Arbitration

Published on: August 26, 2011

FINRA RULING: BUNDA TO PAY FINES AND RESTITUTION

Securities arbitration for Frankfort, Ill., trader Robert T. Bunda ended with a sixteen-month suspension and a total penalty of $346,740. The payment order includes $171,740 in restitution and a $175,000 fine. The restitution total is equal to his total personal gain that resulted from his misconduct. The Financial Industry Regulatory Authority (FINRA) found that Bunda engaged in manipulative trading and attempted to conceal that trading by using one of his undisclosed outside brokerage accounts. Bunda’s manipulative trading included “spoofing that artificially impacted the market price of a NASDAQ security,” according to FINRA’s August 18^th announcement.

Finra ruling: bunda to pay fines and restitution

While Bunda neither admitted nor denied the allegations against him, he did consent to FINRA’s ruling.

“This case underscores FINRA’s commitment to aggressively pursue disciplinary actions for manipulative trading schemes that undermine legitimate trading activity,” says FINRA Executive Vice President of Market Regulation Thomas Gira. “Bunda’s conduct was designed to artificially move the market for his own personal gain and demonstrates an unsuccessful attempt to conceal improper trading activity through non-disclosure of outside brokerage accounts.”

Published on: August 14, 2011

CITIGROUP FINED $500,000 BY FINRA

by InvestorLawyers

The Financial Industry Regulatory Authority (FINRA) announced on August 9, 2011, its decision to fine Citigroup Global Markets Inc. for failing to supervise one of its former registered sales assistants, Tamara Moon. Moon was employed at Citigroup’s Palo Alto, California, office and misappropriated a total of $749,978 over 8 years. In addition, she engaged in unauthorized trading and falsified account records. Moon’s discretions were made possible by Citigroup’s supervisory lapses, according to FINRA’s securities arbitration proceedings.

Citigroup fined $500,000 by finra

FINRA’s decision to fine Citigroup comes just under two years after its decision to bar Moon, which was announced on August 25, 2009. In connection with that decision, Susan L. Merrill, FINRA’s Executive Vice President and Chief of Enforcement at that time, said, “Firms have an obligation to supervise all of their personnel, including sales assistants who have access to confidential customer account information.” Current FINRA Executive Vice President and Chief of Enforcement Brad Bennett said, “Tamara Moon used her knowledge of Citigroup’s lax supervisory practices at the branch to take advantage of some of the firm’s most vulnerable customers, including the elderly. Citigroup had reason to know what she was doing and could have stopped her.”

Moon’s 22 victims consisted of individuals she thought were unable to properly monitor their accounts and included the elderly and the ill. In one case, Moon created a fake account for her father and used the account to misappropriate $30,000 of her own father’s money and $250,000 of other Citigroup customers’ money. Setting up and maintaining this account required Moon to forge her father’s signature multiple times. In another case, Moon stole $26,000 from an elderly widow by moving money from the widow’s account to other accounts, including some owned by Moon and some owned by other Citigroup customers, without authorization.

Published on: August 11, 2011

FINRA RULING: SUNTRUST ORDERED TO PAY $5 MILLION

by InvestorLawyers

Securities arbitration ended with a Financial Industry Regulatory Authority (FINRA) announcement on July 26 that SunTrust Robinson Humphrey Inc. and SunTrust Investment Services Inc. will pay a total of $5 million for “violations related to the sale of auction rate securities (ARS).” $400,000 of the $5 million fine will be paid by SunTrust IS for failure to provide adequate ARS procedures, sales material and training. The remaining $4.6 million will be paid by SunTrust RH, the underwriter of the ARS, for sharing material non-public information, using inadequate sales material, having inadequate procedures and training for the sales of ARS, and failure to adequately disclose increased ARS risk of failure.

The FINRA investigation determined that SunTrust RH became aware of stresses in the ARS market in late summer 2007. These stresses increased the risk of auction failure. SunTrust Bank instructed SunTrust RH to reduce the usage of the bank’s capital and began examining their financial capabilities. These stresses continued to increase. The firm’s sales representatives were not adequately informed of the risks and were simultaneously encouraged to sell SunTrust RH-led ARS issues.

FINRA Executive VP and Chief of Enforcement, Brad Bennett, stated “SunTrust Robinson Humphrey and SunTrust Investment Services withheld information about the ARS market which prevented their sales representatives from making proper recommendations and their customers for making informed decisions about ARS. Because of that, the customers were left holding illiquid securities when the auctions failed.”

Published on: August 4, 2011

JANNEY SETTLES SEC CHARGES FOR $850,000

by InvestorLawyers

Janney Montgomery Scott, a broker-dealer from Philadelphia, and his firm, Janney Montgomery Scott LLC, will pay $850,000 in his settlement with the Securities and Exchange Commission for not taking proper precautions to prevent insider trading. According to securities regulators, Janney didn’t establish proper policies and, in some cases, didn’t enforce what policies were in place, to prevent potential insider trading.

Janney Settles SEC Charges for $850,000

The firm’s lax policies and lack of adherence to them continued for more than four years, from January 2005 until July 2009. The policies in question affected the firm’s Equity Capital Markets division. This division included trading, equity sales and research departments. Problems with policies included a lack of enforcement and failure to follow policies as written. This misconduct made it possible for nonpublic information to be used in insider trading — a clear violation of the law that states a firm should seek to prevent this possible misuse of material.

In addition, Janney did not require pre-clearance for personal trades of its investment bankers or approval for its employees to have brokerage accounts at other firms. The firm also failed to maintain a proper firewall between the email of investment banking staff and research staff. These measures are necessary to properly supervise and maintain accountability that would prevent insider trading. Insider trading creates an unfair advantage in the market and, therefore, unbalances it, perhaps causing major repercussions.

Published on: July 21, 2011

SECURITIES ARBITRATION FILED AGAINST JAMES J. ALBRIGHT, AIG

by InvestorLawyers

On July 5, a securities arbitration claim was filed against James J. Albright Jr. and what was formerly known as AIG Financial Advisors. Claims were made on behalf of eight individuals against Albright and what is now Sagepoint Financial Inc., but more slighted customers are expected to come forward.

Securities Arbitration Filed Against James J. Albright, AIG

The claim states that Albright recommended the purchase of risky, non-traded, illiquid Real Estate Investment Trusts (REITs) to the eight claimants but failed to sufficiently disclose the risks. Inland Western Retail Real Estate Trust, KBS REIT and Behringer Havard are among the unsuitable REITs Albright recommended to his investors. These investments reportedly caused hardships and financial ruin among the investors, including substantial losses and locked assets.

“We believe that tens if not hundreds more of his trusted clients were invested in those REITs, and we anticipate filing many more arbitration actions to seek damages and other relief for them," James Eccleston of Eccleston Law, the firm that filed claim with the Financial Industry Regulatory Authority (FINRA), stated.