Securities Industry Commentator by Bill Singer Esq

SEC Charges Morgan Stanley Smith Barney With Providing Misleading Information to Retail Clients / Settlement Will Create $5 Million Fund to Benefit Harmed Investors (SEC Release)

FINRA Imposes Fine and Suspension for Rep's Transmittal of Customer Documents Via Email

In the Matter of Sune Gaulsh, Respondent (FINRA AWC)

FINRA Imposes Fine and Suspension for Rep's Fraternal Benefit Society Short-cut

In the Matter of Robert Nordaune, Respondent (FINRA AWC)

CityMD mistakenly told 15,000 people with coronavirus antibodies they're immune (CNBC by William Feuer)

If Landlords Get Wiped Out, Wall Street Wins, Not Renters /  Bans on evictions and rent strikes could push out small investors.(Bloomberg Businessweek by Prashant Gopal and Oshrat Carmiel)

Live Nation, Bishop Gunn host coronavirus pandemic's first-ever socially distant concert / The live music venue will limit seating capacity to 229 (Fox Business by Angelica Stabile)

Trump orders federal retirement money invested in Chinese equities to be pulled / The assets at hand number around $4.5 billion in Chinese stocks (Fox Business by Blake Burman)

Wrap fee programs offer accounts in which clients pay an asset-based "wrap fee" that covers investment advice and brokerage services, including trade execution.  According to the SEC's order, MSSB marketed its wrap fee accounts as offering clients professional investment advice, trade execution, and other services within a "transparent" fee structure.  From at least October 2012 until June 2017, some of MSSB's marketing and client communications gave the impression that wrap fee clients were not likely to incur additional trade execution costs.  During that period, however, the order finds that some MSSB managers routinely directed wrap fee clients' trades to third-party broker-dealers for execution, which in some instances resulted in MSSB clients paying additional transaction fees that were not visible to them.  As a result of MSSB's conduct, the order finds that certain MSSB clients were unable to assess the value of the services received in exchange for the wrap fee paid to MSSB.

[F]rom at least May 2015 until May 2019, Tucker worked in several boiler-room-like operations to enable shareholders who owned large blocks of illiquid microcap securities to dump their shares without causing the price of the shares to crash. As alleged, Tucker cold-called prospective investors and convinced them to purchase shares of the microcap companies that his selling clients wanted to liquidate. The complaint alleges that Tucker would determine the amount of shares that the prospective investors wanted to purchase and the prices at which they would buy. Tucker allegedly then relayed that information to the selling shareholders, who entered sell orders at the coordinated prices and volumes, making it highly likely that their sell orders and the solicited investors' buy orders would match. Through this alleged matched trading, the selling shareholders were able to offload their shares into a market that Tucker had helped create. In addition to working as a sales agent in the matched-trading scheme, Tucker allegedly pitched fictitious investment opportunities to particularly vulnerable investors whom he identified while working in the boiler rooms. Instead of investing the funds he obtained from these investors as he had represented he would, Tucker allegedly spent the funds on personal expenses.

On March 27, 2018, in anticipation of his leaving the Firm for another job and contrary to Firm policy as well as an agreement he signed when he joined the Firm, Gaulsh used his work email account to email to himself, at his personal email account, approximately 100 confidential and proprietary Firm documents. The documents included approximately 70 documents related to computer code, approximately 25 documents related to third party vendor data and 9 documents related to indices data-the unauthorized dissemination of which could base exposed the Firm to legal liability and had other negative consequences. The Firm detected Gaulsh's transmissions, required him to demonstrate that he had deleted the files at issue, and told him to refrain from such conduct. 

Notwithstanding this directive, on March 29, April 9 and April 11, 2018, Gaulsh attempted to send to himself approximately 20 additional confidential and proprietary Firm documents in 13 separate emails. These documents primarily related to third party vendor data and one was related to computer code. During these attempts, Gaulsh took steps to conceal from the Firm's electronic filters the nature of the documents by placing them in zip archives and changing the archive file extensions in an effort to conceal the number and nature of the files being attached. The Firm's automated email filter system detected and blocked all 13 of the emails before they left the Firm. 

In May 2019, Respondent met with a recently-widowed woman to fill out paperwork to transfer ownership of a variable annuity that her husband had purchased from TIMI's parent company. TIMI and its parent company are part of a fraternal benefit society that offers products and services only to its members. Respondent, believing that the woman was already a member of the society and thus was eligible to assume ownership of the variable annuity, did not ask her to apply for membership at their meeting. Afterward, however, Respondent discovered that the woman was not a member of the society. Respondent filled out a membership application for the woman, signed her name, and submitted the application, all without her permission or knowledge. Respondent did so even though, as he knew, TIMI prohibited associated persons from signing documents for customers. Shortly afterward, the woman received a copy of the membership application and complained to Respondent, who suggested that she had electronically signed the document but forgotten about it. The woman then complained to TIMI, who terminated Respondent's association and transferred the variable annuity in accordance with the woman's wishes. 

Rich Uncle Pennybags, the Monopoly game character who tips his top hat with one hand and holds tight to a sack of cash in the other, may be the most famous landlord in America. But the stereotype is wrong. Many landlords aren't any better off than their tenants and certainly aren't rich enough to credibly pull off a bow tie, says Jan Lee, who manages two buildings in New York's Chinatown that his family has owned for nearly a century.

In the first letter written Monday, obtained exclusively by FOX Business, national security adviser Robert O'Brien and National Economic Council Chair Larry Kudlow write to U.S. Labor Secretary Eugene Scalia stating that the White House does not want the Thrift Savings Plan, which is a federal employee retirement fund, to have money invested in Chinese equities that numbers about $4 billion in assets.

• Securities Industry Commentator
• Bill Singer