FINRA Fines Oppenheimer $2.5 million

Wednesday, April 1st, 2015

The Financial Industry Regulatory  Authority (FINRA) recently imposed a hefty fine on the broker dealer, Oppenheimer & Co. Inc, for failure to adequately supervise their employee Mark Hotton. The firm was fine $2.5 million and ordered to pay $1.25 million in restitution.

According to FINRA, Oppenheimer failed to supervise Hotton in a number of respects. The firm allegedly failed to thoroughly investigate Hotton prior to hiring him. Hotton’s record apparently showed that he had a history of customer disputes including criminal charges. Furthermore, it is alleged that Oppenheimer failed to place Hotton under adequate supervision even after they learned that his business partners had sued him for defrauding them out of millions.

FINRA also purportedly found that Oppenheimer overlooked “red flags” including money transfers from customer accounts to entities controlled by Hotton. More than $2.9 million was allegedly transferred out of customer accounts. In addition,  the firm apparently failed to adequately supervise Hotton despite the fact that Oppenheimer’s surveillance analyst detected excessive trading on customers accounts.

According to an ABC report, “Hotton was sentenced to prison in October as a result of two scams. In 2011, he promised a Connecticut real estate company that he would secure a $20 million loan in return for a $200,000 upfront fee and other payments. Then, in 2012, he pledged to raise $4.5 million to back a Broadway production of “Rebecca,” a musical based on a psychological thriller by Daphne du Maurier and an Alfred Hitchcock film, and was paid tens of thousands by the producers.”

Brokerage firms have a fiduciary duty to monitor all the business activities and transactions of their employees. When a broker violates securities laws and industry regulations the brokerage firm may be liable for negligent supervision and can be held responsible for investment losses in a FINRA dispute resolution claim.

If you suffered losses investing with Mark Hotton and would like to discuss your potential to recover your losses through a FINRA arbitration claim, please call the securities attorney of The White Law Group at (312) 238-9650 for a free consultation.

The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm dedicated to the representation of investors in FINRA arbitration claims against brokerage firms throughout the United States. Our offices are located in Chicago, Illinois and Vero Beach, Florida.

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Macquarie Capital fined over Puda Coal due diligence.

Tuesday, March 31st, 2015

Have you suffered losses investing in Puda Coal?  If so, the securities attorneys of The White Law Group may be able to help you recover those losses in a FINRA arbitration claim against the broker-dealer that recommended the investment to you.

At least one firm involved in the sale of Puda Coal was recently sanctioned by the Securities and Exchange Commission (the SEC).

The SEC recently announced charges against a New York-based brokerage firm responsible for underwriting a public offering despite obtaining a due diligence report indicating that the China-based company’s offering materials contained false information.

Macquarie Capital (USA) Inc. has reportedly agreed to settle the SEC’s charges by paying $15 million and separately covering the costs of setting up a Fair Fund to compensate investors who suffered losses after purchasing shares in the public offering by Puda Coal.  The SEC previously charged the Puda Coal executives behind the offering fraud at the company, which is no longer in business.

According to the SEC’s complaint filed in federal court in Manhattan, Macquarie Capital was the lead underwriter on a secondary public stock offering in 2010 by Puda Coal, which traded on the New York Stock Exchange at the time and purported to own a coal company in the People’s Republic of China (PRC).  In the offering documents, Puda Coal falsely told investors that it held a 90-percent ownership stake in the Chinese coal company.  Macquarie Capital repeated those statements in its marketing materials for the offering despite obtaining a report from Kroll showing that Puda Coal did not own any part of the coal company.  According to corporate registry filings in the PRC that Kroll accessed in its due diligence review, Puda Coal’s chairman had transferred ownership of the coal company to himself and then sold nearly half of his interest to the largest state-owned investment firm in the PRC.  As a result, Puda Coal no longer had any ownership stake or source of revenue.

The SEC alleges that Macquarie Capital made a net profit of $4.17 million as lead underwriter on the Puda Coal offering, which sold stock to investors at a price of $12 per share.  When reports about Puda Coal’s false claim appeared on the Internet based on the same PRC filings that Kroll Associates accessed for its report, Puda Coal’s stock price plunged as low as pennies per share.

The SEC’s complaint charges Macquarie Capital with violating Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933.  The firm agreed to settle the charges and accept permanent injunctions without admitting or denying the allegations.  The settlement is subject to court approval.

The White Law Group is investigating the liability that Macquarie Capital may have to individual investors who purchased Puda Coal while relying on Macquarie Capital.  Brokerage firms are required to perform due diligence on any offering they recommend and to ensure that all recommendations made are suitable in light of the client’s age, investment experience, net worth, income, and investment objectives.  If a firm fails to perform due diligence or makes an unsuitable recommendation, the broker-dealer can be held responsible for any losses in a FINRA arbitration claim.

If you suffered losses investing in Puda Coal and would like to discuss your litigation options, please call the securities attorneys of The White Law Group at 312/238-9650 for a free consultation.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.  For more information on the firm and its representation of investors in FINRA arbitration claims, visit http://www.whitesecuritieslaw.com.

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Three Brokerage Firms fined over supervisory failures.

Monday, March 30th, 2015

According to reports, the Financial Industry Regulatory Authority Inc. (Finra) recently issued six-figure fines to three brokerages for lapses in supervising reports to clients that summarize all their assets, including those not handled at the firms. The regulator reportedly cited concerns about the potential for the reports to conceal fraudulent activity.

Beck, LaSalle St. Securities and J.P. Turner were hit with fines of $425,000, $175,000 and $100,000, respectively. According to the Finra announcement, all three were allegedly deficient in reviewing and verifying the account information on the consolidated reports.

The firms settled with Finra without admitting or denying the charges.

LaSalle’s disciplinary action also purportedly involved problems related to private placements.

The foregoing information, which is all publicly available, is being provided by The White Law Group.  The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.

For a free consultation with a securities attorney, please call the firm’s Chicago office at 312/238-9650.  For more information on the firm’s FINRA arbitration practice, visit http://www.whitesecuritieslaw.com.

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Merrill Lynch fined by State of Massachusetts over supervisory failures.

Monday, March 30th, 2015

Merrill Lynch recently agreed to pay a $2.5 million fine in Massachusetts to settle charges that it failed to follow its own compliance rules.

Secretary of the Commonwealth William Galvin accused Merrill, Lynch, Pierce, Fenner & Smith of failing to supervise employees properly when the company made two presentations in January 2013 to financial advisers and others in Boston before properly vetting the material with its compliance department.

According to the State, the presentations were aimed at helping financial advisers increase their business and manage services provided to clients. One section discussed transferring client assets from commission-based brokerage accounts to fiduciary fee-based accounts but failed to include language about clients’ suitability for such switches.

The foregoing information, which is publicly available and widely reported, is being provided by The White Law Group.  The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.  The firm represents investors throughout the country in FINRA arbitration claims against their brokerage firm.

For a free consultation with a securities attorney, please call the firm’s Chicago office at 312/238-9650.  For more information on The White Law Group and its representation of investors, visit http://www.whitesecuritieslaw.com.

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Recovery of TIER REIT

Wednesday, March 25th, 2015

Have you suffered investment losses in TIER REIT ? If so, the securities attorneys of The White Law Group may be able to help you recover your losses by filing a FINRA Dispute Resolution claim against the brokerage firm that sold you the investment.

The trouble with real estate investment trusts (REITs), like TIER REIT , is that they are complex and inherently risky products. Compared to traditional investments, such as stocks, bonds and mutual funds, REITs are more complex and less regulated, making them better suited for sophisticated and institutional investors.

Broker dealers are required to perform adequate due diligence on any investment they recommend and to ensure that all recommendations are suitable for the investor in light of the investor’s age, risk tolerance, net worth, and investment experience. Firms that fail to do so, may be held responsible for any losses.

Another problem with these investments involves liquidity. Investors looking to sell often have difficulty finding a buyer, and can suffer significant losses on the sale. According to LPsales.com, a secondary market for private placements, shares of TIER REIT recently sold for between $2.75 per unit in February 2015.

To determine whether you may be able to recover investment losses incurred as a result of your purchase of TIER REIT, please contact The White Law Group at (312) 238-9650 for a free consultation.

The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida. For more information on the firm, visit www.WhiteSecuritiesLaw.com.

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