Pension Purchase Agreements; The worst "investment" in the world?
(Oct 2015)
In recent years, platforms for buying and selling pension benefit payments have been created and gained traction. Voyager Financial Group (VFG) operated one of the largest and most active exchanges for buying and selling pension payments. There is limited information available on the size of this market because these firms have operated under the radar of securities regulators.
In pension benefit agreements, a pensioner agrees to turn over a specific number of their future pension benefit...
Why Citigroup Paid the SEC $180 Million Over MAT/ASTA
(Aug 2015)
I. Introduction
This week Citigroup paid $180 million to the SEC to settle allegations that Citigroup improperly sold high risk hedge funds known as MAT, ASTA and Falcon. The SEC Order is available to view online.
The SEC Order makes clear that Citigroup did not effectively monitor the portfolio manager or the sales force as it sold billions of dollars of high risk MAT ASTA funds with false and misleading sales presentations. In the end, Citigroup lost hundreds of wealthy clients and likely...
A Non-traded REIT Investor Fights Back
(Jun 2015)
On June 5, 2015, I wrote that American Realty Capital's latest listing of a non-traded REIT was further evidence of the harm caused by sponsors of non-traded REITs. I also pointed out that, contrary to the common pattern in non-traded REIT listings, Schorsch and ARC used their control of the non-traded REIT version of GNL to tie the hands of shareholders and management in the subsequent GNL traded REIT and to opportunistically transfer wealth to themselves. I pointed out that similar...
Enforcement Actions: Week in Review - May 15th, 2015
(May 2015)
SEC ENFORCEMENT ACTIONS
SEC Sues Retirement Planners for Making False Claims to Investors
May 11, 2015 (Litigation Release No. 85)
Novers Financial and its principals, Christopher A. Novinger and Brady J. Speers, were charged with falsely informing customers that interests in life settlements they sold were guaranteed and federally insured. Interests in life settlements are investments that are based on life insurance policies purchased by others. These interests are not risk-free or...
FINRA Enforcement Actions: Month in Review
(Jun 2014)
MAY 2014 SELECTED FINRA ENFORCEMENT ACTIONS
FIRMS FINED
ABN AMRO Clearing Chicago LLC (CRD #14020, Chicago, Illinois)
ABN AMRO Clearing Chicago LLC consented to a censure and $95,000 fine for allegedly failing "to report short interest positions to the New York Stock Exchange and FINRA on certain settlement dates, and submitt[ing] to FINRA an inaccurate short-interest position report." FINRA found that the firm's supervisory system did not provide for supervision reasonably designed to achieve...
FINRA Enforcement Actions: Month in Review
(May 2014)
APRIL 2014 SELECTED FINRA ENFORCEMENT ACTIONS
FIRMS FINED
The Huntington Investment Company (CRD #16986, Columbus, Ohio)
The Huntington Investment Company consented to a $25,000 fine and censure. The firm consented to an entry of "findings that it failed to provide notice to the MSRB via the Electronic Municipal Market Access System (EMMA) that no preliminary official statements or official statements were to be prepared for bond anticipation note offerings in which the firm participated."...
Retail Investors Have Lost at Least $27.7 billion as a Result of Non-Traded REITs
(Apr 2014)
As part of our effort to help investors avoid non-traded REITs, we have written over 25 blog posts on this defective investment type. We have noted in our research that because of high costs, illiquidity, lack of transparency and conflicts of interest, non-traded REITs should underperform liquid, low-cost traded REITs. A number of our blog posts including our post on the early trading in NYRT last week, titled "NYRT's Listing is More Evidence That Even the Non-Traded REITs Winners Are...
Structured Product Based Variable Annuites are Riskier Than Advertised
(Feb 2014)
My colleagues and I have a paper in the current (Winter 2014) Journal of Retirement about structured product based variable annuities (spVAs), which are variable annuities with index-linked accounts that have a payoff similar to structured products. We have been following the market for spVAs since they were first introduced in 2010, and distributed our first working paper in 2011. Since then, three issuers have sold more than $3 billion worth of spVAs, according to a recent article in...
SEC Examiniation Priorities 2014
(Jan 2014)
The Securities and Exchange Commission (SEC) senior staff recently announced their 2014 examination priorities . The national examination program will be focusing on fraud detection and prevention, corporate governance, and registrants that serve as both a broker-dealer and investment adviser.
SEC staff also plans to undertake initiatives that examine the rollover of retirement vehicles during employment transitions or near retirement. In particular, the staff is concerned about misleading...
