Posts belonging to Category Securities/Commodities Arbitration



Front-End Bonus Payments May Need To Be Disclosed

 

If your broker or financial adviser told you he was moving to another brokerage firm and asked you to move your account there, would you want to know if he was being paid thousands or millions of dollars to make the move?  The Financial Industry Regulatory Authority (FINRA) thinks so, and is proposing a new [...]

Brokerage Firm ‘Shoots First and Asks Questions Later’

 

When a securities brokerage firm sues to collect the balance due under a promissory note from one of its brokers, the securities industry often views the case as close as one can get to a “slam dunk” case for the firm.  When UBS Financial Services sued former brokers James Kirwin and Joanne Meninger for amounts [...]

Alternative Investments – Big Problems

 

According to financial advisers, do not be fooled by the recent market in stocks into believing that we are in for a continuing period of sustained low volatility.  Those advisers want you to expect lots of volatility and market corrections and to invest accordingly. In light of the foregoing, investors should adopt alternative investment strategies [...]

Promissory Note Award Hits Broker-Dealer Hard

 

A Financial Industry Regulatory Authority (FINRA) Arbitration Panel has ordered MML Investors Services LLC to pay $1,137,923 to a California investor in connection with the sale of an unregistered security (a promissory note) issued by Diversity Lending Group, Inc. (“DLG”).  The award includes compensatory damages plus reimbursement for expert witness fees, deposition costs, and the [...]

More Risks Ahead for Muni Investors

 

Stockton, California, the most recent U.S. city to file for Chapter 9 bankruptcy protection, has presented serious issues about whether municipal bondholders will be forced to take a “haircut” while Stockton pensioners do not. With 300,000 residents, Stockton is the largest U.S. city in history to file bankruptcy.  Stockton has total outstanding debt of over [...]

Most of the Yield from Muni Bonds is Illusory

 

Allan S. Roth prefers low-cost diversified bond funds for investors seeking the best interest yields on their investments. Mr. Roth, the noted financial planner and Wall Street Journal contributor, periodically reviews clients’ portfolios and makes recommendations.  Sometimes the only thing a client wants to keep is the municipal bond manager who seems to be producing [...]

OppenheimerFunds Pays $35 Million to Settle Charges

 

OppenheimerFunds  Inc. has agreed to pay more than $35 million to settle SEC charges that it  made misleading statements about two of its mutual funds during the credit crisis in late 2008.  The payments include a penalty of $24 million, disgorgement of $9,879,706, and prejudgment interest of $1,487,190. According to the SEC, Oppenheimer used total [...]

Alternative Investments – Are They All They Are Cracked Up To Be?

 

Rising interest rates may be death to traditional bonds and bond funds, but a number of alternative investment strategies allegedly designed to protect principal in a rising interest rate environment are springing up to take their place.  It remains to be seen whether they will provide ballast when bond prices fall. For decades, bond investors [...]

CDOs Haunt UBS

 

Swiss banking giant UBS AG is reported to be engaged in settlement discussions with the U.S. Securities and Exchange Commission regarding its structuring and underwriting of an allegedly fraudulent mortgage bond deal.  The SEC has alleged that UBS defrauded clients that invested over $748 million in notes linked to a CDO known as ACA ABS [...]

Hedge Fund Scams Harm Investors

 

Anastasios “Tommy” Belesis, owner of John Thomas Financial, a brokerage firm, and George R. Jarkesy Jr., a hedge fund manager, worked together to defraud investors in the John Thomas Bridge and Opportunity Fund LP I and John Thomas Bridge and Opportunity Fund LP II, according to a recently filed SEC complaint.  The funds reportedly invested [...]

Investment Policy Statements Are Important

 

A decided majority (61%) of financial advisers do not provide their clients with a written investment policy statements.  Such policy statements should, at a minimum, be based upon a number of suitability factors developed by the Financial Industry Regulatory Authority (FINRA). Those factors include, but are not limited to, the client’s age, other investments, financial [...]

Be Careful When Considering Municipal Bonds

 

A recent Wall Street Journal column advises money managers not to put more client money in municipal bonds. The column sets forth a number of risks and problems that it urged money managers to consider before placing clients’ money in these investments. First, municipal bonds’ tax-exempt status may be in political jeopardy (“Morning Call: Advisers [...]

Regulators Focus on Complex Alternatives

 

The Financial Industry Regulatory Authority (FINRA), as well as the SEC and state regulators, have announced that they are concerned about broker/adviser sales practices involving alternative investments including variable annuities and equity-indexed annuities. They have the distribution of these complex products on their radar screens.  On January 11, 2013, FINRA sent a letter to its [...]

Investors are Gorging on Junk Bonds

 

Prices of “junk” bonds keep rising as investors continue to buy the riskier debt.  Yields on junk bonds, which move inversely to bond prices, settled at a record low of 5.56% recently.  Demand for junk bonds is part of the yield-seeking behavior recommended by advisers to many fixed income investors, as they venture further out [...]

Financial Crimes – How Should We Deal With Them?

 

Has the government gone too far in ignoring financial criminal conduct? Is the United States operating under an unspoken policy to refrain from prosecuting large financial institutions even if they believe criminal laws were violated? Are the regulators afraid that doing so might damage the economy? Those questions were raised in a recent Wall Street [...]