Investor Lawyers Blog
Securities fraud attorneys are currently investigating claims on behalf of the customers of Sanders Morris Harris Inc. and Fifth Third Securities Inc. in light of recent fines and censures by the Financial Industry Regulatory Authority. Fifth Third Securities was fined $80,000 and ordered to pay restitution to investors in the amount of $26,876.52, plus interest. The firm was also ordered to revise its WSPs in regard to step-out transactions. Sanders Morris Harris was fined $75,000. Both firms submitted a Letter of Acceptance, Waiver and Consent but neither admitted or denied FINRA’s findings.
In the case of Sanders Morris Harris, FINRA’s findings indicated that the firm’s registered representatives distributed advertising material to retail customers for hedge funds that did not adequately disclose the risks of the funds. Furthermore, it was alleged that the advertising contained unclear graphs or charts that contained misleading statements and omitted material information. In addition, the material allegedly implied that investors could avoid negative returns and/or indicated that the fund’s past performance would yield future positive returns. According to stock fraud lawyers, FINRA’s findings also indicated that two of the nine subject pieces of advertising were distributed by the firm, without principal review, to retail customers.
Securities fraud attorneys say that in the case of Fifth Third Securities, FINRA’s findings indicated that the firm’s transactions with or for a customer resulted in a failure to execute due diligence to determine the most appropriate inter-dealer market and, further, failed to execute transactions in such a market to procure the most favorable price to its customer as possible, given market conditions. Reportedly, the firm did not properly report transactions in municipal securities to the RTRS, and an adequate supervisory system was not in place to maintain compliance with applicable MSRB rules, securities laws and regulations in regard to step-out transactions.