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FINRA Suspends City Securities Broker John Cody Miller

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.


SEC Charges 36 Firms Over Fraudulent Municipal Bond Offerings

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:


Consulting Firm Reveals $50 Billion loss for Investors in Non-traded REITs

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.

Business Development Companies (BDCs) – Look Before You Leap

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).

Tom Buck Now Facing 5 Customer Complaints for Unauthorized Trading & Excessive Fees

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.



Warning: What You Need to Know About ‘Indexed’ Annuities?

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.”

Attorney Mark Maddox Quoted in IBJ Article

Checkout the article Attorney Mark Maddox was quoted in below.


LPL Ordered to Pay 10M in Fines & 1.7M in Restitution

LPL Financial LLC facing 11.7M in sanctions by FINRA for widespread supervisory failures related to complex product sales, trade surveillance, and trade confirmations delivery. Supervisory failures include the sales of non-traditional exchange-traded funds, certain variable annuity contracts, non-traded real estate investment trusts, and other complex products, as well as failing to monitor and report trades and deliver customers millions of trade confirmations. In addition, FINRA ordered LPL to pay 1.7M in restitution to specific customers who purchased non-traditional ETFs. The firm may pay additional compensation to ETF purchasers pending a review of its ETF systems and procedures. LPL consented to FINRA’s findings.

Colorado Merrill Lynch Brokers Terminated by Bank of America

Our firm will be looking into investor complaints against Joseph Yanofsky and Brooke Clements and the Yanofsky Group as a result of their termination from Bank of America Merrill Lynch.



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.

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