars including advice that was unsuitably risky for senior investors.
Posted by Greco & Greco on 09/21 at 02:31 PM
FINRA •
SEC •
State Regulators •
Suitability •
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Universal Leases found to be Unregistered Securities
As set out more fully below on our firm’s website (link below), the sale of Universal Leases in the name of Resort Holdings, Yucatan Resorts, and Avalon Resorts have been found by many states to be violations of securities laws prohibiting the sale of unregistered securities. The federal government has alleged that these investments relating to timeshares were a ponzi scheme. The link below further has a link to the FBI press release regarding the arrest of Michael Kelly.
Greco & Greco Universal Lease page
Posted by Greco & Greco on 08/03 at 04:13 PM
Ponzi Scheme •
State Regulators •
Arizona •
California •
Colorado •
Illinois •
Maryland •
Pennsylvania •
Texas •
Utah •
Universal Lease - Resort Holdings, Yucatan, Avalon •
Unregistered Securities •
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Morgan Stanley Fined $250,000 by Rhode Island
The Rhode Island Department of Business Regulation fined Morgan Stanley $250,000 for failing to supervise sales representatives at its Providence, Rhode Island office. According to the Rhode Island press release below, the charges related to the replacement of mutual funds with more expensive mutual funds and variable annuities.
Rhode Island Press Release
Posted by Greco & Greco on 07/20 at 02:16 PM
Mutual Funds •
State Regulators •
Rhode Island •
Variable Annuities •
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