Articles Tagged with securities fraud

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On September 17, 2019 the SEC (The Securities and Exchange Commission) imposed an order against three Raymond James entities for improperly charging advisory fees on inactive accounts and charging excess commissions for investments, including unit investment trusts (UITs).

The SEC Order states that Raymond James & Associates, Inc., and Raymond James Financial Services Advisors, Inc., failed to perform review of advisory accounts which had no trading activity for at least one year.

Because Raymond James did not conduct the reviews properly, Raymond James failed to conclude whether the client’s fee-based account was suitable. The Order concluded that the entities also misapplied incorrect pricing to various UIT positions held by clients.

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“Pump and Dump” schemes are not just the subject of episodes of the Sopranos. Nor are they limited to the unregulated 1920’s stock market in the USA commanded by Joe Kennedy. They persist in the here and now, made even more extreme through internationalization of markets, information and trading.

 On 20 June 2019 the SEC (Securities and Exchange Commission) published charges against five foreign traders for “matching” trades in Medico International, Inc. (MDDT) to artificially increase the price. Assets were frozen by the Court in the defendant’s brokerage accounts, inclusive of $144,000 slated for wiring offshore, and blocks of MDDT stock.

The SEC complaint stated that on 19 June 2019, traders from China, Singapore, and Malaysia attempted to artificially manipulate the price of MDDT. “Matched” orders to buy and sell MMDT at about the same times, sizes, and prices were implemented. The SEC complaint was filed in the US District Court for the Southern District of New York.

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On 28 May 2019, the SEC (The Securities and Exchange Commission) charged investment adviser Stephen Brandon Anderson with fraud. The specific fraud was overcharging of advisory fees to his clients.

Anderson owned River Source Wealth Management, LLC, a registered investment adviser in North Carolina. River Source’s primary revenue was customer advisory fees. Customer agreements provided that those fees would be based on each customer’s assets under management. River Source is now out of business.

According to the SEC, in 2015 and 2016, Anderson overcharged his clients. The amounts were about 40% more than the agreed fees. Anderson also misled his clients about the reason he transferred their assets from River Source’s asset custodian, falsely stating that it was his decision when the asset custodian ended the relationship with River Source after noting irregular billing practices.

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On April 11, 2019, the SEC (Securities and Exchange Commission) charged two former directors of investments at Woodbridge Group of Companies LLC related to their participation in a massive Ponzi scheme. Ivan Acevedo and Dane R. Roseman, were charged, along with Robert H. Shapiro (who was Woodbridge’s owner).

Previously, a number of others, principally unregistered securities brokers, were charged.

In prior SEC charges, the SEC charged Woodbridge and Shapiro, and Woodbridge’s unlicensed brokers. A federal court in Florida in January 2019 ordered Woodbridge and Shapiro together to pay $1 billion for operating this Ponzi scheme.

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The SEC (Securities and Exchange Commission) advanced charges against former executives of Woodbridge Group. The total claim is $1.2 billion. Woodbridge engaged in an elaborate Ponzi, mostly against the elderly.

Ivan Acevedo and Dane R. Roseman, former directors of investments at Woodbridge, were charged for their roles in the scheme. Acevido and Roseman, were former controlling persons of Woodbridge

The criminal charges against them pend in Federal Court in Los Angeles.

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The SEC (Securities and Exchange Commission) on April 2, 2019 charged the founder a Silicon Valley startup with defrauding investors in Jumio Inc. a private mobile payments company.

Former CEO, Daniel Mattes, agreed to pay more than $17 million to settle the charges.

The SEC’s complaint which was filed in federal court in California alleged that Mattes overstated Jumio’s 2013 and 2014 revenues,. then sold shares he owned to unrelated investors.

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$50 MILLION IN WHISTLEBLOWER AWARDS BY SEC

On March 26, 2019, the SEC (Securities and Exchange Commission) awarded $50 million to two whistleblowers. The information provided the basis for an enforcement action.

One Whistleblower received an award of $37 million; the other $13 million.

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BROKER NAILED FOR $250K. BROKER TIMARY DELORME FINED IN  PUMP AND DUMP.

The SEC  (Securities and Exchange Commission) (SEC) announced that Wedbush Securities Inc. will pay a $250,000 penalty and has agreed to be censured to settle its failure to supervise charge concerning a “pump and dump” scheme by its broker, Timary Delorme.

The SEC stated: “Wedbush ignored numerous red flags indicating that one of its registered representatives was involved in a long-running pump-and-dump scheme targeting retail investors. Wedbush conducted two flawed and insufficient investigations into the registered representative’s conduct, and failed to take appropriate action.”

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Two FINRA claims were filed involving Michael Fasciglione’s and National Securities Corporation. The claims allege suitability, breach of contract, breach of fiduciary duty, negligence, and/or churning.

The claims were settled for $525,000 and $80,000. FINRA reports of 6 other settled claims involving with prior brokerages.

Michael Fasciglione has been licensed with Aegis Capital Corp since September 2017; previously Fasciglione was licensed with National Securities Corporation. In December 2014, Fasciglione was suspended from the securities industry for 1 month and fined $5,000 by FINRA.

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On March 15, 2019, Talimco LLC, a registered investment adviser, and its former COO, Rodgers, were charged with manipulating the auction of a commercial real estate asset. One client’s asset was raided in a bid rigging scheme to sell the asset to a private affiliated client.

The asset was a commercial real estate asset sold in an alleged bidding process.

Talimco and Rogers owed its selling client a fiduciary duty to take steps to use its best efforts to maximize the price obtained for the asset. Rather than searching for competitive arms length offers, Rogers purportedly used the firm’s successful affiliated fund client for one bid, then convinced two other bidders to participate in the auction (who were actually shills who would underbid).