Things Go From Bad to Worse for BrokerCheck
(Jul 2016)
Last week we posted about two brokers who had not disclosed that customer complaints had been adjudicated to arbitration awards in favor of the clients but rather continued to report them as pending up to 15 months after the arbitration award was rendered. See Bad Brokers Falsify Their BrokerCheck Records and No One Notices. Two days ago we showed that FINRA corrected these two brokers' BrokerCheck records in Bad Brokers' Incorrect Records Got Partially Corrected Last Week. We'll let you...
Bad Brokers' Incorrect Records Got Partially Corrected Last Week
(Jul 2016)
We wrote that FINRA's BrokerCheck allowed brokers to report cases adversely resolved as "pending" last week, in Bad Brokers Falsify Their BrokerCheck Records and No One Notices.
We provided two examples. The first included a large award in FINRA's awards database that had not been correctly reported as adversely resolved on the broker's BrokerCheck but had been correctly reported on her employer's BrokerCheck. Our second example, was of two adversely resolved filings against another broker....
This is Why Merrill Lynch Paid the SEC and FINRA $15 million over Bank of America's VOL Index-linked Structured Products.
(Jun 2016)
The Securities and Exchange Commission yesterday announced a settlement with Merrill Lynch over structured products linked to Bank of America's proprietary investable volatility index based on VIX Future contracts ("VOL Index"). The SEC press release announcing the settlement and its Order Instituting Proceedings are available on the SEC website. The companion FINRA settlement press releaseand AWC are available on the FINRA website. Bank of America published its VOL Index in 2010 and shortly...
A Bad Broker Found His Firm; You Should Avoid Them Both
(Jun 2016)
In June 2016, a FINRA panel in Albuquerque, NM ordered Centaurus Financial, Inc. to pay the Claimant, a recent widow when the subject conduct began, $150,000 plus all hearing fees after reasoned findings that "the investments Hashemian recommended while at Centaurus were not suitable", that Centaurus was responsible for Hashemian's actions which "constituted fraudulent and negligently made misrepresentation and omitted material information in the sale of investments" and that "Centaurus...
Smaller Brokerage Firms Are Even Worse!
(May 2016)
Last week we posted Have 1.3% or 7.3% of Stock Brokers Engaged in Misconduct? explaining that the competing estimates of broker misconduct differ because of differences in their definition of misconduct and the sample of brokers studied.
Firms with 400 to 999 Brokers Are Much Worse Than Larger Firms.
In last week's post, we listed the 100 highest risk brokerage firms with 400 or more registered brokers sorted by the percentage of their brokers associated with Investor Harm Events as of...
UBS Puerto Rico Still Can't Shoot Straight
(Oct 2015)
We've written extensively about the investment carnage caused by UBS Puerto Rico's management and sales of closed end municipal bonds funds. A summary of our findings can be found here: UBS Puerto Rico's Bond Fund Debacle: What We Know So Far .
Others will have to decide whether UBS was just incompetent or also wolfishly indifferent to Puerto Rico investors but recent evidence demonstrates that UBS Asset Managers of Puerto Rico continues to be, at least, incompetent.
The fourteen closed end...
More Signs of Trouble for Auto Liquidators
(Oct 2015)
In "The Recent Market Turmoil Spells Trouble for Auto Liquidators Like Interactive Brokers" we wrote about how the market decline on August 24, 2015 revealed continuing problems at auto-liquidating brokerage firms that cater to active traders. These active traders' accounts typically are subject to "portfolio margin" requirements which we have written about at length. 1
We showed that thinly traded long-dated, deep out-of-the money SPX put options were bought on August 24, 2015 at...
The Recent Market Turmoil Spells Trouble for "Auto-liquidators" like Interactive Brokers
(Aug 2015)
Interactive Brokers Group, Inc. (IB) caters to active traders including those who trade futures and options. These active traders' accounts typically are subject to "portfolio margin" requirements which we have written about at length. 1 IB requires its customers to agree to have IB auto-liquidate positions when accounts are in a margin deficit.
IB's auto-liquidation procedures were the focus of a FINRA arbitration earlier this year in which the Claimant, Glen Lyon Long-Term Options, LP,...
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...
