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Category Archives: SEC News

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.

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.

South Florida Stockbroker Indicted and Charged With Stealing From Client

Posted byValerie Escobar

On January 21, 2022, the Securities and Exchange Commission filed a complaint in the U.S. District Court for the Southern District of Florida against German Nino, a former investment advisor with UBS Financial Services, Inc.

The SEC alleges that, over a period of 6 years, Nino stole approximately $5.8 million from an advisory client. The client invested $11 million with UBS through Nino. He gradually wired large sums of money into a personal account. This account was, naturally, separate from his shared marital accounts, as Nino spent most of the money ($4.6 million) on various gifts for women with whom he was having affairs. These gifts ranged from vacations to luxury cars to an apartment in Colombia. The rest of the funds went towards paying back another client from whom he previously stole.

Nino doctored account statements to conceal his fraud. In meetings with the client, he lied about account performance and account balances to perpetuate his scheme. Nino’s crimes were not revealed until the client’s son noticed discrepancies in the accounts.

One must always remain diligent in regard to one’s investments. If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

SEC Charges Wedbush Securities with Unregistered Sales of Microcap Securities and Failing to Report Suspicious Transactions

Posted byValerie Escobar

The SEC announced that Wedbush has agreed to pay more than $1.2 million to settle charges arising from the unlawful, unregistered distribution of nearly 100 million shares of more than 50 different microcap companies.  In addition, Wedbush failed to file suspicious activity reports (SARs) in reference to these transactions.

According to the SEC’s Order, Wedbush engaged in unregistered offers and sales of large blocks of low-priced securities by an offshore customer.  Wedbush held a brokerage account for Silverton SA, now known as Wintercap, S, a purported Swiss assets manager.  The activity in Silverton’s account reflected a pattern of depositing them low priced securities, selling a large quantity of these shares soon after depositing them and withdrawing the proceeds.  Silverton’s business model enabled individuals or groups scheming to conceal their ownership of and control over public companies to fraudulently sell stock to investors.  Despite the presence of numerous red flags that Wedbush had identified in its written guidance to employees, it failed to file SARs for the transactions it executed on behalf of its offshore customer, as required to do when transactions are suspected to involve fraudulent activity.

Wedbush agreed to cease and desist from committing or causing violations of these provisions; to be censured; payment of disgorgement and prejudgment interest of over $207,000 and a civil penalty of $1 million.  Additionally, in 2018, the SEC and US Attorney’s Office for the District of Massachusetts brought parallel actions against a number of related parties, including Silverton’s principal, Roger Knox, for the alleged fraudulent scheme.

If you wish to discuss any securities related questions, please contact David A. Weintraub, P.A. 7805 SW 6th Court, Plantation, FL  33324.  By phone 954-693-7577 or 800-718-1422.

SEC Charges Former Executives of TCA Fund Management Group Corp.

Posted byValerie Escobar

On September 30, 2021, the SEC charged Robert D. Press, the former CEO, and Donna M. Silverman, the former Chief Portfolio Manager of TCA Fund Management Group, Corp.  for their alleged roles in the firm’s scheme to artificially inflate values and performance results of several of the firm’s funds.

According to the SEC investigation, Press allegedly recorded non-binding transactions and fraudulent investment banking fees in the fund’s books and records.  Subsequently, the inflated asset values and false performance results were included in promotional materials and account statements distributed to the TCA funds’ current and prospective investors, creating a false sense of having positive monthly returns.  In fact, the funds had at least 34 months of negative returns since inception.

According to the Director of the SEC’s Miami Regional Office “Press and TCA gave investors a false portrayal of the TCA Funds’ investment success, with Press profiting from this misinformation.”   Without admitting or denying the SEC’s findings, Press and Silverman each agreed to the entry of a cease-and-desist order.  In addition, Press agreed to be barred from the securities industry, and to pay disgorgement of overcharged management and performance fees he received of $4,409,546 plus interest and penalties.  Silverman agreed to a limitation on activities from acting in a director or officer capacity in the securities industry, and to pay a penalty of $50,000.

 

Seeman Holtz Lawsuits

Posted byValerie Escobar

Several lawsuits have been filed during recent weeks alleging that Florida financial firm Seeman Holtz (SH) defrauded investors. The suits allege that SH sold unregistered securities to unsuspecting and unsophisticated investors, many of whom were in their 90’s.  The investments were purportedly life insurance-backed promissory notes.  Not only were the notes not registered as securities, SH has never been a registered brokerage dealer, and its salesmen were not registered associated persons.

The lawsuits allege that SH’s salesmen visited upscale communities and preyed on elderly investors who wanted stable and secure investments. SH told investors that “the Notes were safe and secure and would be collateralized by a portfolio of life insurance policies which would provide safety of principal and substantial returns.” Investors were assured that their promissory notes would be “liquid and that they would be repaid upon maturity.” One of SH’s clients had purchased multiple notes, of which the client’s suit details two. One note matured in January of 2019 and the other matured a year later. These notes were collectively worth approximately $226,000 and have since defaulted.

It should be noted that Eric Holtz, a cofounder of SH and a defendant in the lawsuits at hand, committed suicide earlier this month.

In one of the pending lawsuits, the Florida Office of Financial Regulation accuses SH of running a “ponzi-type” scheme, accusing the firm of various violations of Florida’s blue-sky statute, including fraud.  As of this date, the SEC has not publicly announced whether it is investigating Seeman Holtz.

If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

Herbert J. Sims & Co. Ordered to Cease and Desist

Posted byValerie Escobar

On July 30, 2021, the U.S. Securities and Exchange Commission issued a cease-and-desist order against investment firm Herbert J. Sims & Co., Inc “HJS”.  The SEC found that between January 2015 and April 2018 HJS made unsuitable investment recommendations to forty-five customers.  Thirteen registered brokers at HJS’s Boca Raton, Florida branch recommended certain high-risk and highly sophisticated variable interest rate structured products “VRSPs” to forty-five customers.  Brokers are required to determine whether an investment is in their client’s best financial interests.  All of the VRSPs recommended and sold to the clients at issue had maturity periods of at least fifteen years.  Notwithstanding this, the product was sold to elderly clients.  VRSPs are “principal-at-risk” securities, meaning that investors can lose part of or their entire principal.  The HJS brokers recommended these VRSPs to elderly clients with low risk tolerance and low annual income.  In one example, an HJS broker “recommended the purchase of over $30,000 in VRSPs to a 69-year-old customer with a low risk tolerance, an investment objective of income, an annual income of less than $25,000, and a net worth of less than $185,000.”

The SEC ordered HJS to hire an independent consultant to review its policies and procedures that are designed to prevent and detect unsuitable recommendations.  The SEC also fined HJS $250,000.

If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.

The Arizona Corporation Commission ordered Jayson Papa, David Miller and Associates to Pay Restitution

Posted byValerie Escobar

On May 18, 2021, the securities division of the Arizona Corporation Commission ordered Jayson Papa, David Miller, and associates to pay restitution and penalties for defrauding investors. Miller operated a company called Meroe Capital Group Ltd. which was retained by Papa’s company, Castle International, LLC. The respondents in the ACC’s order offered and sold securities in the form of at least 22 notes to at least l1 investors, for a total of at least $1,119,425. All of the securities were unregistered and were all fraudulent.

Miller found investors by approaching strangers in public places, such as gyms and restaurants. He told offerees that Castle International was “an exciting company that conducted medical transports domestically and did rescue missions outside the U.S. Miller claimed that Meroe, his “firm,” was a serious Wall Street investment firm. The company’s website and materials featured a Wall Street address, which was in reality a virtual office. Miller told one investor that Castle International was such an exciting company that he personally invested $200,000 in it. The investors’ notes were never fulfilled.

One must always remain diligent in regard to one’s investments. If you wish to discuss any securities related question, please contact David A. Weintraub, P.A., 7805 SW 6th Court, Plantation, FL  33324.  By phone: 954.693.7577 or 800.718.1422.