Year: 2017

FINRA Arbitration Orlando, Florida

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FINRA stands for the Financial Industry Regulatory Authority. It is an organization that oversees the securities industry. The organizations primary function is to protect investors and does so by subjecting traders to a set of rules and regulations. Enforcing rules and subjecting violators to punishment is what takes place after the detection of any wrongdoing. Educating the public is a primary function as well, as the best way to reduce the impact disputes have, is to avoid them altogether. Being that we live in an imperfect world and trade in an imperfect marketplace, disputes are inevitable. Once a dispute ensues, FINRA’s forum handles the overwhelming majority of arbitration’s and mediation’s with locations in all 50 states as well as in the United Kingdom and Puerto Rico.

Since practically all disputes in this industry pass through the hands of FINRA, it is important to retain an attorney that is knowledgeable, experienced and tested when it comes to FINRA regulations, procedural nuances and formal hearings. While resolving a security complaint doesn’t necessarilly require you to have an attorney, if you are seeking a beneficial outcome, it is in your best interest. Brokerage firms will be represented by an attorney which is why you need to come represented as well. The attorneys that that defend brokerage firms are savvy and you’ll need a fierce advocate to represent your best interests.

Depending on the circumstances, a dispute will either result in Arbitration or Mediation. The former closely parallels a trial that would take place in a United States court. The state of Florida has specific narrowly tailored guidelines for arbitration that change the landscape of the field. In other states, individuals with no license to practice law can provide advice to disputant investors for a fee. Arrangements of this nature are banned in Florida. In addition to this, arbitrators can include reasonable attorneys fees as part of the settlement for the receiving party. Before any type of settlement is awarded, the facts are reviewed. The process requires an initiation (commencement) , a statement of claim, examination of witnesses and presentation of evidence.

The Hanley Law is a South Florida based firm with the FINRA experience and insight needed to successfully secure a settlement on your behalf. The firms history with the security industry precedes the creation of FINRA. Whether your investments were poorly handled or you were the victim of stock fraud, Hanley Law offers a free case evaluation to determine the best course of action for you.

Fraud Lawyers in Florida

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Investing in securities can be a great way to secure your financial future; however, it’s important to understand the ways your investments can be mishandled. Understanding the different types of fraudulent activity that can occur is crucial if you plan to invest your money. Making an arrangement with a stockbroker should be carefully considered, as there are many ways that your investments can be mishandled. Stockbroker fraud constitutes a large portion of all lawsuits related to securities, so understanding the different ways your broker could be mishandling your accounts is essential for investors.

You might feel that your investments are unsuitable to your portfolio, over-concentrated in one area or industry, were misrepresented to you (either by purposefully withholding information or presenting misleading information), or that your broker was churning your investments. Churning refers to when a broker trades excessively on your behalf to increase their commissions. Insurance and annuity fraud is often subject to this; annuities, for example, offer some of the highest commissions for stockbrokers, and as such can be misrepresented or sold to investors when it is not in their best interest.

In addition to stockbroker fraud, there are other abuses that regulatory agencies like FINRA & the SEC (Securities & Trade Commission) look out for. Insider trading, fraud and market manipulation also occur in the industry, when individuals privy to certain company information use that information to help theirs or others investments. Investment schemes need to also be considered – these include methods for stealing investor’s money, using misrepresentation and instilling false hope into the investor. A well-known example of an investment scheme is the Ponzi scheme – Where brokers will use the money from new investors to pay their current clients, rather than money generated from the investment. To this end, when the Ponzi scheme is shut down, there isn’t enough real money that can be used to pay back investors. Pyramid schemes are another example of an investment scheme.

Securities violations come in many different forms and carry severe punishments. The process for solving these issues can come in the form of litigation or, more commonly, arbitration, and anyone looking to recover damages from a securities lawsuit should fully understand both options and the prerequisites to filing a claim. If you feel your investments have been mishandled or you may have been subject to securities abuses, it’s important to speak with an attorney who specializes in securities arbitration and litigation. The Hanley Law offer free case evaluations and can help you navigate through your claim.

Security Fraud in Florida and Nationwide

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Securities Arbitration and Litigation Attorneys

Securities Fraud is widespread and as an investor, it is essential to be aware of the most common types of fraud so you can take preventative measures, maximize your gains and reduce the possibility of taking a loss. Not all types of fraud are the result of premeditated criminal schemes, though a lot of them are. Professionals in the securities industry are trained in making sound investments so even if they didn’t have the intention of compromising your investment, in the event they have or do in the future, those individuals can still be held responsible. Similar to the medical profession, a doctor who commits malpractice may not have had the intention of harming the patient, but if they do they can be held responsible in a civil court and even a criminal court if laws were violated in the process. This logic is also applicable to investment bankers, firms, stock brokers,etc.

The most common types of fraud are propagated by individuals who practice outright deception and those who are incompetent/irresponsible. Whether your losses are a result of reckless practices or flat out lies, the implications for you don’t vary as much as they do for the individual you trusted with your hard earned money. In either case, you can seek to recover losses suffered.

Investments Compromised due to Negligence

One of the most common types of fraud occurs when an inappropriate investment is made, this is related to the investors status and is usually a high risk investment. For example, a particularly high risk investment would not be right for a person who is retired or an investor with a conservative track record.

Another form of fraud is when the firm fails to perform their fiduciary duty to the investor, this is called failure to perform due diligence and commonly this results in the firm investing someones funds in a company they didn’t properly research.

Additionally, failure to diversify an investors portfolio is considered an inappropriate practice. Over concentrating funds in one investment is a poor practice that can result in losses for the investor.

Brokers Knowingly Compromising Your Investment

There a number of circumstances when brokers knowingly compromise your investment for their own personal gain. There are a wide range of practices from over-trading to selling penny stocks that are considered fraud. Excessive trading is when a broker trades with the primary intention of profiting from the commission they make as a result of the trade, this is called Churning and is illegal. To prove churning, attorneys will look at excessive activity, that is quantifiable by turnover rate and cost-equity ratio.

Misrepresentation occurs when a stockbroker fails to disclose pertinent information to an investor, which interferes with their ability to make a sound decision/ investment. Omitting facts or details about a company is a common cause of investment loss.

Investors who promise guaranteed returns on investments or claim that an investment will offer high returns with little to no risks are committing fraud. Shy away from brokers or firms that guarantee a return , usually one that is just too good to be true.

Finally, trading without permission of the investor is considered unauthorized trading and is also a poor practice. In certain circumstances, the broker does have permission to trade without consulting the investor only if they receiver prior authorization, these accounts are called discretionary accounts.

If you’ve suffered losses due to fraudulent practices, contact the The Hanley Law, who are offering free case evaluations. Hanley Law have experience recovering losses for sole investors and in class actions suits against major investment firms.

How to Recover Damages Through Securities Arbitration

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Florida Securities Arbitration Attorneys at Hanley Law, PLLC

If you have investments with a financial corporation or brokerage firm, it’s important to monitor your investments to ensure they are being handled according to your agreement with the broker. If you suspect that some fraudulent activity might be going on, including any activity you didn’t consent to, you might want to consider resolving the issue through arbitration. Arbitration is how the majority of disputes in the securities industry are resolved (as opposed to a traditional courtroom trial) because it is a quick and inexpensive way to solve complicated concerns.

The process will typically take anywhere between 12-14 months from the time the claim was filed, but the timeframe will vary depending on certain factors (# of involved parties, complexity of issues, personal schedules, volume of necessary discovery) and can be expedited in special circumstances (due to medical concerns or age). The first step is to file a Statement of Claim with FINRA. This will include the details of the dispute, including identifying the Claimant (who filed the claim) and Respondent (who the claim is against), and the type of damages requested. The Claimant must also file an Arbitration Submission Agreement and pay a filing fee, which depends on the amount of the claim, number of discovery motions, number of hearing sessions and any postponements. Next the claim gets served to the respondent(s), who then file an “answer” which specifies any relevant facts and outlines their defense.

After the answer is received, the arbitrator selection process begins. The Claimant and Respondent are provided lists of arbitrators (generated from FINRA’s Neutral List Selection System) and get the opportunity to evaluate their potential arbitrators and eliminate those they don’t want on their case. Depending on the dollar amount of the damages requested and parties involved, 1-3 arbitrators may be assigned. Next, you will have a prehearing conference with all parties involved including the appointed arbitrators to determine the timelines for discovery, briefing & motions, and evidentiary hearing dates.

After all discovery and any motions have been filed it is time for the actual hearing, which is similar to a normal trial where the Claimant will try and prove their claim and the Respondent will try to defend their position. The hearing will typically include testimony from involved parties and any witnesses, and reviewing any evidentiary documents. After the hearing arbitrators will then deliberate and render their decision of award, which is issued within 30 days. There is no appeals process offered through FINRA, but district courts do have the power to overturn an arbitration award under certain circumstances. Brokerage firms & brokers then have 30 days to pay you, or they risk suspension by FINRA.

This is a highly simplified version of the securities arbitration process, intended to give a general overview of how to collect damages through arbitration. To learn more or to have your case evaluated for free by legal experts, please contact The Hanley Law.

Aegis Capital Fined Nearly $1 Million over Sales of Unregistered Penny Stocks

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Aegis Capital Corp. (CRD No. 15007), a New York based broker dealer, was recently fined $950,000 by FINRA over allegations of improper sales of billions of shares of unregistered penny stocks and anti-laundering supervisory lapses. Furthermore, two former chief compliance officers were also fined and suspended in connection with this penny stock scheme.

According to FINRA’s Disciplinary and Other FINRA Actions publication, Aegis Capital Corp., along with representatives, Charles D. Smulevitz (CRD No. 5099387) and Kevin C. McKenna (CRD No. 1343870), allegedly liquidated nearly 3.9 billion shares of five unregistered penny stocks that seven customers deposited into their accounts at the firm. According to FINRA, most shares have to be registered with the SEC to ensure that potential investors are able to receive facts about the issuers. However, allegations stated that the shares were not registered with the SEC nor were the transactions exempt from registration.

As a result of the illicit sales conducted by Aegis Capital Corp. and its representatives, the customers allegedly generated over $24.5 million in proceeds and Aegis collected over $1.1 million in commissions, according to FINRA. (See FINRA Disciplinary Proceeding No. 2011026386001)

Charles D. Smulevitz has been registered with the following member firm(s):

UBS FINANCIAL SERVICES INC.
(CRD# 8174)
NEW YORK, NY
07/2012 – 04/2013

AEGIS CAPITAL CORP.
(CRD# 15007)
NEW YORK, NY
06/2009 – 07/2012

CASIMIR CAPITAL L.P.
(CRD# 105061)
NEW YORK, NY
04/2006 – 06/2009

Kevin C. McKenna has been registered with the following member firm(s):

MORGAN STANLEY SMITH BARNEY
(CRD# 149777)
NEW YORK, NY
06/2009 – 02/2010

MORGAN STANLEY & CO. INCORPORATED
(CRD# 8209)
NEW YORK, NY
04/2007 – 06/2009

MORGAN STANLEY DW INC.
(CRD# 7556)
NEW YORK, NY
12/2006 – 04/2007

VANDERBILT SECURITIES, LLC
(CRD# 5953)
MELVILLE, NY
01/2006 – 12/2006

METLIFE SECURITIES INC.
(CRD# 14251)
NEW YORK, NY
08/2005 – 01/2006

METROPOLITAN LIFE INSURANCE COMPANY
(CRD# 4095)
NEW YORK, NY
08/2005 – 01/2006

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
(CRD# 7691)
NEW YORK, NY
10/1988 – 06/2004

If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Hanley Law to discuss your legal options. The Hanley Law is dedicated to helping investors nationwide. If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses. Contact our office toll free at (239) 649-0050 for a complimentary initial consultation.

Types of Broker Misconduct

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Broker misconduct makes up a large portion of securities lawsuits. Understanding the different types of broker misconduct is essential if you’re having issues with your stock broker. Most of these claims can be categorized as churning, unsuitability, overconcentration, or misrepresentation & omissions.

Churning happens if your stock broker is engaging in excessive trading on your behalf to increase their commissions. Be wary if they always have some “good” reason you should just take quick profits. To actually establish proof of this, we recommend doing as much as possible of the following:

  • Calculate the annualized rate of return that would be necessary to cover commissions charged in your account.
  • Determine how many times your account’s equity has been turned over to purchase securities.
  • Determine all purchase & sale trading that occurred in your account.

Armed with this information you will have the necessary proof to determine if your stock broker has been churning your account illegally.

A broker might also be on the hook for making any investments that would be considered “unsuitable” for their clients. When a broker makes a decision on your behalf, it must be consistent with that client’s needs, their tolerance for risk, and the objectives of their investment. For example, an investor may have made what could be considered a “high risk” investment if their client’s financial situation couldn’t reasonably incur the associated risk, or if the client was unaware of or didn’t understand these risks. Because a broker should be well aware of a client’s investment goals and their financial situation, they are responsible to make suitable investments.

Another common type of misconduct occurs when a broker has concentrated too many of a client’s investments in one individual investment or one type of investment. Focusing like this greatly increases the risk for potential losses as you are essentially ‘putting all your eggs into one basket’. If this one investment or this investment area declines in value, you don’t have any other investments to fall back on and help the health of your portfolio. If your investment fails and you find that your broker hasn’t properly diversified your portfolio, they are potentially liable for your losses.

You might also feel like an investment wasn’t explained or presented to you in an entirely truthful way. Misrepresenting and omitting information that may prove important in a client’s decision making process is considered broker misconduct. Brokers will misrepresent certain investments so they can better disguise the potential risk involved. Obviously, this can lead to clients losing money due to the trust they placed in their broker.

When hiring a broker there is a certain amount of trust involved, but they are also required to adhere to certain standards and guidelines. At Hanley Law we are well-informed about all types of broker activity and have handled our share of misconduct cases. Contact us today for an evaluation of your broker misconduct case.

Read more on broker misconduct.

Securities Attorneys Representing Clients in Florida and Nationwide

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Securities are the financial instruments that represent a form of ownership or stake in a company. Securities allow individuals to own asset(s) without taking possession of them. Because of this, securities can be exchanged easily. In addition to this, pricing securities is not difficult which is why they are a strong indicator of the value of the asset. In order to purchase or sell securities, a trader must obtain a license to ensure they have been trained to follow a set of laws established by the SEC (Securities and Exchange Commission). Despite the regulatory agencies and laws in effect, fraud is still widespread. Fraud is an “umbrella term” that encompasses a wide range of deceptive and manipulative practices utilized by perpetrators to profit at the expense of the investor(s).

Types of securities:

Bonds, which can be issued by corporations or the government (Federal/Local).

A corporate bond is essentially a loan to a corporate entity in which you receive interest annually until the loan is paid off. Corporate bonds offer stability and are considered safer than stock in a company. Bondholders do not get dividends or voting rights which is why in the long haul, stocks have the potential for larger returns.

A bond issued by the federal government is very low in terms of risk and most frequently issued by the US Treasury. The potential for return is significantly lower than stocks or bonds issued by corporate entities.

A municipal bond is issued by state and local government. These include a city, county, town or school district. Typically,the rate of interest is lower than that of a bond issued by a corporation.

Mutual Funds , which are composed of a variety of securities.

A mutual fund can be stock options, bonds or both. In most cases, the investment is placed in a pool with monies from other investors. The fund is managed by an investment company, who selects the securities. The risk of the investment is reduced due to the diversity of the portfolio.

Stock Options

The right to purchase or sell stock in a company, at a specific rate for a window of time. The right to purchase stock is referred to as a call, the right to sell is called a “put”.

Futures Option

A futures contract is an agreement to sell a certain security in the future for a pre-determined rate. An option is the right to purchase or sell a contract at a certain price for a specified period of time. Since it used to reduce risk, a futures option is utilized by many investors.

History of Regulation

The regulation of Securities in the United States dates back to the 1930’s when the New Deal was passed. In the1930’s & 40’s, five major laws were put into place by the Federal Government.

  • Securities Act of 1933 a regulation on the distribution of new securities
  • Securities Exchange Act of 1934- regulation of trading securities , brokers & exchanges
  • Trust Indenture Act of 1939- regulation of debt securities
  • Investment Company Act of 1940- regulating mutual funds
  • Investment Advisers Act of 1940- regulation of investment advisers

Since the 1940’s a number of amendments have been made to these regulations in order to promote fair trade and enforce illegitimate/illegal practices. These major laws also serve to protect investors, ensuring they are adequately informed at the time of purchase.

While many measures are in place to reduce risk, it is still inherent, especially when dealing with non-governmental entities. Educating yourself on the common practices of Fraudsters can help you identify red flags when it comes time to invest your hard earned money. While often, fraudsters target vulnerable investors, saavy, educated people are still victimized.

Florida Based Law Firm Hanley Law have represented thousands of clients nationwide and represent individual investors in claims for securities and stockbroker misconduct. If you’ve suffered monetary loss due to misconduct or believe your investment was mishandled, contact us for a Free Case Evaluation.

Former Merrill Lynch Broker Thomas Buck Barred by FINRA Over Numerous Allegations of Misrepresentations and Misconduct

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According to FINRA’s Disciplinary and Other FINRA Actions publication, former top Merrill Lynch Broker Thomas Buck (CRD #1024868) of Indianapolis, Indiana, was barred by FINRA over numerous allegations of engaging in misrepresentations and other misconduct in the handling of customer accounts.

Allegations stated that Buck held customer assets in commission-based accounts rather than fee-based accounts in order to generate higher revenues. According to FINRA, registered representatives are required to assess the comparative costs to customers of commission-based or fee-based accounts, and discuss those alternatives with their customers, which Buck failed to do. FINRA alleges that Buck not only failed to fully assess the suitability of the fee structure for certain clients, but in fact decided to use commission-based accounts despite knowing that it would have been less expensive for those clients to maintain fee-based accounts. As such, Buck allegedly misled customers regarding the relative costs of commission-based or fee-based trading for their accounts, in order to keep them in higher-cost commission-based accounts.

Furthermore, allegations also stated that Buck exercised discretion and made unauthorized trades in customer accounts without prior authorization from the customers or his member firm, Merrill Lynch. Allegedly, Buck placed trades in customer accounts without obtaining his customers’ consent in advance or even after placing the trade, exercised discretionary authority without obtaining authorization, and placed trades which he assumed the customers would want without obtaining their authorization to do so. As a result of engaging in such conduct, Buck, according to FINRA, directly violated FINRA rules and his obligation to observe high standards of commercial honor and just and equitable principles of trade

According to a recently published InvestmentNews Article, Buck has been Merrill Lynch’s top broker in Indiana since at least 2009, overseeing approximately $1.3 billion in assets. Since that time, Buck has allegedly pursued unethical and improper business practices which generated increased revenues and commissions, which in turn enhanced his status as a top-producing broker. Buck has accrued nearly a dozen customer complaints for unsuitable investments and unauthorized trading.

According to FINRA’s Broker Check, Thomas Buck (CRD #1024868) has been permanently barred by FINRA from acting as a broker or otherwise associating with firms that sell securities to the public. Buck was registered in the securities industry for thirty three (33) years, and was registered with the following firm(s):

RBC CAPITAL MARKETS, LLC
CRD #31194
INDIANAPOLIS, IN
Registered with this firm since 04/2015

MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
CRD #7691
INDIANAPOLIS, IN
12/1981 – 04/2015

If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Hanley Law to discuss your legal options. The Hanley Law is dedicated to helping investors nationwide. If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses. Contact our office toll free at (239) 649-0050 for a complimentary initial consultation.

Broker Dealer Financial Services Corporation Fined by FINRA for Unsuitable Recommendations and a Failed Supervisory System

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According to FINRA’s Disciplinary and Other FINRA Actions publication, Broker Dealer Financial Services Corp. (CRD#8073), an Iowa Firm, was censured and fined $75,000 for failing to establish and maintain a supervisory system, including written procedures, that were reasonably designed to ensure that the firm’s sales of leveraged or inverse exchange-traded funds (“ETFs”) compiled with applicable securities laws and NASD and FINRA rules.

Allegedly, representatives of Broker Dealer Financial Services Corp. made unsuitable recommendations to their customers by recommending high-risk ETFs. FINRA further alleged that Broker Dealer Financial Services Corp. did not investigate nontraditional ETFs before allowing its registered representatives to recommend them to customers. Furthermore, Broker Dealer Financial Services Corp. allegedly did not train its personnel in the appropriate use of nontraditional ETFs, and did not adequately monitor and supervise ETF activity in customer accounts. (See AWC No. 2012030436501)

If you have suffered investment losses as a result of your broker’s or brokerage firm’s misconduct, contact the Hanley Law to discuss your legal options. The Hanley Law is dedicated to helping investors nationwide. If you have lost money as a result of your broker’s recommendations, you may be entitled to recover your investment losses. Contact our office toll free at (239) 649-0050 for a complimentary initial consultation.

Former Huntington Bank Broker of Columbus Ohio Barred by FINRA for Misappropriation of Client Funds

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According to FINRA’s Disciplinary and Other FINRA Actions publication, Bryan A. Carnahan (CRD No. 3103811), a former broker with Huntington Bank in Hilliard, Ohio, was barred by FINRA for misappropriation of funds from a Huntington customer. FINRA alleged that between September 2013 and March 2015, Carnahan converted approximately $169,500 from one of his customers by causing fund transfers to be made on five occasions from the customer’s brokerage account to her bank account at the Firm’s affiliated bank. FINRA further alleged that Carnahan then had his client withdraw funds from her bank account and get cashier’s checks for supposed investments. FINRA alleged that after Carnahan took possession of the cashier’s checks, he fraudulently caused them to be re-issued in the form of multiple cashier’s checks, totaling approximately $169,500, that were payable to his own accounts and to the accounts of at least 13 of his other customers who had suffered investment losses. (See FINRA AWC No. 2015044908301)

According to FINRA’s Broker Check, Bryan A. Carnahan was permanently barred by FINRA from acting as a broker or otherwise associating with firms that sell securities to the public. Carnahan was registered in the securities industry for sixteen (16) years with the following firm(s):

THE HUNTINGTON INVESTMENT COMPANY
CRD #16986
COLUMBUS, OH
02/1999 – 03/2015

JOHN HANCOCK DISTRIBUTORS, INC.
CRD #486
BOSTON, MA
08/1998 – 12/1998

If you have suffered financial losses as a result of your broker’s or brokerage firm’s misconduct, contact the Hanley Law to discuss your legal options. The Hanley Law represents investors nationwide and is dedicated to helping investors who have been victims of securities fraud. If you have been a victim of securities fraud, you may be entitled to recover your investment losses. Contact the Hanley Law toll free at (239) 649-0050 for a complimentary initial consultation.