Articles Posted in Merrill Lynch

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Financial Fraud On October 31, 2017, Carmel, Indiana financial advisor Thomas J. Buck, 63, was charged under federal securities laws with one count of securities fraud.  The unsealed criminal charges brought in the U.S. District Court for the Southern District of Indiana allege that Mr. Buck defrauded his clients by charging excessive commissions.  Mr. Buck has agreed to plead guilty to the charge.

From 1981-2015, Mr. Buck was a registered financial advisor with Merrill Lynch, Pierce, Fenner & Smith (“Merrill Lynch”), which since January 2009 has operated as a division of Bank of America.  The unsealed criminal charges allege, that in recent years, Mr. Buck defrauded some clients by charging excessive commissions, while intentionally failing to advise them of cheaper options for services rendered.  Specifically, it is alleged that Mr. Buck took discretion over certain accounts, and in these accounts placed trades without client authorization, resulting in clients paying commissions on these trades.  It is further alleged that Mr. Buck informed clients that they were paying less in commissions than were actually charged, and that he also allegedly failed to inform certain clients that a fee-based payment structure was available which could result in financial savings to the client(s).

As a result of the alleged fraudulent enterprise, it is estimated that Mr. Buck’s activities caused clients to incur aggregate losses of approximately $2 million.  According to Assistant U.S. Attorneys Cynthia J. Ridgeway and Nick Linder, who are handling prosecution of the case, Mr. Buck has agreed to plead guilty and could face up to 25 years in prison.  Contemporaneous with the unsealing of the criminal charges, Mr. Buck has also agreed to a monetary settlement with the Securities and Exchange Commission (“SEC”) in the amount of approximately $5 million.

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Recently, Wade James Lawrence was barred from the financial industry by the Financial Industry Regulatory Authority (FINRA). Investors’ rights lawyers are exploring accusations made against Lawrence regarding misappropriation of funds during his time as a broker.  According to the FINRA report, Lawrence failed to respond to these allegations, and in doing so forfeited his opportunity to remain a practicing broker.

FINRA Bars Wade James Lawrence from Financial Industry

Lawrence’s most recent history as a broker was with Southwest Securities, where he was registered from August 2011 through December 2013.  Prior to that, he worked for Oppenheimer & Co. from June 2008 through July 2011, and Merrill Lynch from April 2003 through June 2008.   During his time at both Southwest Securities and Oppenheimer & Co., there were several complaints issued against Lawrence by customers who claimed to have received unsuitable recommendations.  One client even alleged that Lawrence borrowed $850,000 and failed to return the funds. This alleged borrowing occurred while Lawrence was with Oppenheimer & Co. and the FINRA report states that he intended to “…pay for the losses.  I [Lawrence] then voluntary resigned and left the appropriate funds in my personal account to be used to cover the losses.”  Despite this response, Lawrence failed to appear for testimony with FINRA regarding this, or any of the other complaints, which included additional allegations of misappropriated funds and failure to provide appropriate investment recommendations.

If you suffered significant losses as a result of doing business with Wade James Lawrence or believe that another stockbroker or financial advisor led you to inappropriately use investment funds, you may be able to recover your losses through securities arbitration.  To find out more about your legal rights and options, contact a securities fraud attorney at the Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

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David Zeng was recently barred from working within the securities industry after he failed to respond to inquiries concerning over a dozen customer complaints about his investment activities.  These complaints alleged misrepresenting an investment, unauthorized stock trading, unsuitable investment advice and fraud.

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Prior to starting with Merrill Lynch in 2009, Zeng worked for UBS Financial Services and before that for Morgan Stanley.

If you suffered significant losses as a result of doing business with David Zeng or received an unsuitable recommendation in any of the mentioned investment categories from another stockbroker or financial advisor, you may be able to recover your losses through securities arbitration. To find out more about your legal rights and options, contact a stock fraud lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or newcases@investorlawyers.net for a no-cost, confidential consultation.

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Securities fraud attorneys are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with Wade James Lawrence. Lawrence, a former broker for Lubbock Investments, recently surrendered his securities license because the Financial Industry Regulatory Authority (FINRA) requested he give testimony regarding his conduct and Lawrence failed to appear for the on-the-record interview.

Customers of Wade James Lawrence, Merrill Lynch, Oppenheimer Could Recover Losses

Lawrence is also the defendant in two lawsuits filed in November. According to the allegations in these lawsuits, Lawrence failed to repay $1 million in loans made by private individuals. Reportedly, Lawrence stated in November 2013 that he would turn himself over to regulators “regarding allegations of illegal securities trading practices.”

According to FINRA reports, Lawrence has been accused of causing $140,000 in customer losses because of inappropriate trades during the time he worked with Southwest Securities and $71,000 in customer losses because of unauthorized trading when he was with Oppenheimer.

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Investment fraud lawyers are currently investigating claims on behalf of Wells Fargo customers who suffered significant losses in municipal auction-rate securities. On December 24th, a Financial Industry Regulatory Authority (FINRA) arbitration panel ordered Wells Fargo Advisors to buy back $94 million in securities at face value because the adviser allegedly misrepresented the investments, which would have violated the firm’s obligation to fully disclose all the risks of a given investment when making recommendations.

Wells Fargo Ordered to Buy Back $94 Million in Auction-rate Securities

According to Investment News, the award is related to securities purchased since March 2008 by the now-deceased Robert B. Cohen, his family and Hudson News, Cohen’s affiliated business. Reportedly, Cohen’s family has accused Wells Fargo and one of its advisors of misleading and fraudulent statements regarding municipal auction-rate securities.

Reportedly, when the financial crisis struck and investors found these securities difficult to sell, a Wells Fargo advisor allegedly told the Cohens they could earn back their investment within months with relatively high rates of return. According to investment fraud lawyers, a case is still pending against Timothy P. Shannon, a Wells Fargo adviser based in New Jersey. The FINRA panel also denied Wells Fargo’s request to have the dispute expunged from Shannon’s regulatory records.

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Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of investing in managed-futures funds offered by Morgan Stanley Smith Barney (MSSB). MSSB subsidiaries Merrill Lynch Alternative Investments LLC and Ceres Managed Futures also are being investigated, among others.

Unsuitable Sales of Managed-futures Funds

According to a recent Bloomberg article, U.S. Securities and Exchange Commission data indicate that in dozens of managed-futures funds, 89 percent of the gains were used to pay commissions, fees and expenses instead of being returned to investors. Furthermore, securities arbitration lawyers say that in light of the fees, stcckbrokers and financial advisors  who recommended such funds may have and made that recommendation despite the investment’s unsuitability.

According to investment fraud lawyers, firms have an obligation to fully disclose all the risks of a given investment when making recommendations, and those recommendations must be suitable for the individual investor receiving the recommendation given their age, investment objectives and risk tolerance. If a firm fails to make suitable recommendations, investors may be able to recover losses through FINRA arbitration.

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Investment fraud lawyers are currently investigating claims on behalf of investors who suffered significant losses as a result of doing business with Merrill Lynch and Sentinel Securities Inc. Both firms have recently been fined by Massachusetts regulators for failing to adequately supervise employees who used customer funds for their own personal benefit.

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In one case, registered representative Jane E. O’Brien reportedly borrowed client funds amounting to more than $2 million.  O’Brien allegedly used client funds that should have been invested in a software company for personal expenses. According to Massachusetts prosecutors and regulators, O’Brien has pleaded guilty to charges of fraud. She was sentenced to 33 months in prison and was barred from the securities industry.

In addition, regulators say that Merrill Lynch should have suspected that O’Brien was in financial trouble when she removed $380,750 from her retirement account prematurely, incurring tax penalties, but they didn’t inform regulators about a conduct review until almost a week after the Justice Department indicted her. Merrill was ordered to pay a fine of $500,000 for allegedly failing to adequately supervise O’Brien.

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Investment fraud lawyers at the Law Office of Christopher J. Gray P.C. recently filed a securities arbitration claim with the Financial Industry Regulatory Authority regarding UBS Puerto Rico investments. This case, which was filed on behalf of a retiree, focuses on one of a group of closed-end funds structured by UBS Puerto Rico, known as the Puerto Rico Fixed Income Fund I.

According to the allegations stated in the claim, Fund I was marketed and sold as a safe fixed-income investment, and was primarily invested in bonds issued by the Puerto Rican government. However, according to securities arbitration lawyers, because these funds suffered heavy exposure to the Puerto Rico government-issued bonds, there were substantial risks associated with the fund’s concentration these bonds in the event that they lost value. Due to their leveraged exposure to Puerto Rico government bonds, the value of the close-end funds has significantly declined as the underlying municipal bonds have dropped in price.

Fund I had a stated value of $8.55 per share as of July 2013. However, the value per share dropped to $6.06 in September and, as of October 1, shares of Fund I were only valued at $3.73. There are 23 closed-end funds currently in question, some of which have lost more than half their value, according to recent reports. Some of the funds currently being investigated by investment fraud lawyers are:

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Investors who suffered significant losses as a result of their auction-rate securities investment with Jeffries Group LLC may be able to obtain a recovery via FINRA securities arbitration. Jeffries Group is a subsidiary of Leucadia National Corp., another full-service brokerage firm. Recently, Jeffries was ordered to pay an investor $7 million regarding an auction-rate securities dispute.

In May 2012, a statement of claim was filed with the Financial Industry Regulatory Authority by Saddlebag LLC. The claim alleges that the firm wrongfully invested the client’s assets in illiquid auction-rate securities (ARS). According to securities lawyers, many financial firms sold auction-rate securities as short-term instruments with a highly-liquid nature, much like money market funds.

However, in 2008, the credit crunch resulted in a failure of the ARS market and investors with a piece of the $330 billion market were stuck holding securities that they were unable to sell. Other firms, including Morgan Keegan, have been accused of misleading investors regarding the liquidity risk of auction-rate securities.

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  Reportedly, 15 brokerage firms have been subpoenaed by the Commonwealth of  Massachusetts as part of an  investigation into sales of alternative investments to senior citizens.

15 Brokerage Firms Subpoenaed Over Alternative Investment Sales

The following firms have reportedly been subpoenaed: Merrill Lynch, Morgan Stanley, UBS Securities LLC, Charles Schwab & Co. Inc., Fidelity Brokerage Services LLC, Wells Fargo Advisors, ING Financial Partners Inc., TD Ameritrade Inc., LPL Financial LLC, MML Investor Services LLC, Commonwealth Financial Network, Investors Capital Corp., WFG Investments Inc. and Signator Investors Inc.

According to securities arbitration lawyers, the state sent subpoenas to the firms on July 10, 2013, requesting information regarding the sale of certain products to Massachusetts residents 65 or older over the last year. Nontraditional investments include private placements, hedge funds, oil and gas partnerships, tenant-in-common offerings, and structured products.

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