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SEC bars advisor who falsely claimed he managed “trillions” of dollars in clients’ assets

Posted byValerie Escobar

On September 13, 2024, the SEC barred Ruben Cedrick Williams, of Nashville, Tennessee.  He was CEO, CCO and co-owner of Vista Financial Advisors LLC.  Williams was also a financial advisor from December 2021 through December 2023.   The SEC alleges that Vista and Williams made material misrepresentations in the firm’s Form ADV filings.  Last September, the SEC sued Williams and Vista Financial Advisors, alleging the two had violated industry rules by making these false claims and statements.

In April 2022, Williams and the firm stated on Vista’s Form ADV that Vista had $10 billion in client assets but failed to provide the SEC with evidence to corroborate this statement.  Williams and Vista “ignored repeated requests” from SEC staff to substantiate, correct, or withdraw the statement regarding Vista’s assets, according to the SEC.  In fact, the firm’s assets “did not remotely approach the $10 billion” in client assets.

Williams and Vista then “compounded the misrepresentation” by filing an updated Form ADV in 2023, stating the firm’s assets had grown to nearly $11.5 trillion.  “To the extent that Vista had any [client assets], such assets did not remotely approach the $11.5 trillion stated in the 2023 Form ADV,” according to the SEC. The firm did not manage at least $25 million, according to the SEC.

Without admitting or denying the SEC Findings, Williams agreed to the entering of the SEC’s Order.

Harmed investors may call (954) 693-7577 or email [email protected] to discuss their legal options. All consultations are free and confidential.   Most cases are handled on a contingency fee basis, meaning that clients are not obligated to pay attorney fees unless money is recovered on their behalf.

David A. Weintraub, P.A.

7805 SW 6th Court

Plantation, FL  33324

 

Morgan Stanley Fined $2 Million for First Republic Bank Insider Sales

Posted byValerie Escobar

Massachusetts securities regulators https://www.sec.state.ma.us/divisions/securities/download/9-5-24-morgan.pdf  fined Morgan Stanley $2 million for its failure to monitor insider trades made by the Chairman and several executives at First Republic Bank in advance of the stock’s collapse.  What other broker dealers were aware of, or should have been aware of these insider sales?  The Wall Street Journal reported on the fine at the following link:  https://www.wsj.com/finance/regulation/morgan-stanley-is-fined-over-first-republic-insider-sales-48ad84bf?mod=hp_lead_pos3 .

If you suffered losses in First Republic Bank stock, and wish to discuss your potential claims, please contact David A. Weintraub, P.A. at (954) 693-7577.  If you have research reports for First Republic Bank stocks for 2022 or 2023, we would very much appreciate your sending us copies of those reports at [email protected] .   We are interested in reports from any and all analysts.

Twenty-Six Firms to Pay More Than $390 Million Combined in Penalties for Widespread Recordkeeping Failures

Posted byValerie Escobar

On August 14, 2024, the Securities and Exchange Commission today announced charges against 26 firms for widespread and longstanding failures by the firms and their personnel to maintain and preserve electronic communications.  Ameriprise Financial Services, LLC; Edward D. Jones & Co., L.P.; LPL Financial LLC; Raymond James & Associates, Inc.; RBC Capital Markets, LLC; BNY Mellon Securities Corporation; Pershing LLC; TD Securities (USA) LLC; TD Private Client Wealth LLC; Epoch Investment Partners, Inc.; Osaic Services, Inc.; Osaic Wealth, Inc.; Cowen and Company, LLC; Cowen Investment Management LLC; Piper Sandler & Co.; First Trust Portfolios L.P.; Apex Clearing Corporation; Truist Securities, Inc.; Truist Investment Services, Inc.; Truist Advisory Services, Inc.; Cetera Advisor Networks LLC; Cetera Investment Services LLC; Great Point Capital, LLC; Hilltop Securities Inc.; P. Schoenfeld Asset Management LP; Haitong International Securities (USA) Inc. were all sanctioned for their misconduct.

In October 2022, the SEC staff commenced a risk-based initiative to investigate whether investment advisers were properly maintaining communications that they required to preserve as records under the Advisers Act.  The firms cooperated with the investigation.    The SEC’s individual investigations found extensive and longstanding use of unapproved communication methods, known as off-channel communications, at these firms.  As described in the SEC’s orders, the firms admitted that, during the relevant periods, their personnel sent and received off-channel communications that were records required to be maintained under the securities laws. The failure to maintain and preserve required records deprives the SEC of these communications in its investigations. The failures involved personnel at multiple levels of authority, including supervisors and senior managers.  For instance, one financial advisor wrote to a colleague, using an unapproved platform, to ask him to execute an unsolicited trade requested by a customer.  On another occasion, a private wealth advisor and colleague exchanged text messages on an unapproved platform concerning customer brokerage account documents.

According to the firms’ respective SEC orders, they admitted and acknowledged that their conduct violated recordkeeping provisions of the federal securities laws.  The firms agreed to pay combined civil penalties of $392.75 million and have begun implementing improvements to their compliance policies and procedures to address these violations.

In summary, the firms were penalized as follows:

  • Ameriprise Financial Services, LLC agreed to pay a $50 million penalty
  • Edward D. Jones & Co., L.P. agreed to pay a $50 million penalty
  • LPL Financial LLC agreed to pay a $50 million penalty
  • Raymond James & Associates, Inc. agreed to pay a $50 million penalty
  • RBC Capital Markets, LLC agreed to pay a $45 million penalty
  • BNY Mellon Securities Corporation, together with Pershing LLC, agreed to pay a $40 million penalty
  • TD Securities (USA) LLC, together with TD Private Client Wealth LLC and Epoch Investment Partners, Inc., agreed to pay a $30 million penalty
  • Osaic Services, Inc., together with Osaic Wealth, Inc., agreed to pay an $18 million penalty
  • Cowen and Company, LLC, together with Cowen Investment Management LLC, agreed to pay a $16.5 million penalty
  • Piper Sandler & Co. agreed to pay a $14 million penalty
  • First Trust Portfolios L.P. agreed to pay an $8 million penalty
  • Apex Clearing Corporation agreed to pay a $6 million penalty
  • Truist Securities, Inc., together with Truist Investment Services, Inc. and Truist Advisory Services, Inc., which self-reported, agreed to pay a $5.5 million penalty
  • Cetera Advisor Networks LLC, together with Cetera Investment Services LLC, which self-reported, agreed to pay a $4.5 million penalty
  • Great Point Capital, LLC agreed to pay a $2 million penalty
  • Hilltop Securities Inc., which self-reported, agreed to pay a $1.6 million penalty
  • Schoenfeld Asset Management LP agreed to pay a $1.25 million penalty
  • Haitong International Securities (USA) Inc. agreed to pay a $400,000 penalty

The firms were each charged with violating certain recordkeeping provisions of the Securities Exchange Act, the Investment Advisers Act, or both. The firms were also each charged with failing to reasonably supervise their personnel with a view to preventing and detecting those violations.

Harmed investors can call (954) 693-7577 or email [email protected] to discuss their legal options. All consultations are free and confidential.   Most cases are handled on a contingency fee basis, meaning that clients are not obligated to pay attorney fees unless money is recovered on their behalf.

David Charles Burke (Omaha, Nebraska)

Posted byValerie Escobar

May 30, 2024 – An AWC was issued in which Burke was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Burke consented to the sanction and to the entry of findings that he refused to appear for on-the-record testimony requested by FINRA in connection with its investigation into the circumstances giving rise to a Form U5 filed by his member firm. The findings stated that the Form U5 disclosed that Burke had been discharged after an affiliate property/casualty company terminated his contract for applying electronic and wet signatures on several property/casualty insurance forms without the consent or knowledge of the insured. (FINRA Case #2023080266701)

Harmed investors can call (954) 693-7577 or email [email protected] to discuss their legal options. All consultations are free and confidential.   Most cases are handled on a contingency fee basis, meaning that clients are not obligated to pay attorney fees unless money is recovered on their behalf.

Thrivent Investment Management Inc.

Posted byValerie Escobar

May 28, 2024 – An AWC was issued in which the firm was censured, fined $325,000, and required to certify that it has remediated the issues identified in the AWC and implemented a reasonably designed supervisory system, including WSPs. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to establish and maintain a supervisory system reasonably designed to detect possible instances of signature forgery or falsification. The findings stated that firm registered representatives electronically signed customer names on documents, including documents that were required books and records of the firm. The firm’s WSPs required representatives to obtain authentic customer signatures on firm documents. However, the firm’s WSPs did not include any procedure to supervise use of electronic signatures or provide reasonable guidance to supervisors on what they should look for in attempting to assess whether an electronic signature was genuine. As a result, the firm did not reasonably investigate certain red flags contained in the certificates of completion, such as instances where representatives sent a document from their work email address to an email address not recorded in the customer’s account information such as their personal email address, sent an authentication code to their own cell phone number, or instances where the representative and customer’s remote signatures were sent from the same IP address. The firm failed to detect that certain of its representatives sent documents requiring a customer’s electronic signature to their own personal and work email addresses, and corresponding authorization codes to their own phones, and then falsified or forged customer electronic signatures on firm documents. The falsifications and forgeries were not in furtherance of unauthorized activity, there was no customer harm, and no customer complained.  (FINRA Case #2023079075201)

Harmed investors can call (954) 693-7577 or email [email protected] to discuss their legal options. All consultations are free and confidential.   Most cases are handled on a contingency fee basis, meaning that clients are not obligated to pay attorney fees unless money is recovered on their behalf.

Ariel A. Rivero (Miami, Florida)

Posted byValerie Escobar

May 13, 2024 – An AWC was issued in which Rivero was fined $15,000 and suspended from association with any FINRA member in all capacities for six months. Without admitting or denying the findings, Rivero consented to the sanctions and to the entry of findings that he caused his member firm to maintain incomplete books and records by using an instant messaging application to communicate with firm customers regarding securities-related business. The findings stated that the instant messaging application was not an approved channel for electronic communications with customers, and as a result, the firm did not capture or maintain these communications. The messages included, among other things, obtaining authorization to buy and sell stocks, discussions about account performance, and discussions related to a customer complaint and a customer loan. In addition, Rivero falsely attested that he did not use unapproved messaging services for business related communications. The findings also stated that Rivero borrowed $500,000 from a firm customer without providing prior written notice to, or obtaining written approval from, the firm. The customer was not an immediate family member or a financial institution. Rivero has repaid the customer more than half of the amount he borrowed and he is current on his payments on the loan. The findings also included that Rivero attempted to settle a customer complaint without notifying his firm. The customer, who was also Rivero’s former brother-in-law, complained to Rivero about losses in his account from investments in non-traditional exchange traded funds. Rivero offered, via the instant messaging application, to reimburse the customer over $300,000 in monthly installments of $10,000 to resolve the complaint. Rivero did not disclose to his firm the customer’s complaint or his attempt to settle with the customer. However, Rivero did not reach a settlement agreement with the customer or make any payments to him. Ultimately, the customer filed an arbitration claim against the firm and Rivero. The firm later settled the customer’s complaint.

Harmed investors can call (954) 693-7577 or email [email protected] to discuss their legal options. All consultations are free and confidential.   Most cases are handled on a contingency fee basis, meaning that clients are not obligated to pay attorney fees unless money is recovered on their behalf.

 

Jesse Aaron Bray (Orlando, Florida)

Posted byValerie Escobar

May 10, 2024 – An AWC was issued in which Bray was barred from association with any FINRA member in all capacities. Without admitting or denying the findings, Bray consented to the sanction and to the entry of findings that he refused to appear for on-the-record testimony requested by FINRA in connection with its investigation into a disclosure reflected in a Form U4 amendment filed by his member firm reporting that he was charged with a felony. (FINRA Case #2023080242101)

Harmed investors can call (954) 693-7577 or email [email protected] to discuss their legal options. All consultations are free and confidential.   Most cases are handled on a contingency fee basis, meaning that clients are not obligated to pay attorney fees unless money is recovered on their behalf.

Merrill Lynch, Pierce, Fenner & Smith Incorporated

Posted byValerie Escobar

May 9, 2024 – An AWC was issued in which the firm was censured, fined $825,000, and required to certify that it has remediated the issues identified in the AWC and implemented a reasonably designed supervisory system, including WSPs. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to reasonably supervise the execution timeliness of customer orders. The findings stated that the firm’s supervisory system, including its WSPs, was not reasonably designed in so far as the firm only reviewed the execution timeliness of orders processed through the firm’s electronic order systems from the time the orders were routed to a market center for further handling or execution and the final execution time. The firm did not conduct a supervisory review of how long it took the firm’s electronic order systems to process and route the orders to a market center. By omitting the electronic order systems’ order handling time from order receipt to the route time to a market center from its supervisory reviews, the firm failed to reasonably supervise whether it made every effort to execute marketable customer orders that it received fully and promptly. The findings also stated that the firm failed to reasonably supervise the accuracy of memoranda for electronic orders. The firm’s supervisory system, including its WSPs, was not reasonably designed to achieve compliance with SEC and FINRA recordkeeping requirements in so far as the firm did not conduct supervisory reviews to ensure the accuracy of information recorded on its order memoranda for retail brokerage equity orders the firm received electronically. (FINRA Case #2017054488401)

Harmed investors can call (954) 693-7577 or email [email protected] to discuss their legal options. All consultations are free and confidential.   Most cases are handled on a contingency fee basis, meaning that clients are not obligated to pay attorney fees unless money is recovered on their behalf.

Oppenheimer & Co. Inc.

Posted byValerie Escobar

May 7, 2024 – An AWC was issued in which the firm was censured and fined $500,000. Without admitting or denying the findings, the firm consented to the sanctions and to the entry of findings that it failed to reasonably supervise transactions that its registered representatives placed directly with product sponsors on behalf of firm customers (i.e., direct business transactions or held away securities transactions). The findings stated that the firm did not take steps reasonably designed to ensure that direct business transactions appeared on 5 Disciplinary and Other FINRA Actions July 2024 the firm’s daily trade blotter, causing the firm to fail to run transactions, including dividend reinvestments, for customers through exception reports used to identify potential sales practice violations, including potentially unsuitable transactions. The firm also failed to ensure that it collected information for customers’ investment profiles, such as the customers’ ages, investment time horizons, and liquidity needs, that was relevant for making certain suitability determinations. Subsequently, the firm revised its WSPs to prohibit direct transactions with mutual fund companies unless a corresponding account has been established at the firm. The firm also instituted procedures to verify that each direct business mutual fund transaction is housed in a firm account or, if not, to require representatives to promptly obtain a new account application and open an account for the customer. The firm also established progressive discipline measures if representatives failed to obtain new account applications. Ultimately, the firm began a retrospective review of its direct business transactions during the relevant period. That review involved identifying the direct business transactions that the firm failed to include on its trade blotter and reviewing the transactions according to the parameters used by the firm’s exception reporting system. The firm attempted to collect missing information about customers’ investment profiles. The suitability of certain of the transactions could not be determined because the firm was unable to collect complete information at the time of the retrospective review about customers’ investment profiles, including their investment time horizons or liquidity needs that would have been relevant at the time of the purchase. (FINRA Case #2017052438501).

Harmed investors can call (954) 693-7577 or email [email protected] to discuss their legal options. All consultations are free and confidential.   Most cases are handled on a contingency fee basis, meaning that clients are not obligated to pay attorney fees unless money is recovered on their behalf.

 

Former Aegis Capital Broker Surage Kamal Roshan Perera Charged With Fraud

Posted byValerie Escobar

On March 27, 2023, the SEC charged former broker Surage Kamal Roshan Perera and his firm, Janues Capital Incorporated, with defrauding at least one investor out of millions by lying about investment opportunities and strategies, concealing trading losses, and using funds received from others to give the victim the promised returns in Ponzi-like fashion. The SEC has obtained emergency relief in court, including a temporary restraining order and an asset freeze.

According to the SEC’s complaint, from February 2022 until March 2023, Perera, a Long Island, NY resident, falsely told an investor, not named in the complaint, that Janues had access to specific restricted securities at discounted prices though connections with large, institutional investors. He allegedly claimed to also exercise a trading strategy, which he referred to as ‘Options Straddles,’ that would not only prevent any trading losses but also guarantee returns on some of the investments of up to 9 percent with the potential for returns of 50 percent. According to the complaint, Perera and Janues misappropriated at least $3.5 million of the investor’s funds to engage in highly speculative and leveraged trading. In total, Perera engaged in more than $2.5 billion in securities transactions, with nearly $3 million in trading losses. Perera then allegedly concealed the misappropriation and losses by providing the investor with phony confirmations and account statements that falsely showed the expected returns. The complaint also alleges that Perera further attempted to hide the losses by using funds received from other sources to make Ponzi-like payments to the investor.

“As noted in our complaint, Perera and his firm Janues engaged in predatory and fraudulent behavior by claiming to have special access to securities through their professional connections, but instead defrauded millions of dollars from his investor,” said Antonia Apps, Director of the New York Regional Office. “We will continue to pursue individuals who prey upon retail investors and steal money from their clients.”

In a parallel action, the U.S. Attorney’s Office for the Eastern District of New York today announced criminal charges against Perera.

The SEC’s complaint alleges that Perera and Janues violated antifraud provisions of the federal securities laws. Perera also was charged with aiding and abetting Janues’ alleged violations. The SEC’s complaint names Nishani Alahakoon, whose brokerage account Perera and Janues traded, as a relief defendant. The asset freeze obtained by the SEC prevents any further dissipation of investor funds. The SEC is seeking permanent injunctions and disgorgement of ill-gotten gains plus interest and penalties.

If you were a victim of Mr. Perera, please contact David A. Weintraub, P.A. at (800) 718-1422 to discuss possible representation.