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The Wall Street Journal, on June 25, 2018 (“Private Placements Draw Troubled Brokers”), exposed the fact that “securities firms with an unusually high number of troubled brokers are selling tens of billions of dollars a year of private stakes in companies, often targeting seniors.”

“Even though only around 4 out of 10 brokerages sell private placements, these brokerages account for more than half of the 94 firms that FINRA expelled since 2013,” the WSJ analysis found.

As noted in this article, “the emerging trend could mean that unsuspecting investors will be exposed to losses or fraud in a market that has grown sharply in recent years.”

In a review of more than a million regulatory records, the Journal “identified over a hundred firms where 10% to 60% of the in-house brokers had three or more investor complaints, regulatory actions, criminal charges or other red flags on their records – significant outliers in the investment community.”

“The clustering of higher-risk brokers underscores regulator worries about the largely unpoliced market” and “sales of private placements are so lucrative to the brokerage firms that they are a perennial concern for regulators,” said Brad Bennett, a former enforcement chief at brokerage watchdog the Financial Industry Regulatory Authority. Issues on the regulators’ radar, he said, include whether the private placement offers a stake in a legitimate business, what selling perks or markups the brokers get, and how it is sold to investors.”

According to the analysis undertaken by the WSJ, “sales of private placements are surging, as part of a broader rise in private capital markets, fueling concerns among investor representatives about how the products are sold.”

“More than 1,200 firms sold around $710 billion of private placements last year, and sales for the first five months of this year are on track to top that record-setting tally,” the WSJ found.

If you are an individual or institutional investor who has any concerns about your private placement investments with any brokerage firm, please contact us for a no-cost and no-obligation evaluation of your specific facts and circumstances. You may have a viable claim for recovery of your investment losses by filing an individual securities arbitration claim with the Financial Industry Regulatory Authority (FINRA).

On Monday, February 5, 2018,  we watched one of the most volatile days in the history of the stock markets and its largest single day point drop. The ProShares Short XIV Short-Term Futures ETF (NYSE ARCA: SVXY), plunged by nearly 90% in after-hours trading.

If your financial advisor had you invested in the ProShares Short VIX Short-Term Futures ETF, you may have a potential claim. We are investigating claims by investors for unsuitable investing in this ETF and financial advisors not properly disclosing the very high risks associated with this investment.
If you are an individual or institutional investor who has any concerns about the losses experienced in the SVXY or any other investments that dropped significantly in the market volatility on or around May 5th , please contact us for a no-cost and no-obligation evaluation of your specific facts and circumstances. You may have a viable claim for recovery of your investment losses by filing a securities arbitration case with FINRA.

The Financial Industry Regulatory Authority (“FINRA”) recently banned Robert Hayes Hoffman from the securities industry for failing to cooperate with an investigation into a customer complaint against him while he was registered with Woodbury Financial Services in Greenwood, Indiana.  He was registered with Woodbury from 2006 until March 2017.

FINRA records currently show 2 customer complaints against Woodbury and Hoffman, both of which are in FINRA arbitrations. In early 2017, a customer alleged that Hoffman and Woodbury made unsuitable investment recommendations, unauthorized trades and had traded the account(s) excessively. This customer has alleged damages of at least $3.2 Million.

In October of 2017, FINRA demanded that Hoffman provide “on the record testimony” about this customer complaint. Hoffman refused to testify and was subsequently barred from the industry by FINRA, as his refusal to testify violated FINRA rules.

A second customer complaint was filed in November 2017 alleging that Hoffman and Woodbury violated their fiduciary duties in multiple ways, including recommending unsuitable investments. The amount of the second investor’s damages has not yet been disclosed.

Our firm is investigating investor claims against Woodbury Financial and Robert Hayes Hoffman for the improper sale of unsuitable investments, unauthorized trading and excessive trading of investor accounts. If you are an individual or institutional investor who has any concerns about your investments with Woodbury Financial or Robert Hayes Hoffman, please contact us for a no-cost and no-obligation evaluation of your specific facts and circumstances. You may have a viable claim for recovery of your investment losses by filing a securities arbitration case with FINRA.

A front page article in The Wall Street Journal on January 11, 2018 (“Advisers at Leading Discount Brokers Win Bonuses to Push Higher-Priced Products”) exposed the fact that Fidelity, Charles Schwab and TD Ameritrade employees win extra pay and other incentives to put clients in products that are more lucrative for them and the firm.

As noted in the article, while “investors who seek advice from discount brokerage firms might assume the counsel they get is impartial, given how these firms have rejected the old Wall Street model of working on commissions, in fact, advisers at some of the biggest discount brokerage firms make more money if they steer clients toward more-expensive products, according to disclosures from the firms and people who used to work at them. That means customers could end up with investment products and services that are costlier than they need.”

Among the findings that are highlighted in this article are the following:
“Fidelity representatives are paid 0.04% of the assets clients invest in most types of mutual funds and exchange-traded funds. They earn more than twice as much, 0.10%, on choices that typically generate higher annual fees for Fidelity, such as managed accounts, annuities and referrals to independent financial advisers. At Fidelity, sales incentives not only enhance pay directly but also help representatives win ‘Achiever’ bonuses that can be tens of thousands of dollars a year.

Charles Schwab employees with exceptional service and client satisfaction can qualify for the Chairman’s Club, winning a trip to a Hawaii or Florida resort. For advisers, sales volume also can be part of the calculation. The firm’s compensation practices could create ‘a financial incentive to recommend [managed accounts] over other products and services,’ said a 2016 Schwab disclosure of compensation practices.

TD Ameritrade discloses in a document on its website that sales bonuses could give financial consultants an incentive to make recommendations for asset retention with a view to their compensation rather than the best interest of clients.”
“The products and services for which employees of Fidelity, Schwab and TD Ameritrade are best paid charge an annual fee – a percentage of assets – to offer advice.”

According to The Wall Street Journal, “all three firms pay incentives to representatives for referring clients to independent investment advisers. These advisers charge clients an annual percentage of their assets, and the discount brokerage firms receive up to 0.25% annually on assets committed to the advisers.”

If you are an individual or institutional investor who has any concerns about your investments with any discount brokerage firm, please contact us for a no-cost and no-obligation evaluation of your specific facts and circumstances. You may have a viable claim for recovery of your investment losses by filing an individual securities arbitration claim with the Financial Industry Regulatory Authority (FINRA).

The Financial Industry Regulatory Authority (FINRA) is cracking down on the rollover of retirement accounts and other brokerage accounts to fee-based advisory accounts. FINRA examiners are likely to ask more questions this year about the timing of and recommendations to switch these accounts.

This area is a new addition to the annual Regulatory and Examination Priorities Letter, whose 2018 edition was released on Monday as an aide to help firms focus their growing compliance, supervisory and risk management responsibilities, and serve as a warning to brokers about where FINRA disciplinary actions may occur.

The letter’s “sales practice risks” section focused on the rollover of retirement accounts from brokerage accounts to advisory accounts as a new priority area.

FINRA said it is closely watching the timing of recommendations to move customers from traditional commission-based brokerage accounts to fee-based advisory accounts, a twist on the issue of reverse churning that other regulators have identified as an issue for buy-and-hold clients.

“FINRA will review situations in which registered representatives recommend a switch from a brokerage account to an investment advisory account where that switch clearly disadvantages the customer, such as where the registered representative recommended that the customer purchase a securities product subject to a front-end sales charge in a brokerage account and then shortly thereafter recommended that account be transferred to a fee-based account,” the exam priorities letter said.

Our firm is investigating claims against various brokerage firms for the improper rollover of accounts from brokerage to advisory account. If you are an individual or institutional investor who has any concerns about the rollover of your retirement or other accounts from brokerage to fee-based advisory accounts, please contact us for a no-cost and no-obligation evaluation of your specific facts and circumstances. You may have a viable claim for recovery of your investment losses by filing a securities arbitration case with FINRA.

On October 16, 2017, the Financial Industry Regulatory Authority, Inc. (“FINRA”) announced that it had ordered Wells Fargo Clearing Services, LLC and Wells Fargo Advisors Financial Network, LLC to pay more than $3.4 million in restitution to affected customers for unsuitable recommendations of volatility-linked exchange-traded products (ETPs) and related supervisory failures.

FINRA found that between July 1, 2010, and May 1, 2012, certain Wells Fargo registered representatives recommended volatility-linked ETPs without fully understanding their risks and features.

As noted by FINRA, “[v]olatility-linked ETPs are complex products that could be misunderstood and improperly sold by registered representatives. Certain Wells Fargo representatives mistakenly believed that the products could be used as a long-term hedge on their customers’ equity positions in the event of a market downturn. In fact, volatility-linked ETPs are generally short-term trading products that degrade significantly over time and should not be used as part of a long-term buy-and-hold investment strategy.”

In view of the “unique features and risks of volatility-linked ETPs,” FINRA has also issued Regulatory Notice 17-32 “to remind firms of their sales practice obligations relating to these products” which cautions and reminds firms who solicit the sale of volatility ETPs to “be well aware of the unique risks that they pose” including the risk that “many volatility-linked ETPs are highly likely to lose value over time” which may render them “unsuitable for certain retail investors, particularly those who plan to use them as traditional buy-and-hold investments.”

FINRA also “found that Wells Fargo failed to implement a reasonable system to supervise solicited sales of these products during the relevant time period.”

If you are an individual or institutional investor who has any concerns about your investments with Wells Fargo or volatility-linked exchange-traded products (ETPs) purchased through any other brokerage firm, please contact us for a no-cost and no-obligation evaluation of your specific facts and circumstances. You may have a viable claim for recovery of your investment losses by filing an individual securities arbitration claim with the Financial Industry Regulatory Authority (FINRA).

On September 20, 2017, the Enforcement Section of the Massachusetts Securities Division filed a massive complaint against SII Investments, Inc.

The complaint alleges that from 2011 to 2017, SII Investments engaged in “dishonest and unethical conduct and failed to supervise its agents by allowing systemic inflation of its clients liquid net worth while maintaining contradictory and unclear rules related to the purchase of non-traded real estate investment trusts (REITS).”

Non-Traded REITS are companies which own and manage income producing properties or are involved in real estate financing and are often investments that are entirely illiquid. As a result of the complicated characteristics of REIT investments, they have become a “widely used and widely misunderstood investment vehicle” that “typically pay high sales commissions and offer fees that range from 15 to 18 percent.”

The misconduct that is alleged in the enforcement complaint is predicated on the allegation that SII Investments increased the purported liquid net worth of its clients in order to get around the Massachusetts regulation – and SII’s own internal policies and procedures – which limit the amount of a client’s investment to no more than 10% of a client’s liquid net worth in any one sponsor’s REIT with a maximum of no more than 20% of liquid net worth allowed across all such REIT products.

A copy of the complaint filed by Massachusetts against SII Investments can be found here SII-Administrative-Complaint-E-2016-0128.

SII Investments, Inc. is an independent broker-dealer which has an extensive history of prior regulatory actions and customer-initiated arbitration proceedings having been filed against it.

If you are an individual or institutional investor who has any concerns about your investments with SII Investments, please contact us for a no-cost and no-obligation evaluation of your specific facts and circumstances. You may have a viable claim for recovery of your investment losses by filing an individual securities arbitration claim with the Financial Industry Regulatory Authority (FINRA).

According to AdvisorHub, the Federal Bureau of Investigation has interviewed at least one client of James Polese, a Boston-area broker who Morgan Stanley fired for allegedly misappropriating client assets. Morgan Stanley recently fired Polese and fellow broker Cornelius “Cory” Peterson on June 26 for “allegations of conduct involving misappropriation of client assets,” according to their BrokerCheck records. Morgan Stanley has allegedly made one client whole for assets allegedly misappropriated by Polese.

Our firm is investigating potential investor claims against James Polese and Morgan Stanley relating to broker misconduct. If you are an individual or institutional investor who has any concerns about your investments with Morgan Stanley and/or its brokers like James Polese or Cory Peterson, please contact us for a no-cost and no-obligation evaluation of your specific facts and circumstances. You may have a viable claim for recovery of your investment losses by filing a securities arbitration case with the Financial Industry Regulatory Authority (FINRA).

A large group of stockbrokers previously with Wells Fargo were “permitted to resign” because of annuity sales practices, according to some of their Brokercheck reports.

According to Ameriprise, approximately 15 of the Bison Financial Group’s 21 brokers have joined it in the past few weeks, all leaving Wells Fargo. The publicly available Brokercheck reports for CEO David C. Vorbeck, President F. Stephen Dunnuck and Lafayette Market Director Stephen R. Wien were all recently amended to state they were each “permitted to resign” by Wells Fargo due to “termination of licensee agreement of certain annuity processes.”

The attached Advisorhub.com article: https://advisorhub.com/wells-fargo-confirms-expulsion-big-indie-team-annuity-violations/ suggests that these 3 brokers at Bison Financial Group were forced out by Wells Fargo due to improperly generating commissions through the switching or churning of certain investment products called annuities. This article further claims that an insider tipped off Wells Fargo about this problem in September of 2016.

In April of 2017, RBC settled a case involving Indianapolis broker James Wilson for $3.5 Million. The investors alleged that Wilson and RBC had overtraded in many accounts and excessively sold their family various closed end funds that included Unit Investment Trusts (UITs). More details can be found in the story in the Indianapolis Business Journal at: https://www.ibj.com/articles/64159-brokerage-resolves-complaint-with-skinner-family-for-35m?utm_source=this-week-in-ibj&utm_medium=newsletter&utm_campaign=2017-06-10

On behalf of our clients, our firm is investigating various claims against RBC and its brokers, including James Wilson,  for the sale of closed end funds such as UITs, and other bad practices such as overtrading accounts. If you are an individual or institutional investor who has any concerns about your investments with RBC and/or its brokers like James Wilson, please contact us for a no-cost and no-obligation evaluation of your specific facts and circumstances. You may have a viable claim for recovery of your investment losses by filing a securities arbitration case with the Financial Industry Regulatory Authority (FINRA).