Brokerage Firms In The News - Law Offices of Robert Wayne Pearce

Jun 23, 2014

Carolina Financial Securities Fined For Failure to Supervise the Sale of Private Placements

Brevard, North Carolina-based Carolina Financial Securities, LLC (Carolina Financial) consented to, but did not admit to or deny, the described sanctions and to the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that it failed to supervise the sale of an unregistered private placement offering to investors with investments of approximately $1.1 million. FINRAs findings stated that Carolina Financial neglected to follow its procedures with regard to the review and verification of statements made in private placement offering documents. Furthermore, FINRA found that the brokerage firm failed to conduct adequate due diligence prior to the approval of the offering for sale to its investors.

Jun 19, 2014

FINRA Slams Bank of America Merrill Lynch with $8 Million Fine and $89 Million Restitution Order for Mutual Fund Charges

The Financial Industry Regulatory Authority (FINRA) slammed Bank of America Merrill Lynch with an $8 million fine and an $89 million restitution order for failing to waive mutual fund sales commission charges related to certain charities and retirement accounts. Merrill Lynch agreed to the settlement without admitting or denying FINRA’s findings that even though most of the mutual funds on Merrill Lynch’s retail platform waive certain fees for eligible retirement plans and charities, the firm failed to make sure its advisers were properly applying those waivers to as many as 41,000 accounts. FINRA further stated that Merrill Lynch’s written supervisory procedures provided little information or guidance on mutual fund sales charge waivers.

May 20, 2014

Investors Capital Corp. Censured and Fined for Inadequate Supervision of ETF Sales

Lynnfield, Massachusetts-based Investors Capital Corp. submitted a Letter of Acceptance, Waiver and Consent in which the firm consented to, but did not admit to or deny, the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that it failed to ensure delivery of exchange-traded fund (ETF) prospectuses to customers. The findings stated that the firm violated Section 5(b)(2) of the Securities Act of 1933 by failing to establish an adequate supervisory system, including written supervisory procedures (WSPs), concerning the sale of ETFs and the firm’s obligations to provide ETF prospectuses to customers. The firm did not have any procedures directly concerning the sale of ETFs or its obligations to provide ETF prospectuses to customers and permitted representatives to sell ETFs before completing any firm-mandated training. The firm was censured and fined $100,000

May 16, 2014

UBS Puerto Rico Investor Claims Stockbroker Lost Her Inheritance

The claimant is a 43 year old married housewife raising two children in San Juan, Puerto Rico. Several years ago, her father sold his business, gifting his daughter, $5 million dollars, which she deposited in her UBS Puerto Rico account. At that point in time, she had very little investment experience and a very small account. The claimant relied exclusively upon her UBS Puerto Rico broker for investment advice and management of the investments in her account.

Apr 29, 2014

Berthel Fisher Fined by FINRA for Lax Supervision of REIT and ETF Sales

Marion, Iowa-based Berthel Fisher & Company Financial Services, Inc. (Berthel Fisher) and its affiliate, Securities Management Research, Inc. consented to, but did not admit to or deny, the described sanctions and to the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that it failed to supervise the sale of non-traded real estate investment trusts (REITs) and exchange-traded funds (ETFs) and also made unsuitable recommendations relating to alternative investments.

Apr 28, 2014

Brown Brothers Harriman Receives Record $8 Million Fine for Anti-Money Laundering Violations

New York-based Brown Brothers Harriman & Co. (BBH) consented to, but did not admit to or deny, the described sanctions and to the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that BBH allegedly failed to have an appropriate anti-money laundering (AML) program in place to monitor and detect suspicious penny stock transactions. FINRA’s findings also stated that BBH did not sufficiently investigate suspicious penny stock activity, which had allegedly been brought to the firm’s attention, nor did BBH fulfill its Suspicious Activity Report (SAR) requirements. Further, FINRA found that BBH’s supervisory system was inadequate and allowed for the distribution of unregistered securities. FINRA’s findings also included that the firm allegedly knew that customers were depositing and selling large blocks of penny stocks and failed to more closely scrutinize these transactions as potentially being red flags for illegal unregistered distribution.

Apr 15, 2014

FINRA Fines Accelerated Capital Group for Violating Industry Rules and Firm Procedures

Irvine, California-based Accelerated Capital Group, Inc. submitted a Letter of Acceptance, Waiver and Consent in which the firm consented to, but did not admit to or deny, the described sanctions and to the entry of the Financial Industry Regulatory Authority’s (FINRA) findings that its website contained misleading information and that it violated escrow account rules and procedures. The firm’s website contained fabricated testimonials and a world map that incorrectly suggested the firm had global offices and wanted to add 250 financial advisers. However, the firm had only two offices and omitted to state that its membership agreement limited the firm to 20 associated persons. FINRA’s findings also stated that two of the firm’s representatives maintained business-related websites that contained false, misleading, exaggerated, and promissory statements. The firm’s representatives distributed power point slides to investors that were unbalanced, failed to present a sound basis for evaluating the offered investment, and violated the prohibitions against exaggerated performance predictions and unwarranted performance claims and forecasts.

Apr 14, 2014

Santander Securities Investors Lose Life Savings

This arbitration arises out of a Santander stockbroker’s recommendation that a retired couple invest their life savings, $500,000 in Westernbank preferred stock. The clients had never made any stock market investments before they met the Santander stockbroker and the Westernbank preferred stock was the only investment in their accounts.

Apr 11, 2014

UBS Puerto Rico Investor Claims Bond Funds Unsuitable and Misrepresented

In 2002 and 2003, the client inherited what she understood to be bonds and mutual funds from her parents’ UBS PaineWebber accounts when they passed away. The client did not know the true nature or risk of the investments that she had inherited and held in her account. She thought she actually owned bonds that would always pay interest until they matured. Neither UBS Puerto Rico nor her UBS Puerto Rico Stockbrokers ever gave her a full explanation of what type of investments she really owned, which were closed-end funds and that what she actually owned was shares of the closed-end funds (like common stock shares) that only paid dividends at the manager’s discretion. She also didn’t know that these were leveraged, illiquid investments which were very risky.

Apr 10, 2014

UBS Puerto Rico Investor Claims For Unsuitable Investments

The UBS Puerto Rico stockbroker has been the client’s primary broker for many years and knows the client’s age, employment status, and financial condition. The stockbroker knew that the client’s life savings were deposited with UBS Puerto Rico and in his hands. The client has been a passive investor and relied exclusively on his stockbroker to make all of the investment decisions in his UBS Puerto Rico account. As a result of the UBS Puerto Rico stockbroker’s recommendations and decisions, the client’s account became highly concentrated (100%!) in Puerto Rico bonds.