Author: LPclient

In a recent FINRA Securities Arbitration case, against Black Diamond Securities, et al, Arbitration Panel awards the customers more than $3 Million in damages, including attorney fees, costs and interest for breach of fiduciary duty, unjust enrichment, and misrepresentation involving options trades in customer accounts.

For a free case evaluation or to discuss any other investment losses, please contact the Securities Law Firm of Menzer & Hill, P.A., at 888-923-9223, or visit us on the web at www.suemyadvisor.com.

 

Author: LPclient

Gruberman v. LaSalle Street, FINRA ID #12-02021 (Chicago, IL, 1/30/2014) – In this explained Award, a customer couple win $135,000 against a broker-dealer for failing to advise them of unfavorable information on a tenancy in common it recommended.

For a free case evaluation or to discuss any other investment losses, please contact the Securities Law Firm of Menzer & Hill, P.A., at 888-923-9223, or visit us on the web at www.suemyadvisor.com.

Author: LPclient

Carson v. VSR Financial, FINRA ID #11-02400 (Minneapolis, MN, 12/23/2013) – A customer complaining that he received a fractional share of a promissory note when he expected a partnership interest may be equally surprised, but certainly happier, when he recovers $40,000 more in compensatory damages than he requested.

For a free case evaluation or to discuss any other investment losses, please contact the Securities Law Firm of Menzer & Hill, P.A., at 888-923-9223, or visit us on the web at www.suemyadvisor.com.

 

Author: LPclient

WASHINGTON — The Financial Industry Regulatory Authority (FINRA) announced today the launch of a pilot program offering parties in simplified cases pro bono or reduced-fee telephone mediation. Participation in the pilot program, which began on January 15, is voluntary and open to cases involving claims of $50,000 or less.

 

Author: LPclient

FOR IMMEDIATE RELEASE
2013-6

Washington, D.C., Jan. 15, 2013 — The Securities and Exchange Commission today announced that Gregg E. Berman has been named Associate Director of the Office of Analytics and Research in the SEC’s Division of Trading and Markets.

Mr. Berman has been a senior advisor to the Director of the Division of Trading and Markets since June 2010, and joined the SEC staff in October 2009 as a senior advisor in the Division of Risk, Strategy, and Financial Innovation. In his new role, Mr. Berman will oversee the office established in 2012 to conduct research and analysis that will help inform the Commission’s policies on markets and market structure.

“Gregg’s analytical expertise and market background make him a tremendous asset for our new Office of Analytics and Research,” said John Ramsay, Acting Director of the Division of Trading and Markets. “In his time at the SEC, Gregg has worked on many complex issues, including an analysis of the causes of the May 6, 2011, ‘flash crash,’ on rulemaking to create a Consolidated Audit Trail, and on the many new rules for derivatives trading required by the Dodd-Frank Act.”

“I am excited to take on these new responsibilities and honored to have the opportunity to continue working with such a talented and dedicated set of colleagues, both within the division and across the entire SEC,” said Mr. Berman. “Though the markets may be complex, they are not impenetrable, and I am confident in our abilities to continue developing data-driven analyses to inform policy.”

The new office will provide expertise in quantitative data analysis, trading, portfolio management, and risk management, and will examine a wide variety of topics, ranging from market structure to new products and rule filings by exchanges. The use of data analysis to help inform the Commission’s policy decisions is central to the office’s mission and will be aided by the SEC’s recent acquisition of an advanced market data system, which will for the first time allow the staff to analyze trading using the same tools and technologies used by some of today’s most sophisticated market participants.

Before coming to the SEC, Mr. Berman was a co-founding partner of New York-based RiskMetrics Group, which focuses on risk management, corporate governance, and financial research and analysis. Mr. Berman served in various roles during his 11 years at the firm, most recently as the head of its global risk business. Mr. Berman holds a bachelor’s degree in physics from the Massachusetts Institute of Technology and doctorate in physics from Princeton University.

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Author: LPclient

FOR IMMEDIATE RELEASE
2013-5

Washington, D.C., Jan. 15, 2013 — The Securities and Exchange Commission today announced that David Grim has been appointed Deputy Director of its Division of Investment Management. Mr. Grim has worked in the division for 17 years, most recently as Assistant Chief Counsel in its Office of Chief Counsel, and has received several awards for his legal and managerial work.

“We are pleased to welcome Dave to his new role as Deputy Director of the Division of Investment Management. He brings intellectual curiosity and extensive management experience, and is committed to our program of making the division an organization that grows through continuous improvement,” said Norm Champ, Director of the Division of Investment Management.

Mr. Grim joined the SEC in September 1995 as a Staff Attorney in the division’s Office of Investment Company Regulation. In January 1998, he moved to the division’s Office of Chief Counsel, where he has served in a variety of positions, including since September 2007 as Assistant Chief Counsel. Mr. Grim received the SEC’s Capital Markets Award in 2005, the SEC’s Supervisory Excellence Award in 2007, and the SEC’s Law and Policy Award in 2011.

“I am honored to have the opportunity to work with Norm and my dedicated colleagues in the division to carry out our vitally important mission on behalf of investors,” Mr. Grim said.

Mr. Grim graduated cum laude with a degree in Political Science from Duke University and received his law degree from George Washington University, where he was Managing Editor of the George Washington Journal of International Law and Economics.

The SEC’s Division of Investment Management works to protect investors, promote informed investment decisions, and facilitate innovation in investment products and services through regulation of the asset management industry.

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Author: LPclient

WASHINGTON — The Financial Industry Regulatory Authority (FINRA) Investor Education Foundation today released Five Tips to Keep Your Finances From Going Off a Cliff. While the new year is beginning with improving economic conditions, the financial situation of many Americans remains fragile. The FINRA Foundation's five tips can help consumers and investors keep their finances on solid ground.

Author: LPclient

WASHINGTON — The Financial Industry Regulatory Authority (FINRA) today issued a voluntary Interim Form for Funding Portals designed for prospective crowdfunding portals under the JOBS Act. Those intending to become a funding portal may voluntarily submit information regarding their business on the interim form.

Author: LPclient

FOR IMMEDIATE RELEASE
2013-4

Washington, D.C., Jan. 9, 2013 — The Securities and Exchange Commission today charged three former executives at Norfolk, Va.-based Bank of the Commonwealth for understating millions of dollars in losses and masking the true health of the bank’s loan portfolio at the height of the financial crisis.


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The SEC alleges that Edward J. Woodard, who was CEO, president, and chairman of the board, was responsible along with CFO Cynthia A. Sabol and executive vice president Stephen G. Fields for misrepresentations to investors by the bank’s parent company Commonwealth Bankshares. The consistent message in Commonwealth’s public statements and SEC filings was that its portfolio of loans — which comprised approximately 94 percent of the company’s total assets in 2008 — was conservatively managed according to strict underwriting standards aimed at keeping the bank’s reserved losses low during a time of unprecedented economic turmoil.

In reality, the SEC alleges that internal practice deviated significantly from what the public was being told. Woodard knew the true state of Commonwealth’s rapidly-deteriorating loan portfolio, yet he worked to hide the problems and engineer the misleading public statements, particularly those made in earnings releases. Sabol knew of the activity to mask the problems with the company’s loan portfolio and the corresponding effect these masking practices had on the bank’s financial statements and disclosures, yet she signed the disclosures and certified to the investing public that they were accurate. Fields oversaw the bank’s largest portfolio of construction and development loans and was involved in the masking practices.

“During times of financial stress, it’s more important than ever for executives to make full and honest disclosure to the investing public,” said Scott W. Friestad, Associate Director of the SEC’s Division of Enforcement. “Commonwealth’s executives did the opposite and hid the company’s worsening performance from shareholders through masking practices that understated the losses on its most troubled loans.”

According to the SEC’s complaint filed in U.S. District Court for the Eastern District of Virginia, Commonwealth understated its allowance for loan and lease losses (known as ALLL) by approximately 17 to 25 percent from November 2008 to August 2010. This caused the bank to understate its reported loss before income taxes by approximately 64 percent for fiscal year 2008. Commonwealth also understated its losses on real estate repossessed by the bank (known as OREO) in two fiscal quarters, which caused the bank to understate its reported loss before income. For eight consecutive fiscal quarters, Commonwealth underreported its total non-performing loans.

The SEC’s complaint alleges that Commonwealth obtained an appraisal for its largest collateral-dependent loan that falsely inflated the value of the collateral. The bank executed hundreds of “change-in-terms agreements” at the end of the quarter to remove tens of millions of dollars of loans from its reported non-performing loans. Woodard, Sabol, and Fields helped enable the bank to artificially bring otherwise-delinquent loans current by permitting checking accounts associated with the guarantors of the delinquent loans to be overdrawn. The bank also disbursed loan proceeds without inspecting the property to confirm that the work requiring the disbursement had actually been performed.

The SEC’s complaint charges Woodard, Sabol, and Fields with violations of the antifraud, reporting, recordkeeping, internal controls, deceit of auditors, and Sarbanes-Oxley certification provisions of the federal securities laws.

The SEC’s investigation, which is continuing, has been conducted by Laura B. Josephs, Thomas D. Silverstein, David S. Karp, Lucas R. Moskowitz, and David Estabrook. The SEC’s litigation will be led by Richard Hong. The SEC appreciates the cooperation of the Federal Bureau of Investigation, the U.S. Attorney’s Office for the Eastern District of Virginia, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Board of Governors of the Federal Reserve Board, the Federal Reserve Bank of Richmond, the Federal Deposit Insurance Corporation, and the Bureau of Financial Institutions of the Virginia State Corporation Commission.

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Author: LPclient

FOR IMMEDIATE RELEASE
2013-3

Washington, D.C., Jan. 9, 2013 — The Securities and Exchange Commission today announced that Enforcement Director Robert Khuzami will leave the agency after nearly four years of leadership. During Mr. Khuzami’s tenure, the Enforcement Division filed scores of significant actions connected to the financial crisis and brought record numbers of cases involving insider trading and misconduct by investment advisers and investment companies.

Among other accomplishments under Mr. Khuzami’s leadership, the Enforcement Division filed its most-ever cases in fiscal years 2011 and 2012 following the most significant restructuring in agency history that streamlined procedures and expedited investigations.

“Rob’s leadership and bold ideas transformed and reinvigorated the enforcement program,” said Chairman Elisse B. Walter. “Under his direction, the Division not only produced record results, but embraced changes that in the years to come will enable the talented staff to better protect investors through increased efficiency, expertise, and strategic focus.”

Mr. Khuzami said, “I have spent half my career in public service, and nowhere is there the level of professionalism, skill, and talent on such a large and coordinated scale as there is in the SEC’s Division of Enforcement. They have inspired me, educated me, and motivated me to do my very best, and for that I am eternally grateful.”

After being named Enforcement Director in February 2009 by former SEC Chairman Mary Schapiro, Mr. Khuzami prioritized the Enforcement Division’s effort to pursue financial crisis misconduct. The Division has since charged more than 150 individuals and entities with wrongdoing, including 65 CEOs, CFOs, and other senior corporate officers. These financial crisis-related cases have resulted in $2.68 billion in financial relief for harmed investors, and 36 individuals have been barred from serving as officers and directors at public companies or from working in the securities industry. High-profile defendants in SEC cases alleging wrongdoing during the financial crisis include Goldman Sachs, J.P. Morgan, Credit Suisse, Citigroup, State Street, Wachovia, Charles Schwab, and former top executives at Fannie Mae, Freddie Mac, and Countrywide.

Mr. Khuzami has led the Division’s most productive period of insider trading enforcement as investigators cracked large-scale coordinated schemes involving Wall Street professionals. The Galleon Management/Raj Rajaratnam investigation has resulted in charges against 29 defendants including former McKinsey & Co. global head Rajat Gupta. The SEC also has pursued insider trading cases related to expert networks, charging hedge funds, portfolio managers, and analysts for illegally trading on confidential information obtained from technology company employees moonlighting as expert network consultants. The SEC also charged hedge fund advisory firm CR Intrinsic Investors LLC and its former portfolio manager Matthew Martoma in a $276 million insider trading scheme that is the largest ever charged by the SEC. Since the beginning of fiscal year 2010, the SEC has filed 180 enforcement actions alleging insider trading by approximately 430 individuals and entities for illicit profits totaling $900 million.

In addition to the all-time record number of 735 SEC enforcement actions in FY 2011 and another 734 actions in FY 2012, Mr. Khuzami led the Division to record results in a number of specific enforcement areas. The SEC filed 293 enforcement actions involving investment advisers in fiscal years 2011 and 2012, the most ever in a two-year period. There was a 60 percent increase in cases filed against broker-dealers in fiscal year 2011, and the number of filed actions increased another 19 percent in fiscal year 2012. The SEC also filed 17 actions related to municipal securities in fiscal year 2012, the most in a single year since 2004.

The agency’s record results came after Mr. Khuzami initiated the Enforcement Division’s most significant restructuring in the agency’s history. Specialized prosecution units were created nationwide to concentrate on the high-priority areas of investment advisers and private funds; large-scale trading and market abuse; mortgage and other structured products; bribery of foreign officials under the Foreign Corrupt Practices Act; and municipal securities and public pensions. The Division hired private sector and other experts, adopted targeted and risk-based investigative approaches, and increased its overall expertise in the products, transactions, and practices that occur in the securities markets it polices. An Office of Market Intelligence was created to revamp the way the Division handles the more than 30,000 tips, complaints and referrals received each year, enabling the Division to collect, analyze, and triage these complaints and thus enhancing its capacity to prioritize its investigations, stop fraud quicker, and minimize the losses to investors. The Enforcement Division also has become more efficient in maximizing scarce resources, and the agency has increased deterrence efforts by moving quickly to address newly-emerging or well-disguised threats before they take hold across entire industries.

Under Mr. Khuzami’s watch, the SEC created a valuable cooperation program authorizing the use of non-prosecution agreements, deferred prosecutions agreements, and cooperation agreements to establish incentives for individuals and companies to fully and truthfully cooperate and assist with SEC investigations and enforcement actions, often early on in the investigative phase. The agency also established the Office of the Whistleblower to implement the whistleblower program authorized by the Dodd-Frank Act to enable the Division to benefit from timely and high-quality evidence offered by whistleblowers and provide monetary awards to eligible individuals who come forward with high-quality original information that leads to an SEC enforcement action.

Mr. Khuzami has encouraged strong and effective collaboration with the agency’s law enforcement partners, including the criminal authorities as well as other federal and state authorities. He has served as co-chair of both the Securities and Commodities Fraud Working Group and the Residential Mortgage-Backed Securities Working Group of the inter-agency Financial Fraud Enforcement Task Force.

Prior to joining the SEC, Mr. Khuzami served as a federal prosecutor for 11 years with the U.S. Attorney’s Office for the Southern District of New York, including three years as chief of its Securities and Commodities Fraud Task Force. Mr. Khuzami was a member of the prosecution team in what was then the largest terrorism trial in U.S. history — the successful prosecution of the “Blind Sheik” Omar Ahmed Ali Abdel Rahman arising out of the 1993 bombing of the World Trade Center and the 1994 plot to blow up New York City’s bridges, tunnels and other landmarks.

Mr. Khuzami served as a law clerk for the Honorable John R. Gibson of the U.S. Court of Appeals for the Eighth Circuit in Kansas City, Mo. He received his J.D. from the Boston University School of Law, and graduated magna cum laude from the University of Rochester, where he was elected to Phi Beta Kappa.

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