Posts tagged ‘broker dealer’
FINRA Fines Edward Jones For Supervisory And Recordkeeping Failures.
FINRA recently announced that it has fined Edward D. Jones & Co., L.P. of St. Louis $900,000 for its failure to timely deliver official statements to customers who purchased new-issue municipal securities and related supervisory and recordkeeping failures.
With limited exceptions, broker-dealers selling a new-issue municipal securities are required under the rules of the Municipal Securities Rulemaking Board (MSRB) — which are enforced by FINRA — to deliver a copy of the official statement to the customer on or before settlement date. New-issue securities are those sold during the initial distribution of bonds to the public.
FINRA found that Edward Jones’s late deliveries occurred when the firm was conducting retail transactions but was not a member of the underwriting syndicate for a new issue.
FINRA further found that the firm’s failures from 2002 through 2006 were systemic. During that time period, Edward Jones engaged in approximately 100,000 new-issue municipal bond transactions in which it was not an underwriter. For a significant number of those transactions, the firm was late in delivering official statements to its customers. The firm’s systemic late deliveries had multiple causes, including lack of training for employees, incorrect instructions to employees, limited photocopying capacity and errors by employees of the firm, including trading supervisors.
The late deliveries continued. In September 2008 alone, the firm was late in mailing official statements to customers in over 6,200 transactions, which represented 19 percent of the firm’s municipal bond transactions covered by the applicable MSRB rule.
FINRA further found that Edward Jones’s own internal communications repeatedly referenced that it was not timely delivering official statements. Nevertheless, the firm failed to take reasonable and sufficient steps to comply with its delivery obligations.
FINRA also found that Edward Jones failed to keep required records, did not have written supervisory procedures addressing the requirements for delivery of official statements until May 2006, and that those procedures contained incorrect guidance. As part of the settlement, an officer of Edward Jones will certify that it has adopted and implemented systems and procedures reasonably designed to ensure compliance with MSRB rules, including systems and procedures to provide adequate oversight if third party vendors are utilized.
In settling this matter, Edward Jones neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
According to its own website, Edward Jones has over 10,000 branch offices throughout the country (more than any other investment firm in America).
If you have questions about municipal securities you purchased through Edward Jones, The White Law Group may be able to help. For a free consultation, call the firm at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida. With over 30 years of securities law experience, including experience working at FINRA (f/k/a the NASD) and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.
FINRA Fines Piper Jaffray For Rules Violations.
FINRA recently announced that it has fined Piper Jaffray & Co. $700,000 for violations related to its failure to retain approximately 4.3 million emails from November 2002 through December 2008. Piper Jaffray also failed to inform FINRA of its email retention and retrieval issues, which impacted the firm’s ability to comply completely with email extraction requests from FINRA. It also may have affected the firm’s ability to respond fully to email requests from other regulators or from parties in civil litigation or arbitrations.
Piper Jaffray had previously been sanctioned for email retention failures in November 2002, in a joint action by the Securities and Exchange Commission, New York Stock Exchange Regulation and NASD arising from investigations of the firm’s conflicts of interest between its investment banking and research departments. As part of that settlement, Piper Jaffray was required to review its systems and certify that it had established systems and procedures designed to preserve electronic mail communications. The firm made that certification to regulators in March 2003. At no time did the firm alert regulators that its system was experiencing problems.
FINRA discovered Piper Jaffray’s continuing email retention deficiencies when its investigators requested all emails sent or received by a former firm employee suspected of misconduct. The firm provided a CD-ROM purportedly containing all of the employee’s emails, on both his firm and Bloomberg email accounts. When reviewing the CD-ROM’s contents, however, FINRA discovered that one particular email was not produced that investigators had already obtained in hard copy form – an email whose contents sparked an internal investigation that led to the employee’s termination, and formed the basis for a FINRA enforcement action against the employee. Only after further inquiries about that missing email did the firm finally inform FINRA of the intermittent email retention and retrieval issues it had been experiencing firmwide since the November 2002 action.
In settling this matter, Piper Jaffray neither admitted nor denied the charges, but consented to the entry of FINRA’s findings.
If you have questions about investment you made with Piper Jaffray, The White Law Group may be able to help.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida. With over 30 years of securities law experience, including experience working at FINRA (f/k/a the NASD) and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.
Securities Fraud Investigation Involving 1861 Capital Discovery Domestic Fund
The White Law Group is investigating possible securities fraud involving the marketing and sale of the 1861 Capital Discovery Domestic Fund.
Specifically, we are investigating whether brokerage firms, including UBS, misrepresented the safety and security of the 1861 Capital Discovery Domestic Fund.
1861 Capital Management, the firm that created the 1861 Capital Discovery Domestic Fund, is a municipal arbitrage hedge fund. Its focus is on municipal arbitrage and attempting to take advantage of differences between municipal bonds and other types of debt, including Treasury securities and corporate bonds.
Municipal bond arbitrage generally consists of building a leveraged portfolio of tax-exempt municipal bonds and simultaneously hedging the duration risk in that municipal bond portfolio by shorting other debt instruments. Such hedging is often referred to as interest rate swaps. Obviously, this complex strategy is not without risk as the trading is typically highly leveraged – increasing the downsize loss potential.
Notwithstanding the risks of the 1861 Capital Discovery Domestic Fund, it appears that the investment was marketed and sold by UBS and other broker dealers as a safe, secure, and low-risk municipal bond portfolio. It further appears that these brokerage firms, in marketing 1861 to investors, targeted high net worth individual investors who were generally risk averse, took a conservative approach to investing and were interested in the safety and security offered by tax free municipal bonds.
If you have any information that may assist The White Law Group in its investigation into the sale of the 1861 Capital Discovery Domestic Fund, please contact the firm’s Chicago, Illinois office at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida. With over 30 years of securities law experience, including experience working at FINRA (f/k/a the NASD) and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and financial business transactions.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.
Securities Fraud Investigation Involving Reverse Convertible Notes
The White Law Group is investigating the appropriateness of reverse convertible securities or reverse convertible notes sold by broker-dealers.
A reverse convertible security (RCS), or reverse convertible note, is a short-term note linked to an underlying stock. The primary selling point of the product is that it offers a steady stream of income – generally by way of a high coupon rate. At maturity, the owner then receives either 100% of the par value of the note, or, if the stock value falls, a predetermined number of shares of the underlying stock.
Like any other structured product though, reverse convertible notes are complex investments with extraordinary risks.
Notwithstanding the complexity and risks of these products, reverse convertible notes are becoming increasingly popular in the brokerage industry because of the current low-yield environment, and brokerage firms (who generally earn approximately 2% commissions when selling reverse convertible notes) are happy to sell them. In fact, according to data from Future Value Consultants Ltd. issuers have stepped up production of the controversial securities, issuing 632 reverse convertibles in the fourth quarter of 2009 (compared with 178 in the comparable period of 2008).
Even though these products are actually equity investments coupled with a short-term note, often times, these structured products are sold as a relatively safe fixed-income investment to high-net-worth or retired investors.
Concerned that the securities industry is not properly disclosing the risks of reverse convertible notes, FINRA recently issue investor alerts related to the risks of reverse convertible notes. Specifically, FINRA cautions that there are many problems inherent in these structured products, including that the higher yields offered by these products go hand in hand with greater risk, and that typically the stated yield that is advertised is the maximum return that you could achieve on the product in the best circumstances — not a guaranteed return or even likely return.
If you have questions about a reverse convertible note you purchased or if you believe that you have been the victim of a securities fraud, please contact The White Law Group at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida. With over 30 years of securities law experience, including experience working at FINRA (f/k/a the NASD) and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and commodities or futures transactions. For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com, or call the firm at 312-238-9650.
How to file a FINRA complaint
Whether you realized it at the time or not, when you established your brokerage account, you likely entered into an arbitration provision that provides that if you have a dispute with your broker-dealer you agree to waive your right to bring that claim in Court and to arbitrate that dispute through FINRA’s Dispute Resolution process. Typically, such arbitration provisions are enforceable and FINRA’s dispute resolution process is the proper venue for a securities related dispute between an investor and a financial professional or broker-dealer
FINRA (f/k/a the NASD) is an administrative body that regulates the securities industry and provides a forum for securities related disputes.
The good news is that the FINRA Dispute Resolution process is less costly and quicker than litigating in Court. The problem is that FINRA has its own set of rules (known as the FINRA Code of Arbitration). For those not experienced in arbitrating securities related disputes through FINRA, these rules can make the arbitration process daunting for even experienced attorneys that are used to litigating in Court.
However, if you are looking to file a FINRA complaint through FINRA’s dispute resolution process and to initiate an arbitration claim against your financial professional or broker-dealer, FINRA has set up an online filing procedure which can be accessed at: http://www.finra.org/ArbitrationMediation/Parties/ArbitrationProcess/ArbitrationOnlineClaimFiling/
To review the FINRA Code of Arbitration procedure, you can also visit: http://www.finra.org/ArbitrationMediation/Rules/CodeOfArbitrationProcedure/
Although the hiring of an attorney in securities arbitration matters is not required, it can be extremely beneficial. Typically, securities attorneys representing investors handle such cases on a contingency fee basis.
For more information on how to file a FINRA complaint, or to discuss your particular case with an attorney, feel free to contact The White Law Group at 312-238-9650.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida. With over 30 years of securities law experience, including experience working at FINRA (f/k/a the NASD) and the SEC, The White Law Group has the expertise to help investors defrauded in securities, investment and commodities or futures transactions. For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.