(FINRA Press Release) The Financial Industry Regulatory Authority fined Citigroup Global Markets Inc. (CGMI) $5.5 million and required the firm to pay at least $6 million in compensation to retail customers for allegedly displaying inaccurate research ratings during a nearly five-year period, and for related supervisory violations. READ the FULL TEXT AWC Settlement.
FINRA Arbitrator Recommends Expungement Of Three Customer Complaints (BrokeAndBroker.com Blog) A sole FINRA Arbitrator tackles a thorny arbitration in which a registered person seeks the expungement of not one but three customer complaints. The resulting FINRA Arbitration Decision ends the year on a high note as it is well written, concise, and persuasive.
In the Matter of Shervin Neman and Neman Financial, Inc. (Order on Request for Release from Federal Custody, Securities and Exchange Commission, Admin. Proc. Rul. Rel. No.. 5426; Admin. Proc. File No. 3-17699 / December 28, 2017) Federal inmate Shervin Neman is currently incarcerated. See, United States v. Neman, 673 F. App'x 649, 652 (9th Cir. 2016) (affirming 135-month sentence), cert. denied, 137 S. Ct. 2281 (2017). SEC Administrative Law Judge Patil reports that Neman requested h,is immediate release from prison by letter dated December 20, 2017. ALJ Jason S. Patil construes the request as a Petition for a Writ of Habeas Corpus.
(FINRA Press Release The Financial Industry Regulatory Authority fined J.P. Morgan Securities $2.8 million for violating the SEC Customer Protection Rule and for related supervisory failures. READ the FULL TEXT AWC Settlement Agreement. As set forth in part in the FINRA Press Release:
FINRA found that from March 2008 to June 2016, J.P. Morgan Clearing Corp. did not have reasonable processes in place to ensure that its possession or control systems were operating properly. Shares that should have been segregated were available for the firm's use, due to systemic coding and design flaws, recurring and unresolved deficits and unreasonable supervision. By failing to move and maintain securities in good control locations, the firm created deficits in foreign and domestic securities valued at hundreds of millions of dollars. For example, J.P. Morgan failed to move Italian securities to a good control location for nearly two years, and on one sample day, created a deficit in 81 Italian securities worth approximately $146 million.
FINRA Wrestles With No Debt False Statement Versus Untrue On (BrokeAndBroker.com Blog) Wall Street's communications with the public have come under scrutiny in recent years and with good cause. You look back to the lead-up to the Great Recession and there were a lot of lies being told to unwary investors. Now, whether those investors should have been unwary is another question for another day but, for now, let's just say that there were a lot of folks pushing a lot of toxic crap on folks who were seen as easy prey. Not a pretty picture. All of which explains why there is an enhanced focus on how investment products are marketed online, on air, and during seminars -- not that it's a particularly effective line of defense but, you know, the Maginot Line looked like it would work, right? In a recent FINRA regulatory settlement, we see the best and worst of Wall Street regulation. On sound ground is the self-regulator's unhappiness with one guy's use of his personal email to engage in business communications. On less sound ground is the self-regulator's unhappiness with that same guy's statement to a client about whether an issuer had or didn't have any debt.
The SEC accepted the settlement offer of Train Babcock Advisors LLC ("TBA"), which is in the process of winding down its operations, has agreed to settle the SEC's charges by paying more than $1.7 million in disgorgement, interest, and penalties for these and other violations. TBA has also agreed to be censured and to withdraw its registration with the SEC as an investment advisor.(SEC Litigation Release 24022)
Kaleil Tuzman, Former Chairman And CEO Of Technology Start-Up Company Kit Digital, And Omar Amanat Found Guilty In Manhattan Federal Court Of Securities Fraud Related Offenses (DOJ Press Release 17-414) After a six-week trial in the United States District Court for the Southern District of New York Kaleil Isaza Tuzman, the former chairman of the board of directors and chief executive officer of the technology start-up company KIT digital and his associate, Omar Amanat, were found guilty.
FINRA Expungement Arbitration Shows Failed System (BrokeAndBroker.com Blog) The BrokeAndBroker.com Blog's publisher Bill Singer, Esq. takes this last opportunity in the waning days of 2017 to rage against the machine and call for the reform of FINRA's failed expungement system. As Singer notes, the present appellate process by which Wall Street's men and women seek to clear their names is a bastard child no one claims as their own. Public advocates are correct that Wall Street's bygone practice of buying and selling indulgences was a disgrace that needed to be stopped. Similarly, the industry had ample warning of the need to tend to its own mess but chose to do nothing. Consequently, the present expungement process is an angry reaction to a persistent failure to reform. Unfortunately, the ensuing rush to judgment yielded what such angry efforts will: a lack of balance and fairness. For those industry men and women whose good name is besmirched by the mistaken complaint or the erroneous allegation -- no matter how few in number those innocent victims may be -- the relief is little more than a rigid system that takes too long, costs too much, and, in the end, sends the victor on an even more time-consuming and expensive route to the courts.
(SEC Litigation Release 24021) The SEC obtained a Contempt Order in Securities and Exchange Commission v. Anvil Partners, Inc., (United States District Court for the Southern District of New York; 17-Misc-318) finding registered investment advisor Anvil Partners and its majority owner, president, and chief investment officer, Jeremy Beck, in civil contempt of court for failing to comply with the court's prior order enforcing a June 6, 2017, SEC investigative subpoena directed to Anvil. READ the FULL TEXT CONTEMPT ORDER.
The Dead Father, Feuding Kids, Stockbroker In The Middle, And The Lawsuit (BrokeAndBroker.com Blog) As the warm, rosy hue of the holidays is fading, we are once again reminded of family. Ah yes, family! The aunts and uncles who don't talk to each other because of something that happened ten years ago but no one quite remembers exactly what. The cousins who you can't sit next to each other at the dinner table. The feuding siblings who manage to ruin every family get-together. The awkward silences brought on by the divorced folks who politely smile at each other through the entire meal for the sake of the kids but still get in a few shots. In today's BrokeAndBroker.com Blog we consider yet another family affair involving estranged kids and their father . . . their wealthy father . . . and a poor stockbroker who got caught in the middle. It ends for the stockbroker but not without lots of festive nastiness for the holidays. In the holiday spirit, enjoy the three music videos.