This week, it has been reported that the Department of Labor proposed tougher laws after issuing new regulations requiring financial advisors and brokers managing 401k and retirement accounts to act in the best interest of their clients. These rules were proposed a year ago and after deliberating on it for a year, the White House has finalized these tougher requirements. However, it might be a year before these rules go into effect.

An academic study commissioned by the White House revealed that “conflicts of interest” in financial investing was costing Americans about $17 billion a year in retirement savings. Although brokers are required to only recommend “suitable” investments under the current “suitability standard”, they can push a more expensive product that pays a higher commission than a cheaper fund that would be equally appropriate for that investor.

The new rule fiduciary rule is aimed to at reducing fees and commissions that erode retirement savings and hold brokers to higher standards. It will cast a wider net on who is subject to the fiduciary standard.

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In February 2016, academics Mark Egan, Gregor Matvos and Amit Seru at the University of Minnesota and University of Chicago business schools released a report titled “The Market for Financial Adviser Misconduct” on financial advisers in the United States. The report reveals how rampant securities fraud and broker misconduct is throughout the country. For the purpose of the study, these academics have analyzed the full set of disclosures of approximately 10% of employees in the finance and insurance sectors between 2005 and 2015, and taken in to account customer complaints, arbitrations, regulatory actions, terminations, bankruptcy filings and criminal proceedings. Based on this study, 7% of advisers were reported to have engaged in misconduct. The actual unreported cases may add to this number.

Here at Malecki Law, it is our mission to protect individuals who have been victimized by unscrupulous brokers. Here are some excerpts highlighting the important findings from this study:

  • According to the report, prior offenders are five times more likely to repeat their misconduct as compared to an average adviser. Approximately one-third of advisers with misconduct reports are repeat offenders. That is why we encourage all investors to investigate their broker on FINRA’s BrokerCheck

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We are investigating customer complaints against broker David E. Mickey, who is currently barred from acting as a broker or otherwise associating with firms that sell securities to the public, as per FINRA’s BrokerCheck. According to FINRA BrokerCheck, in 2015 FINRA imposed a sanction on Mr. Mickey as he failed to appear for testimony in response to a request pertaining to an investigation about his trading activities. As per BrokerCheck, Mickey’s firm filed a Form U5 with FINRA terminating his registration, disclosing that he sold securities during a blackout period and while in possession of material, non-public information.

According to FINRA BrokerCheck, Mickey had similar allegations made against him in 2014, while he was at LPL Financial, where he allegedly violated the code of conduct by selling Niagara Securities during a blackout period and while in possession of certain non-public material. Per BrokerCheck, there was another customer dispute is 2002, where the customer alleged that Mickey did not act promptly on wire instructions thereby, keeping him from realizing market gains.

If you or anyone you know have experienced similar issues or are concerned about unauthorized trading or failure to execute by a broker, you should let an experienced Securities team assess the situation. You need an experienced team that is well versed with FINRA laws and protecting investors from unscrupulous brokers on your side. At Malecki Law, we champion the cause of investor protection and education.


The securities fraud attorneys at Malecki Law would like to hear from investors who have complaints against John T. Keyser of Dawson James Securities in Florida. In the past, Keyser has been the subject of a FINRA suspension and customer dispute, as well as an outstanding tax lien. Since 1986 he has been at 16 brokerage firms, including 3 that were expelled from the industry. His current firm has 7 regulatory and 1 arbitration disclosure. Two other firms he has worked with had a combined 30 regulatory & 9 arbitration disclosures on BrokerCheck.

According to FINRA’s BrokerCheck, there were customer dispute cases against him in 2010, 2006, and 2002. Further, as per FINRA’s BrokerCheck, in 2010 there were allegations made against him for churning, intentional and negligent misrepresentation, unsuitability, breach of fiduciary duty, and unauthorized trading, seeking damages for $650,000. As per BrokerCheck, the firm and Keyser denied the wrongdoings and refuted the allegations. FINRA’s BrokerCheck shows that in 2006 there was another customer dispute against him, alleging that a stop loss order had not been executed timely to cover his client’s position. The same FINRA site reveals that in 2002, there was an unauthorized trading complaint made against him, demanding damages of 80,000.

There are other disclosure events, regulatory investment and judgement liens, against his records on BrokerCheck, one of which resulted in NASD suspending his license for failure to pay an arbitration award, which was resolved upon award payment. It is noteworthy that on BrokerCheck several Florida firms Mr. Keyser has worked for in the past have been expelled by FINRA including Sterling Financial Investment Group and Barron Chase Securities.

money lossThe Financial Industry Regulatory Authority (FINRA) has announced that it barred broker George E. Johnson from the securities industry for allegedly engaging in manipulation of stock trading, and for committing fraud.  FINRA also imposed a 6-month suspension against a second broker, Joseph Mahalick, and a 2 year suspension against a supervisor, Christopher Wayne.  All three individuals are reported to have worked at the time for the brokerage firm Meyers Associates, L.P. out of the firm’s Chicago, Illinois office.  Mr. Johnson has been working for and was registered by Newport Coast Securities, Inc. from April 2013.

FINRA’s Order stated that during May 2012, Mr. Johnson manipulated the market for the common stock of IceWEB, Inc. (OTCBB: IWEB) by soliciting customers to buy the stock while also soliciting other customers to sell at increasingly higher and artificially inflated prices and frequently effecting matched orders among his own customers.  Before and during this time, FINRA’s Order set forth that Mr. Johnson distributed to his clients misleading research and sales materials concerning IWEB, and failed to disclose material information.

The Order alleged that Mr. Johnson first became involved with IWEB when his employer acted as a placement agent for the company, and that he continued to recommend the stock to his clients through private placements and in the open market, despite the company having years of financial issues.  At the time, IWEB stock was valued at around .12/share, and the Order alleged that Mr. Johnson solicited purchases and sales in the stock to artificially increase the share price to .17/share, allegedly for the purpose of earning placement agent business from IWEB to earn substantial placement fees.

From Deutsche Bank to Credit Suisse and Barclays, brokers are in transition for a variety of reasons – some voluntary and some obligatory.  Either way, for a FINRA registered representative, leaving their broker-dealer can be a nerve-wracking time.  Regardless of the reason for leaving, the ultimate goal is always the same: get to your new firm and bring with you as many clients as you can without getting sued by your old broker-dealer in a FINRA Arbitration.

But, easier said than done.  In addition to the logistical challenges, there are also some legal hurdles that must be cleared first.

The first major question that should be asked is: “Does the Protocol for Broker Recruiting apply?”  If either your old firm or new firm are not signatories to it, then your answer should be “No.”  If both your old firm and your new firm are signatories to it, then the answer to that question should be “Yes” – but some restrictions may apply.

The Securities and Exchange Commission (SEC) announced on February 16, 2016 a settlement with Massachusetts-based PTC, Inc. involving alleged violations of the Foreign Corrupt Practices Act (FCPA).  In total, PTC was reported to agree to pay approximately $28 million, including nearly $12 million in disgorgement and more than $14 million in a non-prosecution agreement with the United States Department of Justice in a parallel action.

According to the SEC Order, PTC’s China-based subsidiaries made payments to China officials in an effort to win business, including:

  • Provided improper travel, gifts, and entertainment totaling nearly $1.5 million to Chinese government officials who were employed by state-owned entities that were PTC customers.

The New York securities and investment fraud attorneys at Malecki Law are interested in hearing from investors in Highland Funds’ series Energy Master Limited Partnerships (MLPs).

Highland Funds’ four Energy MLPs have declined by approximately 23% in the year to date, per Morningstar.  These funds include:

  • Highland Energy MLP C (HEFCX)

Brokers beware; FINRA is watching your firm, and you.  Becoming embroiled in a regulatory inquiry or investigation can become a major and costly headache and impediment to registered representatives’ business.

In January 2016, the Financial Industry Regulatory Authority (FINRA) released its annual list of priorities, showing what sorts of sweeps they may perform, and investigations they may bring, in the coming year.  brokers working in the securities industry should be aware of the priorities that are relevant to them, including those having to do with sales practice.

FINRA’s 2016 Priorities make clear that they intend a top-down review of the following areas, which may lead to firm-wide or broker specific investigations, including:

exclamation-point-icon-1444386The investment fraud attorneys at Malecki Law announce the firm’s investigation into potential securities law claims against broker-dealers relating to the improper sale of natural gas and oil linked structured notes and similar products to investors.

Malecki Law is interested in hearing from investors who purchased structured notes issued by well-known financial institutions, including Bank of America Merrill Lynch (NYSE: BAC), Citigroup (NYSE: C), Credit Suisse (NYSE: CS), Goldman Sachs (NYSE: GS), JP Morgan Chase (NYSE: JPM), Morgan Stanley (NYSE: MS), UBS (NYSE: UBS), and Barclays (NYSE: BCS).

These investment products, often bearing such names as “Phoenix,” “Plus,” “Enhanced Return,” “Principal Protected,” “Bullish,” “Leveraged Upside” or “Accelerated Return,” were reportedly marketed to investors as a way to make significant returns and income from the rising price of oil.  In addition to promises of increased gains, investments like these are frequently also sold to investors with assurances that their potential losses would be limited and their initial investment would be protected.