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Home > Blog > Monthly Archives: April 2015

Monthly Archives: April 2015

RBC Ordered by FINRA to Pay More than $1.4M in Fines and Restitution for Unsuitable Sales of Reverse Convertibles

FINRA found that RBC failed to have supervisory systems practically designed to identify transactions for supervisory review when reverse convertibles were sold to customers, in violation of FINRA’s rules as well as the firm’s own suitability guidelines. RBC established suitability guidelines for the sale of reverse convertibles setting specific criteria for customer investment objectives, annual income, net worth, liquid net worth and investment experience. Consequently, the firm unsuccessfully detected the sale by 99 of its registered representatives of 364 reverse convertible transactions in 218 accounts that were unsuitable for those customers. The customers sustained losses totaling at least $1.1 million. RBC made payments to several customers pursuant to the settlement of a class action lawsuit; FINRA ordered compensation to the remainder of affected customers. Resulting in FINRA ordering RBC Capital Markets to pay a $1 million fine and approximately $434,000 in restitution to customers for supervisory failures resulting in sales of unsuitable reverse convertibles.

Veros Partners sued by SEC for Alleged Ponzi Scheme

Indianapolis Securities Firm, Veros Partners, has been sued by the SEC for an assumed Ponzi scheme that raised $15M in two farm-loan offerings. The lawsuit states that, Veros owes millions of dollars to over 80 investors in past payments. Named in the suit are Veros President Matthew Haab, Fishers attorney Jeffery Risinger, and CEO of Pin Financial Tobin Senefeld. All the assets of those named in the suit have been frozen. This is not Senefeld’s first time being pursued by the SEC. In 1999, he paid a $25,000 fine and 12 month suspension with working with broker dealers, as a result of securities violations.


Report on National Senior Investor Initiative Released by FINRA & SEC

Over the next 15 years more and more baby boomers will be turning 65, the SEC and FINRA issued a report this month to help broker-dealers evaluate, craft, or improve their policies and processes for investors as they prepare for and enter into retirement. The National Senior Investor Initiative report focuses on issues related to senior investors and regard to compliance with laws, rules, and regulations applicable to senior investors to be a high regulatory priority. Concerns that some broker-dealers may be recommending riskier and possibly unsuitable securities to senior investors looking for higher returns and may be failing to adequately disclose the terms and risks of the securities they recommend.

Susan Axelrod, FINRA Executive Vice President, Regulatory Operations, says, “With the dramatic increase in the population of our nation’s seniors, it is critical that securities regulators work collaboratively to make sure that senior investors are treated fairly. The culture of compliance at firms is key to ensuring that seniors receive suitable recommendations and proper disclosures of the risks, benefits, and costs of any investments they are purchasing.”

Zero Coupon Bonds Risky for Investors

Investors are rushing into the uncertain and most volatile corner of the U.S. government bond market in search of bigger returns. Zero-coupon Treasury bonds, mature in more than 25 years have handed investors a return of 5.79% year to date, according to data from Barclays PLC, while not offering a steady stream of income. With expected delay in rising interest rates, fund managers are shrugging off the risks of these government bonds as well. Click here for more information.

Toll-Free FINRA Securities Helpline for Seniors Launched

FINRA launched their toll-free FINRA Securities Helpline for SeniorsTM this week. Senior investors can call the new toll-free number at (844-57-HELPS or 844-574-3577) from 9:00 a.m. – 5:00 p.m. ET, Monday through Friday, and get neutral, knowledgeable assistance from FINRA staff related to concerns they have with their brokerage accounts and investments.

Susan Axelrod, FINRA’s Executive Vice President for Regulatory Operations, says “Protecting senior investors has been an important priority for FINRA for several years. Our goal in setting up this Helpline is to build on these efforts and provide an additional resource to senior investors. FINRA’s Helpline means that older investors are only a phone call away from getting help with questions or concerns they may have regarding their investments. FINRA staff will point seniors to educational tools that can help them better understand investing, savings and investment products, as well as resources like BrokerCheck that can provide valuable information about securities firms and financial professionals.”

A key priority for FINRA, the protection of senior investors has sparked the need for FINRA Securities Helpline for Seniors, along with their recently published paper captioned Report on National Senior Investor Initiative.

Summary of the Department of Labor’s Action to Protect Retirement Savers

Earlier this week, the Department of Labor delivered a proposed rulemaking to guard investors from backdoor payments and hidden fees in retirement investment advice. The below summary is from the fact sheet of the proposal for action.

Backdoor Payments & Hidden Fees Often Buried in Fine Print Are Hurting the Middle Class: Conflicts of interest cost middle-class families who receive conflicted advice huge amounts of their hard-earned savings. Conflicts lead, on average, to about 1 percentage point lower annual returns on retirement savings and $17 billion of losses every year.

The Department of Labor is protecting families from conflicted retirement advice. The Department issued a proposed rule and related exemptions that would require retirement advisers to abide by a “fiduciary” standard-putting their clients’ best interest before their own profits.

The Proposed Rule Would Save Tens of Billions of Dollars for Middle Class and Working Families: A detailed Regulatory Impact Analysis (RIA) released along with the proposal and informed by a substantial review of the scholarly literature estimates that families with IRAs would save more than $40 billion over ten years when the rule and exemptions, if adopted as currently proposed, are fully in place, even if one focuses on just one subset of transactions that have been the most studied.

The Administration Welcomes Feedback: The issuance of a notice of proposed rulemaking and proposed exemptions begins a process of seeking extensive public feedback on the best approach to modernize the rules of the road on retirement advice and set new standards, while minimizing any potential disruption to the many good practices in the marketplace. The proposal asks for comments on a number of important issues. We look forward to hearing from all stakeholders. Any final rule and exemptions will reflect this input.

For more information follow the link below:


Former JPMorgan Chase Broker Oppenheim, Charged in $20 Million Fraud

Our firm will be looking into investor complaints against former JPMorgan Chase broker, Michael J. Oppenheim, as a result of the federal authority’s accusations of embezzlement from his clients over the past four years. Checkout the latest on this breaking story below.

New Hampshire Requesting LPL Financial to pay $3.6M

In a filing last week, The New Hampshire Bureau of Securities Regulation says they are seeking $2.4 million from LPL in buybacks and restitution for clients in 48 sales of nontraded real estate investment trusts that date back to 8 years ago. The rest of the $3.6M stems from a request for a $1 million fine and $200,000 in investigative costs. The state is claiming the sales were “unsuitable and unlawful” and that the advisors allegedly conducted unsuitable sales of real estate investments for their elderly clients.

What to Know about Liquid-Alternative Mutual Funds

With low interest rates hampering the returns of conventional bond funds, the new alternatives are booming in popularity, such as liquid-alternative mutual funds. Sold as portfolio diversification, these “Hedge Funds for the Masses”, bring complicated fixed-income assets within reach of the average investor, who should be frightened at how these funds perform in turbulent markets.

The SEC has taken notice. In a document spelling out its priorities for examinations of the financial industry this year, it said one focus would be the “leverage, liquidity, and valuation policies and practices” of funds holding alternative investments. The SEC pinpointed fixed-income-focused funds specifically, and said it would review whether they mislead investors about how easily the funds can sell their holdings

If market instability were to occur, fixed-income prices can rise and fall quickly. Hedge funds usually are able to ride out the bumps, due to their lockups, but these newer funds may be forced to sell their positions at inopportune moments, leading to big losses for some investors. Click here for pointers when investigating future investments into liquid-alternative funds.

Tom Buck Update

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.

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