New York Securities Fraud Lawyers Blog

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EMPLOYEE RECOVERY $2M FOR A WHISTLEBLOWING TRADER

INVESTOR RECOVERY $7.2+M FOR PONZI SCHEME VICTIMS

INVESTOR RECOVERY $3.9M FOR TAX SHELTER FRAUD VICTIMS

BROKER PONZI SCHEME $7.4 MILLION

FAILURE TO SUPERVISE $4+ MILLION

BROKERAGE THEFT $3.8 MILLION

PONZI AT MAJOR FIRM $4+ MILLION

FAILED PRODUCT 28 EXPUNGEMENTS

WHISTLEBLOWER AWARD MAX 30% BOUNTY

NO ACTION INSIDER TRADING CASE

NO ACTION EMBEZZLEMENT CASE

NO ACTION MARKET MANIPULATION

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New York Securities Fraud Lawyers Blog

Elder Financial Exploitation by Guardians

January 12, 2017 | Malecki Law Team

Recently the Government Accountability Office (GAO) published a report about the extent of elder abuse by guardians and measures that exist to protect older adults. This has become an issue of utmost importance as the number of older adults, over the age of 65, are expected to nearly double to 88 million by 2050 (GAO Report 2016). A “guardian” is a legal relationship created by a state court by granting one person the authority and responsibility to make decisions on behalf of an incapacitated individual, like an older adult. The appointed guardian could be a family member, a professional guardian, or a public guardian. According to the GAO report the most common type of elder abuse inflicted by guardians appear to be financial exploitation. This GAO report attempted to identify red flags of abuse, study reported complaint data about guardianship abuse in 6 states- California, Minnesota, Florida, Ohio, Texas and Washington- and evaluate measures that are in place to help protect older adults.

The federal government does not regulate or directly support guardianship but they may provide indirect support through federal agencies, by sharing information and providing funding for state and local courts who oversee the guardianship process. There are limitations on the data available to study cases of elder abuse because states do not have adequate data on number of guardians serving seniors and not all cases of elder abuse are reported. A close look at reported elder abuse cases since 2010, identified using public-record searches reveal instances of misappropriation of funds, falsified payments, mistreatment of the elderly, diversion of payments, overcharging accounts, excessive spending and inflated personal expenses, and neglect.

FINRA ’s Role in Fighting Elder Financial Exploitation

How Will These Election Results Effect the DOL Fiduciary Rule?

November 11, 2016 | Malecki Law Team

Last year, the Obama administration introduced the Fiduciary rule that requires financial advisers to always act in the best interest of their clients when handling their retirement savings. It was expected to be a big industry shakeup, making financial advice more reliable, compensating advisers with a flat-fee model and reasonable compensations, incentivizing them to really act on their client’s best interest as opposed to their own personal gain. The DOL’s Fiduciary rule was aimed at stopping the $17 billion a year that gets wasted in exorbitant fees.

The banks and Wall Street have continued to oppose this rule on grounds of lengthy paperwork and compliance expenses. Financial firms were anxious that once the rule is in effect, they will not be able to make as much money. Republicans have expressed that repealing this rule is on their agenda. Now with Trump as the President elect, and Republicans holding majority in both Houses, there is a fear that legislative action will be taken to kill the much-needed Fiduciary rule.

Joseph Peiffer of PIABA (Public Investors Arbitration Bar Association) was quoted in the InvestmentNews, “If he (Trump) wins, no one knows what the hell is going to happen.” Now that Trump has won, the fate of the rule hangs in the balance. There are others who think that the rule is here to stay, inspite of the unpredictability.

FINRA Fines 8 Broker-Dealers For Failures of Supervision Over Variable Annuities

November 4, 2016 | Malecki Law Team

The Financial Industry Regulatory Authority Inc. (FINRA) announced in a News Release on November 2, 2016 that it fined eight broker-dealer firms regarding failures to supervise the sale of variable annuities. FINRA announced that the following firms were fined a total of $6.2 million:

VOYA Financial Advisors Inc., of Des Moines, IA, was fined $2.75 million;
Cetera Advisor Networks LLC of El Segundo, CA, was fined $750,000;

Malecki Law Investigates Variable Universal Life Insurance Policies

October 28, 2016 | Malecki Law Team

The securities and investment fraud attorneys at Malecki Law are interested in hearing from investors who have purchased Variable Universal Life Insurance (VUL) policies.

According to Investopedia, VUL policies combine a death benefit with investment feature. The investment feature generally includes sub-accounts, as with other variable annuities, that invest in stocks and bonds, or mutual funds that have exposure to stocks and bonds. While a VUL investment feature may offer an opportunity to gain an increased rate of return by investing in securities, it generally comes with higher management fees and commissions. As a result, these commissions and fees must be weighed against the risk of loss in the securities purchased. These risks must be disclosed to the investor prior to investment.

Issues surrounding VUL policies are not new. A U.S. News and World Report article from 2011 highlighted that these types of policies generally come with higher fees, fewer investment options and sometimes surrender policies.

FINRA Investigates Cross-Selling at Broker-Dealers

October 27, 2016 | Malecki Law Team

As reported recently, the Financial Industry Regulatory Authority has commenced an investigation into the cross-selling activities of several broker dealers in the wake of the Wells Fargo fallout. FINRA’s objective has reportedly been to determine just how much cross selling is taking place (including promotion of products such as credit cards and loans) and what incentives are being provided to employees to engage in the conduct.

A FINRA spokesperson was quoted as saying, ““In light of recent issues related to cross-selling, FINRA is focused on the nature and scope of broker-dealers’ cross-selling activities and whether they are adequately supervising these activities by their registered employees to protect investors.”

Supervision at broker dealers is a very critical aspect of customer service. It is important that brokers and their firms are only promoting and selling products to customers that are appropriate for that customer and in the customer’s best interest. As has been shown by the Wells Fargo disaster, cross-selling incentive programs can compromise that goal by creating a conflict of interest.

Jenice Malecki Will Be A Panelist At An Upcoming Unique National Investor Town Hall Meeting

October 25, 2016 | Jenice L. Malecki, Esq.

Alliance for Investor Education and the PIABA Foundation is Hosting an Educational Conference about Securing Investors’ Financial Futures

The National Investor Town Hall Meeting is a day-long series of presentations, free to the public, aimed at educating investors about the risks and rewards of financial investing. It will be held on October 29, 2016 at the Rancho Bernado Inn in San Diego, California. Many respected industry professionals, including Ms. Malecki and federal and state regulators will participate in four sessions to help attendees understand risk tolerance, choose financial advisors and avoid becoming victims of financial fraud.

“Financial fraud costs Americans approximately $50 billion each year. It has been my mission for over a decade to educate and empower investors, lending them a voice and holding big entities accountable for violating their fiduciary and ethical duties,” said Jenice Malecki, the founder of Malecki Law. She further adds, “I am excited to be part of this much needed grass-root investor education drive.”

BROKER REPORT: Former UBS Broker Jeffrey Howell Barred by FINRA

October 14, 2016 | Malecki Law Team

The investment and securities fraud attorneys at Malecki Law are interested in hearing from investors who have complaints regarding former UBS financial adviser Jeffrey Howell.

Per reports, Mr. Howell has been barred by the Financial Industry Regulatory Authority (“FINRA”)for providing a customer with false weekly account statements for over six years. According to a settlement notice in connection with an investigation by FINRA , Mr. Howell sent these weekly statements with inflated values, at times overvaluing the account by close to $3 million.

Mr. Howell also allegedly used his own personal email account to distribute these reports, which compromised the accuracy of the firm’s books and records. Per BrokerCheck, Mr. Howell has not been licensed in the securities industry since 2014.

UBS Fined for Sales of Complex Investments

October 7, 2016 | Malecki Law Team

According to news reports, the SEC has fined UBS more than $15 million for its failures to properly supervise employees who sold complex investment products to unsophisticated and inexperienced clients of the firm. Complex products are traditionally reserved for only sophisticated investors who have a full understanding of the product and are appreciative and willing to take the risks involved. These are not typically appropriate or suitable for unsophisticated “mom and pop” investors.

Nonetheless, reports indicated that UBS’s financial advisors sold more than half a billion dollars’ worth of these complex products to more than 8,000 inexperienced investors. Making matters worse, reports reveal that many of these investors had moderate or conservative risk profiles. The products sold to investors are said to have included reverse convertible notes, some of which had derivatives that were tied to implied volatility.

This is not new for UBS, which just paid $19.5 million last year in connection with the firm’s sale of complex structured notes.

Morgan Stanley Charged for Unethical High-Pressure Sales Contests

October 4, 2016 | Malecki Law Team

First Wells Fargo, now Morgan Stanley.

On the heels of Wells Fargo’s cross-selling scandal, the broker-dealer Morgan Stanley has been accused of inappropriately promoting “securities based loans” to customers, according to an article published in the Wall Street Journal on October 3, 2016. The complaint, filed by Massachusetts securities regulators, alleges that Morgan Stanley’s lax compliance and supervisory oversight led the broker-dealer to breach their own fiduciary duties owed to their wealth management customers by pushing the loans and minimizing the risks associated with the accounts.

If the allegations turn out to be true, the Massachusetts allegations would further exemplify the conflict of interest between broker-dealers pushing risky products on their clients without providing the balanced view of the products that industry rules require, which could be breaches of duties to certain of their customers. At the very least, FINRA Rule 2111 requires that broker-dealers ensure that recommendations of products are suitable for each customer, which requires a careful assessment of each customer’s respective investment objectives, risk tolerance, age, tax bracket, other investments, liquidity needs, as well as other factors.

Jenice Malecki Speaks at PLI’s Securities Arbitration 2016

October 4, 2016 | Malecki Law Team

Ms. Malecki was a panelist recently at the Practising Law Institute’s (PLI) Securities Arbitration 2016 all-day seminar, where she spoke about ethical and other issues in securities arbitration. Ms. Malecki has spoken at PLI consistently for many years. Her panel Practicum on Experts and Closings focused on expert witnesses and closing arguments. The panel and the seminar had other distinguished securities industry members from the FINRA Dispute Resolution office, professors of law, litigators, mediators and wealth managers. Ms. Malecki is invited every year to participate in PLI’s securities arbitration seminars.