Posts tagged ‘SEC’
Securities America Bailout?
According to the Investment News, Ameriprise Financial Inc. is taking preliminary steps to help its beleaguered independent broker-dealer subsidiary, Securities America Inc.
On Friday, Securities America’s chief financial officer, Kelly Windorski, testified in a federal court in Dallas that the firm could go bust if a federal judge did not approve a $21 million class action settlement. The judge rejected the settlement later in the day.
The class action is part of a welter of litigation that Securities America is facing after its brokers sold $400 million in private placements from 2003 to 2009 that are now in default. The firm has almost $9 million in excess net capital on hand.
It’s been widely debated in the industry whether Securities America’s corporate parent, Ameriprise, will step in and infuse the firm with cash. At the moment, the brokerage has dwindling resources, is spending $2 million a month on lawyers and could be in danger of violating its net-capital requirement if it suddenly loses a handful of arbitration claims investors have brought against the firm over soured private placements.
Securities America’s statement gave no specifics about how much money Ameriprise would be willing to contribute to the firm, but a Securities America spokeswoman said the parent company has reached out to the beleaguered firm.
“Ameriprise has reached out to us to determine whether it can help the parties find a reasonable resolution for all constituents,” wrote Janine Wertheim, a spokeswoman for the broker-dealer, which has about 1,800 reps and advisers. “We hope to develop a process in the coming days that would facilitate exploration of such a resolution and to have a good sense by the end of the week.”
“While Ameriprise Financial has no obligation to participate in Securities America’s settlement discussions, we have reached out to Securities America to determine if we can help the parties find a reasonable resolution to all constituents,” Ameriprise said in a statement published on its investor relations website.
In its annual report, Ameriprise said it was setting aside $40 million in reserves due to legal actions stemming from brokers at Securities America selling private placements of Medical Capital Holdings Inc. and Provident Royalties LLC.
Sold by dozens of independent broker-dealers in the last decade, the two series of private placements went into default in 2009 and the sponsor companies were later charged with fraud by the SEC. Securities America was by far the largest seller of Medical Capital notes, with brokers selling about $700 million of the product.
Ameriprise previously had reached a proposed $28 million settlement with the class action plaintiffs suing Securities America. That proposed settlement is a separate fund from Securities America’s.
Last month, Federal Judge W. Royal Furgeson Jr. temporarily halted three arbitration claims from investors suing Securities America in order to weigh Securities America’s $21 million proposed settlement. Under the terms of that deal, the arbitration claims would have been rolled into the class action.
Mr. Furgeson’s decision pushes one of two class actions, Billitteri v Securities America, et al., back to where it originated in U.S. District Court in the Central District of California. The case was moved to Dallas and landed before Mr. Furgeson this winter because he is overseeing the class action claim against Securities America and other broker-dealers that sold Provident Royalties investments.
This information has been provided by The White Law Group. 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 and financial advisors in securities litigation matters. If you have questions about the way your investments have been handled, the securities attorneys of The White Law Group may be able to help.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.
Anne Marie Schlenker, former Edward Jones Financial Advisor, Charged With Theft of Client Funds
ANNE MARIE SCHLENKER was a financial adviser representative and salesperson for Edward Jones and Company in Bozeman, Montana, from May 31, 2004, until her fraud was discovered in February 2010. SCHLENKER used her position at Edward Jones to misappropriate $329,682.15 of client money for her own personal use from October 18, 2006 to November 16, 2009. SCHLENKER made misrepresentations to clients to have funds wired from her clients’ accounts to her own personal accounts at Wells Fargo, First Horizon, Suntrust, and Citifinancial. SCHLENKER made misrepresentations to have over $50,000 wired from a client’s account to pay for upgrades to a house she was building. Aside from her personal accounts, SCHLENKER also had $11,485.00 wired from a client’s account to a jewelry business in Bozeman, Montana, to pay off her jewelry debt. At the time, this client was a 72-year-old retiree. Additionally, SCHLENKER made misrepresentations to have funds moved from one client’s account to pay back another client from whom SCHLENKER had taken money. The total amount returned was $63,862.21, which results in a total fraud loss of $265,819.94.
SCHLENKER ultimately confessed to Edward Jones that she took money from client accounts via unauthorized transactions. Edward Jones terminated her on February 18, 2010.
SCHLENKER faces possible penalties of 20 years in prison, a $250,000 fine, and three years’ supervised release.
In November, Edward Jones entered into a settlement agreement in which it agreed to pay $349,464.92 in restitution to Schlenker’s victims, pay a fine of $100,000, and make specific changes to its books and records retention policies and procedures.
The investigation into SCHLENKER’s actions was conducted by the Federal Bureau of Investigation as a cooperative effort between the Securities and Insurance Commissioner’s Office and the U.S. Attorney’s Office.
This information has been provided by The White Law Group. 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 and financial advisors in securities litigation matters. If you have questions about the way your investments have been handled, the securities attorneys of The White Law Group may be able to help.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.
Morgan Stanley Smith Barney to lay off trainees and low producing Financial Advisors
According to the Investment News, Morgan Stanley Smith Barney, the largest brokerage in the United States, will lay off between 200 to 300 adviser trainees and low volume producers in the firm’s advisory force by the end of the month.
Another source from Morgan Stanley confirmed the story, but added that the culling of weaker producers and trainees has been going on since the beginning of the year.
The source also confirmed that the general guidelines for the lay-offs are the following: trainees at the firm for between 6 to 36 months with less than $25,000 in annual production, and advisers with five years experience in the industry and at least one year at the firm with annual production of less than $75,000.
The guidelines are not hard and fast, according to the source, with those advisers and trainees showing potential given extra consideration.
The departure of weaker producers will improve the overall productivity of the Morgan Stanley Smith Barney adviser force. Average revenue per adviser stood at $742,000 on Dec. 31, 2010, according to the firm’s fourth quarter earnings supplement. That compares with the average Bank of America Merrill Lynch adviser production of $854,000 last year.
Morgan Stanley hired on 2000 trainees last year, and ended 2010 with an total adviser force of just over 18,100.
Many of these advisors will be leaving Morgan Stanley owing money on either promissory note agreements or trainee agreements, and the firm will likely pursue FINRA arbitration claims against these advisers to recoup any funds loaned.
The White Law Group represents advisors in various litigation matters, including promissory note defense and training agreement defense cases. If you are a Morgan Stanley Smith Barney advisor who owes money on a promissory note or trainee agreement and need legal representation, the securities attorneys of 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 and financial advisors in securities litigation matters.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.
Recovery of KBS REIT Investment Losses
Have you suffered investment losses in KBS REIT? Are you concerned about KBS REITs current price valuation? If so, The White Law Group may be able to help you recover your losses through FINRA arbitration.
The White Law Group is investigating potential securities fraud claims involving broker-dealers’ improper recommendation that investors purchase risky non-traded REIT investments, including KBS REIT.
FINRA recently announced that it is paying close attention to the sale of REITs and, in particular, the ways in which broker/dealers marketed and sold the products to investors. In many cases, and notwithstanding the risk of REIT investments, broker-dealers marketed these investments as safe and secure.
REITs typically pay a high commission – often as much as 15% (which often explains the stockbroker’s motivation in recommending the REIT investment to the investor).
Due to the relatively high interest or dividend offered by non-traded REITs like KBS REIT, retired investors are often attracted to these products. Unfortunately, in addition to be risky investments, non-traded REITs are also illiquid (limiting investors ability to access their own money for unforeseen expenses).
Another problem with non-traded REITs is that broker-dealers are not required to frequently update the current price of the investment. This often leads investors to believe that there REIT investment is doing well even though the widespread real estate market collapse would indicate otherwise.
The White Law Group’s investigation into the improper sales of non-traded REITs to investors includes, but is not limited to, recommendations to invest in the following REITs: Behringer Harvard REIT I, Inland America Real Estate Trust, Inland Western Retail Real Estate Trust, Wells Real Estate Investment Trust II, Piedmont Office Realty Trust, Desert Capital REIT, Apple REIT, Crystal River REIT, and KBS REIT.
To determine whether you may be able to recover investment losses incurred as a result of your purchase of a risky REIT investment, 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.
For more information on The White Law Group, visit http://www.whitesecuritieslaw.com.
Securities Fraud Investigation Involving Oil and Gas Partnerships and Private Placements
The White Law Group is investigating potential securities fraud claims on behalf of investors involving broker-dealers recommending that investors invest in inappropriate oil and gas / energy partnerships and highly speculative private placement investments.
Oil and gas partnerships and private placements are generally risky ventures that are only appropriate for sophisticated investors. Unfortunately, because of the high commissions these products pay to brokers, they are often sold to unsophisticated and retired investors.
The White Law Group’s investigation into the improper sales of oil and gas partnerships and private placements includes, but is not limited to, recommendations to invest in the following: DBSI, Medical Capital, Waveland Oil and Gas, Bradford Energy, Ridgewood Oil and Gas fund, and Black Diamond Energy
If you have any information that may assist The White Law Group in its investigation or are concerned about your investments in oil and gas partnerships or private placements like DBSI, Medical Capital, Waveland Oil and Gas, Bradford Energy, Ridgewood Oil and Gas fund, and Black Diamond Energy, 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.
For more information on The White Law Group, please visit our website at http://www.whitesecuritieslaw.com.