Thursday, March 24, 2016

$470,000 Melendez Ramos v UBS of Puerto Rico Award

In March 2016, a FINRA arbitration panel in San Juan, PR ordered UBS Financial Services and UBS Financial Services of Puerto Rico to pay $470,000 in compensatory damages, interest, attorneys’ fees and costs. You can read the award here. Dr. McCann testified on liability and damages over UBS Puerto Rico's sale of UBS Puerto Rico municipal bond closed end funds.

Tuesday, March 22, 2016

$1.2 million Ramos v UBS of Puerto Rico Award

In March 2016, a FINRA arbitration panel in San Juan, PR ordered UBS Financial Services and UBS Financial Services of Puerto Rico to pay $1.2 million in compensatory damages and expert costs. The panel also ordered the Claimant to pay $156,433 in connection with a debit balance. You can read the award here. Dr. McCann testified on liability and damages over UBS Puerto Rico's sale of UBS Puerto Rico municipal bond closed end funds.

Friday, March 18, 2016

Enforcement Actions: Week in Review

SEC ENFORCEMENT ACTIONS

SEC Approves 2016 PCAOB Budget and Accounting Support Fee
March 14, 2016 (Litigation Release No. 51)
The SEC approved the Public Company Accounting Oversight Board (PCAOB) annual budget and accounting support fee for 2016 which is a task that SEC is required to do annually according to the Sarbanes-Oxley Act. The Sarbanes-Oxley Act of 2002 was established in efforts of the SEC to oversee and approve the PCAOB’s accounting support fee and budget which funds its operations. The approved requested amount totals $257.7 million which is an increase from the approved $253.3 million in 2015.

AIG Affiliates Charged With Mutual Fund Shares Conflicts
March 14, 2016 (Litigation Release No. 52)
The SEC announced that they have settled charges with three AIG affiliates that placed clients in expensive mutual fund share classes in order to collect approximately $2 million in additional fees. The AIG affiliates failed to disclose their conflict of interest when recommending the shares classes, and did so despite their clients being eligible for classes without additional fees. They will pay, collectively, more than $9.5 million to settle the charges.

SEC Charges Microcap Company CEO for Touting Bogus “Clean Energy” Contracts With Foreign Governments
March 14, 2016 (Litigation Release No. 53)
The SEC has charged Cary Lee Peterson, CEO of RVPlus Inc., with fraud. The SEC alleges that Peterson, in public filings and statements to investors, falsely claimed to have a successful relationship with the United Nations and substantial clean energy contracts with foreign governments. He also allegedly posted, using a fake name, on an investor forum that RVPlus was undervalued and incited investors to buy the stock. The U.S. Attorney’s Office for the District of New Jersey is also filing criminal charges against Peterson.

Municipal Advisor Charged for Failing to Disclose Conflict
March 15, 2016 (Litigation Release No. 54)
Central States Capital Markets, its CEO, and two employees have been charged for breaching their fiduciary duties to a municipal client. This action is the first enforcement of a municipal advisor’s fiduciary duty, which was part of the 2010 Dodd-Frank Act. The SEC alleges that CEO John Stepp, Mark Detter, and David Malone failed to inform their client that they had organized bond offerings to be underwritten by a broker-dealer where all three men were working as registered representatives; they advised the client without disclosing their conflict of interest in underwriting with a broker-dealer where they worked. All parties have agreed to settle the charges with the SEC.

SEC Charges Operator of Ponzi Scheme That Claimed to Offer “Bridge Loans” to Jamaican Businesses
March 15, 2016 (Litigation Release No. 55)
The SEC has announced charges against Mark A. Jones for operating a $10 million Ponzi scheme. Jones has been arrested by the FBI and U.S. Attorney for the District of Massachusetts for criminal charges related to said Ponzi scheme. The SEC alleges that Jones began the scheme in 2007, attracting investors with claims that money would be used for “bridge loans” to Jamaican businesses that would create 15-20% interest per year. Approximately $10 million was raised from, at least, 21 investors.

Monday, March 14, 2016

Aucoin v VSR Financial Services - $307,000 non-traded REIT / DPP Award

In February 2016, a FINRA arbitration panel in New Orleans, LA ordered VSR Financial Services to pay $307,000 in compensatory damages over non-traded REITs, promissory notes, limited partnerships and oil drilling programs. You can read the award here. Dr. Henderson testified on liability and damages over VSR's sale of the non-traded REITs and other investments to the Claimant.

Dr. Henderson's "An Empirical Analysis of Non-traded REITs" forthcoming in the Journal of Wealth Management can be downloaded here and SLCG's blog posts on non-traded REITs can be found here .

Silipigno v Raymond James - $800,000 Churning Award

In February 2016, a FINRA arbitration panel in Albany, NY ordered Raymond James to pay at least $791,847 in compensatory damages and interest after a hearing wherein the Claimant alleged Respondent churned the Claimant's accounts. You can read the award here. Dr. McCann testified to the egregiousness of the churning and damages on behalf of the Claimant.

Tuesday, March 1, 2016

Wiles v Questar Capital - $135,000 non-traded REIT Award

In March 2016, a FINRA arbitration panel in Louisville, KY ordered Questar Capital to pay $134,533 in compensatory damages and costs over the sale of Behringer Harvard REIT 1 non-traded REIT. You can read the award here. Dr. Henderson testified on liability and damages over Questar's sale of the non-traded REIT to the Claimant.

Dr. Henderson's "An Empirical Analysis of Non-traded REITs" forthcoming in the Journal of Wealth Management can be downloaded here and SLCG's blog posts on non-traded REITs can be found here .