Posts tagged ‘investment fraud’
BankAtlantic Bancorp Charged with Misleading Investors in 2007
According to a recent release from the Securities and Exchange Commission (SEC), they have “charged the holding company for one of Florida’s largest banks and its top executive with misleading investors about growing problems in one of its significant loan portfolios early in the financial crisis.” The SEC has alleged that BankAtlantic Bancorp and CEO Alan Levan “made misleading statements in public filings and earnings calls in order to hide the deteriorating state of a large portion of the bank’s commercial residential real estate land acquisition and development portfolio in 2007.” Further allegations include fraudulent accounting when seeking to “minimize BankAtlantic’s losses on their books.” The alleged fraud and misleading statements made by BankAtlatic Bancorp may have resulted in unnecessary damage to some investors.
It appears that BankAtlantic may have been consciously hiding information from investors and when “BankAtlantic finally acknowledged the problems in the third quarter of 2007 by announcing a large unexpected loss. The investing public did not expect a loss of that magnitude, and BankAtlantic’s share price immediately dropped 37 percent.” The SEC is seeking “financial penalties and permanent injunctive relief against BankAtlantic and Levan to enjoin them from future violations of the federal securities laws.” This may not comfort retail investors who suffered investment losses due to alleged fraud of BankAtlantic and Mr. Levan. However, investors may be able to seek recovery on their investment through an individual securities arbitration claim.
If you suffered investment losses as a result of Bank Atlantic Bancorp’s alleged failure to disclose a deteriorating portfolio in 2007 and would like to speak to a securities attorney about your potential to recover your investment through a securities arbitration claim please call our Chicago office at 312-238-9650.
The White Law Group, LLC is a securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Boca Raton, Florida.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.
Hantz Financial Services, Inc. fined by FINRA
Hantz Financial Services, Inc. (CRD #46047, Southfield, Michigan) recently submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and fined $50,000.
Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that the firm failed to establish and maintain an adequate supervisory system to ensure that it immediately recorded on the firm’s books and records checks its customers mailed to the firm. The findings stated that supervisory system deficiencies were exploited by a registered representative who embezzled approximately $2.6 million from customers and contributed to the firm’s failure to detect his scheme; the representative exploited the firm’s check handling procedures by taking control of customer checks totaling approximately $850,000 and depositing the customer funds into his own bank accounts, without the checks being logged in the firm’s tracking system.
FINRA registered broker-dealers are responsible for supervising their agents and can be help liable for the actions of these agents if it can be demonstrated that the proper supervision could have discovered the improper actions of the agent.This information which is publicly available on FINRA’s website has been provided by The White Law Group, LLC.
If you have questions about investments you made with Hantz Financial Services, Inc., the securities attorneys of The White Law Group may be able to help. To speak with a securities attorney, please call the firm’s Chicago 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.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.
Valmark Securities, Inc. fined by FINRA
Valmark Securities, Inc. (CRD #31243, Akron, Ohio) recently submitted an Offer of Settlement in which the firm was censured and ordered to pay $350,000 in restitution to investors.
Without admitting or denying the allegations, the firm consented to the described sanctions and to the entry of findings that the firm approved an offering for sale based exclusively on its review of the issuer’s unverified and uncorroborated statements in the offering document.
The FINRA findings further stated that the firm designated an individual to conduct the marketing review for the offering. The individual created a summary page by cutting and pasting language directly from the private placement memorandum (PPM), including a statement about the unblemished payment history of the offering’s affiliates. The individual then completed, signed and dated the requisite 18-question review checklist.
The FINRA findings also stated that the firm, designated an associated person of the firm to conduct the due-diligence review of the offering. The person had not heard of the issuer prior to receiving the PPM and the other individual’s summary report, so he used the summary report and the PPM to conduct the due diligence review, including his assessment of the risks of the offering, and completed, signed and dated the requisite 14-question due diligence review checklist.
Finally, FINRA found that the firm ignored red flags and failed to adequately supervise the sale of the offering after learning about liquidity issues, and failed to suspend sales based on a PPM containing false statements.
Brokerage firms have a fiduciary duty to their clients to perform adequate due diligence on an investment prior to offering it for sale to its clients.
This information which is publicly available on FINRA’s website has been provided by The White Law Group, LLC.
If you have questions about investments you made with Valmark Securities, Inc. the securities attorneys of The White Law Group may be able to help. To speak with a securities attorney, please call the firm’s Chicago 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.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.
Wilson-Davis & Co., Inc. fined by FINRA
Wilson-Davis & Co., Inc. (CRD #3777, Salt Lake City, Utah) recently submitted an Offer of Settlement in which the firm was censured, fined $75,269, $35,269 of which represents disgorgement of the firm’s profits, and required to certify to FINRA, within 30 days, that it has reviewed its policies, systems and procedures for the liquidation of securities delivered in certificate or electronic form, and has determined that they are reasonably designed to achieve compliance with FINRA rules and federal securities laws and provide FINRA with a written description of these policies, systems and procedures.
Without admitting or denying the allegations, the firm consented to the described sanctions and to the entry of findings that the firm failed to take steps necessary to determine whether the shares of an SEC-reporting company could be sold without violating Section 5 of the Securities Act of 1933 (Securities Act); the firm knew, or should have known, information regarding the issuer and its securities, which required that they conduct further inquiry to determine whether the securities sold were registered or going to be sold in transactions exempt from the registration requirements of Section 5 of the Securities Act.
The findings stated that the firm was in possession of information regarding the activity at the firm from various sources, including stock certificates, account information and documents in its possession, as well as from sell orders and wire and transfer instructions that should have alerted them that the sales of the company shares through the firm may have been part of an illegal unregistered distribution.
Finally, the FINRA findings stated that the firm failed to perform an adequate inquiry into the registration or exemption status of the unregistered shares deposited into and sold from firm accounts.
This information which is publicly available on FINRA’s website has been provided by The White Law Group, LLC.
If you have questions about investments you made with Wilson-Davis & Co., Inc., the securities attorneys of The White Law Group may be able to help. To speak with a securities attorney, please call the firm’s Chicago 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.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.
Capital Financial Services sanctioned by FINRA
Capital Financial Services, Inc. (CRD #8408, Minot, North Dakota) recently submitted a Letter of Acceptance, Waiver and Consent in which the firm was censured and ordered to pay $200,000 in restitution to investors.
Without admitting or denying the findings, the firm consented to the described sanctions and to the entry of findings that it failed to have reasonable grounds to believe that private placements offered by two entities pursuant to Regulation D were suitable for any customer. The findings stated that the firm began selling the offerings for one entity after its representatives visited the issuer’s offices to review records and meet with the issuers’ executives; the firm also received numerous third-party due diligence reports for these offerings but never obtained financial information about the entity and its offerings from independent sources, such as audited financial statements.
The findings also stated that despite the issuer’s assurances, the problems with its Regulation D offerings continued; the issuer repeatedly stated to the firm’s representatives that the interest and principal payments would occur within a few weeks, and the issuer made some interest payments but failed to pay substantial amounts of interest and principal owed to its investors, and these unfulfilled promises continued until the SEC filed its civil action and the issuer’s operations ceased. The findings also included that in addition to ongoing delays in making payments to its investors, the firm received other red flags relating to the entity’s problems but continued to allow its brokers to sell the offering to their customers; in total, the firm’s brokers sold $11,759,798.01 of the offering to customers.
FINRA found that despite the fact that the firm received numerous third-party due diligence reports for the other entities’ offering, it never obtained financial information about the issuer and its offerings from independent sources, such as audited financial statements, and although it received a specific fee related to due diligence purportedly performed in connection with each offering, the firm performed little due diligence beyond reviewing the private placement memoranda (PPM) for the issuer’s offerings. FINRA also found that the firm’s representatives did not travel to the entity’s headquarters to conduct any due diligence for these offerings in person and did not see or request any financial information for the entity other than that contained in the PPM.
The findings also included that the firm did not conduct meaningful due diligence for the offerings prior to approving them for sale to its customers; without adequate due diligence, the firm could not identify and understand the inherent risks of these offerings. FINRA found that the firm failed to enforce reasonable supervisory procedures to detect or address potential red flags and negative information as it related to these private placements; the firm therefore failed to maintain a supervisory system reasonably designed to achieve compliance with applicable securities laws and regulations.
In addition, FINRA determined that the firm obtained a third-party due diligence report for one of the offerings after having sold these offerings for several months already; this report identified a number of red flags with respect to the offerings. Moreover, FINRA found that the firm should have been particularly careful to scrutinize each of the issuer’s offerings given the purported high rates of return but did not take the necessary steps, through obtaining financial information or otherwise, to ensure that these rates of return were legitimate, and not payable from the proceeds of later offerings, in the manner of a Ponzi scheme. Furthermore, FINRA found the firm also did not follow up on the red flags documented in the third-party due diligence report; even with notice of these red flags, the firm continued to sell the offerings without conducting any meaningful due diligence. The findings also stated that the firm failed to have reasonable grounds for approving the sale and allowing the continued sale of the offerings; even though the firm was aware of numerous red flags and negative information that should have alerted it to potential risks, the firm allowed its brokers to continue selling these private placements.
This information which is publicly available on FINRA’s website has been provided by The White Law Group, LLC.
If you have questions about investments you made with Capital Financial Services, the securities attorneys of The White Law Group may be able to help. To speak with a securities attorney, please call the firm’s Chicago 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.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.