Category: FINRA Claims

Investment Banker Can be Held Liable for Sending False Statements in Email Signed by Director of Firm

By ,

SPG

Philadelphia FINRA lawyers assist clients with FINRA claims.In the case, Lorenzo v. Securities and Exchange Commission, the U.S. Supreme Court recently ruled that an investment banking director can be held liable for false statements he emailed to a client, even though the director’s boss wrote the content of the email and directed him to send it. In a 6-2 ruling, the court found that the director could be held liable under securities laws, even though the 2011 decision in Janus Capital Group v. First Derivative Traders found that liability for false statements only applied to those with “ultimate authority over the statement.”

However, the Court in Lorenzo distinguished the Janus decision due to the fact that the Janus decision was based specifically on the second prong of the Securities and Exchange Commission Rule 10b-5, which prohibits individuals or entities from making untrue statement of material fact or omitting a material fact. The person making the statement has “ultimate authority of the statement,” according to the court. Unlike in Janus, the Court found in Lorenzo that the first prong of Rule 10b-5, which bars any device, scheme, or artifice to defraud, applies.

According to Court documents, in October of 2009, the director was told that the total assets of his only investment banking client at the time – Waste2Energy – was less than $400,000. However, on October 14, 2009, the director reached out to prospective investors via email about Waste2Energy. The emails stated that the company had assets of $10 million. The emails were signed by the director, but he testified that the firm’s owner instructed him to send the emails.

In addition to being fined $15,000 for sending the emails, the SEC barred the director from working in the securities industry. While Lorenzo argued that since he did not make the untrue statement, he should not be held liable under Janus, Justice Breyer, writing for the majority, affirmed the Circuit Court decision, which stated that the director violated subsections (a) and (c) of Rule 10b-5 and related statutory provisions.

Examples of Investment Fraud

The following are common examples of investment fraud and financial advisor misconduct:

  • Securities fraud
  • Failure to disclose the risks associated with certain investments
  • Making frequent trades for the purpose of generating commissions, also known as churning
  • Lack of suitability
  • Unauthorized trading

If an investor wants to file a claim against a financial advisor, the Financial Industry Regulatory Authority (FINRA) Rule 12200 states that he or she must arbitrate their claims, as opposed to litigating the claims in court. The FINRA rules state that customers have six years from the time of the event to file a claim. Because FINRA arbitration orders are final, and can only be appealed in limited circumstances, it is highly recommended that investors seek legal counsel from an experienced FINRA lawyer.

Philadelphia FINRA Lawyers at Sidkoff, Pincus & Green, P.C. Assist Clients with FINRA Claims

If you have been the victim of investment fraud, you are urged to contact the Philadelphia FINRA lawyers at Sidkoff, Pincus & Green, P.C. We have handled a wide range of disputes involving investment fraud and financial advisor misconduct, and we will ensure that your legal rights are protected. To schedule a confidential consultation, call us today at 215-574-0600 or contact us online. From our offices in Philadelphia, we assist clients throughout Pennsylvania and New Jersey.

  Category: Business Law, FINRA Claims
  Comments: Comments Off on Investment Banker Can be Held Liable for Sending False Statements in Email Signed by Director of Firm
  Other posts by

Ameriprise Prevails Against Former Advisor

By ,

SPG

A Financial Industry Regulatory Authority (FINRA) arbitration panel recently decided that a former Ameriprise broker had to pay Ameriprise $675,000 after a customer complaint against the firm settled. The customer was awarded $675,000 in the settlement, and Ameriprise then filed the third-party arbitration claim against its former broker to recover the funds. The broker is alleged to have misappropriated the client’s investment funds.

According to records maintained by FINRA, Ameriprise accused the broker of violating several company policies related to maintaining a beneficiary relationship with a client, complaint handling, comingling of funds, and conducting business with a foreign client.

A spokeswoman for Ameriprise has stated that the company is pleased with FINRA’s decision to hold its former broker accountable for the violations. After being dismissed from Ameriprise, the broker went to another global firm, but is no longer employed there. She has been named in another Finra arbitration, where several individuals claimed she advised them to purchase a failing business for her own personal gain, and illegally borrowed and comingled funds. The plaintiffs in the pending arbitration are seeking $1 million in damages.

Philadelphia FINRA Lawyers at Sidkoff, Pincus & Green P.C. Represent Clients in FINRA Arbitrations

To learn more about how we can help with your business or commercial arbitration, contact the Philadelphia FINRA lawyers at Sidkoff, Pincus & Green, P.C. today. Our offices are conveniently located in Philadelphia, and we represent clients in Pennsylvania and New Jersey. Call us today at 215-574-0600 or contact us online.

 

 

Philadelphia FINRA Lawyers: Variable Annuity Fraud

By ,

SPG

A Financial Industry Regulatory Authority (FINRA) panel has awarded damages to a woman over claims that her broker misled her about her investment. The investment was an ING Landmark variable annuity for which the petitioner alleged fraud, breach of contract, negligent supervision and breach of fiduciary duty, as well as violation of the Colorado Securities Act by her broker-dealer.. The respondent, broker-dealer, based in Oklahoma City, has been ordered to pay the woman over $1 million in damages.

The petitioner alleged she had been promised seven percent compounded annual returns on her investment. The case was unusual because of the clear paper trail and a written guarantee from the broker. A Salt Lake City arbitration panel awarded the petitioner $537,000 in compensatory damages, an amount equal to the difference of what she had been promised and what she received. The FINRA panel also awarded $537,000 in punitive damages. The panel attributed the punitive award to the “pattern of harming a group of people,” demonstrated by the broker-dealer firm which had as many as eight other clients with the same problem.

Annuity Complaints on the Rise

According to FINRA, client claims involving annuities rose 31 percent last year. They rank fifth among the securities involved in claims against FINRA member firms. This surge in client claims is getting the attention of the federal government, which has considered placing conditions on the sale of annuities, citing conflicts of interest and high fees. The advocacy group Consumer Action says that seniors are particularly at risk for fraud and make up 30 percent of victims.

Philadelphia FINRA Lawyers at Sidkoff, Pincus & Green P.C. Advocate for Victims of Fraud and other Wrongful Acts

If you have suffered a financial loss due to fraudulent financial advice, you may be entitled to compensation. At Sidkoff, Pincus & Green P.C. our Philadelphia FINRA lawyers have extensive experience handling many types of legal disputes, including FINRA arbitration. Call us at 215-574-0600 or contact us online.

Philadelphia FINRA Lawyers: UBS Seeks to Overturn FINRA Ruling

By ,

SPG

Swiss financial wirehouse UBS is seeking to vacate a Financial Industry Regulatory Authority (FINRA) ruling and $18.5 million award on the basis that two out of three arbitrators on the case were not impartial. UBS claims that one of the clients involved in the case went against their financial recommendations, a decision leading to substantial losses. However, the crux of USB’s case to overturn the award is their assertion that arbitrators failed to disclose concerning personal and professional financial details prior to their involvement in the case.

The case was initially decided in favor of the plaintiffs, a married couple, who won damages based on UBS sale of closed-end funds of Puerto Rican bonds, claiming unsuitability and breach of fiduciary duty. The claimants also accuse UBS of violating Puerto Rico’s own financial statutes. The couple initiated their arbitration a year after the Puerto Rican bond market collapsed. They allege that UBS misled clients about the potential vulnerability of their investments, while artificially inflating the local demand for bonds.

A FINRA three-member arbitration panel found that UBS failed in their obligation to these clients. FINRA is a not-for-profit organization dedicated to ensuring the integrity of broker-dealer industry and protecting investors. FINRA is not a part of the government, but is authorized by Congress. FINRA supervises more than 635,000 brokers and 3,900 securities firms.

Philadelphia FINRA Lawyers at Sidkoff, Pincus & Green Resolve the Toughest Business Law Cases

Philadelphia FINRA lawyers at Sidkoff, Pincus & Green bring experience and knowledge to business law cases. If you are seeking representation in a FINRA matter, call our Philadelphia offices today at 215-574-0600 or contact us online to discuss your situation.