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Former Ameriprise Broker Radcliffe (Cliffe) Daly Suspended by FINRA

According to FINRA’s Brokercheck public database, former Granger, IN Ameriprise broker Radcliffe (Cliffe) Daly was suspended by FINRA for the improper sales of the common stock of Sloud, Inc. Daly allegedly sold this Sloud penny-stock by mismarking order tickets as “unsolicited” when in reality the transactions were solicited by him. According to FINRA, Daly made 292 mismarked transactions in Sloud stock for 43 customers.

If you are an individual or institutional investor who has any concerns about any of your investments made with Cliffe Daly or Ameriprise Financial Services, please contact us for a free initial evaluation.

UBS Financial Fires Top Connecticut Broker Phil G. Fiore, Jr.

As reported this week in the Investment News (“UBS Fires Top Connecticut Broker Phil Fiore Jr. for Multiple Violations”), UBS Financial Services Inc. has fired Phil G. Fiore Jr., a top broker based in Stamford, Conn., for the violation of firm policies while he was under heightened supervision.

Mr. Fiore was reportedly a senior vice president and part of the FDG Institutional Consulting Group, as well as one of the top-ranked advisers in Connecticut, according to last year’s ranking by Barron’s magazine.

A review of Mr. Fiore’s registration records with the Financial Industry Regulatory Authority (“FINRA”) indicates that he was discharged at the end of November for violating UBS policies, including not disclosing an unpaid directorship at a not-for profit entity affiliated with a client; not seeking approval to operate a charity golf tournament; not seeking firm approval to make blog posts; and for failing to disclose to UBS that a new client had made an investment in Mr. Fiore’s approved outside business.

Mr. Fiore, who had been a broker at UBS since 2009, has five (5) customer complaint disclosure events indicated on his FINRA registration report – complaints which had alleged misrepresentation, churning, unsuitable trading and failure to follow instructions.

In addition, his FINRA registration report indicates that he has been the subject of two regulatory events including:

A May 2015 suspension, for thirty (30) days, by the Financial Industry Regulatory Authority Inc. for having an outside business activity and acting as a business consultant at an electric utility company without providing specific written notice to UBS; and

A December 2015 conditional registration stipulation, with the Massachusetts Securities Division, which required UBS to supervise his activities, on a heightened basis, for eighteen (18) months; prohibited him from exercising discretion over retail accounts for Massachusetts individuals; and which prohibited him from having any principal or supervisory duties.

If you are an individual or institutional investor who has any concerns about your accounts and/or investments with UBS Financial Services, 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).

UBS Loses Massive Arbitration Case

In early December, 2016, UBS was hit with an $18 million arbitration award because of various breaches of duties regarding its sale of poor performing Puerto Rican bonds. The Claimant in the case alleged breach of fiduciary duty, breach of contract, negligence, negligent supervision, unsuitable investments and strategy, failure to supervise and the failure to comply with the requirements set forth in the “Laws of Banks of Puerto Rico.” The causes of action relate to the Claimant’s investments in Puerto Rico closed-end mutual funds concentrated in Puerto Rico bonds heavily peddled by UBS brokers. The Panel awarded $12.7 million in compensatory damages, $2.5 million in interest, $163,000 in expert witness fees and $3.1 million in attorney fees. It is the largest award to date against UBS for the sales of the Puerto Rico bond funds. The entire award can be viewed at the link below.

http://www.finra.org/sites/default/files/aao_documents/14-02464.pdf

If you are an individual or institutional investor who has any concerns about your accounts and/or investments with UBS, 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).

Merrill Lynch Slammed by FINRA over Loan Management Account Deficiencies

On November 30, 2016, the Financial Industry Regulatory Authority (FINRA) announced that it had fined Merrill Lynch, Pierce, Fenner & Smith Inc. $6.25 million and ordered the firm to pay approximately $780,000 in restitution for inadequately supervising its customers’ use of leverage in their Merrill brokerage accounts.

According to the FINRA press release, Merrill “loan management accounts” (LMAs) are lines of credit that allow the firm’s customers to borrow money from an affiliated bank using the securities held in their brokerage accounts as collateral. FINRA found that from January 2010 through November 2014, Merrill lacked adequate supervisory systems and procedures regarding its customers’ use of proceeds from these LMAs. More specifically, FINRA found that although both Merrill policy and the terms of the non-purpose LMA agreements prohibited customers from using LMA proceeds to buy many types of securities, the firm’s supervisory systems and procedures were not reasonably designed to detect or prevent such use. FINRA further found that during the relevant period, on thousands of occasions, Merrill brokerage accounts collectively bought hundreds of millions of dollars of securities within 14 days after receiving incoming transfers of LMA proceeds.

FINRA separately found that from January 2010 through July 2013, Merrill lacked adequate supervisory systems and procedures to ensure the suitability of transactions in certain Puerto Rican securities, including municipal bonds and closed-end funds, where customers’ holdings were highly concentrated in such securities and highly leveraged through either LMAs or margin. FINRA further found that during the relevant period, 25 leveraged customers with modest net worths and conservative or moderate investment objectives, and with 75 percent or more of their account assets invested in Puerto Rican securities, suffered aggregate losses of nearly $1.2 million as a result of liquidating those securities to meet margin calls. Merrill has already reimbursed some customers and, as part of the settlement, will pay approximately $780,000 in restitution to the remaining 22 customers affected.

If you are an individual or institutional investor who has any concerns about your accounts and/or investments with Merrill Lynch, 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).

Attorney Mark Maddox quoted in IBJ article in Veros Case

Click the link to view the article

http://www.ibj.com/articles/60826-victims-to-collect-money-soon-in-veros-case

Morgan Stanley – Dishonest & Unethical Conduct Harms its Customers

As reported this week in The Wall Street Journal (“Massachusetts Charges Morgan Stanley Over High-Pressure Sales Contest”), Massachusetts officials have charged Morgan Stanley with dishonest and unethical conduct for running high-pressure sales contests between September 1, 2013 and August 20, 2015.

This latest complaint – which alleges that “Morgan Stanley’s firm-wide culture emphasizes the aggressive cross-selling of banking and lending products to wealth management clients,” comes on the heels of a cross-selling scandal at Wells Fargo & Co., where employees opened as many as two million unwanted accounts for unsuspecting customers.

As alleged in the Massachusetts regulatory complaint, “Financial Advisors, often owing a fiduciary duty to their clients, were now in the business of recommending that their clients burden themselves with debt. Financial Advisors responded to the incentives by nearly tripling their banking and lending production during the Sales Contest. The Sales Contest generated new loan balances totaling nearly $24 million.”

Morgan Stanley Financial Advisors, working with Private Bankers, purportedly began actively pushing banking and lending products, including Morgan Stanley’s Portfolio Loan Accounts (“PLAs”), on clients.

PLAs are securities-based loans that allow customers to borrow money against the value of the securities in their investment accounts, with the customer’s securities serving as collateral for the loan.

The risks associated with securities-based loans are material. For example, in the event that the value of a client’s securities pledged as collateral should decline significantly, Morgan Stanley may liquidate those securities if the client is unable to post additional collateral – liquidations that may be effectuated without prior notice to customers.

The complaint further alleges that “Morgan Stanley provided Financial Advisors with dozens of triggers for Financial Advisors to use as catalysts to cross-sell PLAs, such as mortgage funding, tax liabilities or obligations, weddings, and graduations. In addition, Morgan Stanley’s internal-use materials also offered suggestions on how to overcome client objections to borrowing against their portfolios.”

If you are an individual or institutional investor who has any concerns about your accounts and/or investments with Morgan Stanley, 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).

Breitburn Energy Partners LP Filed for Chapter 11 Bankruptcy Protection

This past May, 2016, Breitburn Energy Partners LP filed for chapter 11 bankruptcy protection, another casualty of plunging oil prices. Many investors were sold this investment by their brokerage firms and financial advisors who failed to properly disclose all the risks associated with an investment in this risky energy company. Our firm is investigating cases against brokerage firms where investors were improperly sold this investment. Please contact us if you were an investor in Breitburn Energy Partners LP and have any questions about how this investment was sold to you.

Reverse Convertible Notes – UBS Financial Once Again Violates its Customers’ Trust

On September 28, 2016, the U.S. Securities & Exchange Commission announced that it had imposed severe monetary penalties on UBS Financial Services in connection with the firm’s activities involving nearly $10.7 billion of stock-linked reverse convertible notes (“RCNs”) that had been sold to approximately 44,000 customer accounts between 2011 and 2014. (“In the Matter of UBS Financial Services Inc., Exchange Act Release No. 34-78958”)

The penalties, which included more than $9 million in disgorgement and a civil penalty of $6 million, were based on UBS having failed to develop and implement policies and procedures reasonably designed to educate and train its registered representatives in connection with RCNs so that they could adequately understand the risks and rewards of the product and could form a reasonable basis to make suitable recommendations to their customers.

Without adequate education and training, certain registered representatives made unsuitable recommendations in relation to the offer and sale of approximately 2,500 different RCNs to certain customers – many of whom had little or no relevant investing experience and had identified to UBS modest reported income and net worth, primarily moderate or conservative investment objectives, and some of whom were retired.

RCNs are a type of structured product issued by a financial institution as an unsecured debt obligation that is linked to the performance of an underlying single stock. RCNs are structured to pay a higher interest rate than conventional debt of the same issuer because of the inclusion of the embedded derivative that provides essentially a synthetic put on the underlying stock.

The UBS single stock-linked RCNs at issue in the SEC enforcement action involved certain complex structures, including: (1) Trigger Yield Optimization Notes; (2) Trigger Autocall Optimization Securities; (3) Trigger Phoenix Autocall Optimization Securities; (4) Airbag
Yield Optimization Notes; and (5) Airbag Autocallable Yield Optimization Notes.

As noted in the SEC’s Enforcement Order, “UBS’s internal education and training primarily focused on describing the payouts for the various products and . . . it did not provide adequate training on certain important aspects of RCNs. For example, although the Structured Solutions Desk provided potential issuers with information regarding the RCN option features from the ‘investor’s perspective,’ internal educational materials lacked similar information. In addition, UBS’s internal educational materials did not describe sufficiently the role of implied volatility and the potential for breach in the selection of the equity securities underlying the RCNs. As a result, UBS registered representatives were not adequately educated and trained to understand adequately the risk and characteristics of the product, including relevant volatility concepts and the role that volatility played in the selection of the equity securities underlying the RCNs.”

If you are an individual or institutional investor who has any concerns about your accounts and/or investments with UBS Financial Services Inc., 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).

Brokerages not Paying out Arbitration Awards

Aware of this issue for many years, FINRA has made little progress in finding a way to ensure investors get what they are owed. Back in 2000, a report was issued by the U.S. Government Accountability Office that stated, the industry needed to address the problem of unpaid arbitration awards. With the decline of the broker dealer industry and many firms shutting down the last few years, this issue on unpaid awards to investors is more demanding.

Some experts believe the solution is requiring firms to carry insurance to cover the payment of arbitration awards, but broker dealers who have carried insurance for these investor claims, have proven to be limiting resulting in low payouts or the specific types of claims not being covered.

With new FINRA CEO, Robert Cook, it is being suggested he start off his new role fixing this issue and making his mark for retail investors. The latest industry talk is the idea of establishing a fund for investors of unpaid arbitration awards, but with the long history of no solutions for this growing problem who knows what will happen.

Federal Prosecutors Target Wells Fargo

An article this week in The Wall Street Journal (“Federal Prosecutors Investigating Wells Fargo Over Sales Tactics”) stated that federal prosecutors are in the early stages of an investigation into sales practices at Wells Fargo & Co. – the same sales practices that led to Wells Fargo being slammed with a $185 million fine last week in an enforcement action that was filed by the Office of the Comptroller of the Currency, Consumer Financial Protection Bureau and Los Angeles City Attorney.

The investigation, which is reportedly being conducted by the U.S. Attorney’s Offices for the Southern District of New York and the Northern District of California, could potentially lead to civil or criminal charges being filed against Wells Fargo and/or its executives.

At the center of this new federal investigation are the same allegations that led to last week’s enforcement action which asserted that Wells Fargo had engaged in “widespread illegal” activity which included employees having falsified documents in connection with as many as 2 million accounts having been opened without customers’ knowledge, consent or permission.

If you are an individual or institutional investor who has any concerns about your accounts and/or investments with Wells Fargo, 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).


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