Wall Street Sign
Forbes recently published a list of America’s Top Wealth Advisors. This list is published annually and rates thousands of advisors based on asset under their management, revenue, experience, and compliance. The Malecki Law team noticed that some top managers have several disclosure events in their BrokerCheck record. BrokerCheck is a free tool from FINRA (Financial Industry Regulatory Authority) that helps investors’ research brokers, investment advisors, and their firms.

Here is a list of a few of the top advisors with disclosure events for unauthorized trading, unsuitability, and more. (Not all top advisors on their list had reported events or all of the above reported events on BrokerCheck and the list below does not comprehensively include all top advisors with such disclosure events).

Lyon Polk ranked at #24 has 4 disclosure events between 1992-1994, according to Broker Check, they include allegations by customers of alleged unauthorized trading, misrepresentation, unsuitability, excessive trading, violation of commissions discount agreement. Each of these customer dispute was settled. In 1992, Lyon Polk was the subject of a regulatory disciplinary action, where he was sanctioned with suspension, censure, and a fine amounting to $27,500, per BrokerCheck.

Malecki Law’s team of investment fraud attorneys are interested in hearing from investors who have complaints regarding broker Brett A. Baffa. Mr. Baffa was most recently licensed through NYLife Securities before being terminated by the firm, per industry records.

According to his BrokerCheck report maintained by the Financial Industry Regulatory Authority (“FINRA”), Mr. Baffa has been the subject of two employment separations after allegations and a regulatory inquiry.

Mr. Baffa’s FINRA records indicate that in 2006, Mr. Baffa was “discharged” by J.P. Turner & Co, LLC for “failure to follow principal’s instructions; use of unapproved correspondence that included price predictions.”

551783_street_of_wealthGenerally speaking, it’s usually not a good thing when when a company is fined for similar conduct multiple times.

Just this month, UBS Financial Services, Inc. submitted a Letter of Acceptance, Waiver and Consent No. 2013038351701 (AWC) that detailed a $250,000 fine for failures in supervision regarding sales of mutual fund shares to investors.  According to the AWC, for a four year period, from approximately 2009 to 2013, UBS failed to provide sales charge waivers to customers entitled to waivers through rights of reimbursement.  The AWC detailed that this conduct created a violation of FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade).

Mutual fund class A shares generally require the investor to pay an upfront sales charge, except where the mutual fund waives the charge, such as when the mutual fund is purchased with a right of reimbursement.  The AWC detailed that investors sometimes purchase class A shares with right of reimbursement when they reinvest proceeds from earlier redemptions of Class A shares in the same fund or fund family within a specific time period.

The securities attorneys at Malecki Law are interested in hearing from customers who have complaints against Joseph L. Bess, II.  Mr. Bess was recently registered to sell securities with Waddell & Reed, in Edmond, Oklahoma, From April 2014 to July 2016, according to his publicly available BrokerCheck records maintained by the Financial Industry Regulatory Authority (FINRA).  Mr. Bess was registered by J.P. Morgan Securities, LLC from October 2012 to April 2014, according to BrokerCheck records.

Mr. Bess has fined and suspended from association with any FINRA member broker-dealer for two months by FINRA, after submitting a Letter of Acceptance, Waiver and Consent No. 2014041059901 (AWC).  According to the AWC, Mr. Bess violated FINRA Rules 4511 (General Requirements) and 2010 (Standards of Commercial Honor and Principles of Trade) because from “January 2013 through January 2014, Mr. Bess marked a total of 139 order tickets for the purchase of exchange traded funds in the accounts of 21 customers as ‘unsolicited’ when, in fact, Bess had solicited each order by bringing the relevant ETF transaction to the attention of each customer.”

The AWC makes clear that pursuant to FINRA Rule 4511, broker-dealers must make and preserve books and records, and inherent in the Rule is the obligation that the records be accurate.  The AWC confirmed that “by mismarking the order tickets, Bess caused his member firm to keep inaccurate books and records.”

office_suit_corportate_237605_lThe securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Paul G. Liebezeit.  Mr. Liebezeit is currently registered to sell securities with Purshe Kaplan Sterling Investments at the broker-dealer’s Plymouth Meeting, Pennsylvania office, according to his publicly available BrokerCheck records maintained by the Financial Industry Regulatory Authority (FINRA).

Per his BrokerCheck report, Mr. Liebezeit was previously registered by LPL Financial LLC from December 2010 to October 2014, NRP Financial, Inc. from October 2009 to Determine 2010, and with Morgan Stanley Smith Barney from June 2009 to October 2009.

In 2016, Mr. Liebezeit was fined and suspended from association with any FINRA member broker-dealer for six months by FINRA, after submitting a Letter of Acceptance, Waiver and Consent No. 2014043011201 (AWC).  According to the AWC, Mr. Liebezeit violated NASD Rule 3040 (Private Securities Transactions of an Associated Person) and FINRA Rule 2010 (Standards of Commercial Honor and Principles of Trade) because from December 2013 to February 2014, Mr. Liebezeit recommended and then facilitated a $1,000,000 investment in a fund that was not approved for sale through LPL Financial.  According to the AWC, Mr. Liebezeit did not provide written notice of his participation in the transaction to LPL Financial, and did not obtain LPL’s written approval to participate in the transaction.

White eggs in a brown nest labelled with IRA, Pension, 401k and House representing a typical nest egg.
First, it was M.I.T., Yale and N.Y.U. Then, Duke University, Johns Hopkins, University of Pennsylvania, and Vanderbilt were sued for excessive fees in their employees’ retirement accounts, according to a New York Times report. With these class-action suits filed, let’s examine what are the common problems and allegations made against 403(b) plans.

403(b) plans, are similar to 401(k) retirement plans available to employees of public schools and nonprofit institutions like universities and hospitals. The most common allegation that has been reported against 403(b) plans is excessive fees that result in lost retirement savings for the investors. These universities reportedly used multiple ‘record keeper’ providers and paid excessive revenue sharing payments to these providers, amounting to millions of dollars in lost savings.

While the employee investors would have benefited more from fewer simplified options that leveraged economies of scale, there were 400+ investment options which were confusing for them and made them opt for duplicative strategies according the same news report. Allegedly, millions of dollars in retirement assets were unsuitably invested in underperforming funds in a retail share class as opposed to a less-expensive institutional share class. The investment advisors for these plans allegedly breached their fiduciary duty which mandates the reduction of excessive fees and conflicts of interest that erode retirement savings for all investors.

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Robert E. Heath.  Mr. Heath was previously employed and registered with Presidential Brokerage, Inc. at the broker-dealer’s Colorado Springs, Colorado office, according to his publicly available BrokerCheck records maintained by the Financial Industry Regulatory Authority (FINRA).

Per his BrokerCheck report, Mr. Heath was previously employed and registered by AXA Advisors, LLC from December 2008 to December 2012, and employed by VALIC Investment Services Company from September 1990 to December 2008.

In 2016, Mr. Heath was fined and suspended from association with any FINRA member broker-dealer for three months by FINRA, after submitting a Letter of Acceptance, Waiver and Consent No. 2015046946301 (AWC).  According to the AWC, Mr. Heath violated FINRA Rules 3240 (Borrowing From or Lending to Customers) and 2010 (Standards of Commercial Honor and Principles of Trade) because in July 2012, “while associated with AXA Advisors, Heath borrowed $7,500 from his customer … made one monthly interest payment to [the customer] in August 2012,” even though AXA Advisors prohibited their registered representatives to borrow money from their customers under any circumstances.

The securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints against stockbroker Steven M. Wisniewski.  Mr. Wisniewski is currently employed and registered with Newbridge Securities Corporation and works at the broker-dealer’s Boca Raton, Florida office, according to his publicly available BrokerCheck records maintained by the Financial Industry Regulatory Authority (FINRA).

Per his BrokerCheck report, Mr. Wisniewski was previously employed and registered by Cambridge Investment Research, Inc. from November 2012 to May 2015, Ridgeway & Conger, Inc. from September 2011 to November 2012, and J.P. Turner & Company, LLC from July 2003 to September 2011.

According to his BrokerCheck report, Mr. Wisniewski was the subject of a recent customer complaint received in or around April 2015 alleging churning, unauthorized trading, misrepresentation, negligence, forgery and fraud.  The case is currently pending, with alleged damages of $200,000, according to BrokerCheck records.

BondsIn the recent years, we witnessed a sharp decline in Puerto Rican municipal bond prices and related assets, resulting in an upsurge in FINRA claims, arbitrations and awards. This has revealed new insights into the bond market and we anticipate a wave of FINRA Arbitration cases linked to bonds and fixed income asset classes.

After the recession in 2008, there has been a massive movement away from equities towards the seemingly less-risky and volatile asset class of bonds, creating a spike in demand for U.S. treasuries, corporate and municipal bonds. More than $1 trillion has flowed into the U.S. bond market since 2008.

Bonds are sensitive to interest rates and it’s pricing inversely proportional to interest rates. Fed has explicitly stated their intent to hike interest rates going forward, therefore, a fall in bond prices can be reasonably anticipated. Rising interest rates will result in losses for bond investors, most immediate effect being paper losses, and the inability to sell those bonds without incurring actual losses for a long time. Majority of the impact will be felt by longer term bond investors with 10 years or more to maturity and by non-treasury bond holders that tend to fall faster as rates rise.