Class Action

Ponzi Schemes

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Latest News

Whistleblower Tips, Recoveries on the Rise

By Michael Petro -- Buffalo Law Journal Statutory enactments by federal financial regulatory and various state enforcement agencies have made it easier, safer and financially enticing for employees and former employees to report corporate wrongdoing. According to the U.S. Securities and Exchange Committee, whistleblower tips have been on the increase over the past few years as legislation has provided whistleblowers incentives to report fraud to the Securities and Exchange Commission and Commodity Futures Trading Commission and give protection against retaliation and disclosure of their identities. The SEC, using the whistleblower program developed after the recession in 2010 under the Dodd-Frank Act, has...

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State regulators reveal top enforcement targets and the price they pay

Agencies brought more cases against registered advisers than unregistered entities, and certain products featured in many of them By Mark Schoeff Jr. of investmentnews.com For the first time since they've been keeping enforcement statistics, state regulators last year brought more cases against registered financial advisers than against unregistered entities. In its 2015 enforcement report, the North American Securities Administrators Association said 812 registered advisers were named as respondents in cases, compared to 791 unregistered individuals and firms. Overall, state regulators opened 4,487 investigations last year and took 2,074 enforcement actions, according to the report, which was released at the NASAA annual conference in...

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Finra fines UBS $250,000 for overcharging mutual-fund customers

The firm allegedly failed to provide about 2,700 customers waivers tied to upfront sale charges InvestmentNews.com By Christine Idzelis A unit of UBS Group AG will pay a $250,000 fine to settle charges that it failed to waive certain fees for eligible mutual-fund customers, according to the Financial Industry Regulatory Authority Inc. The brokerage firm charged customers an excess of $277,636 to invest in mutual funds from September 2009 to June 2013, according to a settlement notice that Finra accepted Monday. The alleged supervisory failures were tied to so-called reinstatement rights that allow investors to avoid front-end sales charges. “We are pleased to have resolved...

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Finra panel orders adviser to pay $333,000 to Morgan Stanley

Louis D. Dworsky was found in breach of promissory notes when he left the brokerage firm InvestmentNews.com By Christine Idzelis A former broker for Morgan Stanley must pay the wirehouse $333,000 in damages for failing to pay back money he owed when leaving the firm in 2013, according to the Financial Industry Regulatory Authority Inc. Morgan Stanley will recoup money tied to four promissory notes issued to Louis D. Dworsky in 2007, 2008 and 2009, according to a Finra dispute resolution document released on Monday. Promissory notes are a form of compensation that brokers receive from their employer. Mr. Dworsky now works at Zermatt Wealth...

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Former Merrill Edge adviser accused of misleading customers

Finra said the adviser misled five IRA customers and then did not give an honest account of his actions InvestmentNews.com By Tanvi Acharya The Financial Industry Regulatory Authority Inc. accused former Merrill Lynch adviser of allegedly misleading five clients with individual retirement accounts at the firm by providing incorrect information while making recommendations. Landon L. Williams, who is currently not registered as a Finra member, also “made false statements about what he discussed with and disclosed to the customer” in his notes, according to the complaint filed Thursday. Mr. Williams was an adviser at Merrill Lynch Edge Advisory Center, which serves customers with $250,000 or...

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FINRA panel directs broker to pay Wells Fargo almost $1 million after his termination

Robert Edward Loftus was discharged in 2013 and found in breach of a promissory note InvestmentNews.com By Christine Idzelis Broker Robert Edward Loftus must pay Wells Fargo almost $1 million in compensatory damages after his termination in 2013, according to the Financial Industry Regulatory Authority Inc. An arbitration panel decided that Mr. Loftus owes the firm $930,874 in damages for breach of a promissory note, a form of compensation that he received upfront when he joined Wells Fargo in 2009, according to a Finra document dated Aug. 3. Mr. Loftus is also responsible for $300,000 of the brokerage firm's attorney fees. Mr. Loftus, who now...

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Investment Branch of Fidelity Sued for Fiduciary Breach

Individuals that contribute to a Delta Air Lines Inc. 401(k) plan have sued sections of Fidelity Investments, on the claim of wrongdoing in the firm’s record keeping role. According to its latest Form 5500, the Delta Family-Care Savings Plan had approximately $7.8 billion in assets. The participants in this investment fund are seeking a class-action status and allege that Fidelity hired Financial Engines to provide investment advice and to collect a piece of the action. The complaint stated, “In order to be included as the investment advice service provider on Fidelity’s (record-keeping) platform, Financial Engines agreed to pay – and is paying – Fidelity a significant percentage of the fees it collects from...

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Starr Austen Helped Secure Huge Recovery for Fraud Victims

In a better-than-average outcome, more than 90 investors who lost $9.7 million in a securities fraud debacle will recover a very substantial percentage of their losses. The investors had put money in a hedge fund, Samex Capital Partners, run by a Fishers, Ind., hedge fund manager Keenan Hauke. The court appointed William Wendling, Senior Partner with Campbell Kyle Proffitt in Carmel, Ind., to act as receiver. Wendling then hired Starr Austen & Miller to act as lead securities litigation counsel because of their experience in representing victims of securities fraud. Broker misconduct In 2012, Hauke pleaded guilty to securities fraud and was...

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Prepare for the Unexpected: Your Succession Planning Portfolio

You may dream of someday passing down your family farm and your legacy to the next generation, but are you taking the necessary steps to prepare for that handoff? When it comes to successful succession planning, you do need more than a will – there are other important documents you must consider and open, ongoing communication is a must. According to attorney Polly Dobbs, "This process doesn’t have to be overwhelming. Farmers should begin by asking themselves: ‘What if I get hit by a bus?’ Then draft your succession plan like that life­-changing event is going to happen tomorrow. The hard work...

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Accounting Firm Agrees to Settlement in Ponzi Fraud Case

Indianapolis-based accounting firm DeWitt & Shrader PC agreed to settle a lawsuit brought by a receiver appointed for Samex Capital Partners, LLC involving the way it provided services for convicted Ponzi schemer Keenan Hauke. The suit alleged that DeWitt & Shrader violated the Indiana Securities Act and committed negligence and fraud, as well as breach of contract, by failing to monitor Hauke’s bank accounts. A prominent money manager, Hauke led the hedge fund Samex Capital Partners LLC. In December 2011, Hauke was sentenced to 10 years in prison for securities fraud and ordered to pay $7.1 million in restitution. Hauke concealed losses, estimated...

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