FINRA recently sanctioned an Indianapolis stock broker for failing to obtain written authorization from his clients before purchasing investments in their accounts. According to his CRD, John Miller of City Securities was suspended for 20 days and fined $10,000 by the regulator. Maddox Hargett & Caruso is investigating these allegations. If you believe your stock broker placed unauthorized investments in your account, please contact us.
As a result of, Alfred Talens being charged with stealing about $600,000 from Ovation where he was the CFO, along with other charges. We are looking into cases against Talens and LPL where he was employed as a stockbroker.
For more on this developing story click these links:
The SEC is examining J.P. Morgan for guiding clients to their own proprietary products and away from offerings by other firms. Generally leading to higher fees for the bank, the practice, while not banned, is closely watched by regulators. The bank says they have been responding and cooperating with the authorities. Regulators continue to monitor brokers selling their clients the right product for them, or whether they push the ones that make the firm the most money. Finance Advisers can operate under different rules depending on whether they register as an investment adviser with the SEC. If so, adherence to a fiduciary standard requiring them to recommend only those investment products that are in the best interests of their clients is required. The Government, along with industry participants have been working on policies to address alleged conflicts of interests on Wall Street for years. This April, the Labor Department released a proposal that would require brokers giving retirement advice to make recommendations in their clients’ best interests. The JP Morgan settlement with the SEC, containing their fine could happen later this summer.
Our firm will be looking into investor complaints against John Cody Miller, a City Securities broker and investment adviser in Indiana, as a result of his suspension for executing trades without written consent, going against his company’s policies. For more on this broker and his suspension checkout the below link.
Operating in the $3.7 trillion muni market, 36 municipal bond underwriters ordered collectively to pay about $9 million in compensation over fraudulent offerings, as part of the first pact of its kind with U.S. regulators.
Link to the SEC’s orders and penalty amounts:
- The Baker Group, LP – $250,000
- B.C. Ziegler and Company – $250,000
- Benchmark Securities, LLC – $100,000
- Bernardi Securities, Inc. – $100,000
- BMO Capital Markets GKST Inc. – $250,000
- BNY Mellon Capital Markets, LLC – $120,000
- BOSC, Inc. – $250,000
- Central States Capital Markets, LLC – $60,000
- Citigroup Global Markets Inc. – $500,000
- City Securities Corporation – $250,000
- Davenport & Company LLC – $80,000
- Dougherty & Co. LLC – $250,000
- First National Capital Markets, Inc. – $100,000
- George K. Baum & Company – $250,000
- Goldman, Sachs & Co. – $500,000
- Hutchinson, Shockey, Erley & Co. – $220,000
- J.P. Morgan Securities LLC – $500,000
- L.J. Hart and Company – $100,000
- Loop Capital Markets, LLC – $60,000
- Martin Nelson & Co., Inc. – $100,000
- Merchant Capital, L.L.C. – $100,000
- Merrill Lynch, Pierce, Fenner & Smith Incorporated – $500,000
- Morgan Stanley & Co. LLC – $500,000
- The Northern Trust Company – $60,000
- Oppenheimer & Co. Inc. – $400,000
- Piper Jaffray & Co. – $500,000
- Raymond James & Associates, Inc. – $500,000
- RBC Capital Markets, LLC – $500,000
- Robert W. Baird & Co. Incorporated – $500,000
- Siebert Brandford Shank & Co., LLC – $240,000
- Smith Hayes Financial Services Corporation – $40,000
- Stephens Inc. – $400,000
- Sterne, Agee & Leach, Inc. – $80,000
- Stifel, Nicolaus & Company, Inc. – $500,000
- Wells Nelson & Associates, LLC – $100,000
- William Blair & Co., L.L.C. – $80,000
According to Craig McCann, principal of Securities Litigation & Consulting Group, shareholders are about $50 billion worse off for having put money into non-traded real estate investment trusts rather than exchange-traded versions. McCann said his calculation of a roughly $50 billion “wealth loss” to investors from non-traded REITs is detailed in a paper he co-wrote that will be published in a few months by Investments & Wealth Monitor, a trade journal of the Consultants Association, which offers credentials to brokers and financial planners.
After a review by the Wall Street watchdog revealed problems, The Financial Industry Regulatory Authority cautioned brokerage firms about the way they market non-traded REITs. Investing in a wide range of real estate from apartments to hotels to strip malls, Non-traded REITs tend to have higher fees for investors than publicly-traded REITs and can be tougher to cash in.
The latest “hot” product being offered from Wall Street to Main Street investors is an investment in Business Development Companies (BDCs) which are either publicly registered or non-traded entities that provide financing to small and mid-sized businesses – some of which are experiencing significant financial or business difficulties.
BDCs seek to generate a higher amount of current income and, to a lesser extent, capital appreciation, through direct originations of secured debt, including first lien, first lien/last-out unitranche and second lien debt, unsecured debt, including mezzanine debt and, to a lesser extent, investments in equities.
Unfortunately, many financial advisors have pitched these products to their retail clients without having conducted the necessary due diligence on them or, of equal importance, without having an informed appreciation for the potential pitfalls of BDCs as their higher yields are typically also associated with significantly higher risks – many of which are being concealed from investors.
Notwithstanding the sales pitch that an investor may receive, it should be clear that investing in BDCs involves a high degree of risk, including credit risk, derivative risk and the risk of the use of leverage which could potentially magnify losses, and that they are, without exception, highly speculative. The securities in which BDCs invest will generally not be rated by any rating agency, and if they were rated, they would be below investment grade. Moreover, these securities, which may be referred to as “junk bonds,” have predominantly speculative characteristics with respect to the issuer’s capacity to pay interest and repay principal.
One of the most immediate concerns associated with BDCs, however, is the potential impact that the much anticipated increase in interest rates later this year by the Federal Reserve will have on both their business activities and their valuations since the majority of their debt investments will be long-term and will be tied to various floating rates such as the London Interbank Offer Rate (“LIBOR”), the Euro Interbank Offered Rate (“EURIBOR”), the Federal Funds Rate or the Prime Rate.
In fact, it is widely recognized that general interest rate fluctuations may have a substantial negative impact on many BDC investments (as increased interest rates from their historically low present levels may make it more difficult for their portfolio companies to service their debt) and, accordingly, this may also have a material adverse effect on the rate of return on invested capital, net investment income and the fair value determination of the net asset values of BDCs.
If you are an individual or institutional investor who has any concerns about BDC investments having been recommended for purchase in either your retirement or non-retirement 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 an individual securities arbitration claim with the Financial Industry Regulatory Authority (FINRA).
Our firm will be looking into investor complaints against Tom Buck and the Buck Group as a result of his termination from Merrill Lynch. Checkout the latest on Tom Buck below.
A new warning was just released targeting the sales incentives for ‘Indexed’ Annuities. Exotic trips and other perks are being offered to agents for selling them. Sen. Elizabeth Warren (D., Mass.) has been looking into this form of investment and is focusing on the indexed annuity, widely known within the industry for the perks available to agents, according to industry executives and financial advisers. This type of annuity is a controversial investment that promises returns tied to the stock-market index, guarantees against losses if the market falls, and is much more complicated with serious limitations on the upside potential.
Sen. Warren issued letters to 15 of the nation’s largest annuity issuers back in April, with concern over marketing materials aimed at agents for high-volume annuity sales receiving trips to California’s Wine Country, South Africa, or even a private yacht tour on the Mediterranean. Cash Rewards, car leases, and jewelry were also mentioned as perks listed in the letters.
Sen. Warren’s says, “That annuity sellers who are “more interested in earning perks than in acting in their clients’ best interest can place Americans’ savings and retirement security at risk.”
Checkout the article Attorney Mark Maddox was quoted in below.
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