Criminal Law

Morgan Stanley Plans to Double High Net Worth Advisors

Posted on October 23, 2009
Morgan Stanley Smith Barney announced the integration of Smith Barney?s Citi Family Office into its own ultra-high-net-worth division, which will now be called Morgan Stanley Private Wealth Management. Unlike the old family office, the newly combined unit will exclusively serve clients with a minimum of $20 million in assets...

Schwab Receives Wells Notice For Mutual Funds

Posted on October 15, 2009
In an 8-K filed today, Charles Schwab Corp. disclosed that it has received a Wells Notice from the SEC. Accordign to the filing, the Company has been responding to civil litigation claims and regulatory investigations regarding two fixed income mutual funds, the Schwab YieldPlus Fund(R) and the Schwab Total Bond Market Fund(TM)...

SEC Continues Mark Cuban Fight

Posted on October 08, 2009
The SEC is in trouble. We all know that, and they need to show that they are active, aggressive and enforcing the securities laws. So, we get surprise examinations, a flurry of press releases and other assorted activity. Good for them, they need to regroup and recover from their recent failures...

FINRA Seeks Further Erosion of Broker Rights - BrokerCheck Forever

Posted on October 07, 2009
FINRA has proposed rule SR-FINRA-2009-050 under which it would permanently disclose a condensed record for any broker who has been fined, suspended or barred by securities regulators on its Internet based Broker-Check system. The proposed rule was published in the Federal Register on August 17, 2009 and the SEC solicited comments for submission on or before September 8, 2009...

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Supremes Will Not Hear Manifest Disregard Cases

Posted on October 06, 2009
The United States Supreme Court declined to hear the appeals of three cases, all of which involve the concept of manifest disregard of the law as a grounds for vacating an arbitration award. Manifest disregard of the law has evolved over the years as an alternative justification for vacating an arbitration award...

Pay Czar Targets Salary Cuts

Posted on October 06, 2009
The Obama administration's pay czar is planning to clamp down on compensation at firms receiving large sums of government aid by cutting annual cash salaries for many of the top employees under his authority, according to people familiar with the matter...

No More 50% Pay Cuts?

Posted on October 05, 2009
Sallie Krawcheck, Bank of America Corp.?s head of wealth management, said she won?t do ?stupid things? to pay policies that might spur financial advisers to leave the bank. I guess we don't be seening any more 50% pay cuts or insulting retention bonuses from BofA/Merrill that caused so many brokers so much harm...

Beware of Auction Rate Securities Settlement "Phishing" Scam

Posted on October 05, 2009
FINRA has issued an Investor Alert to warn the public about a recent auction rate securities (ARS) ?phishing? scam that promises compensation from ARS settlements in exchange for personal information. Follow the link to the FINRA web site. The email looks like it originated from FINRA?although it did not...

No More 50% Pay Cuts?

Posted on October 05, 2009
Sallie Krawcheck, Bank of America Corp.?s head of wealth management, said she won?t do ?stupid things? to pay policies that might spur financial advisers to leave the bank. I guess we don't be seening any more 50% pay cuts or insulting retention bonuses from BofA/Merrill that caused so many brokers so much harm...

Report Cites Finra Lapses in Fraud Probes

Posted on October 02, 2009
FINRAhas repeatedly denied that it had any responsibility for the Madoff Mess, claiming earlier this year that  "[n]one of the fraudulent activities that have been alleged deal with the activities of the broker-dealer or come under the jurisdiction of FINRA" according to Reuters...

RIA Assets Fall But Their Numbers Grow

Posted on October 02, 2009
A recent report has confirmed what we suspected - brokers and groups of brokers are moving to the investment advisory side of the business, leaving FINRA and its regulatory nightmare behind them. FA Magazine is reporting that while total assets under management for advisers declined by more than 20%, which is no surprise, the total number of advisers has increased...

The IAA Favors Banning Mandatory Arbitration

Posted on October 01, 2009
I am constantly amazed at the positions people take on issues when they haven't thought the entire issue through. The Investment Adviser Association, a trade association of investment advisers,  supports the Obama's administration's efforts to ban mandatory arbitration clauses in securities contracts...

Advisors? Job Attitude, Outlook Improves

Posted on October 01, 2009
A new survey reveals that independent RIAs have seen their level of job satisfaction rise 10% and the number with an optimistic outlook for the U.S. economy has climbed by 25% over the past three months, according to a survey released by TD Ameritrade Institutional...

Registration and Regulation of Investment Advisers

Posted on September 30, 2009
Increased regulation, and a push for more regulation by FINRA and the States is causing brokers and small firms to move the to investment advisory side of the business. While regulations are going to change here too, there are benefits to the adviser registration, rather than dealing with FINRA...

How BofA Used Merrill To Bully the Government

Posted on September 29, 2009
Some members of Congress and others have accused federal regulators of pressuring Bank of America into going through with its merger with Merrill Lynch. But records suggest it was the bank, not regulators, doing the bullying. Law.com has an analysis of this view of the issue...

EXCERPT: 'The Madoff Chronicles'

Posted on September 29, 2009
If you simply can't get enough Madoff, ABC News correspondent wrote a book which examines the personal and business life of the Madoff Family. More>>>

Due Diligence Failure Leads to SEC Enforcement Action?

Posted on September 28, 2009
Did a failure of due diligence cause a broker to assist a fraud? The SEC has charged Detroit-area stock broker Frank Bluestein with fraud, alleging that he lured elderly investors into a $250 million Ponzi scheme.The complaint reflects that the broker was a top salesman for the Ponzi scheme, raising $74 million from more than 800 investors over a 5 year period...

Due Diligence Failure Leads to SEC Enforcement Action?

Posted on September 28, 2009
Did a failure of due diligence cause a broker to assist a fraud? The SEC has charged Detroit-area stock broker Frank Bluestein with fraud, alleging that he lured elderly investors into a $250 million Ponzi scheme.The complaint reflects that the broker was a top salesman for the Ponzi scheme, raising $74 million from more than 800 investors over a 5 year period...

Friday Q&A - LLCs for Independent Reps

Posted on September 25, 2009
Question: I recently went independent and intend to operate my business as an LLC. We setting up the relationship with my BD, they insist that all the paperwork will be in my name and not the LLC. Is this normal? How do I protect myself from liability?Answer: The reason the BD insists on having the registration and agreements with you rather than your LLC is simple ? securities regulations require it...

SEC Alleges Pump and Dump Scheme Involving ConnectAJet. com Stock

Posted on September 25, 2009
From The Securities Law Prof Blog:The SEC announced today that on September 18, 2009, it sued several individuals and entities, alleging that the defendants implemented a scheme to funnel ConnectAJet.com, Inc. shares into the public market at great profit to themselves when no registration statement was filed or in effect...

A Tax on Cadillac Health Plans May Also Hit the Chevys

Posted on September 25, 2009
This is just outrageous. Senator Max Baucus is proposing to put a "luxury tax" on companies who provide the most expensive health insurance policies to their workers. Unfortunately, Senator Bacus is pegging that tax at policies that cost more than $21,000 a year...

Trouble Brewing for Small Broker-Dealers?

Posted on September 25, 2009
Trouble Brewing for Small Firms? Having spent the last 25 years representing small and mid-sized brokerage firms, I completely understand the issues facing these firms. It always seems that FINRA and the SEC fail to pay attention to the ramifications of their rules and regulations on the smaller firms when new regulations are considered...

A Tax on Cadillac Health Plans May Also Hit the Chevys

Posted on September 24, 2009
This is just outrageous. Senator Max Baucus is proposing to put a "luxury tax" on companies who provide the most expensive health insurance policies to their workers. Unfortunately, Senator Bacus is pegging that tax at policies that cost more than $21,000 a year...

What the SEC Might Look Like If It Did Its Job:

Posted on September 23, 2009
Bloomberg's Susan Antilla has an interesting article on the SEC. While I am not an advocate of putting investors in control of the SEC, which would undoubtedly do more harm than good, the idea of removing the Enforcement Division and putting it into the Justice Department deserves some consideration...

SEC Files Insider Trading Charges Only 5 Days After the Trade!

Posted on September 23, 2009
Wow, this has got to be a record. The SEC announced today that it charged Richardson, Texas resident Reza Saleh with insider trading around the public announcement of Dell Inc.'s tender offer for Perot Systems earlier this week. The trades occurred between September 4 and September 18 OF THIS YEAR! Just 5 days ago...

SEC About Face on BofA Suit

Posted on September 22, 2009
After having its questionable settlement with Bank of America rejected by the Court, the SEC has now said that it will press its case that Bank of America Corp. misled investors, and said additional claims may be added.?We will vigorously pursue our charges against Bank of America and take steps to prove our case in court,? the agency said yesterday in a statement, a week after U...

SEC Proposes Flash Order Ban

Posted on September 18, 2009
A flash order enables a person who has not publicly displayed a quote to see orders less than a second before the public is given an opportunity to trade with those orders. Investors who have access only to information displayed as public quotes may be harmed if market participants are able to flash orders and avoid the need to make the order publicly available...

Cuomo Subpoenas BofA Board

Posted on September 16, 2009
The Merrill Bonus issue at Bank of America is not going away. InvestmentNews is reporting that the New York Attorney General's office subpoenaed five members of BofA's board of directors as part of an investigation into the bank's acquisition of Merrill Lynch & Co...

The Power Grab Continues

Posted on September 16, 2009
It seems like everyone is trying to gain power and control using the Madoff Mess as a justification. The North American Securities Administrators Association (the state securities commissioners) is pushing for authority over all investment advisors who manage less than $100 million in assets...

One of the Richest Men in the US Can't Afford an Attorney

Posted on September 16, 2009
There is something wrong with this picture. Texas financier R. Allen Stanford was reported to be worth approximately 2 billion dollars before his arrest on securities fraud charges. Yesterday, the court appointed a public defender to represent him, because he cannot afford an attorney...

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