In Securities and Exchange SEC v. David S. Haddad, et al., (Complaint, United States District Court for Connecticut, 18-CV-00055), the SEC alleges that Haddad operated Trafalgar Square Risk Management, LLC and New England RE, LLC and that he raised at lease $2.5 million from 29 investors through the offer and sale of unregistered securities in each company. READ the FULL TEXT SEC Complaint.
A Hard Rainmaker Gonna Fall At FINRA (BrokeAndBroker.com Blog) Paperwork. On Wall Street when it comes to compliance and regulation, it often comes down to paperwork -- or whatever passes for that now-quaint term in this digital age. You got to collect information. You got to review information. You got to store information. You got to produce information when a regulator wants to see that you collected, reviewed, and stored. Sometimes you just never got around to writing stuff down; and sometimes, well, just between us, you figured it was a waste of time and who the hell is ever going to need to see this crap anyway -- which, as such logic goes, doesn't quite help you out of the fix you're now in because someone from FINRA or the SEC is sitting in the conference room going through boxes of paperwork and that one damn thing that you didn't collect, review, and store is what those regulators are now asking to see
Manhattan U.S. Attorney Announces Fraud And Bribery Charges Against Former Director Of Financial Aid Of Graduate School / Melanie Williams-Bethea Engaged In Kickback Scheme With Students, Three Of Whom Are Also Charged (DOJ Press Release) A federal criminal Complaint was filed in the United States District Court for the Southern District of New York charging Melanie Williams-Bethea, former Director of Financial Aid of a graduate schoand students Annie Kpana, Carmen Canty, and Kyla Thomas a/k/a/ "Kyla Britt" with one count each of conspiracy to commit bribery and fraud in connection with federal student aid; conspiracy to commit wire fraud; and bribery. Additionally, Williams-Bethea, Canty, and Thomas are also charged with one count of fraud in connection with federal student aid. READ the FULL TEXT Criminal Complaint
Ohio Computer Programmer Indicted for Infecting Thousands of Computers with Malicious Software and Gaining Access to Victims' Communications and Personal Information (DOJ Press Release) Phillip R. Durachinsky was charged in a 16-count indictment today for allegedly creating and installing malware on thousands of computers for more than 13 years in order to watch, listen to, and obtain personal data from unknowing victims, as well as produce child pornography. READ the FULL TEXT INDICTMENT.
FINRA Arbitrators Award $140,000 In Employee Defamation Case (BrokeAndBroker.com Blog) An industry veteran takes on her former FINRA member firm in an effort to clear her name. She put on quite the battle and is not only to be complimented for waging the good fight but also for coming away from the fray with a nice chunk of change. For those who say that you can't beat your former employer, consider today's featured FINRA intra-industry arbitration.
Researching Public Companies Through EDGAR: A Guide for Investors (SEC Online) The SEC's Office of Investor Education and Advocacy posted a helpful investor's guide explaining how to research a company's financial information and operations by reviewing information on EDGAR.
(Opinion, United States Court of Appeals for the Sixth Circuit, 17-3496) Defendant James Mirgliotta and his late wife Bette invested several hundred thousand dollars in now worthless penny stocks at the advice of financial advisors, who were convicted of securities fraud and are defendants in an SEC enforcement action. FINRA member firm Wilson-Davisfiled a complaint for declaratory action and injunctive relief, asserting that it lacked any obligation to arbitrate
I Can't See Clearly (And Convincing) Now In Morgan Stanley FINRA Arbitration (BrokeAndBroker.com Blog) Umm . . . someone . . . anyone . . . puhlease . . . I'm not askin' for much . . . not a whole lot . . . but, you know, like tell me just what the hell this FINRA public customer arbitration is about? I'm not blaming the parties but I'm sorta wonderin' if FINRA couldn't have, you know, read through a draft of the proposed FINRA Arbitration Decision and, well, okay, like maybe asked for a tad more content and context as in, well, like, how should I put it, like, just what the hell is it that the Claimants alleged had happened at Morgan Stanley Smith Barney concerning, lemme see, oh yeah, concerning their "purchase of call options in Apple, Inc. stock." Maybe it's all that expensive law school training that I paid for or maybe it's that I'm a demanding pain in the ass who's never satisfied but, whatever, is it asking all that much to simply get the facts? Who purchased the Apple calls and why did the customers complain about the purchase and how did that purchase result in something shy of $3 million in losses? How's that Johnny Nash song go?
I can't see clearly now, the rain is here,
I can't see all the obstacles in my way
Here are the dark clouds that have me blind
It's gonna be a dark (dark), dark (dark)
FINRA Arbitration day
(SEC Litigation Release No. 24026) In Securities and Exchange Commission v. Joseph A. Rubbo, et al. (Complaint, United States District Court for the Southern District of Florida, 17-CV-62345) the SEC charged Joseph A. Rubbo and Angela Beckcom Rubbo Monaco with defrauding investors through offerings by their companies VIP TV LLC, VIP Television Inc., and The Spongebuddy LLC. The Complaint alleges that Rubbo and Monaco are repeat offenders whose prior securities schemes resulted in criminal convictions against Rubbo and SEC injunctions against both Rubbo and Monaco.two individuals with defrauding elderly investors in a penny stock scheme involving Florida entertainment companies and their Spongebuddy product. The SEC asserts that the Defendants raised at least $5.4 million from 11 primarily elderly investors to fund the growth of their entertainment business and develop the Spongebuddy, a sponge-like glove purportedly to be sold in stores.
Rep Emails Self 1,300 Account Numbers And FINRA Comes A Knockin' (BrokeAndBroker.com Blog) We are nearing that time of year when folks get happy feet and consider moving on to another employer. Some of that is prompted by disappointment with the size of a holiday bonus or the failure to win the promised promotion. Other motivations are a growing unhappiness with an organization's loss of direction and the sense that another year went by without improvement. Whatever has lit a fire under you, please keep in mind that you can't simply do a data dump from your employer's platform to your email or thumb drive. There's whatever is left of the Broker Protocol that may govern some of your freedom of choice; and then there's Reg S-P.
FINRA ruling on broker's sports betting is 'moronic': lawyer (New York Post by Gregory Bresiger) The regulator is an ass. That's what a securities industry gadfly says of the recent enforcement of a Financial Industry Regulatory Authority (FINRA) rule against a broker who made sports handicapping picks.
Finra to Breakaway Brokers, Firms: Fight It Out (Barron's) Finra is apparently going to let brokerages and breakaway brokers fight it out over the issue of who owns the client. A spokeswoman for the regulator tells Financial Advisor IQ that it takes no position on the debate, and adds that Finra isn't involved in the broker protocol. Finra has arbitration rules to handle disputes, but no who-owns-the-customer rule.
Finra Refuses to Get Embroiled in 'Who-Owns (Financial Advisor IQ by Rita Raagas.De Ramos)FINRA isn't going to intervene in the "who-owns-the-customer" debate that's resurfaced in the financial advisory industry because of the three high-profile exits of Morgan Stanley, UBS and Citigroup from the Protocol for Broker Recruiting.
Who Owns The Customer? Open Letter To FINRA Board From Bill Singer Esq (BrokeAndBroker.com Blog) The Broker Protocol is a self-serving agreement negotiated among employers/management and imposed without benefit of bargaining upon employees/labor and foisted upon equally disenfranchised public investors. There is no place for such fiat within self-regulation --- except, you know, the FINRA Board of Governors sat in silence as its large member firms sliced and diced control of public customers among themselves and then forced the convention upon their employees, smaller firms, and customers. Now, as that private agreement dissolves, the Board again gives silent assent. In resolving the "who owns the customer" issuer, FINRA's role is not a combatant but as the protector of the public investor and the industry. As members of the Board of Governors, your role is to act when your intervention is necessary, and this is such a moment in time. For once, assert your independence and protect the public and the industry. No one is asking you take sides. What everyone is asking you to do is your embrace the task of corporate governance and do your job.
SEC Charges California-Based Attorney with Securities Registration Violations (SEC Litigation Release No. 24024)In Securities and Exchange Commission v. Owen H. Naccarato (United States District Court for the Southern District of Florida, 17-CV-24682-JLK), the SEC alleged that in September 2013, California-based attorney Owen H. Naccarato issued two Rule 144 opinion letters improperly concluding that microcap company Global Digital Solutions, Inc. ("Global Digital") was not a shell company and that certain shareholders were not its affiliates. In furtherance of said 144 opinion, Naccarato allegedly improperly instructed Global Digital's transfer agent to remove the restrictive legends from these shareholder certificates. Naccarato consented to the entry of Final Judgment without admitting or denying any of the SEC's allegations. The Final Judgment permanently enjoins Naccarato from violating Sections 5(a) and 5(c) of the Securities Act, and orders him to pay $1,000 in disgorgement, $127.77 in prejudgment interest, and a civil penalty of $10,000. Further, Naccaraot is prohibited for five years from directly or indirectly providing, or receiving compensation from the provision of, professional legal services to any person or entity in connection with the offer or sale of securities pursuant to, or claiming, an exemption under Section 4(a)(1) predicated on Securities Act Rule 144, or any other exemption from the registration provisions of the Securities Act, including, without limitation, participating in the preparation or issuance of any opinion letter related to such offering or sale. READ the FULL TEXT SEC Complaint
SEC Charges Municipal Adviser and its Principal with Defrauding Mississippi City (SEC Litigation Release No. 24025) The SEC filed Securities and Exchange Commission v. Malachi Financial Products, Inc., et al., (Complaint, United States District Court for the Southern District of Mississippi, 18-CV-00001) seeking permanent injunctions, civil penalties, disgorgement plus prejudgment interest. READ FULL TEXT SEC Complaint.