FINRA announced it fined Nuveen Investments $3 million for misleading marketing materials used to push its auction-rate preferred securities. Nuveen did not directly sell the securities to its customers, but it did create marketing brochures used by the brokers who sold the ARPS to retail customers. According to the FINRA news release, “The brochures were […]
If You Want More Fraud, Try Cutting The SEC’S Budget
The SEC’s budget is the topic of hot debate, with SEC Chair Mary Schapiro begging Congress not to make further cuts to the agency that is charged with policing our securities laws. It is distressing to contemplate that this is even up for discussion at a time when investors are still climbing out of the […]
An Overview of FINRA Arbitration
When clients open a brokerage account they usually sign a contract requiring them to resolve any disputes with the firm or their broker through arbitration rather than in court. The Financial Industry Regulatory Authority (FINRA) is normally the forum where these cases are heard. There are pros and cons to FINRA arbitration, but the basic […]
An Outline of the FINRA Arbitration Process For Customer-Broker Disputes
I. General A. Nearly all brokerage firms require retail clients to sign an agreement to have all disputes between them decided in arbitration rather than court. B. About 25 years ago, in Shearson/Am. Express, Inc. v. McMahon, 402 U.S. 220 (1987), the U.S. Supreme Court upheld the validity of arbitration clauses which require clients to […]
FINRA Arbitrators Order Citigroup To Pay $54 Million for MAT/ASTA Funds Claim
A FINRA arbitration panel has ordered Citigroup Global Markets to pay a combined $54 million in awards to clients who were sold the MAT/ASTA funds (FINRA Arbitration 09-03297). The claimants, who were former clients of Citigroup, alleged that they were the victims of securities fraud, unsuitability, and a failure to supervise arising from multiple investments […]
Public Guard Changes at SICA
Brian Smiley’s appointment to SICA is discussed in a recent Securities Arbitration Commenter Alert. A “Securities Arbitration Alert” published on April 6, 2011 by the Securities Arbitration Commentator discussed Brian Smiley’s recent appointment to the Securities Industry Conference on Arbitration (SICA).
FINRA Announces Sanctions of Two Firms and Seven Individuals for Selling Private Placements Without Conducting a Reasonable Investigation
According to a FINRA News Release on April 7, 2011: WASHINGTON — The Financial Industry Regulatory Authority (FINRA) today announced it has sanctioned two firms and seven individuals for selling interests in private placements without conducting a reasonable investigation. The companies whose securities were sold in these private placements were unrelated to the firms and individuals […]
Wells Fargo Settles SEC Claims that Wachovia Sold CDOs to Indian Tribe at Inflated Prices in 2007
The SEC announced on April 5, 2011 that Wells Fargo Securities agreed to a multi-million dollar settlement of charges that one of its units, Wachovia Capital Markets (which is now a part of Wells Fargo), committed securities fraud when it sold the Zuni Indian tribe complex securities known as collateralized debt obligations (CDOs) which are […]
Reverse Convertible Notes
Reverse convertible notes are short-term bonds peddled to investors by Wall Street firms. Throughout their term, they pay comparatively high interest rates, but whether they pay back the investor’s principal is the big question. The reason for that question is because a reverse convertible’s principal repayment is linked to the performance of a specific stock […]
Reverse Convertible Notes Sold By Brokers Under Regulatory Investigation
According to Bloomberg, the SEC is investigating to see if investors were defrauded into buying complex bonds known as reverse convertible notes. Reverse convertibles are securities that promise to pay investors a comparatively high fixed rate of interest and repay the investor’s principal , unless a stock to which the product is linked falls below […]
