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FINRA Rule Would Prohibit Settlement Conditioned On Agreement Not To Oppose Expungement

The Financial Industry Regulatory Authority (FINRA) recently announced a new proposed rule that would prohibit member firms and registered representatives from conditioning settlement on, or otherwise compensating customers for, an agreement not to oppose expungement requests. According to FINRA, the proposed rule will help preserve the integrity of the Central Registration Depository (CRD) system--the database containing, amongst other information, a firm/broker's compliance and disciplinary history.  Much of the information reported on the CRD is publicly available through FINRA's BrokerCheck website.  

FINRA Sanctions Berthel Fisher for Compliance Failures

The Financial Industry Regulatory Authority (FINRA) recently fined the independent broker-dealer Berthel Fisher & Co. Financial Services Inc. and one of its affiliates $775,000 for compliance failures.   According to FINRA, Berthel Fisher failed to supervise the sale of alternative investments, including non-traded real estate investment trusts (REITs) and leveraged and inverse exchange-traded funds (ETFs).

Owners of Pacific Property Assets/Apartments America Charged With Fraud

The FBI recently indicted Michael Stewart of Phoenix, Arizona, and John Packard, of Long Beach, California, for allegedly operating a massive real estate ponzi scheme fraud through their companies, Pacific Property Assets (PPA) and Apartments America, LLC (AA).  According to the SEC, which previously brought civil fraud charges against the alleged fraudsters, Stewart and Packard swindled investors out of more than $110 million by misrepresenting their companies' financial condition to prospective investors in the period leading up to and following the 2007 real estate collapse. 

San Francisco Art Dealers Implicated in $3.4 Million Ponzi Scheme

The FBI recently announced a 12-count federal indictment against Anthony Barreiro and Ernest Ray Parker, a/k/a Ray Parker Gaylord, two art dealers who reside in San Francisco and Dallas. The indictment alleges that Barreiro and Parker operated a Ponzi scheme fraud through several phony businesses, including ARTLoan Financial LLC, ARTLoan Financial Services Inc. and ARTLoan Financial Service LLC (collectively "ARTLoan"), and convinced investors to invest approximately $3.4 million in their scheme.  

Los Angeles Pastor Arrested For Running Ponzi Scheme Fraud

The FBI recently announced that it has arrested Luis Alonso Serna, a pastor based in the San Fernando valley area of Los Angeles, in connection with a federal indictment alleging he ran a Ponzi scheme which bilked upwards of 70 investors out of more than $4 million.  

Morgan Stanley Year-End Technology Glitch Reported

A new technology glitch is impacting Morgan Stanley Wealth Management's ability to re-balance its clients' brokerage accounts.  According to an anonymous source at the firm, the glitch was so significant that the firm's wealth management division called a "crisis management" meeting late last week.  

Crowdfunding: What Investors Need to Know

In April 2012, Congress enacted the "Jumpstart Our Business Startups Act"-or JOBS Act-as part of the federal government's ongoing efforts to stimulate the economy.  The Act was intended to spur small business growth by loosening decades-old rules prohibiting the solicitation and sale of private placement investments to the general public. Through the new "crowdfunding exemption" to the registration requirements of the Securities Act of 1933, Title III of the JOBS Act gives startup companies the go ahead to raise up to $1 million in investment capital per 12 month period from everyday (e.g., non-accredited) investors.

Senate Considers Regulation of Virtual Currencies

The virtual currency Bitcoin was the subject of a hearing held this week by the U.S. Senate Committee on Homeland Security and Governmental Affairs.  The hearing focused on potential implications of the rise of virtual currencies, also known as digital currencies, in today's market.  Appearing at the hearing to testify regarding the benefits, risks and potential regulation of virtual currencies were representatives of the Department of Justice, the Secret Service, the Department of the Treasury, and the Bitcoin Foundation, among others.

FINRA Announces New Version of BrokerCheck

The Financial Industry Regulatory Authority ("FINRA") is making it easier than ever to research an investment professional's background.  On November 12, 2013, FINRA announced its release of an enhanced version of BrokerCheck, the online tool that allows investors to check the background of registered brokers and brokerage firms.  In its news release, FINRA described the improved BrokerCheck as more intuitive, user-friendly, and a quick source of information that "can help [investors] decide if an investment professional is right for them."

Securities fraud - SAC Capital to pay $1.8 billion in fines

Hedge fund SAC Capital Advisors has agreed to pay $1.8 billion in fines and plead guilty to securities fraud charges, according to United States prosecutors. Manhattan federal Judge Laura Taylor Swain issued an order today setting a hearing for this Friday, where SAC Capital will plead guilty to every count on the insider-trading indictment issued by the U.S. Attorney's office in July. The indictment included allegations that SAC Capital principals, including Steven A. Cohen, ignored indications SAC Capital's employees engaged in widespread insider trading based on illegal tips for over ten years. Some of the insider trading included high-profile stocks such as Intel, Yahoo, Blackberry, and Elan. In addition to pleading guilty to securities fraud and wire fraud charges, SAC Capital agrees to shut down its investment advisory business. Earlier this year, the SEC fined SAC Capital $616 million for civil insider-trading charges. Prosecutors hope the massive fine will send a message to other Wall Street firms that this type of misconduct will not be tolerated.

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