Recent Posts

Jan 10, 2014

Joseph Giordano Barred By FINRA for Sales of Unregistered and Unsuitable Debentures

Joseph Anthony Giordano, former Registered Principal of Capital Investment Group, Inc. (CIG) of Annapolis, Maryland and more recently with Meyers Associates, L.P. of Edgewater, Maryland, submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) sanctions and findings for the distribution and solicitation of unregistered Empire debentures, the solicitation of which was prohibited by CIG, and for making unsuitable recommendations to his customers.

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Jan 4, 2014

Conflicts of Interest In 401(k) Retirement-Plan Rollovers Are Prevalent

The lawyers at Robert Wayne Pearce, P. A. are well aware of the conflicts of interest of financial advisors who recommend to prospective clients that they withdraw funds from their 401(k) retirement plans and roll them over into an IRA account at the brokerage firm when they terminate their employment. The Financial Industry Regulatory Authority (FINRA) has finally woken up and given notice to all registered financial advisors and their employers that the pitch to move funds to IRA rollover accounts must be “fair and balanced;” two words that are foreign to many financial advisors.

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Jan 2, 2014

Puerto Rico Borrowing From Self Is Not A Good Sign For UBS Puerto Rico Investors

The latest news from Puerto Rico is that Government Development Bank (GDB) has borrowed $110 million from the State Insurance Fund (SIF) for its liquidity needs. The GDB President attempted to put a positive spin on the loan as achieving two objectives, “increasing GDB’s liquidity and improving the cash flow of SIF,” but borrowing from Peter to pay Paul is never a good strategy, even for a legitimate government. Puerto Rico is ostensibly seeking short-term deals to raise cash as it waits for conditions to improve in the US municipal bond market but the problem is with the Puerto Rico bond market and its economy. Noteworthy is the fact that the GDP still had to pay 8% annually for the loan and then pay it all back in less than 6 years. If 8% is the going rate within the government intra-agency borrowing what are the lenders on the outside going to charge the territory?

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Dec 31, 2013

Edward Scro Permanently Barred by FINRA for Unsuitable Recommendations To Elderly Customers

Edward Francis Scro, a former Registered Representative of the now un-registered financial advisory company NelsonReid, Inc., was permanently barred by the Financial Industry Regulatory Authority (FINRA) for making unsuitable recommendations to his elderly customers. According to FINRA’s findings, Mr. Scro, of Naples, Florida, advised his elderly customers, who needed a stable monthly income, to invest in risky, illiquid investments, sold primarily by Private Placement Memoranda (PPMs).

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Dec 27, 2013

Michael Barina Fined and Suspended by FINRA for Unsuitable Private Placement Recommendations

Longwood, Florida-based registered representative Michael Anthony Barina, employed by Altamonte Springs, Florida-based Merrimac Corporate Securities, Inc., submitted a Letter of Acceptance, Waiver and Consent in which he consented to, but did not admit to or deny, the Financial Industry Regulatory Authority’s (FINRA) sanctions and findings that he recommended an investment in a private placement investment pool without sufficiently understanding the entity’s investment strategy or its parameters. FINRAs findings stated that the entity’s investment strategy included investing up to 25% of its assets in a single security and engaging in options trading. According to FINRA, Mr. Barina allegedly “lacked a reasonable basis to believe that the entity was a suitable investment for the customers,” thereby making an unsuitable recommendation.

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Dec 24, 2013

More Downgrades Loom For PREPA and More Losses For UBS Puerto Rico Investors

Standard and Poor’s, Fitch Ratings and Moody’s ratings services have placed Puerto Rico’s general obligation bonds credit rating on negative watch which meant the next step was to downgrade Puerto Rico’s general obligation bonds to junk status. On Friday, Moody’s warned of another possible downgrade; this time of the Puerto Rico Electric Power Authority’s (PREPA) bonds. All three rating agencies have expressed concerns about the Island’s inability to access the market for refinancing and reasonable rates; the extent to which budget targets for the current fiscal year are being met; the instability in the performance of the Puerto Rico economy.

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Dec 19, 2013

Oppenheimer Fined By FINRA for Excessive Markups and Failure to Supervise

Oppenheimer & Co., Inc. (Oppenheimer) was fined $675,000 by the Financial Industry Regulatory Authority (FINRA) and ordered to pay over $246,000 in restitution to customers for charging unfair prices in municipal securities transactions and for failing to have an adequate supervisory system. FINRA also fined Oppenheimer’s head municipal securities trader, David Sirianni, $100,000 for his role in the excessive markups.

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Dec 13, 2013

Merrill Lynch Settles $131.8 Million Dollar Fraud Claim

The United States Securities and Exchange Commission (SEC) charged Merrill Lynch with false and misleading disclosures relating to two collateralized debt obligations (CDOs) and false records relating to a third CDO. Merrill Lynch settled the case for $131.8 million simultaneous with the filing of the SEC’s charges. According to the SEC, Merrill Lynch hid important facts from investors about a hedge fund known as Magnetar Capital, LLC and its involvement over the selection of collateral for the CDOs Octans I CDO Ltd. and Norma CDO I Ltd. Magnetar had undisclosed conflicts of interest. It bought the equity in the CDOs and hedged that equity position by shorting against the CDOs themselves.

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Dec 12, 2013

More Headwinds For UBS Puerto Rico Bond Fund Investors

Three weeks ago, Fitch Ratings placed Puerto Rico’s BBB minus credit rating on negative watch which meant the next step was to downgrade Puerto Rico’s general obligation bonds to junk status. Yesterday, the Moody’s Investors Service joined in Fitch Ratings’ analysis and placed Puerto Rico’s general obligation bonds and related credit on review for possible downgrade to junk bond status as well. Both Moody’s and Fitch, as well as Standard & Poors rate Puerto Rico debt a single level above junk. All three rating agencies have expressed concerns about the Island’s inability to access the market for refinancing at reasonable rates; the extent to which budget targets for the current fiscal year are being met; the instability in the performance of the Puerto Rico economy.

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Dec 11, 2013

FINRA Bars Raymond James Broker Paul Arnold for Misappropriation

According to FINRA, Raymond James and Associates, Inc. (Raymond James) stockbroker Paul David Arnold (Arnold) misappropriated and misused funds of an 88-year-old customer. The regulator alleged that during the period May 2010 through April 2011 that Arnold, a stockbroker in Raymond James’ Largo, Florida office, had customers sign blank checks that Arnold later made payable to his own wife and son without the customer’s authorization. FINRA found that Arnold misappropriated and misused $173,600 in customers’ funds. Arnold did not contest the charges and failed to appear for testimony on two separate occasions. The customer received an arbitration award against Arnold and appears to have settled his claim against the broker-dealer. Arnold has been permanently barred from serving in any capacity in the securities industry.

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